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                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549

                                     FORM 10-KSB

         [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE SECURITIES EXCHANGE ACT OF 1934
              FOR THE FISCAL YEAR ENDED MARCH 31, 1997.
                                          or
         [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE SECURITIES EXCHANGE ACT OF 1934
              FOR THE TRANSITION PERIOD FROM ____________ TO ____________.

                            Commission file number 0-22520

                                      AMTEC, INC.
                                      -----------
                (Exact name of registrant as specified in its charter)

              Delaware                                52-1989122
              --------                                ----------
    (State or Other Jurisdiction of               (I.R.S. Employer
    Incorporation or Organization)               Identification No.)

             599 Lexington Avenue, 44th Floor, New York, New York  10022
             -----------------------------------------------------------
             (Address of principal executive offices, including zip code)

                                     212-319-9160
                                     ------------
                 (Registrant's telephone number, including area code)

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

                   Title of Each                  Name of Each Exchange
                Class so Registered                On Which Registered
                -------------------                -------------------
    Common Stock, $0.001 par value per share     American Stock Exchange


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



Check whether the registrant: (i) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (ii) has been subject to such filing requirements for the past 90
days.  Yes   X     No
           -----      -----

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

The issuer's revenues for the fiscal year ended March 31, 1997 were $0.

The number of shares outstanding of the registrant's common stock as of July 8,
1997 was 31,312,065 shares.  The aggregate market value of the common stock
(18,229,756 shares) held by non-affiliates, based on the closing price ($3.125)
of the common stock as of July 8, 1997 was approximately $57.0 million.

Transitional Small Business Disclosure Format:  Yes        No   X
                                                    -----     -----

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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.

    EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS ANNUAL REPORT ARE FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO ECONOMIC, COMPETITIVE,
GOVERNMENTAL, INTERNATIONAL AND TECHNOLOGICAL FACTORS AFFECTING THE COMPANY'S
REVENUES, JOINT VENTURES, OPERATIONS, MARKETS AND PRICES, AND OTHER FACTORS
DISCUSSED IN THE SECTION ENTITLED "RISK FACTORS" ON PAGES 7 THROUGH 11 OF THIS
ANNUAL REPORT.

                                          2.
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                                        PART I

Item 1.  BUSINESS

         AmTec, Inc. (the "Company") develops and finances communications 
networks in the People's Republic of China ("PRC").  The Company's Chinese 
communications networks include a Global Service Mobile system ("GSM") and a 
multimedia network, both in the northern province of Hebei, PRC.  The Company 
holds these interests through Sino-foreign joint ventures ("SFJVs"), which 
are the legally authorized vehicle for foreign investment in China.  
Consistent with PRC laws and regulations, the Company's SFJVs have entered 
into contracts with authorized network operators in the PRC to build networks 
and sell the assets of such networks to the operators for a portion of the 
cash-flow generated by operations of the networks.  On July 8, 1997, the 
Company changed its name to "AmTec, Inc." from "AVIC Group International, 
Inc."  

JOINT VENTURES IN THE PEOPLE'S REPUBLIC OF CHINA

    Each of the Company's joint ventures, Hebei United Communications Equipment
Company Limited ("Hebei Equipment") and Hebei United Telecommunications
Engineering Company Limited ("Hebei Engineering"), is organized under the laws
of the PRC as a Sino-foreign equity joint venture enterprise, a distinct legal
entity with limited liability.  Such entities are governed by the Law of the
People's Republic of China on Joint Ventures Using Chinese and Foreign
Investments, and implementing regulations related thereto (the "Equity Joint
Venture Law").  The parties to the joint ventures have contractual rights to the
financial returns of the joint venture in proportion to the joint venture
interests that they hold.  The transfer or increase of an interest in a
Sino-foreign equity joint venture enterprise requires agreement among the
parties to the venture and is effective upon approval of relevant government
agencies.  For a discussion of the risks associated with PRC laws, regulations
and policies, see "Risk Factors -- Risks Relating to Doing Business in the PRC
-- PRC Laws; Evolving Regulations and Policies."

JOINT VENTURE NETWORKS

    In March 1996, the Company formed a joint venture with a 60.8% equity
interest in Hebei Equipment.  As a result, Hebei Equipment was converted from a
PRC enterprise into a Sino-foreign joint venture company.  On April 15, 1997,
all PRC governmental approvals were finalized for the conversion of Hebei
Equipment to a Sino-foreign joint venture company. See "Certain Relationships
and Related Transactions."

    The Company, through Hebei Equipment, is currently involved in the
development of two communications networks in Hebei Province:  a digital
cellular telephone network (the "GSM Network") and a province-wide multimedia
network (the "Hebei Multimedia Network").  The GSM Network is being constructed
by Hebei Engineering, which is a 51%-owned subsidiary of Hebei Equipment and is
49%-owned by Nippon Telegraph and Telephone International ("NTTI"), a subsidiary
of Nippon Telegraph & Telephone Corporation.  The Hebei Multimedia Network,
which will link existing cable television systems in Hebei Province, is being
constructed by Hebei Equipment.

GSM NETWORK IN HEBEI PROVINCE

    Hebei Engineering is constructing the GSM Network pursuant to a 15-year
agreement (the "UNICOM Agreement"), dated February 9, 1996, with China United
Communications Co. ("UNICOM").  UNICOM holds one of two licenses to operate
cellular telephone networks in the PRC.  Under the terms of the UNICOM
Agreement, Hebei Engineering will build the GSM Network and sell ownership of
the GSM Network over the life of the agreement to UNICOM in exchange for a
majority share of cash flow generated by UNICOM from UNICOM's operation of the
GSM Network.  Hebei Engineering will also provide consulting assistance to
UNICOM in the operation of the GSM Network.  Hebei Engineering will receive


                                          3.
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78% of up front connection fees paid by new subscribers to connect to the GSM
Network, 78% of depreciation of fixed assets and 78% of net income generated by
UNICOM from operation of the GSM Network until February 9, 2011.  Through the
Company's 60.8% interest in Hebei Equipment and Hebei Equipment's 51% interest
in Hebei Engineering, the Company holds an indirect 31% interest in Hebei
Engineering.

    Under the UNICOM Agreement, the GSM Network will provide cellular telephone
service, using the Global Service for Mobile Telecommunications technology, in
the eleven major cities of Hebei Province, which have a total population,
including surrounding metropolitan areas, of approximately 50 million, or
approximately 78% of Hebei Province's total population of 64 million.  In the
first phase of construction, the GSM Network will be built in 7 major cities,
and have a subscriber capacity of 40,000.  In the second phase of construction,
the GSM Network will be built in the remaining four major cities of Hebei
Province, thereby expanding the total network capacity to 70,000.  Based on
market demand, management believes the capacity of the GSM network may be
expanded in the future beyond 70,000 subscribers.  In February 1997, the GSM
Network commenced commercial operations in Shijiazhuang, the capital of Hebei
Province.  Six additional cities are anticipated to commence commercial
operation before the end of 1997.  Construction in the remaining four major
cities of Hebei Province is anticipated to commence during the first half of
1998.  See "Risk Factors -- Risks Relating to the Company's Joint Venture
Operations."

    As of July 8, 1997, construction of the first phase of the GSM Network had
been financed with a $3 million equity investment from Hebei Equipment and NTTI,
and vendor financing guaranteed by NTTI and a $20 million Term Loan facility
from Bank of Tokyo Mitsubishi guaranteed by NTTI.  Of these amounts, the Company
has provided $1.17 million of equity funding to Hebei Engineering through the
Company's investment in Hebei Equipment.  At present, all funding required for
completion of the first phase of construction has been obtained by Hebei
Engineering.

HEBEI MULTIMEDIA NETWORK

    On April 8, 1997, Hebei Equipment entered into a 20-year agreement (the 
"Hebei Multimedia Agreement") with Hebei Cable Television Station, the 
monopoly provider of cable television service in Hebei Province, pursuant to 
which Hebei Equipment will (i) build a fiber-optic and microwave network to 
connect the existing cable television systems in the eleven major cities in 
Hebei Province, (ii) upgrade one city on a trial basis to a hybrid fiber 
coaxial network ("HFC"), and (iii) hold the option to upgrade the network to 
an HFC network. Under the Hebei Multimedia Agreement, Hebei Equipment will 
sell ownership of the Hebei Multimedia Network to Hebei Cable Television 
Station in exchange for a majority share of cash flow generated by Hebei 
Cable Television Station from operation of the Hebei Multimedia Network.  
Hebei Equipment will also provide operating personnel and assistance to Hebei 
Cable Television Station in the operation of the Hebei Multimedia Network.  
Until Hebei Equipment has recovered its investment, Hebei Equipment will 
receive 80% of depreciation of fixed assets and 80% of net income generated 
by Hebei Cable Television Station from operation of the Hebei Multimedia 
Network. Thereafter, for the balance of 20 years from the commencement date 
of formal commercial operations, Hebei Equipment will receive 30% of 
depreciation of fixed assets and 30% of net income generated by Hebei Cable 
Television Station from operation of the Hebei Multimedia Network.  Hebei 
Cable Television Station is a subsidiary enterprise of the Hebei Radio and 
Television Department, under the jurisdiction of the Ministry of Radio, Film 
and Television in the PRC.

    The current funding requirement for the Hebei Multimedia Network is
estimated at approximately $23 million to link cable systems in the eleven
largest cities in Hebei Province.  As of July 8, 1997, the Company had invested
approximately $1.0 million in Hebei Equipment for purposes of investment in the
Hebei Multimedia Network.  The Company anticipates that the balance of required
funding will be provided in the form of equity and debt investments in Hebei
Equipment and additional joint venture entities that may be established with
strategic partners.  See "Risk Factors -- Risks Relating to the Company's Joint
Venture Operations."


                                          4.
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OTHER TELECOMMUNICATION PROJECTS

    In addition to the UNICOM Agreement and the Hebei Multimedia Agreement, the
Company has entered into a number of letters of intent and preliminary
agreements relating to the development of (i) a fixed wire telephone network in
Hebei Province, (ii) a GSM Network in Sichuan Province, (iii) a nationwide
paging network with Beijing CATCH Communications Group Co. ("Beijing CATCH") and
(iv) an enhanced specialized mobile radio network in Beijing with Beijing CATCH.
All of these letters of intent and preliminary agreements are non-binding in
nature, and management will determine over the course of the next fiscal year
whether to pursue these opportunities.  There can be no assurance that any
definitive agreements relating to these networks will ever be entered into by
the Company or its subsidiaries.

HISTORY OF THE COMPANY 1996-1997

    In November 1996, the Company was listed on the American Stock Exchange.
Prior to that, from March 1996 through November 1996, the Company's Common Stock
was traded on the Over-the-Counter Market of NASDAQ.

    On January 16, 1996, pursuant to an Agreement for Sale of Assets, dated as
of January 11, 1996 (the "Asset Sale Agreement"), between ITV Communications,
Inc. ("ITV") and Netmatics, Inc. ("Netmatics"), ITV, the former primary
operating subsidiary of the Company, sold substantially all of its assets to
Netmatics and Netmatics assumed certain of ITV's liabilities and obligations in
consideration for an aggregate purchase price of $2,500,000 in cash and notes
and common stock of Netmatics equal to 33.0% of the issued and outstanding
shares of Netmatics at the time of the sale.  Although $250,000 in cash has been
received by the Company, the balance of the consideration is unlikely to be
received by the Company.

REINCORPORATION TO DELAWARE AND NAME CHANGE

    At a meeting of the Company's stockholders on May 7, 1996, the stockholders
adopted a resolution approving a change in the Company's state of incorporation
from Colorado to Delaware.  The Company effectuated the transactions
contemplated by the resolution on July 10, 1996 and reincorporated to Delaware
by means of a merger (the "Reincorporation Merger") of the Company with and into
a wholly-owned Delaware subsidiary of the Company.

    On the effective date of the Reincorporation Merger, each issued and
outstanding share of common stock and preferred stock of the Company was
converted into one share of common stock and preferred stock, respectively, of
the Company's Delaware subsidiary.  The Delaware subsidiary succeeded to all of
the assets, liabilities and business of the Company and possesses all of the
rights and powers of the Company.

    On July 8, 1997, the Company changed its name to "AmTec, Inc." from "AVIC
Group International, Inc." by way of a merger of the Company with and into a
wholly-owned Delaware subsidiary of the Company.

HISTORY OF THE COMPANY 1982-1996

    The Company was originally incorporated under the laws of the State of
Colorado on May 10, 1982 under the name "Yaak River Mines, Ltd."  From inception
through January 1992, the Company was engaged in certain business operations
which are not associated with the Company's current business of developing
telecommunications networks in the PRC.  From January 1992 through September
1994, the Company was operationally dormant.


                                          5.
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    On September 2, 1994, the Company entered into an Agreement and Plan of
Reorganization, as amended by an agreement dated December 28, 1994 (the
"Reorganization Agreement") with ITV Communications, Inc. in connection with
which the Company acquired ITV as a wholly-owned subsidiary in exchange for a
number of shares of the Company's Common Stock and options to purchase shares of
the Company's Common Stock equal to approximately 91% of the issued and
outstanding shares of the Common Stock on a fully diluted basis after the
completion of the transaction.

    On February 8, 1995, the Company and ITV completed the transactions
contemplated by the Reorganization Agreement, and the Company changed its name
to "AVIC Group International, Inc."  Since April 1995, the Company has been
engaged in the business of developing telecommunications networks in the PRC.
The Reorganization Agreement has been accounted for as a reverse acquisition or
as a recapitalization of ITV, with ITV as the acquiror.  The historical
financial statements of the Company prior to the closing of the Reorganization
Agreement are those of ITV.

EMPLOYEES

    As of July 8, 1997, the Company had twelve full time employees, consisting
of six executive personnel, three financial personnel and three clerical
employees.  The Company intends to hire additional personnel as the development
of the Company's business continues and makes such action appropriate.  The
Company's employees are not represented by a labor union and are not covered by
a collective bargaining agreement.  The Company believes that its relations with
its employees are good.

                                          6.
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                                     RISK FACTORS

    AN INVESTMENT IN SECURITIES OF THE COMPANY IS SPECULATIVE IN NATURE,
INVOLVES A HIGH DEGREE OF RISK, AND SHOULD NOT BE UNDERTAKEN BY ANY INVESTOR WHO
CANNOT AFFORD THE LOSS OF HIS ENTIRE INVESTMENT.  PERSONS WHO MAY OWN OR INTEND
TO PURCHASE SECURITIES OF THE COMPANY SHOULD CAREFULLY CONSIDER, ALONG WITH
OTHER MATTERS DISCUSSED IN THIS ANNUAL REPORT, THE FOLLOWING RISK FACTORS:

COMPANY AND FINANCIAL RISKS

    PRIOR AND ANTICIPATED LOSSES.  To date, the Company has not generated
revenue and has experienced net losses of $4,064,885 and $5,281,730 during the
fiscal years ended March 31, 1997 and 1996, respectively.  The Company does not
expect to achieve profitability during the current fiscal year.  The ability of
the Company to achieve profitability is dependent upon numerous factors,
including the operations of the Company's joint venture projects and its ability
to finance, develop and implement its PRC telecommunications projects.  There
can be no assurance that the Company will achieve profitability in any future
period.

    HOLDING COMPANY.  The Company is a holding company.  The Company's
operating assets and only source of income and operational cash flow are its
interests in its existing subsidiaries.  The ability of the Company to pay any
dividends on its capital stock is entirely dependent on the Company's ability to
receive distributions from its subsidiaries.  See "Risk Factors -- Risks
Relating to the Company's Joint Venture Operations" and "-- Risks Relating to
Doing Business in the PRC."

    EARLY STAGE PROJECTS.  The telecommunications projects which constitute the
Company's entire business are in the early stages, and are subject to all of the
risks inherent in the establishment of new telecommunications projects.  The
likelihood of the success of the Company's PRC telecommunications operations
must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with the
construction and operation of a new telecommunications network.  There can be no
assurance that the Company's existing or future PRC telecommunications
operations will be successfully implemented or that any of them will generate
any revenue for the Company.

    POSSIBLE NEED FOR ADDITIONAL CAPITAL.  The Company's future capital
requirements will depend on many factors, including, but not limited to, the
financial success of the Company's PRC telecommunications operations, future
capital requirements of the Company's operations and capital requirements
arising out of participation in other telecommunications networks in the future.
At present, the Company's only contractual obligation is for the Hebei
Multimedia Network.  To the extent that existing funds are insufficient to fund
the Company's activities, the Company may need to raise additional capital
through public or private financing.  If additional funds are raised through the
issuance of equity securities, the percentage ownership of existing shareholders
of the Company will be reduced, and such equity securities may have rights,
preferences, or privileges senior to those of the holders of the existing
securities.  No assurance can be given that additional financing will be
available or that, if available, it can be obtained on terms favorable to the
Company and its shareholders.  If adequate funds are not available, the Company
may default on commitments for existing projects, which may have a material
adverse effect on the business and financial condition of the Company.

    COMPETITION.  The opportunity to profit from growth in the PRC's
telecommunications sector has attracted participants from around the world.
Many such competitors have greater marketing resources and technological
capability as well as greater financial resources than the Company.
Accordingly, there can be no assurance that the Company will be successful in
securing roles in additional PRC telecommunications networks or, if able to do
so, will be able to negotiate favorable terms.

    POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS.  The
Company's Certificate of Incorporation includes certain provisions which are
intended to protect the Company's stockholders by


                                          7.
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rendering it more difficult for a person or persons to obtain control of the
Company without cooperation of the Company's management.  These provisions
include certain super-majority requirements for the amendment of the Company's
Certificate of Incorporation and Bylaws.  Such provisions are often referred to
as "anti-takeover" provisions.  The inclusion of such provisions in the
Certificate of Incorporation may delay, deter or prevent a takeover of the
Company which the stockholders may consider to be in their best interests,
thereby possibly depriving holders of the Company's securities of certain
opportunities to sell or otherwise dispose of their securities at above-market
prices, or limit the ability of stockholders to remove incumbent directors as
readily as the stockholders may consider to be in their best interests.

    CONTROL BY PRINCIPAL STOCKHOLDERS.  Tweedia International Limited
("Tweedia") is the Company's principal stockholder and has the beneficial
ownership of approximately 43.9% of the outstanding Common Stock.  As a result
of such Common Stock ownership, Tweedia is in a position to exercise significant
control with respect to the affairs of the Company and the election of the
Company's directors.  In addition, a potential buyer might be deterred from an
effort to acquire the Company, absent the consent of Tweedia or its
participation in the transaction.

    EFFECT OF TECHNOLOGICAL CHANGE ON OPERATIONS.  The market in the
telecommunications industry is characterized by rapidly changing technology.
There can be no assurance that technologies developed by others will not render
obsolete or otherwise significantly diminish the value of the business
operations of the joint ventures in which the Company participates.

SECURITIES RISKS

    LACK OF DIVIDENDS ON COMMON STOCK.  The Company has paid no dividends on
its Common Stock to date and there are no plans for paying dividends on the
Common Stock in the foreseeable future.  The Company has certain obligations to
pay dividends, which can be paid in common stock to holders of the Series C and
D Preferred Shares.  Except for dividends which may be payable on the shares of
issued and outstanding preferred stock and other preferred stock that may be
issued from time to time in the future that require such dividends, the Company
intends to retain earnings, if any, to provide funds for the expansion of the
Company's business.

    ISSUANCE OF ADDITIONAL SHARES; SHARES ELIGIBLE FOR FUTURE SALE.  Future
sales of shares of Common Stock by the Company and its stockholders could
adversely affect the prevailing market price of the Common Stock.  Pursuant to
its Certificate of Incorporation, the Company has the authority to issue
68,687,935 additional shares of Common Stock and 8,475,322 additional shares of
preferred stock.  The issuance of such shares could result in the dilution of
the voting power and other rights of the currently issued and outstanding shares
of Common Stock.  As of May 1, 1997, certain investors who have held an
aggregate of approximately 8.7 million shares of restricted Common Stock may
sell such shares without restriction.  Such sales may have a materially adverse
effect on the prevailing market price of the Common Stock.  The extent of such
adverse effect, if any, cannot be predicted, but based on the volume of trading
in the market and on the number of shares that could be sold thereunder, such
adverse effect may be material.

    FUTURE ISSUANCE'S OF PREFERRED STOCK.  The Company's Certificate of
Incorporation authorizes the issuance of up to 10,000,000 shares of preferred
stock with such designation, powers, rights and preferences as may be determined
from time to time by the Board of Directors, without stockholder approval.  In
the event of the issuance of additional series of preferred stock, such
preferred stock could have voting, liquidation, dividend and other rights
superior to the rights of the outstanding stock of the Company and, in addition,
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company.

