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, 2002

                           Commission File No. 0-12116

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

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

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

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

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

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

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

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

                                Yes  x    No
                                    ---       ---

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of registrant's knowledge, in definitive proxy or information: [ ]

Statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB: None

State the  aggregate  market  value of the voting stock  (common  stock) held by
non-affiliates computed by reference to the price at which the stock was sold or
the average  bid and asked  price of such stock , as of a specified  date within
the  past  sixty  days.  As of the  close of  business,  November  13 2002,  the
aggregate  market value of the  Company's  Common Stock (based on the average of
the $.005 bid and $.006 asked price) held by non-affiliates was $183,500.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

              Number of shares outstanding of each of the issuer's
               classes of Common stock as of November 13, 2002 was
                               70,832,900 shares.

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

                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

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

                                  Yes       No
                                      ---      ---

                    DOCUMENTS INCORPORATED BY REFERENCE: None

                                        1
<PAGE>
           FORM 10-KSB ANNUAL REPORT - FISCAL YEAR ENDED JUNE 30, 2002

                           COMTEC INTERNATIONAL, INC.


                                TABLE OF CONTENTS

                                                                            Page

PART I

Item 1.      Description of Business..........................................3.
Item 2.      Description of Property......................................... 5.
Item 3.      Legal Proceedings............................................... 5.
Item 4.      Submission of Matters to a Vote of Security Holders............. 5.

PART II

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

PART III

Item 9.      Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act...........9.
Item 10.     Executive Compensation..........................................11.
Item 11.     Security Ownership of Certain Beneficial Owners and Management..13.
Item 12.     Certain Relationships and Related Transactions..................16.
Item 13      Exhibits and Reports on Form 8-K................................17.

SIGNATURE PAGE...............................................................18.

Attachment:

INDEPENDENT AUDITOR'S REPORT AND CONSOLIDATED FINANCIAL STATEMENTS, JUNE 30,
2002 AND 2001 AND CUMULATIVE AMOUNTS FROM INCEPTION (MARCH 15, 1994) THROUGH
JUNE 30, 2002.

                                       2
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

(a) Business Development:

1.   GENERAL CORPORATE

     ComTec  International Inc. was incorporated on July 6, 1983 in the State of
New  Mexico,  originally  under  the name of  Nisus  Video,  Inc.  It is a fully
reporting  12(g),  34 Act publicly  traded  company.  The Company has  undergone
various  changes  to date as a result  of  certain  reorganizations.  Historical
changes  are  more  fully  disclosed  in  prior 34 Act  filings.  The  Company's
principal  office is  located at 12835 East  Arapahoe  Road,  Tower 1 Suite 800,
Englewood,  Colorado 80112; its telephone number is (303) 662-8069.  The Company
is currently authorized to issue 200,000,000 common shares, $0.001 par value and
10,000,000 preferred shares,  $0.001 par value. The Company has one wholly owned
operating subsidiary, American Wireless Network, Inc. ("AWN").

2.   ASSET FORFEITURES, DISPOSITIONS AND TERMINATIONS OF CONTRACT RIGHTS

         DISPOSITION OF INTEREST IN CMSR Systems, Inc.'s SMR OPERATION

     In March 2002,  AWN received cash in the amount of $271,172 in exchange for
a seven and one half  percent  operating  interest  in the  operational  segment
represented by the FCC licenses and operations  previously sold to CMSR Systems,
Inc. by AWN.  The  contract  for the sale of this  interest  was reported in the
prior year financials at a sale price of $333,750,  however due to a third party
reduction in the  valuation of the group of assets in which the AWN interest was
included, the settlement price was reduced by $62,578.

(b) Business of Issuer:

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

Current Status and Operations
-----------------------------

     During the fiscal year ended June 30, 2002 and  through  the  present,  the
Company has  continued as a  developmental  stage entity  focused on seeking and
evaluating  potential  merger and acquisition  candidates.  Activities have been
concentrated  on revising  the  Company's  strategic  business  plan,  financing
efforts,  negotiations  to acquire other  entities and  operations,  maintaining
management,  and maintaining reporting compliance for various federal government
agencies,  such  as  the  SEC  and  FCC.  The  Company  is  exploring  potential
acquisition and or merger  transactions with amenable business  opportunities in
telecommunications,  information industries, financial service industry or other
compatible business operations.

         RESEARCH AND DEVELOPMENT

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

         COPYRIGHTS, PATENTS, PROPRIETARY INFORMATION, AND TRADEMARKS

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

(c) Government Regulation:

     The Company has no  operations  and  therefore is not subject to Government
Regulation at this time.

(d) Employees and Consultants:

     As of the date of this filing,  the Company and its wholly owned subsidiary
AWN  employs  a total of two (2)  persons:  James  Krejci,  President  and Chief
Executive Officer of the Company and Gordon Dihle, the Secretary/Treasurer, both
of whom waived salaries for the year ended June 30, 2002.

                                       3
<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, 2002,  the Company had an  accumulated
deficit of approximately $16,000,000. Since such date, losses have increased and
are continuing through the date of this report.  Accordingly,  it is anticipated
that the Company  will  continue to incur  significant  losses.  There can be no
assurance  that the  Company  will be  successful  in  generating  revenues at a
sufficient  quantity or margin or that the Company will ever achieve  profitable
operations.

     Significant Capital Requirements.  Need for Additional Capital; Explanatory
Paragraph in Accountant's  Report. The Company's capital  requirements have been
and will continue to be significant. The Company has been dependent primarily on
the private  placement of equity  securities  and debt  financings.  The Company
anticipates, based on its current proposed growth plans and assumptions relating
to its  growth and  operations,  that the  proceeds  from the  existing  private
placements and borrowings and planned revenues will not be sufficient to satisfy
the Company's contemplated cash requirements for the next 12 months and that the
Company will be required to raise additional funds within the next 12 months. In
addition,  in the event that the Company's plans change or its assumptions prove
to  be  inaccurate  (due  to  unanticipated  expenses,   delays,   problems,  or
otherwise), the Company would be required to seek additional funding sooner than
anticipated.  Any such  additional  funding  could be in the form of  additional
equity   capital.   The  Company  is  currently   pursuing   potential   funding
opportunities. However, there can be no assurance that any of such opportunities
will result in actual funding or that additional  financing will be available to
the Company when needed,  on  commercially  reasonable  terms, or at all. If the
Company is unable to obtain  additional  financing if needed,  it will likely be
required to curtail its plan to acquire an operating entity or effect a business
combination  and may  possibly  cease  its  operations.  Any  additional  equity
financings  may  involve  substantial  dilution to the  Company's  then-existing
shareholders.  The Company's  independent  public  accountants  have included an
explanatory paragraph in their reports on the Company's financial statements for
the years ended June 30, 2002 and 2001,  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.

     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

                                       4
<PAGE>
Company's  relationships with clients and suppliers could cause the price of the
Company's Common Stock to fluctuate, perhaps substantially.  In recent years the
stock market has experienced extreme price  fluctuations,  which have often been
unrelated to the operating performance of affected companies.  Such fluctuations
could adversely affect the market price of the Company's Common Stock.

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

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

     FORWARD-LOOKING  STATEMENTS.  A number of the  matters  and  subject  areas
discussed in the foregoing  "Risk  Factors"  section and elsewhere in this 10KSB
Report  that are not  historical  or current  facts deal with  potential  future
circumstances and developments. The discussion of such matters and subject areas
is  qualified  by  the  inherent  risks  and  uncertainties  surrounding  future
expectations generally, and also may materially differ from the Company's actual
future  experience  involving any one or more of such matters and subject areas.
The Company has attempted to identify,  in context,  certain of the factors that
it currently  believes may cause actual future  experience and results to differ
from the Company's current expectations regarding the relevant matter or subject
area.

ITEM 2.  DESCRIPTION OF PROPERTY

Corporate Office:
-----------------

     AWN leases approximately 200 square feet of executive office space at 12835
East Arapahoe Road, Tower 1 Suite 800, Englewood,  Colorado from an unaffiliated
party. All corporate,  administrative,  accounting and operational functions are
carried out from the corporate  headquarters.  The Company  shares  offices with
AWN. This lease space is fully utilized for Company purposes and is adequate for
the Company's current needs.

