10-12G

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 2001


                               REGISTRATION NO.


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


                                     FORM 10

                  GENERAL FORM FOR REGISTRATION OF SECURITIES
                      PURSUANT TO SECTION 12(b) OR 12(g)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                             THE TOPAZ GROUP, INC.
                        (Name of Issuer in its charter)

                 Nevada                                  91-1762285
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization)

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

                           126/1 KRUNGTHONBURI ROAD
                          BANGLAMPOO LANG, KLONGSARN
                            BANGKOK 10600 THAILAND

                   -----------------------------------------
             (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

                            -----------------------
               (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                                  COPIES TO:
                          MITCHELL S. NUSSBAUM, ESQ.
                     JENKENS & GILCHRIST PARKER CHAPIN LLP
                             THE CHRYSLER BUILDING
                             405 LEXINGTON AVENUE
                           NEW YORK, NEW YORK 10174
                   TEL: (212) 704-6426; FAX: (212) 704-6288

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

    Title of each class              Name of each exchange on which
    to be so registered              each class is to be registered
    None                             None

Securities to be registered under Section 12(g) of the Act:

                   COMMON STOCK, PAR VALUE $ 0.001 PER SHARE


                               (TITLE OF CLASS)






                                TABLE OF CONTENTS



Item                                                                Page Number

ITEM 1.   DESCRIPTION OF BUSINESS.............................................2

ITEM 2.   FINANCIAL INFORMATION..............................................14

ITEM 3.   DESCRIPTION OF PROPERTY............................................19

ITEM 4.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....20

ITEM 5.   DIRECTORS AND EXECUTIVE OFFICERS...................................21

ITEM 6.   EXECUTIVE COMPENSATION.............................................22

ITEM 7.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................25

ITEM 8.   LEGAL PROCEEDINGS..................................................25

ITEM 9.   MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
          EQUITY AND OTHER SHAREHOLDER MATTERS...............................25

ITEM 10.  RECENT SALES OF UNREGISTERED SECURITIES............................26

ITEM 11.  DESCRIPTION OF SECURITIES..........................................26

ITEM 12.  INDEMNIFICATION OF OFFICERS AND DIRECTORS..........................29

ITEM 13.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS......................29

                                      i



                               EXPLANATORY NOTE

     The Topaz Group, Inc. is filing this registration statement on Form 10 in
order to become a reporting company under the Securities Exchange Act of 1934 or
"Exchange Act". Topaz is currently traded on the Pink Sheets quotation service
under the symbol "TPAZ". Under current NASD rules, we must become a reporting
company under the Exchange Act in order to have our stock traded on the OTC
Bulletin Board.


                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This registration statement on Form 10 contains forward-looking statements
that involve risks and uncertainties that address:

     o  business and growth strategies;

     o  financial condition and results of operations;

     o  forecasts; and

     o  trends, including growth, in the gem and jewelry markets.

     Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"intends," "plans," "should," "seeks," "pro forma," "anticipates," "estimates,"
"continues," or other variations thereof (including their use in the negative),
or by discussions of strategies, opportunities, plans or intentions. Such
statements include but are not limited to statements under the captions "Risk
Factors, " "Management's Discussion and Analysis of Financial Condition and
Results of Operations, " "Business," as well as captions elsewhere in this
document. A number of factors could cause results to differ materially from
those anticipated by such forward-looking statements, including those discussed
under "Risk Factors" and "Business."

     In addition, such forward-looking statements necessarily depend upon
assumptions and estimates that may prove to be incorrect. Although we believe
that the assumptions and estimates reflected in such forward-looking statements
are reasonable, we cannot guarantee that our plans, intentions or expectations
will be achieved. The information contained in this registration statement,
including the section discussing risk factors, identifies important factors that
could cause such differences.


                                      -1-


ITEM 1.  DESCRIPTION OF BUSINESS

     The Topaz Group, Inc. and its subsidiaries (collectively referred thereto
as The Topaz Group) is a vertically integrated manufacturing company engaged in
manufacturing and selling fine jewelry products and a broad array of gemstones,
including topaz, rubies, sapphires, emeralds, amethysts and a large variety of
other semi-precious stones. Our jewelry products are sold throughout the world,
with the United States representing our primary market. Our products are sold by
department stores such as Sears, J.C. Penny, TJ Maxx and Marshalls, discount
chains such as K-Mart, Wal-Mart, television marketers such as QVC and Home
Shopping Network, large wholesalers such as Helen Andrews and Colibri, and
e-tailers. Our strengths in sourcing, cutting and polishing gemstones and our
ability to design, craft and produce jewelry strategically position us to be a
significant source of virtually any gem and jewelry product. However, our
production capacity is largely focused on producing topaz stones due to our
ability to control the entire manufacturing process from the acquisition of raw
gemstones through the final phases of production. This process includes:

     o    the sourcing of the highest quality materials directly from mines in
          various locations, including, primarily, Brazil, Africa and Sri Lanka;

     o    specialty gem cutting and polishing for mass production; and

     o    the treatment of the cut gemstones through an irradiation process
          through our exclusive licensing agreement with the University of
          Missouri for the use of its nuclear reactor.

Background

     Our History

     The Topaz Group, Inc. and its subsidiaries or the "Topaz Group" is a Nevada
corporation listed on the Pink Sheets Service under the trading symbol "TPAZ".
We were originally incorporated in Utah as H&H Energy Corporation. After several
name changes, we changed domicile by merging into Technivision, Inc., a Nevada
corporation, in June 1996. In November 1996, Technivision changed its name to
Chancellor Corporation. In November 1998, Chancellor changed its name to The
Topaz Group, Inc.

     In April 1999, we entered into two separate exchange agreements with Best
Worth Agents, Ltd., a British Virgin Islands corporation or "Best Worth", to
acquire all of the issued and outstanding preferred shares of Creative Gems and
Jewelry Co., Ltd. and Advance Gems and Jewelry Co., Ltd., both Thai
corporations. According to the terms of the exchange agreements, we acquired
99.7% of the voting and dividend participation rights in each Thai company from
Best Worth in consideration for which Topaz issued 25,459,000 shares of series A
convertible voting and participating preferred stock to Best Worth. On September
29, 2000, we authorized a "one for five" reverse stock split. The split did not
affect our common stock's par value or the number of shares of our authorized
common stock. On January 22, 2001, we amended our articles of incorporation to
re-designate 50,000,000 of authorized preferred shares to create a new class of
preferred stock, the series B preferred. On January 25, 2001, we announced an
exchange of 20,130,250 series A preferred (representing five of each six shares
of common stock outstanding per each series A holder) into 1,006,513 shares of
the series B preferred. All share amounts have been adjusted to retroactively
reflect the January 25, 2001 recapitalization.

     Our principal operating business of manufacturing and selling fine jewelry
and gemstones are conducted through our three subsidiaries, Creative Gems and
Jewelry Co., Ltd. or "Creative", Advance Gems and Jewelry Manufacturing Company
or "Advance Manufacturing" and Advance Gems and Jewelry Co., Ltd. or "Advance".
We have engaged in our principal operating business since approximately 1970.
Creative primarily engages in manufacturing jewelry. Advance and Advance
Manufacturing primarily engage in cutting, polishing and manufacturing
gemstones. Advance Manufacturing was formed in 2000 to enable us to apply and
qualify for tax-exempt status under a Thai governmental program designed to
promote local employment.


                                      -2-


     MARKET OVERVIEW

     Our primary market, the United States jewelry market, is a diverse retail
environment. Retail outlets served include independent jewelry stores, chain
store operations, discount giants, television marketers, department stores, and
e-tailers. We are a supplier to a large segment of each of these markets and we
sell our products at many levels of distribution. Our gemstone division is the
main source of materials to our jewelry-manufacturing subsidiary which, in turn,
sells finished jewelry products to wholesalers, importers and retailers.

NARRATIVE DESCRIPTION OF BUSINESS

     We source a wide variety of raw gemstones, cut and polish them and then
professionally enhance the quality and color of the stones with different
treatments depending on the stone type. These treatments range from heating the
stones to treating them under high pressure and irradiation. After treatment,
the stones move to our jewelry-manufacturing subsidiary where our highly skilled
craftsmen and craftswomen design, mould, cast, file, polish and assemble fine
jewelry products. We provide a broad range of fashionable jewelry targeted at a
wide customer base, and direct our marketing efforts at retail customers who are
likely to purchase jewelry at frequent intervals as fashions and styles change.
The most significant volume of our business is based upon the sale of topaz
gemstones and jewelry. However, we also produce jewelry incorporating other
gemstones. We, through our subsidiary Creative, have entered into a joint
venture agreement with Muthama Gemstones (Kenya) Limited, or MGK, for the sole
supply of ruby material from the John Saul Mine located in East Africa which we
believe has one of the largest ruby deposits in the world. Under our joint
venture agreement, Creative and MGK, who are equal shareholders in the joint
venture, agree to purchase rough ruby stones at a twenty-five percent (25%)
discount from Rockland Kenya Limited or "Rockland", an entity which operates the
John Saul Mine with funds provided equally by Creative and MGK. Under this
agreement, Creative shall receive the rough ruby stones for cooking and cutting,
respectively. The cost of which shall be borne equally by Creative and MGK and
at a fixed rate of $135 per kilogram for cooking and $0.60 per carat cutting,
respectively. MGK guarantees that it will procure the stones from Rockland as
and when required. MGK also confirms that Rockland has the capability to produce
four (4) "parcels" or shipments of stones of varying qualities sufficient to
total approximately U.S. $250,000 per calendar quarter. Creative has a right of
first refusal to purchase the stones at a price to be set by Creative and MGK.
If the stones are sold to a third party purchaser, Creative is entitled to a
twenty percent (20%) commission. Either Creative or MGK may terminate the joint
venture agreement without cause by sending sixty (60) days written notice. As we
receive no intangible rights in this joint venture, it does not impact our
accounting. For accounting purposes no costs were capitalized under this
agreement.

     Advance Manufacturing purchases all of the raw gemstones used by us
including white topaz from mines in Africa, Sri Lanka and Brazil, and imports
the raw gemstones into Thailand where they are cut and polished at our factories
in Bangkok, MaeSai, Lop Buri, and Payao. After the stones have been cut and
polished, Advance Manufacturing sells some of the stones to local customers and
exports the bulk of the stones to the Topaz Group in the United States, where
the stones are irradiated and treated for color enhancement.

     The stones are irradiated in a nuclear research reactor, a particle
accelerator, or both, depending upon the color desired. Irradiation of the topaz
in a particle accelerator is a necessary step in the enhancement of blue topaz
stones. Our topaz stones are irradiated by Iotron Technologies Inc. or "Iotron"
which processes our stones in an accelerator that it operates in Canada.
Iotron's irradiation service is subcontracted through Creative's contact
Quali-Tech. We currently do not have a written agreement with Iotron or
Quali-Tech. After Iotron receives a shipment of stones to be irradiated from us,
Iotron sends us an invoice for the irradiation and/or storage service it
provides for each shipment of stones. In order to produce stones with darker
coloring, the clear topaz must first be processed through a nuclear research
reactor.

     We have also entered into an exclusive license agreement with The Curators
of the University of Missouri contracting on behalf of the University of
Missouri-Columbia Research Reactor Center or the "University" to irradiate our
white stones in their nuclear research reactor. Under our license agreement, the
University has agreed to provide to us its irradiation service or capacity to
irradiate topaz gemstones contained in specialized irradiation containers. The
license agreement is effective for four (4) years, from March 1, 2001 to
February 28, 2005. Once the initial four (4) year term is completed, the
agreement may be extended upon mutual consent. The fee for the University's
irradiation capacity is calculated based upon a rate of $15.38 per hour and on
minimum and maximum hours of irradiation exposure. The University also charges a
fee for handling irradiation containers based upon a $300 per container/per
irradiation charge. Currently, there are very few reactor facilities in the
world capable of enhancing topaz stones to dark hues, and the University's
facility has been set up to color topaz stones in massive quantities. As a
result, we believe that our exclusive license agreement is valuable for us in
our efforts to continue to succeed in the topaz market, both today and in the
future.

                                     -3-


     After the colorization process is complete and the required half-life has
elapsed, the stones are shipped to Creative who sells the finished topaz stones
into the industry or incorporates them into our jewelry. The half-life period
varies based upon the color of the stones. For the lightest colored stones,
called "Baby Blue", the half-life or decay period is generally up to one hundred
twenty (120) days depending upon the size of the stones. For slightly darker
stones, called "Swiss Blue", the half-life or decay period is generally up to
one hundred eighty (180) days depending upon the size of the stones. For the
darkest stones, called "London Blue", the half-life or decay period is generally
up to two hundred forty (240) days depending upon the size of the stones.

     We intend to capitalize on the expected expansion of the jewelry industry
by promoting our lines of jewelry and cut stone through electronic distribution
channels, further developing existing customer relationships by providing
special services, and taking aggressive steps to expand into new mass
distribution channels throughout the world.

PRODUCTS

     We manufacture a comprehensive selection of quality jewelry and gemstone
products including rings, pendants, earrings, bracelets, necklaces, pins, and
men's jewelry. Currently, we categorize our products into amounts of gemstone
sales as opposed to jewelry sales, Topaz products as opposed to other products
and low-end products as opposed to high-end products. The percentages below
illustrate the revenues by product group for the fiscal period ended December
31, 2000.

                                                                      Total
                                                                      -----

     Gemstone sales         42%           Jewelry Sales      58%:      100%
     ----------------------------------------------------------------------
     Topaz products         60%           Other products     40%:      100%
     ----------------------------------------------------------------------
     Low-end products       80%           High-end products  20%:      100%


MANUFACTURING PROCESS

     Our principal manufacturing and assembly operations are performed by our
subsidiaries, Advance and Creative, at their factories in Bangkok, Mae Sai, Lop
Buri, and Payao, Thailand. We believe that Advance and Creative have the largest
facilities in Thailand coupling jewelry manufacturing and stone cutting,
employing 2,000 production workers, plus 800 participants in Her Majesty the
Queen's and the Thai government's Royal Sponsored Women's program or "Royal
Sponsored Women's Program". The Royal Sponsored Women's Program is a government
program promoting local job creation and employment in economically depressed
areas in Thailand and provides tax-exempt incentives to eligible participating
companies. Participating companies are granted exemption from payment of
corporate income taxes in Thailand for a period of 8 years. By participating in
this program, we gain flexibility in meeting our production needs. Individuals
who participate in the program are not our employees. We have access to an
additional 1,700 independent contractors on an "as needed" basis who have been
trained to meet our manufacturing specifications and perform the work from their
homes. The employees perform a range of tasks from processing raw materials to
the cutting and polishing of stones to jewelry design. The manufacturing of
jewelry is performed by skilled workers under the supervision of technicians
according to set specifications. We implement quality control measures at each
level of production which include inspecting the raw materials prior to cutting
and polishing the gemstones and producing our jewelry as well as inspecting the
finished product.

CUTTING AND POLISHING STONES

     Currently large amounts of gemstones are cut and polished in Thailand. We
are currently producing in excess of 2,000,000 carats of loose stones each
month.

     We utilize a semi-mechanized process that we created which allows multiple
stonecutters to produce an unlimited number of identical stones without
incurring the prohibitive costs of a fully mechanized process. Our technicians
designed an instrument called the "angle controller" which allows stonecutters
to set up and control the cutting and angle of a stone or gem being cut. The
angle controller is positioned on a vertical dowel which is positioned 90
degrees from an abrasive turntable. The gem stone end is then applied to an
abrasive turntable to achieve the desired cut. This process enables us to take
advantage of low labor costs while producing quality identical pieces of jewelry
on a large scale.


                                     -4-


     In addition, we have established an "art of producing gemstones" program to
train local villagers in the art of cutting and polishing stones in conjunction
with the Thai Department of Industrial Promotion and the Royal Sponsored Women's
Program. This program is currently in place in more than 500 rural villages in
28 provinces of Thailand. To date, approximately 1,500 individuals have been
trained under this program and 800 are participants in the program. Through this
program we gain additional capacity on a variable basis while contributing to
and supporting rural communities throughout Thailand.

         THE COLORING PROCESS

     The coloring of topaz stones requires that the clear topaz stones be
irradiated to differing degrees in order to achieve specific hues. We have
relationships with two entities to irradiate the topaz stones. We have the
stones irradiated at a particle accelerator operated by Iotron and/or at the
University, depending upon the color desired for the stones. After the stones
are radiated, they are held in protective storage for a period of time until the
natural radioactive decay process or "cooling" or half-life period for each type
of stone has elapsed. The half-life period varies based upon the color of the
stones. For the lightest colored stones, called "Baby Blue", the half-life or
decay period is generally up to one hundred twenty (120) days depending upon the
size of the stones. For slightly darker stones, called "Swiss Blue", the
half-life or decay period is generally up to one hundred eighty (180) days
depending upon the size of the stones. For the darkest stones, called "London
Blue", the half-life or decay period is generally up to two hundred forty (240)
days depending upon the size of the stones. After the stones are radiated and
"cooled", we ship them to Creative to complete the cutting and polishing. Iotron
processes approximately 60% of the stones while the remainder is processed by
MURR, this being due to the present color fashion.

     The Missouri University Research Reactor or "MURR" is a nuclear research
reactor licensed by the Nuclear Regulatory Commission, and it is the largest
capacity reactor dedicated to the colorization of topaz stones. MURR uses a
two-step process to color the stones. The first step is the irradiation of the
stones in the research reactor. The second step is the storage of the stones
during the process of radioactive decay during which the stones take on the
desired color. Through our licensing agreement with the University, we control
the entire process of colorization at MURR including the cool-down holding
facility.

         QUALITY CONTROL

     As part of our commitment to maintaining high standards of quality, we
employ specially trained quality control teams to check every step of production
using state-of-the-art electronic testing and repair equipment. Upon completion
of the manufacturing process, each individual piece is inspected for defects in
workmanship and materials and only after an item has passed a final inspection
is it shipped to our customer. In March 2001, we received version 2000 ISO 9001
certification for gem and jewelry production and design process.

MANUFACTURING PLANTS

         We operate four factories located in Bangkok, Mae Sai, Lop Buri, and
Payao with production areas of 90,800 square feet, 11,000 square feet, 8,600
square feet and 5,250 square feet, respectively. Each factory is dedicated to
the cutting and polishing of stones, with our factory in Bangkok also serving as
our primary jewelry production facility.

RAW MATERIALS AND SOURCES OF SUPPLY

     We purchase gemstones and other raw materials from over 200 vendors. Our
two largest vendors are Gold Corporation (Thailand) Ltd. and Little Rock Co.,
Ltd., that supply approximately 13% and 10%, respectively, of our total raw
material purchases; but there are diversified sources and multiple vendors of
raw materials available. On September 6, 1999 we, through our subsidiary
Creative, signed a joint venture agreement with MGK for the supply of rough ruby
stones from a ruby mine in Kenya East Africa. Under our joint venture agreement,
Creative and MGK, who are equal shareholders in the joint venture, agree to
purchase rough ruby stones at a twenty-five percent (25%) discount from Rockland
Kenya Limited or "Rockland", an entity which operates the John Saul Mine with
funds provided equally by Creative and MGK. MGK guarantees that it will procure
the stones from Rockland as and when required. MGK also confirms that Rockland
has the capability to produce four (4) "parcels" or shipments of stones of
varying qualities sufficient to total approximately U.S. $250,000 per calendar
quarter. Creative has a right of first



                                     -5-


refusal to purchase the stones at a price to be set by Creative and MGK. If
the stones are sold to a third party purchaser, Creative is entitled to a
twenty percent (20%) commission. Either Creative or MGK may terminate the
joint venture agreement without cause by sending sixty (60) days written
notice. The joint agreement stipulates that MGK is required to supply, upon
request, four (4) parcels per annum with a capacity of $250,000 per quarter.
Current volume under this agreement is at capacity. Management believes that
if we are unable to purchase raw materials from any source, adequate
alternative sources of raw materials are available so that our operations or
production capacity will not be materially affected.

CUSTOMERS

     We have a broad customer base including over 350 individual purchasers. Our
four largest customers are, Goldmine Enterprises, Helen Andrews (the wholesale
distributor to K-Mart, QVC and TJ Maxx), Wal-Mart and Sears, which accounted for
approximately 33% of all net sales in the year ended December 31, 2000, with
Goldmine Enterprises accounting for approximately 13%. No other single customer
accounted for 10% or more of net sales. Although the loss of one or more large
customers could have a material adverse effect on our operating results, we
maintain good relationships with our customers and do not currently anticipate
the loss of any major customer.

BACKLOG

     Backlog orders as of December 31, 2000 were $2,200,000 compared to
$1,900,000 as of December 31, 1999. In the past, we allowed dealers to submit
estimated orders to guarantee shipment times. Now all orders are expected to be
filled and shipped as ordered and considered firm. We do, however, allow
modifications or cancellations of orders up to the time the product is loaded
for shipment, although a cancellation at such a late stage is subject to a
monetary penalty and is rare. We recognize revenue when goods are shipped as
opposed to when ordered. Therefore, receipt of blank orders does not impact our
revenue recognition.

SALES AND MARKETING

     Historically, our sales and marketing efforts have been modest because the
demand for our products is outpacing our ability to supply our products. Our
sales and marketing efforts focus on customer service and generating repeat
business. Sales and marketing towards our U.S. based customers is carried out
both from our Issaquah, Washington office and our Bangkok office, while our
sales staff in Bangkok handles sales efforts directed at our non-U.S. customers.
In addition to direct sales and customer support, we are an active participant
in the major jewelry trade shows held each year in Orlando and Las Vegas, USA,
Hong Kong and Bangkok, Thailand.

COMPETITION

     The jewelry manufacturing industry is highly competitive worldwide. Our
competitors include domestic and foreign jewelry manufacturers, wholesalers and
importers who operate on an international, national, regional or local scale.
However, the number of jewelry manufacturers that combine stone and jewelry
production is small, though still unquantifiable. We believe that competition in
the jewelry manufacturing business is based primarily on price, quality, design
and customer service. The range of retail prices available for various product
lines makes our products affordable to a wide range of customers. Additionally,
as a vertically integrated operation, we believe we are able to deliver quality
products faster and at a lower cost than competitors using outside resources.
There can be no assurance that our competitors, many of which may have greater
financial, personnel, technical, and other resources, will not have a material
adverse effect on future financial results of our operations.

INTELLECTUAL PROPERTY

     We currently hold no patents, licenses or franchises. We own the Savanna
trademark in the European Common Union. We have been granted the "CJ" trademark
in the European Common Union, which is used in the jewelry and is stamped next
to the karat to identify the source, Creative Jewelry. We do not consider our
intellectual property rights to be material to our business.

                                     -6-


ENVIRONMENTAL MATTERS

     We are subject to Thai national, provincial and local environmental
protection regulations. Thai environmental laws currently impose a graduated
schedule of fees and possible plant closures for the improper discharge or cure
of certain behavior causing environmental damage. Based upon our experience and
information currently available to us, we believe that our environmental
protection facilities and systems are in compliance with existing national and
local environmental protection regulations in all material respects. However,
there can be no assurance that Thai national or local authorities will not
impose additional regulations, which would require additional expenditures on
environmental matters in the future or have a material adverse effect on our
financial condition, results of operations or liquidity.

     We are also subject to environmental regulations in the United States. The
United States Nuclear Regulatory Commission has established and oversees
regulations governing the operation of a nuclear reactor and the storage of
radioactive material. These regulations govern our topaz colorization process at
MURR. If MURR is found to be in violation of the NRC's regulations either in the
operation of the reactor, or in its storage of radioactive materials, and those
violations result in MURR having to cease operations, such a finding could have
a material adverse effect on our sales and operations. If the MURR ceases
operations, we will no longer be able to color our blue topaz stones at this
reactor. Currently 60% of our products include blue topaz stones. If we unable
to color our blue topaz stones at MURR, our contingency plan would include
locating an alternate facility, such as in Malaysia, to color the topaz stones.
However, we may not be able to locate such a facility or reach terms
satisfactory to us for the use of such an alternate facility. In the event of
such an occurrence, we would experience a period of "no production" caused by
locating a new facility, staffing the facility, purchasing the proper equipment
to process the stones and training the staff to process the stones correctly
based upon the desired coloration.

     Our products are subject to the regulations promulgated by the Nuclear
Regulatory Commission and the U.S. Department of Transportation for the
handling, storage and transportation of our products. We are exposed to any and
all risks and liabilities typically associated with the handling, storage and
transportation of materials that have been irradiated. However, we have retained
a nuclear regulatory consultant to oversee this process and have received a
letter of regulatory compliance from the company that transports and handles our
radioactive materials. Also, the consultant has confirmed that upon sample
testing of our products on reentry into the United States market, the
radioactive levels were below the regulatory licensing limits required under the
U.S. Nuclear Regulatory Commission.

STRATEGY

     Our strategy is to continue to expand our position within the gemstones and
jewelry market. This strategy includes, furthering our position as a producer of
topaz jewelry and topaz stones in all market segments. Implementation of our
strategy includes focus in four primary areas: increasing production and
production efficiencies, broadening distribution channels, expanding ruby sales
and the growth of the U.S. sales and marketing teams.

     INCREASE PRODUCTION. We intend to obtain financing to increase production
of our products by building additional production facilities or purchasing
additional jewelry manufacturers.

     BROADEN DISTRIBUTION CHANNELS. We seek to expand our distribution channels
by entering into strategic alliances or acquisitions to be able to obtain access
to more "mom and pop" shops.

     EXPAND RUBY SALES. We intend to expand our ruby sales by increasing
purchases on an as-needed basis from various suppliers worldwide.

     EXPAND U.S. SALES AND MARKETING TEAM. We intend to expand our U.S. sales
and marketing team so that we can increase sales made to existing U.S. customers
which have domestic budgets. Many of our customers have both international and
domestic budgets and most of our sales are made within their international
budgets. We believe that an expanded U.S. sales and marketing team will allow us
to increase sales by allowing our U.S. customers to purchase products within
their domestic regions.

                                     -7-


EMPLOYEES

     As of June 1, 2001, we had approximately 2,000 employees plus 800
individual participants under the Royal Sponsored Women's Program. The Royal
Sponsored Women's Program is a government program promoting local job creation
employment in economically depressed areas in Thailand. As a participant in this
program, member companies receive tax-exempt incentives for payment of corporate
income taxes in Thailand. The tax-emempt incentives are distributed in 8-year
terms under this program, participating companies can re-apply for this program
in successive terms. Our employees include designers, technicians, management,
administrative personnel, marketing, sales, and factory personnel. All of our
employees are "at will" employees.

     Our employees are not currently members of a trade union. We have not
experienced any strikes or other labor disputes that have interfered with our
operations and we believe that our relations with our employees are good.

LEGAL PROCEEDINGS

     Neither the Topaz Group nor any of its subsidiaries is a party to, nor is
any of their respective properties the subject of, any material pending legal or
arbitration proceeding.


                                  RISK FACTORS


                          RISKS RELATED TO OUR BUSINESS

WE MAY EXPERIENCE FLUCTUATIONS IN OUR QUARTERLY RESULTS.

     Our operating results have varied significantly from quarter to quarter in
the past and may continue to vary significantly from quarter to quarter in the
future due to a variety of factors. Many of these factors are out of our
control. These factors include:

     o    fluctuations in the jewelry and gemstone market;

     o    seasonality of the jewelry industry;

     o    unexpected delays in importing gemstones or the manufacturing process;

     o    changes in consumer jewelry purchasing patterns from purchasing light
          stones to dark stones could result in delays because of the extended
          decay period required for the darker stones;

     o    changes in supply or availability of stones;

     o    new competitors;

     o    a decline in economic conditions which effects people's discretionary
          spending; and

     o    increases in expenses, whether related to sales and marketing,
          maintenance or repair costs, or administration.

     We will continue to determine our investment and expense levels based on
our expected future revenues, which may not grow at historical rates in future
periods, if at all. A significant portion of our expenses is not variable in the
short term and cannot be quickly reduced to respond to decreases in revenues.
Therefore, if our revenues are below expectations, our operating results and net
income are likely to be adversely affected. In addition, we may reduce our
prices or accelerate our development activities in response to competitive
pressures or to pursue new market opportunities. Any one of these activities may
further limit our ability to adjust spending in response to revenue
fluctuations.



                                     -8-


IF DEMAND FOR TOPAZ JEWELRY AND GEMSTONES DECLINES, WE COULD EXPERIENCE A
MATERIAL DECLINE IN RESULTS OF OPERATIONS.

     Sales generated by topaz stones and topaz based jewelry will continue to
account for a major portion of our revenues. Accordingly, our business and
results of operations are dependent on the demand for this single product and
any decrease in the demand for such product, whether as a result of competition,
changes in fashion, economic conditions in Thailand, the United States and
around the world or other factors, or restrictions on our ability to market this
product for any reason, would have a material adverse effect on our business,
financial condition and results of operations.

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS.

     We depend on a limited number of suppliers for the raw materials used in
the production of our topaz jewelry, specifically precious metals and topaz
stones. We have no guaranteed supply arrangements with any supplier, other than
MGK. Any interruption in the supply of key materials and components for our
products, which cannot be quickly remedied, could have a material adverse effect
on our business, financial condition or results of operations.

IF WE ARE UNABLE TO CONTINUE OUR RELATIONSHIP WITH MURR, WE WILL NOT BE ABLE TO
PRODUCE CERTAIN COLORS OF TOPAZ STONES.

     We depend on the Missouri University Research Reactor or "MURR" to
irradiate clear topaz stones in its nuclear research reactor to produce deeply
colored topaz stones, sales of which account for approximately 40% of our
revenues. Although we have entered into an exclusive license agreement with MURR
to continue using its research reactor for the purpose of irradiating topaz
stones, there can be no assurance that we will not be forced to cease using MURR
for reasons beyond our control. If we are unable to continue irradiating stones
at MURR, it may not be possible to find another entity willing or able to
provide the same service. A decision by the University to discontinue its
irradiation program would prevent us from fulfilling our orders and would have
an immediate material adverse effect on our operating results, even though we
might have recourse against University in a court of law for such an action.
Further, if MURR were forced to cease operations for an extended period of time
for any reason, our results of operations could be adversely affected.

CLAIMS BY INJURED EMPLOYEES COULD SUBSTANTIALLY INCREASE OUR EXPENSES BECAUSE WE
DO NOT CARRY WORKERS COMPENSATION INSURANCE.

     Our business exposes us to potential liability risks that are inherent in
the manufacturing process. Although we maintain product liability coverage, we
do not maintain workers compensation insurance with respect to our factories,
which is consistent with industry practice in Thailand. Historically, we have
not experienced any workers compensation claims. However, we can give no
assurance that personal injury claims would not have a direct material impact on
our expenses.

WE DEPEND ON THE SERVICES OF OUR CHAIRMAN, JEREMY F. WATSON, OUR PRESIDENT, DR.
APHICHART FUFUANGVANICH, AND OUR EXECUTIVE OFFICERS.

     In 1999, we appointed Jeremy F. Watson as chairman of our board of
directors and we have retained or recruited a number of other senior executives
and other key employees. We are dependent on these personnel, who have been
instrumental in designing and implementing our recent initiatives and are
involved in the strategies for our future growth and profitability. The loss of
services of Mr. Watson, Dr. Aphichart or our executive officers could have a
material adverse effect on all aspects of our operations and have a significant
negative impact on our financial condition. We can give no assurance that we
will be able to attract and retain additional qualified personnel as needed in
the future. We do not maintain key-man life insurance on our senior executives
or other key employees.




                                     -9-


                  RISKS RELATING TO OUR OPERATIONS IN THAILAND

ENFORCEMENT OF CIVIL LIABILITIES.

     The vast majority of our assets are located in Thailand. There is doubt
that the courts of Thailand would enforce, either in an original action or in an
action for enforcement of judgments of United States courts, liabilities, which
are predicated upon the securities laws of the United States.

OUR OPERATIONS ARE DEPENDENT UPON THE STABILITY OF THE THAI POLITICAL STRUCTURE
AND THE CONTINUED STRENGTH OF THE THAI ECONOMY.

     Our results of operations and financial condition may be influenced by the
political situation in Thailand and by the general state of the Thai economy.
The political situation in Thailand has been unstable from time to time in
recent years and future political and economic instability in Thailand could
have an adverse effect on our business and results of operations. Any potential
investor in our securities should pay particular attention to the fact that we
are governed in Thailand by a political, economic, legal and regulatory
environment that may differ significantly from that which prevails in other
countries.

     Thailand is a constitutional monarchy. Under the constitution, the King is
Head of State, Commander of the Armed Forces and Patron of all Religions.
Executive power is vested in the cabinet while the elected bicameral national
assembly exercises legislative power. Thailand has experienced several changes
of government and changes in its political system since World War II. A new
constitution became effective on October 11, 1997. There can be no assurance
that Thailand's current government or political system will continue unchanged
for the foreseeable future. Additionally, there can be no assurance that any
future change in the government will be the result of democratic processes.

THE THAI ECONOMY HAS A RECENT HISTORY OF INSTABILITY.

     Although Thailand's economy has been characterized in the past decade by
high growth rates, in 1996 and particularly in 1997, economic growth slowed
significantly in relation to historical levels. In late 1996 and throughout
1997, Thailand experienced significant economic weakness, resulting primarily
from declines in the property and finance industries, a sharp reduction in
financial liquidity and a general deterioration in investor confidence. In
addition, the country has had recurring trade balance and current account
deficits. The government of Thailand also agreed on August 5, 1997, to accept
the austerity measures of the International Monetary Fund or "IMF" aimed at
rehabilitating and restructuring the economy as a condition to receipt of
IMF-led loans and financial assistance in the billions of dollars. International
credit rating agencies, including Moody's Investors Service, Inc. and Standard &
Poor's Corporation, had downgraded Thai sovereign as well as various Thai
corporate and financial institutions' debt ratings. Between January 3, 1996 and
December 31, 1997, the Stock Exchange of Thailand Index fell from 1,323.43 to
372.69. On December 8, 1997, the Thai government terminated the operations of 56
of the 91 finance companies in Thailand.

     There can be no assurance that our operations will not adversely be
affected by:

     o    the economy in Thailand and in Southeast Asia generally;

     o    the interest rates and inflation in Thailand and other Southeast Asian
          countries;

     o    the lack of liquidity and stability in the Thai and other Southeast
          Asian finance industries; or

     o    other factors including measures taken by the government of Thailand
          in response to economic conditions.

     Instability in the Thai economy could affect our ability to finance our
working capital needs, collect on receivables for goods shipped or build market
share internationally or in Thailand. Further, we can give no assurance that the
economies of Thailand and Southeast Asia will not materially worsen.



                                     -10-


THE THAI GOVERNMENT CONTROLS THE CURRENCY CONVERSION RATES AND SETS LIMITS ON
THE AMOUNT OF CASH THAT A THAI ENTITY MAY MAINTAIN IN U.S. DOLLARS.

     On January 6, 1998, the Thai Cabinet approved the issuance of a Ministry of
Finance regulation to limit the U.S.$ holding period for exporters in an effort
to curtail currency speculation and increase the U.S.$ supply in the local
economy. Previously, exporters were required to be paid within 180 days and to
sell or deposit the proceeds in a foreign currency account with an authorized
bank in Thailand within 15 days of receiving such proceeds. However, according
to the January 1998 regulation, exporters must now be paid within 120 days,
after which they have seven days in which to sell or deposit the proceeds in a
foreign currency account in Thailand. This requirement applies to all export
proceeds earned by a Thai company outside Thailand.

     A Thai entity may open a foreign currency account under the following
conditions:

     o    the account must be with an authorized bank in Thailand and the funds
          must originate from abroad;

     o    remittance abroad of funds deposited in such an account for payment of
          ordinary business transactions would require submission of supporting
          evidence and approval of the Bank of Thailand; and

     o    the total amount of daily outstanding balances in such an account must
          not exceed U.S.$5 million, otherwise, such excess amount would be
          required to be converted to Baht.

     An exemption to these regulations allows a depositor to keep deposits in
U.S.$ up to an amount not to exceed the depositor's obligations to foreign
creditors and the international banking facilities of Thailand commercial banks
payable within the next three months. Funds deposited in a foreign currency
account may be withdrawn for, inter alia, payment of interest and principal due
on offshore debt repayments. Proof that the payment of interest is required must
be submitted with the bank in which the currency is deposited each and every
time an application to withdraw and repatriate foreign currency is made. As a
general matter, the outward remittance from Thailand of dividends, interest or
capital gains from the transfer of securities after payment of any applicable
Thai taxes, if any, may be made if the amount does not exceed U.S.$5,000 per
remittance, beyond which amount, a report must be made to the Bank of Thailand.

     Parties may apply for an exemption or relaxation from the "strict
observance" of the above requirements. We were able to obtain waivers from the
Bank of Thailand which would allow us to keep certain U.S.$ amounts of export
earnings offshore in certain accounts for an amount not to exceed U.S.$130
million each year through the redemption of certain notes and debentures.
Additionally, we were also granted an approval from the Bank of Thailand which
would allow us to keep U.S.$ amounts in excess of U.S.$5 million in accounts in
Thailand for an amount not to exceed our obligations in foreign currencies
payable within three months from the date of deposit.

     Any excess amount of foreign currencies must be converted into Baht. Such
conversion would require us to bear exchange rate risks as many of our
obligations are U.S.$ denominated. If we are unable to maintain these waivers
and are required to convert such revenue into Baht, any devaluation of the Baht
against the U.S.$ could have an adverse effect on our results of operations and
could materially impair our ability to repay our U.S.$ obligations.

BECAUSE WE HAVE SIGNIFICANT BAHT DENOMINATED ASSETS AND LIABILITIES, WE ARE
SUBJECT TO FLUCTUATIONS IN CURRENCY EXCHANGE RATES.

     Prior to July 1997, the Bank of Thailand determined the value of the Baht
based on a "basket," the composition of which was not made public but of which
the U.S.$ was the principal component. Prior to July 1997, the Baht had a
history of stability, trading in a narrow range of 24.47 Baht to 25.97 Baht to
the U.S.$1.00, as a result of frequent intervention by the Bank of Thailand
through purchases and sales of U.S.$. However, on July 2, 1997, under
substantial market pressure, the Thai government floated the Baht and
effectively ceased such intervention, and the value of the Baht, as reflected in
the Noon Buying Rate, declined from 24.52 Baht per U.S.$1.00 on July 1, 1997 to
56.10 Baht per U.S.$1.00 on January 12, 1998 and stood at 39.15 Baht to
U.S.$1.00 on May 15, 1998. We can give no assurance that the value of the Baht
will not decline further, increase or continue to fluctuate widely against other
currencies in the future. Adverse economic conditions in Thailand and the region
incidental to the devaluation of the



                                     -11-


Baht may also reduce some of our customers' ability to pay, and we can give no
assurance that such reduced demand will not have an adverse effect on us.

     Our functional currency is the U.S. dollar, however, we have significant
Baht denominated assets and liabilities. Therefore, fluctuations in the value of
the Baht relative to the U.S.$ may cause us to recognize material foreign
exchange gains or losses which could adversely affect our results of operations
and financial condition. Although we had not done this in the past, in the
future, we may decide to hedge our currency positions to attempt to avert any
adverse consequences of exchange rate fluctuations. We can give no assurance
that we will be able to successfully hedge our exchange rate exposure or that we
will be able to hedge such exposure at a satisfactory cost.

WE ARE SUBJECT TO THE THAI LEGAL SYSTEM IN WHICH CASE OUTCOMES AND THE
APPLICATION OF LAW ARE UNPREDICTABLE.

     The Thai legal system is based on written statutes and is a system, unlike
common law systems, in which decided legal cases have little precedential value.
The Thai system is similar to civil law systems in this regard. The basic laws,
such as the Civil and Commercial Code, the Civil Procedures Code, and the
Criminal Procedures Code are derived from similar codified laws in continental
Europe.


                   RISKS ASSOCIATED WITH THE JEWELRY BUSINESS

IF GENERAL ECONOMIC CONDITIONS WORSEN, PURCHASES OF JEWELRY AND GEMSTONES ARE
LIKELY TO DECLINE.

     Jewelry purchases are discretionary for consumers and may be particularly
affected by adverse trends in the general economy. The success of our operations
depends to a significant extent upon a number of factors relating to
discretionary consumer spending in markets where we operate. Some of the factors
that impact consumer spending include economic conditions in the regions we
serve, employment, wages and salaries, business conditions, interest rates,
availability of credit and taxation. We can give no assurance that consumer
spending will not be adversely affected by general economic conditions and
negatively impact our results of operations or financial conditions.

     Any significant deterioration in general economic conditions or increases
in interest rates may inhibit consumers' use of credit and cause a material
adverse affect on our net sales and profitability. Furthermore, any downturn in
general or local economic conditions in the markets in which we operate could
materially adversely affect our collection of outstanding customer accounts
receivables.

THE JEWELRY BUSINESS IS HIGHLY SEASONAL.

     We greatly depend on the success of our Christmas "selling season" for our
success. The success of our Christmas season depends on many factors beyond our
control, including general economic conditions and industry competition. Sales
during the Christmas selling season typically account for approximately 40% of
net sales and 45% of annual earnings. During our 2000 Christmas selling season
net sales were $14,227,438.

WE ARE SUSCEPTIBLE TO FLUCTUATIONS IN THE PRICE OF GEMS AND PRECIOUS METALS.

     We are subject to other supply risks, including fluctuations in the prices
of precious gems and metals. Presently, we do not engage in any activities to
hedge against possible fluctuations in the prices of precious gems and metals.
If fluctuations in these prices are unusually large or rapid and result in
prolonged higher or lower prices, we cannot assure that the necessary retail
price adjustments can be made quickly enough to prevent us from being adversely
affected.