                                          8.
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RISKS RELATING TO THE COMPANY'S JOINT VENTURE OPERATIONS

    CONSTRUCTION AND OPERATION OF PROPOSED TELECOMMUNICATIONS NETWORKS.  The
telecommunications networks in the PRC which the Company's joint ventures are
currently engaged in developing may experience difficulties and delays relating
to the construction and operation of such networks.  While the Company's joint
ventures have undertaken to obtain the technical capability, personnel or
resources to build, service and maintain a telecommunications network in the
PRC, the performance of all or any of the Company's joint venture obligations
under its agreements relating to PRC telecommunications networks may require the
cooperation and participation of third parties.  Such third parties may be
parties to or independent contractors with the Company's Sino-foreign joint
ventures, for the purpose of building, servicing or maintaining any such
telecommunications network.  There can be no assurance that the Company's joint
ventures will be able to obtain such cooperation, if required, with respect to
its PRC telecommunications networks.  Moreover, there can be no assurance that
such networks will be completed in a timely manner, if at all, or that any
financing which may be completed with respect to any such network will be
sufficient to complete or to operate any proposed project.  The failure by the
joint ventures to achieve these goals, or any difficulties or delays, may have a
material adverse effect on the Company's business, financial condition and
results of operations.

    SIGNIFICANT ADDITIONAL FUNDING OF JOINT VENTURE PROJECTS REQUIRED.  The
aggregate funding required from joint venture partners for the first phase of
construction for the Hebei Multimedia Network is approximately $23 million of
which, to date, $1.0 million has been invested by the Company into Hebei
Equipment.  While the Company and Hebei Equipment currently have approximately
$4 million of cash on hand and the Company has entered into a $25 million Common
Stock Investment Agreement, material limitations exist on the Company's right to
access funds under such agreement.  At present there can be no assurance that
the Company will meet its funding requirement for the Hebei Multimedia Network.
Beyond this expansion phase, future capital requirements for the GSM Network
will depend on the rate of network capacity growth which, in turn, will depend
on the market acceptance of the GSM cellular service, among other factors.
There can be no assurance that the Company's joint venture partners will meet
their funding commitments under the joint venture contracts.  It is anticipated
that debt or equity contributions made by the Company and its partners to the
joint ventures, as well as additional loans made by third parties, will be used
to develop the GSM Network and the Hebei Multimedia Network.  However, there can
be no assurance that the equity contributions and loans made, or to be made, to
the joint ventures by their respective partners will be sufficient to meet the
capital needs of either the GSM Network or the Hebei Multimedia Network, or to
successfully complete or support the competitive position of either project.
The Company may elect to make additional equity contributions or loans to either
joint venture to fund such additional capital needs, thus creating an additional
demand on the Company's capital, or may elect not to make such payments, which
may negatively affect the successful implementation of the networks.  Securing
alternative sources of funds may dilute the Company's ownership

    ROLE IN FUTURE EXPANSION OF THE HEBEI GSM NETWORK.  Further expansion of
the GSM Network is anticipated beyond Phase II of the Hebei GSM Network, but the
joint venture partners, timing and amount of investment have not been finally
determined.  In the event of such expansion, UNICOM is to give preferential
consideration, in securing new investment, to investments from the Company and
its joint venture partners on the same terms as their prior investments.
However, at present there can be no assurance that further expansion of the GSM
Network will occur, or that the Company will be allowed to participate in later
stages of the Hebei GSM project.

    COMPETITION WITH THE MINISTRY OF POSTS AND TELECOMMUNICATIONS AND OTHERS.
The two primary providers of telecommunications services in China, the Ministry
of Posts and Telecommunications (the "MPT") (through its operating subsidiary
China Telecom) and UNICOM, compete intensely.  UNICOM has entered into a
contract with a subsidiary of the Company with respect to the GSM Network, and,
therefore, the Company indirectly competes with the MPT in certain of its
activities.  The MPT has a dominant market share in all sectors of
telecommunications in China, and already has established a fixed-wire network in
the


                                          9.
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country.  Moreover the MPT regulates and licenses all public telephone service
projects in China, including network access, and maintains the ability to make
important regulatory decisions with respect to its competitors, including the
Hebei GSM project.  The Company's joint venture may also have to compete with
other telecommunications services providers, some of which may have greater
marketing and development budgets and greater capital resources than the
Company's joint ventures.  Accordingly, there can be no assurance that the
Company will be able to achieve and maintain a competitive position in the PRC
telecommunications industry.  In addition, new competitors may be entering the
market, including the People's Liberation Army through it's Great Wall
Communications Group.

    GOVERNMENT APPROVAL FOR JOINT VENTURE PROJECTS.  All the Company's joint
venture contracts will require approval at some level of the provincial or
related government in China.  There can be no assurance that in the future all
necessary governmental approvals will be obtained for joint venture projects
that the Company may enter in the future.

RISKS RELATING TO DOING BUSINESS IN THE PRC

    INTERNAL POLITICAL RISKS.  The Company's business operations may be
adversely affected by the political environment in the PRC.  The PRC has been a
socialist state since 1949 and is controlled by the Communist Party of China.
Changes in the political leadership of the PRC may have a significant effect on
laws and policies related to the current economic reforms program, other
policies affecting business and the general political, economic and social
environment in the PRC, including the introduction of measures to control
inflation, changes in the rate or method of taxation and imposition of
additional restrictions on currency conversion and remittances abroad and
foreign investment.  These effects could substantially impair the Company's
business, profits or prospects in China.  Moreover, economic reforms and growth
in the PRC have been more successful in certain provinces than in others, and
the continuation or increases of such disparities could affect the political or
social stability of the PRC.

    GOVERNMENT CONTROL OVER ECONOMY.  The PRC only recently has permitted
greater provincial and local economic autonomy and private economic activities.
The government of the PRC has exercised and continues to exercise substantial
control over virtually every sector of the Chinese economy through regulation
and state ownership.  Accordingly, government actions in the future, including
any decision not to continue to support recent economic reforms and to return to
a more centrally planned economy or regional or local variations in the
implementation of economic policies, could have a significant effect on economic
conditions in the PRC or particular regions thereof, and could require the
Company to divest the interests it then holds in Chinese properties or joint
ventures.  Any such developments could have a material adverse effect on the
business prospects of the Company.

    INFLATION AND ANTI-INFLATION POLICIES.  In recent years, the Chinese
economy has experienced periods of rapid expansion and high rates of inflation,
which have led to the adoption by the PRC government, from time to time, of
various corrective measures designed to restrict the availability of credit or
regulate growth and contain inflation.  While inflation has moderated since
1995, high inflation may in the future cause the PRC government to impose
controls on credit and/or prices, or to take other action which could inhibit
economic activity in China, and, thereby, adversely affect the Company's
intended business operations in the PRC.  There can be no assurance that
potential high rates of inflation and any PRC anti-inflation policies adopted in
the future will not have a material adverse effect on the Company's liquidity
and business operations.

    RESTRICTIONS ON FOREIGN CURRENCY EXCHANGE.  The Renminbi is not a freely
convertible currency at present. The Company's joint ventures will receive
nearly all of their revenue in Renminbi, which will need to be converted to
other currencies, primarily U.S. dollars, and remitted outside of the PRC.
Effective July 1, 1996, foreign currency "current account" transactions by
foreign investment enterprises, including Sino-foreign joint ventures, are no
longer subject to the approval of State Administration of Foreign Exchange
("SAFE", formerly, "State Administration of Exchange Control"), but need only a
ministerial review,


                                         10.
<PAGE>

according to the ADMINISTRATION OF THE SETTLEMENT, SALE AND PAYMENT OF FOREIGN
EXCHANGE PROVISIONS promulgated in 1996 (the "FX regulations").  "Current
account" items include international commercial transactions which occur on a
regular basis, such as those relating to trade and provision of services.
Distributions to joint venture parties also are considered a "current account
transaction." Other non-current account items, known as "capital account" items,
remain subject to SAFE approval.

    EXCHANGE RATES LOSSES.  Until 1994, the Renminbi had experienced a gradual
but significant devaluation against most major currencies, including U.S.
dollars, and there was a significant devaluation of the Renminbi on January 1,
1994 in connection with the replacement of the dual exchange rate system with a
unified managed floating rate foreign exchange system.  Since 1994, the value of
the Renminbi relative to the U.S. dollar has remained stable.  However, if
devaluation of the Renminbi were to occur in the future, the Company's returns
on its operations in China, which are expected to be in the form of Renminbi,
will be negatively affected upon conversion to U.S. dollars.

    PRC LAWS; EVOLVING REGULATIONS AND POLICIES.  The PRC's legal system is a
civil law system based on written statutes in which decided legal cases have
little value as precedents, unlike the common law system prevalent in the United
States.  The PRC does not have a well-developed, consolidated body of laws
governing foreign investment enterprises.  As a result, the administration of
laws and regulations by government agencies may be subject to considerable
discretion and variation, and may be subject to influence by external forces
unrelated to the legal merits of a particular matter.  China's regulations and
policies with respect to foreign investments are evolving.  Definitive
regulations and polices with respect to such matters as the permissible
percentage of foreign investment and permissible rates of equity returns have
not yet been published, statements regarding these evolving policies have been
conflicting and any such policies, as administered, are likely to be subject to
broad interpretation and discretion and to be modified, perhaps on a
case-by-case basis.  The uncertainties regarding such regulations and policies
present risks that the Company will not be able to achieve its investment
objectives.  There can be no assurance that the Company will be able to enforce
any legal rights it may have under its joint venture contracts or otherwise.

    EXPROPRIATION.  The PRC government has, in the past, renounced various debt
obligations incurred by predecessor governments, which obligations remain in
default, and expropriated assets without compensation.  There can be no
assurance that the PRC government will not in the future expropriate or
nationalize assets which may relate to any current or prospective business
operations of the Company.

    RELIANCE ON STATISTICS.  Statistics relating to economic, demographic, and
general business data are not widely disseminated within or outside of the PRC.
Further, certain PRC statistics may not be compiled in accordance with, or may
not be subject to, Western standards of accuracy.  The resultant imperfect
information naturally hinders the performance of  the Company's business
planning or investment analysis and introduces risks in conducting business in
the PRC.

ITEM 2.   PROPERTIES

    The Company leases a 7,600 square foot office located at 599 Lexington
Avenue, 44th Floor, New York, New York 10022.  The facility serves as the
Company's principle executive offices.  The Company pays an annual rent of
$334,400 on a lease which expires in May 2000.  The Company has obtained an
option to extend the lease for an additional five year term based on the fair
market value of the leased premises at or about the time of the expiration of
the initial term of the lease.

ITEM 3.   LEGAL PROCEEDINGS

    A first amended complaint, dated April 15, 1996, was filed against the
Company, ITV, and other parties, including certain of the Company's officers,
directors and principal stockholders, by Jacqueline Brandwynne, a stockholder of
the Company, in a matter captioned "Jacqueline B. Brandwynne vs. AVIC Group
International, Inc., et al," civil action number BC145036.  The complaint, filed
in the Superior Court


                                         11.
<PAGE>

of California, County of Los Angeles, alleges fraud, misrepresentation and
breach of contract with respect to the sale of 666,667 shares of ITV for
$1,000,000 prior to the completion of the Reorganization Agreement between the
Company and ITV in February 1995, in connection with which the shares of ITV
were exchanged on a two for one basis for shares of the Company.  The complaint
alleges that certain misrepresentations were made in connection with the sale of
the 666,667 shares and that the claimant was entitled to receive 666,667 shares
of the Company after the completion of the Reorganization Agreement.  The
complaint seeks rescission of the transaction and damages of no less than
$1,000,000.  The complaint also alleges a claim in connection with an alleged
oral employment agreement for 125,000 options to purchase shares of the
Company's Common Stock at an exercise price of $0.35 per share and the right to
purchase additional shares of Common Stock at $1.00 per share, plus other
benefits, including a salary of no less than $130,000.  Management of the
Company believes that these claims are without merit, that there are valid
defenses to each claim and is in the process of vigorously defending the matter.
The matter is in the discovery phase and it is not possible to predict with any
degree of certainty the likely outcome.  The Company is represented by the law
firm of Matthias & Berg LLP, 515 South Flower Street, Seventh Floor, Los
Angeles, California 90071, on this matter.

    The lessor of certain property formerly leased by ITV in Canoga Park,
California brought a lawsuit against the Company, ITV and other parties,
captioned "6800 Owensmouth, Inc. vs. ITV Communications, Inc., et al," civil
action number BC146964, with respect to the premises in March 1996.  The
complaint, filed in the Superior Court of California, County of Los Angeles,
alleged certain claims, including abandonment of the lease and failure to pay
rent plus late charges and other expenses from September 1995 through October
12, 1995, and the amount of rent abated during the first six months of the
lease, in the aggregate principal amount of approximately $82,000.  The lessor
also sought approximately $760,500 which was the amount of rent payment due
under the lease for its full term ending in 1999.  The Company and the lessor of
the property agreed to a settlement of the claims of abandonment and failure to
pay rent on March 18, 1997, whereby the Company agreed to pay to the lessor the
amount of $75,000 in cash and 25,000 shares of the Company's Common Stock, with
a then market value of $112,500.  The 25,000 shares of Common Stock issued had
certain demand and "piggy-back" registration rights.  Further, if at the time of
registration, the share price of the Company has increased or decreased by 20%
or more, the Company shall issue, or the lessor shall return, as the case may
be, a number of shares to restore the value of the Common Stock so issued to
$112,500.

    Except as set forth above, the Company is not aware of any pending
litigation that could have a material adverse effect on the Company's business,
financial condition or results of operations.

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

    No matters were submitted to a vote of stockholders during the quarter
ended March 31, 1997.

                                         12.
<PAGE>

                                       PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    As of July 8, 1997, the authorized capital stock of the Company consisted
of 100,000,000 shares of Common Stock and 10,000,000 shares of preferred stock,
par value $0.001 per share (the "Preferred Stock").  As of July 8, 1997, there
were issued and outstanding 31,257,921 shares of Common Stock, options to
purchase 8,543,284 shares of Common Stock, 1,524,178 shares of Series A
Convertible Preferred Stock, 250 shares of Series C Convertible Preferred Stock
and 150 shares of Series D Convertible Preferred Stock.  All shares of the
Series B Convertible Preferred Stock have been converted into 1,507,477 Common
Shares as of July 8, 1997.  Further, there were issued and outstanding warrants
to purchase 2,345,000 shares of Common Stock.  As of July 8, 1997, there were
approximately 1620 holders of record of the Common Stock.

    The Company's Common Stock was originally listed for trading in the
over-the-counter market on March 4, 1996 and was quoted on the NASDAQ Bulletin
Board or in the "pink sheets" maintained by the National Quotation Bureau, Inc.
under the symbol "AVIC."  The Company changed its listing on November 20, 1996,
when its Common Stock was approved for listing on the American Stock Exchange,
where it currently trades under the symbol "AV."  In connection with the name
change of the Company from "AVIC Group International, Inc." to "AmTec, Inc.,"
the Company changed its trading symbol on the American Stock Exchange to "ATC"
on July 14, 1997.  The high and low sales prices of the Common Stock, as quoted
on the American Stock Exchange, on July 7 1997 were approximately $3.00 and
$3.125, respectively.

    No dividend has been declared or paid by the Company on its shares of
Common Stock since its inception.  The payment of dividends by the Company on
its shares of Common Stock is within the discretion of the Company's Board of
Directors and will depend on the earnings, capital requirements, restrictions in
any future credit agreements and operating and financial condition of the
Company, among other factors.  The Company has certain obligations to pay
dividends on issued and outstanding shares of certain Preferred Stock.  Except
for dividends which may be payable on and according to the terms of shares of
Preferred Stock, the Company does not anticipate that any dividends will be
declared or paid in the future.  There can be no assurance that the Company will
ever pay a dividend on its shares of Common Stock.  See "Risk Factors -- Lack of
Dividends on Common Stock."

    The following table sets forth for the period indicated before November 20,
1996, the high and low bid information of the Company's Common Stock as quoted
on the NASDAQ Bulletin Board, and for the period indicated on or after November
20, 1996, the high and low sales price of the Company's Common Stock as reported
on the American Stock Exchange.  Quotations on the NASDAQ Bulletin Board reflect
inter-dealer prices, without retail mark-ups, mark-downs or commissions, and may
not represent actual transactions.
                                   Fiscal Year Ending March 31
                    -----------------------------------------------------------
                      1996                       1997
                    ------    -------------------------------------------------
                     4th Q     1st Q     2nd Q           3rd Q            4th Q
                    ------    ------    ------    -------------------    ------
 COMMON STOCK PRICE
 High               $8.500    $9.125    $5.000    $3.875(1)/$4.125(2)    $6.250
 Low                $8.250    $3.250    $1.125    $1.438(1)/$1.625(2)    $2.125
_______________

(1) High and low bid information as quoted on the NASDAQ Bulletin Board for the
    period from October 1, 1996 to November 19, 1996.

(2) High and low sales price as reported on the on the American Stock Exchange
    for the period from November 20, 1996 to December 31, 1996.

                                         13.
<PAGE>

    The transfer agent for the Company is Chasemellon Shareholder Services,
LLC, 450 West 33rd Street, New York, New York, 10001.  Its telephone number is
(800) 851-9677.

CERTAIN SALES OF UNREGISTERED SECURITIES

    OFFERING OF SERIES B CONVERTIBLE PREFERRED STOCK.  On June 12, 1996, the
Company issued 100 shares of its Series B Convertible Preferred Stock (the
"Series B Preferred Shares") to six institutional investors, at a purchase price
of $25,000 per share for a total consideration of $2,500,000.  Each of the
Series B Preferred Shares was convertible into shares of Common Stock based on a
conversion formula.  Pursuant to the purchase arrangement, the Company agreed to
issue warrants to the holders of the Series B Preferred Shares to purchase
additional shares of the Company's Common Stock, based on the number of shares
of Common Stock into which the corresponding number of Series B Preferred Shares
are convertible.  The Series B Preferred Shares and warrants were issued
pursuant to an exempt transaction under Regulation S promulgated under the
Securities Act of 1933, as amended (the "Securities Act").

    During the period from September 1996 to February 1997, all of the Series B
Preferred Shares were converted into an aggregate of 1,507,477 shares of Common
Stock, and warrants to purchase an aggregate of 1,507,477 shares of the
Company's Common Stock were issued to the investors.  The warrants are currently
exercisable at the exercise price of $3.19 per share and have terms of five
years.

    In connection with the issuance of the Series B Preferred Shares, the
Company paid fees and expenses to the placement agent in the aggregate amount of
$200,000 and issued warrants to purchase 120,599 shares of Common Stock at an
exercise price equal to $3.19 per share.  Further, the Company agreed to provide
the placement agent with the right to raise up to an additional $12,500,000 on
behalf of the Company until August 13, 1997, subject to certain terms and
conditions satisfactory to the Company.  In addition, in connection with the
issuance of the Series B Preferred Shares, the Company issued warrants to
purchase 33,670, 16,800 and 16,633 shares of Common Stock to Regal International
Capital, Inc., Heracles Fund and Charles Kreusen, respectively, with an exercise
price of $3.31 per share in consideration for certain investment advisory
services provided by them.

    OFFERING OF SERIES D CONVERTIBLE PREFERRED STOCK.  On March 6, 1997, the
Company issued to a single investor 150 shares of the Company's Series D
Convertible Preferred Stock, par value $.001 per share (the "Series D Preferred
Shares"), at a price of $10,000 per share for a total consideration of
$1,500,000.

    The holder of the Series D Preferred Shares is entitled to receive, when,
as and if declared by the Board of Directors of the Company out of funds legally
available therefor, cumulative dividends at the annual rate of 8% per annum per
share, payable quarterly (i) in shares of Common Stock, or (ii) in cash in
connection with any payment pursuant to a Series D Conversion Default (as
defined below) at the election of the Company's Board of Directors.  The holder
of Series D Preferred Shares has certain preferential rights over the holders of
Common Stock in the event of the liquidation, dissolution or winding-up of the
Company or a disposition of the Company's assets.  The holder of the Series D
Preferred Shares also has certain registration rights and certain rights to
participate in exempt equity offerings by the Company until March 6, 1999.

    The Series D Preferred Shares are convertible by the holder into the number
of shares of Common Stock which may be purchased at the lowest trading price
during the 30 business days immediately preceding each conversion date (the
"Lowest Trading Price") for the Series D Preferred Shares.  In addition, under
certain circumstances, the holder of the Series D Preferred Shares may be
obligated to purchase additional shares of Common Stock for cash.  In the event
the Company issues or sells any shares of Common Stock or shares of securities
convertible into or exchangeable for Common Stock (other than shares of Common
Stock or options to purchase Common Stock issued pursuant to stock option plans
or are otherwise currently issued and outstanding) at an effective purchase
price per share of less than $5.00, then at the time the Series D Preferred
Shares are submitted for conversion, the Company shall cause the effective
market price on the


                                         14.
<PAGE>

conversion date of such shares of Common Stock to be equal to the lesser of (i)
the Lowest Trading Price, or (ii) the effective price at which such securities
are issued.

    If the Company does not have sufficient shares available to satisfy its
obligations to the holder of Series D Preferred Shares upon receipt of a
conversion notice, or otherwise fails or refuses to perfect conversion of any
Series D Preferred Shares (a "Series D Conversion Default"), the holder of the
Series D Preferred Shares has the right to put the Series D Preferred Shares to
the Company at a price equal to 125% of the purchase price, plus all accrued and
unpaid dividends.

