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

                                   FORM 10-KSB

            [X] Annual Report Pursuant to Section 13 or 15(d) of the
            Securities Exchange Act of 1934 For the Fiscal Year Ended
                                  June 30, 1999
                           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.)

          9350 East Arapahoe Road, Suite 340, 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        No x
                                   ---       ---

 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:[ ]

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,  March 10, 2000, the aggregate
market value of the  Company's  Common Stock (based on the average of the ($.32)
bid and ($.41) asked price) held by non-affiliates was $15,399,000.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

              Number of shares outstanding of each of the issuer's
                classes of Common stock as of March 10, 2000 was
                               44,876,191 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


<PAGE>



FORM 10-KSB ANNUAL REPORT - FISCAL YEAR ENDED JUNE 30, 1999

COMTEC INTERNATIONAL, INC.


TABLE OF CONTENTS                                                           Page

PART I

Item 1.   Description of Business                                             3.
Item 2.   Description of Property                                            14.
Item 3.   Legal Proceedings                                                  15.
Item 4.   Submission of Matters to a Vote of Security Holders                16.

PART II

Item 5.   Market for Common Stock Equity and Related Stockholder Matters     17.
Item 6.   Management's Discussion and Analysis or Plan of Operation          19.
Item 6a.  Quantitative And Qualitative Disclosures About Market Risk         24.
Item 7.   Financial Statements                                               25.
Item 8.   Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure                                   25.
PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section  16(a) of the Exchange Act         25.
Item 10. Executive Compensation                                              28.
Item 11. Security Ownership of Certain Beneficial Owners and Management      32.
Item 12. Certain Relationships and Related Transactions                      34.
Item 13. Exhibits and Reports on Form 8-K                                    35.

SIGNATURE PAGE                                                               37.

INDEPENDENT AUDITOR'S REPORT AND CONSOLIDATED FINANCIAL
STATEMENTS, JUNE 30, 1999 AND 1998                                          F-1.

Exhibit 10.8                                                                 39.




                                                                               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 many
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 9350 East Arapahoe Road,  Suite 340,  Englewood,  Colorado 80112; its
telephone number is (303) 662-8069;  its facsimile number is (303) 662-8485. The
Company is currently  authorized to issue 100,000,000 common shares,  $0.001 par
value and 10,000,000  preferred  shares,  $0.001 par value.  The Company has one
wholly owned operating subsidiary, American Wireless Network, Inc. ("AWN").

     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 have been  undertaken
by CMSR  Systems,  Inc.  under a  management  contract  wherein  AWN  supervises
management  of the systems  pursuant to FCC rules but actual hands on operations
are now conducted by CMSR Systems,  Inc. The Company is now exploring  potential
acquisition and or merger  transactions with existing business  opportunities in
telecommunications,  information  industries,  computer  industry  or other cash
positive business operations.

2.   CURRENT OPERATIONS
     ------------------

     OPERATING SUBSIDIARY

     On December 3, 1996 the Company formed  American  Wireless  Network,  Inc.,
(`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  ownership and control of
the  Company to AWN  (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  additional  Company  affiliated  entities.  In March of 1997 the  Company
exchanged  for  stock in the  Company  all  shares  of AWN held  outside  of 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  SMR  sites  in  seven  MTA's  in the  southeastern  U.S.A.,  operating
specialized mobile radio licenses purchased from Centennial Communications Corp.
As a result of the Asset Acquisition Agreement (as amended) entered into between
AWN and CMSR  Systems,  Inc. on April 15, 1999 which  became  effective  June 1,
1999, the day to day SMR operations of AWN have been undertaken by CMSR Systems,
Inc.  under a  management  contract  wherein AWN  supervises  management  of the
systems pursuant to FCC rules but actual day to day operations are now conducted
by CMSR Systems, Inc.

                                                                               3
<PAGE>


     PRINCIPAL OFFICE OF REGISTRANT

     On December 15, 1997 the Company  relocated its principal  offices to Suite
340, East Arapahoe Road, Englewood,  Colorado, 80112. The Company's phone number
is (303)  662-8069.  The  Company's  operating  subsidiary,  AWN,  which is also
located at such address,  entered into a three-year lease for the premises, said
lease ending November 30, 2000.

     INACTIVE SUBSIDIARIES

     Custom  Concepts,  Inc.  was  incorporated  as a  Colorado  Corporation  in
November, 1997 as an additional subsidiary of the Company. Custom Concepts, Inc.
is currently inactive with no defined business plan and has no material assets.

     On January 14, 1998 the name of CTI Real Estate,  Inc. a subsidiary  of the
Company  which held real estate  formerly  owned by the Company,  was changed to
AmNet  Resources,  Ltd.  ("AmNet").  AmNet has no active  operations or material
assets.  AmNet is currently  inactive  with no defined  business plan and has no
material assets.

     International Media Group, Ltd. ("IMG") was formed as Colorado  Corporation
in March of 1997  with a plan to  operate  and  market  as a public  advertising
media,  the use as of  giant  LED  screens.  The  Company  has  entered  into an
agreement  to  dispose  of the LED  screens.  IMG has no  active  operations  or
material assets. IMG is currently inactive with no defined business plan and has
no material assets


3.   CHANGE IN MANAGEMENT
     --------------------

     James J. Krejci and began initial  employment  with the Company on February
17, 1998 and in conjunction therewith, was named CEO of AWN and Chief Operations
Officer of the Company.

     On June 23,  1998,  Donald G. Mack  resigned  as  President  and CEO of the
Company and in all officer and  director  capacities  with  subsidiaries  of the
Company.  Mr. Mack remained as a Director of the Company. Mr. Mack's resignation
letter stated that his  resignation  was not a waiver of any rights or claims to
any compensation,  stock, options,  bonuses or accrued amounts of cash, loans or
guarantees  made on behalf of the Company under the terms and  conditions of his
employment  contract.  Mr.  Mack's  resignation  letter did not request that any
disagreement be reported or disclosed in the Company's  regulatory filings.  Mr.
Mack has subsequently  filed  litigation  against the Company related to alleged
compensation  entitlements  and the  Company has filed  extensive  counterclaims
against Mr. Mack. (SEE ITEM 3 LEGAL PROCEEDINGS - LITIGATION WITH FORMER OFFICER
AND DIRECTOR)

     On  August  26,  1998,  pursuant  to  a  call  for  a  special  meeting  by
shareholders  owning  in  excess  of 10%  of the  Company's  common  stock,  and
presented  to the  shareholders  by a notice and proxy  mailed by the  Company's
independent transfer agent on August 11, 1998, a special

                                                                               4
<PAGE>


meeting  and  election  of all  shareholders  of the  Company  was held with the
following proposed  purposes:  remove Donald G. Mack from the Board of Directors
for cause;  remove Daniel  Melnick from the Board of  Directors;  elect James J.
Krejci  to the Board of  Directors  and  elect  Gordon D.  Dihle to the Board of
Directors.  As a result of the Special Meeting of  Shareholders  held August 26,
1998,  Donald G. Mack and  Daniel  Melnick  were  removed  as  Directors  of the
Company. In the same special shareholders meeting, James J. Krejci and Gordon D.
Dihle were elected to the  Company's  Board of  Directors  until the next annual
meeting  of the  Shareholders.  As of August  26,  1998 the  Company's  Board of
Directors  consisted of J. Kent  Millington  (appointed  May 8, 1998),  James J.
Krejci and Gordon D. Dihle.

     Prior to the special  meeting of  shareholders  held August 26, 1998,  by a
letter dated August 21, Donald G. Mack tendered his resignation as a Director of
the  Company  and as an  officer  and  director  of  any  of  its  subsidiaries.
Previously, on June 23, 1998 Mr. Mack had tendered his resignation as an officer
of the Company and as an officer and  director of any of its  subsidiaries.  Mr.
Mack's  resignation  letter stated that his  resignation was not a waiver of any
rights or claims to any compensation, stock, options, bonuses or accrued amounts
of cash,  loans or guarantees  made on behalf of the Company under the terms and
conditions of his employment  contract.  Mr. Mack's  resignation  letter did not
request  that  any  disagreement  be  reported  or  disclosed  in the  Company's
regulatory filings. Mr. Mack was officially removed as a Director of the Company
by the  special  meeting of  shareholders  held  August 26,  1998.  Mr. Mack has
subsequently   filed   litigation   against  the  Company   related  to  alleged
compensation  entitlements  and the  Company has filed  extensive  counterclaims
against Mr. Mack. (SEE ITEM 3 LEGAL PROCEEDINGS - LITIGATION WITH FORMER OFFICER
AND DIRECTOR)

     J. Kent Millington who was appointed May 8, 1998 resigned from the board of
directors  effective  September 2, 1998.  With respect to the resignation by Mr.
Millington, there was no disagreement with Mr. Millington on any administrative,
operational or technology issues or public disclosure which disagreement, if not
resolved  to the  satisfaction  of this  officer,  would have caused him to make
reference to the subject matter in connection with its report.

     At a Special  Board of  Directors  meeting  held  September  2,  1998,  the
following officers were appointed by the Board of Directors:  James J. Krejci as
President,  CEO and  Chairman of the Board of  Directors  and Gordon D. Dihle as
Secretary  and  Treasurer.   Michael  Bunch   remained  as  the   organization's
controller.

     On September 30, 1998, Marc Maassen, an individual previously  unaffiliated
with the Company or current  management  was appointed to the Board of Directors
as an outside director.

