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Tuesday, 09/26/2000 12:04:40 AM

Tuesday, September 26, 2000 12:04:40 AM

Post# of 1019
michael markow was a consultant for amtec, a failed telecom a couple of years ago...do these filings sound a lot like the prs put out by worldwide for shps?....


Item 1. BUSINESS

AmTec, Inc. (the "Company") develops and finances communications
networks in the People's Republic of China ("PRC"). The Company's Chinese
communications networks include a Global Service Mobile system ("GSM") and a
multimedia network, both in the northern province of Hebei, PRC. The Company
holds these interests through Sino-foreign joint ventures ("SFJVs"), which
are the legally authorized vehicle for foreign investment in China.
Consistent with PRC laws and regulations, the Company's SFJVs have entered
into contracts with authorized network operators in the PRC to build networks
and sell the assets of such networks to the operators for a portion of the
cash-flow generated by operations of the networks. On July 8, 1997, the
Company changed its name to "AmTec, Inc." from "AVIC Group International,
Inc."

JOINT VENTURES IN THE PEOPLE'S REPUBLIC OF CHINA

Each of the Company's joint ventures, Hebei United Communications Equipment
Company Limited ("Hebei Equipment") and Hebei United Telecommunications
Engineering Company Limited ("Hebei Engineering"), is organized under the laws
of the PRC as a Sino-foreign equity joint venture enterprise, a distinct legal
entity with limited liability. Such entities are governed by the Law of the
People's Republic of China on Joint Ventures Using Chinese and Foreign
Investments, and implementing regulations related thereto (the "Equity Joint
Venture Law"). The parties to the joint ventures have contractual rights to the
financial returns of the joint venture in proportion to the joint venture
interests that they hold. The transfer or increase of an interest in a
Sino-foreign equity joint venture enterprise requires agreement among the
parties to the venture and is effective upon approval of relevant government
agencies. For a discussion of the risks associated with PRC laws, regulations
and policies, see "Risk Factors -- Risks Relating to Doing Business in the PRC
- -- PRC Laws; Evolving Regulations and Policies."

JOINT VENTURE NETWORKS

In March 1996, the Company formed a joint venture with a 60.8% equity
interest in Hebei Equipment. As a result, Hebei Equipment was converted from a
PRC enterprise into a Sino-foreign joint venture company. On April 15, 1997,
all PRC governmental approvals were finalized for the conversion of Hebei
Equipment to a Sino-foreign joint venture company. See "Certain Relationships
and Related Transactions."

The Company, through Hebei Equipment, is currently involved in the
development of two communications networks in Hebei Province: a digital
cellular telephone network (the "GSM Network") and a province-wide multimedia
network (the "Hebei Multimedia Network"). The GSM Network is being constructed
by Hebei Engineering, which is a 51%-owned subsidiary of Hebei Equipment and is
49%-owned by Nippon Telegraph and Telephone International ("NTTI"), a subsidiary
of Nippon Telegraph & Telephone Corporation. The Hebei Multimedia Network,
which will link existing cable television systems in Hebei Province, is being
constructed by Hebei Equipment.

GSM NETWORK IN HEBEI PROVINCE

Hebei Engineering i
s constructing the GSM Network pursuant to a 15-year
agreement (the "UNICOM Agreement"), dated February 9, 1996, with China United
Communications Co. ("UNICOM"). UNICOM holds one of two licenses to operate
cellular telephone networks in the PRC. Under the terms of the UNICOM
Agreement, Hebei Engineering will build the GSM Network and sell ownership of
the GSM Network over the life of the agreement to UNICOM in exchange for a
majority share of cash flow generated by UNICOM from UNICOM's operation of the
GSM Network. Hebei Engineering will also provide consulting assistance to
UNICOM in the operation of the GSM Network. Hebei Engineering will receive


3.


78% of up front connection fees paid by new subscribers to connect to the GSM
Network, 78% of depreciation of fixed assets and 78% of net income generated by
UNICOM from operation of the GSM Network until February 9, 2011. Through the
Company's 60.8% interest in Hebei Equipment and Hebei Equipment's 51% interest
in Hebei Engineering, the Company holds an indirect 31% interest in Hebei
Engineering.

