U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended March 31,
1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from _______ to
_______
COMMISSION FILE NUMBER 0-28348
DBS INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 84-1124675
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94946
(Address of principal executive offices)
(415) 380-8055
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Securities: Common Stock, $.0004 Par Value
Shares Outstanding as of April 30, 1999: 14,195,427
Transitional Small Business Disclosure FormaYes: ___ No X
<PAGE>ii
INDEX
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PAGE
PART I - FINANCIAL INFORMATION.................................................................................1
ITEM 1. Financial Statements................................................................................1
Condensed Consolidated Balance Sheets:
As of March 31, 1999 (unaudited) and December 31, 1998.........................................................2
Condensed Consolidated Statements of Operations (unaudited):
For the Three Months Ended March 31, 1999 and March 31, 1998
and for the period from April 25, 1990 (Inception) to March 31, 1999..........................................3
Condensed Consolidated Statements of Cash Flows (unaudited):
For the Three Months Ended March 31, 1999 and March 31, 1998
and for the period from April 25, 1990 (Inception) to March 31, 1999 ..........................................4
Notes to Condensed Consolidated Financial Statements.........................................................5-7
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................................................8-11
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings...................................................................................12
ITEM 4. Submission of Matters to a Vote of Security Holders.................................................12
ITEM 6. Exhibits and Reports on Form 8-K....................................................................12
</TABLE>
<PAGE>1
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>2
DBSI INDUSTRIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
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March 31, December 31,
1999 1998
Current assets: (Unaudited)
--------------- ---------------
Cash and cash equivalents $ 9,306,274 $ 1,291,711
Prepaid and other current assets 58,091 71,138
--------------- ---------------
Total current assets 9,364,365 1,362,849
--------------- ---------------
Furniture and equipment (at cost) 65,516 65,516
Less accumulated depreciation 45,738 42,989
--------------- ---------------
19,778 22,527
--------------- ---------------
Other assets:
Investments and advances 851,490 851,490
Goodwill, net of accumulated amortization of
$88,056 and $87,428 respectively 2,934 3,562
Satellite construction costs 2,338,425 1,272,083
--------------- ---------------
3,192,849 2,127,135
--------------- ---------------
Total assets $ 12,576,992 $ 3,512,511
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 143,431 $ 240,240
Customer advances 400,000 400,000
Accrued liabilities 93,865 489,531
--------------- ---------------
Total current liabilities 637,296 1,129,771
--------------- ---------------
Stockholders' equity:
Common stock 5,023 3,452
Capital in excess of par value 19,124,433 8,511,410
Warrants 1,194,136 1,085,500
Note receivable from stockholder (60,000) -
Deficit accumulated during the development stage (8,238,896) (7,132,622)
Treasury stock (85,000) (85,000)
--------------- ---------------
Total stockholders' equity 11,939,696 2,382,740
--------------- ---------------
Total liabilities and stockholders' equity $ 12,576,992 $ 3,512,511
=============== ===============
</TABLE>
<PAGE>3
DBSI INDUSTRIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
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April 25, 1990
Three Months Ended (Inception) to
March 31, March 31,
1999 1998 1999
-------------- --------------- ----------------
Revenue $ - $ - $ 161,420
-------------- --------------- ----------------
Cost and operating expenses:
Cost of revenue - - 127,580
General and administrative 898,042 305,482 9,559,731
Research and development 220,601 98,982 3,187,319
-------------- --------------- ----------------
1,118,643 404,464 12,874,630
-------------- --------------- ----------------
Loss from operations (1,118,643) (404,464) (12,713,210)
-------------- --------------- ----------------
Other income (expense):
Interest, net 12,369 (1,678) (697,090)
Equity in loss of investees, net - - (512,920)
Gain on sale of investment - - 5,829,218
Other, net - - (56,634)
-------------- --------------- ----------------
12,369 (1,678) 4,562,574
-------------- --------------- ----------------
Loss before provision
for income taxes and
minority interests (1,106,274) (406,142) (8,150,636)
Provision for income taxes - - 96,835
-------------- --------------- ----------------
Loss before minority interests (1,106,274) (406,142) (8,247,471)
Minority interests in income of
consolidated subsidiaries - - 8,575
-------------- --------------- ----------------
Net loss $ (1,106,274) $ (406,142) $ (8,238,896)
============== =============== ================
Basic net loss per share $ (0.11) $ (0.07)
============== ===============
Diluted net loss per share $ (0.11) $ (0.07)
============== ===============
Weighted average number of
shares of common stock, basic 9,632,620 5,896,906
============== ===============
Weighted average number of
shares of common stock, diluted 9,632,620 5,896,906
============== ===============
</TABLE>
<PAGE>4
DBSI INDUSTRIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
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April 25, 1990
Three Months Ended (Inception) to
March 31, March 31,
1999 1998 1999
-------------- --------------- ----------------
Net cash used in operating activities $ (1,229,075) $ (50,007) $ (11,176,479)
-------------- --------------- ----------------
Cash flows from investing activities:
Proceeds from sale of investment - - 1,099,940
Proceeds from Loral settlement - - 3,573,677
Purchase of fixed assets - - (111,047)
Satellite construction payments (1,066,342) - (2,338,425)
Organization costs - - (28,526)
Advances to officers and shareholders (60,000) - (91,187)
Purchase of interest in Continental - - (2,292,409)
Investments and advances - (204,848) (1,208,726)
Net assets of purchased subsidiaries - - (147,500)
Cash transferred from Fi-Tek IV, Inc.