     Current  management of the Company  consists of President and CEO, James J.
Krejci,  an MBA,  formerly a top  executive  with Jones  Intercable,  Inc./Jones
International,   Ltd.   associated   companies,   Chief  Financial  Officer  and
Secretary/Treasurer,  Gordon Dihle, an attorney and CPA, and Controller, Michael
Bunch, a CPA and MBA. Marc Maassen is an outside director of the Company,

                                                                               5
<PAGE>



4.   ASSET FORFEITURES, DISPOSITIONS AND TERMINATIONS OF CONTRACT RIGHTS
     -------------------------------------------------------------------

     DISPOSITION OF LED SCREEN ASSETS

     On December 31, 1998 the Company  disposed of six (6) giant  light-emitting
diode  (LED)  screens  by sale  to  Lanstar  Computer  Products,  Inc.,  a Texas
Corporation, located in Dallas, Texas. The giant LED screens are used to provide
computer light  presentation  programs,  adaptable for indoor or outdoor use for
sporting  events,   advertising  displays  and  other  theatrical  applications.
Pursuant to the Purchase  Agreement entered into between the Company and Lanstar
Computer Products, Inc., the LED screens were sold to Lanstar Computer Products,
Inc. in exchange for a  Promissory  Note payable to the Company in the amount of
two million four hundred thousand dollars  ($2,400,000).  The promissory note is
secured by an agreement utilizing the assets sold as security for the promissory
note. The entire principal of the promissory note was due December 31, 1999. The
promissory note, a general obligation of Lanstar Computer Products,  Inc., bears
simple  interest at the rate of eight percent (8%) per annum payable  quarterly.
The Buyer,  Lanstar Computer Products,  Inc., is a Texas Corporation  located at
13707 Gamma Road, Dallas,  Texas 75244.  Prior to this disposition,  neither the
Company, nor any of its subsidiaries,  directors, officers or persons associated
with the  Company's  officers and directors  had any  relationship  with Lanstar
Computer Products, Inc. or any of its officers or directors.  Lewis D. Rowe, who
is not an officer or director of the Company,  but who is listed as an affiliate
of the Company in the  Company's  June 30,  1997,  1998 and 1999 Form 10KSB as a
person known by the Company to own  beneficially  more than 5% of the  Company's
 .001 par value common stock, may be an affiliate of Lanstar  Computer  Products,
Inc.,  a non-pubic  company.  The LED Screens had been on  consignment  for sale
since August 1998. No determination as to the  collectability  of the promissory
note has been made.

     AGREEMENT FOR DISPOSITION OF 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  is 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.  The sale is subject to certain
conditions and events,  including final and  unappealable  regulatory  approvals
relating to the transfer of the licenses to the Buyer. In consideration  for the
sale,  the Buyer is to assume  approximately  $1,400,000  of  American  Wireless
Network,  Inc.'s debt to the Federal  Communications  Commission  related to the
licenses. AWN will retain 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  includes  a 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 to be sold to CMSR Systems,  Inc. were  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,

                                                                               6
<PAGE>



and  September 3, 1998 and Items 2 and 7 of the form 8K-A and  Exhibits  thereto
dated  February  9,  1999.  Effective  June 1,  1999  all  hands  on  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.  Application  has been made and  approval  of the  transfer  of the 900 MHz
licenses  and  assumption  of the debt to the FCC  related  to the  licenses  is
pending at the FCC.

(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 acts as
the supervisor of certain SMR operations managed by CMSR Systems, Inc. under the
provisions of the management contract with CMSR Systems, Inc.

     During the fiscal year ended June 30, 1999 and  through  the  present,  the
Company has continued as a  developmental  stage entity  focused on developing a
business plan.  Activities have been  concentrated on creating and executing the
Company's strategic business plan, raising private financing, efforts to acquire
other  entities and  operations,  developing a management  and support  staff to
execute its business  plan,  and  maintaining  reporting  compliance for various
federal  government  agencies,  such as the  SEC and  FCC.  The  Company  is now
exploring  potential  acquisition  and  or  merger  transactions  with  existing
business opportunities in telecommunications,  information industries,  computer
industry or other compatible cash positive business operations.

Current Status and Operations

     On April 15, 1999, AWN executed an Asset Acquisition Agreement (as amended)
with CMSR  Systems,  Inc.,  ("Buyer") a  unaffiliated  Nevada  corporation.  The
purpose of the Asset  Acquisition  Agreement is to facilitate the future 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.  The sale and an
associated  lease of SMR related  equipment  owned by AWN, is subject to certain
conditions and events,  including final and  unappealable  regulatory  approvals
relating to the transfer of the licenses to the Buyer. In consideration  for the
sale,  the Buyer is to assume  approximately  $1,400,000  of  American  Wireless
Network,  Inc.'s debt to the Federal  Communications  Commission  related to the
licenses. AWN will retain 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  includes  a lease of SMR  related
equipment  owned  by AWN to  CMSR  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. Application has been made and approval of the transfer of the
900 MHz licenses and  assumption  of the debt to the FCC related to the licenses
is pending at the FCC. At present AWN acts as the

                                                                               7
<PAGE>


supervisor  of  SMR  operations  conducted  by  CMSR  Systems,  Inc.  under  the
provisions of the management contract.

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. Like the public telephone system,  cellular systems are regulated by the
FCC and public service commissions of respective state governments.

     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 to build wide-area networks through roaming agreements.

     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, hospital, general government agency field operations), mining operations
and messenger services.

(c)  Government Regulation:

     The Company's operations 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.

                                                                               8
<PAGE>


     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
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 actions of these  agencies,  future action 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.

                                                                               9
<PAGE>


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.

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.

(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  on a full time  basis:  James  Krejci,
President  and Chief  Executive  Officer of the  Company and Gordon  Dihle,  the
Secretary/Treasurer  of the Company.  Mike Bunch,  the Controller is employed by
the Company on a part time as needed basis.

     The Company  periodically  retains outside  consultants  such as attorneys,
accountants,  engineers, technicians and industry consultants to perform certain
corporate administrative tasks and SMR related maintenance.

(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  currently  offers  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").

                                                                              10
<PAGE>



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  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, 1999,  the Company had an  accumulated
deficit of approximately $13,252,100. 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

                                                                              11
<PAGE>


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, 1999 and 1998, 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  may be  required  to enhance  its  existing  systems and to develop and
introduce new products that take advantage of technological advances and respond
promptly to new customer requirements and evolving industry standards. There can
be no  assurance  that the  Company  will be able to keep  pace  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  Telecommunications  Act.  The
Company's  ability  to  conduct  its  business  is  dependent,  in part,  on its
compliance   with  FCC  rules   and   regulations.   See   "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  business.  In  addition,  should  the FCC  fail to  renew  any of the
Company's licenses or pass rules or regulations that limit the Company's ability
to conduct  its  business,  this could  have a  material  adverse  effect on the
Company.

                                                                              12
<PAGE>


     Assets Primarily  Consist of Intangible FCC Licenses.  The Company's assets
consist primarily of intangible assets,  principally FCC licenses,  the value of
which will depend  significantly  upon the success of the Company's business and
the growth of the SMR and wireless communications  industries in general. In the
event of default on indebtedness or liquidation of the Company,  there can be no
assurance  that the value of these  assets  will be  sufficient  to satisfy  its
obligations.

     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

                                                                              13
<PAGE>


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  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 2000 square feet of executive office space at 9350
East Arapahoe Road, Suite 340, Englewood,  Colorado. The office lease extends to
November 30, 2000. All  corporate,  administrative,  accounting and  operational
functions are carried out from the corporate  headquarters.  The Company  shares
offices with AWN. As a result of employee and operational reductions, this lease
space is only twenty five percent utilized for Company purposes and is more than
adequate for the Company's current needs. The Company has subleased a portion to
its office space in order to offset office overhead.

                                                                              14
<PAGE>



ITEM 3.  LEGAL PROCEEDINGS

     On September  14, 1998 the Company  received by certified  mail a Complaint
filed in Superior  Court of  California,  County of San Diego,  Case No.  723581
entitled  John  Brent,  et al  vs.  ComTec  International,  Inc.,  a New  Mexico
corporation,  et al Defendants.  The Complaint by seven named Plaintiffs alleges
securities  fraud,   improper  sale  of  unregistered   securities,   and  stock
manipulation against the Company and five individual  defendants who were former
officers and/or directors of the Company,  none of whom are currently associated
with  the  Company.  The  Plaintiff's   interrogatory  responses  indicate  that
allegations of actual damages by the seven Plaintiffs totals less than $100,000.
The Company believes that it has meritorious defenses and will vigorously defend
against  the  allegations  of the  Complaint.  A motion to  dismiss  Plaintiffs'
complaint  based upon statute of limitations and other issues has been initiated
by the Company and remains  pending.  A trial date has been  tentatively set for
May 28, 2000.

Litigation with Former Officer and Director

     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,  a current  officer and a shareholder  of ComTec.  On March 24, 1999
ComTec  filed  its  Answer  and  extensive  Counterclaims  against  Donald  Mack
("Mack").  Mack  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 in May of 1998).  Mack further alleges that
although he resigned as an officer in June 1998,  he was  wrongfully  induced to
resign. Mack alleges that he is due salary, car allowance, health plan payments,
life  insurance  payments,  stock  bonuses  and other  items from June 30,  1998
through June 30, 2002.  ComTec'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  Mack.  ComTec's  answer  further  states  as
affirmative  defenses  that Mack's claims are barred by the doctrine of estoppel
and unclean  hands,  that the March 31,  1997  addendum  was entered  into under
circumstances of fraud and illegality,  that Mack's claims are barred by failure
of consideration, fraud and illegality, waiver, failure to mitigate, that Mack's
alleged claims are more than setoff by the  counterclaims of ComTec against Mack
and that Mack's alleged  damages,  if any, are the result of Mack's own actions.
ComTec believes it has meritorious and virtuous defenses and anticipates that it
will vigorously and  effectively  defend against any and all claims by Mack. The
Company filed a number of  Counterclaims  against Mack.  Among the  Counterclaim
allegations of ComTec  against Mack are  allegations  that an agreement  entered
into in May of 1995,  whereby Mack gained control of ComTec through an agreement
for ComTec to purchase the assets of a corporation  controlled by Mack, KeyStone
Holding  Corporation,  was entered  into with  intent to defraud  ComTec and its
shareholders.  Among other allegations,  ComTec alleges that  misrepresentations
and  omissions  of  material  fact  were  made by  Mack  prior  to the  Keystone
transaction,  that Mack used ComTec as an  instrumentality  for his own personal
benefit and affairs,  that Mack acted to conceal material facts regarding Mack's
ultra vires and unauthorized acts in the name of ComTec.  ComTec further alleges
that Mack took  unauthorized  and unearned  bonuses in stock of ComTec and cash,
that the execution of the employment

                                                                              15
<PAGE>


addendum  through which Mack is alleging amounts are now due him from ComTec was
accompanied  by  circumstances  of  fraud  and  collusion,  and that  Mack  made
unauthorized  use of ComTec's funds and property.  ComTec's  claims against Mack
include:  intentional   misrepresentation/fraudulent  inducement  regarding  the
Keystone  Transaction;  fraudulent  concealment/constructive  fraud;  breach  of
warranty;  breach of fiduciary duty; conversion;  fraudulent  conveyance;  civil
theft pursuant to C.R.S.  Sections  18-4-401 and 18-4-405 and  securities  fraud
pursuant  to  C.R.S.  Section  11-51-501.  ComTec  seeks  monetary  damages  and
constructive  trust as well as  Declaratory  Judgment  pursuant to C.R.C.P.  57.
ComTec believes it has meritorious  claims and will resolutely pursue its claims
against Mack. In October of 1999,  the  Plaintiff,  Mack,  filed for  bankruptcy
protection.  Various motions are now pending with respect to the Mack bankruptcy
matter as it  relates to the  Company's  claims  against  Mack as well as issues
related  to the  status  and  jurisdiction  of Mack's  allegations  against  the
Company.  In February 2000,  attorneys  representing  Mack in the original state
court action as well as Mack's bankruptcy proceeding have each filed motions for
leave to withdraw from  representation  of Mack. The state court action has been
suspended pending resolution of jurisdictional  issues and other  administrative
matters involving Mack's bankruptcy proceedings.