Under the UNICOM Agreement, the GSM Network will provide cellular telephone
service, using the Global Service for Mobile Telecommunications technology, in
the eleven major cities of Hebei Province, which have a total population,
including surrounding metropolitan areas, of approximately 50 million, or
approximately 78% of Hebei Province's total population of 64 million. In the
first phase of construction, the GSM Network will be built in 7 major cities,
and have a subscriber capacity of 40,000. In the second phase of construction,
the GSM Network will be built in the remaining four major cities of Hebei
Province, thereby expanding the total network capacity to 70,000. Based on
market demand, management believes the capacity of the GSM network may be
expanded in the future beyond 70,000 subscribers. In February 1997, the GSM
Network commenced commercial operations in Shijiazhuang, the capital of Hebei
Province. Six additional cities are anticipated to commence commercial
operation before the end of 1997. Construction in the remaining four major
cities of Hebei Province is anticipated to commence during the first half of
1998. See "Risk Factors -- Risks Relating to the Company's Joint Venture
Operations."

As of July 8, 1997, construction of the first phase of the GSM Network had
been financed with a $3 million equity investment from Hebei Equipment and NTTI,
and vendor financing guaranteed by NTTI and a $20 million Term Loan facility
from Bank of Tokyo Mitsubishi guaranteed by NTTI. Of these amounts, the Company
has provided $1.17 million of equity funding to Hebei Engineering through the
Company's investment in Hebei Equipment. At present, all funding required for
completion of the first phase of construction has been obtained by Hebei
Engineering.

HEBEI MULTIMEDIA NETWORK

On April 8, 1997, Hebei Equipment entered into a 20-year agreement (the
"Hebei Multimedia Agreement") with Hebei Cable Television Station, the
monopoly provider of cable television service in Hebei Province, pursuant to
which Hebei Equipment will (i) build a fiber-optic and microwave network to
connect the existing cable television systems in the eleven major cities in
Hebei Province, (ii) upgrade one city on a trial basis to a hybrid fiber
coaxial network ("HFC"), and (iii) hold the option to upgrade the network to
an HFC network. Under the Hebei Multimedia Agreement, Hebei Equipment will
sell ownership of the Hebei Multimedia Network to Hebei Cable Television
Station in exchange for a majority share of cash flow generated by Hebei
Cable Television Station from operation of the Hebei Multimedia Network.
Hebei Equipment will also provide operating personnel and assistance to Hebei
Cable Television Station in the operation of the Hebei Multimedia Network.
Until Hebei Equipment has recovered its investment, Hebei Equipment will
receive 80% of depreciation of fixed assets and 80% of net income generated
by Hebei Cable Television Station from operation of the Hebei Multimedia
Network. Thereafter, for the balance of 20 years from the commencement date
of formal commercial operations, Hebei Equipment will receive 30% of
depreciation of fixed assets and 30% of net income generated by Hebei Cable
Television Station from operation of the Hebei Multimedia Network. Hebei
Cable Television Station is a subsidiary enterprise of the Hebei Radio and
Television Department, under the jurisdiction of the Ministry of Radio, Film
and Television in the PRC.

The current funding requirement for the Hebei Multimedia Network is
estimated at approximately $23 million to link cable systems in the eleven
largest cities in Hebei Province. As of July 8, 1997, the Company had invested
approximately $1.0 million in Hebei Equipment for purposes of investment in the
Hebei Multimedia Network. The Company anticipates that the balance of required
funding will be provided in the form of equity and debt investments in Hebei
Equipment and additional joint venture entities that may be established with
strategic partners. See "Risk Factors -- Risks Relating to the Company's Joint
Venture Operations."


4.


OTHER TELECOMMUNICATION PROJECTS

In addition to the UNICOM Agreement and the Hebei Multimedia Agreement, the
Company has entered into a number of letters of intent and preliminary
agreements relating to the development of (i) a fixed wire telephone network in
Hebei Province, (ii) a GSM Network in Sichuan Province, (iii) a nationwide
paging network with Beijing CATCH Communications Group Co. ("Beijing CATCH") and
(iv) an enhanced specialized mobile radio network in Beijing with Beijing CATCH.
All of these letters of intent and preliminary agreements are non-binding in
nature, and management will determine over the course of the next fiscal year
whether to pursue these opportunities. There can be no assurance that any
definitive agreements relating to these networks will ever be entered into by
the Company or its subsidiaries.

