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


                                 FORM 10-KSB/A1


            [X] Annual Report Pursuant to Section 13 or 15(d) of the
            Securities Exchange Act of 1934 For the Fiscal Year Ended
                                  June 30, 2001
                           Commission File No. 0-12116

                           ComTec International, Inc.
                 (Name of Small Business Issuer in its charter)

              New Mexico                                   75-2456757
    State or other jurisdiction of                      (I.R.S. Employer
     Incorporation or organization                     Identification No.)

     12835 East Arapahoe Road, Tower 1 Suite 800, Englewood, Colorado 80112
                    (Address of principal executive offices)

                                 (303) 662-8069
                 (Issuer's Telephone Number Including Area Code)

        Securities registered pursuant to Section 12(b) of the Act: None

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

                          Common Stock $$.001 par value
                                (Title of Class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days

                               Yes   x    No
                                    ---       ---

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will 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: None

State the  aggregate  market  value of the voting stock  (Common  Stock) held by
non-affiliates computed by reference to the price at which the stock was sold or
the average bid and asked price of such stock, as of a specified date within the
past sixty days. As of the close of business,  September 25, 2001, the aggregate
market value of the  Company's  Common Stock (based on the average of the $.0425
bid and $.059 asked price) held by non-affiliates was $1,919,189.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

Number of shares  outstanding of each of the issuer's classes of Common Stock as
of September 14, 2001 was 70,832,900 shares.

State issuer's revenues for its most recent fiscal year. $0

                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the  distribution of
securities under a plan confirmed by a court

                                 Yes       No
                                     ---      ---

                    DOCUMENTS INCORPORATED BY REFERENCE: None

                                       1

<PAGE>


           FORM 10-KSB ANNUAL REPORT - FISCAL YEAR ENDED JUNE 30, 2001

                           COMTEC INTERNATIONAL, INC.


TABLE OF CONTENTS                                                          Page

PART I

Item 1.  Description of Business............................................  3
Item 2.  Description of Property............................................  9
Item 3.  Legal Proceedings..................................................  9
Item 4.  Submission of Matters to a Vote of Security Holders................  9

PART II

Item 5.  Market for Common Stock Equity and Related Stockholder Matters.....  9
Item 6.  Management's Discussion and Analysis or Plan of Operation.........  12
Item 6a. Quantitative And Qualitative Disclosures About Market Risk........  15
Item 7.  Financial Statements..............................................  15
Item 8.  Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure......................................  16
PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section  16(a) of the Exchange Act...........  16
Item 10. Executive Compensation............................................  18
Item 11. Security Ownership of Certain Beneficial Owners and Management....  21
Item 12. Certain Relationships and Related Transactions....................  24
Item 13. Exhibits and Reports on Form 8-K..................................  25

SIGNATURE PAGE.............................................................  27

Attachment:

INDEPENDENT AUDITOR'S REPORT AND CONSOLIDATED FINANCIAL STATEMENTS, JUNE 30,
2001 AND 2000 AND CUMULATIVE AMOUNTS FROM INCEPTION (MARCH 15, 1994) THROUGH
JUNE 30, 2001.




                                       2

<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

(a)  Business Development:

1.   GENERAL CORPORATE


     ComTec International Inc. was incorporated on July 6, 1983, in the State of
New  Mexico,  originally  under  the name of  Nisus  Video,  Inc.  It is a fully
reporting  12(g),  34 Act publicly  traded  company.  The Company has  undergone
various  changes  to date as a result  of  certain  reorganizations.  Historical
changes  are  more  fully  disclosed  in  prior 34 Act  filings.  The  Company's
principal  office is located at 12835 East  Arapahoe  Road,  Tower 1, Suite 800,
Englewood, Colorado 80112; its telephone number is (303) 662-8069; its facsimile
number  is  (303)  662-8485.  The  Company  is  currently  authorized  to  issue
200,000,000  common shares,  $0$.001 par value and 10,000,000  preferred shares,
$0$.001 par value. The Company has one wholly owned operating subsidiary.

     From  December 5, 1997,  to June 1st,  1999,  The  Company's  wholly  owned
subsidiary,  American Wireless Network "AWN," operated  specialized mobile radio
("SMR") sites in seven Metropolitan Trade Areas in the southeastern  U.S.A. As a
result of the Asset Acquisition  Agreement (as amended) entered into between AWN
and CMSR  Systems,  Inc. on April 15, 1999,  and reported on Form 8K filed April
30, 1999, the day to day SMR operations of AWN were  undertaken by CMSR Systems,
Inc., an unaffiliated  Nevada  Corporation,  under a management contract wherein
AWN supervised  management of the systems pursuant to FCC rules but actual hands
on operations  were conducted by CMSR Systems,  Inc. In September 2000, the sale
to CMSR Systems,  Inc. of 900 SMR licenses  (book value of  $1,390,700)  and the
assumption of FCC debt in the  offsetting  amount of $1,390,700 by CMSR Systems,
Inc. was approved by the FCC and the transaction was  consummated.  As a result,
the Company had no 900 SMR operations after September,  2000. The  communication
equipment  owned by the Company remains under a long term lease to CMSR Systems,
Inc.  The  Company  is  now  exploring  potential   acquisition  and  or  merger
transactions  with existing business  opportunities in broadband  communications
systems, cable television systems,  telecommunications,  information industries,
financial services or other compatible business operations.

2.   CURRENT OPERATIONS

     OPERATING SUBSIDIARY

     On December 3, 1996, the Company  formed AWN, a wholly owned  subsidiary of
the  Company,  to pursue  opportunities  in the  Specialized  Mobile Radio (SMR)
industry.  In connection with this transaction,  the Company transferred all SMR
radio  licenses  under the  ownership  and  control  of the  Company  to AWN (in
exchange for 500,000  shares of common stock in AWN). On December 22, 1996,  AWN
issued an additional  143,000 shares of common stock to three Company affiliated
entities.  In March of 1997,  all shares of AWN held outside of the Company were
exchanged for stock in the Company.  As of March 31, 1997,  and  currently,  the
Company owns all of the outstanding common stock of AWN.

     From December 5, 1997, to June 1st, 1999, AWN operated  specialized  mobile
radio ("SMR") sites in seven Metropolitan Trade Areas in the southeastern United
States. As a result of the Asset Acquisition Agreement (as amended) entered into
between AWN and CMSR  Systems,  Inc. on April 15, 1999,  and reported on Form 8K
filed April 30, 1999,  the day to day SMR  operations of AWN were  undertaken by
CMSR  Systems,  Inc., an  unaffiliated  Nevada  Corporation,  under a management
contract wherein AWN supervised  management of the systems pursuant to FCC rules
but actual hands on operations were conducted by CMSR Systems, Inc. In September
2000,  the  sale to CMSR  Systems,  Inc.  of 900 SMR  licenses  (book  value  of
$1,390,700)  and  the  assumption  of FCC  debt  in  the  offsetting  amount  of
$1,390,700 by CMSR Systems, Inc. was approved by the FCC and the transaction was
consummated. As a result, the Company had no 900 SMR operations after September,
2000. The communication equipment owned by the Company remains under a long term
lease to CMSR Systems,  Inc. The Company is now exploring potential  acquisition
and or merger  transactions  with existing  business  opportunities in broadband
communications   systems,   cable   television   systems,    telecommunications,
information   industries,   financial  services  or  other  compatible  business
operations.

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<PAGE>
     PRINCIPAL OFFICE OF REGISTRANT

     On December 31, 2000, the Company  relocated its principal offices to Suite
800,  Tower 1,  12835  East  Arapahoe  Road,  Englewood,  Colorado,  80112.  The
Company's phone number is (303) 662-8069.

3.   MANAGEMENT

     The  Company's  current  management  consists of James J. Krejci and Gordon
Dihle. Mr. Krejci, an MBA and former top executive with Jones  Intercable,  Inc.
and Jones  International,  Ltd.,  serves as  President  and CEO. Mr.  Dihle,  an
attorney and CPA, serves as the Secretary and Treasurer.

4.   ASSET FORFEITURES, DISPOSITIONS AND TERMINATIONS OF CONTRACT RIGHTS

     DISPOSITION OF SMR LICENSES

     As previously  reported on Form 8K filed April 30, 1999, on April 15, 1999,
AWN executed an Asset Acquisition Agreement (as amended) with CMSR Systems, Inc.
("Buyer"),  a Nevada Corporation  unaffiliated with the Company.  The purpose of
the Asset Acquisition  Agreement was to facilitate the sale by American Wireless
Network, Inc. to CMSR Systems, Inc. of specifically  identified 900 MHz Licenses
and  American  Wireless  Network,   Inc.'s  customer  base  and  customer  lists
associated  with the specified 900 MHz licenses.  In September 2000, the sale to
CMSR  Systems,  Inc.  of 900 SMR  licenses  (book value of  $1,390,700)  and the
assumption of FCC debt in the  offsetting  amount of $1,390,700 by CMSR Systems,
Inc. was approved by the FCC and the transaction was  consummated.  As a result,
the Company had no 900 SMR  operations  after  September,  2000.  AWN retained a
seven  and one  half  percent  operating  interest  in the  operational  segment
represented  by the licenses and operations  sold to CMSR Systems,  Inc. by AWN.
The agreement  also included a capital lease of SMR related  equipment  owned by
AWN to CMSR Systems,  Inc. The 900 MHz Licenses and American  Wireless  Network,
Inc.'s  customer base and customer lists  associated  with the specified 900 MHz
licenses  sold to CMSR  Systems,  Inc.  were  originally  purchased  by American
Wireless  Network,  Inc.  on  July  6,  1998  as a part  of the  acquisition  of
divisional  segment  assets  from  Centennial  Communications  Corp.  which  was
reported in Item 2 of Form 8K's dated  December 26, 1997, and September 3, 1998,
and Items 2 and 7 of the form 8K-A and Exhibits thereto dated February 9, 1999.

(b)  Business of Issuer:

     American Wireless Network,  Inc. ("AWN"),  a wholly owned subsidiary of the
Company, was incorporated under the laws of the State of Colorado on December 3,
1996, to act as the wireless  communications  operating  entity for the Company.
The Company's SMR operations were conducted through AWN. At present AWN conducts
no active  operations but acts as the lessor of a lease of SMR related equipment
owned by AWN to CMSR  Systems,  Inc.  and  retains a seven and one half  percent
operating  interest in the operational  segment  represented by the licenses and
operations it sold to CMSR Systems, Inc.

     During the fiscal year ended June 30, 2001,  and through the  present,  the
Company has  continued as a  developmental  stage entity  focused on seeking and
evaluating  potential  merger and acquisition  candidates.  Activities have been
concentrated  on revising  the  Company's  strategic  business  plan,  financing
efforts,  negotiations  to acquire other  entities and  operations,  maintaining
management,  and maintaining reporting compliance for various federal government
agencies,  such  as  the  SEC  and  FCC.  The  Company  is  exploring  potential
acquisition and or merger  transactions with amenable business  opportunities in
telecommunications,  information industries, financial service industry or other
compatible business operations.

Current Status and Operations

     From December 5, 1997,  to June 1, 1999,  AWN operated  specialized  mobile
radio ("SMR") sites in seven Metropolitan Trade Areas in the southeastern United
States. As a result of the Asset Acquisition Agreement (as amended) entered into
between AWN and CMSR  Systems,  Inc. on April 15, 1999,  and reported on Form 8K
filed April 30, 1999, the day to day SMR operations of AWN were been  undertaken
by CMSR Systems,  Inc., an unaffiliated Nevada  Corporation,  under a management
contract wherein AWN supervised  management of the systems pursuant to FCC rules
but actual hands on operations were conducted by CMSR Systems, Inc. In September
2000,  the  sale to CMSR  Systems,  Inc.  of 900 SMR  licenses  (book  value  of
$1,390,700)  and  the  assumption  of FCC  debt  in  the  offsetting  amount  of
$1,390,700 by CMSR Systems, Inc. was approved by the FCC and the transaction was
consummated.  As a result,  the Company had no active 900 SMR  operations  after
September, 2000. AWN retained a seven and one half percent operating interest in
the operational  segment represented by the licenses and operations sold to CMSR
Systems,  Inc. by AWN. The communication  equipment

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<PAGE>
owned by the Company  remains under a long term lease to CMSR Systems,  Inc. The
Company is now exploring  potential  acquisition and or merger transactions with
existing  business  opportunities  in broadband  communications  systems,  cable
television  systems,   telecommunications,   information  industries,  financial
services or other compatible business operations.

The Specialized Mobile Radio Industry

     SMR,  considered  "private  carriage,"  was  designed to serve the business
community.  With  the  birth  of  SMR,  the  government  saw an  opportunity  to
deregulate  the  business  communications  industry  by  creating  a viable  new
marketplace and, at the same time, decrease the cost of providing fleet dispatch
service to small businesses. In contrast, cellular, considered "common carriage"
by the FCC,  was  designed  to be a mobile  outgrowth  of the  public  telephone
system.  Typical SMR users are businesses in need of communication with large or
small  groups of  employees  on the road,  especially  those in fleet  sales and
service  operations.  Categories of users include  transportation,  real estate,
construction,  security services, plumbing and electrical contractors,  delivery
services,  taxi and  limousine  services,  government  agencies  (such as public
safety,   hospitals,   general  government  agency  field  operations),   mining
operations and messenger services.

     The  establishment  of  "private  carrier"  systems  allows  a  third-party
entrepreneur to make a profit from a mobile communications system.  Services are
provided by SMR systems to a number of different  commercial  entities,  or "end
users," which use the system for their  communications  needs.  Because users do
not have to invest in the base station,  SMR service is available to individuals
and small businesses.  Services include but are not limited to dispatch, private
voice and data networks, paging and telephone interconnect.  Essentially, an SMR
is an individual or company's  internal  mobile  communication  network.  Unlike
cellular, SMR does not adhere to one equipment standard or protocol.  Currently,
two major  equipment  manufacturers,  Motorola  and E.F.  Johnson,  dominate the
industry,  each with its own  protocol.  Sophisticated  switching  necessary  to
facilitate  wide-area SMR systems allows dissimilar  systems to communicate with
each  other  through  the use of digital  technology,  allowing  individual  SMR
operators the potential to build wide-area networks through roaming agreements.

     RESEARCH AND DEVELOPMENT

     The Company  has not  incurred,  and does not expect to incur,  significant
research and development expenses.

     COPYRIGHTS, PATENTS, PROPRIETARY INFORMATION, AND TRADEMARKS

     The Company has no registered service marks, copyrights, or patents.

(c)  Government Regulation:

     The Company's  remaining  SMR assets are subject to  government  regulation
primarily by the FCC. The licensing,  operation,  assignment, and acquisition of
900 MHz SMR licenses are  regulated  under the  Communications  Act of 1934,  as
amended in 1996 (the "Communications Act"). Since that time, the FCC has adopted
new rules converting  interconnected SMR service from a private radio service to
a commercial  mobile radio  service and has  proposed  other new rules  allowing
operational  flexibility and mandating future licensing by competitive  bidding.
The FCC periodically has various dockets under consideration, which could result
in  changes  to the  FCC's  rules,  regulations,  and  policies.  Certain  rule,
regulation or policy changes by the FCC could  potentially  affect the financial
standing of the Company.

     All  SMR and  commercial  mobile  radio  service  licenses  are  issued  as
conditional licenses. The conditional licenses become licenses without condition
only upon  timely and proper  completion  of station  construction  and  minimal
loading.  If a licensee fails to complete  construction  of a station timely and
properly,  the  license  for that  station  cancels  automatically,  without any
further action by the FCC.

     Prior to  imposition  of its  commercial  mobile radio  service  regulation
system,  the FCC issued SMR licenses for five-year terms. Since January 2, 1995,
commercial  mobile radio service  licenses have been issued for ten-year  terms.
Each license may be renewed at the end of the license term upon  application  to
the FCC.  While the FCC  generally  grants  renewal of SMR  licenses  in routine
fashion  and the  Company  is aware of no reason why its  licensees  will not be
entitled to a similar renewal expectancy, there can be no certainty that the FCC
will continue its current renewal practices or extend them to the Company.

     Regulation of radio towers. The transmitters for SMR stations typically are
located on free-standing or building  roof-top towers.  The towers are regulated
by both the FCC and the Federal Aviation Administration ("FAA"). The regulations

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<PAGE>
concern geographic location,  height,  construction and lighting standards,  and
maintenance.  Failure to comply with tower  regulations can result in assessment
of fines against the tower owner or operator and has, historically,  resulted in
fines assessed against  individual  licensees located on an offensive tower. The
owners of towers are responsible  for compliance  with FCC and FAA  regulations.
The Company does not own or manage any towers.

     Other  Federal  regulations.  The  Company  is  generally  subject  to  the
jurisdiction of various federal  agencies and  instrumentalities  in addition to
the FCC and the FAA including but not limited to the United States Environmental
Protection  Agency,  the United States  Department  of Labor,  the United States
Occupational  Safety  and  Health   Administration,   the  United  States  Equal
Employment  Opportunity  Commission,  the United States  Securities and Exchange
Commission  and  others.  While the Company  believes  that it is  operating  in
conformity with all material  applicable rules and regulations,  policies,  rule
changes,  and other future actions by these agencies could adversely  effect the
operations and financial standing of the Company.

     State regulations.  At present, state and local governments cannot regulate
the rates charged by SMR operators.  Such  governments  may,  however,  exercise
regulatory powers over health, safety, consumer protection, taxation, and zoning
regulations with respect to SMR stations.  Currently,  the Company's systems are
not subject to any state or local  regulatory  restraint  (other than  generally
applicable laws and regulations).  However, there can be no assurances that such
systems  will  not  become  subject  to  various  states  and  local  regulatory
authorities in the future.

     Regulatory  developments.  In March 1996, the  Communications Act went into
effect. This Act effected  significant change in regulation and market entry for
communications service providers.  Despite this effect on the telecommunications
industry as a whole, the Company does not anticipate any material adverse effect
on its business arising from the Communications Act.

     Legislation  or materially  different  rules may be proposed and enacted at
any  time  and may have a  material  adverse  affect  on the  operations  of the
Company.  At this time,  the  Company is unaware of any pending  legislation  or
rule-making proceedings that would have a material adverse affect on the current
operations of the Company.

(d)  Employees and Consultants:

     As of the date of this filing,  the Company and its wholly owned subsidiary
AWN  employs  a total of two (2)  persons:  James  Krejci,  President  and Chief
Executive  Officer of the Company and Gordon Dihle, the  Secretary/Treasurer  of
the  Company.  The Company  periodically  retains  outside  consultants  such as
attorneys,  accountants,  engineers,  technicians  and industry  consultants  to
perform certain corporate administrative tasks and SMR related functions.

(e)  Wireless Industry:

     The wireless  communications  industry,  which  includes  services  such as
cellular,  SMR, paging,  and others, is one of the fastest growing industries in
the world.  The  Company's  SMR systems  (as  operated  by CMSR  Systems,  Inc.)
currently  offer mobile  communications  services  consisting  of basic  two-way
dispatch.  Analog SMR network  systems are capable of  providing  voice and data
services on a single system. Pricing for SMR service is normally based on a flat
monthly fee for unlimited unit-to-unit communications. Existing cellular and SMR
operators in the Company's  operating  territories  have been in operation for a
number of years,  and have  significant  customer  bases.  In  addition to their
entrenched market position, these operators have available significantly greater
financial and other  resources than those  available to the Company.  Larger SMR
companies are currently converting to all digital formats, which require current
subscribers  to purchase  digital radio  equipment or find another analog system
provider. The competition for new SMR subscribers within the Company's operating
territories may also include Nextel  Communications and/or other independent SMR
regional operators. Nextel Communication is the largest wireless SMR operator in
the nation.  The Company  also faces  possible  competition  for digital  mobile
service from other radio operators for channels that may be allocated by the FCC
in the future and operators of new wireless communications  technologies such as
personal communications systems ("PCS").

RISK FACTORS

     The securities of the Company are  speculative and involve a high degree of
risk, including, but not necessarily limited to, the factors affecting operating
results described below. The statements which are not historical facts contained
in this  report,  including  statements  containing  words  such as  "believes,"
"expects," "intends,"  "estimates,"  "anticipates," or similar expressions,  are
"forward looking  statements" (as defined in the Private  Securities  Litigation
Reform Act of 1995) that

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involve risks and uncertainties  including,  but not limited to, the factors set
forth below (see also "Forward Looking Statements").

     Limited  Revenues;  Limited  Relevant  Operating  History;  Significant and
Continuing Operating Losses;  Negative Cash Flow; Accumulated Deficit. Since its
inception,  the Company has been  engaged  primarily in the  acquisition  of FCC
Licenses and the  construction  of facilities to begin  commercial  operation of
such licenses and,  therefore,  has had very limited  revenues from sales of its
services.  Management  has not included  revenues in its  financials  since past
revenues have not been  sufficient to be  separately  stated in accordance  with
GAAP.  Accordingly,  the Company has a limited relevant  operating  history upon
which an  evaluation  of its  prospects  can be  made.  Such  prospects  must be
considered  in  light  of  the  risks,  expenses  and  difficulties   frequently
encountered   in  the   establishment   of  a  new   business  in  the  wireless
communications  industry, which is a continually evolving industry characterized
by an increasing number of market entrants and intense  competition,  as well as
the risks,  expenses and difficulties  encountered in the  commercialization  of
services  in new  markets.  The Company has  incurred  operating  losses in each
quarter  since  inception and on June 30, 2001,  the Company had an  accumulated
deficit of approximately $16,249,000. Since such date, losses have increased and
are continuing through the date of this report.  Accordingly,  it is anticipated
that the Company  will  continue to incur  significant  losses.  There can be no
assurance  that the  Company  will be  successful  in  generating  revenues at a
sufficient  quantity or margin or that the Company will ever achieve  profitable
operations.

     Significant Capital Requirements;  Need for Additional Capital; Explanatory
Paragraph in Accountant's  Report. The Company's capital  requirements have been
and will continue to be significant. The Company has been dependent primarily on
the private  placement of equity  securities  and debt  financings.  The Company
anticipates, based on its current proposed growth plans and assumptions relating
to its  growth and  operations,  that the  proceeds  from the  existing  private
placements and borrowings and planned revenues will not be sufficient to satisfy
the Company's contemplated cash requirements for the next 12 months and that the
Company will be required to raise additional funds within the next 12 months. In
addition,  in the event that the Company's plans change or its assumptions prove
to  be  inaccurate  (due  to  unanticipated  expenses,   delays,   problems,  or
otherwise), the Company would be required to seek additional funding sooner than
anticipated.  Any such  additional  funding  could be in the form of  additional
equity   capital.   The  Company  is  currently   pursuing   potential   funding
opportunities. However, there can be no assurance that any of such opportunities
will result in actual funding or that additional  financing will be available to
the Company when needed,  on  commercially  reasonable  terms, or at all. If the
Company is unable to obtain  additional  financing if needed,  it will likely be
required to curtail its plan to acquire an operating entity or effect a business
combination  and may  possibly  cease  its  operations.  Any  additional  equity
financings  may  involve  substantial  dilution to the  Company's  then-existing
shareholders.  The Company's  independent  public  accountants  have included an
explanatory paragraph in their reports on the Company's financial statements for
the years ended June 30, 2001 and 2000,  which express  substantial  doubt about
the Company's ability to continue as a going concern. The Company's consolidated
financial  statements have been prepared assuming that the Company will continue
as a going  concern.  As discussed in Footnote 2 to the  consolidated  financial
statements,  the Company has  suffered  recurring  losses  from  operations  and
accumulated  deficit that raises substantial doubt about its ability to continue
as a going concern.

     Management  of  Growth  and  Attraction  and  Retention  of Key  Personnel;
Management  of the  Company's  growth  may  place a  considerable  strain on the
Company's  management,  operations and systems. The Company's ability to execute
any future business  strategy will depend in part upon its ability to manage the
demands of a growing business.  Any failure of the Company's  management team to
effectively  manage growth could have a material adverse effect on the Company's
business,  financial  condition or results of operations.  The Company's  future
success  depends in large part on the  continued  service of its key  management
personnel.  The Company  believes  that its future  success  also depends on its
ability to attract  and  retain  skilled  technical,  managerial  and  marketing
personnel.  Competition for qualified personnel is intense. The Company has from
time to time experienced difficulties in recruiting qualified personnel. Failure
by the Company to attract  and retain the  personnel  it  requires  could have a
material adverse effect on the financial  condition and results of operations of
the Company.