     On February  14,  2000,  the  Company was served with a Complaint  filed in
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.  The Company believes that it has meritorious  defenses
and will vigorously defend against the allegations of the Complaint. The Company
has not yet filed its answer to the complaint but has filed an initial motion to
dismiss for lack of personal jurisdiction.  Due to the preliminary nature of the
proceedings, further information is not available.

     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

     On August 26, 1998, pursuant to a call for a special  shareholders  meeting
by shareholders owning more than 10% of the Company's common stock and presented
to the  shareholders  by a notice and proxy mailed by the Company's  independent
transfer agent on August 11, 1998, a special election of the shareholders of the
Company was held with the  following  proposed  purposes:  Remove Donald G. Mack
from the Board of Directors for cause;  Remove Daniel  Melnick from the Board of
Directors;  Elect James J.  Krejci to the Board of  Directors;  Elect  Gordon D.
Dihle to the Board of Directors.  The  necessary  quorum of shares were voted at
the special meeting. On the date of the election there were 39,626,718 shares of
 .001 par value common stock  outstanding.  As a result of the Special Meeting of
Shareholders  held  August  26,  1998,  Donald G. Mack and Daniel  Melnick  were
removed as Directors  of the  Company.  James J. Krejci and Gordon D. Dihle were
elected to the Company's Board of Directors until the next annual meeting of the
Shareholders.  The results of the special  shareholder  meeting were  previously
reported in the 8K filed September 3, 1998.

                                                                              16
<PAGE>


     No matters  have been  submitted to the  shareholders  since the August 26,
1998 meeting.

                                     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  614  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.

     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, 1998 and June 30,
1999,  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 1998:
First Quarter: July 1, 1997 through September 30, 1997        $0.52      $0.24
Second Quarter: October 1, 1997 through December 31, 1997     $1.80      $0.22
Third Quarter: January 1, 1998 through March 31, 1998         $0.85      $0.19
Fourth Quarter: April 1, 1998 through June 30, 1998           $0.20      $0.09

Fiscal 1999:
First Quarter: July 1, 1998 through September 30, 1998        $0.10      $0.05
Second Quarter: October 1, 1998 through December 31, 1998     $0.06      $0.02
Third Quarter: January 1, 1999 through March 31, 1999         $0.05      $0.02
Fourth Quarter: April 1, 1999 through June 30, 1999           $0.07      $0.03


                                                                              17
<PAGE>


(b)  Holders:

     As of March 10, 2000 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                      614

(c)  Dividends:

     The Company has paid no dividends  during fiscal years ended June 30, 1999,
June 30, 1998 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 entities during the Fiscal Year Ended
June 30,  1999  which  the  Company  believed  to be  exempt  from  registration
requirement as a nonpublic offering.

Date          Number of Shares    Issued to                       Consideration

1/15/99           36,000          Marc Maassen                    Services

Unregistered  Shares  Issued  pursuant  to  Regulation  S during  the year ended
--------------------------------------------------------------------------------
6/30/99.
--------

Date          Number of Shares   Issued to                        Consideration

9/2/98           1,538,461       Overseas Foreign Holdings, Ltd.  Loan Fees

9/2/98           1,538,461       Queens Cross Group, Ltd.         Loan Fees

11/12/98         1,538,461       Cayman Offshore Intl. Ltd.       Loan Fees

     As reported on Form 8Ks filed  September  3, 1998 and November 23, 1998 the
above listed shares of the Company's  .001 par value common stock were issued to
entities not residents of the United States of America pursuant to Regulation S.
All of the total 4,615,383 shares of

                                                                              18
<PAGE>


001 par value  common  stock were  issued to entities  organized  outside of the
United  States of America  and  entities  that are not  residents  of the United
States of America.

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  A 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, 1999,
and June 30, 1998, 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 "Business--Risk Factors" in this report.

                                                                              19
<PAGE>



(a)  Plan of Operation:

     From May 10, 1995 until April of 1999,  the  Company's  strategic  business
plan was, aside from terminated  venture in the LED screens and the divested TTI
prepaid phone card investment, been 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 have been undertaken by CMSR Systems,  Inc. under a management
contract wherein AWN supervises  management of the systems pursuant to FCC rules
but actual day to day  operations  are now conducted by CMSR  Systems,  Inc. The
Company is now exploring  potential  acquisition and or merger transactions with
existing business opportunities in telecommunications,  information  industries,
computer industry or other cash positive 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) has only generated  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 entered the initial  phase of a purchase  agreement
whereby AWN purchased seven  operating SMR systems for $3,035,700.  The wireless
communications   assets  and  associated   business   acquired  from  Centennial
Communications Corp. lay within the following seven MTA's: Birmingham,  Alabama;
Knoxville,  Tennessee;  Memphis, Tennessee;  Nashville,  Tennessee; New Orleans,
Louisiana;  Oklahoma City,  Oklahoma;  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  are to be sold to CMRS
Systems,  Inc. The initial phase of the Asset Acquisition Agreement (as amended)
became effective June 1, 1999. The purpose of the Asset Acquisition Agreement is
to  facilitate  the future  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. The agreement also includes the lease of SMR related equipment
owned by AWN to CMSR Systems, Inc. The sale is subject to certain conditions and
events,  including final and unappealable  regulatory  approvals relating to the
transfer of the licenses to the Buyer. In consideration  for the sale, the Buyer
is to assume approximately  $1,400,000 of American Wireless Network, Inc.'s debt
to the  Federal  Communications  Commission  related to the  licenses.  AWN will
retain 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 900 MHz Licenses and American  Wireless  Network,  Inc.'s customer base
and customer lists  associated with the specified 900 MHz licenses to be sold to
CMSR Systems,  Inc. were purchased by American Wireless Network, Inc. on July 6,
1998 as a part of the  acquisition of divisional  segment assets from Centennial
Communications Corp. As

                                                                              20
<PAGE>


a part of the Asset Acquisition Agreement (as amended),  the Company will assign
its tower site  licenses and lease 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 5 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.  Management  believes
this agreement  will relieve the Company of the now existing  negative cash flow
burdens of debt  service,  operating  deficits and extensive  maintenance  costs
related to the SMR systems.  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.
Application  has been made and  approval of the transfer of the 900 MHz licenses
and  assumption of the debt to the FCC related to the licenses is pending at the
FCC.

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

     The Company  reported a net loss of $1,526,800  for the year ended June 30,
1999  and a net loss of  $3,029,900  for the year  ended  June 30,  1998 and has
reported net losses of $13,231,700  from inception  (March 15, 1994) to June 30,
1999.  As reported on the  consolidated  statements  of cash flows,  the Company
incurred  deficient  cash flows from  operating  activities  of  $1,205,300  and
$1,046,000  for the years  ended  June 30,  1998 and 1999  respectively  and has
reported  deficient  cash flows from  operating  activities of  $4,480,600  from
inception (March 15, 1994) to June 30, 1999. 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-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 would 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 in license rights,  the recoverability of which is dependent upon the
success of future events.

     On July 2, 1998 the Company  obtained a loan of $600,000  from Queens Cross
Group,  Ltd.  for the  purpose  of  closing  the  purchase  of SMR  assets  from
Centennial  Communications,  Inc.  On July 20,  1998  the  Company  obtained  an
operating loan of $250,000 from Overseas

                                                                              21
<PAGE>


Foreign Holding, Ltd. and on October 26, 1998 the Company obtained an additional
operating loan of $200,000 from Cayman Offshore International, Ltd.

     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
or other cash positive business operations.  The Company entered an agreement to
sell its FCC licenses to eliminate  negative cash flow from SMR  operations,  to
satisfy debt  requirements  and in a plan anticipated to generate cash flows, is
expecting to lease its SMR equipment.

     In the  previous  fiscal  year and in the year  ended  June 30,  1999,  the
Company paid due diligence  deposits to Sigma Finance  Corporation in connection
with a nonbinding  financing  proposal for up to a $200  million  ten-year  bond
issue to be collateralized by all of the Company's assets. In September 1998, as
reported in Form 10KSB for the year ended June 30, 1998,  the Board of Directors
approved  the  preliminary  requirements  of the  proposed  tentative  financing
arrangement and management was authorized to take all necessary action to pursue
and  finalize  the  transaction  if the  opportunity  arises.  The  Company  has
additional  unrelated  proposals  for private debt  funding with other  entities
pending.  There is no  agreement  or  requirement  on the part of Sigma  Finance
Corporation or any other entity to provide financing to the Company.

     Should the Company be successful in obtaining  substantial  additional debt
financing,  management plans to seek acquisitions of more  telecommunication  or
computer  related  businesses,  information  and data  services  or  other  cash
generating 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 expansion and its overall business plan.

     From  March 1, 1999 to the end of fiscal  year  ended  June 30,  2001,  the
Company  estimates  its cash  needs to  maintain  operations  under its  current
negative  cash flow  situation is $600,000.  This amount is composed of $600,000
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  1999 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
wireless industry requires adequate financing and on-going funding sources.  The
Company has 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).