    The holder of the Series D Preferred Shares may not convert such shares
prior to May 5, 1997 and may convert subsequent to such date as follows: (i) 30
shares after May 6, 1997; (ii) 60 shares after June 5, 1997; (iii) 90 shares
after July 5, 1997; (iv) 120 shares after August 4, 1997; and (v) 150 shares
after September 2, 1997.

    As of June 20, 1997, there were 150 Series D Preferred Shares outstanding
and held of record.  The holder of the Series D Preferred Shares has no voting
rights, except with respect to certain matters that affect the rights of the
Series D Preferred Shares.

    OFFERING OF SERIES C CONVERTIBLE PREFERRED STOCK.  On June 13, 1997, the
Company issued to ten accredited investors 250 shares of the Company's Series C
Convertible Preferred Stock, par value $.001 per share (the "Series C Preferred
Shares"), at a price of $10,000 per share pursuant to an exempt transaction
under Regulation D promulgated under the Securities Act.

    The holders of the Series C Preferred Shares are entitled to receive, when,
as and if declared by the board of directors of the Company out of funds legally
available therefor, cumulative dividends at the annual rate of 8% per annum per
share, payable quarterly (i) in shares of Common Stock, or (ii) in cash in
connection with any payment pursuant to a Series C Conversion Default (as
defined below).  The holders of Series C Preferred Shares have certain
preferential rights over the holders of Common Stock in the event of the
liquidation, dissolution or winding-up of the Company or a disposition of the
Company's assets.  The holders of the Series C Preferred Shares also have
certain registration rights and certain rights to participate in exempt equity
offerings by the Company until June 12, 1999.

    The Series C Preferred Shares are convertible by the holders into the
number of shares of Common Stock which may be purchased at the lowest trading
price during the 30 business days immediately preceding each conversion date
(the "Lowest Trading Price") for the Series C Preferred Shares.  In addition,
under certain circumstances, the holders of the Series C Preferred Shares may be
obligated to purchase additional shares of Common Stock for cash.  In the event
the Company issues or sells any shares of Common Stock or shares of securities
convertible into or exchangeable for Common Stock (other than shares of Common
Stock or options to purchase Common Stock issued pursuant to stock option plans
or are otherwise issued as compensation to employees or directors or shares of
Common Stock issued upon exercise of options, warrants or rights outstanding as
of June 13, 1997 or shares of Common Stock or options to purchase Common Stock
issued in consideration for business acquisitions or combinations made by the
Company) at an effective purchase price per share of less than $5.00, then at
the time the Series C Preferred Shares are submitted for conversion, the Company
shall cause the effective market price on the conversion date of such shares of
Common Stock to be equal to the lesser of (i) the Lowest Trading Price, or (ii)
the effective price at which such securities are issued.

    If the Company does not have sufficient shares available to satisfy its
obligations to the holders of Series C Preferred Shares upon receipt of a
conversion notice, or otherwise fails or refuses to perfect conversion of any
Series C Preferred Shares (a "Series C Conversion Default"), the holders of the
Series C Preferred Shares have the right to put the Series C Preferred Shares to
the Company at a price equal to 125% of the purchase price, plus all accrued and
unpaid dividends.


                                         15.
<PAGE>

    The holders of the Series C Preferred Shares may not convert such shares
prior to August 12, 1997 and may convert subsequent to such date as follows: (i)
60 shares after August 13, 1997; (ii) 120 shares after September 12, 1997; (iii)
180 shares after October 12 1997; (iv) 240 shares after November 11, 1997; and
(v) 300 shares after December 10, 1997.

    As of July 8, 1997, there were 250 Series C Preferred Shares outstanding
and held of record.  The holders of the Series C Preferred Shares have no voting
rights, except with respect to certain matters that affect the rights of the
Series C Preferred Shares.

    THE PROMETHEAN COMMON STOCK INVESTMENT AGREEMENT.  On March 31, 1997, the
Company entered into a Common Stock Investment Agreement with Promethean
Investment Group L.L.C. ("Promethean") pursuant to which Promethean will provide
$10 million in equity funding to the Company.  The Company has agreed to issue a
minimum of $4,000,000 in Common Stock, at a 10% discount to market price, to
Promethean within two years following the effective date of a registration
statement covering the shares to be sold pursuant to the Common Stock Investment
Agreement.  On April 29, 1997, the Company and Promethean agreed to increase the
equity funding commitment from $10 million to $25 million.

    OTHER SALES OF UNREGISTERED SECURITIES.  On December 10, 1996, the Company
issued 5,000 shares of the Company's Common Stock to Westergaard and Company as
consideration for certain consulting services provided to the Company.

    On March 31, 1997, the Company issued 25,000 shares of its Common Stock,
with a then market value of $112,500, to a lessor of certain property formerly
leased by ITV in connection with a settlement of a lawsuit involving the lease
of such property.  The shares of Common Stock issued had certain demand and
"piggy-back" registration rights.  Further, if at the time of registration, the
share price of the Company has increased or decreased by 20% or more, the
Company shall issue, or the lessor shall return, as the case may be, a number of
shares to restore the value of the Common Stock so issued to $112,500.

    On September 6, 1996, the Company issued options to purchase 20,000 shares
of the Company's Common Stock as compensation to two employees.  For a
discussion of the issuance of securities as compensation to the directors and
executive officers of the company, see "Executive Compensation."

    Except as otherwise provided above, the Company believes that the issuances
of securities pursuant to the foregoing transactions were exempt from
registration under the Securities Act by virtue of section 4(2) thereof as
transactions not involving public offerings.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

    The Company devotes substantially all of its efforts to financing and
developing Sino-foreign joint ventures to establish telecommunications networks
in the PRC.  In January 1996, the Company completed the sale of the assets of
its ITV subsidiary.  As such, research and development, marketing, and sales of
products from its ITV subsidiary have ceased.

LIQUIDITY AND CAPITAL RESOURCES

    The Company has financed its operations primarily through equity
investments and loans from its founding stockholders.

    Approximately $3,558,000 of cash was provided by the Company's operations
for the fiscal year ended March 31, 1997, compared to the use of approximately
$2,887,000 of cash for the year ended March 31, 1996.  The cash flow from
operating activities relates to the increase in prepaid expenses and other
current assets reflected in the Company's financial statements as a result of
the consolidation of its joint venture subsidiaries in the PRC.  The use of cash
from operations for the year ended March 31, 1996


                                         16.
<PAGE>

reflects increases in accounts payable and accrued expenses, including accrued
interest, of approximately $1,400,000.  During the fiscal year ended March 31,
1995 the Company used approximately $4,399,000 in its operating activities.  The
decrease in cash used in the Company's operating activities from the year ended
March 31, 1995 to the year ended March 31, 1996 reflects a greater net loss in
1995, and an increase in accounts payables and accrued expenses in 1996.

    The Company used approximately $15,715,000 in its investing activities in
the year ended March 31, 1997, compared to approximately $1,040,000 in the year
ended March 31, 1996.  This increase reflects the Company's joint venture
funding during the year ended March 31, 1997, as well as construction costs of
approximately $21,881,000 in the Company's GSM Network in Hebei Province.  The
Company further reported approximately $6,550,000 of net liabilities assumed
through consolidation of its joint venture subsidiaries in the PRC.  Net cash
used in the Company's investing activities for the year ended March 31, 1995 was
approximately $861,000, which reflects development expenses related to research
and development of its ITV subsidiary prior to the sale of ITV to Netmatics.

    The cash inflows from financing activities during the year ended March 31,
1997 were generated from the following sources: (i) approximately $11,521,000 in
loans from Mitsubishi Bank and vendor provided financing for the development of
the Hebei GSM Network, which the Company has reported through the consolidation
of its PRC joint ventures, (ii) the receipt of additional Common Stock
subscriptions of $2,000,000 and (iii) the receipt of $3,841,219 in Preferred
Stock subscriptions.  On June 12, 1996, the Company issued 100 shares of the
Company's Series B Convertible Preferred Stock, at a purchase price of $25,000
per share, and a number of warrants equal to the number of common shares into
which the Series B Preferred Shares were converted in consideration of
$2,500,000, of which the Company received $2,341,219 after placement agent's
fees.  In addition, on March 31, 1997, the Company issued 150 shares of the
Company's Series D Convertible Preferred Stock at a purchase price of $10,000
per share in consideration of $ 1,500,000.

    During the years ended March 31, 1996 and March 31, 1995, the Company
received approximately $2,934,000 and $6,387,000 from its financing activities,
respectively.  The sources of these amounts were from: (i) the sale of
approximately $2,194,000 and $2,605,000 in Common Stock during the years ended
March 31, 1996 and March 31, 1995, respectively, (ii) the receipt of
approximately $1,536,000 in Common Stock subscriptions in the year ended March
31, 1995, and (iii) the receipt of shareholder loans of approximately $740,000
during the year ended March 31, 1996 and $2,245,000 during the year ended March
31,1995.

    On December 15, 1995, the Company also agreed to issue 1,524,178 shares of
the Company's Series A Convertible Preferred Stock (the "Series A Preferred
Shares") to Tweedia as consideration for the contribution to the Company by
Beijing CATCH of Beijing CATCH's interest in a $4,572,536 non-refundable deposit
paid to Motorola in connection with an Enhanced Specialized Mobile Relay System
Equipment Purchase Contract #700.0008D, dated December 12, 1993, and as amended,
between Beijing CATCH and Motorola.  The deposit has been reflected in the
financial statements as a deduction of stockholders' equity, as it is currently
the view of management that this deposit may be forfeited and such Series A
Preferred Shares will be canceled.

    As of December 21, 1995, the Company agreed to issue up to 50,000,000
shares of Common Stock to Tweedia, an affiliate of Beijing CATCH and the
principal shareholder of the Company, pursuant to the terms of a Master
Agreement and Right of First Refusal, dated December 21, 1995, between Beijing
CATCH, Tweedia and the Company (the "Master Agreement").  As of July 8, 1997,
the Company has not issued any shares pursuant to the Master Agreement, and has
not entered into, and management has no current intent of entering into, any
Sino-foreign joint ventures with Beijing CATCH under the terms of the Master
Agreement.  As a result, no obligation for future issuances of Common Stock to
Beijing CATCH under the Master Agreement exists or are contemplated.  See
"Certain Relationships and Related Transactions."


                                         17.
<PAGE>

    The current funding requirement for the Hebei Multimedia Network is
estimated at approximately $23 million to link cable systems in the eleven
largest cities in Hebei Province.  As of June 20, 1997, the Company had invested
approximately $1.0 million in Hebei Equipment for purposes of investment in the
Hebei Multimedia Network.  The Company anticipates that the balance of required
funding will be provided in the form of equity and debt investments in Hebei
Equipment and additional joint venture entities that may be established with
strategic partners.  See "Risk Factors -- Significant Additional Funding of
Joint Venture Projects Required."

    The Company's ability to obtain profitable operations is dependent in part
on the successful development, implementation and marketing of the PRC joint
ventures' products and services.  The Company will continue to seek funds in the
form of lines of credit and/or equity and debt offerings to third parties as
well as its existing shareholders.  See "Risk Factors -- Possible Need for
Additional Capital."

    In the event the Company fails to raise additional funds from such
financing, and fails to generate any additional revenues from operations, the
Company may not be able to meet all of its obligations past December 1997, based
on its current operating expenditures.  There can be no assurances that any
sources of financing will be available from existing stockholders or external
sources on terms favorable to the Company or at all or that the business of the
Company will ever achieve profitable operations.  In the event the Company does
not receive any such financing or generate profitable operations, management's
options will be to suspend or discontinue its business activity in its present
form.

EQUITY ISSUANCE AND SERVICE AGREEMENTS

    As the Company's entire business consists of the financing and development
of telecommunications networks in the PRC, and the Sino-foreign joint ventures
for such projects are in their development stage, the Company had no cash flow
from such ventures during the fiscal year ended March 31, 1997.  Since inception
of its current business in February 1995, the Company has financed its
participation in the Sino-foreign joint ventures through private equity
investments and loans from its founding stockholders.  The following is a
discussion of arrangements entered into by the Company for certain financial,
legal and consulting services.

    On July 30, 1996, the Company entered into an agreement with Merrill Lynch
(Asia Pacific) Limited ("Merrill Lynch") pursuant to which Merrill Lynch will
act as a financial advisor to the Company and will assist the Company with
strategic financing alternatives with respect to the Company's PRC projects.
The Company was required to pay Merrill Lynch a retainer of $50,000 upon the
execution of the agreement and three installments of $150,000 each payable every
120 days thereafter, none of which has been paid by the Company to date.
Additional fees may be paid to Merrill Lynch if Merrill Lynch successfully
assists the Company in raising capital for the Company and the Company's
Sino-foreign joint ventures.

    In October 1996, the Company entered into an agreement with two of its law
firms, to settle a portion of their accrued fees through the issuance of stock
options.  With this transaction, the Company converted accrued legal fees in the
aggregate of approximately $98,000 into options to purchase an aggregate of
65,064 shares of the Company's Common Stock at an exercise price of $1.50 per
share, the market value of the Company's common stock at that time.  A portion
of the accrued legal fees were credited against gains made by actual resale
price.  In addition, one firm continues to hold options to purchase 10,102
additional shares of Common Stock against future legal fees.  The Company also
agreed to register the underlying shares with the Commission on Form S-8.  The
registration statement relating to these shares was filed with the Commission on
or about November 11, 1996.

    On October 15, 1996, the Company agreed to issue warrants to David
Rubenstein to purchase 200,000 shares of the Company's Common Stock.  These
warrants were issued for Mr. Rubenstein's services related to advising the
Company with respect to its Sino-foreign joint ventures and marketing activities
in


                                         18.
<PAGE>

the PRC.  The warrants issued have a three year term and an exercise price of
$1.50, which was the market value of the Company's Common Stock at the time of
issuance of the warrants.

    On December 10, 1996, the Company agreed to issue to E. Pendelton James
5,000 shares of the Company's Common Stock with a market value of $18,125 (based
on the fair market value at the time of issuance), in addition to 5,000 shares
issued to him in May 1996 which had a market value of $45,625 (based on the fair
market value at the time of issuance), for professional executive search
consulting services he has been providing to the Company in developing the
composition of its management and Board of Directors.

    The Company agreed to register shares of Common Stock underlying warrants
issued to David Rubenstein and shares of Common Stock issued to E. Pendelton
James for consulting services, and certain shares of Common Stock issued to
Joseph R. Wright, Jr. in lieu of cash compensation with the Commission.  On or
about December 31, 1996, the Company filed a registration statement on Form S-8
with the Commission.  The total number of shares covered by the registration
statement was 397,500.

    On or about October 19, 1996, the Company entered into a twelve month
financial advisory services agreement with an investment bank.  The services
provided under this agreement relate to financial advisory services, including,
but not limited to, the development of a financing strategy for the Company and
the Company's projects in the PRC.  The agreement calls for a $50,000 retainer
and the payment of success fees for raising capital for the Company and its
projects.  In addition, the Company has agreed to issue a warrant to purchase up
to 600,000 shares of the Company's Common Stock to the investment bank.  This
warrant has an exercise price of $2.00 per share, which was the market value of
the Company's Common Stock at the time of the issuance of the warrants.  300,000
of the warrants vest immediately, and the additional 300,000 warrants will vest
only when the investment bank has raised a minimum of ten million dollars in any
form of financing for the Company.

RESULTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 1997 AND MARCH 31, 1996

    Following the ITV Asset Sale in January 1996, the Company has focused its
business solely on establishing Sino-foreign joint ventures to develop
telecommunications networks in the PRC.  As a result of the ITV Asset Sale, the
Company does not currently generate sales or market any products.  Management
expects to begin reporting sales during fiscal year 1998 from Hebei Equipment's
interest in the GSM Network, which commenced operations in the fourth quarter of
fiscal year 1997.  In light of this change in operations, net sales decreased
from $683,733 during the year ended March 31, 1996 to $0 during the year ended
March 31, 1997.  Net sales during the year ended March 31, 1996 reflected the
former operations of ITV and related to the sale of prototypes of the Company's
products and miscellaneous services provided to the Company's customers on a
pilot-testing basis, as well as filed testing of the Company's products.  The
decrease in net sales during the year ended March 31, 1997 is attributable to
cessation of operations of the Company's ITV subsidiary after the Asset Sale of
ITV.

    Selling, general and administrative expenses increased 25% from $3,207,570
during the year ended March 31, 1996 to $3,996,151 during the year ended March
31, 1997 due to increased levels of salaries paid to employees and legal and
professional expenses incurred over the past year.

    Net research and development expenses decreased from $1,287,629 during the
year ended March 31, 1996 to $0 during the year ended March 31, 1997.  The
decrease in research and development expenses related to a shift in the focus of
the business of the Company from manufacturing technologically advanced
networking equipment through its ITV subsidiary to establishing Sino-foreign
joint ventures with entities in the PRC involved in telecommunications through
its PRC subsidiary.  As a result of the closing of the Asset Sale Agreement in
January 1996, the Company ceased all activities related to research and
development.


                                         19.
<PAGE>

    The equity in losses of unconsolidated subsidiary of $500,000 recorded
during the year ended March 31, 1996 represents the Company's share of losses
reported by Netmatics between January 17, 1996 and March 31, 1996, during which
period the Company owned thirty-three percent (33%) of the issued and
outstanding common shares of Netmatics.  Through a series of secured debentures
issued by Netmatics to its shareholders, and the conversion of a note in the
amount of 2,250,000 to equity, the Company's ownership in Netmatics increased to
39%.  Further, the Company has written off $198,538 of investments it has made
in Netmatics.

    Interest expense during the year ended March 31, 1997 decreased to
approximately $130,000 from approximately $241,856 during the year ended March
31, 1996 due to a reduction in outstanding balance of shareholder loans payable
during the year ended March 31, 1997.

    The loss from abandoned assets of $130,840 recorded during the year ended
March 31, 1996 represents a non-recurring "write-off" of certain remaining
assets of ITV that were not sold in the ITV Asset Sale.

    The Company's net loss decreased 23% from $5,281,730 during the year ended
March 31, 1996 to $4,064,885 during the year ended March 31, 1997.  This
decrease in net loss was due to reductions in losses and "write-offs" associated
with the operations of ITV, which were terminated following the ITV Asset Sale.

RESULTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 1996 AND MARCH 31, 1995

    Net sales increased from $345,276 during the year ended March 31, 1995 to
$683,733 during the year ended March 31, 1996.  Net sales during the year ended
March 31, 1995 related to the sale of prototypes of the Company's products and
miscellaneous services provided to the Company's customers on a pilot-testing
basis.  The increase in net sales during the year ended March 31, 1996 is
attributable to the development of a tested product line and a nation-wide sales
and marketing program for the distribution of the Company's products.  As all of
the Company's revenues since inception were generated by ITV, the Company had no
net sales subsequent to the closing of the Asset Sale Agreement in January 1996.

    Selling, general and administrative expenses decreased nine percent from
$3,513,567 during the year ended March 31, 1995 to $3,207,570 during the year
ended March 31, 1996.  This reduction is primarily related to a decrease in
payroll and related expenses associated with the closing of the Asset Sale
Agreement in January 1996, which led to a reduction in the number of employees
working in the Company.

    Net research and development expenses decreased by 38% from $2,086,324
during the year ended March 31, 1995 to $1,287,629 during the year ended March
31, 1996.  The decrease in research and development expenses related to a shift
in the focus of the business of the Company from manufacturing technologically
advanced networking equipment to establishing Sino-foreign joint ventures with
entities in the PRC involved in telecommunications.  As a result of the closing
of the Asset Sale Agreement in January 1996, the Company ceased all activities
related to research and development.

    The equity in losses of unconsolidated subsidiary of $150,000 recorded
during the year ended March 31, 1996 represents the Company's share of losses
reported by Netmatics between January 17, 1996 and March 31, 1996, during which
period the Company owned thirty-three percent (33%) of the issued and
outstanding common shares of Netmatics.

    Interest expense during the year ended March 31, 1996 increased to
approximately $242,000 from approximately $118,000 during the year ended March
31, 1995 due to a higher average outstanding balance of shareholder loans
payable during the year ended March 31, 1996.


                                         20.
<PAGE>

    The loss from abandoned assets of $130,840 recorded during the year ended
March 31, 1996 represents the write-off of certain remaining assets of ITV that
were not sold.

    The Company's net loss decreased from $5,538,303 during the year ended
March 31, 1995 to $5,281,730 during the year ended March 31, 1996.  This
decrease in net loss was due to decreases in SG&A and research and development
expenses that more than offset the loss from the abandonment of assets and
higher interest expenses incurred during the year ended March 31, 1996.

ITEM 7.   FINANCIAL STATEMENTS

    The financial statements required by this Item 7 are attached hereto as
"Exhibit (a)(1)" and incorporated herein by reference.

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

    Previously reported.

                                         21.
<PAGE>

                                       PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

    The directors of the Company currently have terms which will end at the
next annual meeting of the stockholders of the Company or until their successors
are elected and qualified, subject to their prior death, resignation or removal.
Officers are appointed by and serve at the discretion of the Board of Directors,
subject to the rights of the officers under their respective employment
agreements.  There are no family relationships among any of the Company's
directors and executive officers.