HISTORY OF THE COMPANY 1996-1997

In November 1996, the Company was listed on the American Stock Exchange.
Prior to that, from March 1996 through November 1996, the Company's Common Stock
was traded on the Over-the-Counter Market of NASDAQ.

On January 16, 1996, pursuant to an Agreement for Sale of Assets, dated as
of January 11, 1996 (the "Asset Sale Agreement"), between ITV Communications,
Inc. ("ITV") and Netmatics, Inc. ("Netmatics"), ITV, the former primary
operating subsidiary of the Company, sold substantially all of its assets to
Netmatics and Netmatics assumed certain of ITV's liabilities and obligations in
consideration for an aggregate purchase price of $2,500,000 in cash and notes
and common stock of Netmatics equal to 33.0% of the issued and outstanding
shares of Netmatics at the time of the sale. Although $250,000 in cash has been
received by the Company, the balance of the consideration is unlikely to be
received by the Company.

REINCORPORATION TO DELAWARE AND NAME CHANGE

At a meeting of the Company's stockholders on May 7, 1996, the stockholders
adopted a resolution approving a change in the Company's state of incorporation
from Colorado to Delaware. The Company effectuated the transactions
contemplated by the resolution on July 10, 1996 and reincorporated to Delaware
by means of a merger (the "Reincorporation Merger") of the Company with and into
a wholly-owned Delaware subsidiary of the Company.

On the effective date of the Reincorporation Merger, each issued and
outstanding share of common stock and preferred stock of the Company was
converted into one share of common stock and preferred stock, respectively, of
the Company's Delaware subsidiary. The Delaware subsidiary succeeded to all of
the assets, liabilities and business of the Company and possesses all of the
rights and powers of the Company.

On Ju
ly 8, 1997, the Company changed its name to "AmTec, Inc." from "AVIC
Group International, Inc." by way of a merger of the Company with and into a
wholly-owned Delaware subsidiary of the Company.

HISTORY OF THE COMPANY 1982-1996

The Company was originally incorporated under the laws of the State of
Colorado on May 10, 1982 under the name "Yaak River Mines, Ltd." From inception
through January 1992, the Company was engaged in certain business operations
which are not associated with the Company's current business of developing
telecommunications networks in the PRC. From January 1992 through September
1994, the Company was operationally dormant.


5.


On September 2, 1994, the Company entered into an Agreement and Plan of
Reorganization, as amended by an agreement dated December 28, 1994 (the
"Reorganization Agreement") with ITV Communications, Inc. in connection with
which the Company acquired ITV as a wholly-owned subsidiary in exchange for a
number of shares of the Company's Common Stock and options to purchase shares of
the Company's Common Stock equal to approximately 91% of the issued and
outstanding shares of the Common Stock on a fully diluted basis after the
completion of the transaction.

On February 8, 1995, the Company and ITV completed the transactions
contemplated by the Reorganization Agreement, and the Company changed its name
to "AVIC Group International, Inc." Since April 1995, the Company has been
engaged in the business of developing telecommunications networks in the PRC.
The Reorganization Agreement has been accounted for as a reverse acquisition or
as a recapitalization of ITV, with ITV as the acquiror. The historical
financial statements of the Company prior to the closing of the Reorganization
Agreement are those of ITV.

EMPLOYEES

As of July 8, 1997, the Company had twelve full time employees, consisting
of six executive personnel, three financial personnel and three clerical
employees. The Company intends to hire additional personnel as the development
of the Company's business continues and makes such action appropriate. The
Company's employees are not represented by a labor union and are not covered by
a collective bargaining agreement. The Company believes that its relations with
its employees are good.

6.