                                                                              22
<PAGE>


(e)  Results of Operations:

Fiscal Year Ended June 30, 1999

     For the year ended June 30,  1999 the  Company  recorded a net loss  before
other income and expense of $54,700 and a net loss of $1,526,800 with a net loss
per common share of $0.04.  As of June 30,  1999,  the Company  incurred  direct
expenses of $831,000  associated with the  administration and limited operations
of the Company compared to $1,031,000  reported in the year ended June 30, 1998.
From the  period  of July 1,  1998 to June 30,  1999  the  Company's  management
incurred general and administrative  expenses of $831,000 a decrease of $200,000
from similar  expenses  incurred  during the year ended June 30, 1998. The major
reason for the decrease in expense were  employee  reductions  and  management's
continuing  efforts to reduce  overhead.  The  Company had  ancillary  income of
$124,200 from dividends, interest and other sources. 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.  Interest expense of
$287,100,  Loan origination fees of $582,700 and losses from telephone  services
discontinued in December, 1997 of $776,500, were recorded, making up the bulk of
the total net loss of $1,526,800.


Fiscal Year Ended June 30, 1998

     For the year ended June 30,  1998 the  Company  recorded a net loss  before
other income and expense of $1,031,000  and a net loss of $3,029,900  with a net
loss per common share of $0.15. As of June 30, 1998 the Company  incurred direct
expenses of $1,031,000 associated with the administration and limited operations
of the Company compared to $2,574,100  reported in the year ended June 30, 1997.
From the  period  of July 1,  1997 to June 30,  1998  the  Company's  management
incurred general and administrative  expenses of $818,000 a decrease of $720,200
from similar  expenses  incurred  during the year ended June 30, 1997. The major
reason  for  the  decrease  in  expense  was a  decrease  in  recorded  officers
compensation  from  $980,300  reported  in the June  1997  year end to  $128,900
reported in the year ended June 30, 1998.  The Company had  ancillary  income of
$73,400 from dividends,  interest and other sources. 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.  Write-downs of LED
equipment of $1,374,300,  interest expense of $457,000,  loss from  foreclosures
and disposal of assets that totaled $179,600 and losses from telephone  services
discontinued in December, 1997 of $61,000, constituted 68% of the total net loss
of $3,029,900.

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

                                                                              23
<PAGE>


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 its 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  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  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.


                                                                              24
<PAGE>



ITEM 7.  FINANCIAL STATEMENTS

     Financial  statements  meeting the  requirements  of Item 310 of regulation
S-B,  for the years  ending  June 30,  1998 and June 30,  l999  which  have been
audited and reported upon by Hixson, Marin, Powell & DeSanctis,  P.A. and Grabau
& Company,  PC  respectively  are annexed as a separate  section to this Report,
designated pages F-1 through F-39.

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

     On July 14, 1997 the Company  retained Hixson,  Marin,  Powell & DeSanctis,
P.A. of Miami, Florida as its independent  Certified Public Accountants.  During
the  Company's  two most recent  fiscal  years,  and the interim  periods  since
completion of its last fiscal year, the Company had not consulted Hixson, Marin,
Powell  &  DeSanctis,  P.A.  with  respect  to  the  application  of  accounting
principles to a specified  transaction,  the type of audit opinion that might be
rendered  on the  Company's  financial  statements  or any  matter  that was the
subject of a disagreement  or reportable  event.  The Company duly reported this
change in accountants to the Securities and Exchange  Commission in its Form 8-K
current report dated July 18, 1997.

     On  September  3, 1999 the Company  retained  Grabau and  Company,  P.C. of
Denver,  Colorado as its independent  Certified Public  Accountants.  During the
Company's two most recent fiscal years, and the interim periods since completion
of its last fiscal year, the Company had not consulted Grabau and Company,  P.C.
with  respect  to  the  application  of  accounting  principles  to a  specified
transaction,  the type of audit  opinion that might be rendered on the Company's
financial  statements  or any matter that was the subject of a  disagreement  or
reportable  event.  The Company duly reported this change in  accountants to the
Securities  and  Exchange  Commission  in its  Form  8-K  current  report  dated
September 29, 1999.


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 or 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, 58               August, 1998         Next Annual
         Director, President & CEO                              Meeting

                                                                              25
<PAGE>


         Gordon D. Dihle, 45               October, 1997        May 8, 1998
         Director, Secretary & Treasurer   August, 1998         Next Annual
                                                                Meeting

         Marc Maassen, 49                  October, 1998        Next Annual
         Outside Director                                       Meeting


     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's  appointment as a Director of the
Company. 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.

     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.


                                                                              26
<PAGE>


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's  appointment as a Director of the
Company. 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's appointment as a Director of the
Company. Mr. Maassen was employed as follows:

     January 1999 through  present,  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

                                                                              27
<PAGE>


Company  during the past five years which is material  to an  evaluation  of the
ability or integrity of such director or officer.

(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, 1999.  As of the date of this report,  the SEC has not taken any  additional
action with regard to any failure to file reports

     To the  knowledge  of the Company  none of the  following  persons  (former
officers) who may have had Section 16 filing requirements during the fiscal year
ended June 30, 1999 complied with Section 16:  Clifford S. Perlman and Donald G.
Mack.

ITEM 10.  EXECUTIVE COMPENSATION.

(a)  General

     (1) through (7) All Compensation Covered. During the fiscal year ended June
30, 1999, the Company  employed the following  senior  management  personnel who
served pursuant to employment agreements further described in Section (g) 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,  1998 and June 30,
1999.

SUMMARY COMPENSATION TABLE

                            ANNUAL COMPENSATION        LONG TERM COMPENSATION
                            -------------------        ----------------------

Name and Position      Year   Salary   Bonus  Other  SAR   Options  LTIP  Other
-----------------      ----   ------   -----  -----  ---   -------  ----  -----


James J. Krejci        1999  $117,000   None   None  None   None    None   None
CEO and President      1998  $150,800   None   None  None   None    None   None






(c)  Option/SAR  Grant  Table.  During the fiscal  years ended June 30, 1998 and
     1999, no effective grants of stock options or freestanding  SAR's were made
     by the Company.

                                                                              28
<PAGE>



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 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;

                                                                              29
<PAGE>


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, 1999.  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 the anniversary of his
term as a director on September 30, 1999.

(d)  Aggregate  Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table.
     No  stock  options  or  freestanding   SAR's  are  issued  or  outstanding.
     Accordingly,  and  during the fiscal  year  ended June 30,  1999,  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.  (1) and (2). During the fiscal year ended June
     30, 1999,  Marc Maassen  received  36,000 shares of the Company's  .001 par
     value common stock valued at approximately  $600 for services as an outside
     director. No other director of the Company received any compensation in his
     capacity as director.

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

     A former  officer,  Donald G. Mack was acting as  President  and CEO of the
Company under a three year contract  ending in May,  1998.  Mr. Mack resigned as
President  and CEO of the Company and as an officer and  director of each of the
Company's  subsidiaries on June 23, 1998. Mr. Mack's  resignation  letter stated
that  his  resignation  was  not a  waiver  of  any  rights  or  claims  to  any
compensation,  stock,  options,  bonuses  or accrued  amounts of cash,  loans or
guarantees  made on behalf of the Company under the terms and  conditions of his
employment  contract and an alleged  addendum  thereto.  Mr. Mack's  resignation
letter did not request  that any  disagreement  be reported or  disclosed in the
Company's regulatory filings. Prior to a special

                                                                              30
<PAGE>


meeting of  shareholders  held  August 26,  1998,  one of the  purposes of which
meeting  was to remove Mr.  Mack as a  director,  by a letter  dated  August 21,
Donald G. Mack tendered his  resignation  as a Director of the Company and as an
officer and director of any of its  subsidiaries.  Previously,  on June 23, 1998
Mr. Mack had  tendered  his  resignation  as an officer of the Company and as an
officer and director of any of its subsidiaries.  Mr. Mack's  resignation letter
stated  that his  resignation  was not a waiver  of any  rights or claims to any
compensation,  stock,  options,  bonuses  or accrued  amounts of cash,  loans or
guarantees  made on behalf of the Company under the terms and  conditions of his
employment  contract.  Mr.  Mack's  resignation  letter did not request that any
disagreement be reported or disclosed in the Company's  regulatory filings.  Mr.
Mack was officially  removed as a Director of the Company by the special meeting
of shareholders held August 26, 1998. Mr. Mack has subsequently filed litigation
against the Company related to alleged compensation entitlements and the Company
has filed extensive counterclaims against Mr. Mack. SEE ITEM 3 LEGAL PROCEEDINGS
- LITIGATION WITH FORMER OFFICER AND DIRECTOR

     On February 16, 1998, the Company entered into a letter  agreement with the
Company,  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 equal annual  increments to equal a total of 10% of the
Company's  outstanding  common shares over a three year period. 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 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. 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  2nd,  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

                                                                              31
<PAGE>


 .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.  No
options have actually been issued pursuant to agreements with Mr. Dihle.

     Report on Repricing of Options/SAR's.

     No  stock  options  or  freestanding  SAR's  were  issued  or  outstanding.
Accodingly,  and during the fiscal year ended June 30, 1999, no stock options or
freestanding SAR's were repriced.

     With respect to the  informal  letter  agreement  between Mr.  Krejci,  the
Company's CEO, and the Company, in reference to the spirit of the agreement, the
strike price of the potential options available to be earned by Mr. Krejci,  was
modified (repriced) by Board of Director action on October 7, 1998, to $.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.  No options have actually been issued
pursuant to agreements with Mr. Krejci.

ITEM  11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)  Security Ownership of Certain Beneficial Owners:

     The information is furnished as of June 15, 1999 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, 1999, the Company had outstanding Class A .001 par value Common
Stock,  the only  class of voting  securities  outstanding.  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
-------------------                -----------------------        --------------

Lewis D. Rowe                           4,317,924  (1)                  9.6%
PO Box 1561GT
Zephyr House, Mary Street
Grand Cayman, British West Indies


(1.)     Includes  2,158,962 warrants to purchase .001 par value common stock at
         prices from $4.50 per share to $2.90 per share  expiring  between  June
         2000 and March 2001.  The shares and warrants were issued in payment of
         fees to Mr. Rowe between June 30, 1997

                                                                              32
<PAGE>


         and March 23,  1998 with  respect to certain  funding  received  by the
         Company from various entities not residents of the U.S.A.,  as reported
         on the Company's Form 8K filed April 7, 1998.