                                     -12-


                  RISKS RELATED TO OWNERSHIP OF OUR SECURITIES

THE MARKET PRICE FOR OUR COMMON STOCK HAS BEEN HISTORICALLY VOLATILE AND IT MAY
BE DIFFICULT TO PREDICT THE FUTURE PRICE OF OUR COMMON STOCK.

     From time to time, there has been and may continue to be significant
volatility in the market price for our common stock. Quarterly operating
results, changes in general conditions in the Thailand economy, the U.S.
economy, financial markets, natural disasters or other developments could cause
the market price of our common stock to fluctuate substantially.

BECAUSE THE MARKET FOR OUR COMMON STOCK LACKS LIQUIDITY, IT MAY BE DIFFICULT TO
PURCHASE OR SELL OUR STOCK ON THE PUBLIC MARKET.

     Our common stock currently trades on the Pink Sheet Service. We have
applied to have our common stock listed on the American Stock Exchange. We also
intend to contact an authorized OTC Bulletin Board market-maker for sponsorship
of our common stock on the OTC Bulletin Board after this registration statement
clears the comment and review process of the United States Securities and
Exchange Commission. Although we have applied to list our common stock on the
American Stock Exchange, there can be no assurance that an active public market
for our common stock will be created and sustained. Accordingly, investors may
not be able to sell their common stock should they desire to do so, or may be
able to do so only at lower than desired prices. While no prediction can be made
as to the effect, if any, that future sales of shares of our common stock, or
the availability of additional shares for future sales, will have on the market
price of our common stock prevailing from time to time, sales of substantial
amounts of our common stock or the perception that such sales could occur, would
likely adversely affect the market price for our common stock.

YOU WILL BE UNABLE TO EXERCISE ANY CONTROL OVER OUR MANAGEMENT BECAUSE A SINGLE
STOCKHOLDER CONTROLS 80% OF THE VOTING CONTROL OF THE TOPAZ GROUP.

     Ms. Jariya Sae-Fa, an officer and director of one of our subsidiaries and
sister of Dr. Apichart, is the principal stockholder of Best Worth. Best Worth
beneficially owns all of our outstanding series A and series B preferred stock
and controls approximately 95% of all stockholder votes primarily as a result of
its ownership of all of the 3,721,050 outstanding shares of our series A
preferred stock and all of the 1,006,513 outstanding shares of our series B
preferred stock, which entitles the holder to 20 votes per share. Accordingly,
Ms. Sae-Fa, as managing member of Best Worth, is in a position to elect all of
our directors and to direct stockholder approval upon all issues to be voted
upon by our stockholders.

OUR OFFICERS AND DIRECTORS ARE GRANTED LIMITED LIABILITY FOR THEIR ACTIONS BY
OUR ARTICLES OF INCORPORATION AND BY-LAWS.

     Our articles of incorporation and by-laws contain provisions limiting the
liability of our directors for monetary damages to the fullest extent
permissible under Nevada law. This is intended to eliminate personal liability
of a director for monetary damages in an action brought by us or in our right
for breach of a director's duties to us or to our stockholders except in certain
limited circumstances. In addition, the articles of incorporation and by-laws
contain provisions requiring us to indemnify our directors, officers, employees
and agents serving at our request against expenses, judgments (including
derivative actions), fines and amounts paid in settlement. This indemnification
is limited to actions taken in good faith in the reasonable belief that the
conduct was lawful and in or not opposed to our best interests. Our articles of
incorporation and by-laws provide for the indemnification of directors and
officers in connection with civil, criminal, administrative or investigative
proceedings when acting in their capacities as agents for us. The foregoing
provisions may reduce the likelihood of derivative litigation against directors
and officers and may discourage or deter stockholders or management from suing
directors or officers for breaches of their duties to us, even though such an
action, if successful, might otherwise benefit us and our stockholders.



                                     -13-


FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.

     Future sales of shares of common stock by existing stockholders under Rule
144 of the Securities Act of 1933, as amended or the "Securities Act", could
materially adversely affect the market price of our common stock. A material
reduction in the market price of our common stock could materially impair our
future ability to raise capital through an offering of equity securities. A
substantial number of shares of common stock are available for sale under Rule
144 in the public market or will become available for sale in the near future.

ITEM 2.  FINANCIAL INFORMATION


                      SELECTED CONSOLIDATED FINANCIAL DATA

     The tables that follow present portions of our consolidated financial
statements and are not complete. You should read the following selected
consolidated financial information in conjunction with our consolidated
financial statements and related notes and with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this registration statement. The consolidated statements of operations data for
the years ended December 31, 1998, 1999 and 2000 and the consolidated balance
sheet data as of December 31, 1999 and 2000 are derived from our consolidated
financial statements that have been audited by Grant Thornton LLP, independent
auditors, which are included elsewhere in this registration statement. The
consolidated statements of operations data for the years ended December 31, 1996
and 1997 and the consolidated balance sheet data as of December 31, 1996, 1997
and 1998 are derived from unaudited financial statements that are not included
in this registration statement, which in our opinion reflect all adjustments
necessary to present fairly our financial position and results of operations for
the periods presented. The statement of operations data and balance sheet data
for the six months ended June 30, 2000 and June 30, 2001 are derived from
unaudited financial statements, which in our opinion reflect all adjustments
necessary to present fairly our financial position and results of operations for
the periods presented. The historical results presented below are not
necessarily indicative of the results to be expected for any future year. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."




                                                                                                          Six Months Ended
                                                     Year Ended December 31,                                  June 30,
                                   -----------------------------------------------------------------------------------------
                                   2000          1999         1998          1997          1996          2001            2000

                                                                                                  
Sales                           $ 32,483,043   $ 19,881,283  $ 18,886,737   $ 17,622,804   $ 24,309,947   $ 9,486,245  $ 10,455,707
Cost of Goods Sold                23,672,904     11,025,824    10,976,881     12,937,673     21,654,240     6,666,915     7,317,975
                                ------------   ------------  ------------   ------------   ------------   -----------  ------------
Gross Profit                       8,810,139      8,855,459     7,909,856      4,685,131      2,655,707     2,819,330     3,137,732
Selling, General &
Administrative Expenses            3,952,089      4,346,100     4,154,545      2,636,375      4,220,181     1,877,097     2,048,239
                                ------------   ------------  ------------   ------------   ------------   -----------  ------------

Earnings from operations           4,858,050      4,509,359     3,755,311        464,950         19,332       942,233     1,089,493


Other Income (expense)              (782,017)     1,826,234       884,299     (4,768,083)     4,845,289     1,275,328      (209,843)
                                ------------   ------------  ------------   ------------   ------------   -----------  ------------

Earnings (loss) before             4,076,033      6,335,593     4,639,610      5,310,239     (4,748,751)    2,217,561       879,650
extraordinary item

Extraordinary item-gain on
debt Restructuring                        --        803,589            --             --             --            --            --
                                ------------   ------------  ------------   ------------   ------------   -----------  ------------

Net Earnings (loss)                4,076,033      7,139,182     4,639,610      5,310,239     (4,748,751)  $ 2,217,561       879,650

Preferred stock dividends                 --     (2,734,610)   (12,270,00)            --            --             --            --
                                ------------   ------------  ------------   ------------   ------------   -----------  ------------


                                     -14-


Net Earnings (loss) available
to common stockholders          $  4,076,033   $  4,404,572  $ (7,630,930)  $  5,310,239   $ (4,748,751)  $ 2,217,561  $    879,650

Weighted average shares of           829,727        763,000       763,000        763,000        763,000     1,248,643       763,000
Common Stock

Common stock and potential         5,639,419      5,498,680            --      5,498,680             --     6,052,449     5,498,680
issuable common stock

Net earnings (loss)  Basic      $       4.91   $       5.77  $     (10.00)  $       6.96   $     (6.22)  $       1.78  $   1.15
per share available  Diluted
to common Stockholders          $       0.72   $       0.80  $     (10.00)  $       0.97   $     (6.22)  $       0.37  $   0.16





                                                           December 31,                                     June 30, 2001
                                   -------------------------------------------------------------------------------------------
                                   2000          1999         1998          1997          1996           2001            2000
BALANCE SHEET DATA
                                                                                                   
Cash and Cash Equivalents            321,734      574,439     1,782,897      293,002        842,078       653,213       409,226
Working Capital                   17,941,917   14,632,923     5,483,459   12,314,174      4,113,516    19,908,169    15,314,224
Total Assets                      26,662,838   24,374,159    23,846,301   20,491,681     16,846,513    29,631,858    27,867,783
Total Liabilities                 11,345,249   13,232,603    16,186,882    5,772,247      9,851,553    12,136,708    15,786,577
Total Stockholders' Equity        15,277,589   11,141,556     7,659,419   14,719,254      6,994,960    17,495,150    12,081,206


MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

      The following discussion of the financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and related notes thereto. The following discussion contains
certain forward-looking statements that involve risk and uncertainties. Our
actual results could differ materially from those discussed herein. Factors
that could cause or contribute to such differences include, but are not
limited to, risks and uncertainties related to the need for additional funds,
the rapid growth of the operations and our ability to operate profitably after
the initial growth period is completed. We undertake no obligation to publicly
release the results of any revisions to those forward-looking statements that
may be made to reflect any future events or circumstances.

RESULTS OF OPERATIONS

THE SIX MONTHS ENDED JUNE 30, 2001 AND JUNE 30, 2000

      SALES. Total sales for the first six months ended June 30, 2001 were
$9,486,245 compared to $10,455,707 for the six months ended June 30, 2000, a
decrease of 9.3%. The decrease in sales is primarily attributed to decrease in
consumer spending in the U.S.

      COST OF GOODS SOLD. Cost of goods sold was $6,666,915 or 70.3% of sales
for the six months ended June 30, 2001 as compared to $7,317,975 or 70% of
sales during the six months ended June 30, 2000. The small percentage increase
is a result of increased radiation cost of manufactured gemstones.

      OPERATING COSTS. Operating costs were $1,877,097 for the six months ended
June 30, 2001, compared to $2,048,239 for the six months ended June 30, 2000.
The decrease is largely attributed to a bad debt expense incurred during the six
months ended in June 2000 of $184,842 plus a remeasurement baht devaluation for
the first six months of 2001. This devaluation is applied to Baht Sales General
and Administrative expenses when remeasured to US dollars. This reduction in
SG&A expenses was offset against increased professional fees of $43,663 and
$40,375 in increased Sales General & Administrative Salaries.

      EARNINGS FROM OPERATIONS. Earnings from operations for the six months
ended June 30, 2001 were $942,233 compared to $1,089,493 for the six months
ended June 30, 2000. This decrease is attributed to a reduction in year to
date revenues of $969,462 and a corresponding drop in gross profit of $318,402
offset by a reduction in selling, general and administrative expenses of
$171,142.

                                     -15-


      OTHER INCOME. Other income and (expense) was $1,275,328 for the six
months ended June 30, 2001 compared to ($209,843) for the six months ended
June 30, 2000. The increase in other income is primarily attributed to a net
increase in the Currency Exchange Rate Gain and Remeasurement Gain of
$1,459,574. Our Thai subsidiaries maintain their books and records in Thai
Baht. However, their functional currency is the U.S. dollar. Monetary assets
and liabilities and related income and expense items are remeasured using the
current rates. Certain non-monetary assets (notably property and equipment)
are remeasured at historical rates. Other non-monetary balance sheet items and
related revenues, expenses, gains and losses are remeasured using average
exchange rates.

      NET EARNINGS. We reported net earnings of $2,217,561 for the six months
ended June 30, 2001 compared to $879,650 for the six months ended June 30, 2000.
The difference is largely attributed to favorable currency movements and a net
decrease in selling, general and administrative expenses that offset a reduction
in gross profit.

FISCAL YEARS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999

     SALES. Total sales were $32,483,043 in fiscal 2000 compared to $19,881,283
in fiscal 1999, an increase of 63.4%. The increase in sales is primarily
attributed to increased sales of jewelry to existing customers, aggressive
promotion of lower priced jewelry lines to new customers and the addition of new
customers due to increased participation in jewelry shows in the United States
and Hong Kong. Sales increased due to jewelry manufactured with lower grade
stones. Such sales carried lower profit margins, resulting in an overall revenue
increase from 1999 to 2000 without increases to gross margin.

     COST OF GOODS SOLD. Cost of goods sold was $23,488,062 in fiscal 2000,
72.3% of sales, compared to $11,025,824 in fiscal 1999, 55.4% of sales. The
increase in cost of goods sold is due in part to increased incentive programs
for new customers and lower gross margin sales of jewelry manufactured with
lower grade stones.

     OPERATING COSTS. Operating costs were $4,136,931 in fiscal 2000, 12.7%
of revenues, compared to $4,346,100 in fiscal 1999, 21.8% of revenues. This
decrease is due in part to reduced overtime pay for staff employees of
approximately $105,153, and to a Baht devaluation when applying the 1999
exchange rate to our year 2000 expenses.

     OPERATING PROFIT. Operating profit for fiscal 2000 was $4,858,050
compared to 1999 operating profit of 4,509,359 an increase of 7.7%. The increase
is due primarily to reduced selling, general and administrative expenses.

     OTHER INCOME. Other income and (expense) were ($782,017) in fiscal 2000
compared to $1,826,234 in fiscal 1999, due to gains (losses) resulting from
currency fluctuations. Our Thai subsidiaries maintain their books and records in
Thai Baht. However, their functional currency is the U.S. dollar. Monetary
assets and liabilities and related income and expense items are remeasured using
the current rates. Certain non-monetary assets (notably property and equipment)
are remeasured at historical rates. Other nonmonetary balance sheet items and
related revenues, expenses, gains and losses are remeasured using average
exchange rates.

     NET EARNINGS. We reported net earnings of $4,076,033 for fiscal 2000
compared to $7,139,182 for fiscal 1999, a decrease of 42.9%. The difference
between operating profit and net earnings is largely attributed to currency
fluctuations and an extraordinary gain on debt restructuring that occurred
during the year ended December 31, 1999.

FISCAL YEARS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998

     SALES. Total sales were $19,881,283 in fiscal 1999 compared to $18,886,737
in fiscal 1998, an increase of 5.3%. The fiscal 1999 increase in revenue is
primarily attributed to increased sales of jewelry to existing customers.

     COSTS GOODS SOLD. Cost of goods sold was $11,025,824 in fiscal 1999
compared to $10,976,881 in fiscal 1998, an increase of 0.4%, due in part to
reduced raw stone purchasing costs.

     OPERATING COSTS. Operating costs were $4,346,100 in fiscal 1999 compared to
$4,154,544 in fiscal 1998, an increase of 4.6%. This resulted from increased
Baht valuation in the fiscal 1999. In addition, increased salaries of
approximately $159,759 also affected operating expenses.

                                     -16-


     OPERATING PROFIT. Operating profit for fiscal 1999 was $4,509,359 compared
to 1998 operating profit of $3,755,311 an increase of 20.1%, in part from an
increase in gross profit margin from 1998 to 1999 of 2.6%.

     OTHER INCOME. Other income and (expense) were $1,826,234 in fiscal 1999
compared to $884,299 in fiscal 1998, an increase of 106.5%, resulting in part to
a net increase in the currency exchange rate gain and a remeasurement gain of
$917,753 or 106.9%. Our Thai subsidiaries maintain their books and records in
Thai Baht. However, their functional currency is the U.S. dollar. Monetary
assets and liabilities and related income and expense items are remeasured using
the current rates. Certain non-monetary assets (notably property and equipment)
are remeasured at historical rates. Other non-monetary balance sheet items and
related revenues, expenses, gains and losses are remeasured using average
exchange rates.

     EXTRAORDINARY ITEM. On July 30, 1999, Advance completed debt restructuring
with an investor that purchased the rights to the debt from a failed financial
institution, resulting in an extraordinary gain of $803,589. The debt
restructuring occurred as a result of the failure of the financial institution
and not Advance's ability to service the debt.

     NET EARNINGS. We reported net earnings of $7,139,182 for fiscal 1999
compared to $4,639,610 for fiscal 1998, an increase of 53.9%. The difference in
operating income from net income is largely attributed to currency fluctuations
and extraordinary gain on debt restructuring for fiscal 1999.

LIQUIDITY AND CAPITAL RESOURCES

SIX MONTHS ENDED JUNE 30, 2001

     Our principal source of working capital is income from operations,
borrowings under our revolving credit facilities and short-term loans from a
company affiliate. At June 30, 2001, we had a cash and cash equivalent balance
of $653,213 and working capital of $19,875,179.

     Our operating activities provided cash of $85,142 for six months ended June
30, 2001 and $915,618 for year ended December 31, 2000. The decrease in cash
provided by operating activities resulted primarily from a net increase in
inventory growth of $896,361 for six months ended June 30, 2001. The net cash
provided by financing activities for six months ended June 30, 2001 was $400,989
compared to (961,785) for the period ended December 31, 2000. This increase is
due primarily to $1,736,947 in payments on notes payable accounted for during
twelve months ended December 31, 2000 and absent during period end June 30,
2001.

     Our principal business is seasonal in nature with fourth quarter sales
representing as much as 40% of annual sales. As a result of this seasonality and
the decay periods inherent in our topaz products, inventory growth in the second
and third quarters are customary. As of June 30, 2001 inventory was $23,660,417
compared to December 31, 2000 of $20,626,502, an increase of $3,033,915. The net
effect directly impacts our cash flow as a decrease in cash flow from operating
activities. In addition to seasonal build up, inventory growth can be attributed
to two other factors: anticipated fourth quarter sales growth with changes in
consumer buying trends and lengthy decay periods for the radiated stones
coupled with short lead times on customer orders. The decay periods for the
topaz stones can range from 120 to 240 days depending upon the hue. For darker
hues the decay periods are longer. At the end of the 1st quarter the
consumer-buying trend was to move from the lighter topaz hues to the darker
colors. As a result of the decay periods, our production included significant
levels of lighter hues preparing for the seasonal revenues. The consumer buying
preference shifted to a darker stone, which included a longer decay period. As a
result, our inventory levels continue to build with darker stones while the
lighter topaz stones are showing slowing demand trends. This change in trends
causes increased inventory levels. In addition, retailers and wholesalers
continue to demand shorter lead-times for orders which in turn causes higher
carrying values of finished stones to meet customer orders on time.

     We have two line of credit arrangements with two Thai financial
institutions entered into in October 1999 and April 2000. Both lines are
renewable automatically on a yearly basis and are subject to the banks' periodic
reviews resulting in adjustment of our credit limit. The 1999 and 2000 lines
bear interest at a rate equal to LIBOR plus two percent (8.208% December 31,
2000); the 1999 line is personally guaranteed by two of our directors and
collateralized by various real estate properties belonging to us and one of our
directors. The 2000 line is also guaranteed by two of our directors and secured
by a deed on a real estate property owned by a related party. As of June 30,
2001, approximately $462,500 was available for borrowing under both 1999 and
2000 lines, respectively. As of December 31, 1999 and 2000 and June 30, 2001,
the outstanding balance under both lines of credit was $0, $775,162 and
$1,176,151, respectively.

     Our principal source of working capital is income from operations,
borrowings under our revolving credit facilities and short-term loans from a
company affiliate. At December 31, 2000, we had a cash and cash equivalent
balance of $321,734 and working capital of $17,941,917 compared to $574,439 of
cash and cash equivalents and working capital of $14,632,923 at December 31
1999.



     Our operating activities provided (used) cash of $951,618 and ($1,398,827)
for fiscal 2000 and 1999. The increase in cash provided by operating activities
resulted primarily from our fiscal 2000 profit of $4,076,033, less inventory
growth of $2,137,554 and a non-cash gain of $752,760 on the remeasurement of
redeemable ordinary shares. Operating cash flow increased from fiscal 1999 to
2000 because of a reduction in inventory growth when compared to 1999 inventory.
Sales growth from 1999 to 2000 was 63.4% while inventories increased by only
11.6%. Selling, general and administrative expenses also decreased by $209,169
causing an increase in operating income. This increase is offset by a reduction
in gross margin from 44.5% for fiscal 1999 to 27.7% for fiscal 2000. The
reduction in gross margin is a result of lower profit jewelry sales manufactured
with lower grade stones in fiscal 2000. The decrease in net cash provided by
financing activities for 2000 and 1999 was $1,299,085, due primarily to
$1,736,947 in payments on notes payable offset by $775,162 in additional net
borrowings on our lines of credit. We have two line of credit arrangements with
two Thai financial institutions entered into in October 1999 and April 2000.
Both lines are renewable automatically on a yearly basis and are subject to the
banks' periodic reviews resulting in adjustment of our credit limit. The 1999
and 2000 lines bear interest at a rate equal to LIBOR plus two percent (8.208%
December 31, 2000), The 1999 line is personally guaranteed by two of our
directors and collateralized by various real estate properties belonging to us
and one of our directors. The 2000 line is also guaranteed by two of our
directors and secured by a deed on a real estate property owned by a related
party. As of December 31, 2000, approximately $836,000 and $493,000 were
available for borrowing under the 1999 and 2000 line, respectively. As of
December 31, 2000, the outstanding balance under both lines of credit was
$775,162.

     The effects on liquidity of carrying large values of inventory can be
referenced by days of sales in inventory. On average, for 12 months ended June
30, 2001, December 31, 2000 and 1999 inventory would remain on the books 354,
236 days and 378 days respectively until it is sold. During this period the
inventory is classified as a current asset on the balance sheet but restricts
the use of working capital until the inventory is sold.

     Inventory is valued by applying a moving average method for valuation. In
general the inventory is valued by taking the quantities of inventory by group
times a unit cost. The unit cost is calculated by adding the raw cost of the
product plus any additional costs to bring it to its current condition including
processing, transportation, insurance and holding costs. Because costs per unit
fluctuate by unit over a relative period of time, the average cost for the
processing or handling costs are averaged over the respective period represented
by the age of the inventory.

                                     -17-


     Our business can be classified into two major groups including sale of
finished jewelry and finished stones, to a lesser degree. Most of our finished
jewelry is made to order and is shipped when completed. (Inventory valuations
include the lesser of manufactured cost or market valuation per unit times the
quantities on hand.) Lower of cost or market is referenced by recent sale prices
of the finished stones compared to the cost to produce or acquire such stones.
If recent sales of an existing stone is not available, current market prices
will dictate lower of cost or market.

     Management believes we have the ability to meet our current and anticipated
financing needs for the next twelve months with the facilities in place and
funds from operations, however, given our growth prospects, we may need to seek
increases in our credit facilities during the upcoming year to sustain further
revenue growth.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

CURRENCY FLUCTUATIONS

         1. EXCHANGE RATE INFORMATION

     Our Consolidated Financial Statements are prepared in U.S. dollars. The
financial statements of our foreign subsidiaries are remeasured into U.S.
dollars in accordance with Statement of Financial Accounting Standards No. 52.
Fluctuations in the value of foreign currencies cause U.S. dollar amounts to
change in comparison with previous periods and, accordingly, we cannot quantify
in any meaningful way, the effect of such fluctuations upon future income. This
is due to the constantly changing exposure in the Thai Baht for our Thai
subsidiaries.

     As of October 20, 2001, the interbank exchange rate for the Baht is trading
at 44.73 Baht to the US dollar. The exchange rate in Thailand is showing signs
of stability in 2001 with gradual recovery anticipated in early 2002. We
anticipate that the economies of the Asian countries are continuing to recover
which will further strengthen the Baht, however, the regions of Thailand are
promoting exports to strengthen their economies. An attempt to control the
valuation of the Baht is likely to come from easing exports, not imposing tight
restrictions. We are unable to predict whether the trends noted above would have
a material effect on our future financial condition or the results of operations
and, if so, whether such an effect will be positive or negative.

         2. EXCHANGE RATE FLUCTUATION


         Thai Baht
                                                     2001                              2000
                                            High     Low      Average           High    Low   Average
                                            ----     ---      -------           ----    ----- -------
                                                                               
         Second quarter                     45.85    44.68    45.45             39.45   37.72    38.67

         First quarter                      45.00    42.19    43.29             38.30   36.71    37.96


                                                     2000                              1999
                                            High     Low      Average           High    Low   Average
                                            ----     ---      -------           ----    ----- -------
         Fourth quarter                     44.44    41.88    43.43             40.90   37.35    38.86

         Third quarter                      42.77    39.10    40.97             41.70   36.60    38.31


     We expect that the exchange rate of the currency of certain countries in
Asia including Thailand will stabilize by the end of 2001. The stabilization and
recovery of the Thai Baht is anticipated to show continued improvement with the
recovery of the economy through 2002. We anticipate that the cost of raw
materials, which includes precious and non-precious metals, are expected to show
slight cost increases in the short-term with long-term stability.

                                     -18-


         3. FORWARD-LOOKING STATEMENTS

     From time to time, we may make certain statements that contain
"forward-looking" information. Words such as "anticipate", "estimate", project",
"believe" and similar expressions are intended to identify such forward-looking
statements. Forward-looking statements may be made by management orally or in
writing, including, but not limited to, in press releases, as part of the
Financial Information or Management's Discussion and Analysis or Plan of
Operations and as part of other sections of this registration statement.

     Such forward-looking statements are subject to certain risks, uncertainties
and assumptions, including without limitations those identified below. Should
one or more of these risks or uncertainties materialize, or should any of the
underlying assumptions prove incorrect, actual results of current and future
operations may vary materially from those anticipated, estimated or projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their respective dates.

         4. FOREIGN CURRENCY RISK

     As of June 30, 2001, we had no open forward-contracts. Our Thai
subsidiaries keep their books in the Thai Baht currency. As such, the Thai
balances are exposed to currency gains and losses depending upon the currency
rate fluctuations when compared to the US dollar for the respective periods. The
currency and remeasurement gains and losses for periods ended June 30, 2001 and
2000 are $1,308,171 and $(195,857).

         5. INTEREST RATE FLUCTUATIONS

     Our interest expenses and income are sensitive to changes in interest
rates. We had interest-bearing obligations of $1,176,151 for the period ended
June 30, 2001 bearing various interest rates, and any fluctuation in the
interest rate will have a direct impact on our interest expenses, cash flow and
results of operations.

ITEM 3.  DESCRIPTION OF PROPERTY

     We operate four fully integrated facilities in various parts of Thailand
totaling 101,000 square feet.

     Our headquarters, administrative facilities and primary manufacturing
facilities are located in the Topaz Tower, a 15 story tower at 126/1
Krungthonburi Road, Banglampoo Lang, Klongsarn, Bangkok, Thailand that
encompasses approximately 90,800 square feet. We occupy 74,000 square feet of
this space subject to a lease that expires February 28, 2011 at a cost of
approximately $3,200 per month and we lease the remaining 16,800 square feet on
a month to month basis. We also have manufacturing facilities located at Mai
Sai, Thailand, which we occupy subject to a lease that expires August 15, 2004
at a cost of approximately $200 per month, Lop Buri, Thailand, which we occupy
subject to a lease that expires April 19, 2002 at a cost of approximately $760
per month, and Prayao, Thailand, which we lease on a month to month basis. The
factory at Mai Sai encompasses approximately 11,000 square feet, the factory at
Lop Buri encompasses approximately 8,600 square feet and the factory at Prayao
encompasses approximately 5,250 square feet. We expect that we will be able to
renew our leases when they expire. If, however, we are unable to renew any of
our leases, we believe that there is widely available commercial space for
leasing in each of our locations and that we would be able to relocate our
capital equipment into a new space without experiencing a material adverse
impact on our results from operations or operating expenses.

     We lease offices located in Issaquah, Washington which are subject to a
lease that provides for monthly rent of approximately $5,300 per month and
include 2,171 square feet with a termination date of August 31, 2006.
Our office is located at 1180 NW Maple Street, Suite 180, Issaquah, Washington
98027. Our telephone number is 425-392-3144. The operations that are
performed at this location include: U.S. accounting activities, preparation of
quarterly and annual reports, financing and capital-raising activities, credit,
collections and U.S. sales and customer support services. Our chief financial
officer, treasurer and U.S. sales staff is located in this office.

     Our subsidiaries are located as follows: Creative Gems & Jewelry Co., Ltd.,
57/7 Moo 4, Tambol Thasala, Amphur Muang, Lopbur, Thailand 15000; Advance Gems &
Jewelry Co., Ltd., 57/31 Moo 4, Tambol Thasala, Amphur Muang, Lopburi, Thailand
15000; and Advance Gems Manufacturing Co., Ltd., 399 Moo 4 Tambol Yuan, Amphur
Chiangkam, Payao, Thailand 56110.



                                     -19-


ITEM 4.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership of our common stock and series A and series B preferred stock as of
July 31, 2001 by:

     o    each person known by us to beneficially own more than 5% of the
          outstanding shares of common stock, preferred stock or series B
          preferred stock;

     o    each of our directors and named executive officers; and

     o    our directors and executive officers as a group.

     Each share of common stock and series A preferred stock is entitled to one
vote per share while each share of series B preferred stock is entitled to
twenty votes per share. The shares of series A preferred are convertible into
shares of common stock at any time. The shares of series B preferred stock are
convertible into shares of common stock upon specified events.


                                                                           Series A                  Series B
                                                Common Stock            Preferred Stock          Preferred Stock
                                                ------------            ---------------          ---------------
                                                         Percent                   Percent                  Percent
NAME AND ADDRESS OF                          No.           of           No.          Of          No.          of
BENEFICIAL OWNER (1)                        Shares        Class        Shares       Class      Shares        Class
                                          ----------    ---------    ----------   ---------  ----------    -------
                                                                                            

Best Worth Agents, Ltd. (2)                       ---          ---     3,721,050       100%    1,006,513       100%

U.S. Heritage Capital Corp.                   148,000       11.17%           ---        ---          ---        ---
5770 Wulff Run Road
Cincinnati, OH 45233

Ray L. Sloan                                  120,000        9.06%           ---        ---          ---        ---
8728 CR 1016
Burleson, TX 76028

Jeremy F. Watson                              100,000        7.55%           ---        ---          ---        ---

Thammatinna Thammaradi                            ---          ---           ---        ---          ---        ---

Leonard Orrin                                     ---          ---           ---        ---          ---        ---

David Dikinis                                     ---          ---           ---        ---          ---        ---

Dr. Aphichart Fufuangvanich                    27,000        2.04%           ---        ---          ---        ---

Terrance C. Cuff                              100,000        7.55%           ---        ---          ---        ---

Timothy Matula                                101,250        7.64%           ---        ---          ---        ---

Thiti Fufuangvanich                               ---          ---           ---        ---          ---        ---

Alson Lee                                         ---          ---           ---        ---          ---        ---

Jason Sugarman                                    ---          ---           ---        ---          ---        ---

All officers and directors                    328,250       24.78%           ---        ---          ---        ---
as a group (ten (10) persons,
including the foregoing)

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

                                     -20-



(1)    Unless otherwise indicated, the address of each beneficial owner is the care of Topaz Group, Inc., 126/1 Krungthonburi Road,
       Banglampoo Lang, Klongsarn, Bangkok 10600 Thailand.

(2)    Jariya Sae-Fa is the beneficial owner of Best Worth Agents, Ltd.  and the sister of Dr. Aphichart Fufuangvanich, who is also
       one of our directors.




ITEM 5.  DIRECTORS AND EXECUTIVE OFFICERS

     Our directors and executive officers and their present positions with us
are as follows:


NAME                                          AGE      POSITION
                                                 
Jeremy F. Watson                              60       Chairman of the Board of Directors
Dr. Aphichart Fufuangvanich                   51       Director and President
Thammatinna Thammaradi                        40       Director and Executive Vice President
Terrance C. Cuff                              38       Director and Chief Financial officer
Timothy Matula                                40       Director and Treasurer
Leonard T. Orrin                              53       Director and Director of Sales
Thiti Fufuangvanich                           22       Director and Director of Research and Development
David Dikinis                                 48       Independent Director
Alson Lee                                     74       Independent Director
Jason Sugarman                                29       Independent Director


     Jeremy F. Watson has served as Chairman of the Board of Directors since
September 1999. From March 1996 to February 1998, he served as Regional Vice
President for Fritz Gegauf, A.G. From October 1973 to February 1996, Mr. Watson
served in various positions at The Singer Company, the last being Managing
Director of China Operations. He is a Fellow of the Institute of Chartered
Accountants in England and Wales.

     Dr. Aphichart Fufuangvanich has served us as president and as a director
since February 2001. He has worked within the manufacturing and sales business
for over 30 years. Dr. Aphichart Fufuangvanich has extensive experience within
this field and has spent the last five years consulting to various stone
manufacturing and sales companies, including Topaz Group. Dr. Apichart is the
father of director Thiti Fufuangvanich.

         Thammatinna Thammaradi has served as an executive vice president since
February 2000 and a director since September 1999, and has served as a director
of Topaz Group since September 1999. She has been involved in the jewelry
industry for over 10 years. She received an MBA in finance from the University
of Denver and a Bachelors Degree in Economics from Thammasat University,
Bangkok.

         Terrance C. Cuff has served us as chief financial officer and as a
director since February 2001. From January 1994 to February 2000, he was the
President and a shareholder of Business Exchange Center, Inc., a merger &
acquisitions firm. Prior to holding the President position he served as senior
valuation analyst, from 1989 to 1994 with the same firm.

         Timothy Matula has served us as treasurer and as a director since
February 2001. He is currently a principal in Quantum Capital Advisors, a money
management and corporate advisory firm. He is also currently a member of the
Board of Directors at Eat at Joe's, Inc. From 1994 to 1997, Mr. Matula served as
Assistant Vice President of Quantum Portfolio Manager at Prudential Securities.

         Leonard T. Orrin has served as director of sales and as a director for
Topaz Group since September 1999 and the Director of Sales for Topaz Group's
subsidiaries since August 1995. Previously, he provided consulting services to
various stone manufacturing and sales firms.

                                     -21-


         Thiti Fufuangvanich has served as a director and the director of
research and development since February 2001. From 1996 to 1999, he was a member
of the Faculty of Engineering at Chulalongkorn University. He was the President
of Student Government at Chulalongkorn University in 1999. Thiti Fufuangvanich
is the son of director Dr. Aphichart Fufuangvanich.

         David Dikinis has served us as an independent director since February
2001. He is the founder of Gemstones.com, Amulet, Gemstone and Jewelry Catalog
and Talisman Catalog each of which he established 1985. Mr. Dikinis is a
Gemologist (GIA) and former board member of the American Gem Trade Association
(AGTA).

         Alson Lee has served us as an independent director since February 2001.
He served in various functions within The Singer Company, including Vice
President Pacific Region. Since retiring from The Singer Company, he has worked
as a volunteer executive with the International Executive Service Corps with
project assignments in Estonia from November 1993 to December 1993, Russia from
May 1996 to June 1996, and Kazakhstan from September 1997 to October 1997. Mr.
Lee also is a certified public accountant in the State of New York and the
District of Columbia.

         Jason Sugarman has served us an independent director since September
2001. Mr. Sugarman is a principal of MKA Capital, a privately held real estate
fund located in Orange County, California. He started at MKA in March 2000.
Prior to this position Mr. Sugarman was the president of Cardinal Mortgage from
February 1999 to March 2000. From 1994 to 2000, Mr. Sugarman was a principal of
Patriot Homes, a land development and homebuilding company. He has a BA degree
in economics from Stanford University.

Election of officers and directors

         All of our directors hold office until the next annual meeting of
shareholders and until their successors have been elected and qualified. Our
officers are elected by the board of directors at the first board of directors'
meeting after each annual meeting of shareholders and hold office until their
death, until they resign or until they have been removed from office.

ITEM 6.  EXECUTIVE COMPENSATION

     The following table provides certain summary information concerning the
compensation that will be paid on an annualized basis to our chief executive
officer and the three (3) other most highly paid executive officers for all
services to be rendered in all capacities to us during the fiscal years ended
December 31, 1998, 1999 and 2000. No officers received compensation in excess of
$100,000 during such years.




                           SUMMARY COMPENSATION TABLE

                                                                                              Long-Term
                                                 Annual Compensation                         Compensation
                                            ---------------------------------     ---------------------------------

                                                                                  Restricted    Securities
                                  Fiscal                          Other Annual       Stock      Underlying       All Other
Name and Principal Position        Year     Salary ($)   Bonus    Compensation      Awards        Options      Compensation
---------------------------        ----     ----------   -----    ------------      ------        -------      ------------
                                                                                               

Kasem Chitmunchaitham,             2000       29,653       0            0              0             0               0
President and                      1999       31,710       0            0              0             0               0
Chief Executive Officer            1998       8,743        0            0              0             0               0


     We did not grant stock options in 2000.

     No executive officer held stock options during the 2000 fiscal year. As of
the date of this registration statement, no executive officer holds stock
options.

2001 STOCK OPTION PLAN

     Our board of directors adopted our stock option plan on May 15, 2001.
Options granted under the plan may include those qualified as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended



                                     -22-


or the "Code", as well as non-qualified options. Employees as well as other
individuals, such as our outside directors and consultants who are expected to
contribute to our future growth and success, are eligible to participate in
the plan. However, incentive stock options may only be granted to persons who
are our employees or employees of certain of our affiliates on the date of
grant. As of July 30, 2001 no options had been granted under the plan.

     The following summary of the plan is qualified in its entirety by reference
to the text of the plan, a copy of which is filed as an exhibit to this
registration statement.

TYPES OF GRANTS AND AWARDS

     The plan permits the grant of options which are intended to either be
"incentive stock options" within the meaning of Section 422 of the Code, or
"non-qualified stock options", which do not meet the requirements of Section 422
of the Code.

ELIGIBILITY

     All employees (including officers), directors and consultants of us and our
affiliated corporations are eligible to be granted options under the plan. We
currently have 2,000 employees. Participants under the Royal Sponsored Women's
Program or outside subcontractors are not eligible for options.

STOCK SUBJECT TO THE PLAN

     The total number of shares of common stock for which options may be granted
under the plan may not exceed 1,000,000, subject to possible adjustment in the
future, including adjustments in the event of a recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction affecting our common stock. Any shares of common stock
subject to any option, which for any reason expires, is canceled or is
terminated unexercised will again become available for granting of options under
the plan. However, once this registration statement becomes effective, none of
our employees may be granted options individually with respect to more than
2,000,000 shares of common stock during any calendar year.

ADMINISTRATION

     Once this registration statement becomes effective, the plan will be
administered by a committee of the board of directors of two directors, each of
whom is a "non-employee director" within the meaning of regulations promulgated
by the United States Securities and Exchange Commission and an "outside
director," within the meaning of regulations promulgated by the U.S. Department
of the Treasury. The stock option plan committee has the authority under the
plan to determine the terms of options granted under the plan, including, among
other things, the individuals who will receive options, the times when they will
receive them, whether an incentive stock option and/or non-qualified option will
be granted, the number of shares to be subject to each option, the date or dates
each option will become exercisable (including whether an option will become
exercisable upon certain reorganizations, mergers, sales and similar
transactions involving The Topaz Group, Inc.), and the date or dates upon which
each option will expire. The stock option plan committee has the authority,
subject to the provisions of the plan, to construe the terms of option
agreements and the plan; to prescribe, amend and rescind rules and regulations
relating to the plan; and to make all other determinations in the judgment of
the stock option plan committee necessary or desirable for the administration of
the plan.

EXERCISE PRICE

     The exercise price of options granted under the plan is determined by the
stock option plan committee, but in the case of an incentive stock option may
not be less than:

     o    100% of the fair market value of the common stock on the date the
          incentive stock option is granted; and



                                     -23-


     o    110% of such fair market value in the case of incentive stock options
          granted to an optionee who owns or is deemed to own stock possessing
          more than 10% of the total combined voting power of all classes of
          stock of the Topaz Group.

     The exercise price is payable by delivery of cash or a check to the order
of The Topaz Group, Inc. in an amount equal to the exercise price of such
options, or by any other means (including, without limitation, cashless
exercise), which the board of directors determines are consistent with the
purpose of the plan and with applicable laws and regulations.

TERMS AND CONDITIONS

     Options granted to employees and consultants may be granted for such terms
as are established by the stock option plan committee, provided that, the term
will be for a period not exceeding ten years from the date of the grant, and
further provided that incentive stock options granted to a stockholder who is
the beneficial owner of 10% of our common stock will be for a period not
exceeding five years from the date of grant.

     Except to the extent otherwise determined by the stock option plan
committee at the time of grant of a non-qualified stock option, if an optionee's
relationship with the Topaz Group is terminated for any reason other than
"disability" or death, the option may be exercised at any time within three
months thereafter to the extent exercisable on the date of termination. However,
in the event that the termination of such relationship is either (a) for cause,
or (b) otherwise attributable to a breach by the optionee of an employment or
confidentiality or non-disclosure agreement, such option will terminate
immediately.

     Except to the extent otherwise determined by the stock option plan
committee at the time of grant of a non-qualified stock option, in the event of
the death of an optionee while an employee of, or consultant or advisor to the
Topaz Group, within three months after the termination of such relationship
(unless such termination was for cause or without the consent of the Topaz
Group) or within one year following the termination of such relationship by
reason of the optionee's "disability", the option may be exercised, to the
extent exercisable on the date of his or her death, by the optionee's legal
representatives at any time within one year after death, but not thereafter and
in no event after the date the option would otherwise have expired.

     An option may not be transferred other than by will or the laws of descent
and distribution and may be exercised during the lifetime of the optionee only
by the optionee.