     Technological  Advances  and  Evolving  Industry  Standards;  The  wireless
communications industry, and in particular the SMR industry, is characterized by
rapid technological  developments,  changes in customer  requirements,  evolving
industry  standards and frequent new product  introductions.  In the future, the
Company  will  have  no  management  control  over  its  remaining  SMR  assets.
Therefore, there is no assurance that the Company's SMR assets will maintain its
value or functionality  with the rapid evolution of the wireless  communications
industry.

     Dependence  on   Governmental   Regulation.   The   licensing,   operation,
acquisition and sale of the Company's SMR licenses are regulated by the FCC. FCC
regulations  have undergone  significant  changes during the last five years and
continue  to evolve as new FCC rules and  regulations  are  adopted  pursuant to
Omnibus  Budget  Reconciliation  Act of 1993  and

                                       7

<PAGE>
Telecommunications  Act.  The  Company's  ability to  conduct  its  business  is
dependent, in part, on its compliance with FCC rules and regulations.  See "ITEM
1.  DESCRIPTION  OF  BUSINESS  -  Government   Regulation."  Future  changes  in
regulation or legislation  affecting the Company's system,  including  Congress'
and the FCC's recent  allocation of additional  commercial mobile radio services
spectrum, could materially adversely affect the Company's remaining SMR assets.

     Concerns About Mobile  Communications  Health Risk.  Allegations  have been
made  and  certain  studies  appear  to show  that  the use of  portable  mobile
communications  devices may pose health risks due to radio  frequency  emissions
from such devices. The actual or perceived risk of mobile communications devices
could adversely affect the Company through a reduced  subscriber  growth rate, a
loss of current  subscribers,  reduced  network usage per  subscriber or through
reduced financing available to the mobile communications industry.

     Lack of  Dividend  History;  No  Dividends.  The  Company  has  never  paid
dividends  on its Common Stock and intends to utilize any earnings for growth of
its business.  Therefore,  the Company does not intend to pay cash dividends for
the  foreseeable  future.  This lack of  dividends  and a dividend  history  may
adversely affect the liquidity and value of the Company's Common Stock.

     Possible  Volatility of Market Price.  The Company's  Common Stock has been
traded on the OTC Bulletin Board since 1984.  The Company  believes that factors
such as (but not  limited  to)  announcements  of  developments  related  to the
Company's business,  fluctuations in the Company's quarterly or annual operating
results,  failure to meet securities analysts' expectations,  general conditions
in the  international  marketplace and the worldwide  economy,  announcements of
technological  innovations or new systems or  enhancements by the Company or its
competitors,  developments in patents or other intellectual  property rights and
developments  in the Company's  relationships  with clients and suppliers  could
cause  the  price  of  the  Company's   Common  Stock  to   fluctuate,   perhaps
substantially.  In recent years the stock market has  experienced  extreme price
fluctuations,  which have often been  unrelated to the operating  performance of
affected companies. Such fluctuations could adversely affect the market price of
the Company's Common Stock.

     OTC Bulletin Board listing requirements.  Under the new rules for continued
listing on the  Bulletin  Board,  OTC traded  firms are  required  to become and
remain fully reporting under Section 12 of the 1934 Securities and Exchange Act.
Although the Company intends to complete all future required filings on a timely
basis,  there can be no  assurance  that its $.001 par value Common Stock (YRLS)
will not be de-listed  from the Bulletin  Board.  If de-listed,  the market will
almost  certainly  reflect a  depressive  effect  on the price of the  Company's
Common Stock.

     Penny  stock  regulations  and  requirements  for  low  priced  stock.  The
Commission adopted  regulations which generally define a "penny stock" to be any
non-Nasdaq equity security that has a market price of less than $5.00 per share,
subject to certain  exceptions.  Based  upon the price of the  Company's  Common
Stock as currently  traded on the OTC Bulletin  Board,  the  Company's  stock is
subject to Rule 15g-9 under the  Exchange  Act which  imposes  additional  sales
practice  requirements on broker-dealers  which sell securities to persons other
than established customers and "accredited  investors." For transactions covered
by this Rule, a broker-dealer must make a special suitability  determination for
the purchaser and have received a purchasers  written consent to the transaction
prior to sale. Consequently,  the Rule may have a negative effect on the ability
of shareholders to sell common shares of the Company in the secondary market.

     FORWARD-LOOKING  STATEMENTS.  A number of the  matters  and  subject  areas
discussed in the foregoing  "Risk  Factors"  section and elsewhere in this 10KSB
Report  that are not  historical  or current  facts deal with  potential  future
circumstances and developments. The discussion of such matters and subject areas
is  qualified  by  the  inherent  risks  and  uncertainties  surrounding  future
expectations generally, and also may materially differ from the Company's actual
future  experience  involving any one or more of such matters and subject areas.
The Company has attempted to identify,  in context,  certain of the factors that
it currently  believes may cause actual future  experience and results to differ
from the Company's current expectations regarding the relevant matter or subject
area.  The  operation  and  results  of the  Company's  wireless  communications
business also may be subject to the effect of other risks and  uncertainties  in
addition  to  the  relevant  qualifying  factors  identified  elsewhere  in  the
foregoing  "Risk  Factors"  section,  including,  but not  limited  to,  general
economic  conditions in the geographic  areas and  occupational  market segments
(such as,  for  example,  construction,  delivery,  and real  estate  management
services) that the Company is targeting for its SMR systems, the availability of
adequate  quantities  of system  infrastructure  and  subscriber  equipment  and
components  to meet the Company's  systems  deployment  and marketing  plans and
customer demand,  the success of efforts to improve and  satisfactorily  address
any issues relating to the system's  performance,  the ability to achieve market
penetration  and  average   subscriber  revenue  levels  sufficient  to  provide
financial  viability  to the SMR  system,  access to  sufficient  debt or equity
capital to meet the Company's  operating and  financing  needs,  the quality and
price of similar or comparable wireless Communications services offered or to be
offered by the Company's

                                       8

<PAGE>
competitors, including providers of cellular and PCS service, future legislative
or regulatory  actions relating to SMR services,  other wireless  communications
services  or  telecommunications  generally  and other  risks and  uncertainties
described from time to time in the Company's reports filed with the Commission.

ITEM 2.  DESCRIPTION OF PROPERTY

Corporate Office:

     AWN leases approximately 800 square feet of executive office space at 12835
East Arapahoe Road, Tower 1 Suite 800, Englewood,  Colorado from an unaffiliated
party.  The month to month office  lease is prepaid to December  31,  2001.  All
corporate, administrative,  accounting and operational functions are carried out
from the corporate headquarters. The Company shares offices with AWN. This lease
space is fully  utilized for Company  purposes and is adequate for the Company's
current needs.

ITEM 3.  LEGAL PROCEEDINGS

     On February 1, 1999, Donald Mack, the former CEO, President and Director of
ComTec  International,  Inc., filed a complaint in the District Court,  City and
County of Denver, State of Colorado,  Civil Action Number 99CV634,  Courtroom 6,
against  ComTec  International,  Inc.  ("ComTec")  as  well  as  two  individual
defendants,  including a current  officer of ComTec.  On March 24, 1999,  ComTec
filed its Answer and extensive  Counterclaims against Donald Mack ("Mack"). Mack
alleged that he is entitled to continued  compensation and benefits based upon a
March 31, 1997  addendum to his December  26, 1995  employment  contract  (which
expired in May of 1998).  Mack further  alleged that  although he resigned as an
officer in June 1998,  he was  wrongfully  induced  to resign.  ComTec's  answer
stated  that the March 31, 1997  addendum  was null and void as a matter of law,
denied any  wrongdoing or  inducement  and denied any and all liability to Mack.
The Company  filed a number of  Counterclaims  against Mack. In October of 1999,
the Plaintiff,  Mack,  filed for bankruptcy  protection.  In September 2001, all
claims and  counterclaims  with respect to Mack were  finally and fully  settled
with no payment by either side.

     On February 14, 2000, the Company was served with a Complaint  filed in the
Superior Court of California,  County of Los Angeles, Central Division, Case No.
BC 224058, entitled A-1 Business Products,  Inc. vs. ComTec International,  Inc.
The complaint alleges damages of approximately  $200,000 with respect to alleged
financing  arrangements.  In September 2000, the Plaintiff amended its complaint
to  include  as  defendants  two  employees  of the  Company  as  well as to add
allegations  of fraud to its compliant.  In March of 2001,  the Company  entered
into a settlement  agreement  wherein it agreed to pay A-1  Business  Products a
total of $100,000 in payments of $6,250 per quarter over a period of four years.

     Except for the foregoing, no non-course of business or other material legal
proceedings,  to which the  Company is a party or to which the  property  of the
Company is subject, is pending or is known by the Company to be contemplated.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

     No matters were  submitted to the  shareholders  during the year ended June
30, 2001.

                                     PART II

ITEM 5.  MARKET FOR COMMON STOCK EQUITY AND RELATED STOCKHOLDER MATTERS.

(a)  Market Information.

     The  principal  market of the Company's  $.001 par value Common Stock,  its
only trading class of equity securities,  is the NASD Electronic  Bulletin Board
over-the-counter  market.  The Company's Common Stock currently trades under the
symbol YRLS.  The Company has  approximately  600  shareholders  of record.  The
Company's transfer agent is General Securities Transfer Agency, Inc., 3614 Calle
Del Sole NE, Albuquerque, New Mexico 87110.

     On December  26,  1997,  the Board of  Directors,  pursuant to  shareholder
approval  granted at the annual meeting of shareholders  held on March 28, 1997,
voted to  approve a one for five  (1:5)  reverse  stock  split of the  Company's
$$.001 par value Common Stock effective January 31, 1998. Financial  information
contained in this report has been restated to reflect this split.  All share and
per share data is stated to reflect the reverse split.

                                       9
<PAGE>
     The following  table  indicates the quarterly high and low bid market price
ranges  of the  Company's  Common  Stock in the  over-the-counter  market on the
Electronic  Bulletin Board for the fiscal years ended June 30, 2000 and June 30,
2001,  as  reported  by the  Nasdaq-Amex  Market  Group,  an NASD  company.  The
information supplied represents quotations between dealers that does not include
retail  markups,   markdowns  or  commissions,   actual   transactions  and  any
adjustments for stock dividends.

     The  following  chart is made  considering  the  effect of the one for five
reverse  stock split  effective  January 31,  1998,  and rounded to nearest full
penny for presentation purposes only.

                                                                BID       BID
                                                               HIGH($)   LOW($)
                                                               -------   ------
     Fiscal 2001:
     ------------
     First Quarter: July 1, 2000 through September 30, 2000    $  0.18   $ 0.07
     Second Quarter: October 1, 2000 through Dec. 31, 2000     $  0.11   $ 0.05
     Third Quarter: January 1, 2001 through March 31, 2001     $  0.09   $ 0.05
     Fourth Quarter: April 1, 2001 through June 30, 2001       $  0.10   $ 0.05

     Fiscal 2000:
     ------------
     First Quarter: July 1, 1999 through September 30, 1999    $  0.08   $ 0.04
     Second Quarter: October 1, 1999 through December 31, 1999 $  0.14   $ 0.06
     Third Quarter: January 1, 2000 through March 31, 2000     $  0.66   $ 0.08
     Fourth Quarter: April 1, 2000 through June 30, 2000       $  0.18   $ 0.07

(b)  Holders:

     As of September 14, 2001,  the  approximate  number of holders of record of
shares of the Company's Common Stock,  $$.001 par value per share, the Company's
only class of trading securities, was believed by management to be as follows:

               Title of Class                  Number of Record Holders
               --------------                  ------------------------

           Common Stock, $$.001 par                      600

(c)  Dividends:

     The Company has paid no dividends  during fiscal years ended June 30, 2001,
June 30, 2000 or to the present  date.  Other than the  requirements  of the New
Mexico  Business  Corporation  Act that dividends be paid out of capital surplus
only and that the  declaration  and payment of a dividend not render the Company
insolvent,  there are no restrictions on the Company's present or future ability
to pay dividends.

     The payment by the Company of dividends, if any, in the future rests within
the  discretion of its Board of Directors  and will depend,  among other things,
upon  the  Company's  earnings,  its  capital  requirements  and  its  financial
condition,  as well as other relevant  factors.  There is no current plan to pay
dividends.

Unregistered shares issued

     The  following  shares of the  Company's  $.001 par value Common Stock were
issued  without  registration  to the named  individuals  during the fiscal year
ended June 30,  2001 which the Company  believed to be exempt from  registration
requirement as a nonpublic offering.

--------------------------------------------------------------------------------
    Date     Number of Shares      Issued to                Consideration
--------------------------------------------------------------------------------

08/24/2000        36,000       Marc Maassen             Services as a Director
02/02/2001        50,000       Larry Tyler              Services
04/11/2001       143,000       Butch Gordon             Rent of Corporate Office
07/13/2000*       45,000       John Brent               Settlement of litigation
--------------------------------------------------------------------------------

                                       10
<PAGE>
--------------------------------------------------------------------------------
    Date     Number of Shares      Issued to                Consideration
--------------------------------------------------------------------------------

07/13/2000*       60,000       Moris Cohen              Settlement of litigation
07/13/2000*      112,000       Joseph K. Fung           Settlement of litigation
07/13/2000*       37,450       James & Myrna King Trust Settlement of litigation
07/13/2000*       18,650       Stephen S. Zucker        Settlement of litigation
07/13/2000*       26,900       Matthew R. Rutherford    Settlement of litigation
--------------------------------------------------------------------------------

* These shares were issued pursuant to a settlement  agreement  entered into and
reported in the year ended June 30, 2000 financial statements.

     The  following  shares of the  Company's  $.001 par value Common Stock were
issued as  compensation  for  services and  registered  on Form S-8 to the named
employee during the Fiscal Year Ended June 30, 2001.

--------------------------------------------------------------------------------
    Date     Number of Shares      Issued to                Consideration
--------------------------------------------------------------------------------

02/02/2001      1,111,111      James Krejci                 Services as CEO
04/11/2001      1,450,000      James Krejci                 Services as CEO
--------------------------------------------------------------------------------

     The following  shares of the  Company's  $.001 par value Series D Preferred
Stock were issued without registration to the named individual during the fiscal
year  ended  June  30,  2001  which  the  Company  believed  to be  exempt  from
registration  requirement as a nonpublic offering. There is no public market for
the Company's $.001 par value Series D preferred shares.

--------------------------------------------------------------------------------
    Date     Number of Shares      Issued to                Consideration
--------------------------------------------------------------------------------

06/30/2001      6,000,000      James Krejci                 Services as CEO
--------------------------------------------------------------------------------

Designation of Class D Preferred Shares.

     As was reported in Form 8K filed  January 29,  2001,  on December 26, 2000,
pursuant to a resolution of the Board of Directors  adopted by unanimous consent
in lieu of a meeting,  a series of Preferred Stock entitled  "Series D Preferred
Stock" was approved by the Board of Directors on behalf of the Company. Pursuant
to authority granted under the Company's Articles of Incorporation,  as amended,
the Board of Directors  approved the  designation of a series of Preferred Stock
of the Company to be known as "Series D  Preferred  Stock." The number of shares
constituting  the Series D  Preferred  Stock  shall be  6,000,000,  which may be
issued in such  amounts  as shall be  determined  by the Board of  Directors  in
accordance  with the provisions of the  Certificate of  Designation.  The series
shall be designated Series D Preferred Stock with a par value of $.001 per share
and an issue price of $$.001 per share.  Holders of the Series D Preferred Stock
shall be entitled to dividends of twelve percent per annum on the issue price of
the  certificate  from the date of issue,  which  dividends  shall  accrue until
declared payable by the Board of Directors and paid by the Company. In the event
of any liquidation, dissolution or winding-up of the affairs of the Corporation,
whether  voluntary or  involuntary,  the holders of the Series D Preferred Stock
shall be entitled,  before any assets of the  Corporation  shall be  distributed
among or paid over to the holders of the Common Stock, but only after authorized
distribution  or payment to the  holders of the Series A  Convertible  Preferred
Stock in accordance  with the  provisions of the Series A Convertible  Preferred
Stock  Designation,  to be paid $.001 per share of Series D Preferred Stock plus
any accrued but unpaid dividends  hereon.  Except as otherwise  permitted by the
applicable provisions of the New Mexico Business Corporation Act, holders of the
Series D Preferred  Stock shall not be entitled to vote in regular  elections of
the  Corporation  for members of the board of  directors so long as a sufficient
number of common  shares are  present in person or by proxy for the  election of
the board of  directors  as  required  by the bylaws of the  Corporation  or the
applicable  laws of any state in which the  Corporation is domiciled.  If at any
time, the Corporation shall place or be required to place for shareholder vote a
proposal to  liquidate  or dissolve  the  corporation;  to amend its articles of
incorporation;  to change the  capital  structure  of the  corporation  or other
corporate  reorganization;  to  acquire  a  subsidiary,  business  or  assets in
exchange for shares of the Company's  equity or debt  instruments  issued by the
Company;  to merge with or  consolidate  into  another  corporation;  to tender,
transfer  or  otherwise  dispose of all or  substantially  all of its  property,
assets, shares of stock or other securities,  property or business;  any special
meeting of shareholders; or any other action by the corporation which requires a
vote of its Common  Stock  shareholders  other than for  regular  elections  for
members of the board of directors,  the holders of the Series D Preferred  Stock
shall  be  entitled  to  vote in  such  shareholder  election  with  the  common
shareholders.  In such shareholder  elections,  each share of Series D Preferred
Stock voted in the election  shall be equal to one hundred  fifty common  shares
for  purposes  of such  election  results.  If at any  time,  the  Corporation's
management  or its board of directors  shall pass a

                                       11
<PAGE>
resolution or enter into a contract to liquidate or dissolve the corporation; to
change  the  capital   structure   of  the   corporation   or  other   corporate
reorganization;  to acquire a  subsidiary,  business or assets in  exchange  for
shares of the Company's  equity or debt  instruments  issued by the Company;  to
merge with or  consolidate  into  another  corporation;  to tender,  transfer or
otherwise  dispose of in excess of twenty  five  percent of its total  property,
assets, shares of stock or other securities,  property or business,  the holders
of a minimum  of 50% of the Series D  Preferred  Stock  shall  within 30 days of
direct  notice of the event made to Series D  Preferred  Stockholders,  have the
option to require that the resolution made or action taken by the  Corporation's
management be placed for a vote of the shareholders. If in a regular election of
the  Corporation  for members of the board of directors a  sufficient  number of
common  shares  are not  present in person or by proxy for the  election  of the
board  of  directors  as  required  by  the  bylaws  of the  Corporation  or the
applicable laws of any state in which the Corporation is domiciled,  the holders
of the Series D Preferred  Stock  shall be entitled to vote in such  shareholder
election with the common  shareholders  and  establish a legal  quorum.  In such
director elections, each share of Series D Preferred Stock voted in the election
shall be equal to one hundred  fifty common shares for purposes of such required
quorum and election results. There were no previous shares of Series D Preferred
Stock  issued or  outstanding  and there is no public  market  for the  Series D
Preferred  Stock.  The Series D  Preferred  Stock is not  convertible  to Common
Stock.

     On December 28, 2000,  the  Company's  Board of Directors  voted to issue a
total of  6,000,000  shares of its $.001 par value  Series D Preferred  Stock to
James J. Krejci,  the  Corporation's  President,  at an issue price of $.001 per
share.. The shares are to be issued in consideration of services provided to the
Company by Mr. Krejci.  No underwriter  was involved in the  transaction  and no
cash  commissions or discounts  were paid by the Company.  The shares were to be
issued in a private transaction, exempt from registration.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-Looking Statements

     The foregoing and subsequent  discussion  contains certain  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the  Securities  Exchange  Act of 1934,  which are intended to be
covered by the safe harbors created thereby.  These  forward-looking  statements
include the plans and objectives of management for future operations,  including
plans  and  objectives  relating  to the  possible  further  capitalization  and
potential   acquisitions   of  or  mergers   with   operating   companies.   The
forward-looking  statements  included  herein are based on current  expectations
that  involve  numerous  risks and  uncertainties.  Assumptions  relating to the
foregoing  involve  judgments  with  respect  to,  among  other  things,  future
economic,  competitive and market conditions and future business decisions,  all
of which are difficult or impossible to predict accurately and many of which are
beyond the  control of the  Company.  Although  the  Company  believes  that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could be inaccurate and,  therefore,  there can be no assurance that
the  forward-looking  statements  included  in this Form 10-KSB will prove to be
accurate.   In  light  of  the   significant   uncertainties   inherent  in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and plans of the Company will be achieved.

     The following is a discussion of the consolidated  financial  condition and
results of  operations  of the Company for the fiscal years ended June 30, 2001,
and June 30, 2000, which should be read in conjunction with, and is qualified in
its  entirety  by,  the  consolidated  financial  statements  and notes  thereto
included elsewhere in this report.

     Statements   contained   herein   that  are  not   historical   facts   are
forward-looking  statements  as that term is defined by the  Private  Securities
Litigation  Reform  Act  of  1995.   Although  the  Company  believes  that  the
expectations  reflected in such forward-looking  statements are reasonable,  the
forward-looking  statements  are subject to risks and  uncertainties  that could
cause  actual  results to differ  from those  projected.  The  Company  cautions
investors  that  any  forward-looking  statements  made by the  Company  are not
guarantees of future  performance and that actual results may differ  materially
from  those in the  forward-looking  statements.  Such  risks and  uncertainties
include,  without limitation,  fluctuations in demand, loss of subscribers,  the
quality and price of similar or comparable wireless communications services, the
existence  of  well-established   competitors  who  have  substantially  greater
financial  resources  and  longer  operating  histories,  regulatory  delays  or
denials,  ability to complete intended market roll-out,  termination of proposed
transactions,  access to  sources  of  capital,  adverse  results  in pending or
threatened litigation, consequences of actions by the FCC, general economics and
the risks  discussed  under "ITEM 1.  DESCRIPTION OF BUSINESS - Risk Factors" in
this report.

                                       12
<PAGE>
(a)  Plan of Operation:

     From May 10, 1995 until April of 1999,  the  Company's  strategic  business
plan,  aside from a  terminated  venture in the LED screens and the divested TTI
prepaid phone card investment, concentrated on wireless telecommunications. As a
result of the Asset Acquisition  Agreement (as amended) entered into between AWN
and CMRS Systems,  Inc. (an unaffiliated  Nevada Corporation) on April 15, 1999,
and reported on Form 8K filed April 30, 1999,  the day to day SMR  operations of
AWN were undertaken by CMSR Systems,  Inc. under a management  contract  wherein
AWN supervised management of the systems pursuant to FCC rules but actual day to
day operations were conducted by CMSR Systems,  Inc. In September 2000, the sale
to CMSR Systems,  Inc. of 900 SMR licenses to CMSR Systems, Inc. was approved by
the FCC and the transaction was consummated. As a result, the Company has had no
900 SMR operations since September, 2000. The Company is now exploring potential
acquisition and or merger  transactions with existing business  opportunities in
telecommunications,   information  industries,   computer  industry,   financial
services or other compatible business enterprises.

     The Company has been and  continues  to be in the  development  stage.  The
Company has yet to commence its principal planned  operations and from inception
of the SMR business plan (March 15, 1994)  generated only auxiliary  revenues to
defray  the  cost of its  planned  operations,  with  only  limited  success  in
implementing  actual operations.  The Company has financed its operations during
the  development  stage from the sale of its Common  Stock and from  issuance of
short and long-term debt.