(f)  Security Ownership of Management:

     The  information  is furnished as of September 10, 1998 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:

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

Gordon D. Dihle                         218,676  (1)                    .5%
4881 South Amaro Drive
Evergreen, Colorado  80439

James Krejci                            274,286  (2)                    .6%
1133 Race Street
Denver, Colorado  80206

Marc Maassen                             64,000  (3)                    .1%
240 Hopi Place
Boulder, Colorado  80303

Total officers and directors,           556,962                  1.2% 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  option to purchase  1,000,000
     shares of the Company's  common shares which is to become  effective  after
     July 1, 1999.

(2)  does  not  include  stock  options  potentially  equal  to up to 10% 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  option to purchase  1,300,000 shares of
     the  Company's  common  shares which is to become  effective  after July 1,
     1999.

(3)  includes  automatic stock options to purchase 28,000 shares of common stock
     which  accrued to Mr.  Maassen as an outside  director  under the Company's
     1997 incentive stock option plan.

                                                                              33

<PAGE>



(c)  Changes in Control.

     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

     In April,  1997, a former officer of the Company,  Donald G. Mack, while an
officer/director/shareholder  of the Company  collateralized  the purchase of an
automobile in a limited  liability  company,  which is affiliated with Donald G.
Mack. A certificate  of deposit of the Company in the amount of $78,600 was held
by a financial  institution  as  collateral to the  automobile  purchased by the
related party.  The collateral was reduced by  approximately  $10,000 during the
subsequent  period.  The certificate of deposit is restricted and is included in
cash  and  equivalents.   The  Company  subsequently  obtained  release  of  the
collateralized certificate of deposit from the financial institution in December
1998. The Company has filed extensive  claims against Mr. Mack. SEE ITEM 3 LEGAL
PROCEEDINGS - LITIGATION WITH FORMER OFFICER AND DIRECTOR.

     On February  16, 1998,  the Company  entered  into a letter  agreement  (as
modified)  with the  Company,  which  remains to be  formalized,  by which James
Krejci initially 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. 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, 1999, 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

                                                                              34
<PAGE>


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  (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.

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)

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

10.02Letter  Agreement  between the Company and James Krejci dated  February 12,
     1998.  Incorporated  by reference to exhibit filed with the Company's  Form
     10KSB for June 30, 1997.

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

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

10.05Acquisition  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.

                                                                              35
<PAGE>



10.06Purchase 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.

10.07Asset  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 Acquistion Agreement

10.09Issuance  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 and September 3, 1998.

16.1 Letters on change in certifying  accountant.  (incorporated by reference to
     the  Company's  Incorporated  by reference to 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.

21.2 AmNet Resources, Inc., a Colorado Corporation.

21.3 International Media Group, Ltd., a Colorado Corporation.

21.4 Custom Concepts, Inc., a Colorado Corporation.

21.5 Reference  to Former  Subsidiaries  Incorporated  by  Reference to Exhibits
     Filed with the Company's Form 10-KSB for Fiscal Year Ended June 30, 1995.

27   Financial Data Schedule


     (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 two reports on Form 8-K during the quarter ended June 30,
1999, and two reports on Form 8-K from June 30, 1999 to the date of this report.


                                                                              36
<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 report  signed on its
behalf by the Undersigned, thereunto duly authorized.

COMTEC INTERNATIONAL, INC.

Date:   3/13/00                      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 the following  persons on behalf of the Company and in
the capacities and on the dates indicated.


Signature                            Title                          Date
---------                            -----                          ----

s/Gordon D. Dihle
---------------------------
Gordon D. Dihle                     Director                       3/13/00

s/James J. Krejci
---------------------------
James J. Krejci                     Director                       3/13/00

s/Marc Maassen
---------------------------
Marc Maassen                        Director                       3/13/00



                                                                              37
<PAGE>
















                  COMTEC INTERNATIONAL, INC., AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)

                          INDEPENDENT AUDITORS' REPORT

                                       AND

                        CONSOLIDATED FINANCIAL STATEMENTS

            YEARS ENDED JUNE 30, 1999 AND 1998 AND CUMULATIVE AMOUNTS
              FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 1999















                                       F-1


<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,  1999  and  the  related   consolidated   statements  of   operations,
shareholders' equity (deficiency) and cash flows for the year then ended and the
amounts for the years ended June 30, 1999 included in the cumulative period from
inception  (March  15,  1994) to June 30,  1999.  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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  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  audit  provides  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, 1999 included in the cumulative  period from inception (March 15,
1994)  to June  30,  1999  in  conformity  with  generally  accepted  accounting
principles.

                                       F-2


<PAGE>



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,  1999 of  $1,526,800  and has  experienced  net losses  from
inception.  Sources  of cash  flows  have been  through  the sales of its common
shares ($1,138,900) and from borrowings under financing activities ($6,609,600).
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. As discussed in Notes 13 and 14 of notes to consolidated
financial statements,  the Company is a defendent in various matters relating to
stock transactions and an employment agreement.  Because of the present stage of
litigation,   the  ultimate   outcome  of  these  matters  cannot  presently  be
determined.  Accordingly,  no  provisions  for losses and  liabilities  that may
result  therefrom  have been  made in the  accompanying  consolidated  financial
statements.  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 PC

Denver, Colorado
January 31, 2000

                                       F-3


<PAGE>

<TABLE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
              CONSOLIDATED BALANCE SHEETS - JUNE 30, 1999 AND 1998

                                     ASSETS
<CAPTION>
                                                       1999          1998
                                                  ------------  -------------
<S>                                               <C>           <C>
Current Assets
     Cash and equivalents includes restricted
     funds (1998, $568,500)                       $     70,500  $     667,800
Accounts receivable, less allowance for doubtful
     accounts (1998, $28,900)                           63,100         13,500
Investment in marketable securities                          -              -
LED equipment, held for resale                       1,314,300      1,324,300
Other current assets                                         -         45,000
                                                  ------------  -------------
          Total current assets                       1,447,900      2,050,600

Property and equipment                               1,249,100      1,478,600

License rights                                       1,390,700      1,390,700
Other assets                                            60,500          5,700
                                                  ------------  -------------
                                                  $  4,148,200  $   4,925,600
                                                  ============  =============

                LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
     Current portion of long-term debt            $     12,000  $      13,400
     Accounts payable                                   54,000        254,400
     Accrued liabilities                               846,000        399,700
     Notes Payable                                   1,700,000      1,184,200
     Convertible debenture                                   -              -
                                                  ------------  -------------
          Total current liabilities                  2,612,000      1,851,700
                                                  ------------  -------------
Long-term debt, less current portion                 1,422,000      1,432,900
                                                  ------------  -------------
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                    -              -
     Common stock, $.001 par value,
         authorized 100,000,000 shares;
         issued and outstanding 39,697,196
         shares in 1999 and 1998                        39,700         39,700
Capital in excess of par                            13,326,600     13,326,600
Accumulated other comprehensive loss                         -              -
Deficit accumulated during the
development stage                                  (13,252,100)   (11,725,300)
                                                  ------------  -------------
                                                       114,200      1,641,000
                                                  ------------  -------------
                                                  $  4,148,200  $   4,925,600
                                                  ============  =============

             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

</TABLE>
                                       F-4


<PAGE>

<TABLE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            YEARS ENDED JUNE 30, 1999 AND 1998 AND CUMULATIVE AMOUNTS
              FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 1999


<CAPTION>
                                                   Years Ended           Cumulative
                                                     June 30,           Amounts from
                                           ---------------------------   Inception
                                                1999          1998        to date
                                           ------------  -------------  ------------
<S>                                        <C>           <C>            <C>
Operating Expenses:
     Selling, general and administrative   $     54,700  $     818,000  $  3,278,500
     Compensation in form of common stock             -        213,000     3,655,000
     Management fees, related party                   -              -        65,000
                                           ------------  -------------  ------------

                                                 54,700      1,031,000     6,998,500
                                           ------------  -------------  ------------

Loss before other income (expenses)              54,700      1,031,000     6,998,500
                                           ------------  -------------  ------------
Other income (expenses):
     Interest and dividends                     122,300         27,700       156,300
     Other                                        1,900         45,700       180,200
     Interest Expense (including interest
         paid in the form of common stock,
         1998 $353,800)                        (287,100)      (457,400)   (1,159,100)
     Telephone services, less revenues         (776,500)       (61,000)   (1,352,300)
     Loss on investments, foreclosures and
          disposal of assets                          -       (179,600)     (851,300)
     Write-down of loan origination fees       (532,700)             -      (532,700)
     Write-down of LED equipment and
          intangibles                                 -     (1,374,300)   (2,674,300)
                                           ------------  -------------  ------------
                                             (1,472,100)    (1,998,900)   (6,233,200)
                                           ------------  -------------  ------------
Net Loss                                   $ (1,526,800) $  (3,029,900) $(13,231,700)
                                           ============  =============  ============

Basic Weighted average common shares
   outstanding                               39,697,196     20,251,100    14,692,449
                                           ============  =============  ============
Basic Loss per common share                $      (0.04) $       (0.15) $       (.90)
                                           ============  =============  ============










                  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

</TABLE>
                                       F-5


<PAGE>

<TABLE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            YEARS ENDED JUNE 30, 1999 AND 1998 AND CUMULATIVE AMOUNTS
              FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 1999

<CAPTION>
                                                          Years Ended            Cumulative
                                                            June 30,            Amounts from
                                                    -------------------------    Inception
                                                        1999          1998        to date
                                                    -----------   -----------   ------------
<S>                                                 <C>           <C>           <C>
Cash flows from operating activities:
Net loss                                            $(1,526,800)  $(3,029,900)  $(13,231,700)
                                                    -----------   -----------   ------------
Adjustments to reconcile net loss to net cash
     used in operating activities
          Depreciation and amortization                 214,800        61,700        478,000
          Issuance of common stock for service
               and interest                                   -       443,000      3,304,200
          Gain on the sale of marketable securities           -       (10,000)       (10,000)
          Write-down on LED equipment and
               intangibles                                    -     1,374,300      2,674,300
          Losses on investments,foreclosures
               and disposal of assets                         -       179,600        677,200
          Changes in assets and liabilities:
               Accounts receivable                      (49,600)      113,700        (88,400)
               Deposits and other                             -             -         (2,500)
               Other current assets                      45,000       (45,000)        11,100
               Accounts payable and
                    accrued liabilities                 245,900      (332,700)     1,642,500
               Other assets                              24,700        40,000         64,700
                                                    -----------   -----------   ------------
                                                        480,800     1,824,600      8,751,100
                                                    -----------   -----------   ------------
             Cash used in operating activities     (1,046,000)   (1,205,300)    (4,480,600)

