-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WE3OlTC5F9dX6JC9VCwiKitkoxCrrr1bQQ8AK49p181y7XdvoY3H1odhWXqYBuMi 0MkxPskxXFxXbIp0i2sJ+w== 0000950172-98-001206.txt : 19981118 0000950172-98-001206.hdr.sgml : 19981118 ACCESSION NUMBER: 0000950172-98-001206 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMTEC INC CENTRAL INDEX KEY: 0000912890 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 840873124 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12475 FILM NUMBER: 98751897 BUSINESS ADDRESS: STREET 1: 599 LEXINGTON AVE STREET 2: 49TH FL CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2123199160 MAIL ADDRESS: STREET 1: 599 LEXINGTON AVENUE STREET 2: 49TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: AVIC GROUP INTERNATIONAL INC/ DATE OF NAME CHANGE: 19950323 FORMER COMPANY: FORMER CONFORMED NAME: YAAK RIVER MINES LTD DATE OF NAME CHANGE: 19931001 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 Commission File Number: 0-22520 AMTEC, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Delaware 52-1989122 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 599 Lexington Avenue, 44th Floor New York, New York 10022 ---------------------------------------- (Address of principal executive offices) (212) 319-9160 ------------------------------- (Registrant's telephone number) Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ____ Class Outstanding as of November 16, 1998 - -------------------------------------- ------------------------------------ Common Stock, par value $.001 per share 25,925,145 Transitional Small Business Format (Check one): Yes No x . Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, the matters discussed in this Quarterly Report are forward-looking statements which involve risks and uncertainties, including but not limited to economic, competitive, governmental, international and technological factors affecting the Company's revenues, joint ventures, operations, markets and prices, and other factors discussed in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on June 30, 1998. PART I FINANCIAL INFORMATION Item 1. Financial Statements
AMTEC, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1998 and March 31, 1998 Sept. 30, 1998 Mar. 31, 1998 - ---------------------------------------------------------------------------------------- ASSETS: Current assets Cash $ 6,772,103 $ 10,442,334 Accounts Receivable 112,877 114,661 Prepaid expenses and other current assets 430,596 356,554 ------------- ------------ Total current assets 7,315,576 10,913,549 Property and equipment, net 848,108 897,265 Investment in construction of GSM networks, net of amortization 29,131,345 28,461,810 Other assets 63,300 113,180 Deferred expenses - 6,916 ------------- ------------ TOTAL ASSETS $ 37,358,329 $ 40,392,720 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities Accounts payable $ 272,985 $ 551,705 Accrued expenses 43,004 798,376 Loans payable - shareholders - 1,452,553 Other current payables 10,477,578 10,234,872 ------------- ------------ Total current liabilities 10,793,567 13,037,506 ------------- ------------ Loans payable 20,028,602 20,028,602 Other payables 1,487,727 1,487,727 Minority interest 298,920 941,974 ------------- ------------ TOTAL LIABILITIES 32,608,816 35,495,809 ------------- ------------ STOCKHOLDERS' EQUITY Preferred Stock: authorized 10,000,000 shares Series E Convertible Preferred Stock: $.001 par value; 66.5 and 73 shares issued and outstanding in Sept. 1998 and March 1998, respectively. 1 1 Common stock: $.001 par value, authorized 100,000,000 shares; 26,180,880 and 26,532,502 issued and outstanding at Sept. 30, 1998 and March 31, 1998, respectively 26,181 26,533 Additional paid-in capital 35,997,628 33,148,529 Accumulated deficit (30,620,808) (27,394,590) Cumulative foreign currency exchange loss (6,188) 613 Non employee deferred option cost, net (918,751) (1,378,125) Warrants 271,450 493,950 ------------- ------------ TOTAL STOCKHOLDERS' EQUITY 4,749,513 4,896,911 ------------- ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 37,358,329 $ 40,392,720 ============= ============