Current Status and Operations:

     On December 5, 1997, AWN purchased  seven operating SMR systems and 900 MHz
licenses  from  Centennial  Communications  Corp.  including the seven MTA's of:
Birmingham,   Alabama;  Knoxville,  Tennessee;  Memphis,  Tennessee;  Nashville,
Tennessee; New Orleans, Louisiana; Oklahoma City, Oklahoma; and Tulsa, Oklahoma.
On April 15, 1999, AWN executed an Asset Acquisition Agreement (as amended) with
CMSR  Systems,  Inc.  ("Buyer"),  a Nevada  corporation,  wherein  those  assets
originally  acquired  from  Centennial  Communications  Corp.  were sold to CMRS
Systems, Inc. Effective June 1, 1999, all operations previously conducted by AWN
with respect to the 900 MHz licenses were undertaken by CMSR Systems, Inc. under
a management agreement between AWN and CMSR Systems, Inc. In September 2000, the
sale to CMSR Systems,  Inc. of 900 SMR licenses (book value of  $1,390,700)  and
the  assumption  of FCC debt in the  offsetting  amount  of  $1,390,700  by CMSR
Systems, Inc. was approved by the FCC and the CMRS Systems, Inc. transaction was
consummated.  As a  result,  the  Company  has had no 900 SMR  operations  since
September, 2000. AWN retained ownership of all of its SMR transmission equipment
as well as a seven and one half percent  operating  interest in the  operational
segment represented by the licenses and operations sold to CMSR Systems, Inc. by
AWN. As a part of the Asset Acquisition Agreement (as amended), AWN assigned its
tower site  licenses  and leased to CMSR  Systems,  Inc.,  certain  SMR  related
transmission  equipment  for a five (5) year  term at the  initial  base rate of
$33,750 per quarter for the first year of payments,  $42,000 per quarter for the
second year of payments, $52,000 per quarter for the third year of payments, and
$57,250 per quarter for the fourth year of  payments;  provided,  however,  that
such  Equipment  Lease  payments shall begin one year from the Effective Date of
June 1, 1999.  The  Lessee  shall have the option to extend the Lease for 1 year
terms (up to a total of a 3 year extension after the termination of the original
five year term); provided, however, that the monthly rate will be based upon the
fair market value  ("FMV") of  Equipment on the date of any  extension as agreed
upon by the  parties;  provided  that in the event that  Lessee and the  Company
cannot agree on a FMV, the FMV shall be  determined  by a third party  appraiser
selected by the Company and Lessee. Lessee shall have the option, within 30 days
of the end of any term,  to purchase the Equipment at the then FMV as determined
by the parties;  provided  that in the event that Lessee and the Company  cannot
agree on a FMV, the FMV shall be determined by a third party appraiser  selected
by the Company and Lessee. In the event of the bankruptcy of the Company, Lessee
shall  have the right to  purchase  the  Equipment  at its then FMV.  This lease
agreement  has been  recorded  for  financial  reporting  purposes  as a sale of
equipment  through a capital  lease.  Management  believes this  agreement  will
partially relieve the Company of the currently  existing burdens of debt service
and operating  deficits as well as eliminating the extensive  maintenance  costs
related to the SMR systems.

(b)  Management's  Discussion and Analysis of Financial Condition and Results of
Operations.

     The  Company  reported a net loss of  $773,400  for the year ended June 30,
2001,  and a net loss of  $2,223,500  for the year ended June 30, 2000,  and has
reported net losses of $16,228,600  from inception  (March 15, 1994) to June 30,
2001.  As reported on the  consolidated  statements  of cash flows,  the Company
incurred deficient cash flows from operating  activities of $421,000 and $54,700
for the years  ended  June 30,  2001 and 2000,  respectively,  and has  reported
deficient  cash flows from  operating  activities of $4,956,300  from  inception
(March  15,  1994) to June  30,  2001.  To  date,  these  losses  and cash  flow
deficiencies have been financed principally through the sale of Common Stock and
warrants and issuance of short and long-

                                       13
<PAGE>
term  debt  which  includes  related  party  debt.   Additional  capital  and/or
borrowings  will be  necessary in order for the Company to continue in existence
until attaining  profitable  operations.  Although a portion of convertible debt
was liquidated  through the issuance of Common Stock, no assurances can be given
that the sources of borrowings  will continue.  The Company is highly  leveraged
and a number of developments  over the past year had material adverse effects on
the Company. The Company has a significant investment remaining in SMR equipment
and a  non-operator  interest  in SMR  assets,  the  recoverability  of which is
dependent upon the success of future events and unrelated third parties.

     Management  is  endeavoring  to develop a strategic  plan to raise  private
financing,  develop a management team, maintain reporting compliance and explore
potential   acquisition  and  or  merger  transactions  with  existing  business
opportunities in telecommunications,  information industries, computer industry,
financial  services  or  other  compatible  business  operations.   The  Company
consummated a major  transaction in September 2000,  selling its FCC licenses in
order to eliminate  negative cash flow from SMR  operations  and satisfy its FCC
debt.

     In the fiscal year ended June 30, 2001,  the Company  continued  efforts in
connection with private financing proposals to fund future merger or acquisition
activities as well as working capital needs.  The Company has several  proposals
for private funding with unrelated  entities  pending.  There is no agreement or
requirement  on the part of any  entity to  provide  financing  to the  Company.
Should the Company be successful  in obtaining  substantial  private  financing,
management  plans  to  seek  acquisitions  of  broadband  communications,  cable
systems,  telecommunication or computer related businesses, information and data
services, financial services or other compatible enterprises that would generate
sufficient  cash flow to maintain debt service.  There can be no assurances that
the  Company  will  be  successful  in  the   implementation  of  its  plan  for
acquisitions, other expansion or its overall business plan.

     From  October 1, 2001 to the end of fiscal  year ended June 30,  2002,  the
Company  estimates  its cash  needs to  maintain  operations  under its  current
negative  cash flow  situation is $270,000.  This amount is composed of $270,000
for working  capital  assuming that current  operations  continue in its present
status.  These amounts do not include  offsets for  anticipated  amounts of cash
generated  from the  current  operations.  There can be no  assurances  that the
Company will be able to successfully obtain the additional financings or will be
otherwise  able to obtain  sufficient  financing  to  consummate  the  Company's
business plan.

     The Company has limited  capitalization and is dependent on the proceeds of
private or exempt  offerings to continue as a going concern and  implementing  a
business  plan.  All  during  fiscal  2001 and to the date of this  filing,  the
Company has had and continues to have a substantial need for working capital for
normal  operating  expenses  associated  with the Company  continuing as a going
concern.  This lack of cash has  slowed  its  ability  to  acquire  SMR or other
productive assets and initiate revenue producing operations. Any activity in the
communications   industry  requires  adequate  financing  and  on-going  funding
sources.  The Company  entered this industry with limited  financing and funding
sources.  The Company is currently in discussions  with one or more entities for
private debt and equity financing package(s).

(e)  Results of Operations:

Fiscal Year Ended June 30, 2001

     For the year ended June 30,  2001,  the Company  recorded a net loss before
other income and expense of $829,700 and a net loss of $773,400  with a net loss
per common share of $0.01.  Professional fees of $94,200,  the bulk of which was
related to now settled  litigation and accrued but unpaid  officers  salaries of
$343,750,  made up the  majority  of the expense  attributed  to the fiscal year
ended June 30, 2001.  Again on disposal of assets totaling  $68,900 was reported
as a result of the sale by the  Company's  subsidiary  of its SMR  licenses  and
disposition of its wireless  communications  equipment  through a capital lease.
The fiscal year ended June 30, 2001, was a year of  reorganization,  elimination
of non-performing  assets and non productive activities remaining from the prior
management.  Litigation with the Company's former President which has threatened
the Company for the past two years was successfully  settled without cost to the
Company.

Fiscal Year Ended June 30, 2000

     For the year ended June 30,  2000,  the Company  recorded a net loss before
other  income and expense of $173,400  and a net loss of  $2,223,500  with a net
loss per  common  share of $0.05.  Management  has not  included  SMR  operating
revenues in its  financials  since past revenues have not been  sufficient to be
separately  stated in accordance with GAAP. The fiscal year ended June 30, 2000,
was a year of  reorganization,  evaluation  and  elimination  of  non-performing
assets  and non  productive  activities  remaining  from the  prior  management.
Interest expense of $287,100, write-offs from telephone services

                                       14

<PAGE>
discontinued in December 1997 of $479,800,  and a write-down of 1,314,300 of LED
equipments were recorded during the year ended June 30, 2000, making up the bulk
of the total net loss of $2,223,500.

     On June  21,  2000,  the  Company  entered  into an  agreement  to  convert
$1,700,000 of outstanding  loans and $444,550 of accrued  interest to 21,445,500
shares of $.001 par value Common Stock of the Company. This agreement eliminated
the majority of the Company's debt obligations.

Impact of Recently Issued Accounting Standards

     The Company has adopted the  Statement  of Financial  Accounting  Standards
Board (SFAS) No. 130,  "Reporting  Comprehensive  Income,"  issued in June 1997.
Comprehensive  income  includes  net income and all  changes in an  enterprise's
other  comprehensive  income  including,  among other things,  foreign  currency
translation  adjustments and unrealized gains and losses on certain  investments
in  debt  and  equity  securities.  The  Company  also  adopted  SFAS  No.  131,
"Disclosures  about  Segments of an Enterprise  and Related  Information."  This
Statement  establishes  standards  for  reporting  information  about  operating
segments in annual financial statements,  and requires that an enterprise report
selected  information  about  operating  segments in interim  reports  issued to
shareholders.  The Company does not expect the adoption of these  statements  to
have a material impact on its financial condition or results of operations.

     The Company adopted SFAS No. 128,  Earnings Per Share,  which specifies the
method of computation,  presentation and disclosure for Earnings Per Share. SFAS
No. 128 requires the presentation of two EPS amounts,  basic and diluted.  Basic
EPS is calculated by dividing net income (loss) by the weighted  average  number
of common shares  outstanding for the period.  Diluted EPS includes the dilution
that would occur if outstanding stock options and other dilutive securities were
exercised and is comparable  to the EPS the Company has  historically  reported.
The diluted EPS  calculation  excludes  the effect of stock  options  when their
exercise  prices  exceed the average  market price over the period.  There is no
change in loss per share because diluted EPS is anti-dilutive.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities,"  which defines
derivatives,  requires that  derivatives be carried at fair value,  and provides
for  hedge  accounting  when  certain  conditions  are met.  This  statement  is
effective  beginning in the year 2000.  The adoption of this  statement will not
have an impact on the Company's consolidated financial statements.

     In April 1998,  the AICPA  finalized  SOP 98-5,  "Reporting on the Costs of
Start-Up   Activities,"   which   requires  that  costs  incurred  for  start-up
activities,  be expensed as incurred.  This SOP, which is effective in the first
quarter of 1999,  is not  expected  to have a material  impact on the  Company's
consolidated financial statements.

     In 1998, the Company,  adopted the American  Institute of Certified  Public
Accountants' ("AICPA") Statement of Position 98-1 ("SOP 98-1"),  "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use." SOP 98-1
defines the types of computer  software  project costs that may be  capitalized.
All other costs must be expensed in the period  incurred.  In order for costs to
be capitalized,  the computer  software project must be intended to create a new
system or add identifiable functionality to an existing system. Adoption of this
statement  did not  have  an  impact  on the  Company's  consolidated  financial
statements.

ITEM 6A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As of the date  hereof,  all the  Company's  long and short term debt bears
fixed interest rates,  however,  the fair market value of this debt is sensitive
to changes in prevailing  interest rates.  The Company runs the risk that market
rates will  decline and the  required  payments  will exceed  those based on the
current  market  rate.  The  Company  does  not  use  interest  rate  derivative
instruments to manage its exposure to interest rate changes.

ITEM 7.  FINANCIAL STATEMENTS

     Financial  statements  meeting the  requirements  of Item 310 of Regulation
S-B,  for the years  ending  June 30,  2001 and June 30,  2000  which  have been
audited and reported upon by Grabau & Company,  PC, Certified Public Accountants
are annexed as a separate section to this Report.

                                       15

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

     None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

(a)  Identify Directors and Executive Officers.

     The  following  table sets  forth:  (1) names and ages of all  persons  who
presently are  Directors of the Company;  (2) all positions and offices with the
Company held by each such person; (3) the term of office of each person named as
a Director; and (4) any period during which he or she has served as such:

             Director Name/Title                From                To
         -------------------------------    ------------     -------------------
         James J. Krejci, 59                August, 1998     Next Annual Meeting
         Director, President & CEO

         Gordon D. Dihle, 46                October, 1997    May 8, 1998
         Director, Secretary & Treasurer    August, 1998     Next Annual Meeting

         Marc Maassen, 51                   October, 1998    Next Annual Meeting
         Outside Director

     There is no  understanding  or  arrangement  between any  Directors  or any
person or persons  pursuant to which such individual was or is to be selected as
a Director or nominee of the Company.

     Each  Director is serving a term of office,  which shall  continue the next
annual meeting of Shareholders and until his successor has been duly elected and
qualified.  Officers  of the  Company  serve  at the  pleasure  of the  Board of
Directors.

(b)  Business Experience:

     The  following is a brief account of the  experience,  during the past five
years, of each Director and executive officers of the Company:

James J. Krejci:  Chief Operations  Officer of the Company and President and CEO
of AWN (February,  1998). Chairman of the Board of Directors,  CEO and President
of the Company (September, 1998).

     For the five years preceding, Mr. Krejci was employed as follows:

          September   1998   through   present:  CEO  and  President  of  ComTec
     International, Inc. and AWN.  February 1998 through  August 1998:   COO  of
     ComTec International, Inc. and Chairman of the Board of Directors,  CEO and
     President of AWN.

          July 1996 through  February 1998:   CEO  and  President  of  Imagelink
     Technologies,  Inc., a firm involved in the development and distribution of
     videoconference equipment.

         May 1994 through February 1996: President -  International  Division of
     International  Gaming Technology,  Inc., a firm involved in the development
     and distribution of gaming equipment.

          May  1985  through  May  1994:  President  and/or  officer  of various
     subsidiaries  of  Jones  International,  Inc.,  including Jones Intercable,
     Inc., a  1934  Act  Reporting   Company.   These  firms  were  involved  in
     development  and  distribution  of  cable  television  systems  as  well as
     activities ancillary and related to the cable television business.

                                       16

<PAGE>
          Mr. Krejci earned a B.S. in chemical engineering  from the  University
     of Wisconsin in 1964 and a MBA from the University of Wisconsin in 1970.

Gordon D. Dihle: Secretary/Treasurer and Director of ComTec International,  Inc.
and AWN  (October  1997 to May  1998) and Chief  Financial  Officer,  Treasurer,
Secretary and Director of ComTec International, Inc. (September 1998).

     For the five years preceding, Mr. Dihle was employed as follows:

          January 1992 through September 1997: Dihle & Co., P.C., a professional
     corporation wholly owned by Mr. Dihle which provides legal,  accounting and
     tax services.

          April  1993  through present: Lostwood Farms, Ltd., a farm corporation
     wholly owned by Mr. Dihle.

          May  1998  through  August 1998:  Self  employed  as  an  attorney and
     consultant, including work for ComTec International, Inc.

          Mr. Dihle achieved a B.A. in Accounting and Business Administration in
     1976 at Dickinson State University,  Dickinson, North Dakota, and a J.D. in
     1980 at the University of North Dakota School of Law.

Marc Maassen: Outside Director of ComTec International, Inc. (October, 1998).

     For the five years preceding, Mr. Maassen was employed as follows:

          June 2001 through  present:  Self employed   communications   industry
     consultant.

          January 2001 through May 2001: President of ComTec International, Inc.

          September 2000 through  December  2000:  Self employed  communications
     and computer industry consultant.

          December  1999  through  August  2000:  Employed  by  Netbeam,  Inc. a
     wireless  phone  and  high-speed  Internet  provider as Vice  President and
     operations manager.

          February 1998 through November 1999:  Self employed communications and
     computer industry consultant.

          1991   through   January   1998:   Executive   Vice   President    ICG
     Communications,  Inc.  and  executive  positions  with  subsidiaries of ICG
     Communications,   Inc.  (including   Zycom   Corporation  and  Fiber  Optic
     Technologies, Inc.) operating as a local exchange carrier  providing local,
     long distance,  internet and data services.

          Mr.  Maassen  achieved  a  B.A. in Business  Administration in 1974 at
     Colorado State University, Fort Collins, Colorado.

(c)  Identification of Certain Significant Employees and Consultants:

     None.

(d)  Family Relationships:

     No family relationships exist between any Director or executive officers of
the Company.

(e)  Involvement in Certain Legal Proceedings:

     No event listed in  Subparagraphs  (1) through (4) of  Subparagraph  (d) of
Item 401 of Regulation  S-B, has occurred with respect to any present  executive
officer or Director of the Company  during the past five years which is material
to an evaluation of the ability or integrity of such Director or officer.


                                       17
<PAGE>
(f)  Compliance with Section 16(a) of the Exchange Act:

     To the date of this  filing and to the best of  knowledge  of the  Company,
Form 3 has been filed by its current officers and Directors, Form 4 filings have
not been required, and no supplemental Form 5 had been filed with the Securities
Exchange  Commission  (SEC) by any of its current  officers or Directors at June
30, 2001.  As of the date of this report,  the SEC has not taken any  additional
action with regard to any failure to file reports.

     The Company,  to the best of its knowledge,  believes the following  person
(shareholder) who may have had Section 16 filing  requirements during the fiscal
year ended June 30, 2001,  has not complied  with  Section 16:  Cayman  Offshore
International,  Inc., Overseas Foreign Holdings,  Inc., Queens Cross Group, Inc.
and Zephyr Directors, Limited.

ITEM 10.  EXECUTIVE COMPENSATION.

(a)  General

     (1) through (7) All Compensation Covered. During the fiscal year ended June
30, 2001, the Company  employed the following  senior  management  personnel who
served pursuant to employment agreements further described in Section (f) below.

(b)  Summary Compensation Table.

     No employee of the Company other than James J. Krejci,  its CEO,  earned in
excess of  $100,000  during the fiscal  years  ended June 30,  2000 and June 30,
2001.

                           SUMMARY COMPENSATION TABLE

                             ANNUAL COMPENSATION       LONG TERM COMPENSATION
                         ---------------------------  --------------------------
Name and Position  Year   Salary     Bonus     Other  SAR   Options  LTIP  Other
-----------------  ----  --------- ----------  -----  ----  -------  ----  -----

James J. Krejci    2001  $157,500* $157,500**  None   None    None   None   None
CEO and President  2000  $120,000     None     None   None    None   None   None
-----------------------
-   *Salary of $157,500 was accrued but not actually paid to Mr. Krejci.
-   **$.001 par value Stock valued at  $151,500  was  issued to Mr.  Krejci  and
    registered on Form S-8.  Additionally, the Board of Directors voted to issue
    $.001 par value Series D Preferred Stock valued at $6,000 to Mr. Krejci.

(c)  Option/SAR  Grant  Table.  During the fiscal  years ended June 30, 2001 and
2000, no effective  grants of stock options or  freestanding  SAR's were made by
the Company.

The 1997 Stock Option Plan

     On March 28, 1997, the  shareholders  of the Company adopted the 1997 Stock
Option  Plan (the  "Plan")  reserving  an  aggregate  of  900,000  shares of the
Company's  Common Stock (the  "Available  Shares") for issuance  pursuant to the
exercise  of stock  options  ("Options")  which  may be  granted  to  employees,
officers,  and Directors of the Company and consultants to the Company. The Plan
also  provides  for  annual  adjustment  in  the  number  of  Available  Shares,
commencing  June 30,  1997,  to a number  equal to 10% of the  number  of shares
outstanding  on June 30 of the preceding  year or 980,000  shares,  whichever is
greater.  The Plan was adopted by the Board of  Directors  on February 12, 1997.
The Plan is  designed  to (i)  induce  qualified  persons  to become  employees,
officers,  or  Directors  of the  Company;  (ii)  reward  such  persons for past
services to the Company; (iii) encourage such persons to remain in the employ of
the  Company  or  associated  with  the  Company;  and (iv)  provide  additional
incentive  for such  persons to put forth  maximum  efforts  for the  success of
business of the Company.

     The Plan will be administered by the Compensation Committee of the Board of
Directors (the "Committee").  Transactions under the Plan are intended to comply
with all applicable conditions of Rule16b-3 under the Securities Exchange Act of
1934,  as amended  (the "1934  Act").  In  addition to  determining  who will be
granted  Options,  the Committee  has the authority and  discretion to determine
when  Options  will be granted  and the number of  Options  to be  granted.  The
Committee  may determine  which  Options may be intended to qualify  ("Incentive
Stock Option") for special treatment under

                                       18

<PAGE>
the Internal Revenue Code of 1986, as amended from time to time, (the "Code") or
Non-Qualified Options  ("Non-Qualified Stock Options") which are not intended to
so qualify.

     The Plan  provides  that  disinterested  Directors  will receive  automatic
option grants to purchase 14,000 shares of the Company's Common Stock upon their
initial appointment or election as Directors, and on the date of each subsequent
annual shareholders'  meeting in which such Director is reelected as a Director.
Grants to employee Directors and  officer/Directors  can be either Non-Qualified
Stock Options or Incentive Stock Options,  to the extent that they do not exceed
the Incentive Stock Option exercise limitations, and the portion of an option to
an employee Director or officer/Director  that exceeds the dollar limitations of
Code Section 422 will be treated as a  Non-Qualified  Stock Option.  All options
granted to disinterested Directors will be Non-Qualified Options.

     This Plan will remain in effect until it is terminated by the  Compensation
Committee,  except that no Incentive  Stock Option will be granted after January
31, 2007.

     The Plan contains provisions for proportionate  adjustment of the number of
shares for  outstanding  options and the option  price per share in the event of
stock dividends,  recapitalizations  resulting in stock, reverse stock splits or
combinations or exchanges of shares.

     Each option  granted  under the Plan will be evidenced by a written  option
agreement  between  the  Company  and the  optionee.  The  option  price  of any
Incentive  Stock  Option may be not less than 100% of the Fair Market  Value per
share on the date of grant of the option; provided,  however, that any Incentive
Stock Option  granted under the Plan to a person owning more than ten percent of
the total combined voting power of the Common Stock will have an option price of
not less  than 110% of the Fair  Market  Value per share on the date of grant of
the Incentive Stock Option.  Each  Non-Qualified  Stock Option granted under the
Plan will be at a price no less than 85% of the Fair  Market  Value per share on
the date of grant,  "Fair  Market  Value" per share as of a  particular  date is
defined  in the Plan as the last sale  price of the  Company's  Common  Stock as
reported on a national  securities exchange or on the NASDAQ System or, if none,
the average of the closing bid and asked prices of the Company's Common Stock as
reported by NASDAQ or, if such quotations are unavailable,  the value determined
by the Committee in its discretion in good faith.

     The exercise  period of options  granted  under the Plan may not exceed ten
years  from the date of grant  thereof.  Incentive  Stock  Options  granted to a
person  owning more than ten percent of the total  combined  voting power of the
Common Stock of the Company will be for no more than five years.

         No options were formally issued from the 1997 Stock Option Plan during
the year ended June 30, 2001. As a disinterested Director, Marc Maassen became
entitled to receive automatic option grants to purchase 14,000 shares of the
Company's Common Stock upon his initial appointment as a Director on September
30, 1998, and an option for an additional 14,000 shares on each anniversary of
his term as a Director, September 30, 1999 and September 30, 2000.

(d)  Aggregate Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table.

     During  the  fiscal  year  ended  June  30,  2001,   no  stock  options  or
freestanding SAR's were exercised.  Notwithstanding the foregoing,  an aggregate
of 980,000 shares of the Company's Common Stock,  $$.001 par value per share are
reserved  for  issuance  pursuant  to the  Company's  1997 stock  option plan as
adopted by the Company's  Board of Directors on February 12, 1997,  and approved
by the shareholders on March 28, 1997.

(e)  Compensation of Directors.

     No Director of the Company  received  any  compensation  in his capacity as
Director during the fiscal year ended June 30, 2001.

(f)  Employment  Contracts  and Termination of Employment, and Change-in Control
     Arrangements.