     The stock option plan committee may accelerate the date or dates on which
an option may be exercised, or extend the dates during which an option may be
exercised, provided, that no such acceleration or extension with cause any
option intended to be an incentive stock option to fail to qualify as an
incentive stock option, or cause the plan or any option granted thereunder to
fail to comply with applicable short-swing profit rules promulgated by the
United States Securities and Exchange Commission.

     The stock option plan committee may include additional provisions in option
agreements, including without limitation, restrictions on transfer, repurchase
rights, rights of first refusal, commitments to pay cash bonuses or to make,
arrange for or guaranty loans or to transfer other property to optionees upon
exercise of options, provided, that such additional provisions will not be
inconsistent with the requirements of applicable law and such additional
provisions will not cause any option intended to be an incentive stock option to
fail to qualify as an incentive stock option.

EMPLOYMENT AGREEMENTS

     As of the date of this registration statement, we have no employment
agreements with any of our executive officers.

DIRECTOR COMPENSATION

     There is no compensation for directors either on an annual basis or for
attendance at board meetings.


                                     -24-


     Our board is also comprised of an Audit Committee which has the following
three members, all of whom are independent directors: David Dikinis, Jason
Sugarman and Alson Lee who serves as the Chairman of the Audit Committee.

ITEM 7.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the fiscal year ended December 31, 1999, we exchanged an aggregate
of $905,369 of gemstones from Calibration of Gems Factory Co., Ltd., Well Gems &
Jewelry Co., Ltd. and Trillion Royal Grand Company Limited, companies controlled
by Dr. Aphichart Fufuangvanich. Dr. Aphichart is one of our directors. These
transactions were negotiated at arm's length and the prices paid for the
gemstones were no less favorable than those we could have obtained from
independent parties on the open market.

     Ms. Jariya Sae-Fa, a director of our wholly owned subsidiary Creative
through January 2001 and the managing member of Best Worth Agents, Ltd., had
loaned to us the cumulative amount of $543,929 as of December 31, 2000, $380,406
of which remains due and payable to Ms. Sae-Fa as of June 30, 2001. The loans
from Ms. Sae-Fa have no term and do not bear interest. The debts are classified
as a current liability and are expected to be paid within the fiscal year.

ITEM 8.  LEGAL PROCEEDINGS

     We are not presently a party to any litigation material to our ongoing
business operations or financial condition.

ITEM 9.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
         OTHER SHAREHOLDER MATTERS

         EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock is quoted on the Pink Sheets Service under the symbol
"TPAZ". The Pink Sheets Service or the "Pink Sheets" is a quotation service
operated by the National Quotation Bureau, LLC, a paper quotation medium printed
weekly and distributed to brokers/dealers. The Pink Sheets does not impose
listing standards or requirements, does not provide automatic trade executions,
and does not maintain relationships with quoted issuers. Issuers whose
securities are quoted on the Pink Sheets may experience a loss of market makers,
a lack of readily available "bid" and "asked" prices for their securities, a
greater spread between the "bid" and "asked" price for their securities, and a
general loss of liquidity in their securities.

     As of October 23, 2001, we had 1,624,886 shares of common stock outstanding
held by 562 stockholders of record. The number of shares of our common stock
which can be sold pursuant to Rule 144 under the Securities Act is 941,807
shares. The number of shares of our common stock which are subject to issuance
upon conversion of the series A or series B preferred stock is 4,427,563 shares.
The number of shares of our common stock which is subject to issuance upon the
exercise of any outstanding warrants is 32,884 shares. On January 16, 2001 we
filed with the Secretary of State of Nevada to increase voting privileges
of the Series B preferred shares from 1 vote per share to 20 votes per share.

     The following table sets forth the range of high and low bid prices of our
common stock for the fiscal quarters of 1998, 1999 and 2000, and for the fiscal
quarters ended March 31 and June 30, 2001. The quotations represent prices
between dealers in securities, do not include retail mark-ups, markdowns or
commissions and do not necessarily represent actual transactions.



                          1ST QTR.                   2ND QTR.                  3RD QTR.                  4TH QTR.
                          HIGH LOW                   HIGH LOW                  HIGH LOW                  HIGH LOW
                                                                                             

1998                    5.00         2.38          2.88          .34         1.19          .38          .63          .16

1999                    1.06          .25          3.75          .56         1.19          .38          .75          .38

2000                    1.25          .38          1.03          .42          .75          .36         1.55          .31

2001                    1.25          .70          2.70         1.25          N/A          N/A          N/A          N/A



                                     -25-


     We have not paid common stock dividends.

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES

     We issued the following unregistered securities during the three-year
period ended June 30, 2001.

     In April 1999, we entered into two separate exchange agreements with Best
Worth Agents, Ltd., a British Virgin Islands corporation, to acquire all of the
issued and outstanding preferred shares of Creative Gems and Jewelry Co., Ltd.
and Advance Gems and Jewelry Co., Ltd., both Thai corporations. According to the
terms of the exchange agreements, Topaz acquired 99.7% of the voting and
dividend participation rights in each Thai company from Best Worth in
consideration for which Topaz issued to Best Worth all shares of series A
convertible voting and participating preferred stock. The terms of the preferred
stock provide Best Worth with the right to one vote for each share of preferred
stock on all matters voted on by holders of our common stock, as well as the
right to receive dividends paid to preferred shareholders by us. We issued
shares of our preferred stock to Best Worth in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933. We believe
that the exemption afforded by Section 4(2) of the Securities Act is applicable
to the Best Worth Transaction because it was a sale of securities by an issuer
not involving a public offering, and the shares were offered to a single
accredited investor in an offering not involving a general solicitation.

     In September 2000, we issued warrants to purchase an aggregate of 32,884
shares of common stock to three consultants as compensation for services
rendered to us. The names of the persons to whom these securities were issued
and the number of shares of our common stock issuable to each person upon
exercise of the warrants by such person are as follows:


NAME                                                   COMMON SHARES ISSUABLE
Timothy Matula                                         4,933
Terrance C. Cuff                                       12,179
Herbert H. Wax                                         15,772

     We issued these warrants to each consultant in reliance on the exemption
from registration provided by Section 4(2) of the Securities Act of 1933. We
believe that the exemption afforded by Section 4(2) of the Securities Act is
applicable to this placement because it was a sale of securities by an issuer
not involving a public offering, and the shares were offered to three accredited
or sophisticated investors in an offering not involving a general solicitation.

     On May 5, 1999, we issued 210,000 shares of common stock each to Jim Fain
and Sakon, Ltd. In consideration for services rendered in connection with the
share exchange between Topaz Group and Best Worth Agents, Ltd. Both sales were
made in reliance on the exemption from registration provided by Section 4(2) of
the Securities Act.

ITEM 11. DESCRIPTION OF SECURITIES

     The authorized capital stock of the Topaz Group consists of one hundred
million shares of common stock, 1,324,886 of which were outstanding as of June
25, 2001, and held of record by approximately 562 shareholders, and fifty
million shares of preferred stock. Of the preferred stock, we have authorized
26,000,000 shares of series A and 10,000,000 shares of series B, of which
3,721,050 and 1,006,513 shares, respectively, were issued and outstanding as of
June 25, 2001. The following summaries of certain provisions of the common stock
and certain of the rights and privileges of the preferred stock do not purport
to be complete and are subject to, and qualified in their entirety by, the
provisions of our restated articles of incorporation, bylaws, and the
certification of designation of series A preferred stock and series B preferred
stock, each of which is included as an exhibit to this registration statement,
as well as and by the provisions of applicable law.



                                     -26-


COMMON STOCK

     The holders of our common stock: are entitled to one vote per share on all
matters to be voted on by stockholders generally, including the election of
directors; do not have cumulative voting rights; do not have preemptive,
subscription or conversion rights and there are no redemption or sinking fund
provisions or rights applicable thereto; are entitled to dividends and other
distributions as may be declared from time to time by the board of directors out
of any funds legally available for that purpose; and, will, upon the
liquidation, dissolution or winding up of the Topaz Group, share ratably in the
distribution of all of our assets remaining available for distribution after
satisfaction of all of the our liabilities and the payment of the liquidation
preference of any outstanding preferred stock, if such stock is at any time
authorized, issued and outstanding.

     All shares of our common stock now outstanding are fully paid and
non-assessable. Reference is made to the our articles of incorporation, by-laws
and the applicable statutes of the State of Nevada for a more complete
description of the rights and liabilities of the holders of our common stock.

SERIES A AND SERIES B PREFERRED STOCK

     Our board of directors has authorized the issuance of two series of
preferred stock, designated as series A preferred stock, consisting of
26,000,000 shares, par value $.001 per share and series B preferred stock,
consisting of 10,000,000 shares, par value $.001 per share. A certificate of
designation filed with the secretary of state of Nevada governs the terms and
conditions of the series A and series B preferred stock. The following is a
brief description of key terms of the preferred stock.

     DIVIDENDS

     The holders of shares of the preferred stock shall be entitled to receive,
when, as and if declared by the board of directors, out of our assets legally
available therefore, non-cumulative dividends on a pro rata basis with all other
holders of preferred stock (as adjusted for any stock dividends, combinations or
splits with respect to such stock).

     Each fractional share of preferred stock outstanding shall be entitled to a
ratably proportionate amount of any dividends or other distributions made with
respect to each outstanding share of preferred stock, and all such distributions
shall be payable in the same manner and at the same time as distributions on
each outstanding share of preferred stock.

         PREFERENCES ON LIQUIDATION.

     In the event of any dissolution, liquidation or winding up of the Topaz
Group, whether voluntary or involuntary, the holders of preferred stock shall be
entitled to receive out of our assets, for each share of preferred stock then
outstanding, before any payment or distribution shall be made in respect of our
common stock, cash in an amount equal to (i) $0.001 (as adjusted for any stock
dividend, split, combination, recapitalization or similar transaction with
respect to the capital stock of the Topaz Group), plus an amount equal to all
accrued or declared but unpaid dividends thereon to the date of such payment,
and (ii) the pro rata share of any proceeds, treating the preferred stock as if
converted into shares of common stock.

     If upon our liquidation, dissolution, or winding up, our assets available
for distribution to our stockholders shall be insufficient to pay the holders of
the preferred stock the full liquidation preference, the holders of the
preferred stock shall all share in any distribution of assets, each getting a
relative share of the distribution based on their relative holdings of the
preferred stock.

         CONVERSION RIGHTS

     Each share of series A preferred stock shall be convertible, at the option
of the holder thereof and without the payment of additional consideration by the
holder thereof, at any time, into one share of common stock.



                                     -27-


         FORCED CONVERSION

     We may force a conversion of the series A preferred stock if we sell our
common stock in a public offering at a price to the public of at least $4.00 per
share and in which we receive more than $5,000,000 in gross proceeds or if we
sell all or substantially all of our assets or capital stock to another entity.
The series B preferred stock will automatically convert into common stock on a
one-to-one basis immediately prior to either the sale of all of our capital
stock to a third party or the merger of the Topaz Group into another surviving
company.

         VOTING RIGHTS

     Except as otherwise required by applicable law, the holders of preferred
stock shall be entitled to vote on all matters on which the holders of common
stock shall be entitled to vote, in the same manner and with the same effect as
the holders of common stock, voting together with the holders of common stock as
a single class. For this purpose, the holders of preferred stock shall be given
notice of any meeting of stockholders as to which the holders of common stock
are given notice in accordance with our bylaws.

     As to any matter on which the holders of preferred stock shall be entitled
to vote, each holder of series A preferred stock shall have a number of votes
per share equal to the number of shares of common stock into which such share of
preferred stock is convertible.

     As to any matter on which the holders of preferred stock shall be entitled
to vote, each holder of series B preferred stock shall have a number of votes
per share of series B preferred stock equal to twenty (20) times the number of
shares of common stock into which such share of series B preferred stock is
convertible.

     So long as any shares of preferred stock are outstanding, we will not

     (a)  alter or change any of the powers preferences, privileges, or rights
          of the series A or series B preferred stock; or

     (b)  amend the provisions of the certificate of designation changing the
          seniority, liquidation, conversion or other rights of the series A or
          series B preferred stock, without first obtaining the approval of the
          holders of at least a majority of the outstanding shares of series A
          or series B preferred stock, as applicable.

ANTI-TAKEOVER EFFECTS OF OUR ARTICLES OF INCORPORATION

     The following provisions in our articles of incorporation may be deemed to
have an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt that a stockholder might consider in its best interest,
including those attempts that might result in a premium over the market price
for the shares held by our stockholders.

     o    Authorized But Unissued Shares. The authorized but unissued shares of
          common stock are available for future issuance without stockholder
          approval. These additional shares may be utilized for a variety of
          corporate purposes including future public offerings to raise
          additional capital, corporate acquisitions and employee benefit plans.
          The existence of authorized but unissued and unreserved common stock
          could render more difficult or discourage an attempt to gain control
          of us by means of a proxy contest, tender offer, merger or otherwise.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for our common stock is Transfer Online,
Inc. and is located at 227 SW Pine Street, Suite 300, Portland Oregon 97204.



                                     -28-


ITEM 12. INDEMNIFICATION OF OFFICERS AND DIRECTORS

         LIMITATION ON DIRECTOR'S LIABILITY

     Under Nevada Revised Statutes Section 78.7502 and 78.751, our articles of
incorporation and by-laws provide us with the power to indemnify any of our
directors, officers, employees or agents. The director, officer, employ or agent
must have conducted himself in good faith and reasonably believe that his
conduct was in, or not opposed to our best interests. In a criminal action the
director, officer, employee or agent must not have had a reasonable cause to
believe his conduct was unlawful. Advances for expenses may be made if the
director affirms in writing that he believes he has met the standards and that
he will personally repay the expense if it is determined he did not meet the
standards.

     We will not indemnify a director or officer adjudged liable due to his
negligence or willful misconduct toward us, adjudged liable to us, or if he
improperly received personal benefit. Indemnification in a derivative action is
limited to reasonable expenses incurred in connection with the proceeding.

     We have agreed to indemnify each of our directors and certain officers
against certain liabilities, including liabilities under the Securities Act of
1933.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions described above, or otherwise, we have been advised
that in the opinion of the United States Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than our payment of expenses
incurred or paid by our director, officer or controlling person 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 for resale, we will, unless in the opinion of our counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

ITEM 13. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

     None

                                     -29-


                      CONSOLIDATED FINANCIAL STATEMENTS AND
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


                                C O N T E N T S


                                                                Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS              F-3


FINANCIAL STATEMENTS

           CONSOLIDATED Balance SheetS                          F-4

           CONSOLIDATED STATEMENTS OF EARNINGS                  F-5

           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY       F-6

           CONSOLIDATED STATEMENTS OF CASH FLOWS                F-7

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS           F-8



              Report of Independent Certified Public Accountants
              --------------------------------------------------


Board of Directors
The Topaz Group, Inc.

We have audited the accompanying consolidated balance sheets of The Topaz
Group, Inc. and Subsidiaries as of December 31, 1999 and 2000 and the related
consolidated statements of earnings, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Topaz
Group, Inc. and Subsidiaries as of December 31, 1999 and 2000 and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Seattle, Washington
March 14, 2001 (except for note N as to which the
    date is July 9, 2001)



                                      F-3



                                               The Topaz Group, Inc. and Subsidiaries

                                                     CONSOLIDATED BALANCE SHEETS


                                                               ASSETS

                                                                                    December 31,
                                                                   -----------------------------------------------      June 30,
                                                                           1999                    2000                   2001
                                                                   ---------------------   ---------------------   -----------------
CURRENT ASSETS                                                                                                         (unaudited)
                                                                                                          
    Cash and cash equivalents                                      $         574,439       $         321,734       $         653,213
    Accounts receivable, net of allowance of
        $606,384, $923,474, and $781,012                                   2,089,413               3,299,161               2,534,361
    Receivables from related parties                                         905,369                  19,456                      -
    Inventories                                                           18,488,948              20,626,502              23,660,417
    Prepaid expenses and deposits                                            230,660                 196,376                 542,786
                                                                   -----------------       -----------------       -----------------

                Total current assets                                      22,288,829              24,463,229              27,390,777

PROPERTY AND EQUIPMENT - NET                                               2,030,502               2,127,733               2,208,091

OTHER ASSETS                                                                  54,828                  31,876                  32,990
                                                                   -----------------       -----------------       -----------------

                Total assets                                       $      24,374,159       $      26,622,838       $      29,631,858
                                                                   =================       =================       =================

                                                LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Line of credit                                                 $              -         $         775,162      $       1,176,151
    Accounts payable                                                       5,000,979                4,401,675              5,215,906
    Accrued liabilities                                                      301,711                  473,177                518,797
    Payables to related party                                                616,269                  871,298                604,744
    Notes payable                                                          1,736,947                       -                      -
                                                                   -----------------       -----------------       -----------------

                Total current liabilities                                  7,655,906                6,521,312              7,515,598

REDEEMABLE ORDINARY SHARES                                                 5,576,697                4,823,937              4,621,110

COMMITMENTS                                                                       -                        -                      -

STOCKHOLDERS' EQUITY
     Class A preferred stock, liquidation preference of
         $9,252,879, $10,153,954 and $11,627,229                           5,127,654                4,827,477              4,483,724
     Class B preferred stock, liquidation preference of
         $0, $2,541,646 and $2,910,423                                            -                     1,007                  1,007
     Common stock                                                                763                    1,025                  1,325
     Additional paid in capital                                               43,052                  402,474                745,927
     Retained earnings                                                     5,970,087               10,045,606             12,263,167
                                                                   -----------------       -----------------       -----------------

                                                                          11,141,556               15,277,589             17,495,150
                                                                   -----------------       -----------------       -----------------

                Total liabilities and stockholders' equity         $      24,374,159        $      26,622,838      $      29,631,858
                                                                   =================        =================      =================


The accompanying notes are an integral part of these statements.

                                                               F-4



                                               The Topaz Group, Inc. and Subsidiaries

                                                 CONSOLIDATED STATEMENTS OF EARNINGS

                                                                                                        Six months ended June 30,
                                                                                                  ---------------------------------
                                                   1998               1999              2000             2000              2001
                                            ----------------  -----------------  ---------------- ---------------- ----------------
                                                                                                     (unaudited)      (unaudited)
                                                                                                    
Sales                                       $     18,886,737  $      19,881,283  $     32,483,043 $     10,455,707 $      9,486,245
Cost of goods sold                                10,976,881         11,025,824        23,488,062        7,317,975        6,666,915
                                            ----------------  -----------------  ---------------- ---------------- ----------------

    Gross profit                                   7,909,856          8,855,459         8,994,981        3,137,732        2,819,330

Selling, general and administrative expenses       4,154,545          4,346,100         4,136,931        2,048,239        1,877,097
                                            ----------------  -----------------  ---------------- ---------------- ----------------

     Earnings from operations                      3,755,311          4,509,359         4,858,050        1,089,493          942,233

Other income (expense)
       Exchange rate gain (loss)                  (3,722,629)           320,075            86,164           59,669          (17,727)
       Interest expense                             (235,932)           (79,399)         (101,256)         (51,793)         (27,848)
       Interest income                               153,434             18,224             4,114              740              623
       Gain (loss) on remeasurement                4,580,806          1,455,855          (831,288)        (246,526)       1,290,444
       Other, net                                    108,620            111,479            60,249           28,067           29,836
                                            ----------------  -----------------  ---------------- ---------------- ----------------
                                                     884,299          1,826,234          (782,017)        (209,843)       1,275,328
                                            ----------------  -----------------  ---------------- ---------------- ----------------

Earnings before extraordinary item                 4,639,610          6,335,593         4,076,033          879,650        2,217,561

Extraordinary item - gain on debt
restructuring                                             -            803,589                 -                -               -
                                            ----------------  -----------------  ---------------- ---------------- ----------------
Net earnings                                       4,639,610          7,139,182         4,076,033          879,650       2,217,561

Preferred stock dividends                        (12,270,000)        (2,734,610)               -                -               -
                                            ----------------  -----------------  ---------------- ---------------- ----------------

Net earnings (LOSS) AVAILABLE
    TO COMMON STOCKHOLDERS                   $    (7,630,390)  $      4,404,572   $     4,076,033  $       879,650  $     2,217,561
                                            ================  =================  ================ ================ ================

Earnings (loss) per share available to
     common stockholders before
     extraordinary item:
     Basic                                   $       (10.00)   $         4.72     $         4.91   $         1.15   $         1.78
                                            ================  =================  ================ ================ ================
     Diluted                                 $       (10.00)   $         0.66     $         0.72   $         0.16   $         0.37
                                            ================  =================  ================ ================ ================

Net earnings (loss) per share available to
     common stockholders:
     Basic                                   $       (10.00)   $         5.77     $         4.91   $         1.15   $          1.78
                                            ================  =================  ================ ================ ================
     Diluted                                 $       (10.00)   $         0.80     $         0.72   $         0.16   $          0.37
                                            ================  =================  ================ ================ ================



The accompanying notes are an integral part of these statements.


                                       F-5




                                               The Topaz Group, Inc. and Subsidiaries

                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                  Years ended December 31, 1998, 1999 and 2000, and the six months
                                                   ended June 30, 2001 (unaudited)

                                              Thai             Class A           Class B          Subscriptions      Ordinary
                                         Preferred Stock     Preferred Stock   Preferred Stock     Receivable         Shares
                                         ---------------    --------------     ---------------    --------------    ------------
                                                                                                  
Balance at January 1, 1998               $        -         $        -         $        -         $(2,118,651)      $7,642,284

Subscriptions received                            -                  -                   -        (1,883,729)              -

Dividends                                         -                  -                   -                -                -

Issuance of Class B Preferred and
   Ordinary shares totaling 9,800,000
   and 200,000,  respectively              2,404,920                 -                   -                -            49,080

Net earnings for the year                         -                  -                   -                -                -
                                         ---------------    --------------     ---------------    --------------    ------------

Balance at December 31, 1998               2,404,920                 -                   -        (4,002,380)       7,691,364

Issuance of Thai Preferred and
   Ordinary shares totaling 9,800,000
   and 200,000, respectively, on
   February 19, 1999                       2,593,080                 -                   -                -            52,840

Issuance of Thai Preferred and
   Ordinary shares totaling 490,000 and
   510,000, respectively on March 1, 1999    129,654                 -                   -                -           134,742

Payment of subscription receivable                -                  -                   -         4,002,380               -

Share exchange agreement on May 1, 1999   (5,127,654)         5,127,654                  -                -         (7,878,946)

Warrants issued for services                      -                  -                   -                -                -

Dividends                                         -                  -                   -                -                -

Net earnings for the year                         -                  -                   -                -                -
                                         ---------------    --------------     ---------------    --------------    ------------

Balance at December 31, 1999                      -           5,127,654                  -                -                -

Conversion of preferred stock into                -            (299,684)                 -                -                -
   common

Issuance of additional preferred
   shares under exchange agreement                -                 514                  -                 -               -

Re-designation of preferred shares                -              (1,007)              1,007               -                -

Warrants issued for services                      -                  -                   -                -                -

Net earnings for the year                         -                  -                   -                -                -
                                         ---------------    --------------     ---------------    --------------    ------------

Balance at December 31, 2000                      -           4,827,477               1,007               -                -

Conversion of preferred stock into                -            (343,753)                 -                -                -
   common

Net earnings for six months
   ended June 30, 2001                            -                  -                   -                -                -
                                         ---------------    --------------     ---------------    --------------    ------------

Balance at June 30, 2001                 $        -         $ 4,483,724        $     1,007        $       -         $      -
                                         ===============    ==============     ===============    ==============    ============


                                                  Common      Additional Paid-In     Retained
                                                   Stock           Capital           Earnings           Total
                                                ------------     --------------     ------------     -------------

Balance at January 1, 1998                      $      -         $        -         $9,195,905       $14,719,538

Subscriptions received                                 -                   -               -         (1,883,729)

Dividends                                              -                   -        (12,270,000)     (12,270,000)

Issuance of Class B Preferred and
   Ordinary shares totaling 9,800,000
   and 200,000,  respectively                          -                   -               -          2,454,000

Net earnings for the year                              -                   -        4,639,610         4,639,610
                                                ------------     --------------     ------------     -------------

Balance at December 31, 1998                           -                   -        1,565,515         7,659,419

Issuance of Thai Preferred and
   Ordinary shares totaling 9,800,000
   and 200,000, respectively, on
   February 19, 1999                                   -                   -               -          2,645,920

Issuance of Thai Preferred and
   Ordinary shares totaling 490,000 and
   510,000, respectively on March 1, 1999              -                   -               -            264,396

Payment of subscription receivable                     -                   -               -          4,002,380

Share exchange agreement on May 1, 1999               763               3,052              -         (7,875,131)

Warrants issued for services                           -               40,000              -             40,000

Dividends                                              -                   -        (2,734,610)      (2,734,610)

Net earnings for the year                              -                   -        7,139,182         7,139,182
                                                ------------     --------------     ------------     -------------

Balance at December 31, 1999                          763              43,052       5,970,087        11,141,556

Conversion of preferred stock into                    262             299,422              -                 -
   common

Issuance of additional preferred
   shares under exchange agreement                     -                   -             (514)               -

Re-designation of preferred shares                     -                   -               -                 -

Warrants issued for services                           -               60,000              -             60,000

Net earnings for the year                              -                   -        4,076,033         4,076,033
                                                ------------     --------------     ------------     -------------

Balance at December 31, 2000                        1,025             402,474       10,045,606       15,277,589

Conversion of preferred stock into                    300             343,453              -                 -
   common

Net earnings for six months
   ended June 30, 2001                                 -                   -        2,217,561         2,217,561
                                                ------------     --------------     ------------     -------------

Balance at June 30, 2001                        $   1,325        $   745,927        $12,263,167      $17,495,150
                                                ============     ==============     ============     =============

The accompanying notes are an integral part of this statement.

                                                               F-6




                                               The Topaz Group, Inc. and Subsidiaries

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                    Year ended December 31,
                                                              ---------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents                     1998                     1999                    2000
                                                              --------------------     -------------------     --------------------
                                                                                                      
Cash flows from operating activities
     Net earnings (loss)                                      $      4,639,610         $      7,139,182        $      4,076,033
     Adjustments to reconcile net earnings to net
         cash provided by (used in) operating activities
         Depreciation and amortization                                 163,685                  161,605                 145,307
         Remeasurement of redeemable ordinary shares                        -                (2,302,249)               (752,760)
         Warrants granted for services                                      -                    40,000                  60,000
         Changes in assets and liabilities:
             Receivables                                              (508,830)               1,015,271                (323,835)
             Inventories                                            (5,454,770)              (8,483,736)             (2,137,554)
             Prepaid expenses and deposits/other assets                  2,378                  730,997                  57,236
             Payables                                                1,608,092                  294,217                (476,890)
             Accrued liabilities                                       (46,803)                   5,886                 304,081
                                                              --------------------     -------------------     --------------------

                 Net cash provided by (used in) operating              403,362               (1,398,827)                951,618
                 activities

Cash flows from investing activities
     Purchases of property and equipment                                    -                  (146,931)               (242,538)
                                                              --------------------     -------------------     --------------------

                 Net cash used in investing activities                      -                  (146,931)               (242,538)

Cash flows from financing activities
     Payment on notes payable, net                                     516,262                 (493,890)             (1,736,947)
     Borrowings (payments) on line of credit, net                           -                        -                  775,162
     Proceeds from issuance of share capital                         2,454,000                6,916,511                      -
     Subscriptions received                                         (1,883,729)                      -                       -
     Dividends paid                                                         -                (6,085,321)                     -
                                                              --------------------     -------------------     --------------------

                 Net cash provided by (used in) financing            1,086,533                  337,300                (961,785)
                     activities
                                                              --------------------     -------------------     --------------------

Net increase (decrease) in cash and cash equivalents                 1,489,895               (1,208,458)               (252,705)

Cash and cash equivalents at the beginning of period                   293,002                1,782,897                 574,439
                                                              --------------------     -------------------     --------------------

Cash and cash equivalents at the end of period                $      1,782,897         $        574,439        $        321,734
                                                              ====================     ===================     ====================

Supplemental disclosure of cash flow information:
     Cash paid during the period
         Interest                                             $             -          $         79,279        $         93,576
                                                              ====================     ===================     ====================

Noncash Financing Activities:
         Settlement of related party receivable in lieu of
             payment of declared and accrued dividends        $      3,932,811         $      4,986,478        $             -
                                                              ====================     ===================     ====================

                                                                              Six months ended June 30,
                                                                     --------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents                            2000                     2001
                                                                     --------------------     -------------------
                                                                         (unaudited)             (unaudited)
Cash flows from operating activities
     Net earnings (loss)                                             $        879,650         $      2,217,561
     Adjustments to reconcile net earnings to net
         cash provided by (used in) operating activities
         Depreciation and amortization                                         64,483                   74,294
         Remeasurement of redeemable ordinary shares                         (234,192)                (202,827)
         Warrants granted for services                                         60,000                       -
         Changes in assets and liabilities:
             Receivables                                                      733,620                  784,256
             Inventories                                                   (4,396,663)              (3,033,915)
             Prepaid expenses and deposits/other assets                      (153,174)                (347,524)
             Payables                                                        (218,005)                 270,302
             Accrued liabilities                                            4,611,586                  322,995
                                                                     --------------------     -------------------

                 Net cash provided by (used in) operating                   1,347,305                   85,142
                 activities

Cash flows from investing activities
     Purchases of property and equipment                                     (143,469)                (154,652)
                                                                     --------------------     -------------------

                 Net cash used in investing activities                       (143,469)                (154,652)

Cash flows from financing activities
     Payment on notes payable, net                                         (1,736,947)                      -
     Borrowings (payments) on line of credit, net                             367,898                  400,989
     Proceeds from issuance of share capital                                       -                        -
     Subscriptions received                                                        -                        -
     Dividends paid                                                                -                        -
                                                                     --------------------     -------------------

                 Net cash provided by (used in) financing                  (1,369,049)                 400,989
                     activities
                                                                     --------------------     -------------------

Net increase (decrease) in cash and cash equivalents                         (165,213)                 331,479

Cash and cash equivalents at the beginning of period                          574,439                  321,734
                                                                     --------------------     -------------------

Cash and cash equivalents at the end of period                       $        409,226         $        653,213
                                                                     ====================     ===================

Supplemental disclosure of cash flow information:
     Cash paid during the period
         Interest                                                    $         42,955         $         55,472
                                                                     ====================     ===================

Noncash Financing Activities:
         Settlement of related party receivable in lieu of
             payment of declared and accrued dividends               $             -          $             -
                                                                     ====================     ===================

The accompanying notes are an integral part of these statements.

                                                       F-7



                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The Topaz Group, Inc. (the Company) is a Nevada corporation which, through
     its subsidiaries, is involved in the manufacture and sale of jewelry and
     the polishing, cutting, and selling of precious and semi-precious
     gemstones, principally topaz gemstones. Sales are primarily to companies
     within the United States of America.

     A summary of the significant accounting policies applied in the preparation
     of the accompanying financial statements follows.

1.   Basis of Presentation
     ---------------------

     The accompanying consolidated financial statements include the accounts of
     the Company and its wholly-owned Thailand subsidiaries, Creative Gems &
     Jewelry Limited (Creative), Advance Gems & Jewelry Limited (Advance) and
     Advance Gems Manufacturing Co., Ltd (Advance Manufacturing) (collectively,
     the Subsidiaries). All significant intercompany accounts and transactions
     have been eliminated.

     Best Worth Agents Limited (Best Worth) owned 100% of the issued and
     outstanding preferred stock of Creative and Advance, which constituted
     99.7% of the voting and dividend rights of Creative and Advance. On May 1,
     1999, Best Worth entered into a share exchange agreement that was
     consummated on September 1, 1999. On September 1, 1999, Best Worth
     transferred 100% of its preferred shares in Advance and Creative in
     exchange for 100% (22,375,000 shares) of the voting convertible preferred
     stock of Chancellor Corporation (Chancellor), a non operating public shell
     company. Chancellor subsequently changed its name to The Topaz Group, Inc.
     The transaction resulted in the Company becoming the accounting acquirer,
     whereby Creative and Advance become subsidiaries of the Company and the
     historical financial statements of Creative and Advance become those of The
     Topaz Group, Inc. and Subsidiaries. Ordinary shares of Creative and
     Advance, representing 0.3% voting rights, remain outstanding to individual
     stockholders of those companies (see note J). On September 29, 2000, the
     Company issued an additional 3,084,000 shares of Class A Preferred Stock to
     Best Worth as called for under the terms of the original exchange
     agreement.

     During August 2000, the Company formed Advanced Gems Manufacturing Co.,
     Ltd. The wholly-owned subsidiary of Advance was formed for Thailand
     statutory tax purposes.

2.   Revenue Recognition
     -------------------

     Revenue is recognized when goods are shipped to customers.

3.   Cash and Cash Equivalents
     -------------------------

     The Company considers all highly liquid debt instruments purchased with a
     maturity of three months or less to be cash equivalents. The Company
     maintains its cash accounts in several Thai financial institutions. The
     Company has not experienced any losses in connection with its deposits.

                                       F-8


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

4.   Inventories
     -----------

     Inventories are stated at the lower of cost or market. Cost is determined
     using a moving average method.

5.   Property and Equipment
     ----------------------

     Property and equipment are stated at cost. Depreciation and amortization is
     provided for in amounts sufficient to relate the cost of depreciable assets
     to operations over their estimated service lives, which range from five to
     twenty years. Leasehold improvements are amortized over the lives of the
     respective leases or the service lives of the improvements, whichever is
     shorter.

6.   Advertising Expenses
     --------------------

     The Company expenses the cost of advertising as it occurs. Advertising
     expenses for the years ended December 31, 1998, 1999 and 2000 totalled
     approximately $114,000, $93,000 and $341,000, respectively. Advertising
     expenses for the six months ended June 30, 2000 and 2001, were $141,000 and
     $154,000, respectively.

7.   Functional Currency and Remeasurement.
     --------------------------------------

     The Company's Thai subsidiaries maintain their books and records in Thai
     Baht. However, their functional currency is the US dollar. Monetary assets
     and liabilities and related income and expense items are remeasured using
     current rates. Certain nonmonetary assets (notably property and equipment)
     are remeasured at historical rates. Other nonmonetary balance sheet items
     and related revenues, expenses, gains and losses are remeasured using
     average exchange rates. Gains or losses on remeasurement to U.S. dollars
     from Thai Baht are included in the consolidated statements of earnings.

8.   Segment Information
     -------------------

     The Company has adopted Statement of Financial Accounting Standard No. 131,
     Disclosures About Segments of an Enterprise and Related Information, (SFAS
     131) which requires companies to present financial information on
     individual segments. The Company currently operates in one segment, and
     therefore, the adoption had no effect on the Company's financial statements
     except for the inclusion of geographic areas information.

9.   Earnings Per Share
     ------------------

     Basic earnings per share is computed on the basis of the weighted average
     number of common shares outstanding. Diluted earnings per share is computed
     on the basis of the weighted average number of common shares outstanding
     plus the effect of outstanding preferred shares using the "if-converted"
     method, and outstanding stock warrants using the "treasury stock" method.

                                      F-9



                                               The Topaz Group, Inc. and Subsidiaries

                                             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                December 31, 1998, 1999 and 2000, and
                                       the six months ended June 30, 2000 and 2001 (unaudited)


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     The components of basic and diluted earnings per share were as follows:

                                                                Year ended December 31,              Six months ended June 30,
                                                   ---------------------------------------------    ---------------------------
                                                       1998            1999             2000            2000            2001
                                                   -----------     ------------    -------------    -----------      ----------
                                                                                                      
BASIC
Net earnings (loss) before extraordinary item      $ 4,639,610     $  6,335,593    $   4,076,033    $   879,650      $2,217,561
Preferred stock dividends                          (12,270,000)      (2,734,610)              -              -               -
                                                   -----------     ------------    -------------    -----------      ----------
Net earnings (loss) available to common
   stockholders before extraordinary item          $(7,630,390)    $  3,600,983    $   4,076,033    $   879,650      $2,217,561
Extraordinary item                                          -           803,589               -              -               -
                                                   -----------     ------------    -------------    -----------      ----------
Net earnings (loss) available to common
   stockholders after extraordinary item           $(7,630,390)    $  4,404,572    $   4,076,033    $   879,650      $2,217,561
                                                   ===========     ============    =============    ===========      ==========

Weighted average outstanding shares of common
   stock                                               763,000          763,000          829,727        763,000       1,248,643

Net earnings (loss) per share available to
   common stockholders before extraordinary item   $    (10.00)    $       4.72    $        4.91    $       1.15     $      1.78
                                                   ===========     ============    =============    ============     ===========

Net earnings (loss) per share available to
     common stockholders                           $    (10.00)    $       5.77    $        4.91    $       1.15     $      1.78
                                                   ===========     ============    =============    ============     ===========

DILUTED
Net earnings (loss) available to common
   stockholders before extraordinary item          $(7,630,390)    $  3,600,983    $   4,076,033    $   879,650      $2,217,561
Impact of assumed conversion of preferred stock             -         2,734,610               -              -               -
                                                   -----------     ------------    -------------    -----------      ----------
Net earnings (loss) available to common
   stockholders before extraordinary item
   (including effect of assumed conversion)        $(7,630,390)    $  6,335,593    $   4,076,033    $   879,650      $2,217,561
Extraordinary item                                          -           803,589               -              -               -
                                                   -----------     ------------    -------------    -----------      ----------
Net earnings (loss) available to common
   stockholders after extraordinary item
   (including effect of assumed conversion)        $(7,630,390)    $  7,139,182    $   4,076,033    $   879,650      $2,217,561
                                                   ===========     ============    =============    ===========      ==========

Weighted average outstanding shares of common
   stock                                               763,000          763,000          829,727        763,000       1,248,643

Dilutive effect of preferred shares (1)                     -         4,735,680        4,809,692      4,735,680       4,803,806
                                                   -----------     ------------    -------------    -----------      ----------
Common stock and potentially issuable common
   stock                                               763,000        5,498,680        5,639,419      5,498,680       6,052,449

Net earnings (loss) per share before
   extraordinary item                              $    (10.00)    $       1.15    $        0.72    $       0.16     $      0.37
                                                   ===========     ============    =============    ============     ===========

Net earnings (loss) per share                      $    (10.00)    $       1.30    $        0.72    $       0.16     $      0.37
                                                   ===========     ============    =============    ============     ===========

(1)        The dilutive effect of warrants outstanding during each of the presented periods was immaterial to these computations.

                                                               F-10


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

10.  Fair Value of Financial Instruments
     -----------------------------------

     In assessing the fair value of financial instruments, the Company has used
     a variety of methods and assumptions, which are based on estimates of
     market conditions and risks existing at that time. For all financial
     instruments, including cash, accounts payable, accrued expenses, and notes
     payable, it was estimated that the carrying amount approximated fair value
     for these financial instruments because of their short maturities.

11.  New Authoritative Accounting Pronouncements
     -------------------------------------------

     In June 1998, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards No. 133, Accounting for
     Derivative Instruments and Hedging Activities, (SFAS 133). SFAS 133 (as
     amended by SFAS 138 in June 2000) establishes new standards of accounting
     and reporting for derivative instruments and hedging activities. SFAS 133
     requires that all derivatives be recognized at fair value in the statement
     of financial position, and that the corresponding gains or losses be
     reported either in the statement of operations or as a component of
     comprehensive income, depending on the type of hedging relationship that
     exists. In July 1999, the Financial Account Standards Board issued SFAS No.
     137 (SFAS 137), Accounting for Derivative Instruments and Hedging
     Activities-Deferral of Effective Date of SFAS 133. SFAS 137 deferred the
     effective date of SFAS 133 until the first quarter of fiscal years
     beginning after June 15, 2000. The Company does not currently hold
     derivative instruments or engage in hedging activities. The Company expects
     the adoption of SFAS 133, SFAS 137 and SFAS 138 will not have a material
     impact on its financial statements and related disclosures.

     In December 1999, the Securities and Exchange Commission issued Staff
     Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
     Statements. SAB 101 provides guidance on applying accounting principles
     generally accepted in the United States to revenue recognition in financial
     statements and is effective in the fourth quarter of all fiscal years
     beginning after December 15, 1999. The Company's accounting policies are
     consistent with the requirements of SAB 101, so the implementation of SAB
     101 did not have an impact on the Company's operating results.

     In April 2000, the Financial Accounting Standards Board issued FASB
     Interpretation No. 44 (FIN 44), Accounting for Certain Transactions
     Involving Stock Compensation, an interpretation of APB Opinion No. 25. FIN
     44 is effective for transactions occurring after July 1, 2000. The
     application of FIN 44 did not have an impact on the Company's consolidated
     financial statements.

     In June 2001, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 141 (SFAS 141), Business Combinations.
     SFAS 141 applies to all business combinations initiated after June 30,
     2001. The Statement also applies to all business combinations accounted for
     using the purchase method for which the date of acquisition is July 1,
     2001, or later. The adoption of SFAS 141 did not have an impact on the
     Company's consolidated financial statements.

                                      F-11


                    The Topaz Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     In June 2001, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other
     Intangible Assets. The provisions of SFAS 142 are required to be applied
     starting with fiscal years beginning after December 15, 2001 with earlier
     application permitted for entities with fiscal years beginning after March
     15, 2001 provided that the first interim financial statements have
     previously been issued. The statement is required to be applied at the
     beginning of the entity's fiscal year and to be applied to all goodwill and
     other intangible assets recognized in its financial statements to that
     date. The initial application of the SFAS 142 will have no impact on the
     Company's consolidated financial statements.