AMTEC INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Six months ended Sept 30 Quarter ended Sept 30 1998 1997 1998 1997 - ------------------------------------------------ ---------------------------- -------------------------- Revenues $ - $ - $ - $ - ----------------------------- ------------------------- Expenses: Selling, general and administrative 3,188,666 2,922,779 1,492,481 553,147 ----------------------------- ------------------------- Total expenses 3,188,666 2,922,779 1,492,481 553,147 ----------------------------- ------------------------- Loss from operations (3,188,666) (2,922,779) (1,492,481) (553,147) Other income (expense): Amortization of stock options (459,376) - (229,688) - Write off of investment - (87,441) - (87,441) Other - net 248,819 (103,060) 128,907 (82,043) ------------------------------ ------------------------- Total other income (expense) (210,557) (190,501) (100,781) (169,484) ------------------------------ ------------------------- Loss before minority interest (3,399,223) (3,113,280) (1,593,262) (722,631) Minority interest in loss of subsidiaries (754,694) (321,701) (390,596) 476,721 ------------------------------ ------------------------- Net loss (2,644,529) (2,791,579) (1,202,666) (1,199,352) Preferred stock dividend 468,944 108,000 66,523 - ------------------------------ ------------------------- Loss applicable to common shares (3,113,473) (2,899,579) (1,269,189) (1,199,352) ============================== ========================= Basic loss per common share (0.12) (0.09) (0.05) (0.04) ============================== ========================= Weighted average common shares outstanding 26,702,367 31,701,320 26,598,534 32,119,009 ============================== =========================
AMTEC INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended Sept 30, 1998 Sept 30, 1997 - ------------------------------------------------------------------------------------------- Cash flows from (used in) operating activities: Net loss $ (3,113,473) $ (2,899,579) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of deferred option cost 459,376 - Depreciation and amortization of GSM investment 1,117,237 - Depreciation 58,411 55,234 Preferred Stock dividend 468,944 Issuance of common and options stock for compensation, directors' fees and services rendered - 392,381 (Increase) decrease in: Accounts receivable 1,784 (100,000) Prepaid expenses and other current assets (74,042) (436,228) Deferred Expense 6,916 - Other assets 49,880 - Increase (decrease) in: Accounts payable and accrued expenses (127,606) (402,380) Accrued interest - 60,666 Other current payables 242,706 - Foreign currency loss (6,801) - Minority Interest (643,054) (839,671) ------------------------------ Net cash provided by (used in) operating activities (1,559,722) (4,169,577) ------------------------------ Cash flows from (used in) investing activities: Purchase of property and equipment (9,254) (36,126) GSM construction costs and additional investments (1,786,772) (4,743,261) ------------------------------ Net cash used in investing activities (1,796,026) (4,779,387) ------------------------------ Cash flows from financing activities: Borrowings - 7,719,836 Change in Minority Interest Ownership (112,167) - Proceeds from sale of Series C convertible preferred stock - 2,500,000 Common stock buy back (202,316) - ------------------------------ Net cash provided by financing activities (314,483) 10,219,836 ------------------------------ Net increase (decrease) in cash and cash equivalents (3,670,231) 1,270,872 Cash and cash equivalents, beginning of period 10,442,334 5,390,871 ------------------------------ Cash and cash equivalents, end of period $ 6,772,103 $ 6,661,743 ==============================
AMTEC, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flows - ---------------------------------------------------------------------------- Supplemental Cash Information: No interest or income taxes were paid during the first six months of fiscal 1999 or 1998. Non Cash Financing Activities: Shareholder loans payable of $1,452,553 and related accrued interest of $906,488 were credited to Additional paid-in capital 6.7 shares of Series E Convertible Preferred Stock were converted into 667,843 shares of common stock (inclusive of conversions of preferred dividends). Warrants valued at $222,500 were cancelled and credited to Additional paid-in capital. The Company cancelled a Common Stock Investment Agreement, as permitted by the Agreement, with Promethean Investment Group on August 12, 1998. 1,019,465 shares previously held in escrow designated for issuance under terms of the agreement were cancelled. Notes to Consolidated Financial Statements NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements as of September 30, 1998 and for the six months then ended are unaudited and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. All of the adjustments are of a normal recurring nature. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto together with management's discussion and analysis of financial condition and results of operations, contained in the Annual Report on Form 10-K filed by the Company on June 30, 1998 for the Company's fiscal year ended March 31, 1998. The results of operations for the six months ended September 30, 1998 are not necessarily indicative of the results for the entire year ending March 31, 1999. Basis of Presentation The accompanying financial statements have been prepared in conformity with generally accepted accounting principles. Realization of a major portion of the assets in the accompanying balance sheet is dependent upon the Company's existing projects developing profitable operations. Included in the financial statements are the financial statements of the Company for the six months ended September 30, 1998 and 1997 and the financial statements of its joint venture subsidiaries for the six months ended June 30, 1998 and 1997. Revenue Recognition Due to the early stage of the networks' rollout, the Company has elected not to recognize revenue earned under its cash flow sharing contract with China United Telecommunications, Incorporated ("UNICOM"). Instead, revenue is recognized when cash is received, which is once a year, during the Company's third quarter. However, the Company expects to begin accruing revenue during its next fiscal year. NOTE 2 - PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the Company, its 70% owned subsidiary Hebei United Telecommunications Equipment Co., Ltd. ("Hebei Equipment") (a 20 year life Sino-foreign joint venture) and subsidiary, and the Company's wholly owned subsidiary, ITV Communications, Inc. All significant intercompany accounts and transactions are eliminated in consolidation. Hebei Equipment in turn owns 51% of Hebei United Telecommunications Engineering Company, Ltd. ("Hebei Engineering") (a 25 year life Sino-foreign joint venture). NOTE 3 - ASSETS The consolidated balance sheet includes approximately $29.1 million of assets, net of amortization, associated with the construction of the Hebei GSM Networks. The Company, which has the right to the largest share of the distributable cash flow from these networks over a fifteen year period, amortizes its investment in these networks over that period. NOTE 4 - LIABILITIES The consolidated balance sheet includes total liabilities of approximately $32.6 million. Of this amount, approximately $32.3 million are liabilities of AmTec's subsidiaries, which are guaranteed by co-investors in the Company's joint ventures with no recourse to AmTec. AmTec's direct liabilities amount to approximately $0.3 million. The decrease in consolidated liabilities primarily relates to the elimination of shareholder loans and related accrued expenses of ITV, Inc., a wholly-owned subsidiary. NOTE 5 - CHANGES TO EQUITY The decrease in Stockholders' Equity of approximately $150,000 primarily is due to the net loss for the six months ended September 30, 1998 of approximately $3.1 million offset by an increase in Additional paid-in capital resulting primarily from the cancellation of shareholders' loans and related accrued interest. As permitted by the agreement, on August 12, 1998 the Company cancelled a Common Stock Investment Agreement with Promethean Investment Group. 1,019,465 shares of the Company's common stock held in escrow under this agreement was cancelled as well. During the six months ended September 30, 1998, the Company issued 667,843 shares of its Common Stock upon the conversion of 6.7 shares of its Series E Convertible Preferred Stock. (See Note 7 regarding the acquisition of certain E-Shares.) On September 14, 1998 the Company announced its intention to purchase up to $1 million of its common stock on the open market. As of September 30, 1998, the Company had purchased 162,000 shares under this program for a total cost of approximately $202,000. NOTE 6 - SIGNIFICANT TRANSACTIONS On August 6, 1998 the Company signed an agreement with UIH Asia/Pacific Communications, Inc ("UAP"), a wholly-owned subsidiary of United International Holdings, Inc. ("UIH"), under which AmTec will issue to UAP $12 million of preferred stock convertible into 9.6 million AmTec common shares, subject to certain anti-dilution provisions, in exchange for 100% of the common stock of UIH Hunan, Inc. ("UIHH"). UIHH holds a 49% interest in a Sino-foreign joint venture with the Broadcasting Bureau of Hunan, the monopoly cable television operator in Hunan Province, People's Republic of China. The agreement, which is subject to satisfactory completion of due diligence and approvals of appropriate regulatory authorities in China among other conditions, provides UAP with an option to increase its holdings in AmTec to 25% of AmTec's fully diluted common shares for a price of $3 per share and with rights of co-investment with AmTec in China. The consummation of this deal will make UAP AmTec's largest shareholder. On August 27, 1998 the Company signed an agreement with a subsidiary of Global TeleSystems, Inc. (GTS), under which a subsidiary of GTS will acquire approximately 5.9 million shares of the