ITEM 3.  LEGAL PROCEEDINGS

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

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

     No matters were  submitted to the  shareholders  during the year ended June
30, 2002.

                                     PART II

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

(a) Market Information.

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

     On December  26,  1997,  the Board of  Directors,  pursuant to  shareholder
approval  granted at the annual meeting of shareholders  held on March 28, 1997,
voted to approve a one for five (1:5) reverse stock split of the Company's $.001
par value

                                       5
<PAGE>
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, 2001 and June 30,
2002,  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 2002:
    Fiscal Quarter: July 1, 2001 through September 30, 2001     $0.06     $0.04
    Second Quarter: October 1, 2001 through December 31, 2001   $0.03     $0.02
    Third Quarter: January 1, 2002 through March 31, 2002       $0.01     $0.01
    Fourth Quarter: April 1, 2002 through June 30, 2002         $0.01     $0.01

Fiscal 2001:
    First Quarter: July 1, 2000 through September 30, 2000      $0.18     $0.07
    Second Quarter: October 1, 2000 through December 31, 2000   $0.11     $0.05
    Third Quarter: January 1, 2001 through March 31, 2001       $0.09     $0.05
    Fourth Quarter: April 1, 2001 through June 30, 2001         $0.10     $0.05

 (b) Holders:

     As of  September  24, 2002 the  approximate  number of holders of record of
shares of the Company's  common stock,  $.001 par value per share, the Company's
only class of trading securities, was believed by management to be as follows:

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

         Common Stock, $.001 par                       600

(c) Dividends:

     The Company has paid no dividends  during fiscal years ended June 30, 2001,
June 30, 2001 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
--------------------------

     No shares of the Company's common or preferred stock were issued during the
Fiscal Year Ended June 30, 2002.

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

                                       6
<PAGE>
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, 2002,
and June 30, 2001, 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.

(a) Plan of Operation:

     In September  2000, AWN completed the sale to CMSR Systems,  Inc. of all of
its 900 SMR licenses and  operations.  AWN retained a seven and one half percent
operating  interest in the operational  segment  represented by the licenses and
operations sold to CMSR Systems, Inc. by AWN. The communication  equipment owned
by the Company remains under a long term capital lease to CMSR Systems,  Inc. As
a result,  the Company has had no 900 SMR operations since  September,  2000 but
does have a retained  passive  retained  interest in the SMR operation sold. The
Company is now exploring  potential  acquisition and or merger transactions with
existing business opportunities in telecommunications,  information  industries,
computer industry, financial services or other compatible business enterprises.

     The Company has been and  continues  to be in the  development  stage.  The
Company has yet to commence its principal planned  operations and from inception
of the SMR business plan (March 15, 1994 through  September 2000) generated only
auxiliary  revenues  to defray  the cost of its  planned  operations,  with only
limited success in implementing actual operations.  The Company has financed its
operations  during the  development  stage from the sale of its common stock and
from issuance of short and long-term debt.

Current Status and Operations:
------------------------------

     In  September  2000, a sale to CMSR  Systems,  Inc. of 900 SMR licenses was
consummated.  AWN retained  ownership of all of its SMR transmission  equipment.
AWN leased to CMSR Systems, Inc., certain SMR related transmission equipment for
a five (5) year term at the  initial  base rate of $33,750  per  quarter for the
first year of  payments  beginning  June 1, 2000,  $42,000  per  quarter for the
second  year of  payments  beginning  June 1, 2001,  $52,000 per quarter for the
third year of  payments  beginning  June 1, 2002 and $57,250 per quarter for the
fourth year of  payments  beginning  June 1, 2003.  The Lessee has the option to
extend the Lease for 1 year terms (up to a total of a 3 year extension after the
termination of the original five year term); provided, however, that the monthly
rate will be based upon the fair market  value  ("FMV") of Equipment on the date
of any extension as agreed upon by the parties;  provided that in the event that
Lessee and the Company  cannot agree on a FMV, the FMV shall be  determined by a
third party appraiser selected by the Company and Lessee.  Lessee shall have the
option,  within 30 days of the end of any term, to purchase the Equipment at the
then FMV as  determined  by the parties;  provided that in the event that Lessee
and the Company  cannot agree on a FMV, the FMV shall be  determined  by a third
party  appraiser  selected  by the  Company  and  Lessee.  In the  event  of the
bankruptcy of the Company, Lessee shall have the right to purchase the Equipment
at its then FMV. This lease  agreement is reported for accounting  purposes as a
capital lease.

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

     The  Company  reported a net loss of  $184,000  for the year ended June 30,
2002  and a net  loss of  $773,400  for the year  ended  June  30,  2001 and has
reported net losses of $16,433,000  from inception  (March 15, 1994) to June 30,
2002.  As reported on the  consolidated  statements  of cash flows,  the Company
incurred deficient cash flows from operating activities of $184,000 and $773,400
for the  years  ended  June  30,  2002 and 2001  respectively  and has  reported
deficient  cash flows from operating  activities of  $16,433,000  from inception
(March  15,  1994) to June  30,  2002.  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. A number
of developments over the past year had material adverse effects on the Company.

     In March 2002,  AWN received cash in the amount of $271,172 in exchange for
a seven and one half  percent  operating  interest  in the  operational  segment
represented by the FCC licenses and operations  previously sold to CMSR Systems,
Inc. by AWN.

                                       7
<PAGE>
The  contract  for the sale of this  interest  was  reported  in the prior  year
financials at a sale price of $333,750,  however due to a third party  reduction
in the  valuation of the group of assets in which the AWN interest was included,
the settlement price was reduced by $62,578.

     Management  is  endeavoring  to develop a strategic  plan to raise  private
financing,  develop a management team, maintain reporting compliance and explore
potential   acquisition  and  or  merger  transactions  with  existing  business
opportunities in telecommunications,  information industries, computer industry,
financial services or other compatible business operations.

     In the fiscal year ended June 30, 2002,  the Company  continued  efforts in
connection with private financing proposals to fund future merger or acquisition
activities  as  well  as  working  capital  needs.  There  is  no  agreement  or
requirement  on the part of any  entity to  provide  financing  to the  Company.
Should the Company be successful  in obtaining  substantial  private  financing,
management  plans  to  seek  acquisitions  of  broadband  communications,  cable
systems,  telecommunication or computer related businesses, information and data
services, financial services or other compatible enterprises that would generate
sufficient  cash flow to maintain debt service.  There can be no assurances that
the  Company  will  be  successful  in  the   implementation  of  its  plan  for
acquisitions, other expansion or its overall business plan.

     From  October 1, 2002 to the end of fiscal  year ended June 30,  2002,  the
Company  estimates  its cash  needs to  maintain  operations  under its  current
negative  cash flow  situation is $100,000.  This amount is composed of $100,000
for working  capital  assuming that current  operations  continue in its present
status 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  2002 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  productive assets
and initiate revenue producing  operations.  Any activity in the  communications
industry requires adequate financing and on-going funding sources.

(e) Results of Operations:

Fiscal Year Ended June 30, 2002
-------------------------------

     For the year ended June 30,  2002 the  Company  recorded a net loss  before
other  income and expense of $74,000 and a net loss of $184,000  with a net loss
per common share of $0.  Professional  fees of $24,000 the bulk of which was for
audit costs related to the Company's  continuing SEC reporting,  depreciation of
$12,000,  employer taxes of $10,000 and employee insurance costs of $18,000 made
up the majority of the  operating  expense  attributed  to the fiscal year ended
June 30, 2002.  Other  expenses  consisted of interest  expense of $47,000 and a
loss on  disposition of assets  recorded at 62,578.  In March 2002, AWN received
cash in the amount of  $271,172  in  exchange  for a seven and one half  percent
operating  interest in the operational  segment  represented by the FCC licenses
and operations  previously  sold to CMSR Systems,  Inc. by AWN. The contract for
the sale of this  interest was reported in the prior year  financials  at a sale
price of $333,750,  however due to a third party  reduction in the  valuation of
the group of assets in which the AWN interest was included, the settlement price
was reduced by $62,578, resulting in a capital loss to the Company of 62,578

Fiscal Year Ended June 30, 2001
-------------------------------

     For the year ended June 30,  2001 the  Company  recorded a net loss  before
other income and expense of $829,700 and a net loss of $773,400  with a net loss
per common  share of $0.01.  Professional  fees of $94,200 the bulk of which was
related to now  settled  litigation,  accrued  but unpaid  officers  salaries of
$343,750,  legal  settlements  totaling  $100,000,  office  rent of $27,800  and
depreciation  of $13,400 made up the majority of the expense  attributed  to the
fiscal year ended June 30, 2001. In addition,  the following stock issuances are
included  in the total  expense  for the year:  1.) an  Officer  of the  Company
received  2,561,111  shares of common  stock  valued at $151,500  and  6,000,000
shares of Series D preferred  stock valued at $6,000 in compensation of services
to the Company, 2.) an unaffiliated individual received 143,000 shares valued at
$10,000 in prepayment of rent and 3.) an unaffiliated individual received 50,000
shares valued at $2,200 in exchange of consulting  services.  A gain on disposal
of assets totaling $68,900 was reported as a result of the sale by the Company's
subsidiary of its SMR licenses and  disposition  of its wireless  communications
equipment through a capital lease.