RISK FACTORS

AN INVESTMENT IN SECURITIES OF THE COMPANY IS SPECULATIVE IN NATURE,
INVOLVES A HIGH DEGREE OF RISK, AND SHOULD NOT BE UNDERTAKEN BY ANY INVESTOR WHO
CANNOT AFFORD THE LOSS OF HIS ENTIRE INVESTMENT. PERSONS WHO MAY OWN OR INTEND
TO PURCHASE SECURITIES OF THE COMPANY SHOULD CAREFULLY CONSIDER, ALONG WITH
OTHER MATTERS DISCUSSED IN THIS ANNUAL REPORT, THE FOLLOWING RISK FACTORS:

COMPANY AND FINANCIAL RISKS

PRIOR AND ANTICIPATED LOSSES. To date, the Company has not generated
revenue and has experienced net losses of $4,064,885 and $5,281,730 during the
fiscal years ended March 31, 1997 and 1996, respectively. The Company does not
expect to achieve profitability during the current fiscal year. The ability of
the Company to achieve profitability is dependent upon numerous factors,
including the operations of the Company's joint venture projects and its ability
to finance, develop and implement its PRC telecommunications projects. There
can be no assurance that the Company will achieve profitability in any future
period.

HOLDING COMPANY. The Company is a holding company. The Company's
operating assets and only source of income and operational cash flow are its
interests in its existing subsidiaries. The ability of the Company to pay any
dividends on its capital stock is entirely dependent on the Company's ability to
receive distributions from its subsidiaries. See "Risk Factors -- Risks
Relating to the Company's Joint Venture Operations" and "-- Risks Relating to
Doing Business in the PRC."

EARLY STAGE PROJECTS. The telecommunications projects which constitute the
Company's entire business are in the early stages, and are subject to all of the
risks inherent in the establishment of new telecommunications projects. The
likelihood of the success of the Company's PRC telecommunications operations
must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with the
construction and operation of a new telecommunications network. There can be no
assurance that the Company's existing or future PRC telecommunications
operations will be successfully implemented or that any of them will generate
any revenue for the Company.

POSSIBLE NEED FOR ADDITIONAL CAPITAL. The Company's future capital
requirements will depend on many factors, including, but not limited to, the
financial success of the Company's PRC telecommunications operations, future
capital requirements of the Company's operations and capital requirements
arising out of participation in other telecommunications networks in the future.
At present, the Company's only contractual obligation is for the Hebei
Multimedia Network. To the extent that existing funds are insufficient to fund
the Company's activities, the Company may need to raise additional capital
through public or private financing. If additional funds are raised through the
issuance of equity securities, the percentage ownership of existing shareholders
of the Company will be reduced, and such equity securities may have rights,
preferences, or privileges senior to those of the holders of the existing
securities. No assurance can be given that additional financing will be
available or that, if available, it can be obtained on terms favorable to the
Company and its shareholders. If adequate funds are not available, the Company
may default on commitments for existing projects, which may have a material
adverse effect on the business and financial condition of the Company.

COMPETITION. The opportunity to profit from growth in the PRC's
telecommunications sector has attracted participants from around the world.
Many such competitors have greater marketing resources and technological
capability as well as greater financial resources than the Company.
Accordingly, there can be no assurance that the Company will be successful in
securing roles in additional PRC telecommunications networks or, if able to do
so, will be able to negotiate favorable terms.

POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS. The
Company's Certificate of Incorporation includes certain provisions which are
intended to protect the Company's stockholders by


7.


rendering it more difficult for a person or persons to obtain control of the
Company without cooperation of the Company's management. These provisions
include certain super-majority requirements for the amendment of the Company's
Certificate of Incorporation and Bylaws. Such provisions are often referred to
as "anti-takeover" provisions. The inclusion of such provisions in the
Certificate of Incorporation may delay, deter or prevent a takeover of the
Company which the stockholders may consider to be in their best interests,
thereby possibly depriving holders of the Company's securities of certain
opportunities to sell or otherwise dispose of their securities at above-market
prices, or limit the ability of stockholders to remove incumbent directors as
readily as the stockholders may consider to be in their best interests.

CONTROL BY PRINCIPAL STOCKHOLDERS. Tweedia International Limited
("Tweedia") is the Company's principal stockholder and has the beneficial
ownership of approximately 43.9% of the outstanding Common Stock. As a result
of such Common Stock ownership, Tweedia is in a position to exercise significant
control with respect to the affairs of the Company and the election of the
Company's directors. In addition, a potential buyer might be deterred from an
effort to acqui
re the Company, absent the consent of Tweedia or its
participation in the transaction.

EFFECT OF TECHNOLOGICAL CHANGE ON OPERATIONS. The market in the
telecommunications industry is characterized by rapidly changing technology.
There can be no assurance that technologies developed by others will not render
obsolete or otherwise significantly diminish the value of the bus




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