Company's common stock and merge GTS' Shanghai-based joint venture into the Company. The shares will be issued at a price of $1.35 per share and will make GTS, through a wholly owned subsidiary, AmTec's second largest shareholder following the close of the merger with UIHH described above. The joint venture holds the rights to a majority share of the cash flow generated by Shanghai VSAT Network Systems (SVC), the premier satellite-based telecommunications network operator in China. The merger is subject to final due diligence among other conditions. NOTE 7 - SUBSEQUENT EVENTS On October 1, 1998 a sixth GSM network launched operations in the city of Langfang, Hebei Province, which has a metropolitan area population of 3.6 million people. As of November 16, 1998 the subscriber base of the six networks reached approximately 31,000 subscribers, an increase of 11,000 subscribers from September 30, 1998. On November 10, 1998, 38.5 of the Company's Series E Convertible Preferred Shares were acquired from an investment fund by the Company and investors known to the Company. As a result of this transaction, the Company is retiring 3.85 Series E Convertible Preferred Shares which would have been convertible into 542,192 common shares at the conversion rate effective on November 12, 1998. NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS Comprehensive Income - In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 130, "Reporting Comprehensive Income". This statement is effective for financial statements issued for periods beginning after December 31, 1997. Management has evaluated the effect on its financial reporting of the adoption of this statement and has found the majority of required disclosures not to be applicable and the remainder not to be significant. Segments of an Enterprise and Related Information - In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information." This statement is effective for fiscal years beginning after December 15, 1997. SFAS No. 131 requires the reporting of profit and loss, specific revenue and expense items, and assets for reportable segments. It also requires the reconciliation of total segment revenues, total segment profit or loss, total segment assets, and other amounts disclosed for segments, in each case to the corresponding amounts in the general purpose financial statements. Management has evaluated the effect on its financial reporting of the adoption of this statement and has found the majority of required disclosures not to be applicable and the remainder not to be significant. Disclosures about Pensions and Other Postretirement Benefits--In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits". This Statement is effective for fiscal years beginning after December 15, 1997. This Statement revises employers' disclosures about pension and other postretirement benefit plans. It does not change the measurement or recognition of those plans. It standardizes the disclosure requirements for pensions and other postretirement benefits to the extent practicable, and requires additional information on changes in the benefit obligations and fair values of plan assets that will facilitate financial analysis. Management is currently evaluating the effect of adopting this statement on its financial reporting. Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operation AmTec, Inc. ("AmTec" or "the Company") is a telecommunications company with operations in the People's Republic of China ( the "PRC" or "China"). The Company has focused its operations on China because of its large and rapidly growing need for telecommunications services, its requirement for foreign capital and technology to meet that need, and AmTec's opportunity to obtain cash flow sharing and technical services agreements with operators who hold exclusive or semi-exclusive communications licenses. The Company has established majority ownership in joint ventures with Chinese and other partners to provide financing, network construction and operational consulting services to licensed China network operators. The Company's current operations primarily are focused on a series of cellular telephone networks in the northeastern province of Hebei, which has 11 major cities and a population of approximately 64 million people. In addition, the Company has interests in other projects and networks in various stages of development. Key components of AmTec's business strategy are developing existing network interests and obtaining additional interests in communications networks in China, including combining the efforts of major telecommunications companies in China. Joint Ventures in China AmTec holds a 70% interest in Hebei United Telecommunications Equipment Company Limited ("Hebei