                                       8
<PAGE>
Impact of Recently Issued Accounting Standards
----------------------------------------------

     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.

ITEM 6A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 7.  FINANCIAL STATEMENTS

     Financial  statements  meeting the  requirements  of Item 310 of regulation
S-B,  for the years  ending  June 30,  2002 and June 30,  2001  which  have been
audited and reported upon by Grabau & Company,  PC, Certified Public Accountants
are annexed as a separate section to this Report.

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

     None

                                    PART III

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

(a) Identify Directors and Executive Officers.

     The  following  table sets  forth:  (1) names and ages of all  persons  who
presently are  directors of the Company;  (2) all positions and offices with the
Company held by each such person; (3) the term 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, 60               August 1998               Next Annual Meeting
Director, President & CEO

Gordon D.  Dihle, 47               October 1997-May 8, 1998  Next Annual Meeting
Director, Secretary & Treasurer    August 1998

Marc Maassen, 52                   October 1998              Next Annual Meeting
Outside Director

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

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

(b) Business Experience:

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

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

                                       9
<PAGE>
     For the five years preceding, Mr. Krejci was employed as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

     June 2001 through present: communications industry consultant.

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

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

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

     February 1998 through November 1999:  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:

                                       10
<PAGE>
     No family relationships exist between any director or executive officers of
the Company.

(e)  Involvement in Certain Legal Proceedings:

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

(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, 2002.  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 the following person  (shareholder) who may
have had  Section 16 filing  requirements  during the fiscal year ended June 30,
2002 has not complied with Section 16: Lewis Rowe.

ITEM 10.  EXECUTIVE COMPENSATION.

(a)  General

     (1) through (7) All Compensation Covered. During the fiscal year ended June
30, 2002, 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,  2001 and June 30,
2002.

                           SUMMARY COMPENSATION TABLE

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

James J.  Krejci  2001  $157,500*  $157,500**   None  None    None   None  None
CEO and President 2002  $      0   $      0     None  None    None   None  None

*    Salary of $157,500 was accrued but not actually paid to Mr. Krejci.

**   .001 par value  Stock  valued at  $151,500  was  issued to Mr.  Krejci  and
     registered on Form S-8. Additionally, the Board of Directors voted to issue
     .001 par value Series D preferred stock valued at $6,000 to Mr. Krejci.

(c)  Option/SAR  Grant  Table.  During the fiscal  years ended June 30, 2002 and
2001, no effective  grants of stock options or  freestanding  SAR's were made by
the Company.

The 1997 Stock Option Plan
--------------------------

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

     The Plan will be administered by the Compensation Committee of the Board of
Directors (the "Committee").  Transactions under the Plan are intended to comply
with all applicable conditions of Rule16b-3 under the Securities Exchange Act of
1934,  as

                                       11
<PAGE>
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; 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, 2002.  As a  disinterested  director,  Marc  Maassen  became
entitled to receive  automatic  option  grants to purchase  14,000 shares of the
Company's  Common Stock upon his initial  appointment as a director on September
30, 1998 and an option for an additional  14,000 shares on each  anniversary  of
his term as a director, September 30, 1999 through September 30, 2002.

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

     During  the  fiscal  year  ended  June  30,  2002,   no  stock  options  or
freestanding SAR's were exercised.  Notwithstanding the foregoing,  an aggregate
of 980,000 shares of the Company's  common stock,  $.001 par value per share are
reserved  for  issuance  pursuant  to the  Company's  1997 stock  option plan as
adopted by the Company's Board of Directors on February 12, 1997 and approved by
the shareholders on March 28, 1997.

(e)  Compensation of Directors.

     No director of the Company  received  any  compensation  in his capacity as
director during the fiscal year ended June 30, 2002.

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

     On March 23, 2001,  the Company  entered into a letter  agreement  with the
Company CEO, which remains to be  formalized,  by which James Krejci renewed his
employment  as CEO of the  Company  and  President  and CEO of AWN.  The  letter
agreement calls for a three year  employment  agreement with the opportunity for
Mr.  Krejci to obtain,  through  common stock option  agreements,  up to fifteen
percent (15%) of the  outstanding  common stock of the Company over a three year
period. The preliminary  agreement calls for Mr. Krejci to receive stock options
vesting in equal annual  increments  to equal to a total of 15% of the Company's
outstanding common shares over a three year period ending February 16, 2004. The
strike price of all of the potential  options,  is $.076 (80% of the closing bid
price of $.095 of the Company's common stock on February 15, 2001.

                                       12
<PAGE>
     On February  16,  2001,  James  Krejci  completed  a three year  employment
agreement as Chief  Operations  Officer of the Company and  President and CEO of
AWN. By the  completion of this three year agreement Mr. Krejci became vested in
common stock  options for ten percent (10%) of the  outstanding  common stock of
the Company.  The strike price of all of the vested  options is $.056 per share,
representing  80% of the bid price of the  Company's  common  stock on September
2nd, 1998, Mr.  Krejci's  original  appointment  date as CEO of the Company.  As
additional  employee  incentive,  the non  interested  members  of the  Board of
Directors  passed a  resolutions  granting Mr.  Krejci:  (1) a four year option,
effective 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,  (2) a four year option
effective after July 1, 2000, to purchase 1,300,000 shares of the Company's .001
par value common stock at a strike price of $.111 per share, and (3) a four year
option effective January 1, 2001, to purchase  1,700,000 shares of the Company's
..001 par value common stock at a strike price of $.067 per share.

     On January,  2002, Gordon Dihle completed a three year employment agreement
wherein he was employed as Chief Financial Officer of the Company. By completion
of the three year employment agreement Mr. Dihle became invested in common stock
options for seven and one half percent (7.5%) of the outstanding common stock of
the  Company.  The strike  price of all of the  options  is $.056 per share.  As
additional  employee  incentive,  the non  interested  members  of the  Board of
Directors  passed a  resolutions  granting  Mr.  Dihle:  (1) a four year option,
effective July 1, 1999, to purchase  1,000,000  shares of the Company's .001 par
value common  stock at a strike price of $.05 per share,  (2) a four year option
effective after July 1, 2000, to purchase 1,000,000 shares of the Company's .001
par value common stock at a strike price of $.111 per share, and (3) a four year
option effective January 1, 2001, to purchase  1,400,000 shares of the Company's
..001 par value common stock at a strike price of $.067 per share.

     Effective January 1, 2001, the Company entered into a letter agreement with
Marc Maassen, by which Marc Maassen became employed as President of the Company.
Mr. Maassen resigned as President of the Company  effective May 31, 2001. During
the term of his  employment as President,  Mr.  Maassen  became vested in common
stock  options  for two  percent  (2%) of the  outstanding  common  stock of the
Company, said options are exercisable at a price of $0.048 per share.

Report on Repricing of Options/SAR's.
-------------------------------------

     During  the  fiscal  year  ended  June  30,  2002,   no  stock  options  or
freestanding SAR's were repriced.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)  Security Ownership of Certain Beneficial Owners:

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

     At June 30, 2002, the Company had outstanding Class A .001 par value Common
Stock. Each common share entitles the holder to one vote in any matter submitted
to shareholders for approval. The common shares vote as a single class.