Cash flows from investing activities:
     Proceeds of sale of marketable securities                -       267,500        267,500
     Proceeds from acquisition                                -             -         22,100
     Payments for:
          License rights                                      -      (274,300)      (424,300)
          Marketable securities                               -        (5,600)      (255,600)
          Non-operating assets                                -             -        (25,000)
          Related party                                       -             -        (39,000)
          Property,plant, equipment and trade name            -    (1,408,500)    (1,699,800)
          Other assets                                  (54,800)       (5,700)       (60,500)
          Other                                               -             -        (79,500)
                                                    -----------   -----------   ------------
          Cash used in investing activities             (54,800)   (1,426,600)    (2,294,100)
                                                    -----------   -----------   ------------
Cash flows from financing activities:
     Proceeds from:
          Related party                               1,000,000             -      1,184,500
          Sales of common stock                               -             -      1,138,900
          Notes payable, principally
               related parties                                -     1,144,100      1,295,100
          Warrants                                            -             -         30,000
          Convertible debentures                              -     1,600,000      4,100,000
     Payments on:
          Notes payable,principally related parties    (484,200)      (70,000)      (882,000)
          Long-term debt                                (12,300)       (4,400)       (21,300)
                                                    -----------   -----------   ------------
          Cash provided by financing activities         503,500     2,669,700      6,845,200
                                                    -----------   -----------   ------------
Increase in cash and equivalents                       (597,300)       37,800         70,500

Cash and equivalents,beginning                          667,800       630,000              -
                                                    -----------   -----------   ------------
Cash and equivalents,ending                         $    70,500   $   667,800   $     70,500
                                                    ===========   ===========   ============
                        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
</TABLE>

                                       F-6


<PAGE>

<TABLE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
            YEARS ENDED JUNE 30, 1999 AND 1998 AND CUMULATIVE AMOUNTS
              FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 1999

<CAPTION>
                                                          Years Ended            Cumulative
                                                            June 30,            Amounts from
                                                    -------------------------    Inception
                                                        1999          1998        to date
                                                    -----------   -----------   ------------
<S>                                                 <C>           <C>           <C>
Supplemental disclosure of cash flow information:

          Cash paid for interest                    $   124,900   $    73,100   $    304,900
                                                    ===========   ===========   ============

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      $         -   $ 2,600,000   $  4,100,000
          Acquisition of LED equipment                        -     2,400,000      2,400,000
                                                    -----------   -----------   ------------
                                                    $         -   $ 5,000,000   $  6,500,000
                                                    ===========   ===========   ============

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


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

                        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
</TABLE>

                                       F-7


<PAGE>

<TABLE>


                                             COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                                                (A COMPANY IN THE DEVELOPMENT STAGE)
                                     CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)
                    YEARS ENDED JUNE 30, 1999 AND 1998, AND FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 1999

<CAPTION>
                                                Preferred Stock-Series A         Common Stock
                                                ------------------------   ------------------------
                                       Total        Shares      Amount       Shares        Amount
                                    ----------     -------     --------    ----------   -----------
<S>                                 <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,                       (1,148,300)
  Year ended June 30, 1996          (2,411,400)
                                    ----------     -------     --------    ----------   -----------
Balance, June 30, 1996                 505,000     420,000     $420,000     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
   Officer's 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)
                                    ----------     -------     --------    ----------   -----------
Balance June 30, 1997                 (775,700)          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    39,697,196        39,700

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

                                    ----------     -------     --------    ----------   -----------
                                    $  114,200           0            0    39,697,196        39,700
                                    ==========     =======     ========    ==========   ===========


                                       F-8


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
           CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)
 YEARS ENDED JUNE 30, 1999 AND 1998, AND FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 1999
                                   (Continued)

<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 acquisition                  (231,500)
  Contribution of accrued
   officers' compensation               241,100
Net Loss:
 From inception (March 15, 1994)
  to June 30,                                                  (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
   Officer's 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)
                                    -----------    -------    -----------    ----------   -----------
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)
                                    -----------    -------    -----------    ----------   -----------
                                    $13,326,600          0   ($13,252,100)   $        0             0
                                    ===========    =======    ===========    ==========   ===========

        READ THE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, BOTH OF WHICH ARE AN INTEGRAL
                 PARTY OF THE CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>

                                       F-9


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 1999 AND 1998


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.

                                      F-10


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 1999 AND 1998


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.

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.

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.

                                      F-11


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 1999 AND 1998


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.

         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.

                                      F-12


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 1999 AND 1998


Accounting Pronouncements (continued):
         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.


                                      F-13


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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.

                                      F-14


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


1.  Organization and business:
         On May 8,  1998,  the  Board  of  Directors  authorized  management  to
         liquidate the LED screen. Subsequently, the Company sold the LED screen
         and related  equipment  which are  reflected  as current  assets in the
         accompanying  consolidated  balance sheets. CCI was formed to assist in
         the  wind-down  phase of TTI and was inactive  during the later part of
         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.  While AWN's
         operations  for the year ended June 30,  1998 were not  profitable  and
         additional  capital will be required to develop the AWN business  plan,
         it is the intent of Comtec's  management  that  significant  operations
         could be  generated  through AWN which will take the Company out of the
         development  stage. 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.

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 $1,526,800  and  $3,029,900  for the years ended
         June 30,  1999  and 1998 and has  reported  cumulative  net  losses  of
         $13,231,700  from  inception  (March  15,  1994) to June 30,  1999.  As
         reported on the  consolidated  statements  of cash  flows,  the Company
         incurred  negative cash flows from  operating  activities of $1,046,000
         and  $1,205,300  for the  years  ended  June 30,  1999 and 1998 and has
         reported  negative cash flows from  operating  activities of $4,480,600
         from inception  (March 15, 1994) to June 30, 1999. To date,  these have
         been financed principally through the sale of common stock and warrants
         ($1,138,900)  and  issuance of short and long- term debt  ($6,609,600),
         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 brokerage and management company.  (Read Note
         7 on Convertible  Debentures).  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.  In  September  1998,  the  Company's
         Board of Directors approved the terms of a proposed debt financing with
         Sigma Finance Corporation (Sigma), an affiliate of Zephyr.

                                      F-15


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


2.       Going   concern,   liquidity   and  strategic   planning   (continued):
         Hereinafter Geneva, Cayman, Queens, Overseas and Sigma 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 or complete the proposed  financing  agreements.  The
         amounts of the proposed financing arrangements have not been finalized.

         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 in  telecommunications.  Should
         the Company be successful  in obtaining  sufficient  funds,  management
         intends  to  continue  developing  the  market  for the  Company's  SMR
         services in the territories  they currently  represent and would pursue
         SMR  acquisitions  on an  opportunistic  basis.  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 telecommunication businesses 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.
         Management anticipates that an additional investment of several million
         dollars  will be needed to develop  an  effective  sales and  marketing
         program and fund equipment purchases before the seven operating systems
         will generate  sufficient cash flow to meet current operating  expenses
         and  overhead.  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.

         See subsequent event discussion  concerning the SMR systems in footnote
         14.

                                      F-16


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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
                                              -----------------------------
                                                   1999            1998
                                              ------------     ------------

            Net Loss                          $  1,526,800     $  3,029,900
            Other comprehensive loss:
               Unrealized loss in marketable
                    Securities                           -                -
                                              ------------     ------------

            Total comprehensive loss          $  1,526,800     $  3,029,900
                                              ============     ============


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
                                                      =============

                                      F-17


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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.

         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.

                                      F-18


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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.

         See subsequent discussion concerning the SMR systems in footnote 14.

                                      F-19


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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:
                                                     1999           1998
                                                  ----------     ----------

       Other current assets:
          Accrued interest receivable             $        -     $   14,000
          Other receivables and prepaid expenses           -         31,000
                                                  ----------     ----------

                                                  $        -     $   45,000
                                                  ==========     ==========

       Property and equipment:
          Communications equipment                $1,422,100     $1,436,700
          Furniture, fixtures and equipment           72,700         72,700
                                                  ----------     ----------

                                                   1,494,800      1,509,400
          Accumulated depreciation                   245,700         30,800
                                                  ----------     ----------

                                                  $1,249,100     $1,478,600
                                                  ==========     ==========

       Accrued liabilities:
          Payroll and related benefits            $   67,500     $   72,400
          Interest                                   191,000        198,500
          Professional fees                                -        102,600
          Stock payable                              561,600              -
          Sales taxes                                 22,200         11,400
          Deferred revenue                             3,700         14,800
                                                  ----------     ----------
                                                  $  846,000     $  399,700
                                                  ==========     ==========

                                      F-20


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


6.  Details of financial statement components (continued):

                                                     1999           1998
                                                  ----------     ----------
       Charges to operations, losses(gains) on:
          Disposal of assets                      $        -     $  179,600
                                                  ----------     ----------

       Loss on investments, foreclosures,
          and disposal of assets                  $        -     $  179,600
                                                  ==========     ==========

       Write-down of LED equipment and intangibles:

             LED equipment                        $        -     $1,000,000
             License rights                                -        274,300
                                                  ----------     ----------

                                                  $        -     $1,374,300
                                                  ==========     ==========


                                      F-21


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998

7.  Notes payable:
                                                        1999          1998
                                                    -----------    ----------
    Related parties:
       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           $   250,000    $        -

     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               100,000       100,000

     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               600,000       600,000

     Note payable, unsecured, interest
        at 18% per annum, due to an entity
        related to a former officer/director,
        personally guaranteed by a former
        officer of the Company. Note in
        default, due on demand.                               -        40,000

     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               200,000             -

     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               400,000             -

     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               150,000             -
                                                     ----------    ----------

                                                      1,700,000       740,000

                                      F-22


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998

7.  Notes payable (continued):
                                                        1999          1998
                                                    -----------    ----------
    Other:
       Revolving promissory note payable
         to bank;  $500,000  maximum  principal
         balance, interest on advances of 6.75%
         per annum, payable on demand or on
         December 10, 1998. Collateralized by
         a $500,000 certificate of deposit                    -             -

     Note payable, CCC, unsecured, interest
       at 8% per annum, maturing July 6,
       1998                                                   -       444,200
                                                     ----------    ----------

                                                     $1,700,000    $1,184,200
                                                     ==========    ==========


         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.