      NAME              AGE                   POSITION
---------------------   ---  --------------------------------------------------
Joseph R. Wright, Jr.   58   Chairman of the Board of Directors, Chief
                             Executive Officer and President
Richard T. McNamar      58   Vice Chairman of the Board of Directors
Xiao Jun                40   Executive Vice President - AVIC China and Director
James R. Lilley         69   Director
Michael H. Wilson       59   Director
Drew Lewis              65   Director
Ju Feng                 50   Director
Teoh Set Seng           45   Director
Albert G. Pastino       55   Senior Vice President and Chief Financial Officer
James F. O'Brien        51   Senior Vice President and General Counsel
Michael J. Lim          33   Executive Vice President - Operations
Timothy P. F. Crowley   25   Corporate Secretary

    JOSEPH R. WRIGHT, JR. has served as the Company's Chairman of the Board of
Directors since May 1995, Chief Executive Officer since March 1996 and President
since May 1996.  Mr. Wright also serves as Chairman and member of the Board of
GRC International, Inc. a U.S. public company that provides technical support to
government and private entities, Co-Chairman of Baker & Taylor Holdings, Inc.,
an international book and video distribution company, Vice Chairman of The
Jefferson Group, a member of the Board of Travelers Group, a public company,
PanAm Sat, a public company, and Deswell Industries, a public company.  From
1989 to 1994, Mr. Wright served in various executive capacities for W. R. Grace
& Co., an international chemicals and health care company, and its associated
companies, including Executive Vice President and Vice Chairman of W. R. Grace &
Co., President of Grace Energy Corporation and Chairman of Grace Environmental
Company.  From 1982 to 1989, Mr. Wright held the positions of Director and
Deputy Director of the Office of Management and Budget, The White House, and was
a member of President Reagan's cabinet.  Prior to 1982, he served as Deputy
Secretary, United States Department of Commerce, President of Citicorp Retail
Services and Retail Consumer Services, held posts in the United States
Department of Agriculture, the United States Census Bureau and the United States
Department of Commerce, and was Vice President and Partner of Booz. Allen &
Hamilton, a management consulting firm.  He is also currently a member of the
Board of Advisors of Barington Capital Corporation and Great Lakes Pulp and
Fiber Corporation, and a Trustee of Hampton University.

    RICHARD T. MCNAMAR has served as the Company's Vice Chairman of the Board
of Directors since September 1996.  He was the founder and Chairman of
International Franchise, Inc., a firm that specialized in international
financial transactions, from 1995 to 1997.  He was a Managing Director of
Oppenheimer & Co. from 1991 to 1994.  Formerly, he was the Vice-Chairman of The
Bank of New England Corporation and subsidiaries from 1990 to 1991.  Mr. McNamar
served as Deputy Secretary of the United States


                                         22.
<PAGE>

Treasury from 1981 to 1985.  He served in the Nixon and Ford Administrations
from 1972 to 1977, where he served as the Executive Director of the Federal
Trade Commission from 1973 through 1977. Mr. McNamar is also currently a member
of the Executive Board of the Bretton Woods Committee, the Board of the
Institute of the Americas and the Advisory Committee of the World Economic
Forum.

    XIAO JUN has served as a Director of the Company since February 1995 and
Executive Vice President - AVIC China since December 1995.  He also served as
the Company's Secretary from February 1995 to January 1996 and as Chief
Financial Officer from June 1995 to May 1996.  He has been the President of Xiao
Hua International, Inc., an international steel trading business based in
California since June 1993.  He served as the Vice President of ITV from
December 1994 to January 1996.  From March 1990 to May 1993, Mr. Xiao was the
Vice President of Chong Qing Special Metals Industry Co.  From 1985 to 1990, Mr.
Xiao served as an engineer and project manager at the representative office of
IBM China/HK Corp. (Beijing).  Mr. Xiao received a bachelor's degree in physics
from the Beijing Polytechnic University in 1982.

    JAMES R. LILLEY has served as a Director of the Company since May 1997.
Ambassador Lilley is currently the Director of Asian Studies at the American
Enterprise Institute ("AEI") which he joined in January 1993, and directs the
Institute for Global Chinese Affairs at the University of Maryland.  Prior to
his joining AEI, Ambassador Lilley served in President Bush's Administration as
the Assistant Secretary of Defense for International Security Affairs from
November 1991 to January 1993.  Ambassador Lilley was U.S. Ambassador to the
People's Republic of China from April 1989 to May 1991, and to the Republic of
Korea from 1986 to 1989.  Ambassador Lilley is the co-editor of BEYOND MFN:
TRADE WITH CHINA AND AMERICAN INTERESTS and is the author of the forward for the
AEI publication, CHINESE MILITARY MODERNIZATION.  He has represented Hunt Oil of
Texas and United Technologies of Hartford, Connecticut in 1979 to 1980.
Ambassador Lilley worked for Archer-Daniels-Midland Co. and Westinghouse as a
business consultant.

    MICHAEL H. WILSON has served as a Director of the Company since May 1997.
He has been Vice-Chairman of RBC Dominion Securities, Inc. in Toronto, Canada
since 1995.  Prior to 1994, Mr. Wilson held senior Federal Cabinet posts with
the Government of Canada in Finance, Industry, Science and Technology and
International Trade.  Prior to his career in public service, Mr. Wilson was
Executive Vice-President of Dominion Securities Limited.  Mr. Wilson also serves
on the Board of Directors of Manulife Financial, a mutual insurance company,
Amoco Corporation, a publicly held company, and Rio Algom Limited, a publicly
held company.  He is also active in a number of professional and community
organizations, including The Clarke Institute of Psychiatry, The Aspen Institute
and The Institute of the Americas.

    DREW LEWIS has served as a Director of the Company since May 1997.  Mr.
Lewis served as Chairman and Chief Executive Officer of Union Pacific
Corporation from October 1987 to January 1997, and served as the Chief Operating
Officer of Union Pacific Corporation from April 1986 to October 1987.  Prior to
his positions with Union Pacific Corporation, Mr. Lewis served as Chairman and
Chief Executive Officer of Union Pacific Railroad Company from April to October
1986.  From 1983 to 1986, Mr. Lewis was Chairman and Chief Executive Officer of
Warner Amex Cable Communications.  He served in the Reagan Administration from
January 1981 to February 1983 as U.S. Secretary of Transportation.  Mr. Lewis
also serves as a director to American Express Company, FPL Group, Inc., Gannett
Co., Inc., Gulfstream Aerospace Corporation, Lucent Technologies, Union Pacific
Resources Group, Inc. and Dal-Tile International, all of which are publicly held
companies.

    JU FENG has served as a Director of the Company since February 1995.  He
has been the Vice President and Chief Technical Officer of Beijing CATCH since
1990.  Mr. Ju also serves as the Chairman of Hebei Equipment.  He was an
associate professor and director of the telecommunications laboratory at the
Beijing University of Aeronautics and Astronautics from 1989 to 1990.  From 1987
to 1990, Mr. Ju served as a visiting scholar on mobile communication at the
Department of Electrical and Electronics Engineering at Liverpool University
(United Kingdom).  Mr. Ju received a master's degree from the


                                         23.
<PAGE>

Department of Electronics Engineering from the Beijing University of Aeronautics
and Astronautics in 1980, and a bachelor's degree in electrical engineering from
Tshinghua University (Beijing, China) in 1968.

    TEOH SET SENG has served as a Director of the Company since July 1994 and
served as the Secretary of the Company from July 1994 to February 1995.  She has
also served as an internal auditor for Villa Genting Development SDN BHD since
June 1993.  From 1983 to June 1993, Ms. Teoh served as a manager for Planglobal
Insurance SDN based in Malaysia.

    ALBERT G. PASTINO was appointed in June 1997 to serve as a Senior Vice
President and Chief Financial Officer of the Company, subject to ratification of
such appointment by the Board of Directors.  From 1993 to 1997, Mr. Pastino
served as the President of Kisco Capital Company, Inc., an affiliate of Kohlberg
& Company, a private equity investment company, where he was involved in a
number of equity transactions.  He also served on the boards of directors of a
number of Kohlberg & Company's portfolio companies and currently serves on the
board of four such portfolio companies.  From 1989 through 1992, Mr. Pastino
served as Senior Vice President and Chief Operating Officer of Fortis Private
Capital, Inc., a private equity investment company investing in expansion
financing and management buyouts.  Mr. Pastino began his business career at
Deloitte & Touche LLP where he served as senior partner, and gained his
investment banking experience at Alex Brown & Sons, Incorporated.  Mr. Pastino
received an M.B.A. from Fairleigh Dikinson University and a B.S. from St.
Joseph's University and completed the Harvard University Graduate School of
Business SCMP Program.

    JAMES F. O'BRIEN was appointed in June 1997 to serve as a Senior Vice
President and General Counsel of the Company, subject to ratification of such
appointment by the Board of Directors.  Mr. O'Brien was a senior litigation
partner at the law firm of Goulston and Storrs in Boston, Massachusetts where he
founded the litigation practice in 1978 and specialized in complex financial
transactions.  Prior to that, Mr. O'Brien was an associate with the firm of
Bingham, Dana & Gould.  He has served as an advisor to U.S. corporations seeking
business opportunities in Southeast Asia.  Mr. O'Brien received a J.D. from
Boston College Law School and an A.B. from St. John's Seminary in Boston.

    MICHAEL J. LIM has served as the Executive Vice President - Operations of
the Company since November 1995 and as the Chief Financial Officer from May 1996
through June 1997.  He also served as a Director of the Company from December
1996 to April 1997.  Prior to his joining the Company, Mr. Lim was an investment
banker with Bear, Stearns & Co., Inc. from 1986 to 1988 and from 1991 to 1995.
During the two and a half years prior to his joining the Company, Mr. Lim served
as Vice President of Bear Stearns Asia Limited, where he advised Asian
enterprises on a wide variety of financing transactions, with particular focus
on telecommunications and infrastructure financings.  Mr. Lim also worked as an
investment banker with the Chase Manhattan Bank from 1990 to 1991.  Mr. Lim
received his A.B. from Harvard College in English Literature in 1985 and his
M.B.A. from the Amos Tuck School of Business Administration at Dartmouth in
1990.

    TIMOTHY P. F. CROWLEY joined the Company in May 1995 and has served as the
Secretary of the Company since January 1996.  Prior to joining the Company.  Mr.
Crowley worked in Corporate Administration at Travelers Group.  Mr. Crowley
received his B.A. from Connecticut College in Anthropology and Art History, and
was enrolled in a graduate program in the History of Art at New York
University's Institute of Fine Arts from 1993 to 1994.

    There are currently no members appointed to the Audit Committee of the
Board of Directors.  During the fiscal year ended March 31, 1997, William H.
Davidson was the sole member of such committee until his resignation from the
Board in March 1997.

    In May 1997 Klaus Schwab, the President and Founder of the World Economic
Forum in Geneva, Switzerland was appointed by the Board of Directors to serve as
a member of the Board of Directors of the Company.  At the request of the World
Economic Forum's directors that Mr. Schwab reduce his involvement


                                         24.
<PAGE>

in outside for-profit activities, Mr. Schwab resigned from the Company's Board
of Directors in June 1997.  He resigned from a European corporation's board of
directors at approximately the same time.  No Board meetings were held while he
was a Director.

    SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.  Section 16(a) of
the Securities Exchange Act of 1934, as amended, requires the Company's
directors and executive officers and beneficial holders of more than 10% of any
class of the Company's equity securities to file with the Commission initial
reports of ownership and reports of changes in ownership of such equity
securities of the Company.  Based solely upon a review of such forms furnished
to the Company, and on written representations from certain reporting persons
that no other reports were required for such persons, the Company believes that
all reports required pursuant to Section 16(a) with respect to its executive
officers, directors and 10% beneficial stockholders for the fiscal year ended
March 31, 1997 were timely filed.

                                         25.
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

    The Following tables set forth certain information concerning compensation
for the fiscal years ended March 31, 1997, 1996 and 1995 of certain of the
Company's executive officers, including the Company's Chief Executive Officer
and all executive officers whose total annual salary and bonus exceeded
$100,000, for the fiscal year ended March 31, 1997 (the "Named Executive
Offices").

<TABLE>
<CAPTION>
                                                                                       Long Term
                                                                                      Compensation
                                                                               -------------------------
                                            Annual Compensation                          Awards
                                  ----------------------------------------     -------------------------
Name and                                                      Other Annual       Stock          Options/
Principal Position       Year     Salary ($)      Bonus ($)   Compensation     Awards ($)       SARS (#)
------------------       ----     ----------      ---------   ------------     ----------      ---------
<S>                     <C>       <C>             <C>         <C>              <C>             <C>
Joseph R. Wright         1997       $256,250         0          (2)$30,000       $281,250      3,000,000
  Chief Executive        1996        143,750         0          (2)$30,000                     3,000,000
  Officer(1)
Xiao Jun                 1997        123,958         0                                                 0
  Executive Vice         1996         57,990         0                                           400,000
  President-AVIC         1995         42,250         0                                           125,000
  China
Michael J. Lim           1997        167,333         0                                                 0
  Chief Financial        1996         79,615         0                                         1,000,000
  Officer(3)

</TABLE>
_________________

(1) Mr. Wright has served as the Company's Chief Executive Officer since March
    14, 1996.  He joined the Company as the Chairman of the Board of Directors
    on May 1, 1995.
(2) During fiscal 1996 and 1997, the Company paid approximately $30,000 per
    year on behalf of Mr. Wright for certain personal tax and accounting
    services rendered by third parties for Mr. Wright.
(3) Mr. Lim joined the Company as the Executive Vice President - Operations on
    November 7, 1995 and served as the Company's Chief Financial Officer from
    May 1996 through June 15, 1997.

                                         26.
<PAGE>

OPTION AND SAR GRANTS DURING LAST FISCAL YEAR

    The Company did not grant any stock options or SARs to its Named Executive
Officers during the fiscal year ended March 31, 1997.

OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

    The following table sets forth certain information regarding option
exercises by the Named Executive Officers during the fiscal year 1997 and
options held by such Named Executive Officers on March 31, 1997:

<TABLE>
<CAPTION>

                                                          Number of Securities              Value of Unexercised
                                                         Underlying Unexercised             In-the-Money Options
                         Shares                        Options at Fiscal Year End          at Fiscal Year End(1)
                       Acquired on         Value       --------------------------          ---------------------
      Name               Exercise        Realized    Exercisable       Unexercisable    Exercisable  Unexercisable
      ----             -----------      ---------    -----------       -------------    -----------  -------------
<S>                    <C>              <C>          <C>               <C>              <C>          <C>
Joseph R. Wright. . .                                  4,500,000           1,500,000    $10,800,000      3,600,000
Xiao Jun. . . . . . .       10,000        $78,950        415,000             100,000        995,425        240,000
Michael J. Lim. . . .                                    750,000             250,000      1,800,000        600,000

</TABLE>
________________
 
(1) Based on a per share price of $2.750, the closing price of the Common Stock
    as reported on the American Stock Exchange, minus the exercise price of the
    option, multiplied by the number of shares underlying the Option.

EMPLOYMENT AGREEMENTS

    The Company has entered into employment agreements with six of its
executive officers, Messrs. Joseph R. Wright, Jr., Richard T. McNamar, Albert G.
Pastino, James F. O'Brien, Xiao Jun and Michael J. Lim.

    The Company entered into a five year employment agreement dated as of April
15, 1995, and as amended on November 21, 1995 and September 6, 1996, with Joseph
R. Wright, Jr., pursuant to which Mr. Wright agreed to serve as the Company's
Chairman of the Board of Directors, Chief Executive Officer and President and to
operate out of the Company's executive offices located in New York, New York.
The employment agreement initially provided for an annual base salary of $50,000
during the year commencing April 15, 1995 and $300,000 during the year
thereafter.  The September 6, 1996 amendment to the employment agreement
provides for the issuance of shares of Common Stock in lieu of cash compensation
as payment for the salary that Mr. Wright had accrued from June 1995 through
August 1996, at $1.50 per share, the market price of the Common Stock on
September 6, 1996.  Further, the amendment offers Mr. Wright an automatic
extension of his contract of one year on each April 14, unless the Board of
Directors notifies Mr. Wright 90 days prior to such date that such extension
will not be made.  The Board of Directors also approved revising his salary for
the first year commencing on April 15, 1997 to $150,000, revising his salary for
the second year to $300,000, and increasing his salary in each year thereafter
by $100,000.  The Board of Directors of the Company also approved the issuance
of an additional three million options to Mr. Wright on September 12, 1996.
These options have an exercise price of $3.00 per share, the fair market value
on the date of grant, and vest with respect to fifty percent of said options on
each April 15, 1997 and April 15, 1998.

    In September 1996 the Company approved the issuance of 187,500 shares of
the Company's Common Stock to Mr. Wright, paid in lieu of a portion of cash
compensation Mr. Wright had been accruing from June 1995 through October 15,
1996. The amount of salary accrued through October 15, 1996 was $281,250.  The
Common Stock was issued at $1.50 per share, the fair market value of such shares
at the time of the grant.


                                         27.
<PAGE>

    Pursuant to the employment agreement, Mr. Wright was granted an option to
acquire 3,000,000 shares of Common Stock at an exercise price of $0.35 per
share, and an additional 3,000,000 shares at an exercise price of $3.00 per
share were granted on September 6, 1996.  The option has vested with respect to
the 3,000,000 shares which have an exercise price of $0.35 per share, and with
respect to 1,500,000 shares which have an exercise price of $3.00 per share.
The balance of the option with respect to 1,500,000 shares which have an
exercise price of $3.00 per share will vest on April 15, 1998.  The options
issued to Mr. Wright have been issued pursuant to the Company's 1996 Stock
Option Plan and were based on the market value of the Common Stock on the date
of grant.

    On September 6, 1996, the Company entered into a one year verbal employment
agreement with Richard T. McNamar pursuant to which Mr. McNamar will serve as
Vice Chairman of the Company.  He received 25,000 shares of the Company's Common
Stock upon commencing employment.  Initially, Mr. McNamar was part time, and was
arranged to receive a contingent success fee for financings he introduced or
arranged for the Company.  On October 1, 1996 Mr. McNamar became a full time
employee and waived his rights to any success fees.  In his full time capacity,
Mr. McNamar will be paid $200,000 annual base salary.  Mr. McNamar was issued an
option to purchase 250,000 shares of the Company's Common Stock at an exercise
price of $1.50 per share on September 6, 1996.  He received an additional option
for 250,000 shares at an exercise price of $1.50 per share when he became a full
time employee on October 1, 1996.  The exercise price of the options were based
on the market value of the Common Stock on the date of grant.  The Company and
Mr. NcNamar intend to sign an employment agreement during the current fiscal
year.

    On June 16, 1997, the Company entered into two year employment agreements
with each of Albert G. Pastino and James F. O'Brien, which agreements are
subject to ratification by the Board of Directors of the Company.  Mr. Pastino
will serve as a Senior Vice President and Chief Financial Officer of the Company
and will receive an annual base salary of $100,000 for the first year and stock
options to acquire 400,000 shares of Common Stock at an exercise price of $3.00
per share.  Mr. O'Brien will serve as a Senior Vice President and General
Counsel of the Company and will receive an annual base salary of $100,000 for
the first year and stock options to acquire 400,000 shares of Common Stock at an
exercise price of $3.00 per share.

    The Company entered into a two year employment agreement, effective as of
November 6, 1995, with Michael J. Lim, pursuant to which he will serve as the
Company's Executive Vice President - Operations at an annual base salary of
$200,000.  Mr. Lim also acted as the Company's Chief Financial Officer from May
1996 through June 15, 1997.

    The Company entered into a two year employment agreement, effective as of
January 1, 1996,  with Xiao Jun, pursuant to which he will serve as the
Company's Executive Vice President - AVIC China, at an annual base salary of
$175,000.

    In connection with these employment agreements, the Company has agreed to
issue, to Messrs. Lim and Xiao, options to purchase up to 1,000,000 and 400,000
shares, respectively, of the Company's Common Stock, with an exercise price of
$0.35 per share.  The options have been granted pursuant to the Company's 1996
Stock Option Plan.  The options vest at the rate of twenty-five percent (25%) of
the aggregate number of options so granted at the end of each six (6) month
period following the date of each respective employment agreement.  The options
granted to Messrs. Lim and Xiao expire on November 6, 2005 and December 31,
2005, respectively, and were based on the market value of the Common Stock on
the date of grant.

    The Company has also granted Mr. Xiao a five year option to acquire 125,000
shares of the Company's Common Stock at an exercise price of $0.3555 per share
pursuant to the Company's 1995 Stock Option Plan, all of which options vested as
of February 8, 1995.  See "Stock Option Plans."


                                         28.
<PAGE>

CONSULTANTS

    The Company has entered into a consulting agreement with David Rubenstein
pursuant to which Mr. Rubenstein will provide to the Company advise on marketing
strategies and joint venture structures in the PRC.  Mr. Rubenstein was granted
warrants to purchase 200,000 shares of Common Stock of the Company at an
exercise price of $1.50 per share, the market value of the Common Stock on the
date of the grant.