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

Cayman Offshore International, Inc.
PO Box 1561GT
Zephyr House, Mary Street
Grand Cayman, British West Indies             8,379,816 (1)             11.8%

Overseas Foreign Holdings, Inc.
PO Box 1561GT
Zephyr House, Mary Street                    6,268,929                   8.9%
Grand Cayman, British West Indies

Queens Cross Group, Inc.
PO Box 1561GT
Zephyr House, Mary Street                    10,009,840 (1)             14.1%
Grand Cayman, British West Indies

                                       13
<PAGE>
                                           Amount and Nature       Percentage of
Name and Address of Beneficial Owner    of Beneficial Ownership     Total Class
------------------------------------    -----------------------     -----------

Zephyr Directors Limited *
c/o G.  James Cleaver,
E&Y Restructuring
PO Box 510 GT
Bermuda House, 2nd Floor                    30,579,803 (2)
British American Centre                  *(voting control as           43.2%
Dr.  Roy's Drive                       managing Director but not
Grand Cayman, Cayman Islands             beneficial ownership)

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

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

(f)  Security Ownership of Management:

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

                                        Amount and Nature       Percentage of
Name and Address of Security Owner    of Security Ownership      Total Class
----------------------------------    ---------------------      -----------
Gordon D. Dihle
10333 Behrens Mile Road
Byers, Colorado 80103                       218,676 (1)              3%

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

Marc Maassen
240 Hopi Place                              128,000 (3)              2%
Boulder, Colorado 80303

Total officers and directors                620,962                  9%
as a group (3 persons)

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

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

(3)  includes  automatic stock options to purchase 16,000 shares of common stock
     which  accrued to Mr.  Maassen as an outside  director  under the Company's
     1997 incentive  stock option plan;  does not include stock options of 2% of
     the  Company's  common  shares  which Mr.  Maassen  earned  pursuant  to an
     employment agreement over the one quarter period ending March 31, 2001.

                                       14
<PAGE>

     The  information  is furnished as of September 24, 2002 as to the number of
shares of the  Company's  Series D  Preferred  Stock,  $.001 par value per share
owned by each executive officer and director of the Company and by all executive
officers and directors as a group:

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

James Krejci
1133 Race Street
Denver, Colorado 80206                     6,000,000 (1)           100%

Total officers and directors               6,000,000               100%
as a group (3 persons)

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

(c)  Changes in Control.

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

                                       15
<PAGE>
by the corporation which requires a vote of its common stock  shareholders other
than for regular elections for members of the board of directors, the holders of
the Series D  Preferred  Stock  shall be  entitled  to vote in such  shareholder
election with the common shareholders. In such shareholder elections, each share
of Series D Preferred  Stock voted in the election shall be equal to one hundred
fifty common shares for purposes of such election  results.  If at any time, the
Corporation's  management  or its board of directors  shall pass a resolution or
enter into a contract to liquidate or dissolve  the  corporation;  to change the
capital  structure of the  corporation  or other  corporate  reorganization;  to
acquire a subsidiary, business or assets in exchange for shares of the Company's
equity or debt instruments  issued by the Company;  to merge with or consolidate
into another corporation;  to tender, transfer or otherwise dispose of in excess
of twenty five percent of its total property,  assets,  shares of stock or other
securities,  property or business, the holders of a minimum of 50% of the Series
D  Preferred  Stock shall  within 30 days of direct  notice of the event made to
Series D Preferred Stockholders,  have the option to require that the resolution
made or action taken by the Corporation's management be placed for a vote of the
shareholders.  If in a regular  election of the  Corporation  for members of the
board of  directors  a  sufficient  number of common  shares are not  present in
person or by proxy for the election of the board of directors as required by the
bylaws  of the  Corporation  or the  applicable  laws of any  state in which the
Corporation is domiciled,  the holders of the Series D Preferred  Stock shall be
entitled to vote in such shareholder  election with the common  shareholders and
establish a legal  quorum.  In such director  elections,  each share of Series D
Preferred Stock voted in the election shall be equal to one hundred fifty common
shares for purposes of such required quorum and election results.  There were no
previous  shares of Series D preferred  stock issued or outstanding and there is
no public market for the Series D preferred  stock. The Series D preferred stock
is not convertible to common stock.

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

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

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Transactions
--------------------

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

     On December 28, 2000,  the  Company's  board of directors  voted to issue a
total of  6,000,000  shares of its .001 par value  Series D  preferred  stock to
James J.  Krejci,  the  Corporation's  President  at an issue  price of .001 per
share.  The shares were  issued in  consideration  of  services  provided to the
Company by Mr. Krejci.  No underwriter  was involved in the  transaction  and no
cash commissions or discounts were paid by the Company.  SEE ITEM 11 - EXECUTIVE
COMPENSATION - (c) Change-in Control.

     Effective January 1, 2001, the Company entered into a letter agreement with
Marc Maassen, by which Marc Maassen became employed as President of the Company.
Mr. Maassen resigned as President of the Company  effective May 31, 2001. During
the term of his  employment as President,  Mr.  Maassen  became vested in common
stock  options  for two  percent  (2%) of the  outstanding  common  stock of the
Company, said options are exercisable at a price of $0.048 per share.

     On January 1, 1999, the Company entered into a letter agreement with Gordon
Dihle,  which was completed on January 1, 2002.  Pursuant to that  agreement Mr.
Dihle became  entitled to receive  common  stock  options for seven and one half
percent  (7.5%) of the  outstanding  common stock of the Company.  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, 2002, no
officer, director or relative or spouse of the foregoing persons or any relative
of such person who has the same home as such  person,  or is a director or other
officer of any parent or subsidiary of the Company or any  shareholder  known by
the Company to own of record or beneficially  more than five (5%) percent of the
Company's  Common  Stock,  had a direct or  indirect  material  interest  in any
transaction or presently proposed transaction to which the Company or any of its
parents or subsidiaries was or is a party.

                                       16
<PAGE>
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

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

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

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

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

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

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

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

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

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

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

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

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

   10.02  Letter Agreement  between the Company and James Krejci dated March 23,
          2001. (3)

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

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

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

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

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

   10.08  Amendment Number 1 to Asset Acquisition Agreement (3)

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

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

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

                                       17
<PAGE>
    21    Subsidiaries of the registrant.

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

    99.1  Certification Pursuant to 18USC Section 1350

(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.

(3)  Incorporated  by reference to exhibits  filed with the Company's Form 10KSB
     for June 30, 2001.

(b)  Reports on Form 8-K

     The  Company  filed no  reports  on Form 8-K during the year ended June 30,
2002,  no reports on Form 8-K were filed during the quarter ended June 30, 2002,
or from June 30, 2002 to the date of this report.


                                   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: 11/14/02                       By s/s James J.  Krejci
                                       -----------------------------------------
                                       James J.  Krejci, President and CEO

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

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


Date: 11/14/02                       By: s/s James J.  Krejci
                                        ----------------------------------------
                                        James J.  Krejci, Chairman

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

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


                                       18
<PAGE>
                                 CERTIFICATIONS


We, Gordon Dihle and James J.  Krejci, certify that:

     1.   We  have  reviewed  this  annual  report  on  Form  10-KSB  of  ComTec
          International, Inc. for the year ended June 30, 2002;

     2.   Based on our knowledge, this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary  in  order  to make  the  statements  made,  in light of the
          circumstances  under which such  statements  were made, not misleading
          with respect to the period covered by this annual report;

     3.   Based on our knowledge, the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the Registrant as of, and for, the periods  presented in
          this annual report;

     4.   We  are  responsible  for  establishing  and  maintaining   disclosure
          controls and  procedures  (as defined in Exchange Act Rules 13a-14 and
          15d-14) for the Registrant and have;

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the Registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b.   evaluated  the  effectiveness  of  the  Registrant's   disclosure
               controls and  procedures  as of a date within ninety (90) days of
               the filing date of this annual  report (the  "Evaluation  Date");
               and

          c.   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   We  have  disclosed,  based  on our  most  recent  evaluation,  to the
          Registrant's  auditors  and the Audit  Committee  of the  Registrant's
          Board of Directors (or persons performing the equivalent function):

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the Registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  Registrant's  auditors any material
               weakness in internal controls; and

          b.   any fraud,  whether or not material,  that involves management or
               other  employees  who have a  significant  role in the  Company's
               internal controls; and

     6.   We have  indicated  in this  annual  report  whether or not there were
          significant  changes in  internal  controls or in other  factors  that
          could significantly affect internal controls subsequent to the date of
          our most recent  evaluation,  including  any  corrective  actions with
          regard to significant deficiencies and material weaknesses.


