-----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, JP8EEOWL07bf4z7Xo1VCYrPDjBCz8ULQIpKAsXb/MjWoQej41JMqOCy8xljd0FVy O1G0UQnzjjdFYUKtfny8dA== 0000950172-98-000789.txt : 19980814 0000950172-98-000789.hdr.sgml : 19980814 ACCESSION NUMBER: 0000950172-98-000789 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: AMEX 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: 98686399 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 June 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 incorporation or organization) Identification No.) 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 August 13, 1998 Common Stock, par value $.001 per share 27,200,410 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 June 30, 1998 and March 31, 1998 June 30, 1998 March 31, 1998 ------------- -------------- ASSETS: Current assets Cash $ 9,017,732 $ 10,442,334 Accounts Receivable 105,957 114,661 Prepaid expenses and other current assets 274,372 356,554 ------------ ------------ Total current assets 9,398,061 10,913,549 ------------ ------------ Property and equipment, net 876,267 897,265 Investment in GSM networks, net of amortization 28,997,493 28,461,810 Other assets 63,301 113,180 Deferred expenses 6,916 ------------ ------------ TOTAL ASSETS $ 39,335,122 $ 40,392,720 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities Accounts payable $ 408,239 $ 551,705 Accrued expenses 48,391 798,376 Loans payable - shareholders 0 1,452,553 Other current payables 10,568,017 10,234,872 ------------ ------------ Total current liabilities 11,024,647 13,037,506 ------------ ------------ Loans payable 20,028,602 20,028,602 Other payables 1,487,727 1,487,727 Minority interest 690,553 941,974 ------------ ------------ TOTAL LIABILITIES 33,231,529 35,495,809 ------------ ------------ STOCKHOLDERS' EQUITY Preferred Stock: authorized 10,000,000 shares Series E Convertible Preferred Stock: $.001 par value; 68 and 73 shares issued and outstanding in 1998 and 1997, respectively. 1 1 Common stock: $.001 par value, authorized 100,000,000 shares; 26,983,058 and 26,532,502 issued and outstanding at June 30, 1998 and March 31, 1998, respectively. 26,983 26,533 Additional paid-in capital 36,132,620 33,148,529 Accumulated deficit (29,179,022) (27,394,590) Cumulative foreign currency exchange loss 0 613 Non employee deferred option cost, net (1,148,438) (1,378,125) Warrants 271,450 493,950 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 6,103,593 4,896,911 ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 39,335,122 $ 40,392,720 ============ ============
AMTEC INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ending Quarter Ending June 30, 1998 June 30, 1997 ------------- ------------- Revenues $0 $0 Expenses: Selling, general and administrative 1,549,437 2,369,632 ------------ ------------ Total expenses 1,549,437 2,369,632 ------------ ------------ Loss from operations (1,549,437) (2,369,632) ------------ ------------ Other income (expense): Amortization of stock options (229,688) Other - net 145,760 (21,017) ------------ ------------ Total other income (expense) (83,928) (21,017) ------------ ------------ Loss before minority interest (1,633,365) (2,390,649) Minority interest in loss of subsidiaries 364,098 798,422 ------------ ------------ Net loss (1,269,267) (1,592,227) Preferred stock dividend 402,421 108,000 ------------ ------------ Loss applicable to common shares ($1,671,688) ($1,700,227) ============ ============ Basic loss per common share ($0.06) ($0.05) ============ ============ Weighted average common shares outstanding 30,382,177 31,306,876 ============ ============ AMTEC INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS Quarter Ending Quarter Ending June 30, 1998 June 30, 1998 ------------- -------------- Cash flows from operating activities: Net loss ($1,671,688) ($1,700,227) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of deferred option cost 229,687 Depreciation and amortization of GSM investment 547,342 Depreciation 29,122 36,586 Preferred Stock dividend 402,421 Issuance of common and options stock for compenstation, directors' 273,747 (Increase) decrease in: Accounts receivable 8,704 (359,501) Prepaid expenses and other current assets 82,182 37,031 Deferred Expense 6,916 Other assets 49,879 Increase (decrease) in: Accounts payable and accrued expenses 13,037 (616,811) Accrued interest 30,333 Other current payables 333,145 Foreign currency loss (613) Minority interest (251,421) (696,526) 0 ------------ ------------ Net cash provided by (used in) operating activities (221,287) (2,995,368) ------------ ------------ Cash flows from investing activities: Purchase of property and equipment (8,123) (24,842) GSM construction costs and additional investments (1,083,025) (59,954) ------------ ------------ Net cash used in investing activities (1,091,148) (84,796) ------------ ------------ Cash flows from financing activities: Borrowings 4,429,113 Change in Minority Interest Ownership (112,167) Proceeds from sale of Series C convertible preferred stock 2,500,000 ------------ ------------ Net cash provided by financing activities (112,167) 6,929,113 ----------- ---------- Net increase (decrease) in cash and cash equivalents (1,424,602) 3,848,949 Cash and cash equivalents, beginning of period 10,442,334 5,390,871 ------------ ------------ Cash and cash equivalents, end of period $ 9,017,732 $ 9,239,820 ============ ============