                                      F-23


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


7.  Notes payable (continued):
         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.

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.

                                      F-24


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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 have been  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
         expire 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 are  exercisable  at $4.50 per share and 1,600,000
         warrants  issued on March 23, 1998 are  exercisable at $2.90 per share.
         No warrants  have been  exercised  and they expire three (3) years from
         date of issue, but not later than March 2001.

                                      F-25


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


9.  Long-term debt:
                                                    1999            1998
                                                ------------   -------------
     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                         $   1,390,700   $  1,390,707

     Capital lease obligations, collateralized
        by communication  and computer
        equipment, interest ranging from
        8% to 11% per annum, payable in
        monthly installments through
        February, 2003                                 43,300         55,600
                                                 ------------   ------------

                                                    1,434,000      1,446,300

     Less current portion of long term debt            12,000         13,400
                                                 ------------   ------------

                                                 $  1,422,000   $  1,432,900
                                                 ============   ============

         The aggregate  maturities of the  promissory  notes and future  minimum
         payments under capital leases subsequent to June 30, 1999 are presented
         below:

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

                    2000            $   18,400    $        -    $   18,400
                    2001                14,000             -        14,000
                    2002               199,800       190,300         9,500
                    2003               276,000       269,600         6,400
                 Thereafter            930,800       930,800             -
                                    ----------    ----------    ----------
                                    $1,439,000    $1,390,700    $   48,300
               Less Interest             5,000             -         5,000
                                    ----------    ----------    ----------
                                    $1,434,000    $1,390,700    $   43,300
                                    ==========    ==========    ==========

                                      F-26


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998

9.  Long-term debt (continued):
         In May 1998,  the  Company  paid a  $25,000  deposit  to Sigma  Finance
         Corporation, an affiliate of Zephyr, in connection with a proposed $200
         million  ten-year  bond  issue  to be  collateralized  by  all  of  the
         Company's assets for an amount yet to be determined. In September 1998,
         the Board of Directors approved the terms of the proposed financing and
         management  was  authorized to take all necessary  action to pursue and
         finalize the transaction.  The significant  terms approved by the Board
         include a minimum of two seats on the Board of Directors,  the power of
         veto over  capital  expenditures  and other  significant  matters,  and
         issuance  of  unrestricted  shares of common  stock equal to 20% of the
         Company's  equity,  with a non-dilution  agreement which would have the
         effect of maintaining the 20% holding at no cost to the lender whatever
         additional  issues of equity  capital  was  proposed or made during the
         life of the bond.  In addition  to legal fees to effect the  financing,
         the Company would pay a fee of $20,000,000 to the managing  director of
         Zephyr.

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, 1999
         and 1998 are:

                                                1999               1998
                                             ----------        -----------

          Deferred tax asset:
            Net operating loss               $4,438,400        $ 4,363,300
            Less valuation allowance          4,438,400          4,363,300
                                             ----------        -----------

            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:

                                                   1999             1998
                                               -----------      -----------

          U.S. Federal statutory income
            tax rate of 35% (benefit)          $(1,078,500)     $(1,060,500)
          Effective state income tax (benefit)     (99,900)         (98,200)
                                               -----------      -----------

          Valuation allowance                  $ 1,178,400      $ 1,158,700
                                               ===========      ===========

         At June 30, 1999, the Company had available  federal net operating loss
         carryforwards  of  approximately  $13,222,900,  which  will  expire  in
         varying years through 2014.

                                      F-27


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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, 1998 and 1997, no Series A Redeemable Convertible
         Preferred Stock was issued and outstanding.

         At June 30, 1998 and 1997, no 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, 1998 and 1997 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%.

                                      F-28


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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.

         Other stock option agreements:
         The former plan, which  terminated on September 16, 1998,  provided for
         the granting of stock options to employees,  officers, and directors to
         purchase up to 600,000  shares of common stock.  Options may be granted
         for terms up to three (3) years at the exercise  prices of 100% to 110%
         to the fair market value of the  Company's  stock at the date of grant.
         No options are outstanding under the plan at June 30, 1998 and 1997.

         At June 30, 1999, the following contingent stock issue requirements and
         warrants were outstanding:

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

         -        Shares   reserved   for  issuance  in   accordance   with  the
                  outstanding   warrants   issued  June  30,  1997   (4,242,923)
                  exercisable at $4.50 per share, expiring June 30, 2000.

         -        Shares   reserved  for   contingent   issue  with  respect  to
                  outstanding warrants exercisable at $2.90 per share associated
                  with converted debt and LED Screens  (7,083,333),  expiring in
                  March 2001.

         -        Shares   reserved  for   contingent   issue  with  respect  to
                  outstanding warrants exercisable at @2.90 per share associated
                  with   converted  debt  related  to  the  SMR  Asset  purchase
                  (17,600,000), expiring in March 2001.

                                      F-29


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


12.  Incentive Compensation plans (continued):

         On February 16, 1998, the Company entered into a letter  agreement with
         the  Company,  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  (reprised) 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)


         James Krejci  Compensation  Stock Option:  1,300,000  shares at  strike
         price  of $.50 per share  (111% of $.045 bid  price on  5-6-99),  First
         Granted: 5-6- 99 - effective after 7-1-99

                                      F-30


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


12.  Incentive Compensation plans (continued):

         Effective  January 1,1999,  the Company enters 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  5-6-99),  First
         Granted: 5- 6-9 -effective after 7-1-99.


                 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  an  d
         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.

                                      F-31


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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

         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%.


13.  Commitments, contingencies, litigation, transactions with related parties
     and other:
      Restricted funds:
         In April 1997,  an  officer/director/shareholder  of the Company used a
         $78,600  certificate  of deposit of the  Company to  collateralize  the
         purchase of an automobile  by a limited  liability  company  affiliated
         with the  officer/director/shareholder.  The  collateral was reduced by
         approximately  $10,100  during  the  year  ended  June  30,  1998.  The
         certificate  of  deposit  is  restricted  and is  included  in cash and
         equivalents. While the officer/director resigned his positions with the
         Company  in  June  1998  without  releasing  the  restrictions  on  the
         certificate  of  deposit,  the Company has  subsequently  redeemed  the
         remaining balance of the certificate of deposit.

         In December 1997, the Company purchased a one year $500,000 certificate
         of deposit which is being held by a bank as  collateral  for a $500,000
         revolving  line  of  credit.   This  certificate  of  deposit  is  also
         restricted and is included in cash and equivalents.

                                      F-32


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


13.  Commitments, contingencies, litigation, transactions with related parties
     and other (continued):
      Employment contracts:
         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.  For the year ended June 30, 1997 , the five
         percent (5.0%) stock bonus of approximately $291,200 (727,952 shares at
         $.40 per share) was accrued and charged to operations. There is pending
         litigation between the Company and the former CEO who is no longer with
         the Company.  Information available from Management indicates that this
         litigation is in District  Court,  City and County of Denver,  State of
         Colorado,  Case No.  99CV634 and is being  defended and  counterclaimed
         vigorously  by the  Company.  The  probability  of the  outcome  of the
         litigation  can  not  be  assessed  since  it is  not  probable  that a
         liability has been incurred at the date of the financial statements nor
         can the amount of loss, if any, be reasonably estimated.

         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.


                                      F-33


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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  amount  were  changed  to
         operations.

      Transactions with related parties:
         The following is a summary of  transactions  with related parties as of
         June 30, 1999 and 1998:


                                                       1999          1998
                                                    ---------     ---------
            Compensation to officers/directors/
            shareholders                            $  246,000  $  128,900
            Origination fees to related parties        532,700           -
            Restricted funds for related party               -      65,500
            Advertising fees to related party                -       7,000
            Reimbursement of expenses to
            officers/directors/shareholders                  -      27,600
            Legal settlement with prior
            officers/shareholders                            -       7,500
            Interest on related party loans            180,000      11,500
            Related party loans                      1,000,000      70,000
                                                    ----------  ----------

                                                    $1,958,700  $1,889,700
                                                    ==========  ==========
         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. The common stock issued and the stock
                  option remain outstanding at June 30, 1998.

                                      F-34


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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.

      Tax examinaiton:
         The  Internal  Revenue  Service is  conducting  an  examination  of the
         Company's  1994  Federal  income tax return.  At this time  counsel and
         management are unable to either determine  whether any adjustments will
         be proposed or estimate  the amount of any such  proposed  adjustments,
         therefore, no provision has been made in the accompanying  consolidated
         financial statements.

      Litigation:
         Pending  litigation  includes  a case  brought  by  several  California
         investors  alleging  securities fraud,  manipulation and improper sales
         and seeking  damages of  approximately  $850,000 or  recission of their
         stock  purchases  and return of at least  $250,000  of the price  paid.
         Counsel is unable to gauge the  outcome of these  matters at this time,
         consequently,   no  provision   has  been  made  in  the   accompanying
         consolidated financial statements.

         Claims  made by a  telecommunications  service  provider  and a  former
         employee for breach of their  agreements  were settled  during the year
         ended  June  30,  1998  for  $47,500,  which  was  charged  to  current
         operations.

         The  Company is a  defendant  to  various  other  lawsuits,  claims and
         proceedings.   Management   considers  these  other  actions  as  being
         incidental  to the  Company's  business  and is of the opinion that the
         financial  exposure of these other actions will not  materially  affect
         the financial position of the Company.

      Minority interest:
         Minority interest represents the cumulative effect of earnings, losses,
         capital   contributions   and   distributions   in  TTI   Communication
         Corporation.  The minority interest of TTI  Communications  Corporation
         reflects no value at June 30, 1997. At June 30, 1997,  unused lossed of
         the  minority  interest of  approximately  $166,900  can be utilized to
         offset future profits.

      Rental commitments:
         In  December  1997,  the Company  relocated  its  principal  offices to
         Englewood,  CO and  executed a three year lease on the  premises  which
         expires  November  30, 2000.  Minimum  annual  lease  payments  will be
         approximately  $20,400,  $25,700, and $36,800 for the years ending June
         30, 1998,  1999, and 2000,  respectively and $15,500 for the five month
         period ending November 30, 2000.