pursuant to the merger and reorganization - - 156,648
Cash of divested subsidiary - - (277)
Purchase of patents - - (18,251)
Proceeds from repayment of advances to affiliate - - 152,500
Restricted cash on credit line - - 300,000
-------------- --------------- ----------------
Net cash provided by investing activities (1,126,342) (204,848) (953,583)
-------------- --------------- ----------------
Cash flows from financing activities:
Repayment of borrowing under credit line - - (300,000)
Issuance of debentures - - 4,817,501
Issuance of common stock 10,449,705 - 18,600,447
Redemption of common stock warrants - - (19,490)
Stock issue costs (79,725) - (579,460)
Purchase of shares - - (5,000)
Payment of debentures - - (1,168,445)
Proceeds from stockholders' loans - - 442,750
Payment of stockholders' loans - - (351,967)
-------------- --------------- ----------------
Net cash provided by financing activities 10,369,980 - 21,436,336
Net increase (decrease) in cash 8,014,563 (254,855) 9,306,274
Cash and cash equivalents,
beginning of period 1,291,711 383,054 -
-------------- --------------- ----------------
Cash and cash equivalents,
end of period $ 9,306,274 $ 128,199 $ 9,306,274
============== =============== ================
Supplemental disclosures:
Noncash financing activities:
Value of warrants granted to non-employees $ 300,250
Value of warrants representing stock issue costs $ 270,000
Amortization of options granted to non-employees $ 53,000
</TABLE>
<PAGE>5
DBS INDUSTRIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 UNAUDITED INTERIM FINANCIAL STATEMENTS
The information presented in these condensed consolidated financial
statements of DBS Industries, Inc. (DBSI or the Company) and its wholly
owned subsidiaries, Global Energy Metering Services, Inc. and Newstar
Limited (the subsidiaries), is unaudited.
The financial statements include all adjustments consisting of only
normal recurring adjustments which are, in the opinion of management,
necessary to present fairly the condensed consolidated financial
position of DBSI at March 31, 1999 and condensed consolidated results
of operations and cash flows for the interim periods reported. The
results of operations for the 1999 interim period presented are not
necessarily indicative of expected results for the full 1999 fiscal
year.
These condensed consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
Since inception, the Company has devoted substantially all of its
efforts to developing its business. The Company has therefore
incurred substantial losses and negative cash flows from operating
activities. To address financing needs, the Company is pursuing
various financing alternatives. These factors raise substantial doubt
about the Company's ability to continue as a going concern. These
financial statements do not reflect any adjustments that might result
from the outcome of this uncertainty.
Certain information and footnote disclosures normally contained in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The condensed
consolidated financial statements should be read in conjunction with
the financial statements and notes contained in DBSI's 1998 Annual
Report to Shareholders.
NOTE 2 INVESTMENTS AND ADVANCES
E-SAT Corporation
In October 1994, the Company and Echostar Communications, Inc.
formed E-SAT for the purpose of filing with the Federal Communications
Commission for a license to operate a low earth satellite system. E-SAT
filed a license application with the Federal Communications Commission
on November 16, 1994. In April 1998, the FCC formally approved E-SAT's
application. The Company holds a 20% interest in E-SAT. The Company's
total investments in and advances to E-SAT and EchoStar Communication
were $851,490 as of March 31, 1999. The investment is accounted for
using the equity method. As of March 31, 1999, the Company had net
advances receivable of $724,225 from Echostar, which represents the
excess of advances to date to E-SAT over its proportionate 20% share
of its investee's financing requirements.
