SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
(Dated July 1, 1996)
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report: January 12, 1996
DBS Industries, Inc.
Delaware 0-28348 84-1124675
(State or other (Commission (I.R.S.Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
495 Miller Avenue, Mill Valley, CA 94941
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(415) 380-8055
<PAGE>
Item 2. Acquisition or Disposition of Assets
On January 12, 1996, DBS Industries, Inc. (the "Company")
acquired 72,030 shares of common stock of Continental Satellite
Corporation ("Continental") which the Company at the time
believed represented an approximate 34% interest in Continental.
Continental has a permit to receive one of the nine direct
broadcast satellite ("DBS") licenses awarded by the Federal
Communications Commission ("FCC"). The Company acquired the
72,030 shares of common stock of Continental from INTRASPACE
Corporation ("Intraspace") for approximately $2.3 million
pursuant to a stock purchase agreement.
The Company financed the purchase of the 72,030 shares of
Continental common stock pursuant to a three-year, $3 million
Series B convertible debenture with Echostar Communication
Corporation ("Convertible Debenture"). The Convertible Debenture
bears interest at the rate of prime, plus 2% on the outstanding
balance. Interest only payments are due on a quarterly basis and
the Convertible Debenture is due on January 12, 1999. With
consent of the holder, the Company may extend the due date in
additional one year increments. At the election of the holder,
the holder may receive interest payments in the form of common
stock of the Company based on the average closing bid price
during the quarter. In addition, the holder has the right to
convert the Convertible Debenture, plus any accrued interest,
into common stock of the Company at $.18 per share subject to
adjustment due to standard anti-dilutive provisions. The
Convertible Debenture is subject to subordination in the event
the Company seeks certain types of financing. The Company may
redeem the Convertible Debenture at any time, and the Convertible
Debenture is secured by the 72,030 shares of common stock of
Continental and 200,000 shares of common stock of Direct
Broadcast Satellite Corporation owned by the Company.
On January 22, 1996, Loral Aerospace Holdings, Inc.
("Loral") filed a complaint (No. CV755366) in the Superior Court
of the State of California In and For the County of Santa Clara
(the Court) against Continental and its shareholders. The
complaint seeks declaratory relief to declare that rescission by
Continental of a share certificate issued to Loral is invalid,
that a September 15, 1995, meeting of Continental's shareholders
was not properly noticed and therefore the meeting and the
actions taken at such meeting were invalid, that Loral should be
deemed a 51% shareholder of Continental in accordance with a
prior judgment involving Loral and Continental, that certain
shares issued by Continental, including the 72,030 shares of
common stock issued to Intraspace and subsequently purchased by
the Company, were improperly issued and should be voided, and
that a constructive trust should be imposed on 51% of the common
stock issued to defendant shareholders. Loral also sought a
temporary restraining order preventing Continental from taking
certain actions in connection with its common stock including
recording any transfer of Continental common stock on its books
and records. The Company was not named as a defendant in the
complaint.
On January 26, 1996, the Court issued a temporary
restraining order preventing Continental from issuing any new
Continental shares that would dilute Loral's stock interest
without first providing written notice of its intent to Loral.
Within 72 hours from written notice, Loral has the right to
acquire, under the same terms and conditions, the Continental
shares proposed to be issued. Loral must exercise its right to
acquire additional shares of Continental within the 72 hour
period following the notice or such right will be waived. The
first right of refusal to acquire any proposed new issuance of
Continental shares shall apply only to the extent that Loral's
interest remains below 51% of the issued and outstanding shares
of Continental. Further any shares of Continental acquired by
Loral pursuant to this first right of refusal is subject to
rescission by the Court.
On April 11, 1996, the Court ordered, among other things,
that Michael Targoff, Eric Zahler, representatives of Loral, and
Fred Thompson, be appointed as Continental's directors.
Loral moved for summary judgment in its favor in April 1996.
On May 16, 1996, the Court granted Loral's motion in part. It
ruled that all shares of Continental issued on or after September
15, 1995, including the 72,030 shares of common stock issued to
Intraspace and sold to the Company, are invalid. The Court based
its decision upon a finding that Continental did not obtain
proper shareholder approval to amend its Articles of
Incorporation to increase the number of shares of common stock
that may be issued. However, the judge further stated that,
although the Company's shares in Continental may be deemed
invalid, Intraspace and the Company are not necessarily without
equitable remedy. The Court has set for trial on September 16,
1996 on the issue of whether the Company has an equitable
ownership interest in Continental. The Company intends to
challenge the Court's ruling regarding the invalidity of the
Company's Continental shares.
The Company believes that it has an interest in Continental.
At this time, this interest cannot be determined definitely until
trial which is scheduled for September 16, 1996. Pursuant to the
stock purchase agreement entered into with Intraspace, Intraspace
agreed to defend and indemnify the Company in the event that
there was a breach or inaccuracy of any representation made by
Intraspace in the stock purchase agreement. In the event that
Company's interest in Continental is not recognized, the Company
may seek indemnity and damages from Intraspace pursuant to their
stock purchase agreement since Intraspace indicated that it had
good and marketable title to the 72,030 shares of Continental.
The Company may also be able to assert a claim against
Continental and Loral. See also Item 3. to the Company's Form
10-KSB for the year ended December 31, 1995 for a further
discussion on this litigation.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Not Applicable.
(b) Pro forma financial information.
Not Applicable
(c) Exhibits
10.23 Stock Purchase Agreement between INTRASPACE
Corporation and DBS Industries, Inc.*
10.24 DBS Industries $3,000,000, Three Year Convertible
Debenture, Series B due January 12, 1999. *
* Previously filed on Form 8-K For the Date of Report of January
12, 1996, filed with the Commission on February 2, 1996.
Item 8. Change in Fiscal Year
On January 15, 1996, the Board of Directors of the Company
decided to change the Company's fiscal year end from July 31 to
December 31. The Company intends to file a Form 10-KSB for the
transition period beginning August 1, 1995 and ending December
31, 1995.
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 hereunto duly authorized.
DBS Industries, Inc.
Fred W. Thompson
Dated: July 1, 1996 Fred W. Thompson
President