STOCK OPTION PLANS

    As of February 8, 1995, the Company's Board of Directors and stockholders
approved the Company's 1995 Stock Option Plan (the "1995 Stock Option Plan") in
connection with the closing of the transactions contemplated by the
Reorganization Agreement.  The Company has reserved up to 500,000 shares of
Common Stock for issuance under the 1995 Stock Option Plan.  The Company has
granted options to purchase up to 321,800 shares of Common Stock under the 1995
Stock Option Plan, 135,000 of which have been exercised.

    The 1996 Stock Option Plan (the "1996 Stock Option Plan") was adopted by
the Board of Directors on March 14, 1996 and by the Company's stockholders on
May 7, 1996.  The Company has reserved for issuance thereunder an aggregate of
12,000,000 shares of Common Stock.  The Company has granted options to purchase
up to 8,040,000 shares of Common Stock under the 1996 Stock Option Plan.  Of the
8,040,000 options granted as of the date of this Report, 5,660,000 options have
vested, and the remaining 2,380,000 options may vest subject to certain
schedules.  The Board of Directors has approved a provision in the 1996 Stock
Option Plan which will place a 6,000,000 share limit on the number of options
that may be granted under the 1996 Stock Option Plan to an employee in the
fiscal year ended March 31, 1996, and a 1,500,000 share limit in each fiscal
year thereafter.

    A description of each of the Company's Stock Option Plans is set forth
below.  The description is intended to be a summary of the material provisions
of the Company's Stock Option Plan and does not purport to be complete.

    ADMINISTRATION OF AND ELIGIBILITY UNDER STOCK OPTION PLANS.  Each of the
Stock Option Plans, as adopted, provides for the issuance of options to purchase
shares of Common Stock to officers, directors, employees, independent
contractors and consultants of the Company and its subsidiaries.  The Stock
Option Plans authorize the issuance of incentive stock options ("ISOs"), and
non-qualified stock options ("NSOs") and stock appreciation rights ("SARs") to
be granted by a committee (the "Committee") to be established by the Board of
Directors to administer the Stock Option Plans.

    Subject to the terms and conditions of the Stock Option Plans, the
Committee will have the sole authority to determine: (a) the persons
("optionees") to whom options to purchase shares of Common Stock and SARs will
be granted, (b) the number of options and SARs to be granted to each such
optionee, (c) the price to be paid for each share of Common Stock upon the
exercise of such option, (d) the period within which each option and SAR will be
exercised and any extensions thereof, and (e) the terms and conditions of each
such stock option agreement and SAR agreement which may be entered into between
the Company and any such optionee.

    All officers, directors and employees of the Company and its subsidiaries
and certain consultants and other persons providing significant services to the
Company and its subsidiaries will be eligible to receive grants of options and
SARs under the Stock Option Plans.  However, only employees of the Company and
its subsidiaries are eligible to be granted ISOs.

    STOCK OPTION AGREEMENTS.  All options granted under the Stock Option Plans
will be evidenced by an option agreement or SAR agreement between the Company
and the optionee receiving such option or SAR.  Provisions of such agreements
entered into under the Stock Option Plans need not be identical and


                                         29.
<PAGE>

may include any term or condition which is not inconsistent with the respective
Stock Option Plan and which the Committee deems appropriate for inclusion.

    INCENTIVE STOCK OPTIONS.  Except for ISOs granted to stockholders
possessing more than ten percent (10%) of the total combined voting power of all
classes of the securities of the Company or its subsidiaries to whom such
ownership is attributed on the date of grant ("Ten Percent Stockholders"), the
exercise price of each ISO must be at least 100% of the fair market value of the
Company's Common Stock as determined on the date of grant.  ISOs granted to Ten
Percent Shareholders must be at an exercise price of not less than 110% of such
fair market value.

    Each ISO must be exercised, if at all, within ten (10) years from the date
of grant, but, within five (5) years of the date of grant in the case of ISOs
granted to Ten Percent Stockholders.

    An optionee of an ISO may not exercise an ISO granted under the Stock
Option Plans so long as such person holds a previously granted and unexercised
ISO.

    The aggregate fair market value (determined as of time of the grant of the
ISO) of the Common Stock with respect to which the ISOs are exercisable for the
first time by the optionee during any calendar year shall not exceed $100,000.

    As of the date of this Report, ISOs have been granted under the 1995 Stock
Option Plan, subject to certain vesting schedules, to purchase up to 300,000
shares of Common Stock, 160,000 of which have been exercised.  The 300,000 ISOs
have an exercise price of $0.3555 per share.

    Further, as of the date of the Report, ISOs have been granted under the
1996 Stock Option Plan, subject to certain vesting schedules, to purchase up to
362,380 shares of Common Stock.  These options have the following per share
exercise prices: 285,714 shares ($0.35), 66,666 shares ($3.00) and 10,000 shares
($1.50).

    NON-QUALIFIED STOCK OPTIONS.  The exercise price of each NSO will be
determined by the Committee on the date of grant.  However, the exercise price
for the NSOs under the 1995 Stock Option Plan will in no event be less than 85%
of the fair market value of the Common Stock on the date the option is granted,
or not less than 110% of the fair market value of the Common Stock on the date
such option is granted in the case of an option granted to a Ten Percent
Stockholder.  No such restriction exists with respect to the exercise prices of
NSOs granted under the 1996 Stock Option Plan.

    The exercise price for each NSO will be determined by the Committee at the
time such option is granted, but in no event will such exercise period exceed
ten (10) years from the date of the grant.

    As of the date of this Report, NSOs have been granted under the 1995 Stock
Option Plan, subject to certain vesting schedules, to purchase up to 20,000
shares of the Common Stock at an exercise price of $0.15 per share and up to
1,800 shares of Common Stock at an exercise price of $5.00 per share.

    As of the date of this Report, NSOs have been granted under the 1996 Stock
Option Plan to purchase up to 10,227,620 shares of Common Stock, subject to
certain vesting schedules.  These options have the following per share exercise
prices: 3,733,334 shares ($3.00), 260,000 shares ($1.50) and 6,234,286 shares
($0.35).

    STOCK APPRECIATION RIGHTS.  Each SAR granted under the Stock Option Plans
will entitle the holder thereof, upon exercise of the SAR, to receive from the
Company, in exchange therefor, an amount equal in value to the excess of the
fair market value on the date of exercise of one share of Common Stock over its
fair market value on the date of exercise of one share of Common Stock over its
fair market value on the date of grant (or in the case of an SAR granted in
connection with an option, the excess of the fair market


                                         30.
<PAGE>

of one share of Common Stock at the time of exercise over the option exercise
price per share under the option to which the SAR relates), multiplied by the
number of shares of Common Stock covered by the SAR or the option, or portion
thereof, that is surrendered.

    SARs will be exercisable only at the time or times established by the
Committee.  If an SAR is granted in connection with an option, the SAR will be
exercisable only to the extent and on the same conditions that the related
option could be exercised.  The Committee may withdraw any SAR granted under the
Stock Option Plans at any time and may impose any conditions upon the exercise
of an SAR or adopt rules and regulations from time to time affecting the rights
of holders of SARs.

    As of the date of this Report, no SARs have been granted pursuant to the
1995 Stock Option Plan, as part of the issuance of the 20,000 NSOs and no SARs
have been granted under the 1996 Stock Option Plan.

    TERMINATION OF OPTION AND TRANSFERABILITY.  In general, any unexpired
options or SARs granted under the Stock Option Plans will terminate: (a) in the
event of death or disability, pursuant to the terms of the option agreement or
SAR agreement, but not less than six (6) months or more than twelve (12) months
after the applicable date of such event, (b) in the event of retirement,
pursuant to the terms of the option agreement or SAR agreement, but no less than
thirty (30) days or more than three (3) months after such retirement date, or
(c) in the event of termination of such person other than for death, disability
or retirement, until thirty (30) days after the date of such termination.
However, the Committee may in its sole discretion accelerate the exercisability
of any or all options or SARs upon termination of employment or cessation of
services.

    The options and SARs granted under the Stock Option Plans generally will be
non-transferable, except by will or the laws of descent and distribution.

    ADJUSTMENTS RESULTING FROM CHANGES IN CAPITALIZATION.  The number of shares
of Common Stock reserved under the Stock Option Plans and the number and price
of Common Stock covered by each outstanding option or SAR under the Stock Option
Plans will be proportionately adjusted by the Committee for any increase or
decrease in the number of issued and outstanding shares of Common Stock
resulting form any stock dividends, split-ups. Consolidations,
recapitalizations, reorganizations or like event.

    AMENDMENT OR DISCONTINUANCE OF STOCK OPTION PLAN.  The Board of Directors
has the right to amend, suspend or terminate the Stock Option Plans at any time.
Unless sooner terminated by the Board of Directors, the 1995 Stock Option Plan
and the 1996 Stock Option Plan will terminate on February 8, 2005 and May 7,
2006, respectively, the tenth anniversary date of the effectiveness of each such
Stock Option Plan.

    COMPENSATION OF DIRECTORS.  The Company does not currently compensate its
Directors for services provided as Directors of the Company.  Except for two 
non-employee directors who each received 5,000 shares of Common Stock for a 
value totaling $90,000 (based on market value) in April 1996, no compensation
was paid to non-employee Directors for services performed as Directors of the
Company during the fiscal year ended March 31, 1997.

    DIRECTORS AND OFFICERS LIABILITY INSURANCE.  The Company has obtained
directors' and officers' liability insurance with an aggregate liability for the
policy year, inclusive of costs of defense, in the amount of $3,000,000.  The
insurance policy ending April 3, 1997, was renewed April 1, 1997 and will expire
April 3, 1998.

    INDEMNIFICATION OF OFFICERS AND DIRECTORS.  The Company's Certificate of
Incorporation and Bylaws designate the relative duties and responsibilities of
the Company's officers, establish procedures for actions by directors and
stockholders and other items.  The Company's Certificate of Incorporation and
Bylaws also contain extensive indemnification provisions that will permit the
Company to indemnify its officers and directors to the maximum extent provided
by Delaware law.

                                         31.
<PAGE>

    In addition, the Company has adopted a form of indemnification agreement
(the "Indemnification Agreement") which provides the indemnitee with the maximum
indemnification allowed under applicable law.  The Company has not entered into
Indemnification Agreements with any of its directors, executives, employees or
consultants as of the date of this Report.  Since the Delaware statute is
non-exclusive, it is possible that certain claims beyond the scope of the
statute may be indemnifiable.  The Indemnification Agreements provide a scheme
of indemnification which may be broader than that specifically provided by
Delaware law.  It has not yet been determined, however, to what extent the
indemnification expressly permitted by Delaware law may be expanded, and
therefore the scope of indemnification provided by the Indemnification
Agreements may be subject to future judicial interpretation.

    The Indemnification Agreement provides, in pertinent part, that the Company
shall indemnify an indemnitee who is or was a party or is threatened, pending or
completed action or proceeding whether civil, criminal, administrative or
investigative by reason of the fact that the indemnitee is or was a director,
officer, key employee or agent of the Company or any subsidiary of the Company.
The Company shall advance all expenses, judgments, fines, penalties and amounts
paid in settlement (including taxes imposed on indemnitee on account of receipt
of such payouts) incurred by the indemnitee in connection with the
investigation, defense, settlement or appeal of any civil or criminal action or
proceeding as described above.  The indemnitee shall repay such amounts advanced
only if it shall be ultimately determined that he or she is not entitled to be
indemnified by the Company.  The advances paid to the indemnitee by the Company
shall be delivered within 20 days following a written request by the indemnitee.
Any award of indemnification to an indemnitee, if not covered by insurance,
would come directly from assets of the Company, thereby affecting a
stockholder's investment.

    TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS.  Except as set
forth in employment agreements of certain employees of the Company and its
subsidiaries, the Company has no compensatory plans or arrangements which relate
to the resignation, retirement or any other termination of an executive officer
or key employee with the Company or a change in control of the Company or a
change in such executive officer's or key employee's responsibilities following
a change in control.

                                         32.
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth the beneficial ownership of Common Stock as
of July 8, 1997 by: (i) each person known by the Company to beneficially own 5%
or more of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each Named Executive Officer of the Company and (iv) all
directors and executive officers of the Company as a group.  Unless otherwise
indicated below, to the knowledge of the Company, all persons listed below have
sole voting and investment power with respect to their shares of Common Stock,
except to the extent authority is shared by spouses under applicable law.  The
information set forth in the table and accompanying footnotes has been furnished
by the named beneficial owners:

        NAME OF                                    NO. OF
    BENEFICIAL OWNER                              SHARES(1)   PERCENT(1)
    ----------------                             ----------   ----------
Tweedia International Limited(2). . . .         14,570,269       43.9
Max Chian Yi Sun(3) . . . . . . . . . .          2,798,191        9.0
Joseph R. Wright, Jr.(4). . . . . . . .          4,802,500       13.4
Richard T. McNamar(5) . . . . . . . . .            150,000         *
Xiao Jun(6) . . . . . . . . . . . . . .            425,000        1.3
James R. Lilley . . . . . . . . . . . .                  0         -
Michael H. Wilson . . . . . . . . . . .                  0         -
Drew Lewis. . . . . . . . . . . . . . .             10,000         *
Ju Feng(7). . . . . . . . . . . . . . .         14,575,269       43.9
Teoh Set Seng . . . . . . . . . . . . .                  0         -
Michael J. Lim(8) . . . . . . . . . . .            756,900        2.4
All executive officers and
  directors as a group. . . . . . . . .         21,469,669       54.1

______________

*   Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
    Securities and Exchange Commission and generally includes voting or
    investment power with respect to securities.  Shares of Common Stock
    subject to options currently exercisable, or exercisable within 60 days of
    July 8, 1997, are deemed outstanding for computing the percentage of the
    person holding such options but are not deemed outstanding for computing
    the percentage of any other person.
(2) Includes 1,524,178 shares of Series A Convertible Preferred Stock which are
    convertible into an equivalent number of shares of Common Stock and options
    to purchase 318,182 shares of Common Stock.  Beijing CATCH is the
    beneficial owner of all of the outstanding stock of Tweedia.  Beijing CATCH
    is a wholly-owned subsidiary of the Committee on Science and Technology of
    the Municipality of Beijing, a political subdivision of the People's
    Government of the Municipality of Beijing.  The address of Tweedia is
    Columbus Centre Building, Wickhams Cay, Road Town Tortola, British Virgin
    Islands.
(3) Includes 2,797,691 shares of Common Stock held of record by Occidental
    Worldwide Corporation of which Mr. Sun has sole voting and investment
    power.  The address of Mr. Sun is 126 JLN DEDAP, Taman Ampang Jaya, Trima
    Jaya, 68000 Ampang, Selangor, Malyasia.
(4) Includes options to purchase 4,500,000 shares of Common Stock.  The address
    of Mr. Wright is c/o AmTec, Inc., 599 Lexington Avenue, 44th Floor, New
    York, New York 10022.
(5) Includes options to purchase 125,000 shares of Common Stock.
(6) Includes options to purchase 415,000 shares of Common Stock.
(7) Includes shares beneficially owned by Tweedia.  Mr. Ju is an officer and
    director of Beijing CATCH which has an option to acquire Tweedia.  Mr. Ju
    is the record holder of 5,000 shares of Common


                                         33.
<PAGE>

    Stock.  The address for Mr. Ju is Jing Ming Building, No. 10 Hua Yan Road,
    Chaoyang District, Beijing, PRC, 100029.
(8) Includes options to purchase 750,000 shares of Common Stock.


                                         34.
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    In February 1995, pursuant to the Reorganization Agreement, Tweedia became
the owner of approximately 12,727,000 shares, or approximately 41%, of the
Company's issued and outstanding Common Stock.  Beijing CATCH Communications
Group Co., a Chinese paging company under the jurisdiction of the Beijing
Municipal Government, has an option to acquire 100% of the outstanding capital
stock of Tweedia.  However, this option may not be exercised without the receipt
by Beijing CATCH of all PRC regulatory approvals applicable to such exercise.
After discussions with PRC counsel, management believes that these approvals to
own securities listed on non-PRC stock exchanges are substantive in nature and
are not readily obtained in the PRC except by corporations or banks that are
specifically authorized to own foreign securities.

    As of December 21, 1995, pursuant to the terms of the Master Agreement,
Beijing CATCH agreed to grant the Company a right of first refusal to
participate as a majority investor and provide financial, operating and
technical consulting services with respect to all rights granted, sold,
licensed, or otherwise transferred to Beijing CATCH, directly or indirectly,
that relate to the construction, operation or acquisition of any type of
telephony, telecommunications equipment, paging equipment or related forms of
communication equipment or service in the PRC.  As consideration for this right
of first refusal, the Company agreed to issue up to 50,000,000 shares of Common
Stock to Tweedia based on the receipt of certain agreed upon amounts of net
income by the Company relating to prospective Sino-foreign joint ventures
involving the Company and Beijing CATCH.  The Master Agreement supersedes
certain terms of other prior agreements between the Company and Beijing CATCH
concerning cooperation on telecommunications projects.  As of July 8, 1997, the
Company has not entered into, and management has no current intent of entering
into, any Sino-foreign joint ventures with Beijing CATCH under the terms of the
Master Agreement.  As a result, no obligation for future issuances of Common
Stock to Beijing CATCH under the Master Agreement exists or are contemplated.

    Beijing CATCH is in the process of being acquired by Hainan Minyuan Modern
Agriculture Company ("Hainan Minyuan"), a publicly listed company in the PRC
primarily engaged in real estate development and agriculture production in
Hainan Province of the PRC.  In late 1996, Hainan Minyuan proposed to acquire
Beijing CATCH, and the acquisition was approved by the shareholders of both
companies.  As of May 1997, Hainan Minyuan's proposed acquisition of Beijing
CATCH was awaiting final approval by the Chinese governmental authorities.  If
the acquisition receives final approval by the necessary Chinese governmental
authorities, Hainan Minyuan will in turn hold the option to acquire control of
Tweedia and a proxy to vote the shares of Tweedia.  This option may not be
exercised until all applicable PRC approvals are obtained.  Hence at this time
the control of Tweedia by Hainan Minyuan and its indirect ability to
substantially influence the Company is uncertain.

    At the time of the Company's acquisition of the majority stake in Hebei
Equipment, Hebei United Telecommunications Development Co. ("Hebei Development")
held a 30% ownership of Hebei Equipment and Beijing CATCH held subscription
rights to 9.2% ownership of Hebei Equipment.  Subsequent to Hebei Equipment's
conversion to a Sino-foreign joint venture company, Beijing CATCH defaulted on
its required capital contribution of 2 million Renminbi (1 U.S. dollar equals
approximately 8.35 Renminbi).  On April 22, 1997, the Board of Directors of
Hebei Equipment resolved to terminate Beijing CATCH's ownership participation in
Hebei Equipment, and the Company and Hebei Development agreed to provide to
Hebei Equipment the 2 million Renminbi defaulted on by Beijing CATCH.  The
allocation of (i) the 2 million Renminbi investment required from the Company
and Hebei Development and (ii) the 9.2% ownership previously held by Beijing
CATCH are currently under discussions between the Company and Hebei Development.