NOTE 3 SATELLITE CONSTRUCTION COSTS
On December 15, 1998, the Company and Alcatel Space Industries
("Alcatel") entered into a Memorandum of Understanding and authorization
to proceed ("MOU") pursuant to which Alcatel would become the General
Contractor for the design, construction and launch services for the
Company's planned low earth orbit satellites. The Company and Alcatel
are negotiating a definitive agreement. Upon signing of the MOU, the
Company made a $1 million advance payment to Alcatel.
<PAGE>6
DBS INDUSTRIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Under the terms of the MOU signed with Alcatel, the Company made
additional payments totaling $1 million in January and February 1999.
The Company and Alcatel are negotiating a definitive agreement.
During the construction of the E-SAT System, the Company is
capitalizing all construction costs. Included in Satellite
Construction Costs are approximately $300,000 in engineering and other
costs in connection with the design of the satellites and the
$2 million payments to Alcatel for design services.
On March 31, 1999, the Company signed construction and launch
contracts with two European entities and made advance payments of $7.8
million in April 1999. Total payments under such cancelable contracts
will amount to approximately $47 million through January 2001. On April
8, 1999, the Company notified the FCC that it had entered into a
construction contract for the first two satellites of the E-SAT System.
NOTE 4 CUSTOMER ADVANCES
The Company's wholly owned subsidiary, Global Energy Metering
Services, Inc. (GEMS), is party to a contract to deliver 10,000
satellite radio units. The purchase order is for $1.2 million and under
the terms of the purchase order, GEMS would receive a total of $500,000
in advance payments on the contract, based on certain milestone
achievements. As of September 30, 1998, this purchase order had been
suspended by both parties due to the Company's limited access to the
Argos System. The $400,000 in milestone payments received are reported
as customer advances on the accompanying balance sheet. These milestone
payments could be subject to refund in whole or in part.
NOTE 5 NET LOSS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings
Per Share, which establishes standards for computing and presenting
income (loss) per share. Under the new standard, basic net income
(loss) per share is computed based on the weighted average number of
common shares outstanding and excludes any potential dilution. Diluted
net income per share reflects diluted effects of all outstanding common
stock equivalents. Options and warrants to purchase 3,607,906 shares of
common stock with exercise prices from $.53 to $5.60 were outstanding
as of March 31, 1999 and were excluded from the loss per share
calculation for the three month period then ended as they have the
effect of decreasing loss per share. Options and warrants to purchase
1,418,233 shares of common stock with exercise prices from $.40 to
$5.60 were outstanding as of March 31, 1998 and were excluded from the
loss per share calculation for the quarter then ended as they have the
effect of decreasing loss per share.
NOTE 6 EQUITY TRANSACTIONS
In February 1999, the Company issued 500,000 units each consisting
of a share of Common Stock at a price of $3.00 per share and a warrant
to purchase a share of Common Stock at an exercise price of $4.00. Sale
of these units resulted in gross proceeds to the Company of $1.5
million.
In March 1999, the Company received proceeds of approximately $7.5
million from the exercise of warrants to purchase 2.5 million shares of
the Company's Common Stock issued in connection with the 2.8 million
unit offering discussed above.
<PAGE>7
DBS INDUSTRIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During April 1999, the two European contractors purchased 1,666,667
shares of the Company's Common Stock for a total of $5 million in cash.
Subsequent to December 31, 1998, the Company solicited stockholder
approval to increase the number of authorized shares of Common Stock
from 20,000,000 to 50,000,000. The requisite stockholder approval was
obtained.
<PAGE>8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This discussion, other than the historical financial information, may
consist of forward-looking statements that involve risks and uncertainties,
including quarterly and yearly fluctuations in results, the timely availability
of new communication products, the impact of competitive products and services,
and the other risks described in the Company's SEC reports, including this
report. These forward- looking statements speak only as of the date hereof and
should not be given undue reliance. Actual results may vary significantly from
those projected.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
General
DBS Industries, Inc. ("the Company") has historically recognized its
operating costs and expenses primarily through its twenty percent interest (20%)
in E-SAT, Inc. ("E-SAT").