AMTEC., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS - --------------------------------------------------------------------------- SUPPLEMENTAL CASH INFORMATION: No interest or income taxes were paid during the first quarter of fiscal 1999 or 1998 NON CASH FINANCING ACTIVITIES: In the first quarter, shareholder loans payable of $1,452,553 and related accrued interest of $906,488 were credited to Additional paid-in capital. In the first quarter, 5 shares of Series E Convertible Preferred Stock were converted into 450,556 shares of common stock (inclusive of conversions of preferred dividends). In the first quarter, warrants cancelled and valued at $222,500 were credited to Additional paid-in capital NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements at June 30, 1998 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 three months ended June 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 three months ended June 30, 1998 and the financial statements of its joint venture subsidiaries for the three months ended March 31, 1998. 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 15 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"). NOTE 3 - ASSETS The consolidated balance sheet includes total current assets of approximately $9.4 million and total assets of approximately $39.3 million. Of these amounts, approximately $5 million of cash is reserved for parent company operations as well as additional joint venture investments, as may be required. The Company's current cash position is sufficient to support operations of the Company through January 1, 2000. The Company also reported through consolidation approximately $29 million of assets, net of amortization, associated with the construction of the Hebei GSM Network. NOTE 4 - LIABILITIES The consolidated balance sheet includes total liabilities of approximately $33.2 million. Of this amount, approximately $32 million are liabilities of AmTec's subsidiaries, which are guaranteed by NTTI with no recourse to AmTec. AmTec's direct liabilities amount to approximately $0.5 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 increase in Stockholders' Equity of approximately $1.2 million for the quarter ended June 30, 1998 was primarily the result of an increase in Additional paid-in capital of approximately $3 million due to the elimination of approximately $2.4 million of shareholders' loans and related accrued interest, amortization of the discount on the Series E Preferred Stock of approximately $0.4 milion and the cancellation of 300,000 warrants valued at $0.2 million. These increases were offset by a loss for the quarter of approximately $1.7 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%. Also, during the quarter the Company issued 450,556 shares of its Common Stock upon the conversion of 5 shares of its Series E Convertible Preferred Stock. NOTE 6 - SUBSEQUENT EVENTS The Company cancelled a Common Stock Investment Agreement, as permitted by the Agreement, with Promethean Investment Group. It is the Company's intention to cancel the 1,019,465 shares held in escrow that were designated for issuance under terms of the agreement. 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 shares at a price of $1.25 per share, 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, approval of AmTec's shareholders and approvals of appropriate regulatory authorities in China, provides UAP with an option to increase its holdings in AmTec to 25% of AmTec's fully diluted common shares and with rights of co-investment with AmTec in China. On August 9, 1998 a fourth GSM network began operations in the city of Baoding, which has a metropolitan area population of 9.54 million people. NOTE 7 - 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 applicable. 