12.  Use of Estimates
     ----------------

     In preparing the Company's consolidated financial statements, management is
     required to make estimates and assumptions that affect the reported amounts
     of assets, liabilities and equity, the disclosure of contingent assets and
     liabilities at the date of the financial statements, and the reported
     amounts of revenue and expenses during the reporting period. Actual results
     could differ from those estimates.

13.  Interim Financial Information
     -----------------------------

     The interim consolidated financial statements of the Company as of June 30,
     2001 and for the six months ended June 30, 2000 and 2001, included herein,
     have been prepared by the Company, without audit, pursuant to the rules and
     regulations of the SEC on a basis consistent with the audited consolidated
     financial statements. Certain information and footnote disclosures normally
     included in financial statements prepared in accordance with generally
     accepted accounting principles have been condensed or omitted pursuant to
     the rules and regulations relating to the interim financial statements.

     In the opinion of the management, the accompanying interim consolidated
     financial statements reflect all adjustments, consisting only of normal
     recurring adjustments, necessary to present fairly the financial position,
     results of the Company's operations and its cash flows in accordance with
     generally accepted accounting principles. The accompanying unaudited
     interim consolidated financial statements are not necessarily indicative of
     full year results.

NOTE B - STOCK SPLITS AND OTHER CHANGES TO COMPOSITION OF EQUITY

     On September 29, 2000, the Company authorized a "one for five" reverse
     split of its voting common stock. The split did not affect stock's par
     value and the number of authorized common stock shares. All references to
     number of shares in the financial statements have been adjusted to reflect
     this reverse stock split on a retroactive basis.

     On January 22, 2001, the Company amended its Articles of Incorporation to
     re-designate 50,000,000 authorized preferred shares to create a new class
     of preferred stock, Series B Preferred. On January 25, 2001, the Company
     announced an exchange of 20,130,250 Series A preferred shares (representing
     five of each six shares outstanding per each Series A holder) into
     1,006,513 shares of the Series B preferred stock.

     The accompanying financial statements were adjusted to retroactively
     reflect the January 25, 2001 recapitalization.

                                      F-12



                                           The Topaz Group, Inc. and Subsidiaries

                                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                           December 31, 1998, 1999 and 2000, and
                                  the six months ended June 30, 2000 and 2001 (unaudited)

NOTE C - INVENTORIES

     Inventories consist of the following:
                                                                         December 31,
                                                          ----------------------------------------             June 30,
                                                                 1999                    2000                    2001
                                                           ----------------       ----------------        ----------------
                                                                                                 
    Raw materials                                         $      2,271,893        $      2,860,174        $      3,454,145
    Finished stones                                             14,648,674              17,087,679              19,553,549
    Finished jewelry                                             1,568,381                 678,649                 652,723
                                                           ----------------       ----------------        ----------------
                                                          $     18,488,948        $     20,626,502        $     23,660,417
                                                          ================        ================        ================

NOTE D - PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:
                                                                          December 31,
                                                           ---------------------------------------             June 30,
                                                                  1999                   2000                    2001
                                                           ----------------       ----------------        ----------------

    Land and land improvements                             $      1,350,218       $      1,352,813        $      1,352,813
    Buildings and improvements                                      362,709                381,014                 384,304
    Machinery and equipment                                         965,294              1,125,657               1,221,980
    Office furniture and equipment                                  400,904                441,712                 496,751
    Vehicles                                                        262,049                283,011                 283,011
                                                           ----------------       ----------------        ----------------
                                                                  3,341,174              3,584,207               3,738,859
        Less accumulated depreciation and amortization            1,310,672              1,456,474               1,530,768
                                                           ----------------       ----------------        ----------------

                                                           $      2,030,502       $      2,127,733        $      2,208,091
                                                           ================       ================        ================


                                                           F-13


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE E - RELATED PARTY RECEIVABLES AND PAYABLES

     The related party receivable as of December 31, 1999, consists principally
     of amounts advanced to a related company and was collateralized by precious
     and semi-precious gemstones. The related company has a common director with
     Creative. This balance was settled in 2000 when the Company acquired the
     collateral.

     Payables to related parties consist of the following:

                                      December 31,
                       ----------------------------------         June 30,
                              1999              2000               2001
                       ----------------  ----------------   ----------------

    Due to directors   $        345,310  $        543,929   $        380,406
    Accrued rent                194,754           327,369            224,338
    Other                        76,205                -                  -
                       ----------------  ----------------   ----------------

                       $        616,269  $        871,298   $        604,744
                       ================  ================   ================

     Related party accrued rent is owed to companies that are controlled by the
     Company's president.

NOTE F - LINES OF CREDIT

     The Company has two line of credit arrangements with two Thai financial
     institutions entered into in October 1999 (1999 Line) and April 2000 (2000
     Line). Both lines are renewable automatically on yearly basis and are
     subject to the banks' periodic review resulting in adjustment of the
     Company's credit limit.

     The 1999 line bears interest at a rate equal to LIBOR plus two percent
     (8.208% and 8.136% as of December 31, 2000 and 1999, respectively), is
     personally guaranteed by two of the Company's directors and collateralized
     by various real estate properties belonging to the Company and one of the
     directors. As of December 31, 2000 and June 30, 2001 approximately $836,000
     and $201,500, respectively, was available for borrowing under the 1999
     Line.

     The interest rate on the 2000 line is the same as on the 1999 line. It is
     also guaranteed by two of the Company's directors and secured by a deed on
     a real estate property owned by a related party. As of December 31, 2000
     and June 30, 2001, approximately $493,000 and $261,000, respectively, was
     available for borrowing under the 2000 Line.

     As of December 31, 1999 and 2000, and June 30, 2001, outstanding balance
     under both lines of credit was $0, $775,162 and $1,176,151, respectively.


                                     F-14


                    The Topaz Group, Inc. and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE G - NOTES PAYABLE

     Notes payable consist of the following:



                                                  December 31,
                                   ---------------------------------      June 30,
                                         1999               2000            2001
                                   ---------------   ---------------  ---------------
                                                             
    Debt restructuring             $       685,893   $             -  $             -
    Notes payable - related party          989,402                 -                -
    Note payable to bank                    61,652                 -                -
                                   ---------------   ---------------  ---------------

                                   $     1,736,947   $             -  $             -
                                   ===============   ===============  ===============


     Notes payable to related party were due to directors, without interest or
     fixed terms of repayment and were repaid during the year ended December 31,
     2000.

NOTE H - EXTRAORDINARY ITEM

     On July 30, 1999, Advance completed a debt restructuring with an investor
     that purchased the rights to the debt from a failed financial institution.
     The debt restructuring occurred as a result of the failure of the financial
     institution and not Advance's inability to service the debt. The debt
     restructuring was accomplished through the reduction of the face amount of
     the debt and accrued interest. The result was a gain on restructuring
     totaling approximately $804,000, which is reflected as an extraordinary
     item in the Consolidated Statements of Earnings. The remaining principal
     and interest of $610,470 was paid in full during January 2000. The debt
     restructuring was accounted for in accordance with Statement of Financial
     Accounting Standards No. 15, Accounting by Debtors and Creditors for
     Troubled Debt Restructurings. The net effect of the gain on the debt
     restructuring on basic and diluted earnings per share for the years ended
     December 31, 1999 was $1.06 and $0.15, respectively.

NOTE I - STOCKHOLDERS' EQUITY

     The Company has the following types of equity securities authorized and
     outstanding:

     Preferred stock - 50,000,000 shares authorized as of December 31, 1999 and
     2000, and June 30, 2001.

     Series A Preferred (see note B) $0.001 par value - 26,000,000 shares
     authorized, 22,375,000, 4,021,050, and 3,721,050 shares issued and
     outstanding as of December 31, 1999 and 2000, and June 30, 2001. Each share
     of preferred stock has liquidation preferences, and each preferred
     shareholder is entitled to one vote per share. General conversion
     provisions entitle each preferred share to be converted into one common
     stock share at the election of the holder. At


                                     F-15


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE I - STOCKHOLDERS' EQUITY - Continued

     any time after one year from the date of issuance, the preferred stock is
     subject to mandatory conversion at the rate of one share of preferred stock
     for one share of common stock, upon the undertaking by the Company of a
     public offering of its securities pursuant to the Securities Act of 1933,
     as amended. Holders of preferred stock are entitled to receive dividends
     from funds legally available, concurrent with the declaration of dividends
     on the Company's common stock.

     Series B Preferred (see note B) $0.001 par value - 10,000,000 shares
     authorized, 1,006,513 shares issued and outstanding as of December 31, 1999
     and 2000, and June 30, 2001. Series B preferred has the same rights,
     preferences, privileges and priority as Series A, except for voting rights
     which are twenty votes per each Series B preferred share.

     Common stock - $0.001 par value - 100,000,000 authorized; 763,000,
     1,024,886, and 1,324,886 shares issued and outstanding as of December 31,
     1999 and 2000, and June 30, 2001, respectively. The voting rights are one
     vote per share.

     Common stock warrants - On September 1, 1999, the Company authorized common
     stock warrants to be granted to three consultants in connection with future
     services. The warrants were granted monthly from September 1999 through
     June 2000. The number of the warrants issued in each tranche was determined
     as the fair value of the services provided (set at $10,000 total for each
     month) divided by the fair value of the underlying stock as determined on
     the date of each grant. The warrants' strike price on each grant date was
     equal to the fair value of the underlying stock on the date of each grant
     but not less than $2.50 per share. As of December 31, 1999 and 2000, the
     Company granted 14,759 and 32,884 warrants, respectively, resulting in
     $40,000 and $60,000 in additional expenses for the years ended December 31,
     1999 and 2000, respectively. The warrants expire on July 27, 2005 and have
     strike prices varying from $2.50 to $5.16.

     Stock options - On May 15, 2001, the Board of Directors approved the 2001
     Stock Option Plan and approved 1,000,000 common stock options to be granted
     to employees and directors of the consolidated entity. No options have been
     granted.

                                     F-16


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE I - STOCKHOLDERS' EQUITY - Continued

     A roll forward of shares issued and outstanding is as follows:



                                                               Class A          Class B
                                                              Preferred        Preferred           Common
                                                                Stock            Stock              Stock
                                                          --------------    -------------    ------------
                                                                                         
Shares issued as part of May 1, 1999 exchange agreement       22,375,000               -          763,000(1)
                                                          --------------    -------------    ------------

Balance at December 31, 1999                                  22,375,000               -          763,000

Conversion of preferred stock                                 (1,307,700)              -          261,886

Issuance of additional preferred stock under
     May 1, 1999 exchange agreement                            3,084,000               -               -

Shares issued in recapitalization                            (20,130,250)       1,006,513              -
                                                          --------------    -------------    ------------

Balance at December 31, 2000                                   4,021,050        1,006,513       1,024,886

Conversion of preferred stock                                   (300,000)              -          300,000
                                                          --------------    -------------    ------------

Balance at June 30, 2001                                       3,721,050        1,006,513       1,324,886
                                                          ==============    =============    ============

(1)        represents previously issued and outstanding common shares of Chancellor


NOTE J - REDEEMABLE ORDINARY SHARES

     Advance and Creative have 10,710,000 ordinary shares issued and outstanding
     to related parties. Certain of these related parties are preferred
     stockholders of the Company. The voting rights of the ordinary shares, with
     respect to Advance and Creative, are one vote per share or 0.3% of the
     total outstanding voting shares. The Company controls the remaining 99.7%
     of Advance and Creative as a result of the share exchange consummated on
     May 1, 1999 (as discussed in note A). The ordinary shares are not publicly
     traded and are eligible to receive dividends in proportion to their voting
     rights. Since the ordinary shares do not represent equity of the Company
     and the Company has an obligation to repurchase the ordinary shares they
     have been accounted for as redeemable equity of the Thai subsidiaries.
     Accordingly the redeemable ordinary shares of the subsidiaries have been
     remeasured into U.S. dollars at the current rate as of December 31, 1999
     and 2000, and June 30, 2001.

                                     F-17


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE K - INCOME TAXES

     The Subsidiaries have received a promotional privilege from the Thai Board
     of Investment under certificates dated May 30, 2000 (Creative) and
     September 8, 2000 (Advance Manufacturing) relating to the manufacture of
     gemstones and jewelry. The promotional privilege for Advance expired during
     2000 and Advance is now inactive. Under this privilege, the Subsidiaries
     have received exemption from certain Thai taxes and duties including Thai
     corporate income tax on income derived from the promoted activities for a
     period of eight years commencing from the date that the Subsidiaries have
     income derived from those activities. The Subsidiaries are required to
     comply with the terms and conditions specified in the promotional
     certificate. Management does not believe it will ever utilize the net
     operating loss (NOL) of the predecessor company, Chancellor Corporation,
     due to limitations on change of ownership.

     The income tax expenses reconciled to the tax computed at the U.S.
     statutory rate were approximately as follows:


                                                 Year ended December 31,                     Six months ended June 30,
                                     ---------------------------------------------         ---------------------------
                                        1998              1999              2000               2000              2001
                                     ----------       ----------        ----------         ---------         ---------
                                                                                              
Tax expense (benefit) computed
    at federal statutory rate        $1,577,000       $2,427,000        $1,386,000         $ 210,000         $ 200,000
Non U.S. income exempt
    from tax                         (1,577,000)      (2,427,000)       (1,520,000)         (231,000)         (220,000)
Valuation allowance                         -                -             134,000            21,000            20,000
                                     ----------       ----------        ----------         ---------         ---------
                                     $      -         $      -          $       -          $      -          $      -
                                     ==========       ==========        ==========         =========         =========


     Deferred tax assets and liabilities are measured using enacted tax rates
     that are expected to apply to taxable income in the years in which those
     temporary differences are expected to be recovered or settled. A valuation
     allowance is recorded for deferred tax assets when it is more likely than
     not that such deferred tax assets will not be realized. Deferred income
     taxes reflect the net tax effects of temporary differences between the
     consolidated carrying amounts of assets and liabilities for financial
     reporting purposes and the respective amounts used for income tax purposes.
     Significant components of the Company's deferred tax assets are as follows:


                                             December 31,         June 30,
                                                 2000               2001
                                         ------------------ ------------------
                                                      
    Deferred asset
        Net operating losses             $        114,000   $        134,000
        Warrants                                   20,000             20,000
    Valuation allowance                          (134,000)          (154,000)
                                         ------------------ ------------------
               Net deferred tax asset    $             -    $             -
                                         ================== ==================


     Internal Revenue Code Section 382 places a limitation on the amount of
     taxable income that can be offset by carryforwards after a change in
     control (generally greater than a 50% change in ownership). As a result of
     these provisions, utilization of the NOL and tax credit carryforwards may
     be limited.

                                     F-18


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE L - COMMITMENTS

1.   Operating Lease Agreements
     --------------------------

     The Company conducts its operations in leased facilities under operating
     leases expiring through February 2011. The Company has the option of
     extending the lease terms beyond the current expiration date. The following
     is a schedule by year of approximate minimum rental payments under such
     operating leases.


       Year ending December 31,   Third Party     Related Party           Total
       ------------------------ -------------    --------------      --------------
                                                                 
                 2001           $      21,400    $       74,663      $       96,063
                 2002                  21,400            74,663              96,063
                 2003                  16,645            74,663              91,308
                 2004                      -             74,663              74,663
                 2005                      -             74,663              74,663
              Thereafter                   -            385,758             385,758
                                -------------    --------------      --------------

                                $      59,445    $      759,073      $      818,518
                                =============    ==============      ==============


     Certain of the above leases provide for payment of taxes and other expenses
     by the Company. Rent expense for the leased facilities for the years ended
     December 31, 1998, 1999 and 2000 and the six months ended June 30, 2000 and
     2001, was approximately $65,000, $77,000 and $72,000, $40,000, and $45,000,
     respectively.

2.   Legal Reserve
     -------------

     Under the provisions of Thailand's Civil and Commercial Code, the
     Subsidiaries are required to set aside a legal reserve of at least five
     percent of their net earnings at each dividend declaration until the
     reserve reaches ten percent of the contributed capital. The reserve is not
     available for dividend distribution. As of December 31, 1999 and 2000, and
     June 30, 2001 the reserve balance was $490,800, and was included in the
     Company's retained earnings.

NOTE M - RISK AND UNCERTAINTIES

1.   Country Risk
     ------------

     A significant volume of the Company's operations are conducted in Thailand.
     Accordingly, the Company's business, financial position and results of
     operations may be influenced by the political, economic and legal
     environments in Thailand and the Pacific Rim region (PRR), and by the
     general state of the Thailand and Pacific Rim economies.

                                     F-19


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE M - RISK AND UNCERTAINTIES - Continued

     The Company's operations in the Pacific Rim are subject to special
     considerations and significant risks not typically associated with
     companies in North America and Western Europe. These include risks
     associated with, among others, the political, economic and legal
     environments and foreign currency exchange. The Company's results may be
     adversely affected by changes in the political and social conditions in the
     PRR, and by changes in governmental policies with respect to laws and
     regulations, anti-inflationary measures, currency conversion and remittance
     abroad, and rates and methods of taxation, among other things.

2.   Concentration of Credit Risk
     ----------------------------

     As of December 31, 1999 and 2000, and June 30, 2001 balances of two
     customers represented 13% and 12%, 12% and 8%, 11% and 7%, respectively, of
     the total accounts receivable.

     The Company performs ongoing credit evaluation of each customer's financial
     condition and maintains reserves for potential credit losses. Such losses,
     in the aggregate, have not exceeded management's projections.

3.   Dependence on a Limited Number of Irradiation Treatment Facilities
     ------------------------------------------------------------------

     The Company negotiated a contract with the University of Missouri to
     utilize the University's nuclear reactor for the irradiation (coloration)
     of topaz gemstones. The contract gives the Company exclusive use of the
     reactor for the coloration of gemstones through March 2005 and may be
     extended on an annual basis upon mutual agreement of both parties.
     Management believes that there are fewer than five known facilities in the
     world that are capable of providing similar irradiation processing.

NOTE N - GEOGRAPHIC AREAS AND CONCENTRATIONS

1.   Revenue (thousands)



                              Year ended December 31,                    Six months ended June 30,
                   -----------------------------------------------     -------------------------------
                       1998            1999              2000              2000              2001
                   -------------    ------------     -------------     -------------     -------------
                                                                          
United States      $   15,808       $  16,972        $   28,347        $    9,074        $    6,563
Thailand                3,079           2,909             4,136             1,381             2,923

2.   Long-lived assets
                                    December 31,
                  ----------------------------------------------           June 30,
                          1999                     2000                      2001
                  ---------------------    ---------------------     ---------------------
US                $              -         $              -          $              -
Thailand                  2,030,502                2,127,733                 2,208,091
                  ---------------------    ---------------------     ---------------------

     Total        $       2,030,502        $       2,127,733         $       2,208,091
                  =====================    =====================     =====================


                                     F-20


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE N - GEOGRAPHIC AREAS AND CONCENTRATIONS - Continued

3.   Major customers

     Details of individual customers accounting for more than 10% of the
     Company's sales are as follows:


                                                                  Sales (thousands)
                                          Year ended December 31,                   Six months ended June 30,
                               -----------------------------------------------    ------------------------------
                                  1998             1999              2000             2000             2001
                               ------------     ------------     -------------    --------------    ------------
                                                                                     
Goldmine Enterprises, Inc.     $   2,441        $   4,579        $    4,215       $    2,051        $   1,867
Helen Andrews                      3,225            3,960             2,862              421              240


4.   Major suppliers (thousands)

     Details of individual suppliers accounting for more than 10% of the
     Company's purchases are as follows:



                                          Year ended December 31,                   Six months ended June 30,
                               ----------------------------------------------     -------------------------------
                                  1998              1999            2000              2000              2001
                               ------------     -------------    ------------     --------------    -------------
                                                                                     
Gold Corporation               $   2,455        $   3,271        $   3,657        $    1,545        $     891
Little Rock                          174            1,798            2,667               888              996


                                                     F-21



                                               The Topaz Group, Inc. and Subsidiaries

                                             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                December 31, 1998, 1999 and 2000, and
                                       the six months ended June 30, 2000 and 2001 (unaudited)

NOTE O - SELECTED QUARTERLY DATA (UNAUDITED)
                                                 1st Quarter            2nd Quarter             3rd Quarter         4th Quarter
                                             --------------------   ---------------------   ------------------   ------------------
Year ended December 31, 1999
---------------------------------------------
                                                                                                     
Net sales                                    $      3,716,087       $       5,058,649       $       5,935,431    $      5,171,116
Gross profit                                        1,709,400               2,630,498               3,027,070           1,488,491
Earnings from operations                              831,196               1,607,517               2,035,068              35,578
Net earnings (loss) before extraordinary item       2,781,833               1,627,997               2,129,701            (203,938)
Extraordinary item                                         -                       -                  803,589                  -
Net earnings (loss)                                 2,781,833               1,627,997               2,933,290            (203,938)

Earnings (loss) per share from operations
       Basic                                 $          (2.49)      $            2.11       $           2.67     $           0.05
       Diluted                               $          (2.49)      $            0.29       $           0.37     $           0.01

Net earnings (loss) per share before
   extraordinary item
       Basic                                 $           0.06       $            2.13       $           2.79     $          (0.27)
       Diluted                               $           0.01       $            0.30       $           0.39     $          (0.27)

Net earnings (loss) per share
       Basic                                 $           0.06       $            2.13       $           3.84     $          (0.27)
       Diluted                               $           0.01       $            0.30       $           0.53     $          (0.27)

Year ended December 31, 2000
---------------------------------------------
Net sales                                    $      4,466,439       $       5,989,268       $      7,799,898     $     14,227,438
Gross profit                                        1,161,274               1,976,458              2,183,971            3,673,278
Earnings from operations                               47,526               1,041,967              1,092,637            2,675,921
Net earnings (loss)                                  (272,932)              1,152,582              1,198,819            1,997,564

Earnings per share from operations
       Basic                                 $           0.06       $            1.37       $           1.43     $           3.23
       Diluted                               $           0.01       $            0.19       $           0.20     $           0.48

Net earnings (loss) per share
       Basic                                 $          (0.36)      $            1.51       $           1.57     $           2.41
       Diluted                               $          (0.36)      $            0.21       $           0.22     $           0.35

Year ending December 31, 2001
---------------------------------------------
Net sales                                    $      4,586,282       $       4,899,963
Gross profit                                        1,305,985               1,513,345
Earnings from operations                              467,203                 475,030
Net earnings                                        1,242,292                 975,269

Earnings per share from operations
       Basic                                 $           0.40       $            0.36
       Diluted                               $           0.08       $            0.08

Net earnings per share
       Basic                                 $           1.06       $            0.74
       Diluted                               $           0.21       $            0.16


                                                               F-22


                     The Topaz Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      December 31, 1998, 1999 and 2000, and
             the six months ended June 30, 2000 and 2001 (unaudited)

NOTE P - SUBSEQUENT EVENT (UNAUDITED)

     On July 20, 2001, the Company filed with the State of Nevada to change the
     convertibility provisions of the Series B preferred stock. Under the new
     provisions, Series B preferred shares are only convertible into the
     Company's common stock in the events specified in the Amended and Restated
     Certificate of Designation of The Topaz Group, Inc.

                                      F-23


                                Index To Exhibits

2.1       Agreement of Exchange among the Company, Best Worth Agents, Ltd and
          Advance Gems & Jewelry Co., Ltd., dated April 30, 1999
2.2       Agreement of Exchange among the Company, Best Worth Agents, Ltd and
          Creative Gems & Jewelry Co., Ltd., dated April 30, 1999
3(i)(a)   Amended and Restated Articles of Incorporation of the Company, dated
          November 17, 1998
3(i)(b)   Certificate of Change in the Number of Outstanding Shares of Common
          Stock, dated November 16, 2000
3(ii)     Bylaws of the Company, dated June 5, 1996
4.1       Amended and Restated Certificate of Designation of the Company's
          Series A Preferred Stock and Series B Preferred Stock, filed
          July 20, 2001
4.2       2001 Stock Option Plan of the Company
10.1      Contract between the Company and the Curators of the University of
          Missouri, dated March 1, 2001
10.2      Joint Venture Agreement between Creative Gems & Jewelry Co., Ltd. and
          Muthama Gemstones (Kenya) Limited, dated September 6, 1999.
10.3      Credit Facilities Agreement between UOB Radanasin Bank Pcl and the
          Creative Gems & Jewelry Co. Ltd., dated April 12, 2000
10.4      Overdraft Agreement between Thai Farmers Bank PCL and Creative Gems &
          Jewelry Co. Ltd., dated July 13, 2000
21        Subsidiaries of the Registrant
24.1      Power of Attorney (Included on Signature Page)




                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Bangkok,
State of Thailand, on the 11th day of October, 2001.

                                                     THE TOPAZ GROUP, INC.

                                                    BY: /S/ JEREMY F. WATSON
                                                        Jeremy F. Watson
                                                        Chief Executive officer

                                POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Jeremy F. Watson and Terrance C.
Cuff and each of them with power of substitution, as his attorney-in-fact, in
all capacities, to sign amendments to this registration statement (including
post-effective amendments) and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-facts or their
substitutes may do or cause to be done by virtue hereof

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


NAME                                    TITLE                                   DATE
                                                                          

/s/ Jeremy F. Watson                     Chairman and Chief Executive officer   October 11, 2001
--------------------
Jeremy F. Watson

/s/ Apichart Fufuangvanich               Director and President                 October 11, 2001
--------------------------
Apichart Fufuangvanich

/s/ Thammatinna Thammaradi               Director and Executive Vice President  October 11, 2001
--------------------------
Thammatinna Thammaradi

/s/ Leonard Orrin                        Director and Director of Marketing     October 11, 2001
-----------------
Leonard Orrin

/s/ Timothy Matula                       Director and Treasurer                 October 8, 2001
------------------
Timothy Matula

/s/ Terrance C. Cuff                     Director and Chief Financial officer   October 11, 2001
--------------------
Terrance C. Cuff

/s/ Thiti Fufuangvanich                  Director and Director of Research      October 11, 2001
-----------------------
Thiti Fufuangvanich                      and Development

/s/ Alson Lee                            Director                               October 8, 2001
-------------
Alson Lee

/s/ David Dikinis                        Director                               October 11, 2001
-----------------
David Dikinis

/s/ Jason Sugarman                       Director                               October 11, 2001
------------------
Jason Sugarman

EX-2

                              AGREEMENT OF EXCHANGE
                    of convertible preferred voting stock of
                                TOPAZ GROUP, INC
                      for one hundred percent (100%) of the
                   issued and outstanding preferred shares of
                        ADVANCE GEMS & JEWELRY CO., LTD.


     TOPAZ GROUP, INC. ("TOPAZ") is a development stage Co. presently listed for
trading on the NASDAQ Bulletin Board; ADVANCE GEMS & JEWELRY CO. LTD. ("ADVANCE
GEMS") is an operating company with its principal place of business located in
Bangkok, Thailand; and BEST WORTH AGENTS, LTD. (B.V.I.) ("BEST WORTH") is the
owner of one hundred percent (100%) of the issued and outstanding preferred
stock of Advance Gems which stock constitutes all of the voting and dividend
rights of Advance Gems. Topaz, Advance Gems, and Best Worth (sometimes
collectively referred to herein, as the "Parties"), believe it is in their
mutual best interests for Best Worth to exchange the preferred stock of Advance
Gems it owns for convertible preferred stock of Topaz having both voting and
dividend rights on the terms and conditions set forth in this Agreement of
Exchange.

     Now therefore, the Parties agree as follows:

                                   ARTICLE I
                              AGREEMENT OF EXCHANGE

Section 1.01. Topaz, Advance Gems, and Best Worth agree to the exchange of stock
as follows:

     (a) Best Worth will transfer to Topaz 98,000,000 Baht shares of the
preferred stock of Advance Gems, which constitutes all of the issued and
outstanding shares of preferred stock of Advance Gems;

     (b) In exchange for the transfer of shares by Best Worth in "a", Topaz will
issue shares of its convertible preferred stock and cause appropriate shares
certificates to be delivered to Best Worth as follows:

          (i) upon consummation of this Agreement, eleven million (11,000,000)
shares of the voting convertible preferred stock of Topaz representing
forty-four percent (44%) of the voting and dividend rights of Topaz following
such issuance; and

          (ii) immediately upon receipt of the auditor's records of profits by
Advance Gems, an additional number of shares of the voting convertible preferred
stock of Topaz equal to the aggregate percentage increase in the 1999 profits of
Advance Gems over 1998 aggregate profits of four million five hundred thousand
dollars ($4,500,000). For example, if the combined 1999 profits of Advance Gems
amount to an increase of fifty percent (50%) over into the combined 1998
profits, there would be an additional issuance to Best Worth of four million
(4,000,000) shares.






                                   ARTICLE II
                         COVENANTS, REPRESENTATIONS AND
                               WARRANTIES OF TOPAZ

                                  LEGAL STATUS

Section 2.01. Topaz is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Nevada with corporate power to own
property in carry on its business as it is now being conducted.

Section 2.02. Topaz presently has one subsidiary. U.S. Heritage Corporation and
also owns one hundred percent (100%) of the issued and outstanding preferred
stock of Creative Gems and Jewelry Company Limited ("Creative") which
constitutes all of the voting and dividend rights of Creative. Following
consummation of this Agreement, Topaz will additionally own one hundred percent
(100%) of the issued and outstanding preferred stock of Advance Gems which will
considerate all of the voting and dividend rights of said corporation.

                                 CAPITALIZATION

Section 2.03. (a) Topaz has an authorized capitalization of 100,000,000 shares
of common stock $.001 par value, of which 2,625,000 shares are issued and
outstanding, fully paid, and nonassessable, and 26,000,000 shares of voting
convertible preferred stock, $.001 par value, 11,375,000 of which are presently
issued and outstanding.

     (b) Pursuant to the Agreement of Exchange between Topaz and Creative dated
April 3, 1999, Topaz shall, upon receipt of the auditor's report of profits by
Creative for 1999, issue to Best Worth an additional number of shares of the
voting convertible preferred stock of Topaz equal to the percentage increase in
Creative's 1999 profits over its 1998 profits, times 8,000,000.

                              FINANCIAL STATEMENTS

Section 2.04. (a) Topaz has delivered to Best Worth the balance sheet of Topaz
as of December 31, 1997, the related statements of income and retained earnings
for the year then ended, prepared internally and subject to normal changes
resulting from year-end audit.

     (b) Other than changes in the usual and ordinary conduct of business since
December 31, 1997, there have been, and at the closing date there will be, no
changes in such financial statements.

                               TITLE TO PROPERTIES

Section 2.05. All book assets of Topaz are in existence, are in its possession,
and are in good condition and repair. Topaz has good and marketable title to all
of its assets and, except for any liens or encumbrances which are shown on its
financial statements as of December 31, 1997, or which have arisen in the
ordinary course of business since the date of such financial statements and
which do not interfere with the conduct of its business in the ordinary course,
holds such assets subject to no mortgage, lien, or encumbrance.



                                      -2-


                                  INDEBTEDNESS

Section 2.06. Except as set forth in the balance sheet of Topaz as of December
31, 1997, there is no outstanding indebtedness other than liabilities incurred
in the ordinary course of business or in connection with this transaction. Topaz
is not in default in respect of any terms or conditions of indebtedness.

                     NO LITIGATION OR PROCEEDING PENDING OR THREATENED

Section 2.07. Topaz is not a party to, nor has it been threatened with, any
litigation or governmental proceeding which, if decided adversely to it, would
have a material adverse effect upon the transaction contemplated hereby, or upon
the financial condition, net worth, prospects, or business of Topaz.

                     NO RESTRICTIONS PREVENTING TRANSACTION

Section 2.08. Topaz is not subject to any charter, bylaw, mortgage, lien, lease,
agreement, judgment, or other restriction of any kind which would prevent
consummation of the transaction contemplated by this Agreement

                              STATUS OF RECEIVABLES

Section 2.09. None of the accounts receivable or contracts receivable indicated
in the financial statements which Topaz has delivered to Best Worth is subject
to any counterclaim or setoff, and all such accounts receivable and contracts
receivable are good and collectible at the aggregate recorded amount thereof.

                                      TAXES

Section 2.10. Topaz has filed all federal and state income tax or franchise tax
returns which are required to be filed, has paid all taxes shown on said returns
as have become due, and has paid all assessments received to the extent that
such assessments have become due.

                       STATUS OF SHARES BEING TRANSFERRED

Section 2.11. The shares of stock of Topaz which are to be issued and delivered
to Best Worth pursuant to the terms of this Agreement, when so issued and
delivered will be validly authorized and issued, and will be fully paid and
nonassessable; no shareholder of Topaz will have any preemptive right of
subscription or purchase in respect thereof.

                         AUTHORITY TO EXECUTE AGREEMENT

Section 2.12. Topaz has the legal power and right to enter this Agreement
subject to the approval of the principal terms of this Agreement by the
outstanding shares, as those terms are defined in the General Corporation Law of
Nevada. Topaz has obtained approval of the transaction set forth in this
Agreement by its outstanding shares as required by the Nevada Revised Statutes
and as indicated in the "Written Consent of Shareholders" attached hereto as
Exhibit "A".



                                      -3-


                                   DISCLOSURE

Section 2.13. At the date of this Agreement Topaz has, and at the closing date
it will have, disclosed all events, conditions, and facts materially affecting
the business and prospects of Topaz. Topaz has not now and will not have, at the
closing date, withheld knowledge of any such events, conditions and facts which
it knows, or has reasonable ground to know, may materially affect the business
and prospects of Topaz. None of the representations and warranties of Topaz
herein, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary in order to make the
statements contained herein not misleading.

                                  ARTICLE III
                          COVENANTS, REPRESENTATATIONS
                         AND WARRANTIES OF ADVANCE GEMS
                          AND BEST WORTH AS THEIR SOLE
                              PREFERRED SHAREHOLDER

                                  LEGAL STATUS

Section 3.01. Advance Gems is a corporation duly organized, validly existing,
and in good standing under the laws of Thailand with corporate power to own
property and carry on its business as it is now being conducted.

                                  SUBSIDIARIES

Section 3.02.     Advance Gems has no subsidiaries nor any interest in any other
corporation, firm or partnership.

                                 CAPITALIZATION

Section 3.03. Advance Gems has an authorized capitalization of 102,000,000 Baht
shares of common stock, all of which are issued and outstanding, fully paid, and
nonassessable representing fifty-one percent (51%) of its total capitalization.
Advance Gems is authorized to issue 98,000,000 Baht shares of preferred stock,
all of which are issued and outstanding, fully paid, and nonassessable,
representing forty-nine percent (49%) of its total capitalization. There are no
outstanding options, contracts, calls, commitments, or demands relating to the
authorized but unissued stock of Advance Gems.

                              FINANCIAL STATEMENTS

Section 3.04. (a) Advance Gems has delivered to Topaz its balance sheet as of
December 31, 1998, the related statements of income and retained earnings for
the year then ended, prepared internally and subject to normal changes resulting
from year-end audit.

     (b) Other than changes in the usual and ordinary conduct of the business
since December 31, 1998, there have been, and at the closing date there will be,
no changes in such financial statements.



                                      -4-


                               TITLE TO PROPERTIES

Section 3.05. All books assets of Advance Gems are in existence, and in its
possession, and are in good condition and repair and Advance Gems has good and
marketable title to such assets. Except for any liens or encumbrances shown on
the financial statements as of December 31, 1998, or which have arisen in the
ordinary course of business since the date of such financial statements and
which do not interfere with the conduct of its business in the ordinary course,
such assets are not subject to any mortgage, lien, or encumbrance.

                                  INDEBTEDNESS

Section 3.06. Except as set forth in the balance sheet of Advance Gems as of
December 31, 1998, there is no outstanding indebtedness other than liabilities
incurred in the ordinary course of business or in connection with this
transaction. Advance Gems is not in default in respect of any terms or
conditions of indebtedness.

                     NO LITIGATION OR PROCEEDING PENDING OR THREATENED

Section 3.07. Advance Gems is not a party to, nor has it been threatened with,
any litigation or governmental proceeding which, if decided adversely to it,
would have a material adverse effect upon the transaction completed hereby, or
upon the financial condition, net worth, prospects, or business of the
corporation.

                      NO RESTRICTION PREVENTING TRANSACTION

Section 3.08. Advance Gems is not subject to any charter, bylaw, mortgage, lien,
lease, agreement, judgment, or other restriction of any kind which would prevent
consummation of the transaction contemplated by this agreement.

                              STATUS OF RECEIVABLES

Section 3.09. None of the accounts receivable or contracts receivable indicated
in the financial statements which Advance Gems has delivered to Topaz is subject
to any counterclaim or setoff, and all such accounts receivable and contracts
receivable are good and collectible at the aggregate recorded amount thereof.

                                      TAXES

Section 3.10. Advance Gems has filed all applicable income, sales, and/or value
added tax returns which are required to be filed, has paid all taxes shown on
said returns as have become due, and has paid all assessments received to the
extent that such assessments have become due.

                       STATUS OF SHARES BEING TRANSFERRED

Section 3.11. The shares of preferred stock of Advance Gems which are to be
conveyed to Topaz pursuant to the terms of this Agreement, are validly
authorized and issued, and are fully paid and nonassessable; no shareholder of
Advance Gems will have any preemptive right of subscription or purchase in
respect thereof.

                         AUTHORITY TO EXECUTE AGREEMENT

Section 3.12. Best Worth has the legal power and right to enter this Agreement
and its consummation of this Agreement is not subject to the review or approval
of any governmental or regulatory agency.

                      SHARES BEING ACQUIRED FOR INVESTMENT

Section 3.13. Best Worth is acquiring the shares of preferred stock of Topaz for
investment and without any present intention to sell, distribute, transfer, or
otherwise dispose of the shares. Best Worth will execute and deliver to Topaz on
the closing date an investment letter substantially in the form attached hereto
as Exhibit "B".



                                      -5-


                       ACTIVITIES SINCE BALANCE SHEET DATE

Section 3.14. Since its balance sheet as of December 31, 1998, Advance Gems has
not, and prior to the closing date will not have:

     (a) Issued or sold any stock, bond, or other corporate securities.

     (b) Except for current liabilities incurred and obligations under contracts
entered into in the ordinary course of business, incurred any obligation or
liability, absolute or contingent.

     (c) Except for current liabilities shown on the balance sheet and current
liabilities incurred since that date in the ordinary course of business,
discharged or satisfied any lien or encumbrance, or paid any obligation or
liability, absolute or contingent.

     (d) Mortgaged, pledged, or subjected to lien or any other encumbrance, any
of its assets, tangible or intangible.

     (e) Except in the ordinary course of business, sold or transferred any of
its tangible assets or canceled any debts or claims.

     (f) Sold, assigned, or transferred any patents, formulas, trademarks, trade
names, copyrights, licenses, or other intangible assets.

     (g) Suffered any extraordinary losses, been subjected to any strikes or
other labor disturbances, or waived any rights of any substantial value.

     (h) Except for transactions contemplated by this agreement, entered into
any transaction other than in the ordinary course of business.

                                   DISCLOSURE

Section 3.15. At the date of this agreement Advance Gems has, and at the closing
date it will have, disclosed all events, conditions, and facts materially
affecting their business and prospects and it has not now and will not have, at
the closing date, withheld knowledge of any such events, conditions, and facts
which it knows, or has reasonable ground to know, may materially affect



                                      -6-


their business and prospects. None of the representations and warranties made by
Advance Gems herein, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary in order to make
the statements contained herein not misleading.

                                   ARTICLE IV
                             Conduct of Business of
                              Topaz Pending Closing

                       ACCESS TO INFORMATION AND DOCUMENTS

Section 4.01. (a) Topaz will afford Best Worth, from the date hereof until
consummation of the Agreement, full access during normal business hours to all
properties, books, accounts, contracts, commitments, and records of every kind
of Topaz in order that Best Worth may have full opportunity to make such
investigation as it shall desire to make of, and to keep itself informed with
respect to, the affairs of Topaz.

     (b) In addition, Topaz will permit Best Worth to make extracts or copies of
all such books, accounts, contracts, commitments, and records and will furnish
to Best Worth, within 10 days after demand, such further financial in operating
data as other information with respect to the business and assets of Topaz as
Best Worth shall reasonably request from time to time.

     (c) Best Worth will use any information so secured only for its own
purposes in connection with the consummation of the transaction contemplated
hereby and will not divulge the information to any persons not entitled thereto.

                           CARRY ON BUSINESS AS USUAL

Section 4.02. Topaz look carry on its business in substantially the same manner
as heretofore.

                          SATISFY CONDITIONS PRECEDENT

Section 4.03. Topaz we use its best efforts to cause the satisfaction of all
conditions precedent contained in this Agreement.

                                   ARTICLE V
                             Conduct of Business of
                          Advance Gems Pending Closing

                       ACCESS TO INFORMATION AND DOCUMENTS

Section 5.01. (a) Best Worth will cause Advance Gems to afford Topaz, from the
date hereof until consummation of the Agreement, full access during normal
business hours to all of the properties, books, accounts, contracts,
commitments, and records of every kind in order that Topaz may have full
opportunity to make such investigation as it shall desire to make of, and to
keep itself informed with respect to, the affairs of Advance Gems.



                                      -7-


     (b) In addition, Best Worth will cause Advance Gems to permit Topaz to make
extracts or copies of all such books, accounts, contracts commitments, and
records and will furnish to Topaz, within 10 days after demand, such further
financial and operating data and other information with respect to their
respective businesses and assets as Topaz shall reasonably request from time to
time.