     On March 23, 2001,  the Company  entered into a letter  agreement  with the
Company CEO, which remains to be  formalized,  by which James Krejci renewed his
employment  as CEO of the  Company  and  President  and CEO of AWN.  The  letter
agreement calls for a three year  employment  agreement with the opportunity for
Mr.  Krejci to obtain,  through  Common Stock option  agreements,  up to fifteen
percent (15%) of the  outstanding  Common Stock of the Company over a three year
period. The preliminary  agreement calls for Mr. Krejci to receive stock options
vesting in equal annual  increments  to equal

                                       19
<PAGE>
to a total of 15% of the Company's  outstanding  common shares over a three year
period  ending  February  16,  2004.  The strike  price of all of the  potential
options  is 80% of the  closing  bid  price  of the  Company's  Common  Stock on
February 15,  2001.  On February  16,  1998,  the Company  entered into a letter
agreement  with James  Krejci by which  James  Krejci  became  employed as Chief
Operations  Officer  of  the  Company  and  President  and  CEO of  AWN.  By the
completion of this three year agreement Mr. Krejci became vested in Common Stock
options for ten percent  (10%) of the  outstanding  Common Stock of the Company.
The strike price of all of the vested  options is $.056 per share,  representing
80% of the bid  price of the  Company's  Common  Stock  on  September  2,  1998,
(closing bid price $.07), Mr. Krejci's  original  appointment date as CEO of the
Company. On May 6, 1999, as additional  employee  incentive,  the non interested
members of the Board of Directors passed a resolution granting Mr. Krejci a four
year  option,  to become  effective  after July 1, 1999,  to purchase  1,300,000
shares of the  Company's  $.001 par value Common Stock at a strike price of $.05
per share,  based upon a calculation  of 111% of the .045 bid price of the stock
on May 6, 1999.  On March 20, 2000, as additional  employee  incentive,  the non
interested  members of the Board of Directors  passed a resolution  granting Mr.
Krejci a four year option,  to become  effective after July 1, 2000, to purchase
1,300,000 shares of the Company's $.001 par value Common Stock at a strike price
of $.111 per share,  based upon a  calculation  of 111% of the .10  closing  bid
price of the stock on March  21,  2000.  On  November  1,  2000,  as  additional
employee incentive,  the non interested members of the Board of Directors passed
a resolution  granting Mr. Krejci a four year option,  to become effective after
January 1, 2001, to purchase  1,700,000  shares of the Company's $.001 par value
Common Stock at a strike price of $.067 per share,  based upon a calculation  of
111% of the .07 closing bid price of the stock on October 31,  2000.  No options
have actually been issued pursuant to agreements with Mr. Krejci.

     Effective January 1, 1999, the Company entered into a letter agreement with
Gordon  Dihle,  which  remains to be  formalized,  by which  Gordon Dihle became
employed as Chief Financial  Officer of the Company.  The letter agreement calls
for a three year  employment  agreement  with the  opportunity  for Mr. Dihle to
obtain, through Common Stock option agreements, up to seven and one half percent
(7.5%) of the outstanding  Common Stock of the Company over a three year period.
The  preliminary  agreement calls for Mr. Dihle to receive stock options vesting
in  annual  increments  of 2.5%  to  equal  a  total  of  7.5% of the  Company's
outstanding  common shares over a three year period.  The strike price of all of
the  options  is  $.056  per  share,  representing  80% of the bid  price of the
Company's  Common  Stock on September  2, 1998,  (closing  bid price $.07),  Mr.
Dihle's date of appointment as Chief Financial Officer of the Company. On May 6,
1999, as additional employee incentive,  the non interested members of the Board
of  Directors  passed a resolution  granting  Mr.  Dihle a four year option,  to
become  effective  after  July 1,  1999,  to  purchase  1,000,000  shares of the
Company's  $.001 par value  Common  Stock at a strike  price of $.05 per  share,
based  upon a  calculation  of 111% of the .045 bid price of the stock on May 6,
1999. On March 20, 2000, as additional  employee  incentive,  the non interested
members of the Board of Directors passed a resolution  granting Mr. Dihle a four
year  option,  to become  effective  after July 1, 2000,  to purchase  1,000,000
shares of the Company's  $.001 par value Common Stock at a strike price of $.111
per share,  based upon a calculation of 111% of the .10 closing bid price of the
stock on March 21, 2000. On November 1, 2000, as additional  employee incentive,
the non  interested  members  of the  Board of  Directors  passed  a  resolution
granting Mr.  Dihle a four year option,  to become  effective  after  January 1,
2001, to purchase 1,400,000 shares of the Company's $.001 par value Common Stock
at a strike price of $.067 per share,  based upon a  calculation  of 111% of the
 .07 closing bid price of the stock on October 31, 2000. No options have actually
been issued pursuant to agreements with Mr. Dihle.

     Effective January 1, 2001, the Company entered into a letter agreement with
Marc Maassen, by which Marc Maassen became employed as President of the Company.
The  letter  agreement  called  for a one  year  employment  agreement  with the
opportunity for Mr. Maassen to obtain,  through Common Stock option  agreements,
up to eight percent (8%) of the  outstanding  Common Stock of the Company over a
one year period.  The letter  agreement  calls for Mr.  Maassen to receive stock
options  vesting  in  quarterly  increments  of 2% to equal a total of 8% of the
Company's  outstanding common shares over a one year period. The strike price of
all of the  options  is 80% of the bid price of the  Company's  Common  Stock on
October 31, 2000.  Prior the year ended June 30, 2001, Mr.  Maassen  resigned as
President of the Company effective May 31, 2001.

     Report on Repricing of Options/SAR's.

     During  the  fiscal  year  ended  June  30,  2001,   no  stock  options  or
freestanding SAR's were repriced.

                                       20
<PAGE>
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)  Security Ownership of Certain Beneficial Owners:

     The  information  is furnished as of September 24, 2001 as to the number of
shares  of the  Company's  Common  Stock,  $$.001  par  value  per  share  owned
beneficially, or is known by the Company to own beneficially more than 5% of any
class of such security who is not also an Officer or Director of the Company:

     At June 30,  2001,  the  Company  had  outstanding  Class A $.001 par value
Common  Stock.  Each common share  entitles the holder to one vote in any matter
submitted  to  shareholders  for  approval.  The common  shares vote as a single
class.

         Name and Address               Amount and Nature          Percentage
       of Beneficial Owner            of Beneficial Ownership    of Total Class
-----------------------------------   -----------------------   ---------------

Cayman Offshore International, Inc.          218,676 (1)               .3%
PO Box 1561GT
Zephyr House, Mary Street
Grand Caymen, British West Indies

Overseas Foreign Holdings, Inc.              274,286 (2)               .4%
PO Box 1561GT
Zephyr House, Mary Street
Grand Caymen, British West Indies

Queens Cross Group, Inc.                     114,000 (3)               .2%
PO Box 1561GT
Zephyr House, Mary Street
Grand Caymen, British West Indies

Zephyr Directors Limited*                    606,962             .9% as a group
c/o G. James Cleaver
E&Y Restructuring
PO Box 510GT
Bermuda House, 2nd Floor
British American Centre
Dr. Roy's Drive
Grand Caymen, Cayman Islands
-------------------------------

(1) These shares are also included in the total of 30,579,803 shares which Zephr
Directors Limited has voting power over as the managing director of Queens Cross
Group, Inc. and Cayman Offshore International, Inc.

(2) Zephyr  Directors  Limited has voting control but not  beneficial  ownership
over  30,579,803  shares of the  Company's  common  shares in its  capacity  and
function of managing  director of fifty three foreign  entities located in Grand
Cayman,  Cayman Islands,  including Queens Cross Group, Inc. and Cayman Offshore
International,  Inc.,  both of which  are  individually  a  beneficial  owner of
greater than 5% of the Company's  Common Stock.  Zephyr  Directors  Limited is a
subsidiary of Zephyr International  Limited which holds a Cayman Islands Company
Manager license.  Zephyr International  Limited is subject to a Winding-Up Order
dated  October 24,  2000,  in the Grand Court of the Cayman  Islands  whereby G.
James Cleaver of Ernst & Young, (E&Y Restructuring) PO Box 510GT, 4th Floor, One
Capital Place,  George Town, Grand Cayman was appointed  Official  Liquidator of
Zephyr International Limited.

(b)  Security Ownership of Management:

     The  information  is furnished as of September 24, 2001 as to the number of
shares of the Company's  Common Stock,  $$.001 par value per share owned by each
executive officer and Director of the Company and by all executive  officers and
Directors as a group:

                                       21
<PAGE>
      Name and Address               Amount and Nature            Percentage
     of Security Owner             of Security Ownership        of Total Class
-----------------------------      ---------------------        --------------

Gordon D. Dihle                          218,676 (1)                  .3%
10333 Behrens Mile Road
Byers, Colorado  80103

James Krejci                             274,286 (2)                  .4%
1133 Race Street
Denver, Colorado  80206

Marc Maasen                              114,000 (3)                  .2%
240 Hope Place
Boulder, Colorado  80203

Total officers and directors,            606,962                .9% as a group
(3 persons)
------------------------------------

(1) Includes  14,070  shares owned by a  professional  corporation  owned by Mr.
Dihle.  Does not include  stock options  potentially  equal to up to 7.5% of the
Company's common shares which Mr. Dihle has the potential to earn pursuant to an
employment  agreement over a three year period ending January 1, 2002.  Does not
include a non-formalized  options to purchase  3,400,000 shares of the Company's
common shares effective after July 1, 2000.

(2)  Does  not  include  stock  options  potentially  equal  to up to 25% of the
Company's  common  shares which Mr. Krejci has the potential to earn pursuant to
an employee  agreement over a three year period ending  February 16, 2001.  Does
not  include  a  non-formalized  options  to  purchase  4,300,000  shares of the
Company's common shares effective after January 1, 2001.

(3) Includes  automatic  stock options to purchase 42,000 shares of Common Stock
which accrued to Mr.  Maassen as an outside  Director  under the Company's  1997
incentive  stock  option  plan.  Does not  include  stock  options  of 2% of the
Company's  common  shares which Mr.  Maassen  earned  pursuant to an  employment
agreement over the one quarter period ending March 31, 2001.

     The  information is furnished as of September 24, 2001, as to the number of
shares of the  Company's  Series D Preferred  Stock,  $$.001 par value per share
owned by each executive officer and Director of the Company and by all executive
officers and Directors as a group:

      Name and Address               Amount and Nature            Percentage
     of Security Owner             of Security Ownership        of Total Class
-----------------------------      ---------------------        --------------

James Krejci                            6,000,000 (1)                100%
1133 Race Street
Boulder, Colorado  80102
Total officers and directors,           6,000,000               100% as a group
(3 persons)
----------------------------------

(1) Except as otherwise permitted by the applicable provisions of the New Mexico
Business  Corporation  Act, holders of the Series D Preferred Stock shall not be
entitled  to vote in regular  elections  of the  Corporation  for members of the
board of Directors so long as a sufficient  number of common  shares are present
in person or by proxy for the  election of the board of Directors as required by
the bylaws of the  Corporation or the applicable  laws of any state in which the
Corporation  is domiciled.  If at any time,  the  Corporation  shall place or be
required to place for  shareholder  vote a proposal to liquidate or dissolve the
corporation;  to amend its  articles  of  incorporation;  to change the  capital
structure of the  corporation or other  corporate  reorganization;  to acquire a
subsidiary, business or assets in exchange for shares of the Company's equity or
debt  instruments  issued by the  Company;  to merge  with or  consolidate  into
another  corporation;  to  tender,  transfer  or  otherwise  dispose  of  all or
substantially all of its property,  assets, shares of stock or other securities,
property or business;  any special

                                       22

<PAGE>
meeting of shareholders; or any other action by the corporation which requires a
vote of its Common  Stock  shareholders  other than for  regular  elections  for
members of the board of directors,  the holders of the Series D Preferred  Stock
shall  be  entitled  to  vote in  such  shareholder  election  with  the  common
shareholders.  In such shareholder  elections,  each share of Series D Preferred
Stock voted in the election  shall be equal to one hundred  fifty common  shares
for  purposes  of  such  election  results.  If in a  regular  election  of  the
Corporation for members of the board of directors a sufficient  number of common
shares are not  present in person or by proxy for the  election  of the board of
directors as required by the bylaws of the Corporation or the applicable laws of
any state in which the  Corporation  is  domiciled,  the holders of the Series D
Preferred Stock shall be entitled to vote in such shareholder  election with the
common  shareholders and establish a legal quorum.  In such director  elections,
each share of Series D Preferred  Stock voted in the election  shall be equal to
one  hundred  fifty  common  shares for  purposes  of such  required  quorum and
election results.

(c)  Changes in Control.

     As was reported in Form 8K filed  January 29,  2001,  on December 26, 2000,
pursuant to a resolution of the Board of Directors  adopted by unanimous consent
in lieu of a meeting,  a series of Preferred Stock entitled  "Series D Preferred
Stock" was  approved by the Board of  Directors  on behalf of the  Company.  The
number of shares  constituting the Series D Preferred Stock is 6,000,000,  which
may be issued in such amounts as shall be  determined  by the Board of Directors
in accordance with the provisions of the Certificate of Designation.  The series
was designated  Series D Preferred Stock with a par value of $.001 per share and
an issue  price of $$.001 per share.  Holders  of the Series D  Preferred  Stock
shall be entitled to dividends of twelve percent per annum on the issue price of
the  certificate  from the date of issue,  which  dividends  shall  accrue until
declared payable by the Board of Directors and paid by the Company. In the event
of any liquidation, dissolution or winding-up of the affairs of the Corporation,
whether  voluntary or  involuntary,  the holders of the Series D Preferred Stock
shall be entitled,  before any assets of the  Corporation  shall be  distributed
among or paid over to the holders of the Common Stock, but only after authorized
distribution  or payment to the  holders of the Series A  Convertible  Preferred
Stock in accordance  with the  provisions of the Series A Convertible  Preferred
Stock  Designation,  to be paid $.001 per share of Series D Preferred Stock plus
any  accrued  but  unpaid   dividends   hereon.   On  December  28,  2000,   the
non-interested  members of the  Company's  Board of  Directors  voted to issue a
total of  6,000,000  shares of its $.001 par value  Series D Preferred  Stock to
James J.  Krejci,  the  Corporation's  President  at an issue price of $.001 per
share.  The shares were  issued in  consideration  of  services  provided to the
Company  by  Mr.  Krejci.  Except  as  otherwise  permitted  by  the  applicable
provisions of the New Mexico Business  Corporation  Act, holders of the Series D
Preferred  Stock  shall not be  entitled  to vote in  regular  elections  of the
Corporation for members of the board of directors so long as a sufficient number
of common shares are present in person or by proxy for the election of the board
of directors as required by the bylaws of the Corporation or the applicable laws
of any  state in  which  the  Corporation  is  domiciled.  If at any  time,  the
Corporation  shall place or be required to place for shareholder vote a proposal
to   liquidate  or  dissolve   the   corporation;   to  amend  its  articles  of
incorporation;  to change the  capital  structure  of the  corporation  or other
corporate  reorganization;  to  acquire  a  subsidiary,  business  or  assets in
exchange for shares of the Company's  equity or debt  instruments  issued by the
Company;  to merge with or  consolidate  into  another  corporation;  to tender,
transfer  or  otherwise  dispose of all or  substantially  all of its  property,
assets, shares of stock or other securities,  property or business;  any special
meeting of shareholders; or any other action by the corporation which requires a
vote of its Common  Stock  shareholders  other than for  regular  elections  for
members of the board of directors,  the holders of the Series D Preferred  Stock
shall  be  entitled  to  vote in  such  shareholder  election  with  the  common
shareholders.  In such shareholder  elections,  each share of Series D Preferred
Stock voted in the election  shall be equal to one hundred  fifty common  shares
for  purposes  of such  election  results.  If at any  time,  the  Corporation's
management  or its board of directors  shall pass a  resolution  or enter into a
contract  to  liquidate  or  dissolve  the  corporation;  to change the  capital
structure of the  corporation or other  corporate  reorganization;  to acquire a
subsidiary, business or assets in exchange for shares of the Company's equity or
debt  instruments  issued by the  Company;  to merge  with or  consolidate  into
another  corporation;  to tender,  transfer or otherwise dispose of in excess of
twenty  five  percent of its total  property,  assets,  shares of stock or other
securities,  property or business, the holders of a minimum of 50% of the Series
D  Preferred  Stock shall  within 30 days of direct  notice of the event made to
Series D Preferred Stockholders,  have the option to require that the resolution
made or action taken by the Corporation's management be placed for a vote of the
shareholders.  If in a regular  election of the  Corporation  for members of the
board of  directors  a  sufficient  number of common  shares are not  present in
person or by proxy for the election of the board of directors as required by the
bylaws  of the  Corporation  or the  applicable  laws of any  state in which the
Corporation is domiciled,  the holders of the Series D Preferred  Stock shall be
entitled to vote in such shareholder  election with the common  shareholders and
establish a legal  quorum.  In such director  elections,  each share of Series D
Preferred Stock voted in the election shall be equal to one hundred fifty common
shares for purposes of such required quorum and election results.  There were no
previous  shares of Series D Preferred  Stock issued or outstanding and there is
no public market for the Series D Preferred  Stock. The Series D Preferred Stock
is not convertible to Common Stock.

                                       23
<PAGE>
     As of the  date of this  Report,  the  Company  has not  entered  into  any
agreements,  the operation of which may at a subsequent  date result in a change
of control of the Company.

     The Company knows of no arrangement,  including the pledge by any person of
securities of the Company,  which may at a subsequent date result in a change of
control of the Company.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Transactions

     On  February  16,  1998,  the  Company  entered  into a three  year  letter
agreement (as modified) with James Krejci,  by which Mr. Krejci initially became
employed as Chief  Operations  Officer of the Company and  President  and CEO of
AWN.  Pursuant to that  agreement Mr. Krejci became  entitled to receive  Common
Stock  options  for ten percent  (10%) of the  outstanding  Common  Stock of the
Company. On March 23, 2001, the Company entered into a letter agreement with the
Company CEO, which remains to be  formalized,  by which James Krejci renewed his
employment  as CEO of the  Company  and  President  and CEO of AWN.  The  letter
agreement calls for a three year  employment  agreement with the opportunity for
Mr.  Krejci to obtain,  through  Common Stock option  agreements,  up to fifteen
percent (15%) of the  outstanding  Common Stock of the Company over a three year
period.  SEE "ITEM 10 - EXECUTIVE  COMPENSATION - (f)  Employment  Contracts and
Termination of Employment, and Change-in Control Arrangements."

     On December 28, 2000,  the  Company's  Board of Directors  voted to issue a
total of  6,000,000  shares of its $.001 par value  Series D Preferred  Stock to
James J.  Krejci,  the  Corporation's  President  at an issue price of $.001 per
share.  The shares were  issued in  consideration  of  services  provided to the
Company by Mr. Krejci.  No underwriter  was involved in the  transaction  and no
cash  commissions or discounts were paid by the Company.  The shares were issued
in a  private  transaction,  exempt  from  registration.  The  number  of shares
constituting  the Series D Preferred Stock is 6,000,000,  which may be issued in
such amounts as shall be determined by the Board of Directors in accordance with
the provisions of the Certificate of Designation. Series D Preferred Stock has a
par value of $.001 per share and an issue price of $$.001 per share.  Holders of
the Series D Preferred  Stock are entitled to  dividends  of twelve  percent per
annum on the  issue  price of the  certificate  from  the date of  issue,  which
dividends shall accrue until declared payable by the Board of Directors and paid
by the Company.  In the event of any  liquidation,  dissolution or winding-up of
the affairs of the Corporation, whether voluntary or involuntary, the holders of
the  Series D  Preferred  Stock  shall be  entitled,  before  any  assets of the
Corporation shall be distributed among or paid over to the holders of the Common
Stock, but only after  authorized  distribution or payment to the holders of the
Series A Convertible  Preferred  Stock in accordance  with the provisions of the
Series A Convertible Preferred Stock Designation,  to be paid $.001 per share of
Series D Preferred Stock plus any accrued but unpaid dividends hereon. Except as
otherwise  permitted by the  applicable  provisions  of the New Mexico  Business
Corporation  Act,  holders of the Series D Preferred Stock shall not be entitled
to vote in regular  elections  of the  Corporation  for  members of the board of
directors so long as a sufficient  number of common shares are present in person
or by proxy for the election of the board of directors as required by the bylaws
of the  Corporation or the applicable laws of any state in which the Corporation
is  domiciled.  If at any time,  the  Corporation  shall place or be required to
place for shareholder  vote a proposal to liquidate or dissolve the corporation;
to amend its articles of  incorporation;  to change the capital structure of the
corporation or other corporate reorganization; to acquire a subsidiary, business
or assets in exchange  for shares of the  Company's  equity or debt  instruments
issued by the Company; to merge with or consolidate into another corporation; to
tender,  transfer  or  otherwise  dispose  of  all or  substantially  all of its
property, assets, shares of stock or other securities, property or business; any
special meeting of  shareholders;  or any other action by the corporation  which
requires  a vote  of its  Common  Stock  shareholders  other  than  for  regular
elections  for  members of the board of  directors,  the holders of the Series D
Preferred Stock shall be entitled to vote in such shareholder  election with the
common  shareholders.  In such  shareholder  elections,  each  share of Series D
Preferred Stock voted in the election shall be equal to one hundred fifty common
shares for purposes of such election results.  If at any time, the Corporation's
management  or its board of directors  shall pass a  resolution  or enter into a
contract  to  liquidate  or  dissolve  the  corporation;  to change the  capital
structure of the  corporation or other  corporate  reorganization;  to acquire a
subsidiary, business or assets in exchange for shares of the Company's equity or
debt  instruments  issued by the  Company;  to merge  with or  consolidate  into
another  corporation;  to tender,  transfer or otherwise dispose of in excess of
twenty  five  percent of its total  property,  assets,  shares of stock or other
securities,  property or business, the holders of a minimum of 50% of the Series
D  Preferred  Stock shall  within 30 days of direct  notice of the event made to
Series D Preferred Stockholders,  have the option to require that the resolution
made or action taken by the Corporation's management be placed for a vote of the
shareholders.  If in a regular  election of the  Corporation  for members of the
board of  directors  a  sufficient  number of common  shares are not  present in
person or by proxy for the election of the board of directors as required by the
bylaws  of the  Corporation  or the  applicable  laws of any  state in which the
Corporation is domiciled,  the holders of the Series

                                       24
<PAGE>
D Preferred  Stock shall be entitled to vote in such  shareholder  election with
the  common  shareholders  and  establish  a  legal  quorum.  In  such  director
elections, each share of Series D Preferred Stock voted in the election shall be
equal to one hundred fifty common  shares for purposes of such  required  quorum
and election results.  There were no previous shares of Series D Preferred Stock
issued or  outstanding  and there is no public market for the Series D Preferred
Stock.

     Effective January 1, 2001, the Company entered into a letter agreement with
Marc Maassen, by which Marc Maassen became employed as President of the Company.
The  letter  agreement  called  for a one  year  employment  agreement  with the
opportunity for Mr. Maassen to obtain,  through Common Stock option  agreements,
up to eight percent (8%) of the  outstanding  Common Stock of the Company over a
one year period.  The letter  agreement  calls for Mr.  Maassen to receive stock
options  vesting  in  quarterly  increments  of 2% to equal a total of 8% of the
Company's outstanding common shares over a one year period. Mr. Maassen resigned
as President  of the Company  effective  May 31, 2001.  SEE "ITEM 10 - EXECUTIVE
COMPENSATION - (f)  Employment  Contracts and  Termination  of  Employment,  and
Change-in Control Arrangements."

     Effective January 1, 1999, the Company entered into a letter agreement with
Gordon  Dihle,  which  remains to be  formalized,  by which  Gordon Dihle became
employed as Chief Financial  Officer of the Company.  The letter agreement calls
for a three year  employment  agreement  with the  opportunity  for Mr. Dihle to
obtain, through Common Stock option agreements, up to seven and one half percent
(7.5%) of the outstanding  Common Stock of the Company over a three year period.
SEE "ITEM 10 - EXECUTIVE COMPENSATION - (f) Employment Contracts and Termination
of Employment, and Change-in Control Arrangements."