Dated: November 14, 2002              s/s James J.  Krejci
                                      ------------------------------------------
                                      James J.  Krejci, Chief Executive Officer


Dated: November 14, 2002              s/s Gordon Dihle
                                      ------------------------------------------
                                      Gordon Dihle, Chief Financial Officer


                                       19
<PAGE>















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

                          INDEPENDENT AUDITORS' REPORT

                                      AND

                        CONSOLIDATED FINANCIAL STATEMENTS

            YEARS ENDED JUNE 30, 2002 AND 2001 AND CUMULATIVE AMOUNTS
              FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2002












<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, 2002 and 2001 and the related  consolidated  statements of  operations,
shareholders'  equity (deficiency) and cash flows for the years then,  including
the cumulative  period from inception  (March 15, 1994) to June 30, 2002.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Comtec
International,  Inc.  and for the year then ended and the  amounts  for the year
ended June 30,  2002 and 2001 and cash flows for the year then ended and for the
cumulative period from inception (March 15, 1994) to June 30, 2002 in conformity
with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 2 of notes to
consolidated  financial  statements,  the Company experienced net losses for the
year  ended June 30,  2002 of  $184,000  and has  experienced  net  losses  from
inception of  $16,433,000.  Sources of cash flows have been through the sales of
its common shares  ($1,302,600) and from borrowings  under financing  activities
($5,794,200).  The  borrowings  under  financing  activities  may  cause  severe
liquidity problems.  No assurances can be given to the continuation of the sales
of  securities or continued  ability to obtain short or long term  borrowings to
maintain the Company's present cash flow


<PAGE>
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.  The Company
has no source of current or future funding. The Company's ability to achieve the
elements of its business plan,  which may be necessary to permit the realization
of assets and satisfaction of liabilities in the ordinary course of business, is
uncertain.  All these  conditions  raise  substantial  doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not  include  any  adjustments  that  might  result  from the  outcome  of these
uncertainties.

S/Grabau & Company

Denver, Colorado
September 25, 2002



<PAGE>


                  COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
              CONSOLIDATED BALANCE SHEETS - JUNE 30, 2002 AND 2001


                                     ASSETS

                                                         2002          2001
                                                     ------------  ------------


Current Assets
  Cash and equivalents                               $     23,600  $      4,200
  Other receivables                                            --       333,700
  Current portion of lease receivable                     213,300       178,000
  Other current assets                                         --         5,000
                                                     ------------  ------------
         Total current assets                             236,900       520,900

Property and equipment                                     16,300        28,100

Direct financing lease receivable                         171,800       385,000
                                                     ------------  ------------

                                                     $    425,000  $    934,000
                                                     ============  ============

               LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
   Current portion of long-term debt                 $     12,800  $     33,900
   Accounts payable                                        11,700        26,600
   Accrued liabilities                                    548,000       745,700
   Shareholder & officer notes payable                         --        10,000
                                                     ------------  ------------

        Total current liabilities                         572,500       816,200

Long-term debt, less current portion                           --        81,300

Shareholders' Equity (deficiency):
   Series A convertible preferred stock,
     $1, stated par and liquidation value;
     1,000,000 shares authorized;
     no shares issued and outstanding                          --            --
   Series B convertible preferred stock,
     $5 stated par and liquidation value;
     1,500,000 shares authorized;
     no shares issued and outstanding                          --            --
   Series C convertible preferred stock,
     $10 stated par and liquidation value,
     1,000,000 shares authorized;
     no shares issued and outstanding                          --            --
   Series D cumulative preferred stock,
     $.001 stated par and $.15 liquidation value,
     6,000,000 shares authorized;
     6,000,000 shares issued and outstanding                6,000         6,000
   Common stock, $.001 par value,
     authorized 200,000,000 shares;
     issued and outstanding 70,832,900
     and 68,078,791 shares in 2001 and
     2000                                                  70,800        70,800
Capital in excess of par                               16,208,700    16,208,700
Accumulated other comprehensive loss                           --            --
Deficit accumulated during the
   development stage                                  (16,433,000)  (16,249,000)
                                                     ------------  ------------
                                                         (147,500)       36,500
                                                     ------------  ------------

                                                     $    425,000  $    934,000
                                                     ============  ============

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

<PAGE>

<TABLE>
                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            YEARS ENDED JUNE 30, 2002 AND 2001 AND CUMULATIVE AMOUNTS
              FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2002

<CAPTION>
                                                            Years Ended
                                                              June 30,               Cumulative
                                                    ----------------------------    Amounts from
                                                            2002            2001  Inception to date
                                                    ------------    ------------  -----------------
<S>                                                 <C>             <C>              <C>
Operating Expenses:
     Selling, general and administrative            $     74,400    $    829,700     $  8,074,000
     Management fees, related party                           --              --           65,000
                                                    ------------    ------------     ------------

                                                          74,400         829,700        8,139,000
                                                    ------------    ------------     ------------

Loss before other income (expenses)                       74,400         829,700        8,139,000
                                                    ------------    ------------     ------------

Other income (expenses):
     Interest and dividends                                   --              --          156,300
     Other                                                    --              --          180,200
     Interest Expense                                    (47,000)        (12,600)      (1,474,700)
     Telephone services, less revenues                        --              --       (1,789,500)
     Gain (Loss) on investments, foreclosures and
         disposal of assets                              (62,600)         68,900         (845,000)
     Write-down of loan origination fees                      --              --         (532,700)
     Write-down of LED equipment and
         intangibles                                          --              --       (3,988,600)
                                                    ------------    ------------     ------------

                                                        (109,600)         56,300       (8,294,000)
                                                    ------------    ------------     ------------

Net Loss                                            $   (184,000)   $   (773,400)    $(16,433,000)
                                                    ============    ============     ============

Basic Weighted average common shares
     outstanding                                      70,832,900      68,954,347
                                                    ============    ============

Basic Loss per common share                         $       (.00)   $       (.01)
                                                    ============    ============

</TABLE>

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

<PAGE>

<TABLE>
                  COMTEC INTERNATIONAL, INC., AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
                  YEARS ENDED JUNE 30, 2002 AND 2001, AND FROM
                INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2002


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

 Add (deduct):
  Proceeds from sale of common          $  629,700                                         535,737  $  500
   stock, July, 1995

  Issuance of stock for:
   Liquidation of debt, July , 19995    $  130,000                                         246,019  $  300
   Consulting services, July, 1995      $1,124,400                                         923,164  $  900
   Acquisitions, August, 1995           $  922,200   420,000   $420,000                  3,315,969  $3,300
   Officer's compensation, June, 1996   $1,218,200                                       1,600,300  $1,600
   Exercised warrants, June, 1996       $   30,000                                           6,000      --
   Intangibles, June, 1996                     --                                        1,040,000  $1,100
  Reverse acquistion, June 1996        ($  230,900)                                        592,662  $  600
  Contribution of accrued               $  241,100
   officers' compensation
Net Loss:
  From inception (March 15, 1994)      ($1,148,300)
   to June 30, 1995
  Year ended June 30, 1996             ($2,411,400)


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

Year ended June 30, 1997:
 Add(deduct):
  Proceeds from sale of common          $  509,200                                         743,962  $  700
   stock, August, 1996

  Issuance of stock for:
   Liquidation of debt, October, 1996   $1,500,000                                       3,125,000  $3,100
   Licence rights, April, 1997          $1,444,500                                       1,361,786  $1,400
   Consulting Services, April, 1997     $  951,200                                       1,590,305  $1,600
   Conversion of preferred              $  172,700                                          69,088  $  100
    shares, August, 1996
   Acquistions, August, 1996            $   85,000                                          63,333  $  100
   Officers' compensation, June, 1997   $   59,700                                         324,123  $  300
   Interest, October, 1996              $   46,600                                          97,089  $  100

  Cancellation of shares due to:
   Foreclosure, February, 1997          ($ 786,200) (420,000) ($420,000)                   -98,000 ($  100)

  License rights, February, 1997       ($1,444,500)                                     -1,361,786 ($1,400)