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 China's large and rapidly growing need for telecommunications services, China's requirement for foreign capital and technology to meet that need, and the 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 65 million people. In addition, the Company has interests in other projects and networks in various stages of development, including a multimedia network for cable television programming transmission. Developing existing network interests and obtaining additional interests in communications networks in China in the future are key components of the Company's business strategy. CHINA TELECOMMUNICATIONS MARKET Through the Company's interest in cellular telephone networks in Hebei Province and relationships that the Company has developed with key policy makers and decision makers in Chinese governmental agencies, AmTec has focused its business to capitalize on the growth of the Chinese telecommunications market, which is among the world's largest, fastest growing, and most under-serviced telecommunications markets. Due to the importance of a well-developed communications infrastructure to China's continuing economic development, the PRC government has targeted communications network development as a high priority in the country's economic reform program. It is expected that before the year 2000, China will surpass the United States as both the largest cellular telephone and cable television markets in the world. Since the establishment of China United Telecommunications, Incorporated ("UNICOM") in 1994, China has had only two licensed competitors for cellular, fixed wire and long-distance telephony. The cable television market in China is a monopoly run by the Ministry of Information Industry, which also regulates telecommunications in China. While other communications markets in China have experienced greater competition, most notably paging and value-added services, communications licenses have generally been limited to a small number of competitors relative to markets in the United States. The Company believes that both the overall market size and the environment of limited competition are attractive aspects of the Chinese communications market. Although Chinese regulations currently prohibit direct foreign ownership or operation of communications networks, the regulatory environment has shown recent indications of continuing a policy of partial deregulation. And while there can be no assurance that this policy of partial deregulation will continue, the Company believes that it is well-positioned to benefit from deregulation permitting direct foreign ownership and operation of communications networks, if such deregulation were to occur in the future. 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 August 13, 1998 four cities were providing commercial service with approximately 13,000 subscribers; construction in three additional cities was substantially completed, with commercial launch dates scheduled during 1998 for these additional three cities. As of June 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. Each stage can involve various risks and contingencies, the outcome of which cannot be predicted with a high degree of assurance as interconnection of the GSM Networks with the public switched telephone network is sometimes difficult and time consuming, and the successful completion of all planned sites of the GSM Networks will be dependent, to a significant degree, upon the ability of the parties to lease or acquire sites for the location of their base station equipment. While no major difficulties have been encountered to date in procuring such sites, future site acquisition can not be assured. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1997. The Company did not recognize revenues from the GSM operations during the quarters ended June 30, 1998 and 1997 because it has adopted a policy of recognizing revenues only upon the receipt of cash from UNICOM. As the agreement with UNICOM calls for annual cash distributions, the Company does not expect to recognize revenues from its GSM networks until the third fiscal quarter. At June 30, 1998 there were three networks operating with a subscriber base of approximately 11,000. The Company did not recognize any revenues from the Hebei Multimedia Network which is still in the early stages of development. Selling, general and administrative expenses decreased from approximately $2.4 million during the three months ended June 30, 1997 to approximately $1.6 million during the three months ended June 30, 1998. The decrease primarily related to a reduction in the startup costs of the joint ventures of approximately $1.5 million offset primarily by increases in the amortization of the investment in GSM network of approximately $0.5 million and salaries and fringe benefits of approximately $0.2 million related to the hiring of a Chief Financial Officer and General Counsel in June, 1997. The Company reported assets of approximately $39.3 million at June 30, 1998, a decrease of 2.6% or $1.1 million from March 31, 1998. This decrease primarily related to the amortization of the GSM network of approximately $0.5 million and the funding of current operations of approximately $0.6 million using cash and other accounts payable. The