     (c) Topaz will use any information so secured only for its own purposes in
connection with the consummation of the transaction contemplated hereby and will
not divulge the information to any persons not entitled thereto.


                          SATISFY CONDITIONS PRECEDENT

Section 5.02. Best Worth will use its best efforts to cause the satisfaction of
all conditions precedent contained in this Agreement.

                                   ARTICLE VI
                       CONDITIONS PRECEDENT TO OBLIGATION
                                OF TOPAZ TO CLOSE

Section 6.01. The obligations of Topaz to consummate the Agreement shall be
subject to the following conditions precedent:

                   TRUTH OF REPRESENTATIONS AND WARRANTIES AND
                            COMPLIANCE WITH COVENANTS

     (a) Representations and warranties of Best Worth contained herein shall be
true as of the closing date with the same effect as though made on the closing
date. Best Worth shall have performed all obligations and complied with all
covenants required by this Agreement to be performed or complied with by him
prior to the closing date.

                       COMMITMENT AS TO INVESTMENT PURPOSE

     (b) Best Worth shall have delivered to Topaz, prior to the closing date, a
written commitment in form satisfactory to Topaz, that it is taking the shares
of common stock of Topaz for purposes of investment and will not dispose of the
shares received by it hereunder in a manner which would result in a violation of
the Securities Act of 1933.

                     ACCEPTABILITY OF PAPERS AND PROCEEDINGS

     (c) To the extent reasonably requested by Topaz, the form and substance of
all papers and proceedings hereunder shall be reasonably acceptable to counsel
for Topaz.

                            APPROVAL OF SHAREHOLDERS

     (d) The principal terms of this Agreement shall have been approved by the
outstanding shares of the stock of Topaz as required by the Nevada Revised
Statutes.



                                      -8-


                              FINANCIAL STATEMENTS

     (e) Best Worth shall cause to be delivered to Topaz, unaudited financial
statements of Advance Gems for the fiscal year ended December 31, 1998.

                                  ARTICLE VII
                             CONDITIONS PRECEDENT TO
                       OBLIGATIONS OF BEST WORTH TO CLOSE

Section 7.01. The obligations of Best Worth to consummate the Agreement shall be
subject to the following conditions precedent:

                     TRUTH OF REPRESENTATIONS AND WARRANTIES
                          AND COMPLIANCE WITH COVENANTS

     (a) Representations and warranties of Topaz contained herein shall be true
as of the closing date with the same effect as though made on the closing date.
Topaz shall have performed all obligations and complied with all covenants
required by this agreement to be performed or complied with by it prior to the
closing date.

                         OPINION FROM COUNSEL FOR TOPAZ

     (b) On the closing date, there shall be furnished to Best Worth an opinion
from Counsel to Topaz dated the closing date and in form satisfactory to Best
Worth ad/or its counsel, to the effect that Topaz is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada and that the shares of preferred stock of Topaz delivered to Best Worth
on the closing date have been duly authorized, issued and delivered and are
validly issued and outstanding, fully paid in nonassessable shares of preferred
stock of Topaz.

                                  ARTICLE VIII
                           CONSUMMATION OF TRANSACTION

                           CONSIDERATION OF BEST WORTH

Section 8.01. Best Worth shall deliver to Topaz on the closing date,
certificates representing all of the issued and outstanding shares of preferred
stock of Advance Gems.

                             CONSIDERATION OF TOPAZ

Section 8.02. (a) Topaz shall deliver to Best Worth on the closing date,
certificates representing 26,000,000 shares of common stock of Topaz.

     (b) Upon delivery to Topaz of the auditor's report of the 1999 profits of
Advance Gems, Topaz shall deliver to Best Worth, certificates representing the
number of preferred shares of Topaz determined as provided in Section
1.01(b)(ii).



                                      -9-


                                    EXPENSES

Section 8.03. Topaz shall pay the expenses and costs incident to the
consummation of this agreement.

                                   ARTICLE IX
                         Interpretation and Enforcement

                                     NOTICES

Section 9.01. Any notice or other communication required or permitted hereunder
shall be deemed to be properly given when deposited in the United States mails
for transmittal by certified or registered mail, postage prepaid, or deposited
with a public telegraph company for transmittal, charges prepaid, if such
communication is addressed.

     (a) In the case of Topaz, to: 3030 BRIDGEWAY, SUITE 100, SAUSALITO, CA
94965

or to such other person or address as Topaz may from time to time furnish to
Best Worth for that purpose.

     (b) In the case of Best Worth to: 126/1 KRUNGTHONBURI ROAD, KLONGSARN,
BANGKOK THAILAND or to such other person or address as Best Worth may from time
to time furnish to Topaz for that purpose.

     (c) In the case of Advance Gems to: 126/1 KRUNGTHONBURI ROAD, KLONGSARN,
BANGKOK THAILAND.

or to such other person or address as Advance Gems may from time to time furnish
to Topaz for that purpose.

                                   ASSIGNMENT

Section 9.02. (a) Receipt as limited by the provisions of subsection (b), this
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties.

     (b) Any assignment of this Agreement or the rights hereunder of any party,
without the written consent of the other parties shall be void.

                         ENTIRE AGREEMENT; COUNTERPARTS

Section 9.03. This instrument and the exhibits hereto contain the entire
Agreement between the parties with respect to the transaction contemplated
hereby. It may be executed in any number of counterparts each of which shall be
deemed an original, but such counterparts together constitute only one in the
sworn instrument.



                                      -10-


                                 CONTROLLING LAW

Section 9.04. The validity, interpretation and performance of this Agreement
shall be controlled by and construed under the laws of the State of Nevada.




                                      -11-


Executed on April 30, 1999 at SAUSALITO, CA


/s/
------------------------------------------------------
MS. JARIYA SAE-FA, MR. KIATTICHAI TANTIKITMANEE

/s/
------------------------------------------------------
JANE KELLY, SECRETARY TOPAZ GROUP, INC.

/s/
------------------------------------------------------
JARIYA SAE-FA, DIRECTOR BEST WORTH (BVI)



                                      -12-

EX-2

                              AGREEMENT OF EXCHANGE
                  of convertible preferred the voting stock of
                             CHANCELLOR CORPORATION
                   in exchange for one hundred percent (100%)
                of the issued and outstanding preferred shares of
                        CREATIVE GEMS & JEWELRY CO., LTD.

     Chancellor Corporation ("Chancellor") is a development stage company
presently listed for trading on the NASDAQ Bulletin Board; Creative Gems &
Jewelry Co., Ltd. ("Creative") is an operating company with its principal place
of business located in Bangkok, Thailand; and Best Worth Agents Ltd. (B.V.I.)
("Best Worth") is the owner of one hundred percent (100%) of the issued and
outstanding preferred stock of Creative which constitutes all of the voting and
dividend rights of the Creative. Chancellor, Creative and Best Worth (sometimes
collectively referred to herein as the "Parties"), believe it is in their mutual
best interests for Best Worth to exchange the preferred stock of Creative it
owns for stock representing a majority of Chancellor shareholders' voting and
dividend rights on the terms and conditions set forth in this Agreement of
Exchange.

     Now therefore, the Parties agree as follows:

                                   ARTICLE I
                              AGREEMENT OF EXCHANGE

Section 1.01. Chancellor, Creative, and Best Worth agree to the exchange of
stock as follows:

     (a) Best Worth will transfer to Chancellor 98,000,000 Baht shares of the
preferred stock of Creative, which constitutes all of the issued and outstanding
shares of preferred stock of Creative.

     (b) In exchange for the transfer shares by Best Worth in "a", Chancellor
will issue and cause appropriate share certificates to be delivered to Best
Worth as follows:

          (i) at the closing of this Agreement, 11,375,000 shares of the voting
convertible preferred stock of Chancellor representing eighty-one and 25/100
percent (81.25%) of the voting and dividend rights of Chancellor, and

          (ii) immediately upon receipt of the auditor's report of earnings by
Creative for 1999, an additional number of shares of the voting convertible
preferred stock of Chancellor equal to the percentage increase in Creative's
1999 earnings over 1998 earnings times eight million (8,000,000). (For example,
and the 1999 earnings of Creative the amount to an increase of fifty percent
(50%) over its 1998 earnings, there would be an additional issuance of four
million (4,000,000) shares.






                                   ARTICLE II
                         COVENANTS, REPRESENTATIONS AND
                            WARRANTIES OF CHANCELLOR

                                  LEGAL STATUS

Section 2.01. Chancellor is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada, with corporate power to
own property and to carry on its business as it is now being conducted.

                                  SUBSIDIARIES

Section 2.02. Chancellor has one subsidiary, U.S. Heritage Corporation and no
interest in any other corporation, firm, or partnership.

                                 CAPITALIZATION

Section 2.03. Chancellor has an authorized capitalization of 100,000,000 shares
of common stock $.001 par value, of which 2,625,000 shares are issued and
outstanding, fully paid, and nonassessable, and 26,000,000 shares of preferred
stock, $.001 par value, none of which are presently issued and outstanding.
There are no outstanding options, contracts, calls, commitments, or demands
relating to the authorized but unissued stock of Chancellor.

                              FINANCIAL STATEMENTS

Section 2.04. (a) Chancellor has delivered to Best Worth the balance sheet of
Chancellor as of December 31, 1997, the related statements of income and
retained earnings for that year then ended, prepared internally and subject to
normal changes resulting from year-end audit.

     (b) Other than changes in the usual and ordinary conduct of business since
December 31, 1997, there have been, and at the closing date there will be, no
changes in such financial statements.

                               TITLE TO PROPERTIES

Section 2.05. All book assets of Chancellor are in existence, are in its
possession, and are in good condition and repair. Chancellor has good and
marketable title to all of its assets and, except for any liens or encumbrances
which are shown on its financial statements as of December 31, 1997, or which
have arisen in the ordinary course of business since the date of such financial
statements and which do not interfere with the conduct of its business in the
ordinary course, holds such assets subject to no mortgage, lien, or encumbrance.

                                  INDEBTEDNESS

Section 2.06. Except as set forth in the balance sheet of Chancellor as of
December 31, 1997, there is no outstanding indebtedness other than liabilities
incurred in the ordinary course of business or in connection with this
transaction. Chancellor is not in default in respect of any terms or conditions
of indebtedness.



                                      -2-


              NO LITIGATION OR PROCEEDING PENDING OR THREATENED

Section 2.07. Chancellor is not a party to, nor has it been threatened with, any
litigation or governmental proceeding which, if decided adversely to it, would
have a material adverse effect upon the transaction contemplated hereby, or upon
the financial condition, net worth, prospects, or business of Chancellor.

                      NO RESTRICTION PREVENTING TRANSACTION

Section 2.08. Chancellor is not subject to any charter, bylaw, mortgage, lien,
lease, agreement, judgment, or other restriction of any kind which would prevent
consummation of the transaction contemplated by this agreement.

                              STATUS OF RECEIVABLES

Section 2.09. None of the accounts receivable or contracts receivable indicated
in the financial statements which Chancellor has delivered to Best Worth is
subject to any counterclaim or setoff, and all such accounts receivable and
contracts receivable are good and collectible at the aggregate recorded amount
thereof.

                                      TAXES

Section 2.10. Chancellor had filed all federal and state income tax or franchise
tax returns which are required to be filed, has paid all taxes shown on said
returns as have become due, and has paid all assessments received to the extent
that such assessments have become due.

                       STATUS OF SHARES BEING TRANSFERRED

Section 2.11. The shares of stock of Chancellor which are to be issued and
delivered to Best Worth pursuant to the terms of this agreement, when so issued
and delivered will be validly authorized and issued, and will be fully paid and
nonassessable; no shareholder of Chancellor will have any preemptive right of
subscription or purchase in respect thereof.

                         AUTHORITY TO EXECUTE AGREEMENT

Section 2.12. Chancellor has the legal power and right to enter this agreement
subject to the approval of the principal terms of this agreement by the
outstanding shares, as those terms are defined in the General Corporation Law of
Nevada. Chancellor has obtained approval of the transaction set forth in this
agreement by its outstanding shares as required by the Nevada Revised Statutes
and as indicated in the "Written Consent of Shareholders" attached hereto as
Exhibit "A".

                                   DISCLOSURE

Section 2.13. At the date of this agreement Chancellor has, and at the closing
date it will have, disclosed all events, conditions, and facts materially
affecting the business and prospects of Chancellor. Chancellor has not now and
will not have, at the closing date, withheld knowledge of any such events,
conditions, and facts which it knows, or has a reasonable ground to know, may
materially affect the business and prospects of Chancellor. None of the
representations and warranties of Chancellor herein, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary in order to make the statements contained herein not
misleading.



                                      -3-


                                   ARTICLE III
                           COVENANTS. REPRESENTATIONS
                      AND WARRANTIES OF BEST WORTH AS SOLE
                        PREFERRED SHAREHOLDER OF CREATIVE

                                  LEGAL STATUS

Section 3.01. Creative is a corporation duly organized, validly existing, and in
good standing under the laws of Thailand with corporate power to own property
and carry on its business as it is now being conducted.

                                  SUBSIDIARIES

Section 3.02.     Creative has no subsidiaries nor any interest in any other
corporation, firm, or partnership.

                                 CAPITALIZATION

Section 3.03. Creative has an authorized capitalization of 102,000,000 Baht
shares of common stock, all of which are issued and outstanding, fully paid, and
nonassessable and represent fifty-one percent (51%) of the total capitalization
of Creative. Creative is authorized to issue 98,000,000 Baht shares of preferred
stock, all of which are issued and outstanding, fully paid, and nonassessable
and represent forty-nine percent (49%) of the total capitalization of Creative.
There are no outstanding options, contracts, calls, commitments, or demands
relating to the authorized but unissued stock of creative.

                              FINANCIAL STATEMENTS

Section 3.04. (a) Creative has delivered to Chancellor the balance sheet of
Creative as of September 30, 1998, the related statements of income and retained
earnings for the nine (9) months then ended, prepared internally and subject to
normal changes resulting from year-end audit.

     (b) Other than changes in the usual and ordinary conduct of the business
since September 30, 1998, there have been, and at the closing there will be, no
changes in such financial statements.

                               TITLE TO PROPERTIES

Section 3.05. All book assets of Creative are in existence, and in its
possession, and are in good condition and repair and Creative has good and
marketable title to all of its assets and, except for any liens or encumbrances
which are shown on its financial statements as of September 30, 1998, or which
have arisen in the ordinary course of business since the date of such financial
statements and which do not interfere with the conduct of its business in the
ordinary course, hold such assets subject to no mortgage, lien, or encumbrance.



                                      -4-


                                  INDEBTEDNESS

Section 3.06. Except as set forth in the balance sheet of Creative as of
September 30, 1998, there is no outstanding indebtedness other than liabilities
incurred in the ordinary course of business or in connection with this
transaction. Creative is not in default in respect of any terms or conditions of
indebtedness.

                NO LITIGATION OR PROCEEDING PENDING OR THREATENED

Section 3.07. Creative is not a party to, nor has it been threatened with, any
litigation or governmental proceeding which, if decided adversely to it, would
have a material adverse effect upon the transaction completed hereby, or upon
the financial condition, net worth, prospects, or business of Creative.

                      NO RESTRICTION PREVENTING TRANSACTION

Section 3.08. Creative is not subject to any charter, bylaw, mortgage, lien,
lease, agreement, judgment, or other restriction of any kind which would prevent
consummation of the transaction contemplated by this agreement.

                              STATUS OF RECEIVABLES

Section 3.09. None of the accounts receivable or contracts receivable indicated
in the financial statements which Creative has delivered to Chancellor is
subject to any counterclaim or setoff, and all such accounts receivable and
contracts receivable are good and collectible at the aggregate recorded amount
thereof.

                                      TAXES

Section 3.10. Creative has filed all applicable income, sales, and/or value
added tax returns which are required to be filed, has paid all taxes shown on
said returns as have become due, and has paid all assessments received to the
extent that such assessments have become due.

                       STATUS OF SHARES BEING TRANSFERRED

Section 3.11. The shares of preferred stock of Creative which are to be conveyed
to Chancellor pursuant to the terms of this agreement, are validly authorized
and issued, and are fully paid and nonassessable; no shareholder of Creative
will have any preemptive right of subscription or purchase in respect thereof.

                         AUTHORITY TO EXECUTE AGREEMENT

Section 3.12. Best Worth has the legal power and right to enter this agreement
and its consummation of this Agreement is not subject to the review or approval
of any governmental or regulatory agency.



                                      -5-


                      SHARES BEING ACQUIRED FOR INVESTMENT

Section 3.13. Best Worth is acquiring the shares of preferred stock of
Chancellor for investment and without any present intention to sell, distribute,
transfer, or otherwise dispose of the shares. Best Worth will execute and
deliver to Chancellor on the closing date an investment letter substantially in
the form attached hereto as Exhibit "B".

                       ACTIVITIES SINCE BALANCE SHEET DATE

Section 3.14. Since its balance sheet as of September 30, 1998, Creative has
not, and prior to the closing date will not have:

     (a) Issued or sold any stock, bond, or other corporate securities.

     (b) Except for current liabilities incurred and obligations under contracts
entered into in the ordinary course of business, incurred any obligation or
liability, absolute or contingent.

     (c) Except for current liabilities shown on the balance sheet and current
liabilities incurred since that date in the ordinary course of business,
discharged or satisfied any lien or encumbrance, or paid any obligation or
liability, absolute or contingent.

     (d) Mortgaged, pledged, or subjected to lien or any other encumbrance, any
of its assets, tangible or intangible.

     (e) Except in the ordinary course of business sold or transferred any of
its tangible assets or canceled any debts or claims.

     (f) Sold, assigned, or transferred any patents, formulas, trademarks, trade
names, copyrights, licenses, or other intangible assets.

     (g) Suffered any extraordinary losses, been subjected to any strikes or
other labor disturbances, or waived any rights of any substantial value.

     (h) Except for transactions contemplated by this agreement, entered into
any transaction other than in the ordinary course of business.

                                   DISCLOSURE

Section 3.15. At the date of this agreement Creative has, and at the closing
date it will have, disclosed all events, conditions, and facts materially
affecting the business and prospects of Creative and it has not now and will not
have, at the closing date, withheld knowledge of any such events, conditions,
and facts which it knows, or has reasonable ground to know, may materially
affect the business and prospects of Creative. None of the representations and
warranties made by Creative herein, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary in order to make the statements contained herein not misleading.



                                      -6-


                                   ARTICLE IV
                             CONDUCT OF BUSINESS OF
                           CHANCELLOR PENDING CLOSING

                       ACCESS TO INFORMATION AND DOCUMENTS

Section 4.01. (a) Chancellor will afford Best Worth, from the date hereof until
consummation of the Agreement, full access during normal business hours to all
properties, books, accounts, contracts, commitments, and records of every kind
of Chancellor in order that Best Worth may have full opportunity to make such
investigation as it shall desire to make of, and to keep itself informed with
respect to, the affairs of Chancellor.

     (b) In addition, Chancellor will permit Best Worth to make extracts or
copies of all such books, accounts, contracts, commitments, and records and will
furnish to Best Worth within 10 days after demand, such further financial in
operating data as other information with respect to the business and assets of
Topaz as Best Worth shall reasonably request from time to time.

     (c) Best Worth will use any information so secured only for its own
purposes in connection with the consummation of the transaction contemplated
hereby and will not divulge the information to any persons not entitled thereto.

                           CARRY ON BUSINESS AS USUAL

Section 4.02. Topaz look carry on its business in substantially the same manner
as hereto for.

                          SATISFY CONDITIONS PRECEDENT

Section 4.03. Topaz will use its best efforts to cause the satisfaction of all
conditions precedent contained in this Agreement.

                                   ARTICLE V
                             CONDUCT OF BUSINESS OF
                          ADVANCE GEMS PENDING CLOSING

                       ACCESS TO INFORMATION AND DOCUMENTS

Section 5.01. (a) Best Worth will cause Advance Gems to afford Topaz, from the
date hereof until consummation of the Agreement, full access during normal
business hours to all of the properties, books, accounts, contracts,
commitments, and records of every kind in order that Topaz may have full
opportunity to make such investigation as it shall desire to make of, and to
keep itself informed with respect to, the affairs of Advance Gem.

     (b) In addition, Best Worth will cause Advance Gems to permit Topaz to make
extracts or copies of all such books, accounts, contracts, commitments, and
records and will furnish to Topaz, within 10 days after demand, such further
financial and operating data and other information with respect to their
respective businesses and assets as Topaz shall reasonably request from time to
time.



                                      -7-


     (c) Topaz will use any information so secured only for its own purposes in
connection with the consummation of the transaction contemplated hereby and will
not divulge the information to any persons not entitled thereto.

                          SATISFY CONDITIONS PRECEDENT

Section 5.02. Best Worth will use its best efforts to cause the satisfaction of
all conditions precedent contained in this Agreement.

                                   ARTICLE VI
                       CONDITIONS PRECEDENT TO OBLIGATION
                                OF TOPAZ TO CLOSE

Section 6.01. The obligations of Topaz to consummate the Agreement shall be
subject to the following conditions precedent:

                   TRUTH OF REPRESENTATIONS AND WARRANTIES AND
                            COMPLIANCE WITH COVENANTS

     (a) Representations and warranties of Best Worth contained herein shall be
true as of the closing date with the same effect as though made on the closing
date. Best Worth shall have performed all obligations and complied with all
covenants required by this agreement to be performed or complied with by him
prior to the closing date.

                       COMMITMENT AS TO INVESTMENT PURPOSE

     (b) Best Worth shall have delivered to Chancellor, prior to the closing
date, a written commitment in form satisfactory to Chancellor, that it is taking
the shares of common stock of Chancellor for purposes of investment and will not
dispose of the shares received by it hereunder in a manner which would result in
a violation of the Securities Act of 1933.

                     ACCEPTABILITY OF PAPERS AND PROCEEDINGS

     (c) To the extent reasonably requested by Chancellor, the form and
substance of all papers and proceedings hereunder shall be reasonably acceptable
to counsel for Chancellor.

                            APPROVAL OF SHAREHOLDERS

     (d) The principal terms of this agreement shall have been approved by the
outstanding shares of the stock of Chancellor as required by the Nevada Revised
Statutes.

                              FINANCIAL STATEMENTS

     (e) Best Worth shall cause to be delivered to Chancellor, unaudited
financial statements of Creative for the fiscal year ended December 31, 1998.



                                      -8-


                                  ARTICLE VII
                             CONDITIONS PRECEDENT TO
                       OBLIGATIONS OF BEST WORTH TO CLOSE

Section 7.01. The obligation of Best Worth to consummate the Agreement shall be
subject to the following conditions precedent:

                   TRUTH OF REPRESENTATIONS AND WARRANTIES
                          AND COMPLIANCE WITH COVENANTS

     (a) Representations and warranties of Chancellor contained herein shall be
true as of the closing date with the same effect as though made on the closing
date. Chancellor shall have performed all obligations and complied with all
covenants required by this agreement to be performed or complied with by it
prior to the closing date.

                       OPINION FROM COUNSEL FOR CHANCELLOR

     (b) On the closing date, there shall be furnished to Best Worth an opinion
from Counsel to Chancellor dated the closing date and in form satisfactory to
Best Worth and/or its counsel, to the effect that Chancellor is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Nevada and that the shares of preferred stock of Chancellor delivered
to Best Worth on the closing date have been duly authorized, issued, and
delivered and are validly issued and outstanding, fully paid in nonassessable
shares of preferred stock of Chancellor.

                                  ARTICLE VIII
                           CONSUMMATION OF TRANSACTION

                           CONSIDERATION OF BEST WORTH

Section 8.01. Best Worth shall deliver to Chancellor on the closing date,
certificates representing all of the issued and outstanding shares of preferred
stock of Creative.

                           CONSIDERATION OF CHANCELLOR

Section 8.02.     (a) Chancellor shall deliver to Best Worth on the closing
date, certificates representing 11,375,000 shares of common stock of
Chancellor.

     (b) Upon delivery to Chancellor of the auditor's report of the 1999
earnings of Creative, Chancellor shall deliver to Best Worth, certificates
representing the number of preferred shares of Chancellor determined as provided
in Section 1.01(b)(ii).

                                    EXPENSES

Section 8.03.     Creative shall pay the expenses and costs incident to the
consummation of this agreement.



                                      -9-


                                   ARTICLE IX
                         INTERPRETATION AND ENFORCEMENT

                                     NOTICES

Section 9.01. Any notice or other communication required or permitted hereunder
shall be deemed to be properly given when deposited in the United States mails
for transmittal by certified or registered mail, postage prepaid, or deposited
with a public telegraph company for transmittal, charges prepaid, if such
communication is addressed:

     (a) In the case of Chancellor, to: 3030 BRIDGEWAY, SUITE 100, SAUSALITO, CA
94965 or to such other person or address as Chancellor may from time to time
furnish to Best Worth for that purpose.

     (b) In the case of Best Worth to: 126/1 KRUNGTHONBURI ROAD, KLONGSARN,
BANGKOK THAILAND or to such other person or address as Best Worth may from time
to time furnish to Chancellor for that purpose.

     (c) In the case of Creative to: 126/1 KRUNGTHONBURI ROAD, KLONGSARN,
BANGKOK THAILAND or to such other person or address as Creative may from time to
time furnish to Chancellor for that purpose.

                                   ASSIGNMENT

Section 9.02. (a) Except as limited by the provisions of subsection (b), this
agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties, as well as the parties.

     (b) Any assignment of this agreement or the rights hereunder of any party,
without the written consent of the other parties, shall be void.

                         ENTIRE AGREEMENT; COUNTERPARTS

Section 9.03. This instrument and the exhibits hereto contain the entire
agreement between the parties with respect to the transaction contemplated
hereby. It may be executed in any number of counterparts, each of which shall be
deemed an original, but such counterparts together constitute only one in the
same instrument.



                                      -10-


                                 CONTROLLING LAW

Section 9.04. The validity, interpretation and performance of this Agreement
shall be controlled by and construed under the laws of the State of Nevada.

Executed on April 30, 1999 at SAUSALITO, CA


/s/
------------------------------------------
Ms. Jariya Sae-Fa, Mr. Kiattichai Tantikitmanee
(for Creative Gems & Jewelry Co. Ltd.)


/s/
------------------------------------------
Jane Kelly, Secretary Topaz Group, Inc.


/s/
------------------------------------------
Jariya Sae-Fa, Director Best Worth (BVI)

EX-3

                            ARTICLES OF INCORPORATION
                                       OF
                               TECHNIVISION, INC.

KNOW ALL MEN BY THESE PRESENTS:

     That we the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a corporation under the laws of the State of
Nevada and we do hereby certify:

                                       I.

     The name of this corporation is TECHNIVISION, INC.

                                      II.

     The resident agent of said corporation shall be Pacific Corporate Services,
Inc., 7631 Bermuda Road, Las Vegas, NV 89123 and such other offices as may be
determined by the By-Laws in and outside of the State of Nevada.

                                      III.

     The objects to be transacted, business and pursuit and nature of the
business, promoted or carried on by this corporation are and shall continue to
be engaged in any lawful activity except banking or insurance.

                                      IV.

     The members of the governing board shall be styled Directors and the first
Board of Directors shall consist of one (1). The number of stockholders of said
corporation shall consist of one (1). The number of directors and shareholders
of this corporation may, from time to time, be increased or decreased by an
amendment to the By-Laws of this Corporation in that regard, and without the
necessity of amending these Articles of Incorporation. The name and address of
the first Board of Directors and of the incorporator signing these Articles is
as follows:

         Martin Newman       3030 Bridgeway, #117
                             Sausalito, CA 94965

                                       V.

     The Corporation is to have perpetual existence.

                                      VI.

     The total authorized capitalization of this Corporation shall be and is the
sum of 25,000,000 shares common stock at $.001 par value, said shares to carry
full voting power and the said shares shall be issued fully paid at such time as
the Board of Directors may designate in






exchange for cash, property, or services, the stock of other corporations or
other values, rights or things, and the judgment of the Board of Directors as to
the value thereof shall be conclusive.

                                      VII.

     The capital stock shall be and remain non-assessable. The private property
of the stockholders shall not be liable for the debts or liabilities of the
Corporation.

IN WITNESS WHEREOF, we have set our hands this 31st day of May, 1996.


                                             /s/
                                             -----------------------------------
                                             Martin Newman


STATE OF CALIFORNIA)
                   ) SS
COUNTY OF MARIN    )

     On this 31st day of May 1996, before me a notary public in and for said
County and State, personally appeared Martin Newman, known to me to be the
person whose name is subscribed to the foregoing instrument, and he duly
acknowledged to me that he executed the same for the purpose therein mentioned.

     IN WITNESS WHEREOF, I have set my hand and offered by official seal in said
County and State the day and year in this Certificate first above written.


                                             /s/ Susan Dupuis
                                             -----------------------------------
                                             Notary Public


                                      -2-



FILED:  STATE OF NEVADA
        JUNE 19, 1996


                           ARTICLES AND PLAN OF MERGER
                                       OF
                   Prime Collateral, Inc., a Utah corporation
          pursuant to the General Corporation Laws of the state of Utah
                                      INTO
     TECHNIVISION, INC., A Nevada corporation, as the Surviving Corporation
             pursuant to Section 450 et seq. Nevada Revised Statutes

     PLAN OF MERGER,  dated this 3rd day of June,  1996,  by and  between  Prime
Collateral,  Inc.,  a Utah  corporation  ("Prime"),  and  all  of the  Directors
thereof, and TECHNIVISION, Inc., a Nevada corporation, ("TECHNIVISION"), and all
of the Directors  thereof,  the two  corporations  being  hereinafter  sometimes
called the Constituent Corporations.

     WHEREAS,  the Board of  Directors of each of the  Constituent  Corporations
deem it advisable  for the welfare of the  Constituent  Corporations  that these
corporations  merge under the terms and conditions  hereinafter set forth,  such
merger to be  effected  pursuant  to the  statutes  of the State of Utah and the
statutes of the State of Nevada,  and they have duly approved and authorized the
terms of the Plan of Merger.

     WHEREAS,  Prime is a corporation duly organized under the laws of the State
of Utah, having been incorporated on July 21, 1981 with authorized capital stock
consisting of One Hundred Million  (100,000,000) shares, all of which are of one
class with a par value of $0.001 per share,  of which 782,016  shares are issued
and outstanding; and,

     WHEREAS, TECHNIVISION is a corporation duly organized under the laws of the
State of Nevada,  having  been  incorporated  on June 3, 1996,  with  authorized
capital  consisting  of  25,000,000  shares of $.001 par value of which  500,000
shares are issued and outstanding; and,

     WHEREAS, the laws of the State of Utah and Nevada permit such a merger, and
the  Constituent  Corporations  desire  to  merge  under  and  pursuant  to  the
provisions of the laws of their respective states;

     WHEREAS,  the Plan of Merger is  contained  within the  Articles of Merger;
and,

     WHEREAS, there are no amendments to the Surviving Corporation's Articles of
Incorporation, therefore, no Stockholder approval is required.

     WHEREAS, the addresses of the respective corporations are as follows:

              Prime Collateral, Inc.       Technivision, Inc.
              3030 Bridgeway, #117         29425 C.R., #561
              Sausalito, CA 94965          Tavares, FLA 32778





     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
agreements and covenants herein  contained,  it is agreed that Prime of Utah and
TECHNIVISION  of Nevada  shall be  merged,  and that  TECHNIVISION  shall be the
Surviving Corporation,  and the terms and conditions of such merger and the mode
of carrying it into effect are and shall be as follows:

     1. NAME OF SURVIVING  CORPORATION:  The name of the  corporation,  which is
sometimes hereinafter referred to as the Surviving Corporation, shall, and, from
and after the effective date of the merger,  be TECHNIVISION,  INC. The separate
existence of Prime, a Utah corporation,  shall case at the effective time of the
merger,  except  insofar as it may be  continued by law or in order to carry out
the  purposes  of this  Agreement  of  Merger,  and except as  continued  in the
Surviving Corporation.

     2.  ARTICLES OF  INCORPORATION  OF SURVIVING  CORPORATION:  The Articles of
Incorporation   of  the   Surviving   Corporation   shall  be  the  Articles  of
Incorporation of TECHNIVISION,  Inc., a Nevada  corporation,  a copy of which is
annexed as Exhibit 1, hereto.

     3. BYLAWS OF THE SURVIVING CORPORATION: The Bylaws of TECHNIVISION, Inc., a
Nevada corporation,  at the effective time of the merger, shall be the Bylaws of
the Surviving Corporation, until altered or replaced as provided herein.

     4. BOARD OF DIRECTORS AND  OFFICERS:  The members of the Board of Directors
and the officers of the Surviving  Corporation  immediately  after the effective
time of the merger  shall be those  persons who were the members of the Board of
Directors and the officers,  respectively,  for the terms  provided by law or in
the Bylaws, or until their respective successors are elected and qualified.

     5. AUTHORITY TO CONDUCT  BUSINESS:  TECHNIVISION of Nevada  represents that
the corporation has not filed an application for authority to do business in the
State of Utah. The Surviving  Corporation  will conduct no such business in Utah
without first filing and having such application approved.

     6.  CONVERSION  OF  SHARES:  The  manner of  converting  the  shares of the
Constituent  Corporation into the shares of the Surviving  Corporation  shall be
set forth in this paragraph, as follows:  Immediately upon the effective date of
the merger, each share of stock of Prime of Utah outstanding in the hands of the
existing shareholders, being all of the shares of Prime outstanding, without any
action on the part of the holders  thereof,  shall  automatically  become and be
converted into common stock of the Surviving  Corporation at the rate of one (1)
shares of the Surviving  Corporation  for each one (1) share of the common stock
of Prime of Utah and each  outstanding  certificate  representing  shares of the
common  stock of Prime of Utah  shall  thereupon  be deemed,  for all  corporate
purposes  (other than the payment of dividends) to evidence the ownership of the
number of fully paid,  non-assessable  shares of common  stock of the  Surviving
Corporation  into which such shares of common  stock of Prime of Utah shall have
been converted.

     7. RIGHTS OF  SHAREHOLDERS:  After the effective  time of the merger,  each
holder of a certificate which theretofore  represented shares of common stock of
Prime of Utah shall case to have any rights as a  shareholder  of Prime,  except
such as are  expressly  reserved  to such  stockholder  by  statute.  After  the
effective time of the merger,  any holder of a certificate or certificates which
theretofore  represented  shares of the common stock of Prime may, but shall not
be  required  to,  surrender  the same to the  Transfer  Agent of the  Surviving
Corporation,  Pacific Stock Transfer,  Las Vegas, Nevada, and shall thereupon be
entitled  to  receive in  exchange  therefore,  a  certificate  or  certificates
representing  the number of shares of common stock of the Surviving  Corporation
into which the shares of common



                                      -2-


stock of Prime  theretofore  represented by each  certificate  or  certificates,
shall have been converted.

     8. EFFECTIVE DATE OF MERGER:

          (a) For all purposes of the laws of the State of Utah,  this Agreement
of Merger and the merger  herein  provided  for shall become  effective  and the
separate  existence of Prime,  except insofar as it may be continued by statute,
shall case as soon as this Agreement shall have been adopted,  approved,  signed
and  acknowledged  in  accordance  with  the  laws of the  State  of  Utah,  and
certificates of its adoption and approval shall have been executed in accordance
with such laws;  and this  Certificate  and this  Certificate  and  Agreement of
Merger  shall have been filed in the  office of the  Department  of State of the
State of Utah.

          (b)  For all  purposes  of the  laws  of the  State  of  Nevada,  this
Agreement of Merger and the merger  herein  provided for shall become  effective
and the separate  existence of Prime,  except  insofar as it may be continued by
statute,  shall  cease  as soon as  this  Agreement  shall  have  been  adopted,
approved,  signed and  acknowledged  in accordance with the laws of the State of
Nevada and certificates of its adoption and approval shall have been executed in
accordance with such laws; and this  Certificate of Merger shall have been filed
with the Secretary of State of the State of Nevada.

          (c) The corporate  identity,  existence,  purposes,  powers,  objects,
franchises,  rights and immunities of TECHNIVISION shall continue unaffected and
unimpaired  by the merger hereby  provided  for, and the  corporate  identities,
existences,  purposes,  powers,  objects,  franchises,  rights and immunities of
Prime shall be continued in and merged into TECHNIVISION and TECHNIVISION  shall
be fully vested therewith.

          (d) The date  upon  which  this  Agreement  is  filed  in the  offices
mentioned  above and upon which the  Constituent  Corporation  shall so become a
single corporation is the effective date of the merger.

     9. AUTHORIZATION. The parties hereto acknowledge and respectively represent
that  this  Merger  Agreement  is  authorized  by the  laws  of  the  respective
jurisdictions  of the Constituent  Corporations and that the matter was approved
at a special  shareholders meeting of the respective  corporation,  at which the
shareholders voted, as follows:

                            Shares
     Name of Corporation    Outstanding      Voted for     Voted Against
     -------------------    -----------      ---------     -------------

     Prime Collateral, Inc. 782,016          608,000       None

     TECHNIVISION, Inc.     500,000          500,000       None

     10.  FURTHER  ASSURANCE OF TITLE:  As and when  requested by the  Surviving
Corporation,  or by its successors or assigns, Prime will execute and deliver or
cause to be executed and delivered all such deeds and  instruments and will take
or cause to be taken all such further  action as the Surviving  Corporation  may
deem  necessary or  desirable  in order to vest in



                                      -3-


and  confirm  to the  Surviving  Corporation,  title  to and  possession  of any
property  of any of  the  Constituent  Corporations  acquired  by the  Surviving
Corporation  by reason,  or as a result,  of the merger herein  provided for and
otherwise  to carry out the intent and  purposes  hereof,  and the  officers and
directors of Prime and the officers and directors of the  Surviving  Corporation
are fully authorized in the name of the respective  Constituent  Corporations or
otherwise, to take any and all such action.

     11. SERVICE OF PROCESS OF SURVIVING CORPORATION:  The Surviving Corporation
agrees that it may be served with process in the State of Utah in any proceeding
for  enforcement of any obligation of Prime,  as well as for the  enforcement of
any obligation of the Surviving  Corporation arising from the merger,  including
any suit or  other  proceeding  to  enforce  the  right  of any  shareholder  as
determined in appraisal  proceedings  pursuant to the  provisions of the General
Corporation  Law of the  State of Utah,  and  hereby  irrevocably  appoints  the
Secretary  of State of the  State of Utah,  as its agent to  accept  service  or
process in any suit or other proceedings. Copies of such process shall be mailed
to TECHNIVISION, at:

                        c/o   TECHNIVISION, Inc.
                              3030 Bridgeway, Suite 117
                               Sausalito, CA 94965

     12.  SHAREHOLDERS RIGHT TO PAYMENT:  The Surviving  Corporation agrees that
subject to the  provisions of the  Corporate  laws of the State of Utah, it will
pay  to  the  shareholders  of  Prime,  the  amounts,  if  any,  to  which  such
shareholders  may be entitled  under the provisions of the above statutes or the
laws of Utah, as the case may be.

     13.  ABANDONMENT:  This  Plan of  Merger  may be  abandoned  (a) by  either
Constituent Corporation,  acting by its Board of Directors, at any time prior to
its adoption by the  shareholders  of both of the Constituent  Corporations,  as
provided by law, or (b) by the mutual consent of the  Constituent  Corporations,
acting each by its Board of  Directors,  at any time after such adoption by such
shareholders and prior to the effective time of the merger.  In the event of the
abandonment  of this Agreement of Merger  pursuant to (a) above,  notice thereof
shall be given by the Board of  Directors  of the  Constituent  Corporation  and
thereupon,  or abandonment pursuant to (b) above, this Agreement of Merger shall
become  wholly void and of no effect and there shall be no further  liability or
obligation  hereunder on the part of either the  Constituent  Corporations or of
its Board of Directors or shareholders.



                                      -4-



     IN WITNESS  WHEREOF,  each of the  Constituent  Corporations,  pursuant  to
authority granted by its Board of Directors, has caused this Agreement of Merger
to be executed by a majority of its Board of Directors  and by its President and
its Secretary.

     The respective  Directors and Officers of the  Constituent  Corporations do
hereby  certify that the above merger  Agreement was adopted as set forth in the
above Agreement and that said resolutions have not been revoked or rescinded.

                                    Prime Collateral, Inc.


                                    /s/   Martin Newman
                                    ---------------------------------
                                          Its President



                                    /s/   Jane Kelly
                                    ---------------------------------
                                          Its Secretary



                            ACKNOWLEDGEMENT BY NOTARY

STATE OF CALIFORNIA     )
                        )  SS.
COUNTY OF MARIN         )

      On June 3, 1996, personally appeared before me, Martin Newman, President,
and Jane Kelly, Secretary, of Prime Collateral, Inc. who acknowledge to me that
they were the signers of the foregoing Certificate and Agreement of Merger.


                                    /s/   Susan Dupuis
                                    ---------------------------------
                                          Notary Public




                                      -5-



                                    TECHNIVISION, INC.


                                    /s/   Martin Newman
                                    ---------------------------------
                                          Its President



                                    /s/   Jane Kelly
                                    ---------------------------------
                                          Its Secretary





                            ACKNOWLEDGEMENT BY NOTARY

STATE OF CALIFORNIA     )
                        )  SS.
COUNTY OF MARIN         )

     On June 3, 1996,  personally appeared before me, Martin Newman,  President,
and Jane Kelly,  Secretary,  of  TECHNIVISION,  Inc. who acknowledged to me that
they were the signers of the foregoing Certificate and Agreement of Merger.