  Cancelled acquisition,                                                                  -980,000 ($1,000)
   February, 1997

  Write-down of intangible              $1,300,000

  Unrealized losses on marketable      ($    3,600)
   securities

  Net Loss year ended June 30, 1997    ($5,115,300)                           0  $    0


<PAGE>

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

 Add (deduct):
  Proceeds from sale of common          $      629,200
   stock, July, 1995

  Issuance of stock for:
   Liquidation of debt, July , 19995    $      129,700
   Consulting services, July, 1995      $    1,123,500
   Acquisitions, August, 1995           $    1,744,300                     ($   20,400)               ($1,225,000)
   Officer's compensation, June, 1996   $    1,216,600
   Exercised warrants, June, 1996       $       30,000
   Intangibles, June, 1996              $    1,298,900                                  ($ 1,300,000)
  Reverse acquistion, June 1996        ($      231,500)
  Contribution of accrued               $      241,100
   officers' compensation
Net Loss:
  From inception (March 15, 1994)                                          ($1,148,300)
   to June 30, 1995
  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          $      508,500
   stock, August, 1996

  Issuance of stock for:
   Liquidation of debt, October, 1996   $    1,496,900
   Licence rights, April, 1997          $    1,443,100
   Consulting Services, April, 1997     $      949,600
   Conversion of preferred              $      172,600
    shares, August, 1996
   Acquistions, August, 1996            $       84,900
   Officers' compensation, June, 1997   $       59,400
   Interest, October, 1996              $       46,500

  Cancellation of shares due to:
   Foreclosure, February, 1997         ($      366,100)

  License rights, February, 1997       ($    1,443,100)

  Cancelled acquisition,               ($    1,224,000)                                                $1,225,000
   February, 1997

  Write-down of intangible                                                              $ 1,300,000

  Unrealized losses on marketable                      ($           3,600)
   securities

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

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

<PAGE>

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

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

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

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

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

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

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

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

 Issuance of stock for:
  Loan origination and finders'         $    6,200                                           6,153,844  $ 6,200
  Consulting services, October, 1999    $   10,000                                             227,272  $   200
  Compensation, June, 2000              $    3,500                                             554,979  $   600

 Liquidation of debt, June, 2000        $2,729,800                                          21,445,500  $21,400

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

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

 Issuance of stock for:
  Compensation, February, 2001          $   50,000                                           1,111,111  $ 1,100
  Consulting services, April, 2001      $   12,200                                             193,000  $   200

 Legal settlement, April, 2001          $  101,500                                           1,450,000  $ 1,400

 Issuance of preferred stock,           $    6,000                       6,000,000  $6,000
  June, 2001

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

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

  Net loss year ended June 30, 2002    ($  184,000)

Balance, June 30, 2002                 ($  147,500)        0  $       0  6,000,000  $6,000  70,832,902  $70,800


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

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

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

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

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

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

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

 Issuance of stock for:
  Loan origination and finders'         $           0
  Consulting services, October, 1999    $       9,800
  Compensation, June, 2000              $       2,900

 Liquidation of debt, June, 2000        $   2,708,400

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

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

 Issuance of stock for:
  Compensation, February, 2001          $      48,900
  Consulting services, April, 2001      $      12,000

 Legal settlement, April, 2001          $     100,100

 Issuance of preferred stock,
  June, 2001

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

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

  Net loss year ended June 30, 2002                                       ($   184,000)

Balance, June 30, 2002                  $  16,208,700   $               0 ($16,433,000)  $         0  $         0

</TABLE>

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

<PAGE>

<TABLE>
                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            YEARS ENDED JUNE 30, 2002 AND 2001 AND CUMULATIVE AMOUNTS
              FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2002

<CAPTION>
                                                                Years Ended
                                                                  June 30,             Cumulative
                                                       ----------------------------    Amounts from
                                                               2002            2001  Inception to date
                                                       ------------    ------------  -----------------
<S>                                                    <C>             <C>             <C>
Cash flows from operating activities:
Net loss                                               $   (184,000)   $   (773,400)   $(16,433,000)
Adjustments to reconcile net loss to net cash
     used in operating activities
         Depreciation and amortization                       11,800          13,400         718,200
         Issuance of common stock for service
           and interest                                          --         163,700       3,488,300
         Gain on the sale of marketable securities               --              --         (10,000)
         Write-down on LED equipment and
           intangibles                                           --              --       3,988,600
         Losses (Gains) on investments, foreclosures
           and disposal of assets                            62,600         (61,900)        677,900
         Changes in assets and liabilities:
           Accounts receivable                              271,100              --         245,800
           Deposits and other                                    --              --          (2,500)
           Other current assets                               5,000          (5,000)         11,100
           Accounts payable and accrued liabilities        (212,600)        401,400       2,351,700
           Other assets                                          --           4,500         125,200
                                                       ------------    ------------    ------------
                                                            137,900         516,100      11,594,300
                                                       ------------    ------------    ------------

           Cash used in operating activities                (46,100)       (257,300)     (4,838,700)

Cash flows from investing activities:
     Proceeds of sale of marketable securities                   --              --         267,500
     Proceeds from acquisition                                   --              --          22,100
     Proceeds from direct financing lease                   177,900         160,100         338,000
     Payments for:
         License rights                                          --              --        (424,300)
         Marketable securities                                   --              --        (255,600)
         Non-operating assets                                    --              --         (25,000)
         Related party                                           --              --         (39,000)
         Property, plant, equipment and trade name               --          (2,300)     (1,702,100)
         Other assets                                            --              --         (60,500)
         Other                                                   --              --         (79,500)
                                                       ------------    ------------    ------------

         Cash used in investing activities                  177,900         157,800      (1,958,400)
                                                       ------------    ------------    ------------

Cash flows from financing activities:
     Proceeds from:
         Related party                                           --              --       1,184,500
         Sales of preferred stock                                --           6,000           6,000
         Sales of common stock                                   --              --       1,138,900
         Notes payable, principally related parties              --         110,000       1,405,100
         Warrants                                                --              --          30,000
         Convertible debentures                                  --              --       4,100,000
     Payments on:
         Notes payable,principally related parties          (10,000)             --        (892,000)
         Long-term debt                                    (102,400)        (17,400)       (151,800)
                                                       ------------    ------------    ------------

         Cash provided by financing activities             (112,400)         98,600       6,820,700
                                                       ------------    ------------    ------------

Increase (decrease) in cash and equivalents                  19,400            (900)         23,600
Cash and equivalents, beginning                               4,200           5,100              --
                                                       ------------    ------------    ------------
Cash and equivalents, ending                           $     23,600    $      4,200    $     23,600
                                                       ============    ============    ============

</TABLE>

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


<PAGE>

<TABLE>
                  COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
            YEARS ENDED JUNE 30, 2002 AND 2001 AND CUMULATIVE AMOUNTS
              FROM INCEPTION (MARCH 15, 1994) THROUGH JUNE 30, 2002

<CAPTION>
                                                                Years Ended
                                                                  June 30,             Cumulative
                                                       ----------------------------    Amounts from
                                                               2002            2001  Inception to date
                                                       ------------    ------------  -----------------
<S>                                                    <C>             <C>              <C>
Supplemental disclosure of cash flow information:

         Cash paid for interest                        $     47,000    $     12,600     $   367,000
                                                       ============    ============     ===========


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

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

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

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

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

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

</TABLE>

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

<PAGE>
                  COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 2002 AND 2001


Basis of accounting:
     Comtec International,  Inc. (the Company) prepares its financial statements
     in accordance with generally accepted accounting principles.  This basis of
     accounting  recognizes  revenues  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 fair
     value.  As  judgment  is  involved,   the  estimates  are  not  necessarily
     indicative of the amounts the Company could realize.

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


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 2002 AND 2001


Other receivables:
     Other  receivables  consists of certain cash or stock to be received in the
     future as discussed In Note 4. These amounts were received  during the year
     ended June 30, 2002.

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

                                                         Estimated Useful Lives
                                                                (in years)
                                                         ----------------------
          Office furniture and equipment                            10
          Communication equipment                                    7
          Computer equipment                                         5


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

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

Direct financing lease:
     The Company leased all of its wireless communications equipment in a direct
     financing lease wherein the present value of minimum lease payments exceeds
     90% of the fair  value of the leased  asset.  Direct  financing  leases are
     defined as those leases which  transfer  substantially  all of the benefits
     and risks of ownership  equipment to the lessee.  The cost of the equipment
     is recorded as net investment in direct financing leases.  Leasing revenue,
     which is recognized  over the term of the lease,  consists of the excess of
     lease payments over the equipment's cost.