Equipment"), a Sino-foreign joint venture with a wholly-owned subsidiary of the Electronics Industry Department of Hebei Province. Hebei Equipment, in turn, holds a 51% interest in Hebei United Telecommunications Engineering Company Limited ("Hebei Engineering"), a joint venture with NTT International ("NTTI") and Itochu Corp. Both Hebei Equipment and Hebei Engineering are organized as Sino-foreign equity joint ventures under the laws of China and are headquartered in Shijiazhuang, the capital of Hebei Province. Cellular Telephone Networks Currently, legal restrictions in China prohibit foreign participation in the operation and ownership of communications networks. Therefore, the Company has established majority ownership in joint ventures with Chinese and other partners to provide financing, network construction and operational consulting services to licensed Chinese network operators. Substantially all of the Company's revenues are derived from contractual arrangements for the sharing of cash flow generated from network operations rather than from ownership or operation of the networks. Until regulations in China change to permit direct foreign ownership and operations of communications networks, all future revenues of the Company will continue to be derived from these contractual arrangements. Through Hebei Engineering, AmTec entered into an agreement (the "Unicom Agreement") on February 9, 1996 with Unicom to (i) finance and assist Unicom in the construction of cellular networks (the "GSM Networks" or "GSM Project") in the ten largest cities in Hebei Province and (ii) provide consulting and management support services to Unicom in its operation of the GSM Networks in the 10 largest cities of Hebei Province. This GSM Project will have a capacity of up to 70,000 subscribers. Hebei Engineering is entitled to 78% of the distributable cash flow (defined as activation charges plus depreciation plus net income) from the GSM Networks for a 15-year period commencing February 9, 1996. The construction and operational plan for the GSM Networks consists of a "roll-out" across Hebei Province on a city-by-city basis. As of November 16, 1998 six cities, were providing commercial service, to approximately 31,000 subscribers. As of September 30, 1998, construction of the GSM Networks had been financed by Hebei Engineering with $3 million of equity capital, approximately $11 million of vendor financing guaranteed by NTTI, and a $20 million Term Loan facility from Bank of Tokyo Mitsubishi also guaranteed by NTTI and Itochu. Of the $3 million of equity raised by Hebei Engineering, $1.17 million was contributed by Hebei Equipment. Achievement of the Company's business objectives is dependent upon Unicom's operation of the GSM Networks, among other factors. The implementation of the GSM Networks involves systems design, site procurement, construction, electronics installation, initial systems optimization and receipt of necessary permits and business licenses prior to commencing commercial service. While no major difficulties have been encountered to date in launching the six networks now operating, absence of difficulties in launching additional networks can not be assured. Results of Operations for the Six and Three Months Ended September 30, 1998 As Compared to the Six and Three Months Ended September 30, 1997. Due to the early stage of the networks' rollout, the Company did not recognize revenue from the GSM operations during the six months ended September 30, 1998 and 1997. Instead revenues are recognized when cash is received under the revenue sharing contract, which is expected to occur in the third fiscal quarter. However, the Company expects to begin accruing revenue within the next year as the networks continue to develop. As of November 16, 1998 six cellular networks serving approximately 31,000 subscribers were operating in Hebei province. Selling, general and administrative expenses increased from approximately $2.9 million during the six months ended September 30, 1997 to approximately $3.1 million during the six months ended September 30, 1998. The increase primarily related to increases in the amortization of the investment in GSM network of approximately $1.1 million and an increase in salaries and fringe benefits of approximately $0.3 million related to the hiring of a Chief Financial Officer and General Counsel in June 1997. These increases were offset by an approximately $1.2 million reduction in the start-up costs of the Company's joint venture. Selling, general and administrative expenses increased from approximately $0.5 million during the three months ended September 30, 1997 to approximately $1.5 million during the three months ended September 30, 1998. The increase