                                    /s/   Susan Dupuis
                                    ---------------------------------
                                          Notary Public


                                      -6-



CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT


State of California     )
County of Marin         )

On  _______________________________,  before me, SUSAN DUPUIS,  Notary Public,
personally appeared
                   -------------------------------------------------------------
personally  known  to me OR _____  proven  to me on the  basis  of  satisfactory
evidence to be the  person(s)  whose  name(s)  is/are  subscribed  to the within
instrument,  and  acknowledged  to me  that  he/she/they  executed  the  same in
his/her/their authorized capacity(ies),  and that by his/her/their  signature(s)
on the  instrument  the  person(s),  or the  entity  upon  behalf  of which  the
person(s) acted, executed the instrument.

WITNESS my hand and official seal


                                               /s/
                                               --------------------------------
                                               SUSAN DUPOIS, NOTARY PUBLIC


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

                                OPTIONAL SECTION


Though  statute does not require the Notary to fill in the data below,  doing so
may prove invaluable to persons relying on the document.


          INDIVIDUAL                                      ATTORNEY-IN-FACT
---------                                       ---------
   X
---------                                       ---------
          CORPORATE OFFICER(S)                  --------- TRUSTEE(S)
          /S/ authorized signatory              --------- GUARDIAN/CONSERVATOR
          ------------------------------
          TITLE(S)                              OTHER:
                                                       ---------------------
                                                       ---------------------
---------              ---------
          PARTNER(S)             LIMITED
                       ---------
                                 GENERAL

SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)

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

THIS CERTIFICATE MUST BE           TITLE OF TYPE OF DOCUMENT  Articles & Plan of
                                                              ------------------
ATTACHED TO THE DOCUMENT                                      Merger
                                                              ------
DESCRIBED AT RIGHT
                                   NUMBER OF PAGES  4
                                                       -
                                   DATE OF DOCUMENT
--------------------------                          --------------------------

Though the data requested here is  SIGNER(S) OTHER THAN NAMED ABOVE
not required by law, it could                                       ------------
prevent fraudulent reattachment
of this form.
                                   ---------------------------------------------


Filed:   State of Nevada
         November 8, 1996


                                    AMENDMENT
                                       TO
                            ARTICLES OF INCORPORATION
                                       OF
                               TECHNIVISION, INC.

     I, Gary Luttrell, Assistant Secretary hereby state:

     FIRST: Pursuant to the provisions of Sec. 78.385 and 78.390 of the Nevada
Business Corporation Act, the undersigned hereby adopt the following amendment
to its Articles as follows:

                   ARTICLE I: The name of the corporation is:

                               TECHNIVISION, INC.

                 NEW ARTICLE I: The name of the corporation is:

                             CHANCELLOR CORPORATION

     SECOND: The foregoing amendment to the Articles of Incorporation of the
corporation were authorized and approved by a majority of the Shareholders on
Oct. 15, 1996 holding over 80% of the Common Share Votes pursuant to Section
78.230 of the Nevada Business Corporation Act, a majority of the shareholders
have consented to said amendment.

     THIRD: The number of Directors of the Corporation is three (3):

         President:  Marilyn Bess, Director
         Secretary/Treasurer: Cesar Yumall, Director
         Assistant Secretary: Gary Luttrell, Director

                                       /s/
----------------------------------     ----------------------------------
                                       Marilyn Bess, President


                                       /s/
                                       ----------------------------------
                                       Gary Luttrell, Assist. Secretary


STATE OF CALIFORNIA  )
                     )ss.
COUNTY OF MARIN      )

     On this 28th day of October, 1996, before me, a notary public in and for
said County and State, personally appeared Marilyn Bess and Gary Luttrell, known
to me to be the person whose name is subscribed to the foregoing instrument, and
he duly acknowledged to me that he executed the same for the purpose therein
mentioned.

     IN WITNESS WHEREOF, I have set my hand and offered by official seal in said
County and State the day and year in this Certificate first above written.

                                       /s/ Susan Dupuis
                                       ----------------------------------
                                       NOTARY'S SIGNATURE



Filed:  State of Nevada
        November 4, 1997


                       RESTATED ARTICLES OF INCORPORATION

                                       OF

                             CHANCELLOR CORPORATION

     We, Martin Newman, President and Jane Kelly, Secretary, hereby declare:

     FIRST: Pursuant to the provisions of Section 78.403 of the Nevada Business
Corporation Act, the undersigned corporation adopts the following restated
Articles of Incorporation:

     ARTICLE I: The name of the corporation is:

                  Chancellor Corporation

     ARTICLE II: The principal place of business of the corporation within the
State of Nevada shall be:

                  Pacific Corporate Services, Inc.
                  7631 Bermuda Road
                  Las Vegas, Nevada 89123

     ARTICLE III: The objects to be transacted, business and pursuit and nature
of the business promoted or carried on by this corporation are and shall
continue to be engaged in any lawful activity except banking or insurance.

     ARTICLE IV: Article IV, which currently authorizes one director and one
shareholder only is amended to provide for additional directors.

     ORIGINAL ARTICLE IV FILED ON JUNE 3, 1996: The members of the governing
board shall be styled Director and the first Board of Directors shall consist of
one (1). The number of stockholders of said corporation shall consist of one
(1). The number of directors and shareholders of this corporation may, from time
to time, be increased or decreased by an amendment to the By-laws of this
Corporation in that regard, and without the necessity of amending these Articles
of Incorporation. The name and address of the first Board of Directors and of
the incorporator signing these Articles is as follows:

         Martin Newman           3030 Bridgeway, #117
                                 Sausalito CA 94965

     AMENDED ARTICLE IV FILED ON NOVEMBER 8, 1996: The number of Directors of
the Corporation is three (3)





         President:              Marilyn Bess, Director
         Secretary/Treasurer:    Cesar Yumall, Director
         Assistant Secretary:    Gary Luttrell, Director

     AMENDED ARTICLE IV: The governing body of the corporation shall be known as
directors, and the number, names and post office addresses of the Board of
Directors, which shall consist of three (3) are:

         Martin Newman         3030 Bridgeway, #100
                               Sausalito, CA 94965

         Ronald Sparks         3030 Bridgeway, #100
                               Sausalito, CA 94965

         Jane Kelly            3030 Bridgeway, #100
                               Sausalito, CA 94965

     ARTICLE V: The Corporation is to have perpetual existence.

     ARTICLE VI: Article VI, which currently provides for authorized common
stock only is amended to provide authorization for common stock and preferred
stock.

     ORIGINAL ARTICLE VI: The total authorized capitalization of this
Corporation shall be and is the sum of 25,000,000 shares common stock at $.001
par value, said shares to carry full voting power and the said shares shall be
issued fully paid at such time as the Board of Directors may designate in
exchange for cash, property, services, the stock of other corporations or other
values, rights or things, and the judgment of the Board of Directors as to the
value thereof shall be conclusive.

     AMENDED ARTICLE VI: This corporation is authorized to issue two classes of
shares designated respectively "Common Stock" and "Preferred Stock", and
referred to herein as Common Stock or Common Shares and Preferred Stock or
Preferred Shares, respectively. The number of shares of Common Stock is ONE
HUNDRED MILLION (100,000,000) shares with a par value of one mil ($.001) per
share and the number of Preferred Stock is TEN MILLION (10,000,000) shares with
a par value of one mil ($.001) per share.

     ARTICLE VII: A new Article VII is inserted to read:

     NEW ARTICLE VII: The Preferred shares may be issued from time to time in
one or more series. The Board of Directors is authorized to fix the number of
shares of any series of Preferred Shares and to determine the designation of any
such series. The Board of Directors is also authorized to determine or alter the
rights, preferences, privileges, and restrictions granted to or imposed upon any
wholly unissued series of Preferred Shares, and, within the limits and
restrictions stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series, to increase or
decrease (but not below the number of shares of such series than outstanding)
the number of shares of any such series subsequent to the issue of shares of
that series.



                                      -2-


     ARTICLE VIII: Former Article VII is now Article VIII and reads, as follows:

     NEW ARTICLE VIII: The capital stock shall be and remain non-assessable. The
private property of the stockholders shall not be liable for the debts or
liabilities of the Corporation.

     ARTICLE IX: A new Article IX is inserted to read:

     ARTICLE IX: In accordance with Section 78.037 of the Nevada Business
Corporation Code, the directors and officers of this corporation shall not be
personally liable to the corporation or its stockholders for damages for breach
of fiduciary duty as a director or officer, so long as the acts or omissions did
not involve international misconduct, fraud or a knowing violation of law or as
a result of the payment of dividends in violation of NRS 78.300.

     SECOND: The foregoing Restated Articles of Incorporation of the corporation
and any amendments were authorized and approved by a majority of the Board of
Directors at a special meeting held on October 28, 1997, where, pursuant to
Section 78.320 of the Corporation Laws of the State of Nevada, a majority of the
shareholders, constituting 3,764,197 out of the 4,364,197 issued and
outstanding, have consented to the amendment.

October 28, 1997.


                                   /s/
                                   ---------------------------------------------
                                                   Martin Newman
                                                     President


                                   /s/
                                   ---------------------------------------------
                                                    Jane Kelly
                                                    Secretary
State of California  )
                     ) ss.
County of Marin      )


     On October 28, 1997, personally appeared before me, Martin Newman,
President and Jane Kelly, Secretary of Chancellor Corporation, who acknowledged
to me that they were the signers of the foregoing Restated Articles of
Incorporation.


     SEAL

                                   /s/ Susan Dupuis
                                   ---------------------------------------------
                                                Notary Public


                                      -3-


              FILED
IN THE OFFICE OF THE SECRETARY OF STATE OF THE
          STATE OF NEVADA
          NOV. 04, 1997
          No. C12177-96

                       THIS FORM SHOULD ACCOMPANY AMENDED
               ARTICLES OF INCORPORATION FOR A NEVADA CORPORATION

Name of Corporation:     CHANCELLOR CORPORATION.................................

Date of adoption of Amended and Restated Articles: ..10/28/97...................

3. If the articles were amended, please indicate what changes have been made:

    (a) Was there a name change? Yes __ No X . If yes, what is the new name?
        ........................................................................

    (b) Did you change the resident agent? Yes __ No X . If yes, please indicate
        the new resident agent and address
        ........................................................................
        Please attach the resident agent acceptance certificate.

    (c) Did you change the purposes? Yes __ No X . Did you add --- Banking? __,
        Gaming? __, Insurance? __. None of these? __

    (d) Did you change the capital stock? Yes X No __. If yes, -- ---- what is
        the new capital stock? 100,000,000 common shares, $.001 par
        value;...10,000,000.. preferred shares....$0.001..par..value.........

    (e) Did you change the directors? Yes X No___. If yes, ---- indicate the
        change: Martin Newman,...Ronald..Sparks...and...Jane Kelly replaced
        three previously named......................................

    (f) Did you add the directors liability provision? Yes X No__ --

    (g) Did you change the period of existence? Yes __ No X . If --- yes, what
        is the new existence?.............................................

    (h) If none of the above apply, and you have amended or modified the
        articles, how did you change your
        articles?...............................................................
        ........................................................................
        ........................................................................

                                     /s/.......................................
                                     Name and Title of Officer
                                     Jane Kelly, Secretary

                                     Date     10/28/97
State of...California.........)
                              )
County of...Marin.............)

On...October..28,..1997....personally appeared before me, a Notary
Public...Jane..Kelley......., who acknowledged that he/she executed the above
document.

(notary stamp or seal)               /s/  Susan Dupuis.....................
                                     Notary Public





Filed:  IN THE OFFICE OF THE
        SECRETARY OF STATE OF THE
        STATE OF NEVADA
        November 17, 1998
        No. C-12177-96

                                    AMENDMENT
                                       TO
                            ARTICLES OF INCORPORATION
                                       OF
                             CHANCELLOR CORPORATION

     I, Jane Kelly, Secretary hereby state:

     FIRST: Pursuant to the provisions of Sec. 78.385 and 78.390 of the Nevada
Business Corporation Act, the undersigned hereby adopt the following amendment
to its Articles as follows:

                   ARTICLE I: The name of the corporation is:

                             CHANCELLOR CORPORATION

                 NEW ARTICLE I: The name of the corporation is:

                            TOPAZ GROUP INCORPORATED

     SECOND: The foregoing amendment to the Articles of Incorporation of the
corporation were authorized and approved by a majority of the shareholders on
Nov. 6, 1998 holding over 80% of the Common Share Votes pursuant to Section
78.230 of the Nevada Business Corporation Act, a majority of the shareholders
have consented to said amendment.

     THIRD: The number of Directors of the Corporation is three (3):

     President: Martin Newman, Director
     Secretary/Treasurer: Jane Kelly, Director
     Assistant Secretary: Gary Luttrell, Director

                                                 /s/
                                                 --------------------------
                                                 Martin Newman, President

                                                 /s/
                                                 --------------------------
                                                 Jane Kelly, Secretary

STATE OF CALIFORNIA     )
                        )ss.
COUNTY OF MARIN         )

     On this 13th day of November, 1998, before me, a notary public in and for
said County and State, personally appeared Jane Kelly and Martin Newman, known
to me to be the person whose name is subscribed to the foregoing instrument, and
they duly acknowledged to me that they executed the same for the purpose therein
mentioned.

     IN WITNESS WHEREOF, I have set my hand and offered by official seal in said
County and State the day and year in this Certificate first above written.

                                                 /s/ Susan Dupuis
                                                 --------------------------
                                                 NOTARY'S SIGNATURE

EX-3

Filed:  In the Office of Dean Heller, Secretary of State
        November 16, 2000


                       CERTIFICATE OF CHANGE IN NUMBER OF
                       OUTSTANDING SHARES OF COMMON STOCK
                (Pursuant toss.ss.78.207 and 78.209 of the NGCL)


     WHEREAS on November 1, 2000, the Board of Directors of the Topaz Group,
Inc. (the "Company") approved resolutions pursuant to which the Company effected
a one-for-five (1-for-5) reverse stock split of its Common Stock, par value
$.001 (the "Reverse Split"), whereby the number of outstanding shares of the
Company's common stock was reduced from Five Million One Hundred Twenty-Two
Thousand Six hundred Ninety-Nine (5,122,699) to One Million Twenty-Four Thousand
Five Hundred Forty (1,024,540) shares, par value $.001;

     The Company does hereby certify as follows.


1.   Currently and prior to effecting the Reverse Split, the Company has
     100,000,000 authorized shares of Common Stock, par value $.001.

2.   After effecting the Reverse Split, the Company will have 100,000,000
     authorized shares of Common Stock, par value $.001.

3.   Upon effecting the Reverse Split, the Company will issue one share of
     Common Stock in exchange for every Five Shares issued prior to the Reverse
     Split. As a result, the Company will issue One Million Twenty-Four Thousand
     Five Hundred Forty (1,024,540) shares of Common Stock in exchange for the
     Five Million One Hundred Twenty-Two Thousand Six hundred Ninety-Nine
     (5,122,699) shares of Common Stock currently outstanding.

4.   No scrip or fractional shares of the Company's Common Stock shall be issued
     in connection with the Reverse Split. Holders who would be entitled to
     receive fractional shares hold a number of pre-Reverse Split shares not
     evenly divisible by five, will be entitled, upon surrender of certificates
     representing such pre-Reverse Split shares, to the issuance of one whole
     share for the fractional share such holder would have otherwise received.

5.   Stockholder approval was not required to effect the Reverse Split.

6.   The Reverse Split shall be effective immediately upon filing of this
     Certificate.

                            [Signatures on Next Page]








THE TOPAZ GROUP, INC.


By: /s/                                 By:  /s/
   ----------------------------              ----------------------------
   Name:  Kasem Chitmunchaitham              Name:  Supanee Satasut
   Title: President                          Title: Secretary

Sworn to before me this 8 Nov 2000           Sworn to before this 8 Nov 2000
day of November, 2000                        day of November, 2000

/s/                                          /s/
-------------------------------              ---------------------------------
Notary Public                                Notary Public
Eugenia M. Sidereas                          Eugenia M. Sidereas
Vice Consul of the                           Vice Consul of the
United States of America                     United States of America



                                      -2-

EX-3

                                     BYLAWS

                                       OF

                             Chancellor Corporation

                              A Nevada Corporation


                                    ARTICLE I
                                    ---------

                                     Offices

         Section 1. The registered office of this corporation shall be in the
County of Clark, State of Nevada.

         Section 2. The corporation may also have offices at such other places
both within and without the State of Nevada as the Board of Directors may from
time to time determine or the business of the corporation may require.


                                   ARTICLE II
                                   ----------

                            Meetings of Stockholders

         Section 1. All annual meetings of the stockholders shall be held at the
registered office of the corporation or at such other place within or without
the State of Nevada as the directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.

         Section 2. Annual meetings of the stockholders, commencing with the
year 1996, shall be held on the 31st day of May each year if not a legal holiday
and, if a legal holiday, then on the next secular day following, or at such
other time as may be set by the Board of Directors from time to time, at which
the stockholders shall elect by vote a Board of Directors and transact



such other business as may properly be brought before the meeting.

         Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the President or the Secretary by resolution of
the Board of Directors or at the request in writing of stockholders owing a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose of the
proposed meeting.

         Section 4. Notices of meetings shall be in writing and signed by the
President or a Vice-President or the Secretary or an Assistant Secretary or by
such other person or persons as the directors shall designate. Such notice shall
state the purpose or purposes for which the meeting is called and the time and
the place, which may be within or without this State, where it is to be held. A
copy of such notice shall be either delivered personally to or shall be mailed,
postage prepaid, to each stockholder of record entitled to vote at such meeting
not less than ten nor more than sixty days before such meeting. If mailed, it
shall be directed to a stockholder at his address as it appears upon the records
of the corporation and upon such mailing of any such notice, the service thereof
shall be complete and the time of the notice shall begin to run from the date
upon which such notice is deposited in the mail for transmission to such
stockholder. Personal delivery of any such notice to any officer of a
corporation or association, or to any member of a partnership shall constitute
delivery of such notice to such corporation, association or partnership. In the
event of the transfer of stock after delivery of such notice of and prior to the
holding of the meeting it shall not be necessary to deliver or mail notice of
the meeting to the transferee.

         Section 5. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.

         Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in


                                      -2-


person or represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the Articles of Incorporation. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.

         Section 7. When a quorum is present or represented at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall be sufficient to elect directors or to
decide any question brought before such meeting, unless the question is one upon
which by express provision of the statutes or of the Articles of Incorporation,
a different vote is required in which case such express provision shall govern
and control the decision of such question.

         Section 8. Each stockholder of record of the corporation shall be
entitled at each meeting of stockholders to one vote for each share of stock
standing in his name on the books of the corporation. Upon the demand of any
stockholder, the vote for directors and the vote upon any question before the
meeting shall be by ballot.

         Section 9. At any meeting of the stockholders any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No proxy or
power of attorney to vote shall be used to vote at a meeting of the stockholders
unless it shall have


                                      -3-


been filed with the secretary of the meeting when required by the inspectors of
election. All questions regarding the qualification of voters, the validity of
proxies and the acceptance or rejection of votes shall be decided by the
inspectors of election who shall be appointed by the Board of Directors, or if
not so appointed, then by the presiding officer of the meeting.

         Section 10. Any action which may be taken by the vote of the
stockholders at a meeting may be taken without a meeting if authorized by the
written consent of stockholders holding at least a majority of the voting power,
unless the provisions of the statutes or of the Articles of Incorporation
require a greater proportion of voting power to authorize such action in which
case such greater proportion of written consents shall be required.


                                   ARTICLE III
                                   -----------

                                    Directors

         Section 1. The business of the corporation shall be managed by its
Board of Directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the stockholders.

         Section 2. The number of directors which shall constitute the whole
board shall be seven (7). The number of directors may from time to time be
increased or decreased to not less than one nor more than fifteen by action of
the Board of Directors. The directors shall be elected at the annual meeting of
the stockholders and except as provided in Section 2 of this Article, each
director elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.

         Section 3. Vacancies in the Board of Directors including those caused
by an increase in the number of directors, may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining director,
and each director


                                      -4-


so elected shall hold office until his successor is elected at an annual or a
special meeting of the stockholders. The holders of a two-thirds of the
outstanding shares of stock entitled to vote may at any time peremptorily
terminate the term of office of all or any of the directors by vote at a meeting
called for such purpose or by a written statement filed with the secretary or,
in his absence, with any other officer. Such removal shall be effective
immediately, even if successors are not elected simultaneously and the vacancies
on the Board of Directors resulting therefrom shall be filled only by the
stockholders.

         A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any directors, or if the
authorized number of directors be increased, or if the stockholders fail at any
annual or special meeting of stockholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.

         The stockholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. If the Board of Directors
accepts the resignation of a director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective.

         No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.


                                      -5-


                                   ARTICLE IV
                                   ----------

                       Meetings of the Board of Directors

         Section 1. Regular meetings of the Board of Directors shall be held at
any place within or without the State which has been designated from time to
time by resolution of the Board or by written consent of all members of the
Board. In the absence of such designation regular meetings shall be held at the
registered office of the corporation. Special meetings of the Board may be held
either at a place so designated or at the registered office.

         Section 2. The first meeting of each newly elected Board of Directors
shall be held immediately following the adjournment of the meeting of
stockholders and at the place thereof. No notice of such meeting shall be
necessary to the directors in order legally to constitute the meeting, provided
a quorum be present. In the event such meeting is not so held, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors.

         Section 3. Regular meetings of the Board of Directors may be held
without call or notice at such time and at such place as shall from time to time
be fixed and determined by the Board of Directors.

         Section 4. Special meetings of the Board of Directors may be called by
the Chairman or the President or by any Vice-President or by any two directors.

         Written notice of the tine and place of special meetings shall be
delivered personally to each director, or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held. In case such
notice is mailed or telegraphed, it shall be deposited in the United States mail
or delivered to the telegraph company at least forty-


                                      -6-


eight (48) hours prior to the time of the holding of the meeting. In case such
notice is delivered as above provided, it shall be so delivered at least
twenty-four (24) hours prior to the time of the holding of the meeting. Such
mailing, telegraphing or delivery as above provided shall be due, legal and
personal notice to such director.

         Section 5. Notice of the time and place of holding an adjourned meeting
need not be given to the absent directors if the time and place be fixed at the
meeting adjourned.

         Section 6. The transactions of any meeting of the Board of Directors,
however called and noticed or wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present, and
if, either before or after the meeting, each of the directors not present signs
a written waiver of notice, or a consent to holding such meeting, or an approval
of the minutes thereof. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.

         Section 7. A majority of the authorized number of directors shall be
necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of directors, unless a greater
number be required by law or by the Articles of Incorporation. Any action of a
majority, although not at a regularly called meeting, and the record thereof, if
assented to in writing by all of the other members of the Board shall be as
valid and effective in all respects as if passed by the Board in regular
meeting.

         Section 8. A quorum of the directors may adjourn any directors meeting
to meet again at a stated day and hour; provided, however, that in the absence
of a quorum, a majority of the directors present at any directors meeting,
either regular or special, may adjourn from time to time until the time fixed
for the next regular meeting of the Board.


                                      -7-



                                    ARTICLE V
                                    ---------

                             Committees of Directors

         Section 1. The Board of Directors may, by resolution adopted by a
majority of the whole board, designate one or more committees of the Board of
Directors, each committee to consist of two or more of the directors of the
corporation which, to the extent provided in the resolution, shall have and may
exercise the power of the Board of Directors in the management of the business
and affairs of the corporation and may have power to authorize the seal of the
corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by the Board of Directors. The members of any such committee present at any
meeting and not disqualified from voting may, whether or not they constitute a
quorum, unanimously appoint another member of the Board of Directors to act at
the meeting in the place of any absent or disqualified member. At meetings of
such committees, a majority of the members or alternate members shall constitute
a quorum for the transaction of business, and the act of a majority of the
members or alternate members at any meeting at which there is a quorum shall be
the act of the committee.

         Section 2. The committees shall keep regular minutes of their
proceedings and report the same to the Board of Directors.

         Section 3. Any action required or permitted to be taken at any meeting
of the Board of Directors or of any committee thereof may be taken without a
meeting if a written consent thereto is signed by all members of the Board of
Directors or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.


                                   ARTICLE VI
                                   ----------

                            Compensation of Directors


                                      -8-


         Section 1. The directors may be paid their expenses of attendance at
each meeting of the Board of Directors and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.


                                   ARTICLE VII
                                   -----------

                                     Notices

         Section 1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.

         Section 2. Whenever all parties entitled to vote at any meeting,
whether of directors or stockholders, consent, either by a writing on the
records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meeting
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent, provided a quorum was present at such meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote at such meeting; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.


                                      -9-


         Section 3. Whenever any notice whatever is required to be given under
the provisions of the statutes, of the Articles of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.


                                  ARTICLE VIII
                                  ------------

                                    Officers

         Section 1. The officers of the corporation shall be chosen by the Board
of Directors and shall be a President, a Secretary and a Treasurer. Any person
may hold two or more offices.

         Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a Chairman of the Board who shall be
a director, and shall choose a President, a Secretary and a Treasurer, none of
whom need be directors.

         Section 3. The Board of Directors may appoint a Vice-Chairman of the
Board, Vice-Presidents and one or more Assistant Secretaries and Assistant
Treasurers and such other officers and agents as it shall deem necessary who
shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board of
Directors.

         Section 4. The salaries and compensation of all officers of the
corporation shall be fixed by the Board of Directors.

         Section 5. The officers of the corporation shall hold office at the
pleasure of the Board of Directors. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. Any
vacancy occurring in any office of the corporation by death, resignation,
removal or otherwise shall be filled by the Board of Directors.


                                      -10-


         Section 6. The Chairman of the Board shall preside at meetings of the
stockholders and the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.

         Section 7. The Vice-Chairman shall, in the absence or disability of the
Chairman of the Board, perform the duties and exercise the powers of the
Chairman of the Board and shall perform such other duties as the Board of
Directors may from time to time prescribed.

         Section 8. The President shall be the chief executive officer of the
corporation and shall have active management of the business of the corporation.
He shall execute on behalf of the corporation all instruments requiring such
execution except to the extent the signing and execution thereof shall be
expressly designated by the Board of Directors to some other officer or agent of
the corporation.

         Section 9. The Vice-President shall act under the direction of the
President and in the absence or disability of the President shall perform the
duties and exercise the powers of the President. They shall perform such other
duties and have such other powers as the President or the Board of Directors may
from time to time prescribe. The Board of Directors may designate one or more
Executive Vice-Presidents or may otherwise specify the order of seniority of the
Vice-Presidents. The duties and powers of the President shall descend to the
Vice-Presidents in such specified order of seniority.

         Section 10. The Secretary shall act under the direction of the
President. Subject to the direction of the President he shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the President or the Board of
Directors.


                                      -11-


         Section 11. The Assistant Secretaries shall act under the direction of
the President. In order of their seniority, unless otherwise determined by the
President or the Board of Directors, they shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary. They
shall perform such other duties and have such other powers as the President or
the Board of Directors may from time to time prescribe.

         Section 12. The Treasurer shall act under the direction of the
President. Subject to the direction of the President he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in 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 President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
corporation.

         Section 13. If required by the Board of Directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.

         Section 14. The Assistant Treasurer in the order of their seniority,
unless otherwise determined by the President or the Board of Directors, shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.


                                      -12-



                                   ARTICLE IX
                                   ----------

                              Certificates of Stock

         Section 1. Every stockholder shall be entitled to have a certificate
signed by the President or a Vice President and the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the corporation,
certifying the number of shares owned by him in the corporation. If the
corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the designations, preferences and relative,
participating, optional or other special rights of the various classes of stock
or series thereof and the qualifications, limitations or restrictions of such
rights, shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such stock.

         Section 2. If a certificate is signed (a ) by a transfer agent other
than the corporation or its employees or (2) by a registrar other than the
corporation or its employees, the signatures of the officers of the corporation
may be facsimiles. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall cease to be such officer
before such certificate is issued, such certificate may be issued the same
effect as though the person had not ceased to be such officer. The seal of the
corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.

         Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in


                                      -13-


such manner as it shall require and/or give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.

         Section 4. Upon surrender to the corporation or the 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, if it is satisfied that all provisions of the laws
and regulations applicable to the corporation regarding transfer and ownership
of shares have been complied with, to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.

         Section 5. The Board of Directors may fix in advance a date not
exceeding sixty (60) days nor less than ten (10) days preceding the date of any
meeting of stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining the consent of stockholders for any purpose, as a record date for the
determination of the stockholders entitled to notice of and to vote at any such
meeting, and any adjournment thereof, or entitled to receive payment of any such
dividend, or to give such consent, and in such case, such stockholders, and only
such stockholders as shall be stockholders of record on the date so fixed, shall
be entitled to notice of and to vote at such meeting, or any adjournment
thereof, or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as the cast may be,
notwithstanding any transfer of any stock on the books of the corporation after
any such record date fixed as aforesaid.

         Section 6. The corporation shall be entitled to recognize the person
registered on its books as the owner of shares to be the exclusive owner for all
purposes including voting and dividends, and the corporation shall not be bound
to recognize any equitable or other claim to or interest in such shares or
shares on the part of any other person, whether or not it shall have express or


                                      -14-


other notice thereof, except as otherwise provided by the laws of Nevada.


                                    ARTICLE X
                                    ---------

                               General Provisions

         Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the Articles of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the capital stock,
subject to the provisions of the Articles of Incorporation.

         Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends or for
repairing or maintaining any property of the corporation or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

         Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.

         Section 4. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.

         Section 5. The corporation may or may not have a corporate seal, as may
from time to time be determined by resolution of the Board of Directors. If a
corporate seal is adopted, it shall have inscribed thereon the name of the
corporation and the words "Corporate Seal" and "Nevada". The seal may be used by


                                      -15-


causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.


                                   ARTICLE XI
                                   ----------

                                 Indemnification

         Every person who was or is a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a director or officer of the
corporation or is or was serving at the request of the corporation or for its
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
the General Corporation Law of the State of Nevada from time to time against all
expenses, liability and loss (including attorneys' fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by him
in connection therewith. The expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.


                                      -16-


         The Board of Directors may cause the corporation to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or a6 its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.

         The Board of Directors may from time to time adopt further Bylaws with
respect to indemnification and may amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada.


                                   ARTICLE XII
                                   -----------

                                   Amendments

         Section 1. The Bylaws may be amended by a majority vote of all the
stock issued and outstanding and entitled to vote at any annual or special
meeting of the stockholders, provided notice of intention to amend shall have
been contained in the notice of the meeting.

         Section 2. The Board of Directors by a majority vote of the whole Board
at any meeting may amend these Bylaws, including Bylaws adopted by the
stockholders, but the stockholders may from time to time specify particular
provisions of the Bylaws which shall not be amended by the Board of Directors.

APPROVED AND ADOPTED this 3rd day of June, 1996.

                                        /s/ Jane Kelly
                                        -----------------------------------
                                        Asst. Secretary


                                      -17-


                            CERTIFICATE OF SECRETARY
                            ------------------------

         I hereby certify that I am the Secretary of Chancellor Corp and that
the foregoing Bylaws, consisting of 17 pages, constitute the code of Bylaws of
______________, as duly adopted at a regular meeting of the Board of Directors
of the corporation held June Fifth, 1996.

         IN WITNESS WHEREOF I have hereunto subscribed my name this 1st day of
January, 1998.


                                        /s/ Jane Kelly
                                        -----------------------------------
                                        Secretary


                                      -18-

EX-4

                                                                     
                     -------------------------------------- [          FILED         ]
                                                            IN THE OFFICE OF THE
                              AMENDED AND RESTATED          SECRETARY OF STATE
                                                            OF THE STATE OF NEVADA
                           CERTIFICATE OF DESIGNATION       - JULY 20, 2001
                                                            -------------------------
                                       OF

                            TOPAZ GROUP INCORPORATED

                   Pursuant to Section 78.1955 of the General

                     Corporation Law of the State of Nevada

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

                          SERIES A PREFERRED STOCK AND
                            SERIES B PREFERRED STOCK


     Topaz Group Incorporated, a Nevada corporation (the "Corporation"), hereby
certifies that the following resolution has been duly adopted by the board of
directors of the Corporation (the "Board"):

     RESOLVED, that pursuant to the authority granted to and vested in the Board
by the provisions of the certificate of incorporation of the Corporation (as
amended, the "Certificate of Incorporation"), there hereby is created, out of
the fifty million (50,000,000) shares of preferred stock, par value $.001 per
share, of the Company authorized by Article IV of the Certificate of
Incorporation ("Preferred Stock"), the Series A Preferred Stock consisting of
26,000,000 shares and the Series B Preferred Stock consisting of 10,000,000
shares, which series shall have the following powers, designations, preferences
and relative, participating, optional and other special rights, and the
following qualifications, limitations and restrictions:

     The specific powers, preferences, rights and limitations of the Preferred
Stock are as follows:

     1. Designation; Rank. These series of Preferred Stock shall be designated
and known as "Series A Preferred Stock" and "Series B Preferred Stock." The
number of shares constituting the Series A Preferred Stock shall be twenty-six
million (26,000,000) shares. The number of shares constituting the Series B
Preferred Stock shall be 10 million (10,000,000) shares. Except as otherwise
provided herein, the Series A Preferred Stock and the Series B Preferred Stock
shall rank on a parity with each other, shall have the same rights, preferences
and privileges, and shall collectively referred to herein as the "Preferred
Stock." The Preferred Stock shall, with respect to dividend rights and rights on
liquidation, winding up and dissolution, rank senior to (a) the Common Stock,
and (b) all classes and series of stock of the Corporation now or hereafter



authorized, issued or outstanding which by their terms do not expressly provide
that they are senior to, or on parity with, to the Preferred Stock
(collectively, "Junior Securities").

     2.   Dividends.
          ---------

         (a) The holders of shares of the Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of assets of
the Corporation legally available therefor, non-cumulative dividends on a pro
rata basis with all other holders of Preferred Stock and all holders of Common
Stock (as adjusted for any stock dividends, combinations or splits with respect
to such stock).

         (b) Each fractional share of Preferred Stock outstanding shall be
entitled to a ratably proportionate amount of any dividends or other
distributions made with respect to each outstanding share of Preferred Stock,
and all such distributions shall be payable in the same manner and at the same
time as distributions on each outstanding share of Preferred Stock.

     3.   Liquidation Preference.
          ----------------------

         (a) In the event of any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of Preferred Stock
shall be entitled to receive out of the assets of the Corporation, for each
share of Preferred Stock then outstanding, before any payment or distribution
shall be made in respect of any Junior Securities, cash in an amount equal to
(i) $0.001 (as adjusted for any stock dividend, split, combination,
recapitalization or similar transaction with respect to the capital stock of the
Corporation), plus an amount equal to all accrued or declared but unpaid
dividends thereon to the date of such payment, and (ii) the pro rata share of
any proceeds, treating the Preferred Stock as if converted into shares of Common
Stock.

         (b) If the assets of the Corporation available for distribution to the
holders of Preferred Stock upon any dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, shall be insufficient to pay
the full preferential amount to which holders of Preferred Stock are entitled
pursuant to Section 3(a) of this certificate of designation, (this
"Designation"), no distribution shall be made in respect of any shares of any
other class or series of stock ranking on a parity with the Preferred Stock upon
liquidation, unless the distribution is made pro rata, so that the ratio of the
amount distributed per share on the Preferred Stock to the amount distributed
per share on each such other class or series of stock shall be the same as the
ratio of the amount of the liquidation preference per share of the Preferred
Stock to the amount of the liquidation preference per share of each such other
class or series of stock.

         (c) If upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, payment shall have been made to
the holders of Preferred Stock of the full preferential amount to which they
shall be entitled pursuant to Section 3(a) of this Designation, the entire
remaining assets, if any, of the Corporation available for distribution to
stockholders shall be distributed to the holders of Common Stock pro rata,
treating the Preferred Stock as if converted into shares of Common Stock


                                       2


         (d) The Corporation shall give each holder of Preferred Stock written
notice of any dissolution, liquidation or winding up not later than 15 days
prior to any meeting of stockholders to approve such dissolution, liquidation or
winding up or, if no meeting is to be held, not later than 30 days prior to the
date of such dissolution, liquidation or winding up.

     4. Optional Conversion of Series A Preferred Stock. The holders of Series A
Preferred Stock shall have conversion rights as follows:

         (a) Conversion Right. Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof and without the payment of
additional consideration by the holder thereof, at any time, into one share of
Common Stock (the "Conversion Rate") on the Optional Conversion Date (as
hereinafter defined).

         (b) Mechanics of Optional Conversion. To effect the optional conversion
of shares of Series A Preferred Stock in accordance with Section 4(a) of this
Designation, the holder of record thereof shall make a written demand for such
conversion (for purposes of this Designation, a "Conversion Demand") upon the
Corporation at its principal executive offices setting forth therein (i) the
number of shares so to be converted, (ii) the certificate or certificates
representing such shares, and (iii) the proposed date of such conversion, which
shall be a business day not less than 15 nor more than 30 days after the date of
such Conversion Demand (for purposes of this Designation, the "Optional
Conversion Date"). Within five days of receipt of the Conversion Demand, the
Corporation shall give written notice (for purposes of this Designation, a
"Conversion Notice") to such holder setting forth therein (i) the address of the
place or places at which the certificate or certificates representing the shares
so to be converted are to be surrendered; and (ii) whether the certificate or
certificates to be surrendered are required to be endorsed for transfer or
accompanied by a duly executed stock power or other appropriate instrument of
assignment and, if so, the form of such endorsement or power or other instrument
of assignment. The Conversion Notice shall be sent by first class mail, postage
prepaid, to such holder at such holder's address as may be set forth in the
Conversion Demand or, if not set forth therein, as it appears on the records of
the stock transfer agent for the Series A Preferred Stock, if any, or, if none,
of the Corporation. On or before the Optional Conversion Date, the holder of the
Series A Preferred Stock so to be converted shall surrender the certificate or
certificates representing such shares, duly endorsed for transfer or accompanied
by a duly executed stock power or other instrument of assignment, if the
Conversion Notice so provides, to the Corporation at any place set forth in such
notice or, if no such place is so set forth, at the principal executive offices
of the Corporation. As soon as practicable after the Optional Conversion Date
and the surrender of the certificate or certificates representing such shares,
the Corporation shall issue and deliver to such holder, or its nominee, at such
holder's address as it appears on the records of the stock transfer agent for
the Series A Preferred Stock, if any, or, if none, of the Corporation a
certificate or certificates for the number of whole shares of Common Stock
issuable upon such conversion in accordance with the provisions hereof.

         (c) No Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of shares of Series A Preferred Stock. In lieu
of any fractional


                                       3


share to which the holder would be entitled but for the provisions of this
Section 4(c), based on the full number of shares of Series A Preferred Stock
held by such holder, the Corporation shall issue a number of shares to such
holder rounded up to the nearest whole number of shares of Common Stock. No cash
shall be paid to any holder of Series A Preferred Stock by the Corporation upon
conversion of Series A Preferred Stock by such holder.

         (d) Reservation of Stock. The Corporation shall, at all times when any
shares of Series A Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, such number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Series A Preferred Stock.

         (e) Dividends; Rights. All outstanding shares of Series A Preferred
Stock to be converted pursuant to the Conversion Notice shall, on the Optional
Conversion Date, be converted into Common Stock for all purposes,
notwithstanding the failure of the holder thereof to surrender any certificate
representing such shares on or prior to such date. On and after the Optional
Conversion Date, (i) no such share of Series A Preferred Stock shall be deemed
to be outstanding or be transferable on the books of the Corporation or the
stock transfer agent, if any, for the Series A Preferred Stock, and (ii) the
holder of such shares, as such, shall not be entitled to receive any dividends
or other distributions, to receive notices or to vote such shares or to exercise
or to enjoy any other powers, preferences or rights thereof, other than the
right, upon surrender of the certificate or certificates representing such
shares, to receive a certificate or certificates for the number of shares of
Common Stock into which such shares have been converted. On the Optional
Conversion Date, all such shares shall be retired and canceled and shall not be
reissued.

         (f) Consolidation, Merger, Sale, Etc. In case the Corporation shall
effect a Qualified Sale (as defined herein), then lawful and adequate provision
shall be made whereby, subject to Section 3(a) of this Designation, each share
of Series A Preferred Stock shall, after such Qualified Sale, be convertible
into the kind and number of shares of stock or other securities or property of
the Corporation or of the corporation resulting from such Qualified Sale, or to
which assets shall have been sold in such Qualified Sale, to which the holder of
shares of Series A Preferred Stock would have been entitled if it had held the
Common Stock issuable upon the conversion of such shares of Series A Preferred
Stock on the record date, or, if none, immediately prior to such Qualified Sale,
at the Conversion Rate in effect on such date. The provisions of this Section
4(f) shall similarly apply to successive Qualified Sales.

         (g) Stock Dividends, Splits, Combinations and Reclassifications. If the
Corporation shall (i) declare a dividend or other distribution payable in
Securities, (ii) split its outstanding shares of Common Stock into a larger
number, (iii) combine its outstanding shares of Common Stock into a smaller
number, or (iv) increase or decrease the number of shares of its capital stock
in a reclassification of the Common Stock (including any such reclassification
in connection with a merger, consolidation or other business combination in
which the Corporation is the continuing entity), then in each instance the
Conversion Rate in effect immediately prior to such dividend or other
distribution, split, combination or reclassification, as the case may be,


                                       4


shall forthwith be proportionally adjusted so that each holder of Series A
Preferred Stock shall be entitled to receive the number of shares of Common
Stock which such holder would have owned or been entitled to receive had such
Series A Preferred Stock been converted immediately prior to the record date for
such dividend or other distribution, split, combination or reclassification.
Successive adjustments to the Conversion Rate shall be made upon each such
dividend or other distribution, split, combination or reclassification.