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

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.


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                       YEARS ENDED JUNE 30, 2002 AND 2001


Per share amounts:
     Loss per share is  computed by dividing  net loss by the  weighted  average
     number of  shares  outstanding  throughout  the year.  The  Company  has no
     preferential dividends or securities that could potentially dilute earnings
     per share.

Non-cash transactions:
     The Company accounts for non-cash transactions,  including to acquire goods
     and  services  from  non-employees,  based  upon  the  fair  value  of  the
     consideration  received or the fair value of the equity instrument  issued,
     whichever is a more reliable measure..

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. These effects are not material.

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

<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001


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


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001


1. Organization and business, continued:
     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.

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

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

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

2. Going concern, liquidity and strategic planning:
     The  accompanying  consolidated  financial  statements  have been  prepared
     assuming the Company will continue as a going concern. The Company reported
     net losses of $184,000  and  $773,400 for the years ended June 30, 2002 and
     2001 and has reported  cumulative net losses of $16,433,000  from inception
     (March  15,  1994)  to June  30,  2002.  As  reported  on the  consolidated
     statements  of cash flows,  the Company  incurred  negative cash flows from
     operating  activities  of $46,100 and $257,300 for the years ended June 30,
     2002  and  2001,  and has  reported  negative  cash  flows  from  operating
     activities of $4,838,700 from inception  (March 15, 1994) to June 30, 2002.
     To date,  these have been financed  principally  through the sale of common
     stock and warrants  ($1,302,600)  and issuance of short and long-term  debt
     ($5,794,200),  including  related  party debt.  Additional  capital  and/or
     borrowings  will be  necessary  in order for the  Company  to  continue  in
     existence until attaining and sustaining profitable operations. The Company
     has no source or current or future funding.

     Management  is seeking a merger or  acquisition  of an  operating  business
     entity. In order to satisfy current  obligations,  the Company has sold Its
     FCC licenses. In order to generate cash flows, the Company has sold Its SMR
     equipment on a capital lease basis and receives quarterly payments.  Should
     the  Company  be  successful  in  obtaining  substantial   additional  debt
     financing,  management  plans to seek  acquisitions of more mature business
     Interests  that  would  generate  sufficient  cash  flow to  maintain  debt
     service.  If the company is  unsuccessful in achieving its business plan it
     will likely cease to exist.


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

3. Other comprehensive income:
     The Company has adopted Statement of Financial  Accounting Standards (SFAS)
     No. 130, OReporting  Comprehensive  Income.O 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


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
                                                              ===========

     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
                                                                ============
<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

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

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

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

     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.


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

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

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

                 Loss on cancellation                       $      9,100
                                                            ============

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

     In October,  2000,  the Company  entered  into an  agreement  with CMSR,  a
     subsidiary of Chadmore Wireless Group  ("Chadmore") to sell certain license
     rights and lease certain equipment to Chadmore. Chadmore agreed to purchase
     the MHZ  wireless  licenses  owned by the Company and assume the  long-term
     debt owed to the Federal Communications  Commission as discussed further in
     Note 9.  Additionally,  Chadmore,  with respect to the  operating  Interest
     retained by the Company, agreed to give the Company either $333,700 in cash
     or Nextel  stock  equal to the same value upon  acquisition  of Chadmore by
     Nextel.  The acquisition of Chadmore by Nextel occurred in February,  2002.
     Additionally,  Chadmore  agreed to lease certain  communications  equipment
     from the Company. These lease payments are further discussed in Note 14 and
     is recorded as a direct financing lease. As a result of these transactions,
     the  Company  recorded a net gain upon sale of these  assets of $68,900 for
     the year ended June 30, 2001.  The Company has no  Involvement or liability
     with respect to the assets.  The Interest  was  transferred  to Chadmore In
     February, 2002. Supplementally, the value of the Interest was determined by
     the cash price the Company  was to receive for the  Interest In the assets.
     This cash value was received during the year ended June 30, 2002.

     As a result of a revaluation of assets In the Chadmore/Nextel  transaction,
     the cash  actually  received by the  Company  was reduced by  approximately
     $62,600. As a result, the Company recorded a net loss on sale of assets for
     the year ended June 30, 2002.

<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

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  prior to  disposition  of
     business as discussed in Note 4. 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:
                                                           2002           2001
                                                   ------------   ------------

     Other current assets:
          Other receivables, cash or stock
            as discussed In Note 9                 $          -   $    333,700
          Other receivables and prepaid expenses              -          5,000
                                                   ------------   ------------

                                                   $          -   $    338,700
                                                   ============   ============

     Property and equipment:
          Furniture, fixtures and equipment        $     75,000   $     75,000
          Accumulated depreciation                       58,700         46,900
                                                   ------------   ------------

                                                   $     16,300   $     28,100
                                                   ============   ============

     Accrued liabilities:
          Payroll and related benefits             $    525,800   $    648,300
          Accrued legal fees                                  -         75,200
          Sales taxes                                    22,200         22,200
                                                   ------------   ------------

                                                   $    548,000   $    745,700
                                                   ============   ============


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

7. Notes payable:
                                                              2002          2001
                                                       -----------   -----------
   Related parties:

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


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


     On June 21, 2000, the Company issued  21,445,000  shares of common stock to
     Cayman in exchange for extinguishment of certain debt and accrued interest,
     in the amount of  $2,144,550.  Additionally,  common  stock  payable in the
     amount of $563,850 was extinguished and contributed to capital in excess of
     par. The shares  exchanged were recorded at fair value resulting in no gain
     or loss on the extinguishment of debt.


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


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


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.

<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

8. Convertible debentures:
     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. The promissory note has
     never been recorded as an asset and is not considered to have any value.

     A summary of the convertible debentures is as follows:

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

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

                                                $  6,500,000      $26,208,332
                                                ============      ===========


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

<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

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


9. Long-term debt:
                                                             2002           2001
                                                     ------------   ------------

   Promissory notes, non-interest bearing,
      payable quarterly at $6,250 per quarter,
      beginning September 1, 2001, through
      maturity on December 1, 2004, to settle
      litigation as discussed in Note 13                        -         87,500

   Capital lease obligations, collateralized
      by communication and computer
      equipment, various interest
      rates, payable in
      monthly installments through
      December , 2004                                      12,800         27,700
                                                     ------------   ------------

                                                           12,800        115,200

   Less current portion of long term debt                  12,800         33,900
                                                     ------------   ------------

                                                     $          -   $     81,300
                                                     ============   ============

     The  aggregate  maturities  of the future  minimum  payments  under capital
     leases are due during the year ended June 30, 2002.


<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

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, 2002 and
     2001 are:

                                                         2002               2001
                                               --------------     --------------

      Deferred tax asset:
         Net operating loss                    $    5,557,500     $    5,483,900
         Less valuation allowance                   5,557,500          5,483,900
                                               --------------     --------------
         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:

                                                   2002            2001
                                                   ----            ----
      U.S. Federal statutory income
         tax rate of 35% (benefit)             $   (64,400)    $  (270,700)
      Effective state income tax (benefit)          (9,200)        (38,700)
                                               -----------     -----------

      Valuation allowance                          (73,600)    $  (309,400)
                                               ===========     ===========

     At June 30, 2002,  the Company had  available  federal net  operating  loss
     carryforwards  of approximately  $16,403,800,  which will expire in varying
     years from 2009 through 2017.

     Should the Company  have a  substantial  change in  ownership,  certain net
     operating loss carryforwards may be limited.

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.


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001


11. Shareholders' equity, continued:
     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.  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.

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

                     Issue   Liquidation    Conversion          ratio
             Type      Par      price          price       to common stock
         --------    -----   -----------    ----------     ---------------

         Series A    $.001   $      1.00    $     1.00           1:1
         Series B     .001          5.00          5.00           1:1
         Series C     .001         10.00         10.00           1:1

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

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

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

     At June 30,  2002 and 2001,  the  Company has no Series A, B or C Preferred
     Stock outstanding.

