Amtec Announces Cellular Subscriber Growth and Reports Third Quarter Operating Results

Amtec Announces Cellular Subscriber Growth and Reports Third Quarter Operating Results

NEW YORK–(BUSINESS WIRE)–Feb. 16, 1999–

Cellular Subscribers Increase 75% in Third Quarter

AmTec, Inc. (Amex: ATC), a telecommunications company with operations in the People’s Republic of China, today reported financial results for the third quarter of fiscal 1999 which ended December 31, 1998.

AmTec has established joint ventures to build cellular telephone networks in China and is in the process of merging with the China operations of major telecommunications companies, including UIH International and Global TeleSystems Group, Inc., in order to expand its presence in the rapidly growing Chinese telecommunications market. The Company’s first cellular joint venture has six cellular networks operating and plans to launch an additional four by the end of 1999. During the third quarter, cellular subscribers increased by 75% from 20,000 for the quarter ended September 30, 1998, to 35,000 for the quarter ended December 31, 1998.

In reporting the results for the third quarter, Albert G. Pastino, AmTec’s Chief Financial Officer stated, “The cellular networks are rapidly growing but are still in the roll-out phase. Thus, the Company reported a loss applicable to common shares in the third quarter, of approximately $2.1 million or $0.08 per share, compared with a loss of approximately $1 million or $0.04 per share in the corresponding period of 1997 when there was a higher level of network construction and a substantial amount of cost being capitalized”. Mr. Pastino added, “These financial results are on target with what we expected. It is important for our shareholders to understand that our networks are generating revenues and adding new subscribers. However, we do not recognize any revenues until our portion of the cash flow has been received from the joint venture. This will change as we expect to begin recognizing our portion of the net cash flow on a quarterly basis beginning in the next fiscal year. The Company amortizes its investment in these joint ventures over the life of the contract. The amortization for the quarter was $0.6 million and for the nine months ended December 31, 1998 was $1.7 million.”

AmTec, Inc. is a telecommunications company with operations in the People’s Republic of China. AmTec is developing 10 cellular networks in Hebei Province (population: 64 million) in partnership with China Unicom (one of China’s two licensed cellular telephone operators), NTT International, Itochu, and the Hebei Provincial Government. Six networks are operational with over 35,000 subscribers, and a seventh network is expected to be launched in early 1999. AmTec is now expanding through mergers with other telecommunications companies, including United International Holdings (Nasdaq: UIHIA), Global TeleSystems Group, Inc. (Nasdaq and Easdaq: GTSG) and others. With the closing of the UIH agreement, AmTec will also provide cable television transmission in Hunan Province (population: 64 million) and, with the closing of the GTS agreement, will provide data networking services throughout China.

Note: Forward-looking statements in this press release are necessarily subject to risks and uncertainties that may affect the accuracy of such statements. Such risks may include any political instability in China, any delays in construction of networks, and market acceptance of and demand for the Company’s products. For a discussion of such risks, please refer to the Company’s Form 10(k) filed with the Securities Exchange Commission for the fiscal year ending March 31, 1998. The Company undertakes no obligation to update such factors or to publicly announce the result of any revisions to the forward-looking statements contained herein. -0-

AMTEC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Nine months ended Dec 31 Quarter ended Dec 31

1998 1997 1998 1997

Revenues $ — $ — $ — $ —

————————- ——————–

Expenses:

Selling, general

and administrative 3,163,638 3,672,582 1,060,769 1,207,104

Amortization of GSM

investment 1,709,845 — 624,048 —

————————- ——————–

Total expenses 4,873,483 3,672,582 1,684,817 1,207,104

————————- ——————–

Loss from operations (4,873,483) (3,672,582) (1,684,817) (1,207,104)

Other income (expense):

Amortization of stock

options (459,374) — — —

Other – net (293,812) (81,721) (542,632) 21,339

———————— ——————–

Total other income

(expense) (753,186) (81,721) (542,632) 21,339

———————— ——————–

Loss before minority

interest (5,626,669) (3,754,303) (2,227,449) (1,185,765)

Minority interest in

loss of subsidiaries (941,974) (49,330) (187,280) (272,371)

———————— ——————–

Net loss (4,684,695) (3,704,973) (2,040,169) (913,394)

Preferred stock

dividend 614,051 222,891 145,107 114,891

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

Loss applicable to

common shares (5,298,746) (3,927,864) (2,185,276) (1,028,285)

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

Basic loss per

common share (0.20) (0.13) (0.08) (0.04)

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

Weighted average

common shares

outstanding 26,458,488 30,728,346 25,971,101 29,210,664

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

AMTEC INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Dec. 31, 1998 Mar. 31, 1998

ASSETS:

Current assets

Cash $ 5,850,056 $ 10,442,334

Accounts Receivable 104,881 114,661

Prepaid expenses and

other current assets 228,129 356,554

———– ————-

Total current assets 6,183,066 10,913,549

Property and equipment, net 821,265 897,265

Investment in construction of

GSM networks, net of

amortization 28,518,017 28,461,810

Other assets 63,301 113,180

Deferred expenses — 6,916

———– ————-

TOTAL ASSETS $ 35,585,649 $ 40,392,720

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

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities

Accounts payable $ 175,663 $ 551,705

Accrued expenses 47,491 798,376

Loans payable – shareholders — 1,452,553

Bank loans payable within 1 year 4,000,000 —

Other current payables 9,737,721 10,234,872

———– ————-

Total current liabilities 13,960,875 13,037,506

———– ————-

Bank loans 17,528,747 20,028,602

Other payables 1,487,727 1,487,727

Minority interest — 941,974

———– ————-

TOTAL LIABILITIES 32,977,349 35,495,809

———– ————-

STOCKHOLDERS’ EQUITY

Preferred Stock: authorized

10,000,000 shares

Series E Convertible Preferred

Stock:

$.001 par value; 36.5 and 73

shares issued and outstanding in

Dec.31,1998 and March 31,1998,

respectively. 1 1

Common stock: $.001 par value,

authorized 100,000,000 shares;

30,008,426 and 26,532,502 issued

and outstanding at Dec. 31,

1998 and March 31, 1998,

respectively 30,008 26,533

Additional paid-in capital 35,000,867 33,148,529

Accumulated deficit (32,693,336) (27,394,590)

Cumulative foreign currency

exchange loss (690) 613

Non employee deferred option

cost, net — (1,378,125)

Warrants 271,450 493,950

———– ————-

TOTAL STOCKHOLDERS’ EQUITY 2,608,300 4,896,911

———– ————-

TOTAL LIABILITIES & STOCKHOLDERS’

EQUITY $ 35,585,649 $ 40,392,720

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