consolidated balance sheet of the Company includes total liabilities of approximately $33.2 million. Of this amount, approximately $32.5 million are liabilities of AmTec's Sino-foreign joint venture subsidiaries, with no recourse to AmTec. AmTec's direct liabilities amount to approximately $0.5 million. The decrease in consolidated liabilities primarily relates to the elimination of shareholder loans and related accrued expenses. The Company's loss before dividends decreased from $1.6 million during the three months ended June 30, 1997 to $1.3 million during the three months ended June 30, 1998. The decrease in net loss primarily relates to a decrease in general and administrative expenses, partially offset by $0.2 million amortization of Non-employee deferred option costs . Stockholders' Equity increased by $1.2 million from March 31, 1998 to June 30, 1998, as a result of an increase in Additional paid-in capital of approximately $3 million due to the elimination of approximately $2.4 million of shareholders' loans and related accrued interest, amortization of the discount on the Series E Preferred Stock of approximately $0.4 milion and the cancellation of 300,000 warrants valued at $0.2 million. These increases were offset by a loss for the quarter of approximately $1.7 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%. LIQUIDITY AND CAPITAL RESOURCES While the Company reported $216,348 of revenue during the year ended March 31, 1998, the Company did not report revenues for the quarter ended June 30, 1998 because it reports revenues from its investment in the GSM network as received, which in the normal course of business for the Company's joint venture, occurs once per year, in the Company's third fiscal quarter. As a result, the Company generated an operating loss of $1.6 million and a loss applicable to common shares of $1.7 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 three months ended June 30, 1998, the Company's cash decreased by approximately $1.4 million, primarily due to additional investment in the GSM network of approximately $1.1 million and to cash used to fund current operations of approximately $0.3 million. The Company's direct cash position is expected to be sufficient to support operations of the Company though January 1, 2000. EQUITY ISSUANCES The Company issued 450,556 shares of its Common Stock during its first quarter upon conversion of 5 shares of the Company's Series E Convertible Preferred Shares (the "Series E Shares") by certain holders of the 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 Quarter ended June 30, 1998. Item 5. Other Information Agreement with UIH Asia/Pacific Communications, Inc. 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 at a price of $1.25 per share, subject to certain anti-dilution provisions in exchange for 100% of the common stock of UIH Hunan, Inc. UIH intends, through its ownership in AmTec, to make AmTec its key operation in the China telecommunications market. The transaction, which is subject to satisfactory completion of due diligence, approval of AmTec's shareholders, approvals of appropriate regulatory authorities in China and execution of a definitive agreement, will result in UAP becoming AmTec's largest shareholder and hold the right to nominate 2 members to AmTec's Board of Directors. In addition, UAP will receive co-investment rights with AmTec in China and an option to purchase additional AmTec common stock at $3.00 per share to increase its stake in AmTec to 25 % on a fully diluted basis. 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 operator is currently delivering video services to 13 cities and over 255,000 subscribers. The joint venture currently receives fees for transmission services and participates in the network's advertising revenue. It is currently profitable and will add revenues to AmTec in the first quarter after closing, which is anticipated to take place in the third quarter. 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 Quarter ended June 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: August 13, 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 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: August 13, 1998 AmTec, Inc. By:_________________________ Joseph R. Wright, Jr. Chief Executive Officer By:_________________________ Albert G. Pastino Principal Financial and Accounting Officer EX-27 2 EXHIBIT 27 - FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMTEC, INC.'S FORM 10Q ENDING JUNE 30, 1998. IT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS MAR-31-1999 APR-01-1998 JUN-30-1998 9,017,732 0 105,957 0 0 9,398,061 876,266 29,122 39,335,121 11,024,646 0 0 1 26,983 6,076,610 39,335,121 0 0 0 1,549,437 83,928 0 0 (1,671,688) 0 (1,671,688) 0 0 0 (1,671,688) (0.06) 0.00
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