12. Incentive Compensation Plans, Options and Warrants:
     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 980,000 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 or 980,000
     shares,  whichever is greater. The Compensation  Committee  administers the
     plan.

<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

12. Incentive Compensation Plans, Options and Warrants, continued:
     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, 2002 and 2001,  those  eligible under
     the plan have not  purchased any shares of the company  common  stock,  nor
     have any  options  been  granted.  The plan will  remain  in  effect  until
     terminated by the  Compensation  Committee,  except that no Incentive Stock
     options will be granted after January 31, 2007.


     At June 30,  2002,  the  following  options were  outstanding  or otherwise
     subject to issuance.


     o    Pursuant  to an  existing  employment  agreement  dated March 23, 2001
          between James Krejci and the Company,  Mr. Krejci has the  opportunity
          to obtain up to fifteen percent (15%) of the outstanding  common stock
          of the Company.  The  Agreement  calls for Mr. Krejci to receive stock
          options vesting in equal annual  increments to equal to a total of 15%
          of the  Company's  outstanding  common shares over a three year period
          ending  February  16, 2004.  The strike price of all of the  potential
          options, is $.076.

     o    Pursuant to a completed  employment agreement dated February 16, 1998,
          between  James Krejci and the Company,  Mr.  Krejci  became  vested in
          common stock options for ten percent (10%) of the  outstanding  common
          stock of the Company. The strike price of all of the options is $0.056
          per share.

     o    On May 6,  1999,  as  additional  employee  incentive,  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.

     o    On March 20, 2000,  as  additional  employee  incentive,  the Board of
          Directors passed a resolution  granting Mr. Krejci a four year option,
          to become  effective after July 1, 2000, to purchase  1,300,000 shares
          of the  Company's  .001 par value  common  stock at a strike  price of
          $0.111 per share.

     o    On  November  1,  2000,  as  additional  employee  incentive,  the non
          interested  members  of the  Board of  Directors  passed a  resolution
          granting Mr.  Krejci a four year  option,  to become  effective  after
          January 1, 2001, to purchase  1,700,000  shares of the Company's  .001
          par value common stock at a strike price of $.067 per share.

<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

12. Incentive Compensation Plans Options and Warrants, continued:

     o    Pursuant to a completed  employment  agreement  dated January 1, 1999,
          between Gordon Dihle and the Company,  Mr. Dihle became vested January
          1, 2002 in common stock options for seven and one half percent  (7.5%)
          of the  outstanding  common stock of the Company.  The strike price of
          all of the options is $0.056 per share.

     o    On May 6,  1999,  as  additional  employee  incentive,  the  Board  of
          Directors  passed a resolution  granting Mr. Dihle a four year option,
          to become  effective after July 1, 1999, to purchase  1,000,000 shares
          of the  Company's  .001 par value  common  stock at a strike  price of
          $0.05 per  share,  based  upon a  calculation  of 111% of the .045 bid
          price of the stock on May 6, 1999.

     o    On March 20, 2000,  as  additional  employee  incentive,  the Board of
          Directors  passed a resolution  granting Mr. Dihle a four year option,
          to become  effective after July 1, 2000, to purchase  1,000,000 shares
          of the  Company's  .001 par value  common  stock at a strike  price of
          $0.111  per  share,  based  upon a  calculation  of 111% of the  $0.10
          closing bid price of the stock on March 21, 2000.

     o    On November 1, 2000,  as  additional  employee  incentive the Board of
          Directors  passed a resolution  granting Mr. Dihle a four year option,
          to become  effective  after  January 1, 2001,  to  purchase  1,400,000
          shares of the Company's  .001 par value common stock at a strike price
          of $0.067 per share,  based  upon a  calculation  of 111% of the $0.07
          closing bid price of the stock on October 31,  2000.  No options  have
          actually been issued pursuant to agreements with Mr. Dihle.

     o    Effective  January 1, 2001,  the Company  entered  into an  employment
          agreement  with Marc Maassen,  through which Mr.  Maassen earned stock
          options equal to 2% of the Company's  outstanding  common shares.  The
          strike price of all of the options is $.048 per share.


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

12. Incentive Compensation Plans Options and Warrants, continued:

     o    An incentive stock option plan created in 1997 allows for the granting
          of up to 980,000 options.  No shares have been issued under this plan,
          nor have any options been granted under the plan.

Existing Options.

Date Granted  Recipient     # of Option Shares    Strike Price   Expiration Date

3/23/01       James Krejci  15% of outstanding    $0.076         perpetual

2/16/98       James Krejci  10% of outstanding    $0.056         perpetual

1/1/99        Gordon Dihle  7.5% of outstanding   $0.056         perpetual

1/1/01        Marc Maassen  2% of outstanding     $0.048         perpetual

5/6/99        James Krejci  1,300,000 shares      $0.05          July 1, 2003

3/20/00       James Krejci  1,300,000 shares      $0.111         July 1, 2004

11/1/00       James Krejci  1,700,000 shares      $0.067         January 1, 2005

5/6/99        Gordon Dihle  1,000,000 shares      $0.05          July 1, 2003

3/20/00       Gordon Dihle  1,000,000 shares      $0.111         July 1, 2004

11/1/00       Gordon Dihle  1,400,000 shares      $0.067         January 1, 2005


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

        Employment contracts:

          On February 15,  2001,  the Company  executed a three year  employment
          agreement  with its current  Chief  Executive  Officer.  The agreement
          provided  for a salary of  $14,167  per month  and  stock  options  to
          purchase five percent (5.0%) of the Company's outstanding common stock
          in each year of the contract for a total of 15%.


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

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

     Transactions with related parties:

     The following is a summary of transactions  with related parties as of June
     30, 2002 and 2001:

                                                               2002         2001
                                                         ----------   ----------
           Compensation to officers/directors/
              shareholders                               $        -      555,200
           Series D Preferred Stock issued
              to a shareholder, officer and
              director for cash                                   -        6,000
           Expense reimbursements to shareholders,
              Officers and directors                          4,800            -
           Interest on accrued liabilities paid to
              Shareholders, officers and directors           45,700            -
           Related party loans                                    -       10,000
                                                         ----------   ----------

                                                         $   50,500   $  496,200
                                                         ==========   ==========

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

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

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

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


<PAGE>

                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

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

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

14. Future minimum lease payments

          Future minimum lease payments from the noncancelable  direct financing
          lease of communications equipment owned by the Company, as of June 30,
          2002, is as follows

          Years ending
               June 20, 2003                                 $     213,300
               June 30, 2004                                       171,800
                                                             -------------

         Total future minimum lease payments                 $     385,100
                                                             =============


15. Selected quarterly data (unaudited):

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

          Year ended June 30, 2002:                  Quarter ended
                                          September  December   March    June
                                              30,       31,      31,      30,
                                          ---------  --------  -------  ------
           Expenses:
           Selling, general
             and administrative           $      81  $     95  $    90  $ (192)
           Interest                               2         5       22      18
                                          ---------  --------  -------  ------

                                                 83       100      112    (174)

           Deduct other income (expense)          -         -      (63)      -
                                          ---------  --------  -------  ------

           Net loss                       $     (83) $   (100) $  (175) $  174
                                          =========  ========  =======  ======

           Net loss per share $           $    .(00) $   (.00) $  (.00) $  .00
                                          =========  ========  =======  ======



<PAGE>


                   COMTEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 2002 AND 2001

15. Selected quarterly data (unaudited):

     Year ended June 30, 2001:                        Quarter ended
                                                      -------------
                                          September  December    March    June
                                             30,        31,        31,     30,
                                          -------------------------------------

     Expenses:
     Selling, general and administrative  $    235   $    181    $ 301    $ 113
     Interest                                   --          3        6        3
                                          --------   --------    -----    -----

                                               235        184      307      116

     Deduct other income (expense)             397         39       (7)    (360)
                                          --------   --------    -----    -----

     Net loss                             $    162   $   (145)   $(314)   $(476)
                                          ========   ========    =====    =====

Net loss per share $                      $   .(00)  $   (.00)   $(.00)   $(.01)
                                          ========   ========    =====    =====

16. Fourth Quarter Adjustments:

     A significant fourth quarter adjustment was made during the year ended June
     30, 2002 to reduce salaries  foregone by the officers of the Company In the
     amount of $229,000.

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