     Except for the foregoing and during the fiscal year ended June 30, 2001, no
officer, Director or relative or spouse of the foregoing persons or any relative
of such person who has the same home as such  person,  or is a director or other
officer of any parent or subsidiary of the Company or any  shareholder  known by
the Company to own of record or beneficially  more than five (5%) percent of the
Company's  Common  Stock,  had a direct or  indirect  material  interest  in any
transaction or presently proposed transaction to which the Company or any of its
parents or subsidiaries was or is a party.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits.  The  following  documents are filed herewith or incorporated
         herein by reference as Exhibits:

2.0      Acquisition of assets of Keystone Holding Corp. dated May 10,1995 (1)

2.1      Conversion  of  $1,500,000  debt  to  Common Stock issued to non U.S.A.
         residents Incorporated by reference to Form 8-K dated July 14, 1997 and
         April 7, 1998.

3.1      Articles of Incorporation of the Company. (incorporated by reference to
         Exhibit 3.1  to  the  Company's  Form S-1  Registration  Statement  No.
         82-88530 dated December 20, 1983).  Amendment Incorporated by Reference
         to Form 8-K dated May 12, 1997.

3.2      By-laws.  White  Acquisition  Group  Incorporated  Bylaws  (former name
         of the Company).  Incorporated  by reference to Form 10KSB for June 30,
         1999.  Original bylaws incorporated  by reference to Exhibit 3.2 to the
         Company's  Form S-1  Registration Statement No. 82-88530 dated December
         20, 1983.

3.3      Increase  in   Authorized   Shares;   Shareholders   Authorization  for
         Recapitalization  and   Convertible   Debt  Funding.   Incorporated  by
         Reference  to  Form  8-K dated May 12, 1997 and Form 8-K dated December
         29, 1997.

3.3      Increase in Authorized Shares:   Shareholder Authorization for Increase
         in Authorized Shares. Incorporated by reference to Form 8K dated August
         30, 2000.

4.0      Certificate of Designation of Series A Preferred Shares. (1)

4.1      Certificate of Designation of Series B Preferred Shares. (1)

4.2      Certificate of Designation of Series C Preferred Shares. (1)

                                       25
<PAGE>
4.3      Certificate of Designation of Series D Preferred  Shares.  Incorporated
         by reference to Exhibit filed with Form 8K filed 1/31/2001.

10.01    Form of Employment Agreement between the Company and its officers. (1)

10.02    Letter Agreement between  the  Company and James Krejci dated March 23,
         2001.

10.03    Minutes of Board of Directors  Meeting dated January 15, 1999  relating
         to  modification of Krejci Letter Agreement. (2)

10.04    Letter Agreement between the Company  and Gordon Dihle dated January 4,
         1999. (2)

10.05    Acquisition  of  operating  assets from Centennial Communications Corp.
         Incorporated by reference  to  Form 8-Ks  dated  December 29, 1997 and
         September 3, 1998 and exhibits filed with Form 8-K/A  dated February 6,
         1999.

10.06    Purchase Agreement - LED Screen Disposition.  Incorporated by reference
         to  Form  8-K  dated  January 14, 1999.  Incorporated  by  reference to
         exhibits filed with Form 8-K dated January 14, 1999.

10.07    Asset  Acquisition  Agreement - License  Disposition.  Incorporated  by
         reference to exhibits filed with Form 8-K dated April 29, 1999.

10.08    Amendment Number 1 to Asset Acquisition Agreement

10.09    Issuance of shares to persons and  entities not residents of the U.S.A.
         pursuant to Regulation S.  Incorporated by reference to Forms 8-K dated
         April 7, 1998, September 3, 1998 and August 30, 2000.

16.1     Letters on change in certifying accountant.  (incorporated by reference
         to the Company's Form 8-K dated September 29, 1999  and Form 8K/A dated
         October 18, 1999.

16.2     Change in Certifying Accountants. Incorporated by reference to Form 8-K
         dated July 18, 1997.

21       Subsidiaries of the registrant.

21.1     American Wireless Network, Inc., a Colorado Corporation.
---------------------------------

(1)  Incorporated  by reference to exhibits  filed with the Company's Form 10KSB
for June 30, 1995.

(2)  Incorporated  by reference to exhibits  filed with the Company's Form 10KSB
for June 30, 1998.

(b) The Company  filed three  reports on Form 8-K and one Form 8-K/A  during the
year ended June 30,  2001,  no reports on Form 8-K were filed during the quarter
ended June 30, 2001, or from June 30, 2001 to the date of this report.


                                       26
<PAGE>
                                   SIGNATURES


     Pursuant to the  requirements of the Sections 13 or 15(d) of the Securities
Exchange  Act of 1934, the Company has duly caused this amended report signed on
its behalf by the Undersigned, thereunto duly authorized.


                                    COMTEC INTERNATIONAL, INC.


Date:   November 8, 2001             By       s/s James J. Krejci
              Chief Executive Officer, -----------------------------------------
                                       James J. Krejci, President and CEO


                                     By:      s/s Gordon D. Dihle
               Chief Financial Officer, ----------------------------------------
                                        Gordon D. Dihle, Secretary and Treasurer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by each Director.



Date:   November 8, 2001            By:      s/s James J. Krejci
                                       -----------------------------------
                                       James J. Krejci, Chairman


                                    By:      s/s Gordon D. Dihle
                                       -----------------------------------
                                       Gordon D. Dihle, Director

                                    By:      s/s Marc Maassen
                                       -----------------------------------
                                       Marc Maassen, Director



                                       27
<PAGE>
Exhibit 10.2
                           ComTec International, Inc.
                             12835 E. Arapahoe Road
                                Tower 1 Suite 800
                               Englewood, CO 80112
                          303-662-8069 FAX 303-662-8485


March 13, 2001

James J. Krejci
12835 E. Arapahoe Road
Tower 1 Suite 800
Englewood, CO 80112

Dear Jim:

On behalf of the shareholders and board of directors I want to thank you for the
time and efforts  you've put forth on behalf of ComTec  International,  Inc. and
American Wireless Network, Inc. in the past three years. This letter confirms in
principal the basic terms of our agreement for your  continued  employment  with
ComTec  International,  Inc.,  and  American  Wireless  Network,  Inc.  as Chief
Executive Officer and Chairman of the Board of Directors.

We are pleased to offer you a contractual  salaried  position as Chief Executive
Officer and Chairman of the Board of Directors of ComTec International, Inc. and
American  Wireless  Network,   Inc.  as  well  as  possible  current  or  future
subsidiaries.  The official  start date will be February  15, 2001.  This letter
will also confirm  that you are now vested in perpetual  options to purchase 10%
of ComTec International,  Inc. (at the time the options are exercised) which you
earned based upon your prior three years of service.

This letter will  establish a minimum of a  three-year  employment  contract and
incentive  stock  options  which will give you the  opportunity  to control  and
purchase an additional 15% of ComTec International, Inc. within the term of this
contract.  The option  price will be 80% of the  closing  bid price of ComTec on
February 15, 2001.  These options,  like the options you earned in your previous
three year contract entitling you to purchase 10% of ComTec International, Inc.,
are  perpetual  once  vested  and  will  entitle  you  to  purchase  15%  of the
outstanding  shares of ComTec  International,  Inc.  at the time the options are
exercised.

Some additional fine points of the contract might take some time to complete but
you agree to start immediately based upon this binding letter agreement.

The following basic salary, option earn-in and other pertinent items are agreed:

Starting Salary:       $14,167 per month plus health insurance benefits.

Increase               Salary:  Semiannual  reviews  (every 6  and  12  months),
                       predicated upon  meeting milestone goals, financing, cash
                       flow, Company achievements and your personal performance.

Cash or Stock Bonus:

Following signing hereof, a stock bonus to be S-8 registered,  and thereafter, a
year-end cash or stock bonus will be considered in the first month following the
prior  year's  close of business.  The amount will be  determined  based on both
Company and personal performance.

Business Expenses:

All  business  related  expenses,  including  travel and  applicable  continuing
education,  will be arranged for and paid  directly by the Company or reimbursed
by the Company on a timely basis.

                                       28
<PAGE>
Stock Options Vesting - upon completion of each successive one year period:

      Year One - Option Vesting 33.33% of total option - (5% of ComTec
      outstanding Common Stock)
      Year Two - Option Vesting 33.33% of total option - (5% of ComTec
      outstanding Common Stock)
      Year Three - Option Vesting 33.33% of total option - (5% of ComTec
      outstanding Common Stock)

We agree and  understand  that ComTec is currently in an uncertain  and volatile
position  and its  future is  unpredictable.  The  promise of  potential  future
benefit in the form of the stock options  described  above is provided as reward
for past loyalty,  as an incentive to  participate  in the growth of the Company
and to provide potential rewards for foregoing other  opportunities and assuming
the risk and  responsibility  of long term  employment  as a member of  ComTec's
executive  management  team. Since changes in control and/or direction of ComTec
are a  possibility,  and the  future  is  certainly  changeable,  the  following
paragraphs are made a part of this binding letter  agreement and shall be made a
part of any more formal contract to be completed with respect to your employment
as Chief Executive Officer and Chairman of the Board of Directors ("Executive").

     Termination by Company  without Cause.  The Company may at any time, in its
sole discretion, terminate the employment of Executive hereunder, without cause,
by written  notice to  Executive.  In the event of  termination  of  Executive's
employment by the Company under this Section  without Cause (as defined  below),
Executive shall be entitled:

     a.   to receive  immediate  vesting of all stock options to which Executive
          would have been entitled had his employment continued through the full
          term of his employment contract;

     b.   reimbursement of any expenses otherwise reimbursable hereunder;

     c.   all salary  earned  through  the date of such  termination  and for an
          additional  thirty six months after notice of termination,  payable in
          one lump sum at the date of termination.

     d.   such  other and  additional  benefits  provided  under the  employment
          contract as may by its terms then be applicable.

Termination  "without  cause" for purposes of this agreement  shall mean (1) any
reason which is not  specifically  defined as  "Termination  Due to  Executive's
Death or Disability" or  "Termination  With Cause" in the sections below; or (2)
the  substantial  diminution of authority,  duties  and/or  responsibilities  of
Executive due to a change of control, management or direction of the Company.

Termination by Company Due to Executive's  Death or Disability.  In the event of
Executive's  death or if Executive is unable to perform his duties  hereunder by
reason of  illness or other  physical  or mental  infirmity  for a period of one
hundred eighty (180)  consecutive  days,  the Company may terminate  Executive's
employment  hereunder.  In the  event  of such  termination,  Executive  (or his
Estate) shall be entitled:

     a.   to  receive,  at times  otherwise  payable  and  subject  to the other
          provisions  of this  Agreement,  all of the stock options then accrued
          and  vested  in  Executive  together  with such  other and  additional
          benefits  provided under the  employment  contract as may by its terms
          then be applicable.

     b.   all  salary  earned   through  the  date  of  such   termination   and
          reimbursement of any expenses otherwise reimbursable hereunder;

Termination  by Executive.  In the event  Executive  terminates  his  employment
hereunder  other than by reason of a material  breach of the  provisions of this
Agreement  by the  Company,  the  Company  shall  pay any  salary  and  expenses
otherwise reimbursable accrued through the date of such termination, and, except
as  otherwise  expressly  provided  this  employment  contract in the event that
Executive  then has qualified by age and service for  retirement  benefits under
this  employment  contract,  the  Company  shall  have no  other  obligation  to
Executive hereunder, or otherwise with respect to his employment by the Company.

Termination  by Company for Cause.  The Company  may at any time  terminate  the
employment of Executive  hereunder for "Cause," as defined below,  in accordance
with the following  procedure.  First, the Company shall give Executive  written
notice to the effect  that the Board of the  Company  intends to  consider  such
termination,  stating  the time and place of the

                                       29
<PAGE>
meeting of the Board for such purpose.  Second,  Executive shall be afforded the
opportunity   to  address  the  Board  at  such  meeting  with  respect  to  the
appropriateness  of such termination.  Third, if the Board determines that Cause
exists,  by means of such  procedures  and based on such evidence as it may deem
sufficient   in  the   circumstances,   it  shall   notify   Executive  of  such
determination,  whereupon Executive's employment hereunder shall terminate.  The
Board's good faith  determination  of the existence of Cause shall be final.  As
used in the Agreement,  "Cause" means (i) the failure or refusal of Executive to
substantially  perform  his  duties  hereunder  (other  than  any  such  failure
resulting from Executive's incapacity due to physical or mental illness),  after
written notice from the Company  stating the duties  Executive is believed to be
failing or  refusing to perform  and  stating a  reasonable  period to cure such
failure or refusal and the manner in which such cure may be effected; or (ii) an
act or acts of dishonesty by Executive  involving the Company;  or (iii) conduct
of  Executive  which is  materially  injurious  to the  Company,  monetarily  or
otherwise,  and the  injurious  effect of which  conduct was known or reasonably
should have been known to  Executive;  or (iv)  material  breach by Executive of
this  Agreement;  or (v)  commission  by  Executive  of a  felony.  In the event
Executive's employment hereunder is terminated by the Company for Cause pursuant
to this Section,  the Company shall pay to Executive any salary accrued  through
the date of such  termination.  The Company shall remain obligated to provide or
pay such other and additional benefits provided under the employment contract as
may by its terms then be vested and applicable.

Non-Competition Covenant. Executive shall not, during the term of his employment
by the Company and for the one-year period immediately  following the end of his
employment by the Company, (a) unless Executive's  employment by the Company was
terminated by the Company  without Cause,  as defined above,  act as an officer,
director, employee, partner, or agent of, or invest in or lend money to, or own,
directly or  indirectly,  any interest in, or participate in the control of, any
corporation, partnership, joint venture or other business organization which has
a  business  located in the same  county as the  Company  and which is  directly
competing  with the  Company  or offer to any  person  employed  by the  Company
employment with any business  entity with which Executive may become  associated
in any capacity other than the Company.

Executive is currently associated with Jones  International,  Inc. as a director
and may have  future  association  with  other  entities  affiliated  with Jones
International,  Inc. This Non-Competition Covenant will not restrain Executive's
ability  to  continue  those  activities  during the term of his  employment  or
following  termination  of  employment.  The Company  waives any  conflict  with
respect to activities of Executive in association with Jones International, Inc.

Confidential Information.  Executive shall not, except in the performance of his
duties  hereunder and for the benefit of the Company,  disclose or reveal to any
unauthorized person any confidential  information of the Company relating to the
Company, to its subsidiaries or affiliates, or to any of the businesses operated
by them,  or any business  invested in or funded by the Company,  and  Executive
confirms  that  such  information  constitutes  the  exclusive  property  of the
Company.

Assuredly,  some of the final details of the formal  contract will take time for
us to work out together.  We are pleased to make this offer to you and expect to
be able to benefit from your input,  advice and  experience  in  completing  the
various open matters as well as your  leadership in directing the future growth,
course and prospects of ComTec.

Thank you,

s/s Gordon Dihle
Chief Financial Officer
ComTec International, Inc. and American Wireless Network, Inc.

      s/s James J. Krejci
--------------------------------------------------
Agreed and accepted  -  James J. Krejci (Executive)

Date       3/13/01




                                       30
<PAGE>


                                Grabau & Company
                          Certified Public Accountants
                           A Professional Corporation
                303 East 17th Ave., Suite 700, Denver, CO 80203
                                 (303) 861-0434
                               FAX (303) 863-1296


                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Comtec International Inc and Subsidiaries
Englewood, CO

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Comtec
International,  Inc. and Subsidiaries (a company in the development stage) as of
June 30, 2001 and 2000 and the related  consolidated  statements of  operations,
shareholders' equity  (deficiency)  and cash flows for the years then ended and
the amounts for the years ended June 30, 2001 and 2000, including the cumulative
period from  inception  (March 15,  1994) to June 30, 2001.  These  consolidated
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 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  consolidated  financial  statements are
free of material  misstatements.  An audit includes examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  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 consolidated financial position of Comtec
International,  Inc.  and for the year then ended and the  amounts  for the year
ended June 30, 2001 and 2000 included in the  cumulative  period from  inception
(March  15,  1994)


<PAGE>


to June 30, 2001 in conformity with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 2 of notes to
consolidated  financial  statements,  the Company experienced net losses for the
year  ended June 30,  2001 of  $773,400  and has  experienced  net  losses  from
inception of  $16,249,000.  Sources of cash flows have been through the sales of
its common shares  ($1,302,600) and from borrowings  under financing  activities
($5,794,200).  The  borrowings  under  financing  activities  may  cause  severe
liquidity problems.  No assurances can be given to the continuation of the sales
of  securities or continued  ability to obtain short or long term  borrowings to
maintain the Company's present cash flow requirements.  The Company's  recurring
losses from operations and limited capital  resources  raise  substantial  doubt
about the Company's ability to continue as a going concern.  Management's  plans
with  regard  to  these  matters  are  also  described  in  Note 2 of  notes  to
consolidated financial statements. To date the Company has been dependent on its
major  shareholder  group for debt and equity  financing.  There is no assurance
that  this  shareholder  group  will  continue  as a source  of new  funds.  The
Company's  ability to achieve the  elements of its business  plan,  which may be
necessary to permit the realization of assets and satisfaction of liabilities in
the ordinary  course of  business,  is  uncertain.  All these  conditions  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 these uncertainties.

s/Grabau & Company

Denver, Colorado
October 10, 2001



<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
              CONSOLIDATED BALANCE SHEETS - JUNE 30, 2001 AND 2000


                                     ASSETS

                                                       2001         2000
                                                   -----------   -----------
Current Assets


   Cash and equivalents                            $     4,200   $     5,100
Accounts receivable, less allowance for doubtful
   accounts                                                  -             -
Other receivables                                      333,700             -
Current portion of lease receivable                    178,000             -
Other current assets                                     5,000             -
                                                   -----------   -----------
        Total current assets                           520,900         5,100


Property and equipment                                  28,100     1,034,100

License rights                                               -     1,390,700

Direct financing lease receivable                      385,000             -

Other assets                                                 -         4,500
                                                   --=-------    -----------
                                                   $   934,000   $ 2,434,400
                                                   ===========   ===========

               LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)


Current liabilities
    Current portion of long-term debt              $    33,900   $    13,900
    Accounts payable                                    26,600        43,600
    Accrued liabilities                                745,700       327,300
    Shareholder and officer notes Payable               10,000             -
    Convertible debenture                                    -             -
                                                   -----------   -----------
        Total current liabilities                      816,200       384,800
                                                   -----------   -----------
Long-term debt, less current portion                    81,300     1,409,400
                                                   -----------   -----------
Shareholders' Equity (deficiency):
    Series A convertible preferred stock,
      $1, stated par and liquidation value;
      1,000,000 shares authorized;
      no shares issued and outstanding                       -             -
    Series B convertible preferred stock,
      $5 stated par and liquidation value;
      1,500,000 shares authorized;
      no shares issued and outstanding                       -             -
    Series C convertible preferred stock,
      $10 stated par and liquidation value,
      1,000,000 shares authorized;
      no shares issued and outstanding                       -             -
    Series D cumulative preferred stock,
      $.001 stated par and $.15 liquidation
      value, 6,000,000 shares authorized;
      6,000,000 shares issued and outstanding            6,000             -
    Common stock, $.001 par value,
      authorized 200,000,000 shares;
      issued and outstanding 70,832,900
      and 68,078,791 shares in 2001 and
      2000                                              70,800        68,100
Capital in excess of par                            16,208,700    16,047,700
Accumulated other comprehensive loss                         -             -
Deficit accumulated during the
    development stage                              (16,249,000)  (15,475,600)
                                                   -----------   -----------
                                                        36,500       640,200
                                                   -----------   -----------
                                                   $   934,000   $ 2,434,400
                                                   ===========   ===========


        Read the accompanying summary of significant accounting policies and
 notes to consolidated financial statements, both of which are an integral part
                    of this consolidated financial statement



<PAGE>

<TABLE>

                  COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
           YEARS ENDED JUNE 30, 2001 AND 2000 AND CUMULATIVE AMOUNTS
             FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2001


<CAPTION>
                                                        Years Ended
                                                          June 30,            Cumulative
                                                  -----------------------    Amounts from
                                                      2001        2000     Inception to date
                                                  ----------  -----------  -----------------
<S>                                               <C>         <C>          <C>
Operating Expenses:
   Selling, general and administrative            $  672,200  $   139,900  $       4,153,600
   Compensation in form of common stock              157,500       33,500          3,846,000
   Management fees, related party                          -            -             65,000
                                                  ----------  -----------  -----------------
                                                     829,700      173,400          8,064,600
                                                  ----------  -----------  -----------------
Loss before other income (expenses)                  829,700      173,400          8,064,600
                                                  ----------  -----------  -----------------
Other income (expenses):
   Interest and dividends                                  -            -            156,300
   Other                                                   -            -            180,200
   Interest Expense                                  (12,600)    (256,000)        (1,427,700)
   Telephone services, less revenues                       -     (479,800)        (1,789,500)
   Gain (Loss) on investments, foreclosures and
      disposal of assets                              68,900            -           (782,400)
   Write-down of loan origination fees                     -            -           (532,700)
   Write-down of LED equipment and
      intangibles                                          -   (1,314,300)        (3,988,600)
                                                  ----------  -----------  -----------------
                                                      56,300   (2,050,100)        (8,184,400)
                                                  ----------  -----------  -----------------
Net Loss                                          $ (773,400) $(2,223,500) $     (16,249,000)
                                                  ==========  ===========  =================
Basic Weighted average common shares
   outstanding                                    68,954,347   47,094,211         28,550,005
                                                  ==========  ===========  =================

Basic Loss per common share                       $     (.01) $      (.05) $            (.57)
                                                  ==========  ===========  =================



</TABLE>









        Read the accompanying summary of significant accounting policies and
 notes to consolidated financial statements, both of which are an integral
                  part of this consolidated financial statement

<PAGE>


<TABLE>


                  COMTEC INTERNATIONAL, INC., AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED JUNE 30, 2000 AND 1999, AND FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2000

<CAPTION>


                         Preferred Stock Preferred Stock
                        -Series A -Series D Common Stock
                           Total      Shares     Amount     Shares   Amount   Shares     Amount
                        -----------  --------  ---------  ---------  ------  ----------  -------
<S>                     <C>          <C>       <C>        <C>        <C>     <C>         <C>
Balance, beginning                -         -          -          -       -           -        -

Add (deduct):
 Proceeds from sale
  of common stock       $   629,700                                             535,737  $   500

 Issuance of stock for:
  Liquidation of debt   $   130,000                                             246,019  $   300
  Consulting services   $ 1,124,400                                             923,164  $   900
  Acquisitions          $   922,200   420,000  $ 420,000                      3,315,969  $ 3,300
  Officer's
   compensation         $ 1,218,200                                           1,600,300  $ 1,600
  Exercised warrants    $    30,000                                               6,000        -
  Intangibles                     -                                           1,040,000  $ 1,100
Reverse acquisition     $  (230,900)                                            592,662  $   600
Contribution of
  accrued officers'
  compensation          $   241,100
Net Loss:
 From inception
  (March 15,1994) to
  June 30, 1995         $(1,148,300)
 Year ended
  June 30, 1996         $(2,411,400)

Balance,
  June 30, 1996         $   505,000   420,000  $ 420,000          0  $    0   8,259,851  $ 8,300

Year ended June 30, 1997:
Add(deduct):
 Proceeds from sale
  of common stock       $   509,200                                             743,962  $   700
 Issuance of stock for:
  Liquidation of debt   $ 1,500,000                                           3,125,000  $ 3,100
  License rights        $ 1,444,500                                           1,361,786  $ 1,400
  Consulting Services   $   951,200                                           1,590,305  $ 1,600
  Conversion of
   preferred shares     $   172,700                                              69,088  $   100
  Acquisitions          $    85,000                                              63,333  $   100
  Officers'
   compensation         $    59,700                                             324,123  $   300
  Interest              $    46,600                                              97,089  $   100
 Cancellation of
  shares due to:
  Foreclosure           $  (786,200) (420,000) $(420,000)                       (98,000) $  (100)
 License rights         $(1,444,500)                                         (1,361,786) $(1,400)
 Cancelled acquisition                                                         (980,000) $(1,000)
 Write-down of
  intangible            $ 1,300,000
 Unrealized losses
  on marketable
  securities            $    (3,600)