Plan of Operation
Throughout 1999, the Company plans to advance the satellite development
pursuant to the FCC license granted to E-SAT, Inc. ("E-SAT") by negotiating
vendor agreements with the objectives of beginning construction of the LEO
satellites, securing a launch service provider, and developing the ground
support network. The plan includes a research and development program to produce
low cost ASIC chip remote terminal units. The Company plans to satisfy all
milestone conditions expressed within the Little Leo license issued by the FCC.
The Company plans to attract partners to the E-SAT project who would be
engaged in technical and marketing aspects to effectuate the business plan.
Technical and marketing personnel resources may be increased and will depend on
those resources provided by E-SAT partners.
The Company expects to satisfy its 1999 cash requirements, which
includes contract milestone payments of approximately $19.8 million (of which
$7.8 million has been paid subsequent to March 31, 1999), by supplementing its
present working capital resources with other outside sources of capital, in
addition to attracting new equity partners in the E-SAT project. For example, in
April 1999, two European contractors, who are providing satellite design,
construction and launch services to the Company, purchased 1,666,667 shares of
the Company's Common Stock for a total of $5 million in cash.
Results of Operations
Revenues
The Company remains in the development stage and did not generate any
revenues in either the quarter ended March 31, 1999 or March 31, 1998.
Cost and Operating Expenses
Cost and operating expenses for the quarter ended March 31, 1999, were
$1,118,643 as compared to $404,464 for the quarter ended March 31, 1998. General
<PAGE>9
and administrative expenses increased by approximately $592,560 to $898,042
during the quarter ended March 31, 1999, compared to $305,482 in the quarter
ended March 31, 1998. This significant increase in general and administrative
expenses was due primarily to approximately $260,000 in compensation expense
relating to stock options granted for services provided by consultants and
non-employee directors, and the expansion of the Company's business interests in
Europe and the U.S.
Research and development expenditures increased approximately $121,619
to $220,601 during the quarter ended March 31, 1999, compared to $98,982 in the
quarter ended March 31, 1998. This significant increase in research and
development was due primarily to the issuance of E-SAT's FCC license in April
1998 and related increases in engineering and design costs associated with
meeting the terms of the FCC license and the development of the satellite
system. In addition, $94,000 in compensation expense was incurred relating to
options granted for services provided by a consultant for the E-SAT project.
Other Income (Expense)
The Company experienced a non-operating gain of $12,369 for the quarter
ended March 31, 1999, compared to a loss of $1,678 for the quarter ended March
31, 1998. During 1999, earned interest income was recognized on cash received in
connection with the exercise of approximately 2.5 million warrants to purchase
the Common Stock of the Company at an exercise price of $3.00 per share.
Net Loss
The Company's net loss for the quarter ended March 31, 1999, was
$1,106,274 compared to a net loss of $406,142 for the quarter ended March 31,
1998. During the first quarter of 1999, the Company's net interest income was
offset by operating and non-operating expenses.
Liquidity and Capital Resources
The Company has been in the development stage since its inception and
has not generated any significant revenues or capital resources. The Company's
monthly expenses averaged approximately $350,000 per month during the first
quarter of 1999 which included approximately $250,000 per month for operating,
legal and consulting expenses, and $100,000 per month for E-SAT research &
development. However, expenses will continue to increase during 1999 with the
demands of developing the satellites for the E-SAT System (and contractual
obligations related to such development) and business applications of the E-SAT
System, and additional capital will be necessary to expand operations or
continue current operations. During the quarter ended March 31, 1999, the
Company raised $1.5 million in gross proceeds from a private placement of its
Common Stock and $7.5 million from the exercise of outstanding warrants. The
Company made approximately $1.1 million in payments to several contractors
during the first quarter of 1999. Subsequent to the quarter ended March 31,
1999, the Company made additional contractual payments of $7.8 million.
Traditionally, the Company has relied on equity and debt financings to
fund its operations. This financing was supplemented from the sale of the
Company's interest in entities that held direct broadcast satellite licenses.
The Company no longer has any interest in direct broadcast satellite licensees.
The Company will need substantial additional capital, an estimated $111 million
over the next 24 months, to construct and launch the satellites comprising the
E-SAT System. Further, the construction of the first two of the six planned
satellites was required to commence by March 1999 pursuant to the terms of the
FCC license granted to E-SAT and will require milestone payments of an
additional $24.5 million over the next 12 months, through April of 2000.