                                         35.
<PAGE>

                                       PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)(1) FINANCIAL STATEMENTS:

      Report of Independent Auditors
      Consolidated Balance Sheets
      Consolidated Statements of Operations
      Consolidated Statements of Stockholders' Equity
      Consolidated Statements of Cash Flows
      Notes to Consolidated Financial Statements

(a)(2) EXHIBITS

    The following exhibits, which are furnished with this Annual Report or
incorporated herein by reference, are filed as part of this Annual Report:

 EXHIBIT
 NUMBER            EXHIBIT DESCRIPTION
 -------           -------------------
  2.1    Agreement for Sale of Assets by and between ITV Communications, Inc.
         and Netmatics, Inc., dated January 11, 1996, and Promissory Note and
         Security Agreement dated January 16, 1996(1)
  2.2    Agreement of Merger between AVIC Group International, Inc., a Colorado
         corporation, with and into AVIC Group International, Inc., a Delaware
         corporation dated July 10, 1996(8)
  3.1    Amendments to Articles of Incorporation of the Company dated June 7,
         1996 and June 10, 1996(5)
  3.2    Restated Certificate of Incorporation of the Company(7)
  3.3    Certificate of Ownership and Merger Merging China Telecommunications
         and Technologies, Inc. into the Company
  3.4    Certificate of Designations of Preferences of Series C Convertible
         Preferred Stock of the Company
  3.5    Certificate of Designations of Preferences of Series D Convertible
         Preferred Stock of the Company(7)
  3.6    Restated Bylaws of the Company(8)
  4.1    Specimen Common Stock Certificate
 10.1    1995 Stock Option Plan(2)
 10.2    1996 Stock Option Plan(2)
 10.3    Real Property lease between Lexreal Associates and the Company dated
         May 8, 1995(2)
 10.4    Employment Agreement between Joseph R. Wright, Jr. and the Company
         dated as of April 15, 1995(3), and amendments thereto dated as of
         November 21 1995(4) and September 12, 1996(6)
 10.5    Employment Agreement between Michael J. Lim and the Company dated as
         of November 6, 1995(4)
 10.6    Employment Agreement between Xiao Jun and the Company dated as of
         January 1, 1996(4)
 10.7    Employment Agreement between Albert G. Pastino and the Company dated
         as of June 16, 1997
 10.8    Employment Agreement between James F. O'Brien and the Company dated as
         of June 16, 1997
 10.9    Form of Indemnification Agreement for directors and officers of the
         Company(8)
 10.10   Consulting Agreement between American CATCH Communications Group Co.
         and the Company dated November 30, 1995(4)
 10.11   Consulting Agreement between Michael Markow and the Company dated
         December 15, 1995(4)
 10.12   Consulting Agreement between David Rubenstein and the Company dated
         October 15, 1996(6)
 10.13   Consulting Agreement between E. Pendleton James and the Company dated
         March 22, 1995, and amendment thereto dated January 8, 1997(6)


                                         36.
<PAGE>

 10.14   Common Stock Investment Agreement between Promethean Investment Group
         L.L.C. and the Company dated March 31, 1997, as amended on April 29,
         1997
 10.15   China Paging Networks Preliminary Agreement between Beijing CATCH
         Communications Group Co. and the Company dated April 1995(3)
 10.16   Mobile Telephone Network Preliminary Agreement between Beijing CATCH
         Communications Group Co. and the Company dated April 27, 1995(3)
 10.17   Cellular Telephone Network Preliminary Agreement between Beijing CATCH
         Communications Group Co., Tweedia International Limited and the
         Company dated April 1995(3)
 10.18   Memorandum of Understanding between Hebei United Communications
         Equipment Company and the Company dated May 1, 1995(3)
 10.19   Master Agreement and Right of First Refusal between Beijing CATCH
         Communications Group Co., Tweedia International Limited and the
         Company dated December 21, 1995(4)
 10.20   Letter of Intent between Hebei United Communications Equipment Company
         and the Company dated October 10, 1995(4)
 10.21   Joint Venture Contract between Beijing CATCH Communications Group Co.
         and the Company dated June 11, 1996(5)
 10.22   Joint Venture Contract between Hebei United Communications Equipment
         Company and NTTI dated December 22, 1995(5)
 10.23   Agreement between Hebei United Communications Equipment Company and
         the Company dated March 22, 1996(5)
 10.24   Joint Venture Contract between Hebei United Telecommunications
         Development Company, Beijing CATCH Communications Group Co. and the
         Company dated September 20, 1996
 10.25   Project Cooperation Contract between China United Telecommunications
         Co. and Hebei United Telecommunications Engineering Company Limited
         dated February 9, 1996
 10.26   Term Loan Agreement between Hebei United Telecommunications
         Engineering Company Limited and Bank of Tokyo-Mitsubishi, Ltd. dated
         August 5, 1996
 10.27   Project Cooperation Contract between Hebei Cable Television Station
         and Hebei United Communications Equipment Company Limited dated April
         8, 1997
 21.1    Subsidiaries of the Company
 23.1    Consent of Deloitte & Touche LLP.
 23.2    Consent of Singer Lewak Greenbaum & Goldstein LLP
 27      Financial Data Schedule
_______________

 (1)   Previously filed as part of the Company's Current Report on Form 8-K
       dated January 19, 1996.
 (2)   Previously filed as part of the Company's Transition Report on Form
       10-KSB for the transition period from October 1, 1994 to March 31, 1995.
 (3)   Previously filed as part of the Company's Current Report on Form 8-K
       dated May 1, 1995.
 (4)   Previously filed as part of the Company's Current Report on Form 8-K
       dated December 22, 1995.
 (5)   Previously filed as part of the Company's Annual Report on Form 10-KSB
       for the fiscal year ended March 31, 1996.
 (6)   Previously filed as part of the Company's Registration Statement on Form
       S-8 filed on January 31, 1997.
 (7)   Previously filed as part of the Company's Current Report on Form 8-K
       dated March 6, 1997.
 (8)   Previously filed as part of the Company's Definitive Proxy Statement
       dated April 18, 1996.


    (b)  REPORTS ON FORM 8-K:

    During the quarter ended March 31, 1997, the Company filed a report on Form
8-K dated March 6, 1997 covering Items 7 and 9 under that Form relating to the
issuance of shares of the Company's Series D Convertible Preferred Stock.

                                         37.
<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 Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                  AMTEC, INC.



                                  By /s/ Joseph R. Wright, Jr.
                                    ----------------------------------------
                                       Joseph R. Wright, Jr.
                                       CHAIRMAN OF THE BOARD,
                                       CHIEF EXECUTIVE OFFICER AND PRESIDENT
Date:  July 14, 1997


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

    SIGNATURE           TITLE                                        DATE
    ---------           -----                                        ----

/s/ Joseph R. Wright, Jr.   Chairman of the Board of Directors,    July 14, 1997
-------------------------   Chief Executive Officer and President
    Joseph R. Wright, Jr.   (Principal Executive Officer)

/s/ Richard T. McNamar      Vice Chairman of the Board of          July 14, 1997
-------------------------   Directors
    Richard T. McNamar     

/s/ Xiao Jun                Executive Vice President - AVIC        July 14, 1997
-------------------------   China and Director
    Xiao Jun  

/s/ James R. Lilley         Director                               July 14, 1997
-------------------------
    James R. Lilley

/s/ Michael H. Wilson       Director                               July 14, 1997
-------------------------
    Michael H. Wilson

/s/ Drew Lewis              Director                               July 14, 1997
-------------------------
    Drew Lewis
                            Director                               July 14, 1997
-------------------------
    Ju Feng
                            Director                               July 14, 1997
-------------------------
    Teoh Set Seng

/s/ Michael J. Lim         Executive Vice President - Operations   July 14, 1997
-------------------------  (Principal Financial and Accounting
    Michael J. Lim         Officer)


                                         38.
<PAGE>


                                            AMTEC INC. AND SUBSIDIARIES
                                            (FORMERLY AVIC GROUP INTERNATIONAL
                                            INC. AND SUBSIDIARIES)

                                            CONSOLIDATED FINANCIAL STATEMENTS
                                            FOR THE YEARS ENDED MARCH 31, 1997
                                            AND 1996, AND INDEPENDENT AUDITORS'
                                            REPORT





                                      F-1 

<PAGE>

AMTEC INC. AND SUBSIDIARIES (FORMERLY AVIC GROUP INTERNATIONAL INC. AND
SUBSIDIARIES)

TABLE OF CONTENTS
--------------------------------------------------------------------------------
                                                                   PAGE
 
INDEPENDENT AUDITOR'S REPORT                                        F-3

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                  F-4

CONSOLIDATED FINANCIAL STATEMENTS FOR THE
    YEARS ENDED MARCH 31, 1997 AND 1996:

    Consolidated Balance Sheets                                     F-5

    Consolidated Statements of Operations                           F-6

    Consolidated Statements of Stockholders' Equity                 F-7

    Consolidated Statements of Cash Flows                           F-8

    Notes to Consolidated Financial Statements                      F-10 - F-24


                                      F-2 


<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
AmTec Inc. and Subsidiaries (formerly AVIC
Group International Inc. and Subsidiaries)

We have audited the accompanying consolidated balance sheet of AmTec Inc. and
Subsidiaries (formerly AVIC Group International, Inc. and Subsidiaries) as of
March 31, 1997, and the related consolidated statements of operations,
stockholders' equity (deficiency) and cash flows for year then ended.  These
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

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

In our opinion, the March 31, 1997 consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of
March 31, 1997, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company is engaged in
developing telecommunications networks in the People's Republic of China.  As
discussed in Note 1 to the financial statements, the Company's substantial
capital requirements and the Company's operating losses since inception raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 1.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

DELOITTE & TOUCHE LLP

New York, New York
June 20, 1997
July 8, 1997 (as to Note 16)


                                      F-3 

<PAGE>

                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
AVIC Group International, Inc.

We have audited the accompanying consolidated balance sheet of AmTec, Inc. 
and Subsidiaries (formerly AVIC Group International, Inc. and Subsidiaries) 
as of March 31, 1996, and the related consolidated statements of operations, 
stockholders' equity (deficiency), and cash flows for each of the two years 
in the period ended March 31, 1996.  These financial statements are the 
responsibility of the Company's management.  Our responsibility is to express 
an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of AmTec, Inc. 
and Subsidiaries (formerly AVIC Group International, Inc. and Subsidiaries) as
of March 31, 1996, and the results of their operations and their cash flows for
each of the two years in the period ended March 31, 1996, in conformity with 
generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  During the year ended March
31, 1996, the Company had a net loss of $5,281,730.  Recovery of the Company's
assets is dependent upon future events, the outcome of which is indeterminable.
In addition, successful completion of the Company's development program and its
transition, ultimately, to the attainment of profitable operations is dependent
upon obtaining adequate financing to fulfill its development activities and
achieving a level of sales adequate to support the Company's cost structure.
These factors, among others, as discussed in Note 1 to the financial statements
raise substantial doubt about the Company's ability to continue as a going
concern.  The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
June 18, 1996

                                      F-4
<PAGE>


AMTEC INC. AND SUBSIDIARIES
(FORMERLY AVIC GROUP INTERNATIONAL INC. AND SUBSIDIARIES)

CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND 1996
--------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                             1997                1996
<S>                                                                    <C>                  <C>
ASSETS:
  CURRENT ASSETS:
    Cash                                                               $   5,390,871        $    185,889
    Prepaid expenses and other current assets                                182,090              60,678
                                                                       -------------        ------------

           Total current assets                                            5,572,961             246,567

  Property and equipment, net                                                518,020              76,233
  GSM construction costs                                                  22,017,869                -
  Joint venture deposits                                                       -               1,170,000
  Additional investment in joint venture                                   1,192,000                -
  Office lease deposit                                                       111,500             167,200
  Deferred expenses                                                            5,853                -
                                                                       -------------        ------------

           Total assets                                                $  29,418,203        $  1,660,000
                                                                       -------------        ------------
                                                                       -------------        ------------

LIABILITIES AND STOCKHOLDERS' EQUITY:
  CURRENT LIABILITIES:
    Accounts payable and accrued expenses                              $     991,194        $    866,990
    Accrued interest                                                         780,902             651,063
    Loans payable - stockholders                                           2,413,553           2,563,553
    Current portion of other payables                                        450,685               -
                                                                       -------------        ------------

           Total current liabilities                                       4,636,334           4,081,606
                                                                       -------------        ------------

  Loans payable                                                           11,956,486               -
                                                                       -------------        ------------
  Other payables                                                          10,290,128               -
                                                                       -------------        ------------
  Minority interest                                                        1,987,167               -
                                                                       -------------        ------------

  Commitments and contingencies

STOCKHOLDERS' EQUITY/(DEFICIT):
  Series A Convertible Preferred Stock:
    $.001 par value, authorized 10,000,000 shares; 1,524,178
      shares issued and outstanding in 1997 and 1996                           1,524               1,524

  Series D Convertible Preferred Stock:
    $.001 par value, authorized 10,000,000 shares; 150 and 0 shares
    issued and outstanding in 1997 and 1996, respectively.                         1              -

    Common stock:  $.001 par value, authorized 100,000,000 shares;
      31,257,921 and 28,436,952 issued and outstanding in 1997
      and 1996, respectively                                                  31,258              28,437
    Additional paid-in capital                                            25,202,108          18,648,620
    Accumulated deficit                                                  (20,592,536)        (16,527,651)
    Cumulative foreign currency exchange gain                                 (1,231)             -
    Non-refundable equipment purchase deposit                             (4,572,536)         (4,572,536)
    Warrants                                                                 479,500              -
                                                                       -------------        ------------

           Total stockholders' equity/(deficit)                              548,088          (2,421,606)
                                                                       -------------        ------------

                                                                       $  29,418,203        $  1,660,000
                                                                       -------------        ------------
                                                                       -------------        ------------

</TABLE>

See notes to consolidated financial statements.


                                      F-5

<PAGE>

AMTEC INC. AND SUBSIDIARIES
(FORMERLY AVIC GROUP INTERNATIONAL INC. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         1997                1996                1995
<S>                                                 <C>                <C>                  <C>
Net sales                                           $        -         $     683,733       $     345,276
                                                    ------------       -------------       -------------

Expenses:
  Cost of sales                                              -               637,065             330,981
  Selling, general and administrative                  3,996,151           3,207,570           3,513,567
  Research and development                                   -             1,287,629           2,086,324
                                                    ------------       -------------       -------------

           Total expenses                              3,996,151           5,132,264           5,930,872
                                                    ------------       -------------       -------------

Loss from operations                                  (3,996,151)         (4,448,531)         (5,585,596)
                                                    ------------       -------------       -------------

Other income (expense):
  Consulting income                                          -                   -               150,000
  Rental income                                           42,420                 -                   -
  Interest income                                        152,824                 -                   -
  Gain from sale of assets                                   -                31,880                 -
  Loss from abandoned assets                                 -              (130,840)                -
  Equity in losses of unconsolidated
    subsidiary                                               -              (500,000)                -
  Interest expense                                      (129,039)           (241,856)           (117,533)
  Exchange loss                                          (19,490)                -                   -
  Other - net                                                -                 7,617              14,826
  Write off of investment in
    Netmatics                                           (198,538)                -                   -
                                                    ------------       -------------       -------------

           Total other income (expense)                 (151,823)           (833,199)             47,293
                                                    ------------       -------------       -------------

Loss before minority interest                         (4,147,974)         (5,281,730)         (5,538,303)

Minority interest in loss of subsidiaries                 83,089                 -                   -
                                                    ------------       -------------       -------------

Net loss                                            $ (4,064,885)      $  (5,281,730)      $  (5,538,303)
                                                    ------------       -------------       -------------
                                                    ------------       -------------       -------------

Preferred stock dividend requirement                $     10,000       $         -        $          -
                                                    ------------       -------------       -------------

Loss applicable to common shares                    $ (4,074,885)      $         -         $         -
                                                    ------------       -------------       -------------
                                                    ------------       -------------       -------------

Net loss per common share                           $      (0.14)      $       (0.21)      $       (0.32)
                                                    ------------       -------------       -------------
                                                    ------------       -------------       -------------

Weighted average common
  shares outstanding                                  29,102,347          25,651,045          17,173,262
                                                    ------------       -------------       -------------
                                                    ------------       -------------       -------------

</TABLE>

See notes to consolidated financial statements.

                                      F-6
<PAGE>



AMTEC INC. AND SUBSIDIARIES
(FORMERLY AVIC GROUP INTERNATIONAL INC. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
--------------------------------------------------------------------------------
 

<TABLE>
<CAPTION>
                                                                                SERIES A            SERIES B          SERIES D
                                                        COMMON STOCK        PREFERRED STOCK      PREFERRED STOCK  PREFERRED STOCK
                                                  ---------------------  --------------------   ----------------  ----------------
                                                     SHARES     AMOUNT     SHARES    AMOUNT    SHARES   AMOUNT   SHARES    AMOUNT
                                                 ----------  ---------  ---------  --------    ------   ------   ------    ------
<S>                                              <C>         <C>        <C>        <C>         <C>     <C>       <C>       <C>
BALANCE, April 1, 1994                           10,000,500  $  10,001        -      $  -         -     $  -        -      $  -

Sale of common stock for cash                    12,742,909     12,743        -         -         -        -        -        -
Forgiveness of stockholder accrued
  expenses, September 1994                              -          -          -         -         -        -        -         -
Issuance of common stock for merger,
  February 1995                                   2,500,000      2,500        -         -         -        -        -         -
Net loss                                                -          -          -         -         -        -        -         -
                                                 ----------  ---------  ---------  --------    ------   ------   ------    ------

BALANCE, March 31, 1995                          25,243,409     25,244        -         -         -        -        -         -

Issuance of Series A preferred stock for
  interest in deposit, December 1995                    -          -    1,524,178     1,524       -        -        -         -
Sale of common stock for cash                     1,302,020      1,302        -         -         -        -        -         -
Conversion of stockholders' loans to
  common stock, February 1996                     1,891,553      1,891        -         -         -        -        -         -
Exercise of options, February 1996                      -          -          -         -         -        -        -         -
Equipment purchase deposit                              -          -          -         -         -        -        -         -
Net loss                                                -          -          -         -         -        -          -       -
                                                 ----------  ---------  ---------  --------    ------   ------   ------    ------

BALANCE, March 31, 1996                          28,436,982     28,437  1,524,178     1,524       -        -        -         -

Issuances of Series B preferred stock                   -          -          -         -         100        1                -
Conversion of Series B shares                     1,507,477      1,507        -         -        (100)      (1)               -
Issuance of Series D preferred stock                    -          -          -         -         -        -        150       1
Common shares issued for services rendered           90,962         91        -         -         -        -        -         -
Common shares issued to employees
  as compensation                                   212,500        213        -         -         -        -        -         -
Common shares issued for directors fees              10,000         10        -         -         -        -        -         -
Sale of common shares                             1,000,000      1,000        -         -         -        -        -         -
Preferred dividends                                      -         -          -         -         -        -        -         -
Warrants                                                -          -          -         -         -        -        -         -
Cumulative foreign exchange loss                        -          -          -         -         -        -        -         -
Net loss                                                -          -          -         -         -        -        -         -
                                                 ----------  ---------  ---------  --------    ------   ------   ------    ------

BALANCE, March 31, 1997                          31,257,921  $  31,258  1,524,178  $  1,524       -     $  -        150    $  1
                                                 ----------  ---------  ---------  --------    ------   ------   ------    ------
                                                 ----------  ---------  ---------  --------    ------   ------   ------    ------

<CAPTION>
                                                                                         CUMULATIVE
                                                                                          FOREIGN        EQUIPMENT
                                                           ADDITIONAL                     EXCHANGE       PURCHASE
                                                            PAID-IN      ACCUMULATED     GAIN (LOSS)      DEPOSIT
                                              WARRANTS      CAPITAL        DEFICIT                                        TOTAL
<S>                                           <C>        <C>           <C>               <C>              <C>        <C>
BALANCE, April 1, 1994                          $  -     $  7,100,149  $  (5,707,618)        $  -           $  -     $  1,402,532

Sale of common stock for cash                      -        2,592,589            -              -              -        2,605,332
Forgiveness of stockholder accrued
  expenses, September 1994                         -          305,027            -              -              -          305,027
Issuance of common stock for merger,
  February 1995                                    -           (2,500)           -              -              -             -
Net loss                                           -              -       (5,538,303)           -              -       (5,538,303)
                                            ----------   ------------   ------------      ---------   ------------     ----------

BALANCE, March 31, 1995                            -        9,995,265    (11,245,921)           -              -       (1,255,412)

Issuance of Series A preferred stock for                       
  interest in deposit, December 1995               -        4,571,012            -              -              -        4,572,536
Sale of common stock for cash                      -        2,192,681            -              -              -        2,193,983
Conversion of stockholders' loans to
  common stock, February 1996                      -        1,889,662            -              -              -        1,891,553
Exercise of options, February 1996                 -                -            -              -              -              -
Equipment purchase deposit                         -                -            -              -       (4,572,536)    (4,572,536)
Net loss                                           -                -     (5,281,730)           -              -       (5,281,730)
                                            ----------   ------------   ------------      ---------   ------------     ----------

BALANCE, March 31, 1996                            -       18,648,620    (16,527,651)           -       (4,572,536)    (2,421,606)

Issuances of Series B preferred stock              -        2,341,218            -              -              -        2,341,219
Conversion of Series B shares                      -           (1,506)           -              -              -             -
Issuance of Series D preferred stock               -        1,499,999            -              -              -        1,500,000
Common shares issued for services rendered         -          316,249            -              -              -          316,340
Common shares issued to employees
  as compensation                                  -          318,538            -              -              -          318,751
Common shares issued for directors fees            -           89,990            -              -              -           90,000
Sale of common shares                              -        1,999,000            -              -              -        2,000,000
Preferred dividends                                           (10,000)                          -              -          (10,000)
Warrants                                       479,500            -              -              -              -          479,500
Cumulative foreign exchange loss                   -              -              -           (1,231)           -           (1,231)
Net loss                                           -              -       (4,064,885)           -              -       (4,064,885)
                                            ----------   ------------   ------------      ---------   ------------     ----------

BALANCE, March 31, 1997                     $  479,500   $ 25,202,108   $(20,592,536)     $  (1,231)  $ (4,572,536)    $  548,088
                                            ----------   ------------   ------------      ---------   ------------     ----------
                                            ----------   ------------   ------------      ---------   ------------     ----------
</TABLE>
See notes to consolidated financial statements.