 Net Loss year ended
  June 30, 1997         $(5,115,300)

        READ THE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, BOTH OF WHICH ARE AN INTEGRAL
                  PART OF THE CONSOLIDATED FINANCIAL STATEMENTS



<PAGE>

<CAPTION>
                                      Accumulated   Deficit
                                         other    Accumulated
                           Capital      compre-     During the
                         in excess      hensive    Development   Prepaid      Escrowed
                           of par         loss        Stage        Media       Shares
                         -----------  -----------  -----------  -----------  -----------
<S>                      <C>          <C>          <C>          <C>          <C>
Balance, beginning                 -            -            -            -            -

Add (deduct):
 Proceeds from sale
  of common stock        $   629,200

 Issuance of stock for
  Liquidation of debt    $   129,700
  Consulting services    $ 1,123,500
  Acquisitions           $ 1,744,300               $   (20,400)              $(1,225,000)
  Officer's
   compensation          $ 1,216,600
  Exercised warrants     $    30,000
  Intangibles            $ 1,298,900                            $(1,300,000)
Reverse acquistion       $  (231,500)
Contribution of
  accrued officers'
  compensation           $   241,100
Net Loss:
 From inception
  (March 15,1994) to
  June 30, 1995                                    $(1,148,300)
 Year ended
  June 30, 1996                                    $(2,411,400)

Balance,
  June 30, 1996          $ 6,181,800  $         0  $(3,580,100) $(1,300,000) $(1,225,000)

Year ended June 30, 1997:
Add(deduct):
 Proceeds from sale
  of common stock        $   508,500
 Issuance of stock for
  Liquidation of debt    $ 1,496,900
  License rights         $ 1,443,100
  Consulting Services    $   949,600
  Conversion of
   preferred shares      $   172,600
  Acquisitions           $    84,900
  Officers'
   compensation          $    59,400
  Interest               $    46,500
 Cancellation of
  shares due to:
  Foreclosure            $  (366,100)
 License rights          $(1,443,100)
 Cancelled acquisition,  $(1,224,000)                                        $ 1,225,000
 Write-down of
  intangible                                                    $ 1,300,000
 Unrealized losses
  on marketable
  securities                          $    (3,600)

 Net Loss year ended
  June 30, 1997                                    $(5,115,300)

</TABLE>

        READ THE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, BOTH OF WHICH ARE AN INTEGRAL
                  PART OF THE CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>

<TABLE>
                  COMTEC INTERNATIONAL, INC., AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY), continued
 YEARS ENDED JUNE 30, 2000 AND 1999, AND FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2000

<CAPTION>
                                        Preferred Stock       Preferred Stock
                                           -Series A            - Series D        Common Stock
                             Total      Shares    Amount      Shares   Amount    Shares   Amount
                          -----------  --------  ---------  ---------  ------  ----------  -------
<S>                      <C>          <C>        <C>        <C>         <C>    <C>         <C>
Balance June 30, 1997    $  (775,700)         0  $       0          0  $    0  13,194,751  $13,200

Year ended June 30, 1998:
Add(deduct):
 Issuance of stock for:
  Liquidation of debt    $ 2,600,000                                           18,083,332  $18,100
  LED equipment          $ 2,400,000                                            5,000,000  $ 5,000
  Consulting services    $   193,000                                            1,732,283  $ 1,700
  Officers'
   compensation          $    50,000                                              148,369  $   200
  Loan origination
   and finders' fees     $   200,000                                            1,538,461  $ 1,500

Current period change
 in realized losses on
 marketable securities   $     3,600

 Net loss year ended
  June 30, 1998          $(3,029,900)


Balance,
 June 30, 1998           $ 1,641,000          0  $       0          0  $    0  39,697,196  $39,700


 Net loss year ended
  June 30, 1999          $(1,526,800)

Balance,
 June 30, 1999           $   114,200          0  $       0          0  $    0  39,697,196  $39,700


Issuance of stock for:
 Loan origination and
  finders' fees          $     6,200                                            6,153,844  $ 6,200
 Consulting services     $    10,000                                              227,272  $   200
 Compensation            $     3,500                                              554,979  $   600
 Liquidation of debt     $ 2,729,800                                           21,445,500  $21,400

 Net loss year ended
  June 30, 2000          $(2,223,500)

Balance,
 June 30, 2000           $   640,200          0  $       0          0  $    0  68,078,791  $68,100

Issuance of stock for:
 Compensation            $    50,000                                            1,111,111  $ 1,100
 Consulting services     $    12,200                                              193,000  $   200
 Legal settlement        $   107,500                        6,000,000  $6,000   1,450,000  $ 1,400

 Net loss year ended
  June 30, 2001          $  (773,400)

Balance,
 June 30, 2001           $    36,500          0  $       0  6,000,000  $6,000  70,832,902  $70,800




        READ THE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, BOTH OF WHICH ARE AN INTEGRAL
                  PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>


<CAPTION>
                                     Accumulated    Deficit
                                        other     Accumulated
                          Capital      compre-     During the
                        in excess      hensive    Development   Prepaid      Escrowed
                           of par        loss        Stage        Media       Shares
                        -----------  -----------  -----------  -----------  -----------
<S>                     <C>          <C>          <C>          <C>          <C>
Balance June 30, 1997   $ 7,910,100  $    (3,600) $(8,695,400) $         0  $         0

Year ended June 30, 1998:
Add(deduct):
 Issuance of stock for
  Liquidation of debt   $ 2,581,900
  LED equipment         $ 2,395,000
  Consulting services   $   191,300
  Officers'
   compensation         $    49,800
  Loan origination
   and finders' fees    $   198,500

Current period change
 in realized losses on
 marketable securities               $     3,600

 Net loss year ended
  June 30, 1998                                   $(3,029,900)


Balance,
 June 30, 1998          $13,326,600  $         0  (11,725,300) $         0  $         0


 Net loss year ended
  June 30, 1999                                   $(1,526,800)

Balance,
 June 30, 1999          $13,326,600  $         0  (13,252,100) $         0  $         0


Issuance of stock for:
 Loan origination and
  finders' fees         $         0
 Consulting services    $     9,800
 Compensation           $     2,900
 Liquidation of debt    $ 2,708,400

 Net loss year ended
  June 30, 2000                                   $(2,223,500)

Balance,
 June 30, 2000          $16,047,700  $        0   (15,475,600) $         0  $         0

Issuance of stock for:
 Compensation           $    48,900
 Consulting services    $    12,000
 Legal settlement       $   100,100

 Net loss year ended
  June 30, 2001                                   $  (773,400)

Balance,
 June 30, 2001          $16,208,700  $         0  (16,249,000) $         0  $         0

</TABLE>



        READ THE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, BOTH OF WHICH ARE AN INTEGRAL
                  PART OF THE CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>


<TABLE>
                  COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
           YEARS ENDED JUNE 30, 2001 AND 2000 AND CUMULATIVE AMOUNTS
             FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2001


<CAPTION>
                                                      Years Ended
                                                        June 30,            Cumulative
                                                 ----------------------    Amounts from
                                                    2001        2000     Inception to date
                                                 ---------  -----------  -----------------
<S>                                              <C>        <C>          <C>
Cash flows from operating activities:
Net loss                                         $(773,400) $(2,223,500) $     (16,249,000)
                                                 ---------  -----------  -----------------
Adjustments to reconcile net loss to net cash
  used in operating activities
    Depreciation and amortization                   13,400      215,000            706,400
    Issuance of common stock for service
      and interest                                       -            -          3,324,600
    Gain on the sale of marketable securities            -            -            (10,000)
    Write-down on LED equipment and
      intangibles                                        -    1,314,300          3,988,600
    Losses (Gains) on investments, foreclosures
      and disposal of assets                       (61,900)           -            615,300
    Changes in assets and liabilities:
      Accounts receivable                                -       63,100            (25,300)
      Deposits and other                                 -            -             (2,500)
      Other current assets                          (5,000)           -              6,100
      Accounts payable and accrued liabilities     401,400      520,400          2,564,300
      Other assets                                   4,500       56,000            125,200
                                                 ---------  -----------  -----------------
                                                   352,400    2,168,800         11,292,700
                                                 ---------  -----------  -----------------
      Cash used in operating activities           (421,000)     (54,700)        (4,956,300)

Cash flows from investing activities:
  Proceeds of sale of marketable securities              -            -            267,500
  Proceeds from acquisition                              -            -             22,100
  Proceeds from direct financing lease             160,100            -            160,100
  Payments for:
    License rights                                       -            -           (424,300)
    Marketable securities                                -            -           (255,600)
    Non-operating assets                                 -            -            (25,000)
    Related party                                        -            -            (39,000)
    Property, plant, equipment and trade name       (2,300)           -         (1,702,100)
    Other assets                                         -            -            (60,500)
    Other                                                -            -            (79,500)
                                                 ---------  -----------  -----------------
    Cash used in investing activities              157,800            -         (2,136,300)
                                                 ---------  -----------  -----------------
Cash flows from financing activities:
  Proceeds from:
    Related party                                        -            -          1,184,500
    Sales of preferred stock                         6,000            -              6,000
    Sales of common stock                          163,700            -          1,302,600
    Notes payable, principally related parties     110,000            -          1,405,100
    Warrants                                             -            -             30,000
    Convertible debentures                               -            -          4,100,000
    Payments on:
      Notes payable, principally related parties         -            -           (882,000)
      Long-term debt                               (17,400)     (10,700)           (49,400)
                                                 ---------  -----------  -----------------
      Cash provided by financing activities        262,300      (10,700)         7,096,800
                                                 ---------  -----------  -----------------
Increase (decrease) in cash and equivalents           (900)     (65,400)             4,200

Cash and equivalents, beginning                      5,100       70,500                  -
                                                 ---------  -----------  -----------------
Cash and equivalents, ending                     $   4,200  $     5,100  $           4,200
                                                 =========  ===========  =================

</TABLE>

        Read the accompanying summary of significant accounting policies and
 notes to consolidated financial statements, both of which are an integral
                 part of this consolidated financial statement

<PAGE>

<TABLE>

                  COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
           YEARS ENDED JUNE 30, 2001 AND 2000 AND CUMULATIVE AMOUNTS
             FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2001


<CAPTION>
                                                     Years Ended
                                                        June 30,            Cumulative
                                                 ----------------------    Amounts from
                                                    2001       2000      Inception to date
                                                 ---------  -----------  -----------------
<S>                                              <C>        <C>          <C>
Supplemental disclosure of cash flow information:

     Cash paid for interest                      $  12,600  $     2,500  $         320,000
                                                 =========  ===========  =================

Supplemental schedule of non-cash financing activities:
     Foreclosures:
       Net book value of real property           $       -            -  $      (1,867,100)
       Mortgages, notes, and other debt                  -            -          1,081,300
       Preferred and common stock                        -            -            786,200
       Gain of foreclosure                               -            -               (400)
                                                 ---------  -----------  -----------------
                                                 $       -  $         -  $               -
                                                 =========  ===========  =================

     Common stock issued for:
       Conversion of convertible debentures      $       -  $ 2,144,550  $       6,244,550
       Acquisition of LED equipment                      -            -          2,400,000
                                                 ---------  -----------  -----------------
                                                 $       -  $ 2,144,550  $       8,644,550
                                                 =========  ===========  =================

     Common stock cancellation                   $       -  $         -  $       1,225,000
                                                 =========  ===========  =================

     Acquisitions:
       Book value of property acquired           $       -  $         -  $       1,450,800
       Debt assumed                                      -            -         (1,390,700)
       Capital lease obligation incurred                 -            -            (60,100)
                                                 ---------  -----------  -----------------
                                                 $       -  $         -  $               -
                                                 =========  ===========  =================

     Dispositions:
       Debt assumed                              $       -  $         -  $        (145,000)
       Book value of the property acquired               -            -            135,000
       Loss on deposit for terminated
         Worland acquisition                             -            -             10,000
                                                 ---------  -----------  -----------------
                                                 $       -  $         -  $               -
                                                 =========  ===========  =================

     Stock conversion                            $       -  $         -  $         172,700
                                                 =========  ===========  =================

</TABLE>

      Read the accompanying summary of significant accounting policies and notes
 to the consolidated financial statements, both of which are an integral
                 part of this consolidated financial statement


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 2001 AND 2000


Basis of accounting:

     Comtec International,  Inc. (the Company) prepares its financial statements
     in accordance with generally accepted accounting principles.  This basis of
     accounting  recognized when earned,  and expenses and losses are recognized
     when incurred.  Financial  statement  items are recorded at historical cost
     and may not necessarily represent current values.

Principles of consolidation:

     The  consolidated  financial  statements  include  the  accounts  of Comtec
     International,  Inc. and all  subsidiaries.  All  significant  intercompany
     balances and transactions have been eliminated in consolidation.

Reverse stock split:

     On December  26,  1997,  the Board of  Directors,  pursuant to  shareholder
     approval  granted at the annual meeting of  shareholders  held on March 28,
     1997,  voted to approve a one for five  (1:5)  reverse  stock  split of the
     Company's  $.001 par value common stock,  effective  January  31,1998.  All
     share and per share data is stated to reflect the reverse split.

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,
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements,  and the  reported  amounts of revenues and expenses
     during the  reporting  period.  Certain  amounts  included in the financial
     statements  are  estimated  based on currently  available  information  and
     management's   judgment  as  to  the  outcome  of  future   conditions  and
     circumstances.  Changes  in the status of  certain  facts or  circumstances
     could result in material  changes to the estimates used in the  preparation
     of the  financial  statements  and actual  results  could  differ  from the
     estimates and assumptions.  Every effort is made to ensure the integrity of
     such estimates.

Fair value of financial instruments:

     The carrying amounts of cash and equivalents, accounts receivable, accounts
     payable,  and accrued liabilities  approximate their fair values because of
     the short duration of these instruments.

Impairment of long-lived assets:

     Long-lived assets and certain identifiable intangibles held and used by the
     Company  are   reviewed  for  possible   impairment   whenever   events  or
     circumstances  indicate  the  carrying  amount  of  an  asset  may  not  be
     recoverable.  Intangible  assets  have  been  written  down  to  their  net
     estimated realizable value. As judgment is involved,  the estimates are not
     necessarily indicative of the amounts the Company could realize.

Cash and cash equivalents:

     The Company considers all highly liquid investments purchased with original
     maturities  of  three  months  or  less  to  be  cash  equivalents.



<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 2001 AND 2000


Marketable securities:

     Marketable securities are classified as available for sale and are reported
     at fair value.  Fair value is based upon quoted market prices.  At June 30,
     1997,  marketable  securities  consisted  of mutual  funds and the  Company
     recorded  the  unrealized  loss in  shareholders'  equity . All  marketable
     securities were disposed of during the year ended June 30, 1998.

Property, equipment and depreciation:

     Property and equipment are stated at cost, less  accumulated  depreciation.
     Depreciation  is computed using the straight line method over the estimated
     useful lives as follows:

                                                    Estimated Useful Lives
                                                           (in years)
                                                    ----------------------

         Office furniture and equipment                        10
         Communication equipment                                7
         Computer equipment                                     5


     The  cost of  fixed  assets  retired  or sold,  together  with the  related
     accumulated  depreciation,  are  removed  from the  appropriate  asset  and
     depreciation  accounts,  and the resulting  gain or loss is included in net
     earnings.

     Repairs  and  maintenance  are  charged  to  operations  as  incurred,  and
     expenditures for significant betterments and renewals are capitalized.  The
     cost of property and equipment  retired or sold,  together with the related
     accumulated  depreciation,  are  removed  from the  appropriated  asset and
     depreciation  accounts,  and the  resulting  gain or  loss is  included  in
     operations.

Direct financing lease:

     The Company leased all of its wireless communications equipment in a direct
     financing lease.  Direct financing leases are defined as those leases which
     transfer substantially all of the benefits and risks of ownership equipment
     to the lessee.  The cost of the equipment is recorded as net  investment in
     direct financing leases. Leasing revenue, which is recognized over the term
     of the lease, consists of the excess of lease payments over the equipment's
     cost.

License rights:

     License  rights  are  recorded  at  cost,  less  accumulated  amortization.
     Licenses are amortized to operations  using the  straight-line  method over
     the remaining term.



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 2001 AND 2000

Income taxes:

     The Company accounts for income taxes using the asset and liability method.
     Under this method,  deferred tax assets and  liabilities are recognized for
     the  future  tax  consequences  attributable  to  differences  between  the
     financial statement carrying amounts of existing assets and liabilities and
     their  respective  tax  bases.  Deferred  tax assets  and  liabilities  are
     measured using enacted tax rates applied to taxable  income.  The effect on
     deferred tax assets and  liabilities of a change in tax rates is recognized
     in income in the period  that  included  the  enactment  date.  A valuation
     allowance  is provided  for deferred tax assets when it is more likely than
     not that the asset will not be realized.

Per share amounts:

     Loss per share is  computed by dividing  net loss by the  weighted  average
     number of shares outstanding throughout the year.

Stock based compensation:

     The Company  applies the intrinsic  value method for  accounting  for stock
     based compensation described by Accounting Principles Board Opinion No. 25,
     "Accounting  for Stock Issued to  Employees."  Had the Company  applied the
     fair value  method  described  by the  Statement  of  Financial  Accounting
     Standards Board (SFAS) No. 123, "accounting for Stock-Based  Compensation,"
     it would  report  the  effect  of  compensation  expense  for  stock  based
     compensation  as  pro-forma  effects on income and  earning  per share,  if
     material.

Accounting Pronouncements:

     The Company has adopted the  Statement  of Financial  Accounting  Standards
     Board  (SFAS) No. 130,  "Reporting  Comprehensive  Income,"  issued in June
     1997.  Comprehensive  income  includes  net  income  and all  changes in an
     enterprise's  other  comprehensive  income  including,  among other things,
     foreign currency translation adjustments and unrealized gains and losses on
     certain investments in debt and equity securities. The Company also adopted
     SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
     Information."   This   Statement   establishes   standards   for  reporting
     information about operating  segments in annual financial  statements,  and
     requires that an enterprise  report  selected  information  about operating
     segments in interim  reports issued to  shareholders.  The Company does not
     expect the adoption of these  statements  to have a material  impact on its
     financial condition or results of operations.



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 2001 AND 2000

Accounting Pronouncements (continued):

     The Company adopted SFAS No. 128,  Earnings Per Share,  which specifies the
     method of computation, presentation, and disclosure for Earnings Per Share.
     SFAS No.  128  requires  the  presentation  of two EPS  amounts,  basic and
     diluted.  Basic EPS is  calculated  by  dividing  net income  (loss) by the
     weighted  average  number  of common  shares  outstanding  for the  period.
     Diluted EPS  includes the dilution  that would occur if  outstanding  stock
     options and other dilutive  securities  were exercised and is comparable to
     the EPS the Company has historically  reported. The diluted EPS calculation
     excludes the effect of stock options when their exercise  prices exceed the
     average market price over the period.  There is no change in loss per share
     because diluted EPS is anti-dilutive.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     "Accounting  for  Derivative  Instruments  and Hedging  Activities,"  which
     defines  derivatives,  requires that  derivatives be carried at fair value,
     and provides for hedge  accounting  when certain  conditions  are met. This
     statement  is effective  beginning  in the year 2000.  The adoption of this
     statement will not have an impact on its consolidated financial statements.

     In April 1998,  the AICPA  finalized  SOP 98-5,  "Reporting on the Costs of
     Start-Up  Activities,"  which  require  that costs  incurred  for  start-up
     activities,  be expensed as incurred.  This SOP,  which is effective in the
     first  quarter of 1999,  is not  expected to have a material  impact on the
     consolidated financial statements.

     In 1998, the Company,  adopted the American  Institute of Certified  Public
     Accountants' ("AICPA") Statement of Position 98-1 ("SOP 98-1"), "Accounting
     for the Costs of Computer Software Developed or Obtained for Internal Use."
     SOP 98-1 defines the types of computer  software  project costs that may be
     capitalized.  All other costs must be expensed in the period  incurred.  In
     order for costs to be capitalized,  the computer  software  project must be
     intended  to create a new system or add  identifiable  functionality  to an
     existing  system.  Adoption of this statement did not have an impact on the
     Company's consolidated financial statements.

Reclassifications:

     In order to facilitate comparison of financial information, certain amounts
     reported  in the prior  year have been  reclassified  to  conform  with the
     current year presentation.




<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


1.   Organization and business:

     Comtec  International,  Inc.  (Comtec),  formerly  Nisus Video,  Inc.,  was
     incorporated  in the State of New Mexico on July 6, 1983.  On May 10, 1995,
     Comtec  shareholders  approved the exchange of 2,245,794  common  shares in
     exchange  for  all  the  outstanding   common  stock  of  Keystone  Holding
     Corporation,  Inc.  (Keystone).  Comtec and Keystone  were related  parties
     through certain common  shareholders  and management.  The acquisitions had
     been accounted for in a manner  similar to the pooling of interests  method
     in accordance with Accounting  Principles Board Opinion No. 16,  Accounting
     for  Business  Combinations,  since it  represents  an exchange of entities
     under common control. Accordingly, the consolidated financial statements of
     prior years have been  restated to include  the  accounts of the  companies
     transferred,  all at historical costs. No intercompany transactions existed
     between the  companies  during the prior  periods and no  adjustments  were
     necessary to conform the accounting policies of the company.

     Information about the Company's subsidiaries is presented below:


                                     Percentage     State        Date of
                Company                Owned      Organized    Organization
                -------                -----      ---------    ------------

     American Wireless Network, Inc    100.0%     Colorado    December 3, 1996
     (AWN)

     TTI Communications Corporation     70.0%     Colorado    February 12, 1997
     (TTI)

     International Media Group, Ltd.   100.0%     Colorado    March 20, 1997
     (IMG)

     AmNet Resources, Ltd. (AmNet)     100.0%     Colorado    May 10, 1997
     (formerly CTI Real Estate, Inc.)

     Custom Concepts, Inc. (CCI)       100.0%     Colorado    December 2, 1997


     The subsidiaries are principally in the  telecommunication  business except
     for AmNet,  which held real  property.  The real  property  was  foreclosed
     during the year ended June 30, 1997.  AmNet was inactive during the current
     fiscal year.  In December,  1997,  AWN acquired  management  control of 160
     channels of 900Mhz  Metropolitan  Trading Area licensed for seven operating
     Specialized   Mobile  Radio  (SMR)  systems  located  within  five  states,
     principally in the Southern and Western United States, and began generating
     SMR  revenue.  In June 1998 the  Federal  Communications  Commission  (FCC)
     approved the final sale of the licenses and  assignment  of the  associated
     promissory  notes  from  the  seller  to AWN.  TTI was in the  business  of
     reselling long distance  service  through  prepaid phone cards.  TTI became
     operational in February 1997 and ceased operations on December 2, 1997, due
     to excessive losses.  These operations only provided auxiliary revenues and
     did not take Comtec out of the development stage. IMG was formed to operate
     and market advertising media through the use of giant LED screens. On March
     23,  1998,  the Company  acquired  the LED screens  through the issuance of
     5,000,000 common shares valued at $.48 per share.

<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


1.   Organization and business (continued):

     CCI was  formed to assist in the  wind-down  phase of TTI and was  inactive
     during the current fiscal year.

     Comtec has been and continues to be in the development  stage.  Since 1995,
     the Company has been executing  strategic business plans to develop various
     telecommunications  services and products,  principally in the area of SMR.
     Prior to December 4, 1997,  the Company had yet to commence  its  principal
     planned  operations and from inception  (March 15, 1994) had only generated
     limited revenues to defray the cost of its planned operations.  On December
     4,  1997,  AWN  acquired  management  control  of 160  channels  of  900Mhz
     Metropolitan  Trading Area licenses and began  generating  SMR revenue,  as
     discussed  above.  The  Company  has  financed  its  operations  during the
     development  stage from the sale of its common  stock and from  issuance of
     short and  long-term  debt.  Subsequently,  the Company  has  entered  into
     agreements with an independent third party for the sale of its FCC licenses
     and lease of its SMR  equipment.  No assurances  can be given that the sale
     and operating lease would take the Company out of development stage.