         (h) No Impairment. The Corporation shall not, by amendment of its
certificate of incorporation or through any reorganization, sale, exchange or
other disposition of assets, merger, consolidation, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Section 4 by the Corporation, but will at all times in good faith carry out
all the provisions of this Section 4 and take all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of Series A Preferred Stock against impairment.

         (i) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this Section 4,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and cause its principal
financial officer to verify such computation and prepare and furnish to each
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and setting forth in reasonable detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series A Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the Conversion Rate in effect at such time
for the Series A Preferred Stock; and (iii) the number of shares of Common Stock
and the amount, if any, of other property that at such time would be received
upon the conversion of the Series A Preferred Stock.

         (j) Notices of Record Date. In the event (i) any record date is fixed
for the purpose of determining the holders of any class or series of stock or
other securities who are entitled to receive any dividend or other distribution
or (ii) of any recapitalization or reorganization of the capital stock of the
Corporation, any merger or consolidation of the Corporation, or any sale,
exchange or other disposition of all or substantially all the assets of the
Corporation or any voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, the Corporation shall mail to each holder of Preferred
Stock at least 20 days prior to the record date set forth therein a notice
setting forth: (i) such record date and a description of such dividend or
distribution; (ii) the date on which any such recapitalization, reorganization,
merger, consolidation, disposition, dissolution, liquidation or winding up is
expected to become effective; and (iii) the time, if any is to be fixed, as to
when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such recapitalization,
reorganization, merger, consolidation, disposition, dissolution, liquidation or
winding up.


                                       5


         (k) Issue Taxes. The Corporation shall pay any and all issue and other
non-income taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series A Preferred Stock.

         (l) Minimum Adjustment: No Increase. No adjustment of the Conversion
Rate shall be made in an amount less than one per centum, provided that any
adjustment which is not made by reason of this Section 4(l) shall be carried
forward and shall be taken into account in any subsequent adjustment. No
adjustments of the Conversion Rate in accordance with Section 4 of this
Designation shall have the effect of increasing the Conversion Rate above the
Conversion Rate in effect immediately prior to such adjustment.

     5. Mandatory Conversion of Series A Preferred Stock.
        ------------------------------------------------

         (a) Upon the closing of a Qualified Public Offering or a Qualified Sale
(each as defined below), each share of Series A Preferred Stock shall
automatically be converted into the number of shares of Common Stock into which
such shares of Series A Preferred Stock would be converted on the date of the
closing of such Qualified Public Offering or Qualified Sale, as the case may be
(the "Transaction Date"), in accordance with Section 4 of this Designation. For
purposes of this Designation, (i) "Qualified Public Offering" means the sale of
shares of Common Stock pursuant to a public offering of shares of Common Stock
by the Corporation on a firmly underwritten basis, pursuant to a registration
statement on Form S-1, S-2 or S-3 (or a similar form of general application
prescribed by the Securities and Exchange Commission) filed under the Securities
Act at a price to the public of at least $4.00 per share (as adjusted for any
stock dividend, split, combination, recapitalization or similar transaction with
respect to the capital stock of the Corporation) and in which at least
$5,000,000 in gross proceeds is received by the Corporation, and (ii) "Qualified
Sale" means the sale of all or substantially all of the assets of the
Corporation or the outstanding shares of capital stock of the Corporation
entitled to vote generally for the election of directors, in any such case for
cash or securities having a value of at least $1.00 per share of Common Stock
(as adjusted for any stock dividend, split, combination, recapitalization or
similar transaction with respect to the capital stock of the Corporation), but
excluding any such transaction in which the consideration received by the
Corporation or its stockholders includes securities of the purchaser and such
purchaser is not subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended.

         (b) No fractional shares of Common Stock or scrip shall be issued upon
conversion of shares of Series A Preferred Stock. In lieu of any fractional
share to which the holder would be entitled but for the provisions of this
Section 5(b), based on the full number of shares of Series A Preferred Stock
held by such holder, the Corporation shall issue a number of shares to such
holder rounded up to the nearest whole number of shares of Common Stock. No cash
shall be paid to any holder of Series A Preferred Stock by the Corporation upon
conversion of Series A Preferred Stock by such holder.

         (c) The Corporation shall give to each holder of record of Series A
Preferred Stock written notice of mandatory conversion at least 10 business days
prior to the Transaction


                                       6


Date, setting forth therein: (i) the Conversion Rate on the Transaction Date or
a reasonable estimate thereof; (ii) the number of shares of Common Stock into
which such holder's shares of Series A Preferred Stock are to be converted based
on such Conversion Rate; (iii) the amount of cash, if any, to be paid in lieu of
a fractional share pursuant to Section 5(b) of this Designation; (iv) that the
conversion is to be effective on the Transaction Date; (v) the address of the
place or places at which the certificate or certificates representing such
holder's shares of Series A Preferred Stock are to be surrendered; and (vi)
whether the certificate or certificates to be surrendered are required to be
endorsed for transfer or accompanied by a duly executed stock power or other
appropriate instrument of assignment and, if so, the form of such endorsement or
power or other instrument of assignment. Such notice shall be sent by first
class mail, postage prepaid, to each holder of record of Series A Preferred
Stock at such holder's address as it appears on the records of the stock
transfer agent for the Series A Preferred Stock, if any, or, if none, of the
Corporation. On or before the Transaction Date, each holder of Series A
Preferred Stock shall surrender the certificate or certificates representing all
such holder's shares, duly endorsed for transfer or accompanied by a duly
executed stock power or other instrument of assignment, if the notice so
provides, to the Corporation at any place set forth in such notice or, if no
such place is so set forth, at the principal executive offices of the
Corporation. As soon as practicable after the Transaction Date and the surrender
of the certificate or certificates representing shares of Series A Preferred
Stock, the Corporation shall issue and deliver to each such holder, or its
nominee, at such holder's address as it appears on the records of the stock
transfer agent for the Series A Preferred Stock, if any, or, if none, of the
Corporation a certificate or certificates for the number of whole shares of
Common Stock issuable upon such conversion in accordance with the provisions
hereof, together with cash payable in lieu of any fraction of a share of Common
Stock pursuant to Section 5(b) of this Designation.

         (d) All outstanding shares of Series A Preferred Stock shall, on the
Transaction Date, be converted into Common Stock for all purposes,
notwithstanding the failure of any holder or holders thereof to surrender any
certificate representing such shares on or prior to such date. On and after the
Transaction Date, (i) no share of Series A Preferred Stock shall be deemed to be
outstanding or be transferable on the books of the Corporation or the stock
transfer agent, if any, for the Series A Preferred Stock, and (ii) each holder
of Series A Preferred Stock, as such, shall not be entitled to receive any
dividends or other distributions, to receive notices or to vote such shares or
to exercise or to enjoy any other powers, preferences or rights in respect
thereof, other than the right, upon surrender of the certificate or certificates
representing such shares, to receive a certificate or certificates for the
number of shares of Common Stock into which such shares shall have been
converted. On the Transaction Date, all such shares shall be retired and
canceled and shall not be reissued.

     6. Mandatory Conversion of Series B Preferred Stock.
        ------------------------------------------------

         (a) The Series B Preferred Stock shall convert on a one-to-one basis in
Common Stock (the "Series B Conversion Rate") automatically (i) immediately
prior to a sale to


                                       7


a third party of 100% of the Corporation's capital stock or (ii) immediately
prior to the merger of the Corporation into another surviving corporation (other
than in connection with a recapitalization, reorganization, change of domicile
or like events).

         (b) No fractional shares of Common Stock or scrip shall be issued upon
conversion of shares of Series B Preferred Stock. In lieu of any fractional
share to which the holder would be entitled but for the provisions of this
Section 6(b), based on the full number of shares of Series B Preferred Stock
held by such holder, the Corporation shall issue a number of shares to such
holder rounded up to the nearest whole number of shares of Common Stock. No cash
shall be paid to any holder of Series B Preferred Stock by the Corporation upon
conversion of Series B Preferred Stock by such holder.

         (c) The Corporation shall give to each holder of record of Series B
Preferred Stock written notice of mandatory conversion at least 10 business days
prior to the Transaction Date, setting forth therein: (i) the Series B
Conversion Rate on the Transaction Date or a reasonable estimate thereof; (ii)
the number of shares of Common Stock into which such holder's shares of Series A
Preferred Stock are to be converted based on such Conversion Rate; (iii) the
amount of cash, if any, to be paid in lieu of a fractional share pursuant to
Section 6(b) of this Designation; (iv) that the conversion is to be effective on
the Transaction Date; (v) the address of the place or places at which the
certificate or certificates representing such holder's shares of Series A
Preferred Stock are to be surrendered; and (vi) whether the certificate or
certificates to be surrendered are required to be endorsed for transfer or
accompanied by a duly executed stock power or other appropriate instrument of
assignment and, if so, the form of such endorsement or power or other instrument
of assignment. Such notice shall be sent by first class mail, postage prepaid,
to each holder of record of Series B Preferred Stock at such holder's address as
it appears on the records of the stock transfer agent for the Series B Preferred
Stock, if any, or, if none, of the Corporation. On or before the Transaction
Date, each holder of Series B Preferred Stock shall surrender the certificate or
certificates representing all such holder's shares, duly endorsed for transfer
or accompanied by a duly executed stock power or other instrument of assignment,
if the notice so provides, to the Corporation at any place set forth in such
notice or, if no such place is so set forth, at the principal executive offices
of the Corporation. As soon as practicable after the Transaction Date and the
surrender of the certificate or certificates representing shares of Series B
Preferred Stock, the Corporation shall issue and deliver to each such holder, or
its nominee, at such holder's address as it appears on the records of the stock
transfer agent for the Series B Preferred Stock, if any, or, if none, of the
Corporation a certificate or certificates for the number of whole shares of
Common Stock issuable upon such conversion in accordance with the provisions
hereof, together with cash payable in lieu of any fraction of a share of Common
Stock pursuant to Section 6(b) of this Designation.

         (d) All outstanding shares of Series B Preferred Stock shall, on the
Transaction Date, be converted into Common Stock for all purposes,
notwithstanding the failure of any holder or holders thereof to surrender any
certificate representing such shares on or prior to such date. On and after the
Transaction Date, (i) no share of Series B Preferred Stock shall be deemed to be
outstanding or be transferable on the books of the Corporation or the stock
transfer


                                       8


agent, if any, for the Series B Preferred Stock, and (ii) each holder of Series
B Preferred Stock, as such, shall not be entitled to receive any dividends or
other distributions, to receive notices or to vote such shares or to exercise or
to enjoy any other powers, preferences or rights in respect thereof, other than
the right, upon surrender of the certificate or certificates representing such
shares, to receive a certificate or certificates for the number of shares of
Common Stock into which such shares shall have been converted. On the
Transaction Date, all such shares shall be retired and canceled and shall not be
reissued.

         (e) Stock Dividends, Splits, Combinations and Reclassifications. If the
Corporation shall (i) declare a dividend or other distribution payable in
Securities, (ii) split its outstanding shares of Common Stock into a larger
number, (iii) combine its outstanding shares of Common Stock into a smaller
number, or (iv) increase or decrease the number of shares of its capital stock
in a reclassification of the Common Stock (including any such reclassification
in connection with a merger, consolidation or other business combination in
which the Corporation is the continuing entity), then in each instance the
Series B Conversion Rate in effect immediately prior to such dividend or other
distribution, split, combination or reclassification, as the case may be, shall
forthwith be proportionally adjusted so that each holder of Series B Preferred
Stock shall be entitled to receive the number of shares of Common Stock which
such holder would have owned or been entitled to receive had such Series B
Preferred Stock been converted immediately prior to the record date for such
dividend or other distribution, split, combination or reclassification.
Successive adjustments to the Series B Conversion Rate shall be made upon each
such dividend or other distribution, split, combination or reclassification.

         (f) No Impairment. The Corporation shall not, by amendment of its
certificate of incorporation or through any reorganization, sale, exchange or
other disposition of assets, merger, consolidation, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Section 6 by the Corporation, but will at all times in good faith carry out
all the provisions of this Section 6 and take all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of Series B Preferred Stock against impairment.

     7. Voting.
        ------

         (a) Except as otherwise required by applicable law, the holders of
Preferred Stock shall be entitled to vote on all matters on which the holders of
Common Stock shall be entitled to vote, in the same manner and with the same
effect as the holders of Common Stock, voting together with the holders of
Common Stock as a single class. For this purpose, the holders of Preferred Stock
shall be given notice of any meeting of stockholders as to which the holders of
Common Stock are given notice in accordance with the bylaws of the Corporation.
As to any matter on which the holders of Preferred Stock shall be entitled to
vote, each holder of Series A Preferred Stock shall have a number of votes per
share of Series A Preferred Stock held of record by such holder on the record
date for the meeting of stockholders, if such matter is


                                       9


subject to a vote at a meeting of stockholders, or on the effective date of any
written consent, if such matter is subject to a written consent of the
stockholders without a meeting of stockholders, equal to the number of shares of
Common Stock into which such share of Series A Preferred Stock is convertible on
such record date or effective date, as the case may be, in accordance with
Section 4 of this Designation. As to any matter on which the holders of
Preferred Stock shall be entitled to vote, each holder of Series B Preferred
Stock shall have a number of votes per share of Series B Preferred Stock held of
record by such holder on the record date for the meeting of stockholders, if
such matter is subject to a vote at a meeting of stockholders, or on the
effective date of any written consent, if such matter is subject to a written
consent of the stockholders without a meeting of stockholders, equal to twenty
(20) times the number of shares of Common Stock into which such share of Series
B Preferred Stock would be convertible assuming a mandatory conversion on such
record date or effective date, in accordance with Section 6 of this Designation.

         (b) Notwithstanding anything herein to the contrary, the consent of the
holders of a majority of all of the shares of the Series A Preferred Stock and
the Series B Preferred Stock at the time outstanding shall be required to (i)
authorize or issue any class or series of capital stock of the Corporation
ranking senior to, or on parity with, the such class of Preferred Stock, or (ii)
authorize or issue any class or series of capital stock or bonds, debentures,
notes or other securities or obligations of the Corporation convertible into, or
exercisable or exchangeable for, any class or series of capital of the
Corporation ranking senior to, or on parity with, the Preferred Stock. The
Consent of the holders of the Preferred Stock at the time outstanding shall not
be required to (i) authorize or issue any class or series of capital stock of
the Corporation ranking junior to such class of Preferred Stock, or (ii)
authorize or issue any class or series of capital stock or bonds, debentures,
notes or other securities or obligations of the Corporation convertible into, or
exercisable or exchangeable for, any class or series of capital of the
Corporation ranking junior to the Preferred Stock.

     8. No Sinking Fund. The Corporation shall not be required to make any
payment to any sinking fund or otherwise to deposit or set aside any funds or
other assets of the Corporation in respect of the Preferred Stock.

     9. Amount of Noncash Dividends, Distributions or Consideration. Whenever a
dividend or distribution provided for in Section 2 or 3 of this Designation
(except as otherwise provided therein with respect to the payment of dividends
in shares of Preferred Stock) is to be made in, or any consideration received or
paid by the Corporation consists of securities or other property, other than
cash, the amount of such dividend, distribution or consideration shall be the
fair market value of such securities or other property as determined in good
faith by the Board of Directors.

     10. Definition of Certain Preferences. For purposes hereof, any class or
series of stock of the Corporation shall be deemed to rank:

         (a) senior to the Preferred Stock, either as to dividends or upon
liquidation, if the holders of shares of that class or series of stock shall
expressly be entitled to receive


                                       10


dividends or amounts distributable upon dissolution, liquidation or winding up
of the Corporation, as the case may be, in preference or priority to the holders
of Preferred Stock;

         (b) on a parity with the Preferred Stock, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates,
redemption or liquidation prices per share or conversion or sinking fund
provisions, if any, are different from those of the Preferred Stock, if the
holders of shares of that class or series of stock shall expressly be entitled
to receive dividends or amounts distributable upon dissolution, liquidation or
winding up of the Corporation, as the case may be, in proportion to their
respective dividend preferences (whether based on their respective dividend
rates or the respective amounts of accumulated and unpaid dividends thereon) or
their respective liquidation preferences, without preference or priority, one
over the other, as between the holders of shares of that class or series of
stock and the holders of shares of Preferred Stock; and

         (c) junior to the Preferred Stock, either as to dividends or upon
liquidation, if the holders of shares of Preferred Stock shall be entitled to
receive dividends or amounts distributable upon dissolution, liquidation or
winding up of the Corporation, as the case may be, in preference or priority to
the holders of shares of that class or series of stock.

                     [The next page is the signature page]


                                       11


     IN WITNESS WHEREOF, the undersigned have duly signed this Certificate of
Designation as of this ___th day of ___________, 2001.

                                        TOPAZ GROUP INCORPORATED


                                        By:
                                           ----------------------------------
                                                Name:  Thammatinna Thammaradi
                                                Title: President


                                        By:
                                           ----------------------------------
                                                Name:  Supanee Satasut
                                                Title: Secretary

STATE OF                                            )
                                                    ) ss.:
COUNTY OF                                           )

On the ____th day of _______, 2001 personally appeared before me Thammatinna
Thammaradi who, being duly sworn, declared that she is the person who signed the
within and foregoing Certificate of Designation as President of Topaz Group
Incorporated, and that the statements contained therein are true.


                --------------------------------------------------------------
                                          Notary Public, residing at


                                          My Commission Expires:



                                       12

EX-4

                            TOPAZ GROUP INCORPORATED

                             2001 STOCK OPTION PLAN


1.   Purpose
     -------

            The  purpose of this plan (the  "Plan") is to secure for Topaz Group
Incorporated  (the  "Company") and its  stockholders  the benefits  arising from
capital stock ownership by employees, officers, directors and consultants of the
Company and its  affiliated  corporations  who are expected to contribute to the
Company's  future  growth and success.  The Plan is also designed to attract and
retain other persons who will provide services to the Company.  Those provisions
of the Plan which make express  reference to Section 422 of the Internal Revenue
Code of 1986, as amended or replaced from time to time (the "Code"), shall apply
only to Incentive Stock Options (as that term is defined in the Plan).  The Plan
was  adopted  by  the  Board  of  Directors  of the  Company  (the  "Board")  on
May 15, 2001, subject to the approval of the stockholders of the Company.


2.   Type of Options and Administration
     ----------------------------------

            (a) Types of Options.  Options granted pursuant to the Plan shall be
authorized  by action of the Board (or the  committee  appointed by the Board in
accordance  with Section 2(b) below) and may be either  incentive  stock options
("Incentive Stock Options")  intended to meet the requirements of Section 422 of
the  Code  or  non-statutory   options  which  are  not  intended  to  meet  the
requirements of Section 422 of the Code ("Non-Qualified Options").

            (b)  Administration.  The Plan will be administered by the Board, in
the case of options  granted  under the Plan to  non-employee  directors  of the
Company,  or, in the case of all other  options  granted  under the Plan, by the
Board or a  committee  (the  "Committee")  consisting  of two or more  directors
appointed by the Board, in each case whose  construction and  interpretation  of
the terms and  provisions of the Plan shall be final and  conclusive and binding
upon the optionee and all other persons  interested or claiming  interests under
the  Plan.  Notwithstanding  the  foregoing,  if the  Company  is or  becomes  a
corporation  issuing  any  class of  common  equity  securities  required  to be
registered under section 12 of the Securities Exchange Act of 1934 (a "Reporting
Company"),  to the extent  necessary to preserve  any  deduction  under  Section
162(m) of the Code or to comply with Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the  "Exchange  Act"),  or any successor  rule
("Rule  16b-3"),  any Committee  appointed by the Board to  administer  the Plan
shall  be  comprised  of  two  or  more  directors  each  of  whom  shall  be  a
"non-employee  director,"  within the  meaning of Rule  16b-3,  and an  "outside
director,"  within the meaning of Treasury  Regulation  Section  1.162-27(e)(3),
(the  "Committee")  and the  delegation  of  powers  to the  Committee  shall be
consistent with applicable laws and regulations (including,  without limitation,
applicable  state law and Rule 16b-3).  The Board or  Committee  may in its sole
discretion  grant  options to purchase  shares of the  Company's  Common  Stock,
$0.001 par value per share ("Common  Stock"),  and issue shares upon exercise of
such  options  as  provided  in the Plan.  The  Board or  Committee  shall  have
authority, subject to the express provisions of the Plan, to


                                                                           DRAFT

construe the respective option agreements and the Plan; to prescribe,  amend and
rescind rules and  regulations  relating to the Plan; to determine the terms and
provisions of the respective option agreements, which need not be identical; and
to make all other  determinations  in the  judgment  of the  Board or  Committee
necessary  or  desirable  for the  administration  of the  Plan.  The  Board  or
Committee  may  correct  any  defect or supply any  omission  or  reconcile  any
inconsistency  in the Plan or in any option  agreement  in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such  expediency.  No director or person acting pursuant
to  authority  delegated  by the  Board  shall  be  liable  for  any  action  or
determination under the Plan made in good faith.


3.   Eligibility
     -----------

            Options  may be granted to  persons  who are,  at the time of grant,
employees,  officers,  directors or  consultants of the Company or any parent or
subsidiary of the Company, as respectively defined in Sections 424(e) and 424(f)
of the  Code  (each  such  parent  and  subsidiary  of the  Company  hereinafter
individually and collectively called an "Affiliate"),  provided,  that Incentive
Stock Options may only be granted to individuals  who are employees  (within the
meaning of Section 3401(c) of the Code) of the Company or any Affiliate. Options
may also be  granted  to other  persons,  provided  that such  options  shall be
Non-Qualified Options. A person who has been granted an option may, if he or she
is otherwise  eligible,  be granted additional options if the Board or Committee
shall so determine. Notwithstanding anything in the Plan to the contrary, if the
Company is or becomes a  Reporting  Company,  no  employee  of the Company or an
Affiliate shall be granted options with respect to more than 2,000,000 shares
of Common Stock during any calendar year.


4.   Stock Subject to Plan
     ---------------------

            The stock subject to options  granted under the Plan shall be shares
of authorized but unissued or reacquired Common Stock.  Subject to adjustment as
provided in Section 15 below,  the maximum  number of shares of Common  Stock of
the Company which may be issued and/or sold under the Plan is 1,000,000  shares.
If an option granted under the Plan shall expire,  terminate or is cancelled for
any reason without having been exercised in full, the unpurchased shares subject
to such option shall again be available for  subsequent  option grants under the
Plan.


5.    Forms of Option Agreements
      --------------------------

            As a  condition  to the  grant of an option  under  the  Plan,  each
recipient  of an  option  shall  execute  an option  agreement  in such form not
inconsistent with the Plan and as may be approved by the Board or the Committee.
The terms of such option agreements may differ among recipients.


                                      -2-

                                                                           DRAFT

6.   Purchase Price
     --------------

            (a) General.  The purchase  price per share of Common Stock issuable
upon the exercise of an option shall be determined by the Board or the Committee
at the time of grant of such option,  provided,  however, that in the case of an
Incentive  Stock Option,  the exercise  price shall not be less than 100% of the
Fair Market Value (as  hereinafter  defined) of such Common Stock at the time of
grant of such option, or less than 110% of such Fair Market Value in the case of
options  described in Section 11(b) of the Plan.  "Fair Market Value" of a share
of Common  Stock of the Company as of a specified  date for purposes of the Plan
shall  mean the  average  trading  price of a share of the  Common  Stock on the
principal  securities exchange (including but not limited to The Nasdaq SmallCap
Market or The Nasdaq National Market) on which such shares are traded on the day
immediately  preceding  the  date  as  of  which  Fair  Market  Value  is  being
determined,  or on the next preceding date on which such shares are traded if no
shares were traded on such  immediately  preceding day, or if the shares are not
traded on a  securities  exchange,  Fair Market  Value shall be deemed to be the
average   of  the  high  bid  and  low  asked   prices  of  the  shares  in  the
over-the-counter  market on the day  immediately  preceding the date as of which
Fair Market Value is being  determined  or on the next  preceding  date on which
such high bid and low asked prices were recorded. If the shares are not publicly
traded, Fair Market Value of a share of Common Stock shall be determined in good
faith by the Board.

            (b) Payment of Purchase  Price.  Options  granted under the Plan may
provide for the payment of the exercise  price by delivery of cash or a check to
the  order of the  Company  in an  amount  equal to the  exercise  price of such
options,  or  by  any  other  means  (including,  without  limitation,  cashless
exercise) which the Board determines are consistent with the purpose of the Plan
and with applicable laws and regulations  (including,  without  limitation,  the
provisions of Rule 16b-3 if the Company is or becomes a Reporting Company).


7.   Exercise Option Period
     ----------------------

            Subject to earlier  termination as provided in the Plan, each option
and all rights  thereunder  shall expire on such date as determined by the Board
or the Committee and set forth in the  applicable  option  agreement,  provided,
that such date shall not be later  than ten (10)  years  after the date on which
the option is granted.


8.   Exercise of Options
     -------------------

            Each option  granted under the Plan shall be  exercisable  either in
full or in installments at such time or times and during such period as shall be
set  forth in the  option  agreement  evidencing  such  option,  subject  to the
provisions of the Plan. Subject to the requirements in the immediately preceding
sentence, if an option is not at the time of grant immediately exercisable,  the
Board or Committee may (i) in the agreement evidencing such option,  provide for
the  acceleration  of the exercise date or dates of the subject  option upon the
occurrence  of specified  events,  and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.


                                      -3-

                                                                           DRAFT

9.   Nontransferability of Options
     -----------------------------

            No option  granted  under this Plan shall be assignable or otherwise
transferable  by the  optionee,  except  by will or by the laws of  descent  and
distribution.  An option may be  exercised  during the  lifetime of the optionee
only by the optionee.


10.  Effect of Termination of Employment or Other Relationship
     ---------------------------------------------------------

            Except as  provided  in  Section  11(d) of the Plan with  respect to
Incentive  Stock  Options and except as may otherwise be determined by the Board
or Committee at the date of grant of an option, and subject to the provisions of
the Plan, an optionee may exercise an option at any time within three (3) months
following the  termination  of the optionee's  employment or other  relationship
with the Company and its  Affiliates or within one (1) year if such  termination
was due to the death or  disability  (within the meaning of Section  22(e)(3) of
the Code or any  successor  provisions  thereto) of the  optionee (to the extent
such option is otherwise  exercisable at the time of such termination) but in no
event  later  than  the  expiration  date  of the  option.  Notwithstanding  the
foregoing  and except as may  otherwise be determined by the Board or Committee,
if the  termination  of the  optionee's  employment is for cause or is otherwise
attributable to a breach by the optionee of an employment or  confidentiality or
non-disclosure   agreement,  the  option  shall  expire  immediately  upon  such
termination.  The  Board  shall  have  the  power  to  determine,  in  its  sole
discretion,  what  constitutes  a  termination  for  cause  or a  breach  of  an
employment or confidentiality or non-disclosure  agreement,  whether an optionee
has been  terminated  for cause or has breached such an agreement,  and the date
upon which such termination for cause or breach occurs. Any such  determinations
shall be final  and  conclusive  and  binding  upon the  optionee  and all other
persons interested or claiming interests under the Plan.


11.  Incentive Stock Options
     -----------------------

            Options  granted  under the Plan which are  intended to be Incentive
Stock Options shall be subject to the following additional terms and conditions:

            (a) Express  Designation.  All Incentive Stock Options granted under
the Plan shall, at the time of grant, be specifically  designated as such in the
option agreement covering such Incentive Stock Options.

            (b) 10%  Shareholder.  If any  employee to whom an  Incentive  Stock
Option  is to be  granted  under  the Plan is,  at the time of the grant of such
option, the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the  Company  (after  taking  into  account the
attribution of stock  ownership  rules of Section 424(d) of the Code),  then the
following  special  provisions shall be applicable to the Incentive Stock Option
granted to such individual:


                                      -4-

                                                                           DRAFT

                (i) the purchase  price per share of the Common Stock subject to
      such Incentive Stock Option shall not be less than 110% of the Fair Market
      Value of one share of Common Stock at the time of grant; and

                (ii) the option  exercise period shall not exceed five (5) years
      from the date of grant.

            (c) Dollar  Limitation.  For so long as the Code  shall so  provide,
options  granted to any employee under the Plan (and any other  incentive  stock
option plans of the Company)  which are intended to constitute  Incentive  Stock
Options  shall not  constitute  Incentive  Stock Options to the extent that such
options,  in the  aggregate,  become  exercisable  for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000.

            (d)  Termination  of Employment,  Death or Disability.  No Incentive
Stock Option may be exercised unless, at the time of such exercise, the optionee
is,  and has been  continuously  since  the date of grant of his or her  option,
employed by the Company or its Affiliate, except that:

                (i) an Incentive Stock Option may be exercised within the period
      of three (3) months after the date the  optionee  ceases to be an employee
      of the Company or its  Affiliate  (or within such lesser  period as may be
      specified  in  the  applicable  option  agreement),  to the  extent  it is
      otherwise exercisable at the time of such cessation,

                (ii) if the optionee  dies while in the employ of the Company or
      its Affiliate,  or within three (3) months after the optionee ceases to be
      such an  employee,  the  Incentive  Stock  Option may be  exercised by the
      person  to whom it is  transferred  by will  or the  laws of  descent  and
      distribution within the period of one (1) year after the date of death (or
      within such lesser  period as may be  specified in the  applicable  option
      agreement),  to the extent it is otherwise  exercisable at the time of the
      optionee's death, and

                (iii) if the optionee  becomes  disabled  (within the meaning of
      Section 22(e)(3) of the Code or any successor provisions thereto) while in
      the employ of the Company or its Affiliate, the Incentive Stock Option may
      be exercised within the period of one (1) year after the date the optionee
      ceases to be such an employee  because of such  disability (or within such
      lesser period as may be specified in the applicable option agreement),  to
      the extent it is otherwise exercisable at the time of such cessation.

For all  purposes  of the Plan and any option  granted  hereunder,  "employment"
shall be defined in accordance with the provisions of Section  1.421-7(h) of the
Treasury  Regulations  (or  any  successor  regulations).   Notwithstanding  the
foregoing  provisions,  no Incentive  Stock  Option may be  exercised  after its
expiration date.


                                      -5-

                                                                           DRAFT

12.  Additional Provisions
     ---------------------

            (a) Additional Option Provisions. The Board or the Committee may, in
its sole discretion, include additional provisions in option agreements covering
options granted under the Plan, including without limitation, restrictions on
transfer, repurchase rights, rights of first refusal, commitments to pay cash
bonuses or to make, arrange for or guaranty loans or to transfer other property
to optionees upon exercise of options, or such other provisions as shall be
determined by the Board or the Committee, provided, that such additional
provisions shall not be inconsistent with the requirements of applicable law and
such additional provisions shall not cause any Incentive Stock Option granted
under the Plan to fail to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Code.

            (b) Acceleration, Extension, Etc. The Board or the Committee may, in
its sole discretion (i) accelerate the date or dates on which all or any
particular option or options granted under the Plan may be exercised, or (ii)
extend the dates during which all, or any particular, option or options granted
under the Plan may be exercised, provided, however, that no such acceleration or
extension shall be permitted if it would (i) cause any Incentive Stock Option
granted under the Plan to fail to qualify as an Incentive Stock Option within
the meaning of Section 422 of the Code, or (ii) if the Company is or becomes a
Reporting Company, cause the Plan or any option granted under the Plan to fail
to comply with Rule 16b-3 (if applicable to the Plan or such option).


13.   General Restrictions

            (a) Investment  Representations.  The Board or Committee may require
any person to whom an option is  granted,  as a  condition  of  exercising  such
option or award, to give written  assurances in substance and form  satisfactory
to the Board or Committee to the effect that such person is acquiring the Common
Stock  subject to the option or award for his or her own account for  investment
and not with any present  intention  of selling or  otherwise  distributing  the
same,  and to such other  effects as the Board or Committee  deems  necessary or
appropriate  in order to comply with  applicable  federal  and state  securities
laws,  or with  covenants or  representations  made by the Company in connection
with any public  offering of its Common Stock,  including any "lock-up" or other
restriction on transferability.

            (b) Compliance  With Securities Law. Each option shall be subject to
the  requirement  that if, at any time,  counsel to the Company shall  determine
that the listing,  registration or  qualification  of the shares subject to such
option or award upon any securities  exchange or automated  quotation  system or
under any state or federal  law, or the consent or approval of any  governmental
or regulatory  body, or that the  disclosure  of non-public  information  or the
satisfaction  of any other  condition,  is  necessary  as a condition  of, or in
connection  with the  issuance or purchase of shares  thereunder,  except to the
extent  expressly  permitted  by the  Board,  such  option  or award  may not be
exercised,   in  whole  or  in  part,   unless   such   listing,   registration,
qualification,  consent or approval or satisfaction of such condition shall have
been  effected  or  obtained  on  conditions  acceptable  to  the  Board  or the
Committee. Nothing herein shall be deemed to require the Company to apply for or
to obtain such listing, registration,  qualification, consent or approval, or to
satisfy


                                      -6-

                                                                           DRAFT

such  condition.  In addition,  Common Stock issued upon the exercise of options
may bear such legends as the Company may deem advisable to reflect  restrictions
which may be imposed by law, including,  without limitation,  the Securities Act
of 1933, as amended,  any state "blue sky" or other applicable  federal or state
securities law.


14.  Rights as a Stockholder
     -----------------------

            The holder of an option shall have no rights as a  stockholder  with
respect to any shares covered by the option (including,  without limitation, any
right to vote or to receive dividends or non-cash  distributions with respect to
such shares) until the  effective  date of exercise of such option and then only
to the extent of the shares of Common Stock so purchased. No adjustment shall be
made for  dividends  or other  rights for which the record  date is prior to the
date of exercise.


15.  Adjustment Provisions for Recapitalizations,
     Reorganizations and Related Transactions
     ----------------------------------------

            (a) Recapitalizations and Related Transactions.  If, through or as a
result of any recapitalization,  reclassification,  stock dividend, stock split,
reverse stock split or other similar  transaction (i) the outstanding  shares of
Common Stock are  increased,  decreased or exchanged  for a different  number or
kind of shares or other securities of the Company,  or (ii) additional shares or
new or different shares or other non-cash assets are distributed with respect to
such  shares  of  Common  Stock  or  other   securities,   an  appropriate   and
proportionate  adjustment  shall be made in (x) the  maximum  number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other  securities  subject to any  then-outstanding
options  under  the  Plan,  and (z) the  price  for each  share  subject  to any
then-outstanding options under the Plan, without changing the aggregate purchase
price  as  to  which  such  options  remain  exercisable.   Notwithstanding  the
foregoing,  no  adjustment  shall be made  pursuant  to this  Section 15 if such
adjustment (A) would cause any Incentive  Stock Option granted under the Plan to
fail to qualify as an Incentive  Stock Option  within the meaning of Section 422
of the Code, (B) if the Company is or becomes a Reporting  Company,  would cause
the Plan or any option  granted under the Plan to fail to comply with Rule 16b-3
(if  applicable to the Plan or such  option),  or (C) would be considered as the
adoption of a new plan requiring stockholder approval.

            [(b)   Reorganization,   Merger  and   Related   Transactions.   All
outstanding options under the Plan shall become fully exercisable  following the
occurrence of any Trigger Event (as defined below),  whether or not such options
are then exercisable under the provisions of the applicable  agreements relating
thereto. For purposes of the Plan, a "Trigger Event" is any one of the following
events,  other than in connection with the initial public offering of the Common
Stock:

               (i) the date the Company acquires knowledge that any person or
      group deemed a person under Section 13(d)-3 of the Exchange Act (other
      than the Company, any Affiliate, any employee benefit plan of the Company
      or of any Affiliate or any entity holding shares of Common Stock or other
      securities of the Company for or pursuant to the terms of any such plan or
      any individual or entity or group or affiliate thereof which


                                      -7-

                                                                           DRAFT

      acquired its beneficial  ownership interest prior to the date the Plan was
      adopted by the Board),  in a transaction  or series of  transactions,  has
      become the  beneficial  owner,  directly or  indirectly  (with  beneficial
      ownership  determined as provided in Rule 13d-3,  or any  successor  rule,
      under the Exchange Act), of securities of the Company entitling the person
      or group to 51% or more of all votes (without  consideration of the rights
      of any class of stock to elect  directors  by a  separate  class  vote) to
      which all stockholders of the Company would be entitled in the election of
      the Board were an election held on such date; provided,  however, that the
      sale of voting securities by the Company,  to a person or group,  prior to
      such person or group acquiring such 51% of the voting securities, shall be
      excluded  from the  operation  of this section  15(b)(i)  with the advance
      approval of the Board of Directors;

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

               (iii) the date of approval by the  stockholders of the Company of
      an agreement (a "reorganization agreement") providing for:

                  (A) The merger or  consolidation  of the Company  with another
            corporation (x) where the  stockholders of the Company,  immediately
            prior to the  merger  or  consolidation,  do not  beneficially  own,
            immediately  after  the  merger  or  consolidation,  shares  of  the
            corporation   issuing   cash  or   securities   in  the   merger  or
            consolidation  entitling  such  stockholders  to 50% or  more of all
            votes (without  consideration of the rights of any class of stock to
            elect directors by a separate class vote) to which all  stockholders
            of such corporation  would be entitled in the election of directors,
            or (y) where the  members  of the  Board,  immediately  prior to the
            merger or  consolidation,  do not,  immediately  after the merger or
            consolidation,  constitute  a majority of the Board of  Directors of
            the  corporation  issuing  cash  or  securities  in  the  merger  or
            consolidation, or

                  (B) The sale or other  disposition of all or substantially all
            the assets of the Company.]

            (b) Board Authority to Make Adjustments.  Any adjustments under this
Section 15 will be made by the Board or the Committee, whose determination as to
what  adjustments,  if any,  will be made and the extent  thereof will be final,
binding and  conclusive.  No fractional  shares will be issued under the Plan on
account of any such adjustments.


                                      -8-

                                                                           DRAFT

16.  No Employment Rights
     --------------------

            Nothing  contained  in the  Plan or in any  option  agreement  shall
confer upon any optionee any right with  respect to the  continuation  of his or
her employment or other  relationship  with the Company or any of its Affiliates
or interfere  in any way with the right of the Company or any of its  Affiliates
at any time to  terminate  such  employment  or  relationship  or to increase or
decrease the compensation of the optionee.


17.  Amendment, Modification or Termination of the Plan
     --------------------------------------------------

            (a) The Board may at any time modify,  amend or terminate  the Plan,
provided that to the extent required by applicable  law, any such  modification,
amendment or termination shall be subject to the approval of the stockholders of
the Company.

            (b) The  modification,  amendment or  termination  of the Plan shall
not,  without  the  consent of an  optionee,  affect his or her rights  under an
option  previously  granted  to him or her.  With the  consent  of the  optionee
affected,  the Board or the  Committee  may amend or modify  outstanding  option
agreements  in a manner  not  inconsistent  with the Plan.  Notwithstanding  the
foregoing, the Board shall have the right (but not the obligation),  without the
consent  of the  optionee  affected,  to  amend  or  modify  (i) the  terms  and
provisions of the Plan and of any outstanding  Incentive Stock Option agreements
granted  under  the Plan to the  extent  necessary  to  qualify  any or all such
options for such favorable federal income tax treatment  (including  deferral of
taxation upon exercise) as may be afforded incentive stock options under Section
422 of the Code,  (ii) if the  Company is or becomes a  Reporting  Company,  the
terms and  provisions  of the Plan and the  option  agreements  entered  into in
connection  with any outstanding  options to the extent  necessary to ensure the
qualification  of the Plan and such options  under Rule 16b-3 (if  applicable to
the Plan and such  options),  and (iii) if the Company is or becomes a Reporting
Company,  the terms and provisions of the Plan and the option agreements entered
into in  connection  with any  outstanding  option to the extent  that the Board
determines  necessary to preserve the deduction of compensation  paid to certain
optionees who are "covered employees," within the meaning of Treasury Regulation
Section  1.162-27(c)(2),  as a result of the grant or exercise of options  under
the Plan.


18.  Withholding
     -----------

            (a) The  Company  shall have the right to deduct and  withhold  from
payments or distributions of any kind otherwise due to the optionee any federal,
state or local taxes of any kind  required by law to be so deducted and withheld
with  respect to any shares  issued  upon  exercise  of options  under the Plan.
Subject to the prior  approval  of the  Company,  which may be  withheld  by the
Company  in its  sole  discretion,  the  optionee  may  elect  to  satisfy  such
obligations,  in whole or in part by (i) causing the Company to withhold  shares
of Common Stock otherwise  issuable pursuant to the exercise of an option,  (ii)
delivering to the Company  shares of Common Stock already owned by the optionee,
or (iii)  delivering  to the Company cash or a check to the order of the Company
in


                                      -9-

                                                                           DRAFT

an amount  equal to the amount  required to be so  deducted  and  withheld.  The
shares  delivered in accordance with method (ii) above or withheld in accordance
with method (i) above shall have a Fair Market  Value equal to such  withholding
obligation  as of the  date  that  the  amount  of tax to be  withheld  is to be
determined.  An optionee who has made (with the Company's  approval) an election
pursuant to method (i) or (ii) of this Section 18(a) may only satisfy his or her
withholding  obligation with shares of Common Stock which are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.