                                      F-7
<PAGE>


AMTEC INC. AND SUBSIDIARIES
(FORMERLY AVIC GROUP INTERNATIONAL INC. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                         1997                1996                1995
<S>                                                               <C>                 <C>                   <C>
Cash flows from operating activities:
  Net loss                                                        $  (4,064,885)      $  (5,281,730)      $  (5,538,303)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Amortization of capitalized software
      development costs                                                    -                281,250             168,750
    Depreciation                                                         43,193             346,005             344,611
    Loss from abandoned assets                                             -                130,840                -
    Gain from sale of assets                                               -                (31,880)               -
    Minority interest in net loss                                        83,089                -                   -
    Issuance of warrants for services rendered                          479,500                -                   -
    Issuance of common stock for compensation, directors'
      fees and services rendered                                        725,091                -                   -
    Equity in losses of unconsolidated subsidiary                          -                500,000                -
    (Increase) decrease in:
      Accounts receivable                                                  -                 98,895             (96,614)
      Inventories                                                          -                (96,091)           (110,154)
      Prepaid expenses and other current assets                       5,948,801             (91,200)            (12,258)
      Office lease deposit                                               55,700                -                850,000
      Other assets                                                         -               (131,887)            (16,453)
      Deferred expenses                                                  59,412                -                   -
    Increase (decrease) in:
      Accounts payable and accrued expenses                              98,221           1,251,464            (103,086)
      Accrued interest                                                  129,839             136,982             114,293
                                                                   ------------          ----------        ------------

           Net cash provided by (used in)
             operating activities                                     3,557,961          (2,887,352)         (4,399,214)
                                                                   ------------          ----------        ------------

Cash flows from investing activities:
  Purchase of property and equipment                                   (362,417)           (119,592)           (527,725)
  Joint venture deposit                                               1,170,000          (1,170,000)               -
  Proceeds from sale of assets                                             -                250,000                -
  Increase in capitalized computer software
    development costs                                                      -                   -               (333,767)
  GSM construction costs                                            (21,880,584)               -                   -
  Joint Venture's Net liabilities assumed                             6,549,703                -                   -
  Increase in Investment in joint venture                            (1,192,000)               -                   -
                                                                   ------------          ----------        ------------

           Net cash used in investing activities                    (15,715,298)         (1,039,592)           (861,492)
                                                                   ------------          ----------        ------------

Cash flows from financing activities:
  Borrowings                                                         11,521,100             739,952           2,245,227
  Receipt of common stock subscription receivable                          -                   -              1,536,303
  Proceeds from sale of common stock                                  2,000,000           2,193,983           2,605,200
  Proceeds from sale of Series B Convertible Preferred Stock          2,341,219                -                   -
  Proceeds from sale of Series D Convertible Preferred Stock          1,500,000                -                   -
                                                                   ------------          ----------        ------------
           Net cash provided by financing activities                 17,362,319           2,933,935           6,386,730
                                                                   ------------          ----------        ------------

Net increase (decrease) in cash and cash equivalents                  5,204,982            (993,009)          1,126,024

Cash and cash equivalents, beginning of period                          185,889           1,178,898              52,874
                                                                   ------------          ----------        ------------

Cash and cash equivalents, end of period                           $  5,390,871          $  185,889        $  1,178,898
                                                                   ------------          ----------        ------------
                                                                   ------------          ----------        ------------

</TABLE>
                                                                    (Continued)

                                      F-8
<PAGE>

AMTEC INC. AND SUBSIDIARIES
(FORMERLY AVIC GROUP INTERNATIONAL INC. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

                            Supplemental Cash Information:

No interest or income taxes were paid during fiscal 1997, 1996 and 1995.

                            Non Cash Financing Activities:

In fiscal 1997, 100 shares of Series B Preferred stock were converted into
1,507,477 shares of common stock.

In fiscal 1996, loans from stockholders of $1,891,553 were converted into
1,891,553 shares of common stock.

In fiscal 1996, 1,524,178 shares of Series A Preferred Stock were issued in
exchange for the rights to a deposit totaling $4,572,536.

In fiscal 1996, a deposit from a stockholder of $850,000 was converted to a note
payable.

In fiscal 1995, accrued expenses to a stockholder of $305,159 was forgiven and
additional paid-in capital was increased by $305,159.


See notes to consolidated financial statements.

                                                                    (Concluded)

                                      F-9
<PAGE>

AMTEC INC. AND SUBSIDIARIES
(FORMERLY AVIC GROUP INTERNATIONAL INC. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
--------------------------------------------------------------------------------

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    ORGANIZATION AND LINE OF BUSINESS - AmTec, Inc. (the "Company" or "AmTec")
    was incorporated in Colorado on May 10, 1982.  In February 1995, AmTec
    acquired all of the outstanding stock of ITV Communications, Inc. ("ITV").
    For accounting purposes, the acquisition has been treated as a reverse
    acquisition with ITV as the acquirer.  The historical financial statements
    prior to February 1995 are those of ITV.  AmTec had no assets at the date
    of the acquisition and, therefore, no proforma information is being
    presented.  The Company is currently devoting substantially all of its
    efforts with its majority-owned subsidiary in the People's Republic of
    China ("PRC") which is involved in providing financing and building
    telecommunications networks for third parties in the PRC.  The Company,
    through its wholly-owned subsidiary, ITV was engaged in the design,
    manufacture and sale of technologically advanced communication devices.  In
    January 1996, the Company sold all of the business and operating assets of
    ITV and is no longer involved in the business that ITV was engaged in.  The
    Company (including its subsidiaries) currently does not generate sales or
    market any products.

    PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
    the Company, its 60.8% owned subsidiary Hebei United Communications
    Equipment Co., Ltd. and subsidiary ("Hebei Equipment") (a limited life
    Sino-foreign joint venture) and its wholly-owned subsidiary, ITV
    Communications, Inc.  All significant intercompany accounts and
    transactions are eliminated in consolidation.  Hebei Equipment owns 51% of
    Hebei United Telecommunications Engineering Company, Ltd. ("Hebei
    Engineering").

    The financial statements of Hebei Equipment included in the consolidated
    financial statements are as of and for the period ended December 31, 1996,
    Hebei Equipment's year-end.  In the period January 1, 1997 to the Company's
    fiscal year end, an additional $1,192,000 has been invested by the Company
    in Hebei Engineering.  Such amount will not eliminate on consolidation due
    to the different year-end dates.  As such, the amount has been included in
    the balance sheet at March 31, 1997 as Additional investment in joint
    venture.

    BASIS OF PRESENTATION - The accompanying financial statements have been
    prepared in conformity with generally accepted accounting principles, which
    contemplate continuation of the Company as a going concern.  During the
    years ended March 31, 1997, 1996 and 1995, the Company experienced net
    losses of $4,064,885, $5,281,730 and $5,538,303, respectively.  In view of
    these matters, realization of the assets in the accompanying balance sheet
    is dependent upon the Company's ability to raise capital, to meet its
    financing and operating requirements and the success of its majority owned
    subsidiary in the PRC to complete its projects and to obtain profitable
    operations.  In response, management is pursuing investor opportunities and
    joint ventures to provide funds needed for such existing and future
    projects.

    MANAGEMENT ESTIMATES - The preparation of financial statements in
    conformity with generally accepted accounting principles requires
    management to make estimates and assumptions that affect the reported
    amounts of assets and liabilities and disclosures of contingent assets and
    liabilities at the date of the


                                      F-10
<PAGE>

    financial statements and the reported amounts of revenues and expense
    during the reporting period.  Actual results could differ from those
    estimates.

    CASH EQUIVALENTS - For purposes of the statements of cash flows, the
    Company considers all highly liquid investments purchased with original
    maturities of three months or less to be cash equivalents.

    PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost.

    Depreciation is provided using the straight line method, to write off the
    cost of property and equipment over their estimated useful lives, after
    deducting the estimated salvage value of 10% of cost, as follows:

         Land and buildings                                  20 years
         Furniture, fixtures and equipment                    5 years
         Motor vehicles                                       5 years
         Leasehold improvements                               5 years
         Computer equipment                                   3 years

    REVENUE RECOGNITION - Revenue related to the Company's former operations of
    ITV was derived primarily from product sales, and was recognized upon
    shipment of the products.  (See Note 3 as to current projects).

    RESEARCH AND DEVELOPMENT COSTS - Research and development costs of ITV were
    charged to expense as incurred.  These costs consist primarily of salaries
    and consulting fees.

    INCOME TAXES - The Company uses the liability method of accounting for
    income taxes pursuant to Statement of Financial Accounting Standards, No.
    109 "Accounting for Income Taxes."

    FOREIGN CURRENCY TRANSLATION - The functional currency for the Company's
    foreign operations is the applicable local currency.  The translation of
    the applicable foreign currency into U.S. dollars is performed for the
    balance sheet accounts using current exchange rates in effect at the
    balance sheet date and for revenue and expense accounts using a weighted
    average exchange rate during the period.  The gains and losses, net of
    applicable deferred income taxes if any, resulting from such translation
    are included in stockholders' equity.

    DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amount
    reported in the balance sheets for cash and cash equivalents, accounts
    receivable, accounts payable and accrued expenses approximates fair value
    because of the immediate short-term maturity of these financial
    instruments.

    NET LOSS PER SHARE - Net loss per share is based on the weighted average
    number of common and common equivalent shares outstanding during each year.
    The shares to be issued upon exercise of outstanding stock options and
    warrants are not included as common stock equivalents as they are
    antidilutive.

    RECLASSIFICATION - Certain amounts for the fiscal year ended March 31, 1996
    have been reclassified to conform to the current year's presentation.

    NEW ACCOUNTING PRONOUNCEMENTS - In 1997, the Financial Accounting Standards
    Board issued Statement of Financial Accounting Standards No. 128, "Earnings
    per Share," which is effective for financial statements ending after
    December 15, 1997.  This statement supersedes Accounting Principles Board
    No. 15 and replaces the presentation of primary EPS on the face of the
    income statement for all


                                      F-11
<PAGE>

    entities with complex capital structures, and provides guidance on other
    computational changes.  Had the provisions of the statement been effective
    for the current year, the following proforma EPS amounts would have been
    disclosed:


         Basic EPS                                          $  (0.14)
                                                            ---------
                                                            ---------

    No disclosure of Diluted EPS would be required due to the anti-dilutive
    effects of the Company's warrants, options and convertible securities.

2.  CONSOLIDATION OF MAJORITY OWNED SUBSIDIARY

    In establishing its activities in the PRC, the Company determined to form a
    Sino Foreign Joint Venture ("SFJV") as its investment vehicle.  In March
    1996, the Company invested $1,170,000 in a PRC joint venture company and
    requested approval for conversion of such company to an SFJV from the Hebei
    Province government.  In September 1996, preliminary regulatory approval
    for Hebei Equipment was granted and the SFJV was formed with the Company
    holding a 60.8% interest in the entity.  In April 1997, the Company
    received final PRC regulatory approval for the SFJV.  Hebei Equipment was
    established to hold a 51% interest in Hebei Engineering which is developing
    a GSM network in Hebei Province, PRC.  Nippon Telegraph and Telephone
    International, Inc. ("NTTI") holds the remaining 49% of Hebei Engineering.
    The Company's investment was previously accounted for as a joint venture
    deposit totaling $1,170,000.

3.  INVESTMENT IN GSM PROJECT

    Hebei Equipment, through its 51%-owned subsidiary, Hebei Engineering has
    invested approximately $22,000,000 in the construction of a GSM
    telecommunications network (the "GSM network") in Hebei Province of the
    PRC.  The GSM network is being built pursuant to a 15-year agreement with
    China United Telecommunication Company ("UNICOM").  Terms of the agreement
    include the following:

       -      Initially, UNICOM will own 30% of the assets while Hebei
              Engineering will own 70% of the assets.

       -      Both parties agree to distribute the profit according to the
              "Distributable Cash Flow" (as defined) with 22% going to UNICOM
              and 78% going to Hebei Engineering.

       -      Each year, Hebei Engineering will transfer assets equal in value
              to the Distributable Cash Flow received up to 60% of the assets.

       -      The remaining 10% shall be assigned to UNICOM without any
              consideration upon the termination of the contract.

       -      Hebei Engineering will continue to receive 78% of the
              Distributable Cash Flow after transfer of all the assets for the
              remainder of the 15 year period.

    Under PRC law, foreign entities, such as Hebei Engineering, are not
    permitted to own telecommunications networks.  As such, the Company has
    recorded its investment (GSM Construction costs) at cost and will amortize
    it over the life of the project.  Income will be recognized on receipt of
    distributable cash flow.  Management's current cash flow projections
    indicate the investment is fully realizable.  UNICOM commenced operation of
    the GSM network in February 1997.

                                      F-12
<PAGE>

4.  INVESTMENT IN NETMATICS

    The Company held a 39% (as of March 31, 1997) investment interest in
    Netmatics, Inc. ("Netmatics"), which it acquired in January 1996 in
    connection with the sale by the Company of the ITV business and operating
    assets.  Netmatics was engaged in the design, manufacture, and sale of
    technologically advanced communication devices.  In fiscal 1996, the
    Company suspended the equity method of accounting for its investment in
    Netmatics when the Company's share of losses equaled the carrying amount of
    the investment.  In fiscal 1996, the Company's share of Netmatics' loss
    charged to operations was $500,000.  During fiscal 1997, the Company
    advanced $12,000 to and purchased $186,538 of debentures from Netmatics.
    Such amounts were written-off as of March 31, 1997.

5.  PROPERTY AND EQUIPMENT

    Property and equipment consist of the following:


                                                1997           1996

    Land and buildings                      $  195,350      $    -
    Furniture, fixtures and equipment          249,268         70,936
    Motor vehicles                             111,298           -
    Computer software                           12,273         12,273
    Leasehold improvements                      12,580         12,580
                                            ----------      ---------
                                               580,769         95,789

    Less accumulated depreciation               62,749         19,556
                                            ----------      ---------

                                            $  518,020      $  76,233
                                            ----------      ---------
                                            ----------      ---------

    Depreciation expense for fiscal 1997, 1996, and 1995 was $43,193, $346,005
    and $344,611 respectively.

6.  DEPOSITS

    NON-REFUNDABLE EQUIPMENT PURCHASE DEPOSIT - In December 1995, the Company
    issued 1,524,178 shares of Series A Convertible Preferred Stock to its
    principal stockholder, Tweedia International Limited ("Tweedia"), in
    exchange for a $4,572,536 non-refundable deposit which Tweedia held with a
    vendor.  The deposit is in connection with the purchase of equipment.  If
    the deposit is not utilized, Tweedia has agreed to return the Convertible
    Preferred Shares to the Company for cancellation.  As the preferred shares
    were issued in connection with acquiring the deposit, and the utilization
    of such deposit is in doubt, the deposit is reflected in the financial
    statements as a deduction of stockholders' equity.

7.  OTHER PAYABLES

    The Company is financing equipment purchases related to construction of the
    GSM network through vendor financing under deferred payment terms with
    final installment repayable in 2001 and 1998, respectively.  All of the
    repayment of the liabilities were guaranteed by NTTI.  Liabilities will be
    payable as follows:

                                      F-13
<PAGE>


    LIABILITY REPAYABLE

    Current                              $     450,685
    1998                                     8,938,073
    1999                                       450,685
    2000                                       450,685
    2001                                       450,685
                                         -------------

    Total                                   10,740,813

    Less: current portion                      450,685
                                         -------------

                                         $  10,290,128
                                         -------------
                                         -------------


8.  LOANS PAYABLE

    Loans payable consists of the following:

                                                      MARCH 31,
                                               1997           1996

    Amounts due to shareholders (1)      $   2,413,553   $  2,563,553
    Bank loan (2)                           11,956,486         -
                                         -------------   ------------
                                            14,370,039      2,563,553

    Less - current maturities                2,413,553      2,563,553
                                         -------------   ------------

                                         $  11,956,486   $      -
                                         -------------   ------------
                                         -------------   ------------



(1) The amounts are payable on demand with a 8.5% interest rate.  The above
    amounts include a non-interest bearing note of $850,000 due to Beijing
    CATCH, a related party.

(2) On August 5, 1996, the SFJV obtained a loan facility of $20,000,000 from
    the Bank of Tokyo - Mitsubishi, Ltd. Beijing Branch at an annual rate of
    6.82%, of which approximately $12,000,000 was borrowed as of December 31,
    1996.  The obligation of the borrower under the agreement was guaranteed by
    NTTI.  The principal of the loan shall be repaid in five equal,
    consecutive, semi-annual installments, each in an amount equal to one-fifth
    of the principal amount of the loan outstanding on the third anniversary of
    the date of the agreement with subsequent installments on the last day of
    each of the next four six-month periods thereafter, provided, however, that
    the last such installment shall be in the amount necessary to repay in full
    the unpaid principal amount of the loan.  This amount is repayable as
    follows:

                                      F-14
<PAGE>


         YEAR ENDING
         MARCH 31,

         1998                                           $      -
         1999                                                  -
         2000                                               2,400,000
         2001                                               2,400,000
         2002                                               2,400,000
         Thereafter                                         4,756,486
                                                        -------------

                                                        $  11,956,486
                                                        -------------
                                                        -------------


9.  COMMITMENTS AND CONTINGENCIES

    LEASES - The Company leases a facility for its corporate and operations
    offices under a long-term lease agreement.  Minimum annual rental
    commitments under this lease are as follows:

      YEAR ENDING
       MARCH 31,

       1998                                                 $    372,327
       1999                                                      372,327
       2000                                                      343,582
       2001                                                       55,667
                                                            ------------

                                                            $  1,143,903
                                                            ------------
                                                            ------------


    Rent expense for fiscal 1997, 1996 and 1995 was $369,969, $399,992 and
    $340,918, respectively.

    EMPLOYMENT AGREEMENTS - The Company has entered into employment agreements
    with officers expiring through April 2000 with aggregate annual salaries of
    $1,125,000.

    LITIGATION - The Company and its subsidiaries are involved in litigation
    matters which involve certain claims which arise in the normal course of
    business, none of which, in the opinion of management, is expected to have
    a materially adverse effect on the Company's consolidated financial
    statements.

    FINANCIAL SERVICES - The Company entered into a financial advisory services
    agreement with an investment banking firm.  The agreement calls for a
    $50,000 retainer and the payment of success fees for raising capital for
    the Company and its projects.  In addition, the Company has agreed to issue
    a warrant to purchase up to 600,000 shares of the Company's Common Stock to
    such investment banking firm.  This warrant has an exercise price of $2.00
    per share, which was the market value of the Company's Common Stock at the
    time of the issuance of the warrants.  300,000 of the warrants vest
    immediately, and the additional 300,000 warrants will vest only when such
    investment banking firm has raised a minimum of ten million dollars in any
    form of financing for the Company.  (See Note 10)

    REGULATION - Each of the Company's joint ventures, Hebei Equipment and
    Hebei Engineering, is organized under the laws of the PRC as a Sino-foreign
    equity joint venture enterprise, a distinct legal entity with limited
    liability.  Such entities are governed by the Law of the PRC on Joint
    Ventures Using Chinese and Foreign Investments, and implementing
    regulations related thereto.  The parties to an equity joint venture have
    rights to the financial returns of the joint venture in proportion to the
    joint


                                      F-15
<PAGE>

    venture interests that they hold.  The operation of equity joint ventures
    is subject to an extensive body of law governing such matters as formation
    registration, capital contribution, capital distributions, accounting,
    taxation, foreign exchange, labor and liquidation.  The transfer or
    increase of an interest in a Sino-foreign equity joint venture enterprise
    requires agreement among the parties to the venture and is effective upon
    approval of relevant government agencies.

    RESTRICTIONS ON FOREIGN CURRENCY EXCHANGE - The Renminbi Chinese currency
    is not a freely convertible currency at present.  The Company's joint
    ventures will receive nearly all of their revenue in Renminbi, which will
    need to be converted to other currencies, primarily U.S. dollars, and
    remitted outside of the PRC.  Effective July 1, 1996, foreign currency
    "current account" transactions by foreign investment enterprises, including
    Sino-foreign joint ventures, are no longer subject to the approval of State
    Administration of Foreign Exchange ("SAFE", formerly, "State Administration
    of Exchange Control"), but need only a ministerial review, according to the
    ADMINISTRATION OF THE SETTLEMENT, SALE AND PAYMENT OF FOREIGN EXCHANGE
    PROVISIONS promulgated in 1996.  "Current account" items include
    international commercial transactions which occur on a regular basis, such
    as those relating to trade and provision of services.  Distributions to
    joint venture parties also are considered a "current account transaction."
    Other non-current account items, known as "capital account" items, remain
    subject to SAFE approval.

    CAPITAL COMMITMENTS - The Company's 60.8% owned subsidiary Hebei Equipment
    has entered into a 15-year agreement with UNICOM which defines terms
    relating to the construction of a telecommunications network in Hebei
    Province in China.  The total investment is approximately $72,000,000, of
    which approximately $22,000,000 had been paid in 1996.

    EMPLOYEE RETIREMENT BENEFITS AND POST-RETIREMENT BENEFIT - The Company's
    Chinese employees in the PRC are entitled to a retirement pension
    calculated with reference to their basic salaries on retirement and their
    length of services in accordance with a government managed pension plan.
    The PRC government is responsible for the pension liability to these
    retired staff.  The Company is required to make contributions to the state
    retirement plan at 18% of the adjusted monthly basic salaries of the
    current employees.  The Company is not obligated under any other
    post-retirement plans and post-employment benefits are not material.

10. STOCKHOLDERS' EQUITY

    STOCK PURCHASE AGREEMENT - On August 31, 1994, the Company entered into a
    stock purchase agreement to sell 12,727,909 shares of common stock for
    approximately $2,600,000.  The price per share of $.051 was determined
    based on the cash received and the value attributed to the exclusive
    distribution agreement.  In connection with this sale, an option (expiring
    December 31, 1997) was granted to purchase 318,182 shares of common stock
    at $.711 per share.

    CONVERSION OF LOANS PAYABLE - In December 1995, loans payable and accrued
    interest in the amount of $1,891,553 were converted to common stock at a
    price per share of $1.00 (based on other market sales at the time).