for the quarter was primarily attributed to the amortization of the Company's investment in the GSM networks offset by a reduction in the start-up costs of its joint venture. The Company reported assets of approximately $37.3 million at September 30, 1998, a decrease of 7.5% or $3 million from March 31, 1998. This decrease primarily related to amortization of the Company's investment in the GSM networks of approximately $1.1 million and the funding of current operations of approximately $1.6 million using cash. The consolidated balance sheet of the Company includes total liabilities of approximately $32.6 million. Of this amount, approximately $32.3 million are liabilities of AmTec's Sino-foreign joint venture subsidiaries, with no recourse to AmTec. AmTec's direct liabilities amount to approximately $0.3 million. The decrease in consolidated liabilities primarily relates to the elimination of shareholder loans and related accrued expenses and a decrease in minority interest. The Company's loss before dividends decreased from $2.7 million during the six months ended September 30, 1997 to $2.6 million during the six months ended September 30, 1998. The decrease in net loss primarily relates to an increase in the minority interest in loss of subsidiaries offset by an increase in selling, general and administrative expenses. The decrease in Stockholders' Equity of approximately $0.14 million for the six months ended September 30, 1998 was the net result of an increase in Additional paid-in capital of approximately $2.9 million, a loss for the six months of approximately $3.1 million, amortization of deferred option cost of $0.5 million and an increase in Accumulated deficit of approximately $0.1 million related to AmTec's increase in the ownership of its Sino-Foreign Joint Venture from 60.8% to 70%. The increase in Additional paid-in capital was due to the elimination of approximately $2.4 million of shareholders' loans and related accrued interest, amortization of the discount on the Series E Convertible Preferred Stock of approximately $0.4 milion and the cancellation of 300,000 warrants valued at $0.2 million. Liquidity and Capital Resources While the Company reported $216,348 of revenue during the year ended March 31, 1998, it did not report revenues for the six months ended September 30, 1998. As stated earlier, the Company has elected not to recognize revenue earned under its contract with China UNICOM due to the early stage of the networks' rollout. Instead revenues are recognized when cash is received under the revenue sharing contract, which is expected to occur in the third fiscal quarter. However, the Company expects to begin recognizing revenue on a quarterly basis within the next year as the networks continue to develop. As a result, the Company generated an operating loss of $3.18 million and a loss applicable to common shares of $3.11 million during this period. While the Company expects to achieve profitable operations within several years, there can be no assurances that the Company will achieve this goal. As a result, the Company has financed its current activities primarily through private equity placements. During the six months ended September 30, 1998, the Company's cash decreased by approximately $3.6 million, primarily due to additional investment in the GSM network of approximately $1.8 million, cash used to fund current operations of approximately $1.6 million and $0.2 million of cash used to buy back common stock. The Company's direct cash position is expected to be sufficient to support its operations through January 1, 2000. Equity Issuances The Company issued 667,843 shares of its Common Stock during its first six months upon conversion of 6.7 shares of the Company's Series E Convertible Preferred Shares (the "Series E Shares") by certain holders of the Series E Shares. (See NOTE 7 regarding the acquisition of certain Series E Shares.) Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable. PART II OTHER INFORMATION Item 1. Legal Proceedings Not applicable. Item 2. Changes in Securities Not applicable. Item 3. Default upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of stockholders during the six months ended September 30, 1998. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 27. Financial Data Schedule (b) Reports on Form 8-K. The Company filed no reports on Form 8-K during the six months ended September 30, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November 16, 1998 AmTec, Inc. By: /s/ Joseph R. Wright, Jr. ___________________________ Joseph R. Wright, Jr. Chief Executive Officer By: /s/ Albert G. Pastino __________________________ Albert G. Pastino Principal Financial and Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----