            (b) The  acceptance  of shares of Common  Stock upon  exercise of an
Incentive  Stock  Option  shall  constitute  an agreement by the optionee (i) to
notify the Company if any or all of such shares are  disposed of by the optionee
within two (2) years from the date the option was granted or within one (1) year
from the date the shares were issued to the optionee pursuant to the exercise of
the option, and (ii) if required by law, to remit to the Company, at the time of
and in the case of any such  disposition,  an amount  sufficient  to satisfy the
Company's  federal,  state and local withholding tax obligations with respect to
such  disposition,  whether or not, as to both (i) and (ii),  the optionee is in
the employ of the Company or its Affiliate at the time of such disposition.


19.  Cancellation and New Grant of Options, etc.
     -------------------------------------------

            The Board or the Committee  shall have the  authority to effect,  at
any time and from time to time, with the consent of the affected optionee(s) the
(i) cancellation of any or all outstanding  options under the Plan and the grant
in  substitution  therefor of new options under the Plan (or any successor stock
option plan of the Company)  covering the same or different numbers of shares of
Common Stock and having an option exercise price per share which may be lower or
higher  than the  exercise  price per share of the  cancelled  options,  or (ii)
amendment of the terms of the option agreements  entered into in connection with
any and all  outstanding  options  under the Plan to provide an option  exercise
price per share which is higher or lower than the  then-current  exercise  price
per share of such outstanding options.


20.  Effective Date and Duration of the Plan
     ---------------------------------------

            (a) Effective Date. The Plan shall become  effective when adopted by
the Board,  but no Incentive  Stock Option  granted  under the Plan shall become
exercisable  unless and until the Plan shall have been approved by the Company's
stockholders.  If such  stockholder  approval is not obtained within twelve (12)
months after the date of the Board's adoption of the Plan, no options previously
granted  under the Plan shall be deemed to be  Incentive  Stock  Options  and no
Incentive  Stock  Options  shall be granted  thereafter.  Amendments to the Plan
shall  become  effective  as of the  latest of (i) the date of  adoption  by the
Board,  (ii) the date set  forth in the  amendments  or (iii) in the case of any
amendment requiring  stockholder approval (as set forth in Section 17), the date
such amendment is approved by the Company's  stockholders.  Notwithstanding  the
foregoing,  no Incentive  Stock Option granted on or after the effective date of
any such amendment requiring stockholder approval to qualify for incentive stock
option treatment under Section 422 of the Code shall become  exercisable  unless
and until such amendment shall have been approved by the Company's stockholders.
If such  stockholder  approval is not obtained  within twelve (12) months of


                                      -10-

                                                                           DRAFT


the  Board's  adoption  of such  amendment,  no options  granted on or after the
effective date of such amendment shall be deemed  Incentive Stock Options and no
Incentive  Stock  Options  shall  be  granted   thereafter.   Subject  to  above
limitations,  options  may be  granted  under  the  Plan at any time  after  the
effective  date of the Plan and  before the date  fixed for  termination  of the
Plan.

            (b)  Termination.  Unless sooner  terminated by the Board,  the Plan
shall  terminate  upon the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board.  After  termination of the
Plan, no further options may be granted under the Plan; provided,  however, that
such termination will not affect any options granted prior to termination of the
Plan.


21.  Governing Law
     -------------

            The  provisions  of this Plan shall be  governed  and  construed  in
accordance  with  the laws of the  State of  [Delaware]  without  regard  to the
principles thereof relating to the conflicts of laws.


                                      -11-

EX-10

                                    CONTRACT

     THIS AGREEMENT, made and entered into this 1st day of March, 2001 by and
between TOPAZ GROUP, INC., a corporation organized and existing under the laws
of the State of Nevada and licensed to do business in Missouri, hereinafter
called "Licensee," and THE CURATORS OF THE UNIVERSITY OF MISSOURI, a public
corporation of the State of Missouri, hereinafter called "University".

     This Agreement constitutes the complete understanding among the parties
hereto, and any alteration, amendment, or modification of any of the terms and
conditions shall not be valid unless made pursuant to a written agreement signed
by each of the parties. Any other agreement or understanding shall be null and
void. Both parties represent that there is no conflict with any other agreement.
This agreement shall be construed under and in accordance with the law of the
State of Missouri.

     WITNESSETH: That for and in consideration of the acceptance of Licensee's
proposal and the award of this Contract to Licensee by University, and in
further consideration of the agreements and undertakings of the parties
hereinafter set forth, it is agreed by and between the parties hereto as
follows:

     1.   Licensee shall receive Topaz Gemstone Irradiation Capacity as set
          forth in Licensee's proposal and as amended by letter dated April 4,
          2000, in strict accordance with, and as described in the
          specifications entitled, "Topaz Gemstone Irradiation License," dated
          December 9, 1999, which were prepared by the Director,
          Procurement/Materials Management, University of Missouri-Columbia,
          Columbia, Missouri, and are on file in the Office of the Director,
          Procurement/Materials Management, University of Missouri-Columbia,
          Columbia, Missouri, said specifications being hereby made a part of
          this Contract as fully as if attached hereto, or set forth herein,
          said items to be furnished in strict accordance with the Contract
          Documents.

     2.   The Contract Documents shall consist of the following parts:

          a.   This Instrument;

          b.   Licensee's Bond for Performance;
          c.   University's Request for Proposal dated December 9, 1999;
          d.   Specifications referred to in the paragraph numbered 1 above,
               together with Addendum Numbers 1 and 2; e. Appendix A; f.
               Licensee's Proposal dated February 14, 2000, addressed to The
               Curators of the University of Missouri, Columbia, Missouri, and
               as amended by letter dated April 4, 2000; and g. Notice of Award.

     3.   This Instrument, together with the documents hereinabove mentioned,
          form the Contract, and they are as fully a part of this Contract as if
          attached hereto or herein repeated. In the event that any provision in
          any of the component parts of





          this Contract conflict with any provision of any other component
          parts, the provision in the component part first enumerated herein
          shall govern, except as otherwise specifically stated.

     4.   No member or officer of the Board of Curators of the University of
          Missouri incurs or assumes any individual or personal liability by the
          execution of this Contract or by reason of the default of University
          in the performance of any of the terms hereof. All such liability of
          members or officers of the Board of Curators of the University of
          Missouri as such is hereby released as a condition of and
          consideration for the execution of this Contract.

     5.   University agrees that it will not assert any immunity from attachment
          in aid of execution or from execution upon its property.


     IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed, in triplicate, on the day and year first above written.


ATTEST                                        TOPAZ GROUP, INC.

By   /s/ Authorized Signatory                /s/ Authorized Signatory
     ---------------------------------       -----------------------------------
                                             SELLER

                                             THE CURATORS OF THE UNIVERSITY
                                             OF MISSOURI

                                             By  /s/ Authorized Signatory
                                                 -------------------------------
                                                    (Insert Signature Block)



                                      -2-



                                                                    APPENDIX A


I. INTRODUCTION
This appendix shall provide detailed terms and conditions in support of an
exclusive license Agreement, made and entered into by and between THE CURATORS
OF THE UNIVERSITY OF MISSOURI, a public corporation of the State of Missouri,
contracting on behalf of the University of Missouri-Columbia Research Reactor
Center (hereinafter "University")and THE TOPAZ GROUP, INC. (hereinafter
Licensee). The exclusive license, awarded pursuant to Request for Bid
(RFB)#H-012500, shall apply to University's Topaz Gemstone Irradiation Capacity.

Service provided to Licensee shall include irradiation service only. University
shall irradiate topaz gemstones encapsulated within specialized irradiation
containers. Licensee shall fabricate, at Licensee's expense, all irradiation
containers not transferred to the Licensee at the inception of this Agreement
and shall maintain all irradiation containers. Licensee shall submit to
University irradiation containers loaded, sealed, and ready for irradiation. The
licensee shall make all determinations concerning duration of radiation exposure
and priority for each container. Following irradiation, irradiation containers
shall be returned to the Licensee unopened. All assays and analyses for the
purpose of release of radioactive byproduct material to the unlicensed public,
domestic and abroad, shall be the responsibility of the Licensee.

II. TERM OF AGREEMENT

This Agreement shall be effective for a period of four (4)years, beginning on
March 1, 2001, ending on February 28, 2005. Following completion of the initial
four (4)year license agreement, this agreement may be extended on an annual
basis upon mutual agreement of both parties. The start date of this Agreement
may be modified upon mutual agreement of both parties.

III. FEES, INVOICING, and CONTRACT SECURITY

     A.   Fee for Irradiation Capacity

          The fee for irradiation capacity shall be calculated using a charge
          rate of $15.38 per hour (based upon the annual projected on-line time
          (150 hours/week)and the irradiation capacity fee bid of $120,000.00
          per position (see RFB#H012500)). The fee shall include:

          1. Payment for irradiation container exposure hours. This component of
             the fee calculation shall be based upon the actual irradiation
             exposure hours, rounded to the nearest whole hour.

             a. If irradiation exposure time for an individual irradiation
                container is between 95% and 105% or within one (1)hour of the
                requested time, the actual irradiation hours for the container
                shall he applied to the fee for irradiation capacity.

             b. If irradiation exposure time for an individual container exceeds
                105% of the requested time but is less than 200% of the
                requested time, the





                                                                    APPENDIX A


                irradiation exposure hours for the container
                equivalent to 105% of the requested time shall be applied to the
                fee for irradiation capacity.

             c. If irradiation exposure time for an individual irradiation
                container exceeds 200% of the requested time, the irradiation
                container exposure hours for the container shall not be applied
                to the fee for irradiation capacity.

             d. If irradiation exposure time for an individual irradiation
                container is less than 95% of the requested time, the actual
                irradiation hours for the container shall be applied to the fee
                for irradiation capacity.

          2. Payment for all hours for which no irradiation containers have been
             submitted for irradiation by licensee. Irradiation containers shall
             not be considered submitted unless received twenty-four (24) hours
             prior to the requested start of irradiation.

          3. Payment for all hours that irradiation exposure is ceased due to
             University operational limitations (see section IV. A.).

          4. Payment for all hours that irradiation exposure is ceased due to
             non-compliance with University approved procedures and
             specifications (see section V.).

          5. Payment for all hours that irradiation exposure is ceased due to a
             mechanical failure of a container that prohibits University's
             ability to irradiate containers.

     B.   Fee for Irradiation Container Handling

          1. Fee for irradiation container handling shall be $300 per container,
             per irradiation. One (1)insertion is typically required to
             successfully perform an irradiation. If additional insertions are
             requested by the Licensee (scheduling change.. .)or are required
             due to a University operational limitation as described in section
             IV. A., the $300 handling fee shall be applied for each additional
             insertion.

     C.   Invoicing and Payments

          1. The fee for irradiation capacity shall be paid monthly. On or
             before the start date of the contract period, the Licensee shall
             pay a $40,000.00 deposit to University. At the conclusion of each
             month of the contract period, an invoice will be generated
             corresponding to the actual irradiation capacity fee. At the
             conclusion of the contract period and upon final settlement of
             charges, the deposit shall be returned to the Licensee.

          2. The fee for irradiation container handling will be invoiced
             monthly.

          3. All invoices must be paid within 30 days of the invoice date. If
             payment is not received within 30 days of the invoice date,
             University shall provide in



                                      -4-


                                                                    APPENDIX A

             accordance with Section 14, Information For Respondents and General
             Conditions, University of Missouri Request For Proposal
             (RFP#HO12500).

     D.   Accountings

          1. Upon delivery at University, Licensee shall provide to University a
             listing of the requested irradiation exposure hours and irradiation
             priority for each container.

          2. University shall provide to Licensee a monthly written accounting
             of all charges included in the monthly invoices that depicts the
             official representation of the monthly charges. The accountings
             shall list each irradiation container irradiated including a
             verification of the requested run hours for each container.
             University operational anomalies known to have affected service
             shall be included in the report.

          3. Licensee shall have the right to request an examination of
             University's books and records relative to such monthly written
             accounting. In that event, Licensee and University shall select a
             mutually agreed upon independent auditor to perform the
             examination. If there is a discrepancy between the results of such
             examination and the monthly written accounting, appropriate
             adjustments shall be made. If a dispute remains, Licensee shall so
             advise University in writing (together with furnishing University
             with written proof of the dispute), whereupon the parties shall
             negotiate in good faith in an attempt to resolve the dispute. If
             any such dispute is not resolved within thirty (30) days after
             University's receipt of such written notice and written results,
             either Licensee or University may submit the dispute to non-binding
             arbitration, under the rules of the American Arbitration
             Association. Subject to the foregoing, in the event the independent
             auditor's examination of University's books and records reveals
             more than a 25% difference between the results of such examination
             and the monthly written accounting, University shall reimburse the
             Licensee for the cost of any and all expenses incurred by Licensee
             in conducting such examination. In the event the independent
             auditor's examination of University's books and records reveals no
             less than a 25% difference between the results of such examination
             and the monthly written accounting, Licensee shall bear the cost
             for any and all expenses incurred by Licensee in conducting such
             examination and shall reimburse University for costs of any and all
             expenses incurred by University in conjunction with said
             examination.



                                      -5-

                                                                    APPENDIX A


     E.   Contract Security

          1. Licensee shall, at own expense, on or before the start date of this
             Agreement, furnish a performance bond equivalent to one (1)year
             irradiation capacity fee ($480,000) as security for the faithful
             performance of this Agreement. The bond provided shall be effective
             for a one year term beginning on the start date of this agreement
             and shall be renewable, via continuation certificate, for
             additional one year periods at the sole option of the surety.
             Failure of the surety to provide renewal(s) of this bond shall not
             constitute default under this agreement. However, if Licensee fails
             to secure a substitute surety, acceptable to University for any
             one-year period, that failure shall constitute default under this
             agreement. In no event shall the surety's total liability under
             this bond exceed $480,000.

          2. The surety of such bond shall be a duly authorized surety company
             satisfactory to the University. Licensee shall furnish, at own
             cost, to University, on or before the start date of this Agreement,
             a properly certified copy of the current Certificate of Authority
             to transact business in the State of Missouri of the surety
             company, which proposes to execute the performance bond. Such
             certificate will remain on file with University. The University
             will approve no performance bond until such certificate is
             furnished, unless there already is on file with the University such
             a current certificate of such Surety Company, in which no
             additional certificate will be required during the period of time
             for which such current certificate remains in effect.

          3. In the event of default, surety payment shall be remitted within
             thirty (30)days of the default date.

          4. In the event of default, Licensee's property shall be disposed in
             accordance with Section III, subsection D (see addendum #2)of RFB
             #12500. If Licensee's property is abandoned at University, property
             shall be considered forfeited to University.

     F.   Addresses for Notifications

          1. All notices, reports, invoices, accountings, and other
             correspondence specified in this agreement shall be sent to the
             following addresses unless either party notifies the other of a
             change of address.

             University:     University of Missouri - Columbia
                             Research Reactor Center
                             Columbia, MO 75211

             TGI:            The Topaz Group, Inc.
                             C/o Quali-Tech, Inc.
                             6200 Arrowhead Lake Dr.
                             Columbia, MO 65203



                                      -6-


                                                                    APPENDIX A

IV.   OPERATIONAL CONDITIONS

     A.   University Operational Limitations

          1. University Operational Capacity Limitations are as follows:

             o  Dry Storage Capacity: Forty-eight (48)irradiation containers
             o  Reactor Pool Storage Capacity: Twenty-four (24)irradiation
                containers
             o  Reactor Pool Irradiation Container Dose Limit for Removal:
                Measured rate of 300mr/hr
             o  Reactor Irradiation Positions: Four (4)irradiation containers

          2. The total number of irradiation containers that may reside at
             University at any one time is seventy-six (76). Incoming shipments
             of irradiation containers shall not contribute to the total,
             provided that an equal or greater number of irradiation containers
             are shipped from MURR on the day of the incoming shipment.

          3. Dose rate measurements for irradiation containers in the reactor
             pool may be executed no earlier than 7 days from the end of
             irradiation and a maximum of once daily Monday through Friday
             thereafter or as mutually agreed.

          4. If "800 series" irradiation containers are utilized, two (2)or four
             (4)"800 series" containers must be irradiated simultaneously to
             fully utilize irradiation capacity. If one (1)"800 series"
             container is irradiated in a position, then one (1)adjacent
             irradiation container must remain empty.

          5. University shall routinely store up to three (3)Licensee-owned and
             supplied fifty five (55)gallon drum-type transport containers for
             the purpose of shipping irradiation containers. The number, type,
             size, and storage location of transport containers may be modified
             upon mutual agreement by both parties.

     B.   Irradiation Container Contents and Damage

          1. Topaz is the only material approved for irradiation under this
             agreement. Other materials may be irradiated, but require prior
             written approval from University. Said approval shall not be
             unreasonably withheld. Costs associated with University's
             evaluation of other materials shall be charged to the licensee.

          2. University will be responsible for the actual replacement cost of
             any containers irreparably damaged during handling by University
             personnel. Cost to University for replacement of irradiation
             containers shall not exceed $15,000.00 per container. Licensee
             shall bear all costs for replacement of containers that require
             replacement as a result of normal operations and wear.



                                      -7-

                                                                    APPENDIX A


     C.   Receipt and Shipment of Irradiation Containers

          1. Containers to be irradiated shall be received at University not
             less than twenty-four (24)hours prior to the requested start of
             irradiation or as mutually agreed.

          2. Containers to be shipped from University must meet the University
             operational limit for removal from the reactor pool forty-eight
             (48)hours prior to scheduled shipment or as mutually agreed.

          3. Shipments into or out of University may be executed on Wednesday's
             and/or Thursday's between the hours of 9:00 am and 4:00 pm Missouri
             local time unless another day or time is mutually agreed. Shipments
             may not be executed on days University is closed for holidays.

          4. Shipment dates shall be scheduled and specific shipment contents
             shall be reported to each party in writing no later than 4:00 pm on
             the Monday prior to shipment or as mutually agreed.

          5. All shipments to University shall be made in accordance with
             University instructions and shall comply with all state, federal,
             and/or international laws governing the shipment of radioactive
             byproduct material. Shipments from University shall comply with all
             state, federal, and/or international laws governing the shipment of
             radioactive byproduct material.

          6. All shipping costs shall be the responsibility of the Licensee.
             Commercial carriers shall be paid directly by the Licensee.

          7. The Licensee shall be responsible for providing all transport
             containers. All costs associated with the purchase, maintenance,
             and regulatory compliance of transport containers and shipping
             supplies shall be the responsibility of the Licensee.

          8. Transport containers and commercial carriers of all shipments are
             subject to University approval. Said approval shall not be
             unreasonably withheld.

V.    PROCEDURES, DOCUMENTATION, and QUALITY ASSURANCE

   As stated later in this section, some procedures used by the Licensee shall
   be subject to University approval. Such procedures shall be reviewed and
   approved by University on or before the start date of this Agreement.
   Procedures shall be issued to University via controlled copy and all
   subsequent revisions must be reviewed and approved by University prior to
   utilization.

     A.   Irradiation Containers

          1. All procedures used for the construction, pre-irradiation handling,
             packing, sealing, and marking of irradiation containers must be
             approved by University. All irradiation containers submitted to
             University must



                                      -8-

                                                                    APPENDIX A


             comply with University-approved design specifications and
             construction procedures detailed in RFB#HO12500 Technical
             Information Packet or another design/procedure approved by
             University.

          2. University reserves the right to disqualify any irradiation
             container that has an apparent abnormality or if irradiation, tests
             or analyses performed by University suggest that the
             characteristics or contents of an irradiation container are not in
             accordance with the terms of this Agreement or represent a
             substantial risk of damage to the reactor, its subsystems, or a
             safety hazard to University personnel. Tests and analyses performed
             by University may include any method up to and including opening
             and inspection of irradiation containers and contents. Irradiation
             containers opened by University prior to irradiation will be
             re-sealed by University. Irradiation containers opened by
             University after irradiation will not be re-sealed, but will be
             adequately secured for transport. Tests and analyses may be
             performed before or after irradiation but shall not substantially
             affect the flow of production.

     B.   Topaz

          1. All procedures used for the handling and preparation of topaz
             immediately prior to encapsulation into irradiation containers must
             be approved by University.

     C.   Shipping

          1. All procedures used for the packaging and shipment of irradiation
             containers must be approved by University.

     D.   Documentation

          1. All documentation (forms and records)submitted to University or
             used by University for the purpose of documenting activities
             related to this Agreement must be approved by University.

     E.   Quality Assurance

          1. University may perform quality assurance audits of Licensee's
             compliance with University approved procedures. Quality assurance
             audits may be performed prior to the start date of this Agreement
             and at any time during the term of the Agreement. Quality assurance
             audits may be performed at any site where University approved
             procedures are performed. If subcontractors or subsidiaries of the
             Licensee perform University approved procedures, the Licensee shall
             make all necessary arrangements for quality assurance audits at
             those sites owned and operated by subcontractors or subsidiaries.
             University shall provide Licensee with advance notice of quality
             assurance audits and quality assurance audits will be performed
             during normal business hours. University shall bear all costs to
             University associated with quality assurance audits.



                                      -9-

                                                                    APPENDIX A


VI.   LICENSES AND REGULATORY COMPLIANCE

     A.   Licenses

          1. Both parties shall maintain licenses, and permits where applicable,
             required to legally perform the activities described in this
             Agreement.

     B.   Regulatory Compliance

          1. Both parties shall comply with all local, State, federal, and
             international laws and regulations while engaging in activities
             pursuant to this Agreement.




                                      -10-


                                                                    APPENDIX A



                                      RIDER

          1. Licensee shall have the right to request an examination of
University's books and records relative to such monthly written accounting. In
that event, Licensee and University shall select a mutually agreed upon
independent auditor to perform the examination. If there is a discrepancy
between the results of such examination and the monthly written accounting,
appropriate adjustments shall be made. If a dispute remains, Licensee shall so
advise University in writing (together with furnishing University with written
proof of the dispute), whereupon the parties shall negotiate in good faith in an
attempt to resolve the dispute. If any such dispute is not resolved within
thirty (30) days after University's receipt of such written notice and written
results, either Licensee or University may submit the dispute to non-binding
arbitration, under the rules of the American Arbitration Association. Subject to
the foregoing, in the event the independent auditor's examination of
University's books and records reveals more than a 25% difference between the
results of such examination and the monthly written accounting, University shall
reimburse Licensee for the cost of any and all expenses incurred by Licensee in
conducting such examination. In the event the independent auditor's examination
of University's books and records reveals no less than a 25% difference between
the results of such examination and the monthly written accounting, Licensee
shall bear the cost for any and all expenses incurred by Licensee in conducting
such examination and shall reimburse University for cost of any and all expenses
incurred by University in conjunction with said examination.

          2. Any legal notifications shall be sent to:


                Jenkens & Gilchrist Parker Chapin LLP
                The Chrysler Building
                405 Lexington Avenue
                New York, New York 10 174
                Attn: Mitchell S. Nussbaum, Esq.

          3. University agrees that it will not assert any immunity from
attachment in aid of execution or from execution upon its property.

          4. Licensee's corporate name should be Topaz Group Incorporated
throughout.

EX-10

                             Joint Venture Agreement
                             -----------------------

     This AGREEMENT was made at the date 6 of September 1999, at TOPAZ GEMS
GROUP INC., located at 126/1 Krungthonburi Road, Banglampoo Lang, Klongsarn,
Bangkok 10600, THAILAND.
     By and Between:
     CREATIVE GEMS & JEWELRY COMPANY LIMITED, By Mr. Kiattichai Tantikitmanee
and Miss Jariya Sae-Fa Authorized Director, Its Head Office located at 19/3 Moo
4, Tambol Thasala, Amphur Muang Lopburi, Lopburi Province, THAILAND, hereinafter
referred to as "CREATIVE" of the one part.
     And:
     MUTHAMA GEMSTONES (KENYA) LIMITED, By Mr. Johnson Muthama Authorized
Director, of Loita House, 13th Floor, Loita Street, Nairobi - Zip Code, KENYA
EAST AFRICA, hereinafter referred to as "MGK" of the other part.
     WHEREAS:
     CREATIVE AND MGK are desirous of engaging in a joint venture business on
partnership of procuring ROUGH RUBY STONES for cooking and polishing and
ultimately selling the said polished gems at a profit.
     AND WHEREAS
     Both CREATIVE AND MGK shall have equal shareholding in the joint venture
business.
     NOW IT IS AGREED as follows;

1.   (a)  CREATIVE AND MGK shall purchase rough ruby stones from ROCKLAND KENYA
          LIMITED with funds provided equally by both CREATIVE AND MGK.

     (b)  All purchases made from ROCKLAND KENYA LIMITED shall be settled within
          sixty (60) days from the date of shipment and as shown on the Airway
          Bill.

     (c)  The cost of the Rough Ruby Stones shall be based on a set price as
          previous less a discount of 25%.

2.   MGK guarantees procurement of the Rough Ruby Stones from ROCKLAND KENYA
     LIMITED as and when required and MGK confirms ROCKLAND KENYA LIMITED has
     capability of providing four (4) parcels per annum (i.e. about $250,000/=
     per quarter of various qualities i.e. NO. I, II, III in all sizes as
     before.

3.   CREATIVE shall receive the Rough Ruby Stones for cooking and cutting the
     cost of which shall be borne equally by CREATIVE AND MGK and fixed at $135
     per Kilogram for cooking and $ 0.60 per carat cutting respectively. These
     charges will be recovered from the sales proceeds. The cooking and cutting
     of all Joint Venture Ruby should be completed within Sixty (60) days from
     date of delivery of the material.

4.   CREATIVE shall have the first priority to purchase the cut/polished Ruby
     Stones at a price to be set by both CREATIVE AND MGK, if creative appeared
     in signed in negative of purchasing, creative shall have the rights to
     consider the third party purchaser(s).

5.   Should the cut/polished Ruby Stones be sold to a third party as stated on
     clause (4) of this agreement, then CREATIVE shall be entitled to a 20%
     commission of the selling price of such sale, the commission sum as above
     shall have to submit to creative within 7 days



                                      -1-


     after received payment completely from the third party purchaser(s), in
     ordinary office hour of the local time of receiving.

6.   That upon the sales of the cut/polished ruby stones, the proceeds thereof
     shall immediately be apportioned equally between CREATIVE AND MGK.

7.   CREATIVE shall prepare and maintain the books of accounts which shall be
     joint verified (quarterly) by representatives of CREATIVE AND MGK.

8.   Termination of this agreement shall be by a written notice of sixty (60)
     days by either party.

9.   If this agreement should have to terminated in which from any caused else,
     the two parties agreed as follows;

     (A)  Should CREATIVE breach any of the terms of this agreement and thereby
          caused its termination, MGK shall continue to procure and supply Rough
          Ruby Stones to CREATIVE for a further twelve (12) months but the
          procurement price shall be increased by 25% from the agreed price and
          conditions stated in clauses (2) and (3) of this agreement.

     (B)  Should MGK breach any of the terms of the agreement herein and thereby
          caused its termination, MGK shall continue to procure and supply Rough
          Ruby Stones to CREATIVE for a further twelve (12) months but at a
          discount of 25% from the agreed price and conditions stated in clauses
          (2) and (3) of this agreement.

     (C)  Should the termination appeared in the other caused from the above,
          MGK shall continue to procure and supply rough ruby stones to creative
          for a further twelve (12) months at the agreed price and conditions
          stated in clauses (2) and (3) of this agreement.

10.  Should the Joint Venture Business ceased to operate, the both CREATIVE AND
     MGK shall share the net assets equally.

11.  Should the termination appeared by breach of agreement of one part and
     caused damage(s) and/or loss(es) to the another part, the another part
     upholds the rights to use juristic procedure in any country stated as
     below, to claim for business damage(s) and/or loss(es) value either direct
     or indirect damage(s) and/or loss(es) value.

12.  All disputes and questions which may at any time arise between the parties
     hereto or their respective representatives or assigns touching or arising
     out of or in respect of this agreement shall be referred to a single
     arbitrator in accordance with the provisions of the Arbitration Laws of
     either Kenya or Thailand.

13.  Any kind of law suit according to this agreement will be resolved by and
     decided according to the law and practices of any Court of competent
     jurisdiction of Thailand, Kenya, British Virgin Island and United States of
     America.

14.  Any change(s), modification(s) or amendment(s) to this agreement must be in
     writing and signed by CREATIVE AND MGK.



                                      -2-


This Agreement for Joint Venture was made in two copies, each copy shall be
considered an original and binding document. Both parts acknowledged and
accepted all conditions stated in this agreement. The parties hereto have
executed and signed this agreement to the date first about written, in WITNESS
HEREOF:



CREATIVE GEMS & JEWELRY COMPANY LIMITED
AUTHORIZED DIRECTOR



/s/ Jariya Sae-Fa
------------------------------
(MISS JARIYA SAE-FA)



/s/ Kiattichai Tantikitmanee
------------------------------
(MR. KIATTICHAI TANTIKITMANEE)


MUTHAMA GEMSTONES KENYA LTD.
AUTHORIZED DIRECTOR



/s/ Johnson Muthama
------------------------------
(MR. JOHNSON MUTHAMA)


WITNESS




/s/ Aphichart Fufuangvanich
------------------------------
(DR. APHICHART FUFUANGVANICH)

WITNESS




/s/ Authorized Signatory
------------------------------


                                      -3-

EX-10

Ref:  CBD 1/0016

April 12, 2000

CREATIVE GEMS & JEWELRY COMPANY LIMITED
126/1 Krungthonburi Rd., Klongsan,
Bangkok 10600

Attention:  Miss Jariya Sae-Fa
            President

Subject:    Credit Facilities

Dear Sirs,

UOB Radanasin Bank Public Company Limited ("the Bank") is pleased to offer you,
the following credit facilities ("the Facilities") subject to the main terms and
conditions stated herein.

1.   LINE OF CREDIT            Thai  Baht  45,000,000/-  (Thai  Baht Fort Five
                               Million Only)
1.1. OVERDRAFT ("O/D")
     PURPOSE                   For working capital.
     AMOUNT                    Thai Baht 5,000,000/-
     INTEREST                  Rate At 2% per annum over the Bank's Minimum
                               Overdraft Rate ("MOR") prevailing from time to
                               time (currently 8.75% per annum) on a 365-day
                               year basis with monthly rests.

     Other Condition           Repayable on demand.

1.2. Letter Credit ("L/C"), and Trust Receipt (T/R")

     Purpose                   For opening irrevocable sight or usance L/C up
                               to 180 days covering your imports to Thailand

     Amount                    Thai Baht 10,000,000/-

     Commission and Interest
     Rate

     a)    L/C                 0.25% flat per 3 months

                                       1


     b)    T/R                 At 2% per annum over the Bank's Minimum
                               Lending Rate ("MLR") prevailing from time to time
                               (currently 8.5% per annum). Interest shall be
                               calculated on a 365-day year basis and on the
                               actual number of days elapsed and shall be
                               payable on the maturity of each T/R.

     Engagement                Fee 2.5% per annum, payable in advance for usance
                               L/C.

     Tenor                     Not exceeding 180 days.

     Repayment                 Repayable on the maturity of each T/R.
     Other Conditions          You are required to enter into a forward
                               exchange contract immediately on the day of
                               L/C issuance.

1.3. Packing Credit ("P/C") and Export Bills Negotiated ("EBN")

     Purpose                   For pre- Anderson post-export financing.

     Amount                    Thai Baht 20,000,000/-

     Interest Rate

     a)    P/C                 At 2% per annum over the Bank's MLR prevailing
                               from time to time.  Interest shall be
                               calculated on a 365-day year basis and on the
                               actual number of days elapsed and shall be
                               payable on the maturity of each P/C.

     b)    EBN                 (Usance L/C) At 2% per annum over the Bank's
                               MLR prevailing from time to time. Interest shall
                               be calculated on a 365-day year basis and on the
                               actual number of days elapsed and shall be
                               discounted up-front.

     Tenor                     Not exceeding 180 days.

     Repayment                 Repayable on the maturity of each P/C.

     Other Conditions          a)   P/C against L/C, not to exceed 80% of L/C
                                     amount.

                               b)   P/C against purchase order/sales contract is
                                    subject to the Bank's approval and not to
                                    exceed 70% of purchase order/invoice amount.
                                    You are required to furnish the original L/C
                                    to the Bank within 3 months after date of
                                    financing failing which P/C will have to be
                                    repaid.

1.4.  Export Bills Discounted ("EBD")

     Purpose                   For post-exporting financing

     Amount                    Thai Baht 10,000,000/-


                                       2



     Interest                  Rate At 2% per annum over the Bank's MLR
                               prevailing from time to time. Interest shall be
                               calculated on a 365-day year basis and on the
                               actual number of days elapsed and shall be
                               discounted up-front.

     Tenor                     Not exceeding 180 days.

     OTHER CONDITIONS          Drawees must be acceptable to the Bank.

2.   COLLATERAL

The Facilities and all moneys owing by you from time to time shall be secured
by:

     i.)   Registered  mortgage  over land title deed  no.77527  with total land
           area of 3-2-31.8  Rais owned by Erchart  Development  Co.,  Ltd.,  at
           Bang-Pai, Pasri-Charoen, Bangkok. The mortgage value shall be B45m.

     ii.)  Joint & Several Personal  Guarantee for Thai Baht  45,000,000/-  from
           Miss Jariya Sae-Fa and Mr. Kiattichai Tantikitmanee.

     iii.) Corporate   Guarantee  for  Thai  Baht   45,000,000/-   from  Erchart
           Development Co., Ltd.


3.   IMPLEMENTATION

     The Facilities ca be utilized only on completion of legal documentation and
     fulfillment of such conditions precedent as the Bank may require. The Bank
     has the right to implement a part of the Facilities and/or change the terms
     of its use from time to time.

4.   PERIODIC REVIEW

     Notwithstanding the above terms and conditions, you would appreciate that
     the availability of the Facilities are subject to the Bank's periodic
     review and that any subsequent change in the Facilities shall be at the
     Bank's sole discretion.

5.   COSTS AND EXPENSES

     All costs and expenses, legal or otherwise, connected with the provision
     protection and realization of securities, and the processing implementation
     and recovery of moneys owing under the Facilities shall be payable by you
     on demand, on a full indemnity basis, together with interest from the date
     the costs and expenses are incurred to the date of full payment at such
     rate as the Bank may prescribe.

6.   FINANCIAL STATEMENTS AND INFORMATION

     You shall supply to the Bank on request all statements, information,
     materials and explanation relating to your business and financial position
     including, where appropriate, Annual Audited Financial Statements and
     Directors'/Auditors' Reports which shall be provided not later than 6
     months after the close of each financial year.


                                       3



7.   REORGANIZATION/CHANGES IN MEMORANDUM & ARTICLES OF ASSOCIATION

     You shall not, without the Bank's prior written consent (which will not
     be unreasonably withheld), undertake or permit any reorganization,
     amalgamation, reconstruction, take-over, substantial change of
     shareholders or any other schemes of compromise or arrangement affecting
     your present constitution or amend or alter any of the provisions in
     your Memorandum & Articles of Association relating to your borrowing
     powers and principal business activities.

8.   ACCEPTANCE

     If the above is acceptable to you, kindly confirm by signing and returning
     the duplicate of this letter to the Bank, together with your Board of
     Directors' Resolution of Acceptance. Unless extended by the Bank, this
     offer will be treated as lapsed and cancelled after 14 days from the date
     hereof.

     We are pleased to be of service to you and look forward to a long and
     mutually beneficial relationship with you.

     For UOB Radanasin Bank Public Company Limited

/s/ Amporn Suchiani                     /s/ Steven Ngeo
------------------------------          -----------------------------
Mr. Amporn Suchinai                     Mr. Steven Ngeo
Corporate Banking Department 1          Head, Commercial Banking
                                        Division



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


                                       4



We accept all the above terms and conditions and confirm that the directors who
have signed herein are duly authorized in accordance with the latest status and
all other documents submitted to the Bank


Signed on the 12th day of April, 2000.


/s/ Authorized Signatory
---------------------------------------
For and on behalf of
Creative Gems & Jewelry Company Limited
(AUTHORIZED DIRECTORS)


                                       5

EX-10

                                                                    EXHIBIT 10.4

                  [AS TRANSLATED BY INTERNATIONAL TRANSLATIONS]

                                                           THAI FARMERS BANK PCL

                               OVERDRAFT AGREEMENT

                                                       OFFICE: DOW KANONG BRANCH

                                 13TH JULY 2000

         I, Creative Gems and Jewelry Company Limited, aged - years resided at
126/1 Krung Thonburi Road, Banglumpoo Lang Sub-district, Khlong San District,
Bangkok Metropolis, hereafter called the "Borrower" enter into this agreement
with Thai Farmers Bank PCL which hereinafter called the "Lender" for the
evidence that:

     1. The Borrower requests to borrow money from the Lender for the amount not
exceeding THB 4,000,000 (four million Baht). Both parties agree that the
Borrower may borrow from the Lender at any time required and the Lender may
consider and permit, as appropriate and in accordance with method and procedure
for providing overdraft. All withdrawal documents in the form of checks or any
form used by the Borrower as an evidence to borrow shall be considered as an
integral part of this agreement. Amount drawn down by the Borrower from the
Lender in the mentioned document is also considered the borrowing in this
agreement.

     2. The Borrower agrees to pay interest to the Lender on the amount borrowed
at the rate of MOR+1.0 percent per annum payable at the end of every month
within the working hours at the office of the Lender. If the payment date falls
on the holiday of the Lender, the payment shall be made on the next working day.

     3. Lending and borrowing in this agreement shall be in accordance with the
Bank's procedure. Regardless whether the Lender has made demand for payment or
not, if the Borrower defaults interest payments at the interest rate and due in
Clause 2, the Borrower agrees that the interest payable shall be combined to the
principal outstanding. Interest will then be determined on the new combined
principal applied at the same rate and schedule, as specified in Clause 2.

     4. The Borrower shall repay the borrowing in this agreement reduced
progressively and completely by 13th July 2000. This will not however surrender
the right of the Lender to demand a part and all of debts before they are due
for payment, as the Lender considered appropriate without having to provide
explanation. Regardless whether the Borrower has paid all borrowings as payable
or not, the Borrower may continue to borrow from the Lender. For this, the
Borrower agrees that money withdrawn from the Lender after the due date remains
to be



borrowed in this agreement, which the Lender may demand for payment at any time.
In case the Lender demands payment, the Borrower shall make payment as demanded
without hesitation.

     5. In case the Borrower defaults in any clauses of this agreement, the
Borrower agrees to be responsible for all damages, which the Lender should
receive, as a result of the default made by the Borrower. This includes expenses
for issuing warning, asking, demand, legal proceeding and enforcing to settle
all debts in full and completely.

     6. As an assurance for the Lender to agree lending and payment to the
Borrower, the Borrower has pledged the land title deeds with the registration
numbers of 36160, 36161, 36162 and 4993, 36163, 36164 in Talad Chanthaburi
Sub-district, Muang Chanthaburi District, Chanthaburi Province. The Borrower
also verifies that the assets pledged with the Lender are the assets, which the
Borrower has the lawful and solely right in ownership and the Borrower has not
deposited, pledged and entered into suretyship contract with any persons before,
as well as being assets without any obligations attached.

     7. Whether assets pledged in Clause 6 are kept with the Lender or the
Bank's representative or the Borrower or the Borrower's custodian, the Borrower
and Lender agree that such a safekeeping is strictly as custodian on behalf or
in the name of the Lender or the Borrower or the representative. In safekeeping,
the assets shall not be transferred to another place without a written
permission from the Lender. For any damages incurred with the assets, the
Borrower agrees to be responsible for the Lender and the Borrower will not
demand any charges for maintenance and compensation from the Lender.

     8. In case the Borrower defaults payments due in this agreement, the Lender
has the right to auction the pledged assets in the market three days after the
date of default and shall consider terms and conditions in this agreement to be
rightful for the Borrower to settle debts. When disposed, the Borrower agrees to
allow deduction of expenses from the net sales proceed and then makes payment
for interest and principal. If the net sales proceed is insufficient to settle
debts, the Borrower agrees to pay for the remaining completely.

     9. All letters communicated and/or all documents delivered to the Borrower
whether were sent by registered mail or unregistered mail or delivery in person
to the address specified in this agreement shall be considered to have correctly
made to the Borrower regardless whether the Borrower has received or not. In
case the delivery cannot be made because there is a change or removal of address
without the Borrower advising the Lender or the address specified could not be
found, it shall be considered that the Borrower has received and is aware of the
Lender's letter and/or documents.

     10. The Borrower agrees to be responsible for stamp duties sealed in this
agreement including fee and duties for legalizing this document to make
suretyship and redeem (if any). The Borrower has thoroughly reviewed and
understood the contents in this agreement and hereunder signed their names, as
evidence under the date specified above.


                                      -2-




                                                         Seal of Creative Gems &
                                                               Jewelry Co., Ltd.


         Signed :          -illegible-       -illegible-      Borrower

Mr. Kiatchai Tontikitmanee and Miss Jariya Sae Fa
on behalf of Creative Gems and Jewelry Company Limited

         Signed:           -illegible-                        Witness
                           (Mr. Suwat Wora-Itthinant)

         Signed:           -illegible-                        Witness
                           (Mrs. Laortip Jarusathapom)

         Signed:           -illegible-                        Writer/Printer
                           (Mr. Pirath Kiatthipongpinit)


                                      -3-

EX-21

                                                                  Exhibit 21.1


                             LIST OF SUBSIDIARIES
                             --------------------


1.      Creative Gems and Jewelry Co., Ltd.

2.      Advance Gems and Jewelry Manufacturing Company