    SALE OF COMMON STOCK - In September and November 1995, and February 1996,
    the Company sold an aggregate of 976,000 shares of common stock for
    $976,000, a price of $1.00 per share.

    In March 1996, the Company entered into a stock purchase agreement to sell
    191,020 shares of common stock for $1,170,000, a price of $6.125 per share.


                                      F-16
<PAGE>

    In November 1996, the Company sold 1,000,000 shares of the Company's common
    stock through subscription agreements.  The Company received $2 million in
    proceeds with respect to these subscriptions based on the quoted market
    value of the common shares at the time of the transactions.

    FORGIVENESS OF STOCKHOLDERS ACCRUED EXPENSES - In September 1994, a
    stockholder forgave $305,027 of accrued consulting fees owed by the
    Company.  This amount has been charged to expense and included as an
    addition to additional paid-in capital.

    ISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK - In December 1995, the
    Company issued 1,524,178 shares of Series A Convertible Preferred Stock
    (Series A Preferred) to its principal shareholder as consideration for the
    contribution of an interest in a non-refundable deposit in connection with
    a purchase contract.  As such, the deposit and the Series A Preferred have
    been reflected in the financial statements as separate components of
    stockholders' equity.  See Note 6.

    The holder of Series A Preferred Stock have full voting rights.  The holder
    of the Series A Preferred is entitled to receive a cumulative preferential
    dividend of $0.18 per share per annum, payable in cash on December 31, of
    each year, commencing December 31, 1996.

    The Series A Preferred have a liquidation preference of $3 per share, plus
    the amount of any accrued and unpaid dividends.

    The Series A Preferred is convertible at the option of the holder at any
    time after January 1, 1997.

    SERIES B CONVERTIBLE PREFERRED STOCK - In June 1996, the Company completed
    a $2,500,000 offering of its Series B Convertible Preferred Stock ("Series
    B Preferred").  The offering consisted of 100 shares of Series B Preferred
    at $25,000 per share and warrants to purchase common stock of the Company.
    Each warrant entitles the holder to purchase one share of common stock at a
    fixed conversion price. During fiscal 1997 all outstanding Series B shares
    were converted to 1,507,477 common shares (priced at $3.19 per share based
    on fair market value at the time of conversion).  No additional shares of
    Series B Convertible Preferred stock are authorized.

    SERIES D CONVERTIBLE PREFERRED STOCK - On March 6, 1997, the Company issued
    to a single investor 150 shares of the Company's Series D Convertible
    Preferred Stock, par value $.001 per share (the "Series D Preferred
    Shares") at a price of $10,000 per share.  The holder of Series D Preferred
    Stock has no voting rights except with respect to certain matters that
    affect the rights of the Series D Preferred Stock.

    The holder of the Series D Preferred Shares is entitled to receive
    cumulative dividends at the annual rate of 8% per annum per share, payable
    quarterly (i) in shares of Common Stock or, (ii) in cash in connection with
    any payment pursuant to a Conversion Default (as defined below) at the
    election of the Company's board of directors.  As of March 31, 1997,
    $10,000 of cumulative dividends were in arrears.  The holders of Series D
    Preferred Shares have certain preferential rights over the holders of
    Common Stock in the event of the liquidation, dissolution or winding-up of
    the Company or a disposition of the Company's assets.  The holder of the
    Series D Preferred Shares also has certain registration rights and certain
    rights to participate in exempt equity offerings by the Company until March
    6, 1999.

    The Series D Preferred Shares are convertible by the holder into the number
    of shares of Common Stock which may be purchased at the lowest trading
    price during the 30 business days immediately preceding each conversion
    date (the "Lowest Trading Price") for the Series D Preferred Shares.  In
    addition, under certain circumstances, the holder of the Series D Preferred
    Shares may be obligated to


                                      F-17
<PAGE>

    purchase additional shares of Common Stock for cash.  If the Company does
    not have sufficient shares available to satisfy its obligations to the
    holder of Series D Preferred Shares upon receipt of a conversion notice,
    or otherwise fails or refuses to perfect conversion of any conversion of
    any Series D Preferred Shares (a "Series D Conversion Default"), the holder
    of the Series D Preferred Shares has the right to put the Series D
    Preferred Shares to the Company at a price equal to 125% of the purchase
    price, plus all accrued and unpaid dividends.

    The holder of the Series D Preferred Shares may not convert such shares
    prior to May 5, 1997 and may convert subsequent to such date as follows:
    (i) 30 shares after May 6, 1997; (ii) 60 shares after June 5, 1997; (iii)
    90 shares after July 5, 1997; (iv) 120 shares after August 4, 1997; and
    (v) 150 shares after September 2, 1997.

    STOCK WARRANTS - During fiscal 1996, the Company issued warrants to
    purchase 150,000 shares of common stock at a price 10% above quoted market
    value.  The warrants have a 5 year term and "piggy-back" registration
    rights.

    During fiscal 1997, the Company issued 187,702 warrants to purchase the
    Company's common stock at a conversion price of 110% of the quoted market
    value at the time of grant.  The warrants were issued in connection with
    the Company's issuance of Series B Preferred Shares (see above).

    On July 17, 1996, the Company entered into an agreement with an investment
    banking firm in which such firm will act as a financial consultant to the
    Company relating to corporate finance and other financial matters through
    July 31, 1999.  As compensation for this engagement, such firm received a
    five year warrant to purchase 200,000 shares of the Company's common stock
    at $2.50 per share (the market price at the time of issuing the warrant).
    In connection with this agreement, the Company has recorded $147,000 in
    professional fees.  Such amount was based on the fair value of the warrants
    as determined by the Black-Scholes model utilizing the following
    assumptions; dividend yield - 0%, expected volatility - 45%, risk free
    interest rate - 5.99% and expected life of the warrant 2 years.

    On October 15, 1996, the Company agreed to issue warrants to David
    Rubenstein to purchase 200,000 shares of the Company's Common Stock.  These
    warrants were issued for Mr. Rubenstein's services related to advising the
    Company with respect to its Sino-foreign joint ventures and marketing
    activities in the PRC.  The warrants issued have a three year term and an
    exercise price of $1.50, which was the market value of the Company's Common
    Stock at the time of issuance of the warrants.  In connection with this
    agreement, the company has recorded $110,000 in professional fees.  Such
    amount was based on the fair value of the warrants as determined by the
    Black-Scholes model utilizing the following assumptions; dividend yield -
    0%, expected volatility - 45%, risk free interest rate - 6.14% and expected
    life of the warrant 3 years.

    In connection with the financial services agreement described in note 9,
    the Company issued 600,000 warrants to an investment banking firm, 300,000
    which vest immediately and 300,000 which vest when such firm has raised a
    minimum of $10 million.  With respect to the immediately vested 300,000
    warrants, the Company has recorded $222,500 in professional fees.  Such
    amount was based on the fair value of the warrants as determined by the
    Black-Scholes model utilizing the following assumptions; dividend yield -
    0%, expected volatility - 45%, risk free interest rate - 6.50% and expected
    life of the warrant 3 years.

    ISSUANCE OF COMMON STOCK AND OPTIONS FOR SERVICES - In April 1996, two
    outside directors each received 5,000 shares of common stock for a value
    totaling $90,000 which has been recorded as


                                      F-18
<PAGE>

    compensation expense.  The number of shares issued was based on the quoted
    market value at such time.

    In May 1996, 5,000 shares of the Company's common stock were issued in
    connection with services provided for a value totaling $45,625.  In
    December 1996, 5,000 shares of the Company's common stock were issued in
    connection with services provided for a value totaling $18,125.  Both
    issuances have been recorded as professional fees based on the quoted
    market value at the time of the transaction.

    In October 1996, the Company entered into agreements to settle $98,000 of
    outstanding professional fees through the issuance of options to purchase
    65,064 common shares.  The number of shares was determined based on the
    quoted market value of the shares at the time of issuance.

    THE PROMETHEAN COMMON STOCK EQUITY AGREEMENT - On March 31, 1997, the
    Company entered into a Common Stock Investment Agreement with Promethean
    Investment Group L.L.C. ("Promethean") pursuant to which Promethean will 
    provide $10 million in equity funding to the Company.  The Company has 
    agreed to issue a minimum of $4,000,000 in Common Stock, at a 10% discount
    to market price, to Promethean within two years following the effective 
    date of a registration statement covering the shares to be sold pursuant to
    the Common Stock Investment Agreement.  On April 29, 1997, the Company and 
    Promethean agreed to increase the equity funding commitment from $10 million
    to $25 million.

    STOCK OPTIONS - The Company has adopted two stock option plans (the AmTec,
    Inc. 1995 Stock Plan and the AmTec, Inc. 1996 Stock Option Plan).
    Incentive and nonqualified options and stock appreciation rights may be
    granted to employees, officers, directors, and consultants of the Company.
    There are 12,500,000 shares of common stock reserved for issuance under
    these plans.  The exercise price of the options are determined by the board
    of directors, but in the case of an incentive stock option, the exercise
    price may not be less than 100% of the fair market value on the date of
    grant.  Options vest over periods not to exceed ten years.


                                      F-19
<PAGE>

    A summary of the status of the Company's stock options issued to employees
    as of March 31, 1997, 1996 and 1995 and changes during the years then ended
    is presented below:
 
<TABLE>
<CAPTION>

                                                   WEIGHTED                      WEIGHTED                      WEIGHTED
                                                    AVERAGE                       AVERAGE                       AVERAGE
                                                   EXERCISE                      EXERCISE                      EXERCISE
                                      NUMBER        PRICE         NUMBER           PRICE          NUMBER         PRICE
                                   ---------       --------      ---------       --------        -------       --------
<S>                               <C>              <C>           <C>              <C>           <C>            <C>
Outstanding at
  beginning of year                7,635,000        $  1.39        350,000        $  0.36           -           $  -

Granted                              280,000           1.74      7,520,000           1.41        350,000           0.36
Exercised                               -              -          (185,000)          0.36           -              -
Cancelled                            (10,000)          8.25           -              -              -              -
Forefeited                              -              -           (50,000)          0.36           -              -
Expired                                 -              -              -              -              -              -
                                   ---------        -------      ---------        -------        -------        -------
Outstanding at
  end of year                      7,905,000        $  1.40      7,635,000        $  1.39        350,000        $  0.36
                                   ---------        -------      ---------        -------        -------        -------
                                   ---------        -------      ---------        -------        -------        -------
Options Exercisable
  at end of year                   4,155,000        $  0.42      3,135,000        $  0.35        350,000        $  0.36
                                   ---------        -------      ---------        -------        -------        -------
                                   ---------        -------      ---------        -------        -------        -------
Weighted Average
  fair value of options
  granted during
  the year                         $    0.69                      $   0.44                       $  0.09
                                   ---------                      --------                       -------
                                   ---------                      --------                       -------

</TABLE>
 
    The fair value of each option granted during 1997 and 1996 is estimated on
    the date of grant using the Black-Scholes option pricing model with the
    following assumptions:

         Dividend yield                               0.00%
         Expected volatility                         45.00%
         Risk Free Interest Rate                      6.25%
         Expected Life                              5 years

    The following table summarizes information about options outstanding at
    March 31, 1997:


                             WEIGHTED
                              AVERAGE
  RANGE OF      NUMBER       REMAINING         AVERAGE      NUMBER      AVERAGE
  EXERCISE   OUTSTANDING    CONTRACTUAL       EXERCISE   EXCERSISABLE  EXERCISE
   PRICES     AT 3/31/97   LIFE (YEARS)          PRICE     AT 3/31/97     PRICE
------------  -----------  ------------     ----------   ------------  --------
$.350 - .355   4,635,000              9        $  0.35      3,885,000   $  0.35
     1.50         20,000             10           1.50         20,000      1.50
     3.00      3,000,000              9           3.00
               ---------                                  -----------

               7,655,000                                    3,905,000
               ---------                                  -----------
               ---------                                  -----------


                                      F-20
<PAGE>

    The Company applies APB Opinion No. 25 and related Interpretations in
    accounting for its plans.  Accordingly, no compensation cost has been
    recognized with respect to the plans.  Had compensation cost for the
    Company's stock option plans been determined consistent with Statement of
    Financial Accounting Standards No. 123 "Accounting for Stock-Based
    Compensation" ("SFAS 123"), the Company's net earnings and earnings per
    share would have approximated the pro forma amounts indicated below:

                                                   1997                1996


    Net earnings - as reported               $  (4,064,885)     $  (5,281,730)
                                             --------------     --------------
                                             --------------     --------------

    Net earnings - pro forma                 $  (4,258,970)        (8,592,261)
                                             --------------     --------------
                                             --------------     --------------


    Earnings per share - as reported         $       (0.14)     $       (0.21)
                                             --------------     --------------
                                             --------------     --------------

    Earnings per share - pro forma           $       (0.15)     $       (0.33)
                                             --------------     --------------
                                             --------------     --------------


11. MAJOR CUSTOMERS

    During the years ended March 31, 1996 and 1995, the Company's wholly owned
    subsidiary, ITV, conducted business with two customers whose sales
    comprised substantially all of the Company's revenues.  In January 1996,
    the Company sold substantially all of the assets related to that business.

12. SALE OF BUSINESS

    In January 1996, the Company sold the business and the related operating
    assets in which its wholly owned subsidiary, ITV, was engaged.  The sale
    price was $2,500,000 (which consisted of $250,000 in cash and $2,250,000 in
    the form of a note receivable), plus the Company received an equity
    interest in Netmatics which was valued at $500,000.  Due to the uncertainty
    of the collection of the $2,250,000 note receivable, the amount of the note
    has not been recognized.  The gain associated with the note will be
    recognized when the note receivable is collected.  The sale of the assets
    resulted in a gain from sale of the assets of $31,880.  See note 4 as to
    write-off of Netmatics balance.

                                      F-21
<PAGE>

13. INCOME TAXES

    The Company had net losses for 1997, 1996 and 1995 and, therefore, no
    income taxes have been provided.

    As of March 31, 1997, the Company has federal net operating loss
    carryforwards of approximately $11,000,000 through 2012.

    Significant components of the Company's deferred tax liabilities and assets
    for federal income taxes consist of the following:


                                                          1997          1996

    Deferred tax assets
      Net operating loss carryforwards              $  5,085,404  $  3,310,000
      Start-up and other costs                         2,360,307     1,786,000
      Research credit                                    266,000       266,000
                                                    ------------  ------------

           Total deferred tax assets                   7,711,711     5,362,000

    Valuation allowance for deferred tax assets       (7,711,711)   (4,462,000)

    Deferred tax liabilities
      Note receivable on sale of ITV                        -         (900,000)
                                                    ------------  ------------

    Net deferred tax liability                      $       -     $       -
                                                    ------------  ------------
                                                    ------------  ------------


    The net change in the valuation allowance for the year ended March 31, 1997
    and 1996 was an increase of $3,249,711 and $156,000, respectively.

14. RELATED PARTY TRANSACTIONS

    GENERAL - In February 1995, pursuant to the Reorganization Agreement,
    Tweedia, became the owner of approximately 12,727,000 shares, or 41%, of
    the Company's issued and outstanding Common Stock.  Beijing CATCH
    Communications Group Co. ("Beijing CATCH") has an option to acquire 100% of
    the outstanding capital stock of Tweedia.  However, this option may not be
    exercised without the receipt by Beijing CATCH of all PRC regulatory
    approvals applicable to such exercise.  After discussions with PRC counsel,
    management believes that these approvals to own securities listed on
    non-PRC stock exchanges are substantive in nature and are not normally
    readily obtained in the PRC except by corporations or banks that are
    specifically authorized to own foreign securities.

    As of December 21, 1995, pursuant to the terms of a Master Agreement and
    Right of First Refusal (the "Master Agreement"), Beijing CATCH agreed to
    grant the Company a right of first refusal to participate as a majority
    investor and provide financial, operating and technical consulting services
    with respect to all rights granted, sold, licensed, or otherwise
    transferred to Beijing CATCH, directly or indirectly, that relate to the
    construction, operation or acquisition of any type of telephony,
    telecommunications, equipment, paging equipment or related forms of
    communication in the PRC.  As consideration for this right of first
    refusal, the Company agreed to issue up to 50,000,000 shares of Common
    Stock to Tweedia based on the receipt of certain agreed upon amounts of net
    income by the Company relating to prospective Sino-foreign joint ventures
    involving the Company and Beijing


                                      F-22
<PAGE>

    CATCH.  The Master Agreement supersedes certain terms of other prior
    agreements between the Company and Beijing CATCH concerning cooperation on
    telecommunications projects.  As of June 20, 1997, the Company has not
    entered into, and management has no current intent of entering into, any
    Sino-foreign joint ventures with Beijing CATCH under the terms of the
    Master Agreement.  As a result, no obligation for future issuances of
    Common Stock to Beijing CATCH under the Master Agreement exist or are
    contemplated.

    Beijing CATCH is in the process of being acquired by Hainan Minyuan Modern
    Agriculture Company ("Hainan Minyuan"), a publicly listed company in the
    PRC primarily engaged in real estate development and agriculture production
    in Hainan Province of the PRC.  In late 1996, Hainan Minyuan proposed to
    acquire Beijing CATCH, and the acquisition was approved by the shareholders
    of both companies.  As of May 1997, Hainan Minyuan's proposed acquisition
    of Beijing CATCH was awaiting final approval by the Chinese governmental
    authorities.  If the acquisition receives final approval by the necessary
    Chinese governmental authorities, Hainan Minyuan will in turn hold an
    option to acquire control of Tweedia and a proxy to vote the Tweedia share.
    This option may not be exercised until all applicable PRC approvals are
    obtained.  Hence at this time the control of Tweedia by Hainan Minyuan and
    its indirect ability to substantially influence AmTec is uncertain.

    At the time of the Company's acquisition of the majority stake Hebei
    Development held a 30% ownership of Hebei Equipment and Beijing CATCH held
    subscription rights to 9.2% ownership of Hebei Equipment.  Subsequent to
    Hebei Equipment's conversion to a Sino-Foreign joint venture company,
    Beijing CATCH defaulted on its required capital contribution of 2 million
    Renminbi (1 U.S. dollar equals approximately 8.35 Renminbi).  On April 22,
    1997, the Board of Directors of Hebei Equipment resolved to terminate
    Beijing CATCH's ownership participation in Hebei Equipment, and the Company
    and Hebei Development agreed to provide to Hebei Equipment the 2 million
    Renminbi defaulted on by Beijing CATCH.  The allocation of (i) the 2
    million Renminbi investment required from the Company and Hebei Development
    and (ii) the 9.2% ownership previously held by Beijing CATCH are currently
    under discussions between the Company and Hebei Development.

15  POST BALANCE SHEET EVENTS

    CONTRACTUAL COMMITMENTS - On April 8, 1997, Hebei Equipment entered into a
    20-year agreement (the "Hebei Multimedia Agreement") with Hebei Cable
    Television Station, the monopoly provider of cable television service in
    Hebei Province, to build a multimedia network, which will connect the
    existing cable television systems in the eleven major cities of Hebei
    Province.  The Hebei Multimedia Agreement  grants Hebei Equipment the
    option to upgrade the systems to hybrid fiber coaxial networks ("HFC").
    Under the Hebei Multimedia Agreement, Hebei Equipment will build the Hebei
    Multimedia Network, sell ownership of the Hebei Multimedia Network to Hebei
    Cable Television Station in exchange for a majority share of cash flow
    generated by Hebei Cable Television Station from operation of the Hebei
    Multimedia Network.  Hebei Equipment will also provide operating personnel
    and assistance to Hebei Cable Television Station in the operation of the
    Hebei Multimedia Network. Until Hebei Equipment has recovered its 
    investment, Hebei Equipment will receive 80% of depreciation of fixed
    assets and 80% of net income generated by Hebei Cable Television Station
    from operation of the Hebei Multimedia Network. Thereafter, for the balance
    of 20 years from the commencement date of formal commercial operations,
    Hebei Equipment will receive 30% of depreciation of fixed assets and 30% of
    net income generated by Hebei Cable Television Station from operation of
    the Hebei Multimedia Network.  Hebei Cable Television Station is a
    subsidiary enterprise of the Hebei Radio and Television Department, under
    the jurisdiction of the Ministry of Radio, Film and Television in the PRC.


                                      F-23
<PAGE>

    Under the Hebei Multimedia Agreement, Hebei Equipment will (i) build a
    fiber-optic and microwave network to connect the existing cable television
    systems in the eleven major cities in Hebei Province, (ii) upgrade one city
    on a trial basis to an HFC network, and (iii) hold the option to upgrade
    the network to an HFC network.

    The current funding requirement for the Hebei Multimedia Network is
    estimated at approximately $23 million to link cable systems in the eleven
    largest cities in Hebei Province.  As of June 20, 1997, the Company had
    invested approximately $1.0 million in Hebei Equipment for purposes of
    investment in the Hebei Multimedia Network.  The Company anticipates that
    the balance of required funding will be provided in the form of equity and
    debt investments in Hebei Equipment and additional joint venture entities
    that may be established with strategic partners.

16  SUBSEQUENT EVENTS

    On July 8, 1997, the Company changed its name to AmTec, Inc. from AVIC Group
    International, Inc.

                                     ******


                                      F-24