     At June 30, 2001, all subsidiaries except American Wireless Network,  Inc.,
     are effectively dissolved.

2.   Going concern, liquidity and strategic planning:

     The  accompanying  consolidated  financial  statements  have been  prepared
     assuming the Company will continue as a going concern. The Company reported
     net losses of $773,400 and $2,223,500 for the years ended June 30, 2001 and
     2000 and has reported  cumulative net losses of $16,249,000  from inception
     (March  15,  1994)  to June  30,  2001.  As  reported  on the  consolidated
     statements  of cash flows,  the Company  incurred  negative cash flows from
     operating  activities  of $421,000 and $54,700 for the years ended June 30,
     2001  and  2000  and  has  reported  negative  cash  flows  from  operating
     activities of $4,956,300 from inception  (March 15, 1994) to June 30, 2001.
     To date,  these have been financed  principally  through the sale of common
     stock and warrants  ($1,302,600)  and issuance of short and long-term  debt
     ($5,794,200),  including  related  party debt.  Additional  capital  and/or
     borrowings  will be  necessary  in order for the  Company  to  continue  in
     existence until attaining and sustaining profitable operations.

     The Company's  principal  source of working capital funding has been Geneva
     Reinsurance Company Ltd. (Geneva), a Nevis company,  whose shareholders are
     clients  of  Zephyr  International   Limited  (Zephyr),  a  Cayman  Islands
     investment  management  company.  Additional  working  capital  funding was
     provided by Cayman  Offshore  International,  Ltd.  (Cayman),  Queens Cross
     Group, Ltd. (Queens) and Overseas Foreign Holdings,  Ltd.  (Overseas) which
     are also clients of Zephyr.





<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


2.   Going concern, liquidity and strategic planning (continued):

     Hereinafter Geneva,  Cayman, Queens and Overseas will be referred to in the
     aggregate  as "clients  and  affiliates  of  Zephyr".  The Company has been
     dependent  on clients and  affiliates  of Zephyr to maintain its cash flow,
     and no  assurances  can be given  that  they will  continue  as a source of
     funding.

     Management  has  continued  to develop a strategic  business  plan to raise
     private financing, develop a management team, maintain reporting compliance
     and seek new expansive areas of business acquisitions. However, in order to
     satisfy  current  obligations  the Company is selling  its FCC  licenses to
     satisfy  debt  requirements  and to generate  cash flows is leasing its SMR
     equipment.  Should  the  Company be  successful  in  obtaining  substantial
     additional debt financing,  management  plans to seek  acquisitions of more
     mature  businesses  interests that would generate  sufficient  cash flow to
     maintain debt service.

     In December  1997,  the  Company  acquired  licenses  to operate  seven SMR
     systems located within five states for approximately  $3,035,700.  In order
     to acquire the SMR licenses,  the Company  borrowed  $1,600,000 from Geneva
     for the initial  payments  and  working  capital.  The Company  borrowed an
     additional  $100,000  from  Cayman and  $600,000  from  Queens for  working
     capital and payments  required at the final closing on the SMR systems.  As
     part of its plan to  resolve  the lack of  liquidity,  the  Company  issued
     approximately  2,083,300 common shares at $.48 per share and  approximately
     16,000,000  common shares at $.10 per share to liquidate the $1,000,000 and
     $1,600,000 convertible debentures, respectively. Subsequently, Overseas and
     Cayman advanced an additional $250,000 and $200,000,  respectively,  to the
     Company to fund working capital.

     There can be no  assurances  that the  Company  will be  successful  in the
     implementation of its plan for expansion and its overall business plan.















<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


3.   Other comprehensive income:

     The Company has adopted Statement of Financial  Accounting Standards (SFAS)
     No. 130, "Reporting  Comprehensive  Income." SFAS 130 establishes new rules
     for the  reporting  and  display  of  comprehensive  income  (loss) and its
     components,  however,  it has no impact  on the  Company's  net  loss.  The
     components of comprehensive loss are as follows:

                                                            Year Ended
                                                             June 30
                                                             -------
                                                         2001        2000
                                                       --------   ----------
          Net Loss                                     $773,400   $2,223,500
          Other comprehensive loss:
            Unrealized loss in marketable
               Securities                                     -            -
                                                       --------   ----------
          Total comprehensive loss                     $773,400   $2,223,500
                                                       ========   ==========

4.   Acquisitions and dispositions:

     On December 5, 1997, the Company  acquired from  Centennial  Communications
     Corp.  (CCC)  management  control of seven  operating  SMR systems  located
     within  five  states,  including  SMR  licenses  obtained  from the Federal
     Communications  Commission (FCC), radio equipment and antennas,  tower site
     leases and customer lists, for approximately $3,035,700. The final transfer
     of title to the  acquired  assets was subject to the FCC's  approval of the
     sale and  assignment of the SMR licenses and  assumption of the related FCC
     promissory  notes.  The FCC approval was obtained on June 11, 1998, and the
     final  closing  took  place  on July 6,  1998.  The  acquisition  has  been
     reflected at cost in the accompanying  consolidated  financial  statements.
     Payment of the purchase price of $3,035,700 was as follows:

                                                                Amount
                                                              ----------
             Down payment                                     $  200,000
             Payment at December 1997 closing                  1,000,800
             Note payable to seller due at
                 final closing, 8% interest                      444,200
             Promissory notes payable to the
                 Federal Communications Commission             1,390,700
                                                              ----------
                                                              $3,035,700
                                                              ==========





<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


4.   Acquisitions and dispositions (continued):

     In April 1996,  the Company  entered into a license  option  agreement  (as
     subsequently amended) to purchase approximately 1,380 SMR radio channels in
     the 800 Mhz radio  spectrum form a number of independent  license  holders.
     The purchase price of the option rights was $1,594,500, as amended, and was
     payable as follows:

                                                              Amount
                                                            ----------
             Cash paid on closing                           $  150,000
             Issuance of:
                560,000 common shares of common
                   stock at $1.25 per share                    700,000
                39,767 shares of Series C Redeemable
                Convertible Preferred Stock, $1.00
                par value                                      397,000
                139,000 shares of common stock at
                $2.50 per share                                347,500
                                                            ----------
                                                            $1,594,500
                                                            ==========

     The  Company  had a  significant  investment  in the  license  rights,  the
     recoverability  of which  was  dependent  upon the  success  of  funding  a
     settlement with the independent license holder. The settlement required the
     repurchase  of  all  previously  issued  common  and  preferred  stock  for
     $925,000.  At June 30, 1997,  it was not the intention of management to pay
     the settlement and accordingly the license option agreement was terminated.
     The Company  canceled the common stock and Series C Redeemable  Convertible
     Preferred Stock issued as if the termination had occurred on June 30, 1997,
     which  resulted in a loss of  $150,000.  The holder of the common stock and
     Series  C  Redeemable   Convertible   Preferred   Stock  has   subsequently
     surrendered  the common and  preferred  stock  certificates  which were the
     canceled.

     In March  1998,  the Company  acquired  large  Light  Emitting  Diode (LED)
     screens  from a group of Geneva  shareholders  (Read Note 8 on  convertible
     debentures)  for  $2,400,000,   which  was  financed  by  the  sellers  and
     liquidated by the issuance of approximately 5,000,000 common shares at $.48
     per share.  Closing bid price of the common stock was  approximately  $0.26
     per share. The Company wrote down the acquisition based upon the fair value
     of the stock issued  ($1,300,000).  Management has been  authorized to sell
     the screens for the best possible price. Subsequently, the LED screen asset
     was written-off during the year ended June 30, 2000.

     During the year ended June 30,  1997,  land and  buildings  with a net book
     value of $1,867,100 were foreclosed  upon. The  foreclosures  resulted from
     litigation for  nonperformance.  Long and short-term debt  ($1,081,300) and
     equity ($786,200) were assumed or canceled as a result of the foreclosures.
     The Company recognized a gain of $400, which was credited to operations.






<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


4.   Acquisitions and dispositions (continued):

     In January  1996,  the Company  executed an agreement to acquire 61% of the
     outstanding  common  stock of Network  Teleports,  Inc.  for  approximately
     $1,250,000  consisting  of a $25,000  deposit  and the  issuance of 980,000
     shares of common stock at $1.25 per share ($1,225,000),  which were held in
     escrow until approval was obtained from the FCC.  Certain  shareholders  of
     the Company were also  shareholders  of Network  Teleports,  Inc.  (related
     parties).   During  the  year  ended  June  30,  1997,  the  agreement  was
     terminated,  which  resulted  in a loss  to the  Company  of  approximately
     $318,400  consisting of the $25,000  deposit and equipment  with a net book
     value of $293,400. The loss was charged to operations during the year ended
     June 30, 1997.  The escrowed  shares were canceled by mutual consent of the
     parties.

     In August,  1995,  the Company  acquired  rights to 185  unconstructed  and
     non-operational  SMR  channels  for $75,000  including  a note  payable for
     $50,000,  collateralized  by real property.  The FCC canceled 110 licenses,
     and the remaining 75 licenses  were  considered  active.  The real property
     that  collateralized  the  note  was  lost in a  foreclosure  as  described
     earlier, and the Company forfeited the remaining licenses. As a result, the
     Company  recognized a loss of  approximately  $9,100,  which was charged to
     operations  during the year ended June 30, 1997. The loss was determined as
     follows:

                 Original cash deposit                   $25,000
                 Note payable                             50,000
                 Accrued interest                          9,100
                                                         -------
                                                          84,100
                 Original basis                           75,000
                                                         -------
                 Loss on cancellation                    $ 9,100
                                                         =======

     The Company had  advanced  $40,000 for the  acquisition  of an  advertising
     company.  The  acquisition  agreement  was  terminated  and the advance was
     converted to prepaid advertising costs in October 1997.  Subsequently,  the
     advertising  company started to produce media advertising for AWN, however,
     AWN  decided  not to proceed  with the  advertising  program.  The  prepaid
     advertising costs were charged to operations during 1998.

     In October,  2000,  the Company  entered  into an agreement  with  Chadmore
     Wireless  Group,  Inc.  (Chadmore) to sell certain license rights and lease
     certain equipment to Chadmore. Chadmore agreed to purchase the MHZ wireless
     licenses  owned by the  Company and assume the  long-term  debt owed to the
     Federal   Communications   Commission  as  discussed  further  in  Note  9.
     Additionally,  Chadmore  agreed to give the Company either $333,700 in cash
     or Nextel  stock  equal to the same value upon  acquisition  of Chadmore by
     Nextel.  Management  believes the acquisition of Chadmore will occur before
     December  31,  2001.   Additionally,   Chadmore  agreed  to  lease  certain
     communications equipment from the Company. These lease payments are further
     discussed  in Note 14 and is recorded  as a direct  financing  lease.  As a
     result of these transactions,  the Company recorded a net gain upon sale of
     these assets of $68,900.



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


5.   Concentrations of credit risk:

     Financial   instruments   that   potentially   subject   the   Company   to
     concentrations  of credit risk  consist  principally  of cash and  accounts
     receivable.  During the year, the Company's account balances with financial
     institutions  may exceed  federally  insured limits.  Management  regularly
     monitors  their  balances  and  attempts to keep this  potential  risk to a
     minimum by maintaining their accounts with financial institutions that they
     believe are of good quality.

     The  Company  may have a  concentration  of  credit  risk with  respect  to
     accounts  receivable,  as substantially all customers resulted from SMR and
     prepaid  phone  services.  The  Company  maintains,  when  appropriate,  an
     allowance for uncollectible accounts receivable.  Therefore,  no additional
     credit risk  beyond  amounts  provided  for  collection  losses is believed
     inherent in the Company's accounts  receivable and to date have been within
     management's expectations.

6.   Detail of financial statement components:

                                                        2001         2000
                                                      --------    -----------
     Other current assets:
        Accrued interest receivable                   $      -    $         -
        Other receivables and prepaid expenses           5,000              -
                                                      --------    -----------
                                                      $  5,000    $         -
                                                      ========    ===========
     Property and equipment:
        Communications equipment                      $      -    $ 1,422,100
        Furniture, fixtures and equipment               75,000         72,700
                                                      --------    -----------
                                                        75,000      1,494,800
        Accumulated depreciation                        46,900        460,700
                                                      --------    -----------
                                                      $ 28,100    $ 1,034,100
                                                      ========    ===========
     Accrued liabilities:
        Payroll and related benefits                  $648,300    $   243,500
        Interest                                             -         60,200
        Accrued legal fees                              75,200              -
        Sales taxes                                     22,200         22,200
        Deferred revenue                                     -          1,400
                                                      --------    -----------
                                                      $745,700    $   327,300
                                                      ========    ===========





<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


6.   Details of financial statement components (continued):

                                                         2001          2000
                                                      ---------     ----------
     Charges to operations, losses (gains) on:
        Disposal of assets                            $   7,000     $        -
                                                      ---------     ----------
     Loss on investments, foreclosures,
        and disposal of assets                        $   7,000     $        -
                                                      =========     ==========
     Write-down of LED equipment and intangibles:

           LED equipment                              $       -     $1,314,300
           License rights                                     -              -
                                                      ---------     ----------
                                                      $       -     $1,314,300
                                                      =========     ==========


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000

7.   Notes payable:
                                                          2001        2000
                                                        -------     --------
     Related parties

        Notes payable, shareholder, officer and
          director, non-interest bearing, due upon
          demand                                        $10,000     $      -

        Note payable, Overseas Foreign, unsecured
          interest at 12% per annum, maturing
          October 23, 1998. Note in default,
          due on demand with interest at
          default rate of 18% from maturity                   -            -

        Note payable, Cayman, unsecured
          interest at 12% per annum, maturing
          August 21, 1998. Note in default,
          due on demand with interest at
          default rate of 18% from maturity                   -            -

        Note payable, Queens, unsecured
          interest at 12% per annum, maturing
          September 30,1998. Note in default,
          due on demand with interest at
          default rate of 18% from maturity                   -            -

        Note payable, Cayman Offshore, unsecured
          interest at 12% per annum, maturing
          January 13, 1999. Note in default,
          due on demand with interest at
          default rate of 18% from maturity                   -            -

        Note payable, Pfeiger, unsecured
          interest at 12% per annum, maturing
          June 30, 1999. Note in default,
          due on demand with interest at
          default rate of 18% from maturity                   -            -

        Note payable, Merrivale, unsecured
          interest at 12% per annum, maturing
          September 16,1999. Note in default,
          due on demand with interest at
          default rate of 18% from maturity                   -            -
                                                        -------     --------

                                                        $10,000     $      -
                                                        =======     ========


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000

7.   Notes payable (continued):

     On June 21, 2000, the Company issued  21,445,000  shares of common stock to
     Cayman  in  exchange  for  extinguishment  of the  above  debt and  accrued
     interest, in the amount of $2,144,550.  Additionally,  common stock payable
     in the amount of $563,850 was  extinguished  and  contributed to capital in
     excess of par.


     On May 20, 1998,  the Company  issued  1,538,461  shares of common stock to
     Cayman as loan origination fees on the $100,000 note. At Their September 2,
     1998  meeting,  the Board of  Directors  approved  the  issuance of another
     1,538,461 shares of common stock to Queens as loan originations fees of the
     $600,000  note.  Based upon the bid price of the  common  stock on the loan
     dates,  the origination  fees aggregated  approximately  $353,800 which was
     charged to operations during the year ended June 30, 1998.


     On July 23, 1998 and November 12, 1998, Overseas and Cayman made additional
     loans to the Company of $250,000 and  $200,000,  respectively.  These loans
     were made on terms  similar to those made earlier and each of the companies
     received  1,538,461 shares of common stock as loan origination  fees. Based
     upon the bid price of the common  stock on the loan  dates the  origination
     fees amounted to approximately $138,500 and $76,900 respectively.



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000

8.   Convertible debentures:

     The Company entered into various loan agreements with certain  shareholders
     of Geneva to provide financing for working capital and asset  acquisitions.
     The agreements provided for financing up to $6,500,000, of which $2,500,000
     had been funded  through June 30, 1997;  $1,600,000  was funded in December
     1997,  and the balance of  $2,400,000  was funded in March 1998.  Under the
     terms of the agreement,  the first  $2,500,000  advance earned  interest at
     12%,  maturing in March 1998 and was convertible  into common stock at $.48
     per share.  Each share carried a warrant to purchase an  additional  common
     share at $4.50 per share,  exercisable  at any time during a three (3) year
     period commencing with the date of issuance of the shares and warrants.  On
     June 30, 1997,  the Geneva  shareholders  converted  $1,500,000 of advances
     into  3,125,000  common  shares and  3,125,000  warrants.  The  outstanding
     balance of convertible  debentures at June 30, 1997 was  $1,000,000,  which
     was converted by the Geneva  shareholders  on March 23, 1998 into 2,083,000
     common shares and 2,083,000 warrants.

     In  December  1997  certain  Geneva   shareholders   advanced  the  Company
     $1,600,000  for AWN's  acquisition of SMR systems (Read Note 2 on Strategic
     Planning).  This advance was converted by the Geneva  shareholders on March
     23, 1998 into approximately  16,000,000 common shares at $.10 per share and
     16,000,000  warrants  to  purchase  common  stock on a one for one basis at
     $2.90 per share.

     On March 23,  1998,  the  Company  acquired  giant LED  screens and related
     equipment from a group of Geneva shareholders for $2,400,000.  The group of
     shareholders  owned the LED screen as a result of  foreclosing on a loan to
     an unrelated  third party.  The Company issued  5,000,000  shares of common
     stock at $.48 per share and 5,000,000  warrants to purchase common stock on
     a one for one basis at $2.90 per share to acquire the  screens.  Based upon
     the bid price of $.26 per share,  the  Company  paid a premium  for the LED
     screens of approximately  $1,100,000 which was charged to operations during
     the year ended June 30, 1998.  At their May 8, 1998  meeting,  the Board of
     Directors authorized  management to liquidate the LED screens and equipment
     at the best  possible  price.  In August 1998 the  Company  shipped the LED
     screens and equipment to Lanstar  Computer  Products,  Inc.  (Lanstar),  an
     affiliate of Zephyr,  to be held for sale on consignment.  In December 1998
     Lanstar  executed a $2,400,000  promissory  note in favor of the Company to
     purchase  the LED screens and  equipment.  The note,  secured by the assets
     sold,  bears  interest of 8% per annum  payable  quarterly  with the entire
     principal due at its maturity on December 31, 1999. No determination of the
     recoverability of the promissory note has been determined.



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


8.   Convertible debentures (continued):

     A summary of the convertible debentures is as follows:

                                              Amount           Shares
                                            ----------       -----------

          Working capital loans             $2,500,000         5,208,334
          Purchase of LED screens            2,400,000         5,000,000
          Working capital loans
            and SMR station purchases        1,600,000        15,999,998
                                            ----------       -----------
                                            $6,500,000       $26,208,332
                                            ==========       ===========

     No warrants were exercised as a result of this  transaction.  The 4,242,922
     warrants can be converted  into  4,242,922  shares of common stock at $4.50
     per share and 24,683,332  warrants can be converted in 24,683,332 shares of
     common stock at $2.90 per share. The warrants expired at varying dates from
     June 2000 to March 2001 (Read Note 13 on warrants and options).

     As a result of the financing provided by certain Geneva  shareholders,  the
     Company  agreed to pay  finders  fees of  $245,000  each to Geneva  and the
     managing director of Zephyr. Approximately $490,000 was paid and charged to
     operations on June 30, 1997 through the issuance of approximately 1.020,800
     common  shares at $.48 per share.  An  additional  $160,000 was paid to the
     managing  director  of Zephyr and charged to  operations  on March 23, 1998
     through the  issuance of  1,600,000  common  shares at $.10 per share.  The
     Company  also issued  warrants to  purchase  common  stock on a one for one
     basis.   Approximately   1,020,800  warrants  issued  June  30,  1997  were
     exercisable at $4.50 per share and 1,600,000  warrants  issued on March 23,
     1998 were  exercisable  at $2.90 per share.  No warrants were exercised and
     they expired three (3) years from date of issue, in March 2001.



















<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


9.   Long-term debt:
                                                    2001            2000
                                                 ----------      ----------
     Promissory notes, Federal
       Communications Commission
       collateralized by SMR licenses,
       7% interest per annum only through
       August 31, 2001; quarterly principal
       and interest payments of $86,700
       thereafter through maturity on
       August 21, 2006. Assumed by Chadmore
       during October, 2000 as discussed in
       Note 4.                                   $        -      $1,390,700

     Promissory notes, non-interest bearing,
       payable quarterly at $6,250 per quarter,
       beginning September 1, 2001, through
       maturity on December 1, 2004, to settle
       litigation as discussed in Note 13

     Capital lease obligations, collateralized
       by communication and computer
       equipment, various interest
       rates, payable in
       monthly installments through
       December , 2004                               27,700          32,600
                                                 ----------      ----------
                                                    115,200       1,423,300

     Less current portion of long term debt          33,900          13,900
                                                 ----------      ----------
                                                 $   81,300      $1,409,400
                                                 ==========      ==========

     The  aggregate  maturities  of the  promissory  notes  and  future  minimum
     payments  under  capital  leases  subsequent to June 30, 2001 are presented
     below:

          Year ending                       Promissory         Capital
            June 30            Total           Notes            Leases
          -----------        --------       ----------         --------

              2002           $ 39,800       $   25,000         $ 14,800
              2003             39,800           25,000           14,800
              2004             33,000           25,000            8,000
              2005             12,500           12,500                -
                             --------       ----------         --------
                             $125,100       $   87,500         $ 37,600
          Less Interest         9,900                -            9,900
                             --------       ----------         --------
                             $115,200       $   87,500         $ 27,700
                             ========       ==========         ========


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000



10.  Income taxes:

     Deferred income taxes reflect the net tax effects of temporary  differences
     between  the  carrying  amounts of assets  and  liabilities  for  financial
     reporting purposes and the amounts used for income purposes.

     The  significant  components of the deferred tax asset at June 30, 2000 and
     1999 are:

                                                    2001           2000
                                                ----------      ----------
     Deferred tax asset:
        Net operating loss                      $5,483,900      $5,174,500
        Less valuation allowance                 5,483,900       5,174,500
                                                ----------      ----------
        Net deferred tax asset                  $        -               -
                                                ==========      ==========

     The  valuation  allowance is provided  when it is more likely than not that
     the tax benefit may not be realized.

     The provision  (benefit) for income taxes differs from the amount of income
     tax (benefit) determined by applying the applicable federal rate due to the
     following:

                                                      2001           2000
                                                   ---------      ---------
     U.S. Federal statutory income
        tax rate of 35% (benefit)                  $(270,700)     $(778,200)
     Effective state income tax (benefit)            (38,700)      (111,200)
                                                   ---------      ---------
     Valuation allowance                           $(309,400)     $(889,400)
                                                   =========      =========

     At June 30, 2001,  the Company had  available  federal net  operating  loss
     carryforwards  of approximately  $16,219,800,  which will expire in varying
     years through 2016.