                                      F-35


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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  expire no
         later than 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        200,000        4,242,922      $1.25-$4.50
         Add (deduct):
         Granted                         -       24,683,332            $2.90
         Exercised                       -                -
         Expired or canceled             -                -
                                   -------       ----------
         Balance, ending           200,000       28,926,254
                                   =======       ==========

      Year 2000 compliance:
         The year 2000 issue is the result of computer  programs  being  written
         using two (2)  digits  rather  than four (4) digits to define the year.
         Any of  the  Company's  computer  programs  that  have  date  sensitive
         software  may  recognize a date using "00" as the year 1900 rather than
         2000. This problem could force computers to either shut down or provide
         incorrect data or information.  The Company  utilizes  generic software
         programs  developed,  maintained and upgraded by  independent  computer
         software providers.  In response to the year 2000 issue,  management is
         relying on the  providers of these  software  programs will resolve the
         date sensitive issue so that all critical systems will be in compliance
         prior to the year 2000. There can be no assurance that the providers of
         the software or the manufacturers of chips will resolve the issue.

14.  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.

                                      F-36


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998

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 Company believes that it
         has  meritorious  and virtuous  defenses and  anticipates  that it will
         vigorously  and  effectively  defend  against any and all claims by the
         former CEO. No provision  has been made in the  accompanying  financial
         statements for compensation,  benefits and stock bonuses claimed by the
         former CEO subsequent to the  expiration of his employment  contract on
         May 10, 1998.

         On February 14, 2000, the Company was served with a Complaint  filed in
         Superior Court of California,  County of Los Angeles, Central Division,
         Case No. b C224058  entitled  A-1 Business  Products,  Inc. dba Premium
         Financial   Services,   Inc.,  a  California   Corporation  vs.  ComTec
         International,  Inc. The  Complaint  alleges  damages of $205,142  with
         respect to  allegations  that the Company  failed to pay amounts due to
         Plaintiff  under  assignments  of debts  related to  alleged  factoring
         agreements.  The Company  believes that it has meritorious  defense and
         will vigorously  defend against the  allegations of the Complaint.  The
         Company's answer to the complaint is due approximately  March 15, 2000.
         Due  to  the  very  preliminary  nature  of  the  proceedings,  further
         information is not available.

      Disposition of LED screens and related equipment:
         On  December  31,  1998,  the  Company  sold six giant LED  screens and
         related  equipment  to  Lanstar  Computer   Products,   Inc.,  a  Texas
         corporation  affiliated  with  Zephyr.  The LED  screens  were  sold to
         Lanstar in exchange  for a  $2,400,000  promissory  note secured by the
         assets sold and bearing  interest of 8% per annum,  payable  quarterly.
         The entire  principal is payable at maturity on December  31, 1999.  No
         determination  of  recoverability  of  the  promissory  note  has  been
         determined.

     Pending sale and operating lease agreements:
         On December 18, 1998, the Company  entered into  agreements  whereby an
         independent third party would acquire the Company's FCC license rights,
         customers  and  agreements,  site licenses  and/or leases  necessary to
         operate  the  Company's  seven SMR  operating  systems  through a newly
         formed subsidiary. The subsidiary would assume the Company's $1,390,700
         promissory  notes  payable to the FCC,  issue to the Company  shares of
         common stock representing a 7.5% ownership interest and issue a warrant
         to purchase  50,000 shares of the common stock of the parent company at
         the exercise  price of $.50 per share for a period of three years.  The
         agreement  further  provided that should the market price in the period
         immediately  preceding the closing of the transaction be less than $.50
         per share, the number of shares will be increased proportionately,  but
         in no event to exceed  100,000  shares.  Effective  June 30, 1998,  the
         carrying  value of the license rights were reduced to their sales value
         of $1,390,700.

         The third party will enter into a system management  agreement pursuant
         to which they will  manage the day to day  business  operations  of the
         Company's SMR system subject to the Company's ultimate  supervision and
         control until such time as the FCC shall approve the  assignment of the
         licenses. Thereafter, they will assume all responsibility for operation
         and control of the system.

                                      F-37


<PAGE>



                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


14.  Subsequent events (continued):
         The  Company  shall lease SMR  equipment  to the third party for a four
         year term at annual  base rates of  $135,000,  $168,000,  $208,000  and
         $229,000,  payable quarterly and  collateralized by the third party and
         their affiliate or parent company.  They will have the option to extend
         the lease for up to three additional one year terms,  provided that the
         lease  payment  will be the  fair  market  value  of the  equipment  as
         determined by the two parties in accordance with the lease provisions.

15.  Selected quarterly data (unaudited):
         The following  summarized  certain  quarterly results of operations (in
         thousands, except share amounts):

       Year ended June 30, 1999:                   Quarter ended
                                       ---------------------------------------
                                       September  December    March      June
                                           30,       31,        31,       30,
                                       -------    -------    -------   -------
       Expenses:
       Selling, general and
         administrative                $   160    $   140    $   319   $   212
       Interest                             51         75         75        86
                                       -------    -------    -------   -------
                                           211        215         394      298

       Deduct other income (expense)      (209)      (123)        106     (183)
                                       -------    -------    -------   -------

       Net loss                        $  (420)   $  (338)   $  (288)  $  (481)
                                       =======    =======    =======   =======


       Net loss per share              $  (.01)   $  (.01)   $  (.01)  $  (.01)
                                       =======    =======    =======   =======

       Year ended June 30, 1998:                   Quarter ended
                                       --------------------------------------
                                       September  December    March      June
                                          30,        31,        31,       30,
                                       -------    -------    -------   -------

       Expenses:
       Selling, general and
         administrative                $   285    $   219    $   443   $    84
       Interest                              1          -         (1)      457
                                       -------    -------    -------   -------
                                           286        219        442       541

       Deduct other income (expense)        24        (49)       (40)   (1,477)
                                       -------    -------    -------   -------
       Net loss                        $  (262)   $  (268)   $  (482)  $(2,018)
                                       =======    =======    =======   =======


       Net loss per share              $  (.03)   $  (.03)   $  (.05)  $  (.04)
                                       =======    =======    =======   =======

                                      F-38


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


15.  Selected quarterly data (unaudited):
         Comtec International, Inc. common stock is traded on the OTC Electronic
         Bulletin  Board system under the symbol of YRLSD.  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:
                                                1999             1998
                                           -------------     -------------
                                            High    Low      High     Low
                                           -----   -----     -----   -----

           First quarter, September 30,    $ .12   $ .05     $ .52   $ .24

           Second quarter, December 31,      .07     .02      1.80     .22

           Third quarter, March 31,          .06     .02       .85     .19

           Fourth quarter, June 30,          .07     .03       .20     .09



                                      F-39



<PAGE>



Exhibit 10.8
                              Amendment Number One
                                       to
                           ASSET ACQUISITION AGREEMENT


The ASSET ACQUISITION  AGREEMENT (the  "Agreement")  originally made and entered
into  as of  April  15th,  1999  among  Chadmoore  Wireless  Group,  a  Colorado
corporation (the "Parent"),  S.E. 900, Inc., a Delaware corporation to be formed
(the "Buyer"),  American  Wireless  Network,  Inc., a Colorado  corporation (the
"Company"), and ComTec International,  Inc., the sole shareholder of the Company
(the "Shareholder"), is amended as follows:

The  original  agreement  listed  the  "Buyer"  as S.E.  900,  Inc.  a  Delaware
corporation  to be formed.  The agreement is hereby amended to replace S.E. 900,
Inc. a Delaware  corporation with CMRS Systems,  Inc., a subsidiary of Chadmoore
Wireless Group, Inc. as the Buyer.

The licenses,  assets,  FCC notes,  assignments  and  operations,  including the
equipment  lease  agreement,  acquired by CMRS Systems,  Inc.  through the Asset
Acquisition  Agreement  shall  be held  developed  and  operated  in a  separate
operating unit of CMRS Systems, Inc. designated as the "S.E. 900 Unit." The S.E.
900 Unit will maintain separate financials and accounting treatment,  just as if
it were a separate entity.

Articles  1.3  and  3.4 of the  original  agreement  provide  that  the  Company
(American Wireless Network,  Inc.) shall receive a 7.5% stock ownership interest
in S.E.  900,  Inc.  In lieu of that  interest  in a separate  corporation,  the
Company shall have and maintain without further contribution, a 7.5% interest in
the value of the S.E. 900 Unit, such that upon the sale of any portion or all of
the assets from the S.E.  900 Unit,  the  Company  will be entitled to receive a
7.5% proportional share of the sale proceeds.  The Company shall have the option
at the date three years from the date of the closing of the Acquisition, and for
a period  thirty days  thereafter,  to require an  appraisal of the value of the
S.E. 900 Unit, and to require the Parent (Chadmoore Wireless Group, Inc.) to pay
to the  Company,  cash or the  Parents  common  stock  (at a price  equal to the
average  of the  previous  10 day  closing  average  of the bid and ask price as
quoted on the NASDAQ  Electronic  Bulletin  Board) at the Parents sole election,
equal to 7.5% of the appraised value of the S.E. 900 Unit. In the event that the
Company is paid in the form of Chadmoore Wireless Group, Inc.  restricted common
stock, the Company shall be granted piggy-back  registration  rights, and in the
event that such stock has not been  registered  within six months  thereof,  the
Company shall receive  additional  stock  sufficient to represent a 10% discount
from the average of the previous 10 day closing average of the bid and ask price
as quoted on the NASDAQ Electronic Bulletin Board.

IN WITNESS  WHEREOF,  the parties have caused this Amendment Number One to Asset
Acquisition Agreement to be executed this ___day of July, 1999.

                                                                              39
<PAGE>



Signature Page - Amendment Number One to Asset Acquisition Agreement

PARENT

Chadmoore Wireless Group, Inc.

S/S By: Robert W. Moore, President and CEO

BUYER CMRS Systems, Inc.
S/S By:  Robert W. Moore, President and CEO

SELLER COMPANY
American Wireless Network, Inc.
S/S By: James K. Krejci


SHAREHOLDER
ComTec International, Inc.
S/S By: James K. Krejci


                                                                              40