<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000

11.  Shareholders' equity:

     On March 28, 1997, the Company's  shareholders  approved an increase in the
     number of authorized shares of stock from 50,000,000 to 100,000,000  common
     shares and from  5,000,000 to  10,000,000  preferred  shares.  The Board of
     Directors has authorized up to 4,000,000  shares of  Convertible  Preferred
     Stock, with a par value of $.001 per share. These securities are non-voting
     and have an issue price and liquidation value ranging from $1.00 to $10.00.
     The Series B is  subordinate to the Series A and Series C is subordinate to
     the Series A and B. Each share or each  series is  convertible  into common
     stock,  $.001 par value at the  closing bid price on the date notice of the
     conversion is received.  No  conversion  may be made unless the closing bid
     price has  reached  $10.00  per  Series A and $7.50 per Series B shares for
     more than 20 consecutive  trading days. The Company may redeem the Series A
     at $1.00 per share,  Series B at $5.00 per share and Series C at $10.00 per
     share.  On May 1, 1997, the Company  settled  litigation with the holder of
     420,000 shares of Series A Redeemable  Convertible Preferred Stock pursuant
     to which the 420,000  shares of stock were returned and  canceled.  At June
     30, 2001 and 2000, no Series A Redeemable  Convertible  Preferred Stock nor
     Series B Redeemable Convertible Preferred Stock was issued and outstanding.
     In September  1996, the Company issued 39,767 shares of Series C Redeemable
     Convertible  Preferred  Stock in connection with the acquisition of license
     rights.  When  management  decided  not  to pay  the  settlement  with  the
     independent  license holders and accordingly  terminated the license option
     agreement,  the  Company  canceled  the  Series  C  Redeemable  Convertible
     Preferred Stock as if the termination occurred on June 30, 1997. The holder
     of the Series C Redeemable  Convertible  Preferred  Stock has  subsequently
     surrendered the preferred stock certificate which was canceled. At June 30,
     2001 and 2000 there was no Series C Redeemable  Convertible Preferred Stock
     issued or outstanding.

     A summary of the terms of the Redeemable  Convertible Preferred Stock is as
     follows:

                      Issue   Liquidation   Conversion        ratio
            Type       Par       price         price      to common stock
          --------    -----   -----------   ----------    ---------------
          Series A    $.001   $      1.00   $     1.00         1:1
          Series B     .001          5.00         5.00         1:1
          Series C     .001         10.00        10.00         1:1

     As  described  in Note 8 of notes  to  consolidated  financial  statements,
     certain Geneva  shareholders  converted their debt into common stock of the
     Company.  As a result of the debt  conversions  and common stock issued for
     finders' and loan origination fees, clients of Zephyr and Zephyr's managing
     director controlled approximately 77% of the Company's common stock at June
     30, 1998. Through subsequent  transactions,  they increased their ownership
     interest to approximately 79%.

     On June 21, 2000,  the Company's  shareholders  approved an increase in the
     number of authorized shares of stock from 100,000,000 to 200,000,000 common
     shares.

     On  September  13, 2000,  the  Company's  Board of  Directors  approved the
     designation of 6,000,000  preferred shares as Series D Preferred Stock.. On
     June 30, 2001,  the Company issued  6,000,000  shares of Series D Preferred
     Stock to an officer, director and shareholder. The Series D Preferred Stock
     is  subordinate  to  Series A  Preferred  Stock,  is voting  under  certain
     conditions,  has a  liquidation  value of $.15 and is cumulative at 12% per
     annum.


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


12.  Incentive Compensation plans:

     The Company has a stock option plan,  approved by the  shareholders,  which
     provides for the granting of options to officers, key employees,  directors
     and consultants to the Company. The plan provides for 900,000 shares of the
     Company's common stock (the available  shares) for issuance pursuant to the
     exercise of stock options which may be granted to officers,  key employees,
     directors, and consultants.  The plan provides for annual adjustment in the
     number of available shares to an amount equal to ten percent (10.0%) of the
     number of shares  outstanding  on June 30 of the preceding  year of 980,000
     shares,  whichever is greater. The Compensation  Committee  administers the
     plan.  The committee has the authority and discretion to determine when and
     how many options will be granted.  The committee will also determine  which
     options  may be intended to qualify  (Incentive  Stock  Option) for special
     treatment  under  the  Internal   Revenue  Code  of  1986,  as  amended  or
     non-qualified options  (Non-Qualified Stock Options) which are not intended
     to qualify.  Options are to be granted at 85% to 110% of fair market  value
     on the date of grant.  As of June 30, 1998 and 1997,  those  eligible under
     the plan have not  purchased any shares of the company  common  stock,  nor
     have any  options  been  granted.  The plan will  remain  in  effect  until
     terminated by the  Compensation  Committee,  except that no Incentive Stock
     options will be granted after January 31, 2007.


     At June 30, 2001, the following  contingent  stock issue  requirements  and
     warrants were outstanding:

     - Shares reserved for the Company's incentive stock option plan (900,000)



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


12.  Incentive Compensation plans (continued):

     - On February 16, 1998,  the Company  entered into a letter  agreement with
     James Krejci, which remains to be formalized,  by which James Krejci became
     employed as Chief  Operations  Officer of the Company and President and CEO
     of AWN. The letter  agreement calls for a three year  employment  agreement
     with the opportunity for Mr. Krejci to obtain,  through common stock option
     agreements,  up to ten percent (10%) of the outstanding common stock of the
     Company over a three year period.  The preliminary  agreement calls for Mr.
     Krejci to receive  stock  options  vesting in three  monthly  increments to
     equal  a  total  of 5% of  the  Company's  outstanding  common  shares  are
     conditioned upon the Company reaching certain financial and  administrative
     goal within established timelines. The strike price of all of the potential
     options,  as modified  (repriced) by Board of Director action on October 7,
     1998,  is  $.056  per  share,  representing  80% of the  bid  price  of the
     Company's common stock on September 2nd, 1998, (closing bid price $.07) Mr.
     Krejci's actual  appointment  date as president and CEO of the Company.  On
     August 12, 1999 the board of director  clarified  the vesting  schedule for
     Mr. Krejci's options as follows:

     The vesting  schedule  for Mr.  Krejci's  stock  option in the  preliminary
     agreement is hereby modified to state as follows:

     James J Krejci shall be entitled to earn stock options equal to ten percent
     (10%) of the total outstanding common stock of ComTec  international,  Inc.
     over the three year period beginning on February 16, 1998.

     Stock Options Vesting - upon completion of the successive one year period:

     Year  One-  Option  Vesting  33.33%  of  total  option-  (3.33%  of  ComTec
     outstanding common stock)

     Year  Two-  Option  Vesting  33.33%  of  total  option-  (3.33%  of  ComTec
     outstanding common stock)

     Year  Three-  Option  Vesting  33.34%  of total  option-  (3.34%  of ComTec
     outstanding common stock)

     The above options vested effective June, 2001.

     James Krejci Compensation Stock Option: 1,300,000 shares at strike price of
     $.05 per share (111% of $.045 bid price on 5-6-99),  first granted:  May 6,
     1999 - effective after July 1, 1999.  1,300,000 shares at a strike price of
     $.11 per share  (111% of $.10 bid price on March 21,  2000)  first  granted
     March 20, 2000 - effective after July 1, 2000. 1,700,000 shares at a strike
     price of $.077 per share (111% of $.07 bid price on October 31, 2000) first
     granted on November 11, 2000 - effective January 1, 2001.



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


12.  Incentive Compensation plans (continued):

     - Effective  February 15, 2001, the Company entered into a letter agreement
     with James Krejci,  which remains to be  formalized,  by which James Krejci
     continued as Chief Operations  Officer of the Company and President and CEO
     of AWN. The letter  agreement calls for a three year  employment  agreement
     with the opportunity for Mr. Krejci to obtain,  through common stock option
     agreements,  up to fifteen percent (15%) of the outstanding common stock of
     the Company over a three year period.  The preliminary  agreement calls for
     Mr. Krejci to receive stock options  vesting in three annual  increments to
     equal a total of 15% of the Company's outstanding common shares. The strike
     price of all of the potential options is $.076 per share,  representing 80%
     of the bid  price of the  Company's  common  stock on  February  15,  2001,
     (closing bid price $.95).

     James J Krejci  shall be  entitled to earn stock  options  equal to fifteen
     percent   (15%)  of  the   total   outstanding   common   stock  of  ComTec
     international,  Inc.  over the three year period  beginning on February 16,
     2001.

     Stock Options Vesting - upon completion of the successive one year period:

     Year One- Option Vesting 33.33% of total option- (5% of ComTec  outstanding
     common stock)

     Year Two- Option Vesting 33.33% of total option- (5% of ComTec  outstanding
     common stock)

     Year  Three-  Option   Vesting  33.34%  of  total  option-  (5%  of  ComTec
     outstanding common stock)




<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


12.  Incentive Compensation plans (continued):

     - Effective  January 1, 1999, the Company  entered into a letter  agreement
     with the Company,  which  remains to be  formalized,  by which Gordon Dihle
     became employed as Chief Financial Officer of the Company. The letter calls
     for a three year employment agreement with the opportunity for Mr. Dihle to
     obtain,  through common stock option  agreements,  up to seven and one half
     percent (7.5%) of the outstanding  common stock of the Company over a three
     year period. The preliminary agreement calls for Mr. Dihle to receive stock
     option  vesting in  increments to equal to a total of 2.5% of the Company's
     outstanding common shares over a three year period. The strike price of all
     of the options is $.056 per share, representing 80% of the bid price of the
     Company's common stock on September 2nd, 1998, (closing bid price $.07)

          Mr.  Dihle  date  of  appointment  as  Chief  Financial Officer of the
          Company.

     - Gordon Dihle Compensation Stock Option:  1,000,000 shares at strike price
     of $.050 per share (111% of $.045 bid price on May 6, 1999), First Granted:
     May 6, 1999-  effective  after July 1, 1999.  1,000,000  shares at a strike
     price of $.111 per share  (111% of $.10 bid price on March 21,  2000) first
     granted March 20, 2000 effective after July 1, 2000.  1,000,000 shares at a
     strike  price of $.067 per share  (111% of $.07 bid  price on  October  31,
     2000) first granted November 1, 2000 - effective January 1, 2001.

          James J. Krejci - Contract Stock Option Agreement Summary

          On  February 16,  1998, the Company  entered into a letter  agreement,
     which remains to be  formalized,  by which James Krejci became  employed as
     Chief  Operations  Officer of the Company and  President and CEO of AWN. On
     August  26,  1998  Mr.  Krejci  was  elected  to the Corporation's Board of
     Directors.  On  September  2, 1998  Mr.  Krejci  was  appointed  as CEO and
     President  of  the  Corporation.  The  letter agreement calls for a minimum
     three year  employment  agreement  with the  opportunity  for Mr. Krejci to
     obtain , through common  stock  option  agreements,  up to ten (10%) of the
     outstanding  common  stock  of  the  Company over a three year period.  The
     preliminary agreement calls for Mr. Krejci to receive stock options vesting
     in  monthly  increments  to  equal  to  a  total  of  5%  of the  Company's
     outstanding  common  share over a three year  period.   Options  to  obtain
     an additional 5% of the Company's outstanding  common share are conditioned
     upon the Company reaching certain financial and administrative goals within
     referenced  timelines.  Pursuant  to the Board of Directors  Resolution  at
     the meeting held October 7, 1998,  Mr. Krejci existing letter agreement was
     modified  to  provide  that  the  stock  options  provided  to  him by that
     agreement  shall have a strike price equal  to 80% the closing bid price of
     the Corporation's common stock on 9-2-98 of $.07 ($.056 per share).  9-2-98
     is the date Mr. Krejci became President and CEO of ComTec,  therefore  that
     date was used to establish the strike date.  On  October 7, 1998 there were
     44,495,558  shares  outstanding  or pending issuance.

     Contract  Stock  Option:  10% over three years at strike price of $.056 per
     share, First Contracted: 2/16/98

     Repriced: October 7, 1998. No options actually issued.



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


12.  Incentive Compensation plans (continued):

     Compensation Stock Option: 1,300,000 shares at strike price of and. 050 per
     share (111% of $.045 bid price on 5-6-99), First Granted: 5-6-99 -effective
     after 7-1-99 (See previous discussion).

     As of 5-6-99 there were  46,034,019  shares  outstanding - Krejci option of
     1,300,00  shares on 5-6-99 is 2.7% of the Company  (considering  the option
     exercise).  Total Krejci potential stock purchases pursuant to the contract
     option and the compensation option is 12.7%.

          Gordon Dihle- Contract Stock Option Agreement Summary

     A letter agreement effective 1-1-99 was negotiated with Mr. Dihle providing
     for Mr. Dihle to receive a set monthly salary,  potential bonuses and stock
     options  totaling 7.5% to vest over a three year period with a strike price
     based upon 80% of the market price of the Corporation's  common stock as of
     9/2/98,  ($.056 per share) the date of Mr. Dihle's appointment by the board
     as acting Secretary/Treasurer.  This agreement was ratified by the Board of
     Directors on 1-15-99.  On 1-15-99 there were 44,495,558 shares  outstanding
     or pending issuance.

     Contract  Stock  Option:  10% over three years at strike price of $.056 per
     share, First Contracted: 1/1/99 No options actually issued.

     Compensation  Stock Option:  1,000,000  shares at strike price of $.050 per
     share (111% of $.045 bid price on 5-6-99), First Granted: 5-6-99 -effective
     after 7-1-99.

     As of 5-6-99 there were  46,034,019  shares  outstanding  - Dihle option of
     1,000,000  shares on 5-6-99 is 2.1% of the Company  (considering the option
     exercise).  Total potential stock purchases pursuant to the contract option
     and the compensation option is 9.6%.





<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


13.  Commitments,  contingencies,  litigation, transactions with related parties
     and other:

     Employment contracts:

     On  February  15,  2001,  the  Company  executed  a three  year  employment
     agreement with its current Chief Executive Officer.  The agreement provided
     for a salary  of  $14,167  per month and stock  options  to  purchase  five
     percent  (5.0%)  of the  Company's  outstanding  common  stock to be earned
     ratably  over the term of the  agreement.  Stock  options  to  purchase  an
     additional five percent (5.0%) of the Company's outstanding common stock is
     contingent upon attainment of certain financial and management goals.

     On  February  12,  1998,  the  Company  executed  a three  year  employment
     agreement with its current Chief Executive Officer.  The agreement provided
     for a starting  salary of $8,000 per month,  which was increased to $10,000
     per month  effective  August 15,  1998,  an initial  bonus of $42,000 to be
     satisfied  by the  issuance of common  stock and stock  options to purchase
     five percent (5.0%) of the Company's  outstanding common stock to be earned
     ratably  over the term of the  agreement.  Stock  options  to  purchase  an
     additional five percent (5.0%) of the Company's outstanding common stock is
     contingent upon attainment of certain  financial and management  goals. The
     option  price  was set at 80% of the  closing  bid  price of the  Company's
     common stock on September 2, 1998 or $.056 per share. During the year ended
     June 30, 1998, the Company paid and/or accrued $150,800 in compensation and
     issued 60,000 shares to satisfy half of the initial bonus. No stock options
     were issued in connection with this agreement.

     The Company had an  employment  agreement  with its former Chief  Executive
     Officer/director/shareholder  (former  "CEO")  with whom the  Company is in
     litigation.  The employment  agreement  ended by its terms on May 10, 1998,
     although there is an addendum to such agreement, which is in dispute, which
     addendum  would have extended the agreement to June 30, 2002. The agreement
     provided for minimum salary levels adjusted  annually,  term life insurance
     as well as  incentive  bonuses  payable if specified  management  goals are
     attained.  The agreement allowed the conversion of any unpaid  compensation
     into  common  stock  into  common  stock  at five  percent  (5%) of the net
     increase in the net assets of the Company and  provided  for an  additional
     bonus  of  ten  percent   (10%)  of  net  earnings   before  income  taxes,
     depreciation,  and  amortization,  and an annual  stock bonus equal to five
     percent (5.0%) of the issued and outstanding common stock.

     An employment  agreement with another  former  officer/director/shareholder
     was  settled  an  October  8,  1997,  which  called  for  the  issuance  of
     approximately  520,700  common  shares at $0.25 per share  ($130,200).  The
     amount,  which was accrued and charged to operations  during the year ended
     June 30, 1997, remains unpaid.




<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


13.  Commitments,  contingencies,  litigation, transactions with related parties
     and other (continued):

     Consulting agreements:

     The  Company  had  consulting   service   agreements  with  certain  former
     officers/directors,  expiring at various  dates through  October 1997.  The
     agreements  provided  for  minimum  monthly  fees and  common  stock of the
     Company based upon a formula of the bid price.  The agreement  grants stock
     options for 100,000  common  shares at an  exercisable  price of 70% of the
     offering price of any secondary  offering.  Consulting services of $167,500
     had been paid  and/or  accrued as of June 30,  1997 and  139,870  shares of
     common  stock  had been  issued.  During  the  year  ended  June 30,  1998,
     consulting services of $15,000 was paid and/or accrued and 77,126 shares of
     common stock were issued. All amounts were charged to operations.

     Transactions with related parties:

     The following is a summary of transactions  with related parties as of June
     30, 2001 and 2000:


                                                      2001        2000
                                                    --------    --------
          Compensation to officers/directors/
            shareholders                            $555,200    $212,700
          Legal settlement with prior
            officers/shareholders                          -      30,000
          Interest on related party loans                  -     253,500
          Series D Preferred Stock issued
            to a shareholder, officer and
            director                                   6,000
          Related party loans                         10,000           -
                                                    --------    --------
                                                    $571,200    $496,200
                                                    ========    ========

     Advertising agreement:

     In 1995 the Company entered into a three year media purchase  agreement for
     $1,950,000,  that was partially  prepaid  through the issuance of 5,200,000
     common  shares  at $.25 per  share  ($1,300,000).  As the  advertising  was
     utilized,  the Company  would pay one third of the  invoice and  two-thirds
     would be applied against the prepaid  amount.  The Company also granted the
     advertiser an option  expiring in the year 2000 to acquire  200,000  common
     shares at $1.25 per share. During the year ended June 30, 1997,  management
     determined  the  media  agreements  had no  continuing  value  and  charged
     operations for the outstanding balance.









<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


13.   Commitments,  contingencies, litigation, transactions with related parties
      and other (continued):

     Termination of private placement:

     During  1997,  the  Company  prepared  a private  placement  offering.  The
     discussions  regarding  the  offering  were  terminated  and  the  cost  of
     approximately  $25,000  was charged to  operations  at June 30,  1997.  The
     Company's attorney's were subsequently successful in recouping $24,400 from
     the securities firm which has been accrued and reflected as other income at
     June, 1998.

     Litigation:

     During the year ended June 30, 2001,  an agreement  with Donald G. Mack was
     reached for breach on employment contract.  This matter was settled without
     payment by either side with each party  providing  a mutual  release of all
     liability.

     During the year ended June 30,  2001,  the Company  settled a lawsuit  with
     Premium Financial  Services Inc. (Premium) for goods and services delivered
     to the Company.  This matter was settled when the Company agreed to (a) pay
     the cash sum of $100,000 in  quarterly  payments as discussed in Note 9 and
     (b)  to  issue  certain  shares  of  unrestricted  common  stock,  which  a
     shareholder,  officer and director  provided on April 19, 2001. This amount
     was charged to operations for the year ended June 30, 2001.


     Rental commitments:

     Currently, the Company is on a month-to-month lease for office space.



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


13.  Commitments,  contingencies,  litigation, transactions with related parties
     and other (continued):

     Warrants and options:

     The Company  has  granted  various  stock  options and  warrants to various
     employees,  consultants  and  lenders  under  employment,   consulting  and
     financing agreements.  The agreements with clients and affiliates of Zephyr
     provide for the  issuance of  28.926,254  shares of common  stock at prices
     ranging from $2.90 to $4.50 per share.  The  warrants  expired on March 23,
     2001.

     Information relating to stock options and warrants are as follows:

                                  Employee/consultants  Lender    Option Price
                                       Stock Options   Warrants Per Share Range
                                       -------------   --------- ---------------

     Outstanding options/warrants,
     balance, beginning                  2,300,000     4,242,922      $.056
     Add (deduct):
     Granted                             5,400,000    24,683,332      $ 111
     Exercised                                   -             -
     Expired or canceled                         -             -
                                         ---------    ----------
     Balance, ending                     7,700,000    28,926,254
                                         =========    ==========

14.  Future minimum lease payments

     Future minimum lease payments from the noncancelable direct financing lease
     of communications  equipment owned by the Company,  as of June 30, 2001, is
     as follows

         Years ending
           June 30, 2002                                       $178,000
           June 20, 2003                                        213,200
           June 30, 2004                                        171,800
                                                               --------

         Total future minimum lease payments                   $563,000
                                                               ========

15.  Subsequent events:

     Litigation with former officer and director:

     On February 1, 1999, the Company's former CEO filed a complaint against the
     Company,  its present CEO and the managing  director of Zephyr.  The former
     CEO alleges  that he is entitled to  continued  compensation  and  benefits
     based upon a March 31, 1997  addendum to his December  26, 1995  employment
     contract (which expired on May 10, 1998) and that he was wrongfully induced
     to resign as an officer in June 1998. He alleges that he is due salary, car
     allowance, health plan and life insurance payments, stock bonuses and other
     items from May 10, 1998 through June 30, 2002.

<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000


14.  Subsequent events:

     On March 24, 1999, the Company filed its answer and extensive counterclaims
     against the former CEO. The Company's answer states that the March 31, 1997
     addendum  is null and void as a matter of law,  denies  any  wrongdoing  or
     inducement  and  denies  any and  all  liability  to the  former  CEO.  The
     Company's  answer further  states as  affirmative  defenses that the former
     CEO's claims are barred by the  doctrine of estoppel and unclean  hands and
     by failure of consideration,  fraud, and illegality,  waiver and failure to
     mitigate.  The Company  states that the March 31, 1997 addendum was entered
     into under  circumstances of fraud and illegality and that the former CEO's
     alleged claims are setoff by the  counterclaims of the Company against him.
     The matter was settled by mutual  release with no party paying the other as
     discussed in Note 13.

15.  Selected quarterly data (unaudited):

     The  following  summarized  certain  quarterly  results of  operations  (in
     thousands, except share amounts):

     Year ended June 30, 2001:
                                                      Quarter ended
                                                      -------------
                                            September  December   March   June
                                               30,        31,      31,     30
                                            ---------  --------   -----   -----
       Expenses:
       Selling, general and administrative  $     235  $    181   $ 301   $ 113
       Interest                                     -         3       6       3
                                            ---------  --------   -----   -----
                                                  235       184     307     116

       Deduct other income (expense)              397        39      (7)   (360)
                                            ---------  --------   -----   -----
       Net loss                             $     162  $   (145)  $(314)  $(476)
                                            =========  ========   =====   =====
       Net loss per share                   $    .(00) $   (.00)  $(.00)  $(.01)
                                            =========  ========   =====   =====


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2001 AND 2000

15.  Selected quarterly data (unaudited) - (continued):


     Year ended June 30, 2000:
                                            September  December  March    June
                                               30,        31,     31,      30
                                            ---------  --------  -----  -------

       Expenses:
       Selling, general and administrative  $     142  $    198  $ 219  $    94
       Interest                                    51        51     76       78
                                            ---------  --------  -----  -------
                                                  193       249    295      172

       Deduct other income (expense)              (50)        4      8   (1,277)
                                            ---------  --------  -----  -------
       Net loss                             $    (243) $   (245) $(287) $(1,449)
                                            =========  ========  =====  =======
       Net loss per share                   $    .(01) $   (.01) $(.01) $  (.02)
                                            =========  ========  =====  =======

16.  Selected quarterly data (unaudited):

     Comtec  International,  Inc.  common stock is traded on the OTC  Electronic
     Bulletin  Board system under the symbol of YRLS.  The following  table sets
     forth the  quarterly  high and low sales prices for the periods  indicated.
     The prices shown  represent  actual sales prices  without  retail  markups,
     markdowns, or commissions.

      Share price of common stock:
                                              2001              2000
                                          High     Low      High    Low
                                          ----     ---      ----    ---

      First quarter, September 30,        $.19     $.07     $.12    $.04

      Second quarter, December 31,         .11      .05      .16     .05

      Third quarter, March 31,             .09      .05      .66     .08

      Fourth quarter, June 30,             .14      .05      .24     .07

     A significant fourth quarter adjustment was made during the year ended June
     30,  2001 to  write-down  certain  communications  equipment  to  it's  net
     realizable value in the amount of $265,000.

     A significant fourth quarter adjustment was made during the year ended June
     30, 2000 to write-down  certain LED Equipment to it's net realizable  value
     in the amount of $1,314,300.