<PAGE>10
The Company had cash and cash equivalents of $9,306,274 and $1,291,711
as of March 31, 1999 and 1998, respectively. The Company had working capital of
$8,727,069 as of March 31, 1999 compared to working capital of $233,078 as of
March 31, 1998. Until the Company is able to develop, construct and operate its
E-SAT System and derive revenues therefrom, the Company will continue to use
cash obtained from outside sources for its operations and development of the
E-SAT System.
Net cash used in operating activities was $1,229,075 for the quarter
ended March 31, 1999, as compared to $50,007 for the quarter ended March 31,
1998. Net cash used in operating activities increased during 1999 as compared
with the same quarter last year was a result of increased cash expenditures as
the Company expanded its development activity relating to the E-SAT System. The
increased level of development costs is expected to continue through 1999.
Net cash used in investing activities for the quarter ended March 31,
1999, was $1,066,342. This net cash used represents a loan to a director secured
by the Company's stock for $60,000 and approximately $1 million in progress
payments relating to satellite construction costs. Net cash provided by
investing activities was $204,848 in 1998 and was comprised of investments in
and advances to E-SAT or EchoStar.
Net cash provided by financing activities for the quarter ended March
31, 1999, was $10,369,980 compared to no financing activities for the quarter
ended March 31, 1998. Net cash provided by financing activities during 1999
related to the net proceeds from the sale of units of common stock for $1.5
million, exercise of warrants for $7.5 million, and the exercise of options by
directors, officers and employees of the Company, as well as other non-employee
grants.
In July 1996, the Company began to receive milestone payments under the
terms of a $1.2 million purchase order for 10,000 satellite radio units. Under
this agreement, the Company was eligible to receive up to $500,000 towards
development costs upon meeting the milestone requirements of the contract. The
Company met the first four milestones of the contract and has received $400,000
in cash. Currently, the Company and ABB Power T&D Company, Inc. have suspended
their development under this agreement due to the expiration of the Company's
agreement for the use of the Argos System (a satellite location and data
collection system) on December 31 1997, and the subsequent limits placed on
future commercial use of the Argos System. Therefore, such milestone payments
could be subject to refund, in whole or in part.
Risks and Uncertainties Affecting Future Operating Results
A number of factors could cause future results to differ materially
from historic results. Among these factors is the fact that the Company is
currently negotiating with EchoStar regarding the Company's obtaining a
controlling interest in E-SAT, which owns the FCC license. EchoStar owns 80% of
E-SAT. To date, negotiations have not produced acceptable terms for the transfer
of control of the FCC license. Other factors, in addition to those identified in
this report, which could affect future results would include the Company's
ability to retain a prime contractor for the development, construction and
deployment of the E-SAT System, the Company's ability to raise significant
additional capital from outside sources for the development of the E-SAT System,
the availability of capital on commercially acceptable terms, the completion of
<PAGE>11
a commercially viable E-SAT System, the dependence and uncertainty of utility
companies or other commercial customers to utilize such data messaging service,
the reliance on third parties for the advancement of the design, manufacturing
and marketing of the E-SAT System, satisfying the milestones of E-SAT's FCC
license and construction contracts, the fulfillment of contract obligations by
suppliers and other third parties, the availability of qualified personnel and
equipment, delays in the receipt of or failure to receive necessary governmental
approvals, obtaining permits and licenses or renewals thereof, risks and
uncertainties relating to general economic and political conditions, both
domestically and internationally, changes in the law and regulations governing
the Company's activities in the Little LEO satellite technology, results of the
Company's financing efforts and marketing conditions, and other risk factors
related to the Company's business. Readers of this report are cautioned not to
put undue reliance on "forward looking" statements which are, by their nature,
uncertain as reliable indicators of future performance.
Successfully addressing the factors discussed above is subject to
various risks described in this report, as well as other factors which generally
affect the market for stocks of development stage, high technology companies.
These factors could affect the price of the Company's stock and could cause such
stock prices to fluctuate significantly over relatively short periods of time.
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's, or its suppliers' and customers' computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of operations including, among other things, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities. In the Company's assessment, because the Company's and its
subsidiaries' information systems are primarily comprised of recently purchased
personal computers and software, the Company does not believe that the Year 2000
Issue will materially affect its operations.
In addition, in developing the E-SAT System, the Company will be relying
on vendors to, among other things, manufacture the Little LEO satellites, launch
the Little LEO satellites, manufacture the remote terminal units and build the
E-SAT infrastructure including the control stations which are Y2K compliant. The
Company has entered into contracts with several vendors to develop the E-SAT
System, and, an assessment has been made as to their Year 2000 compliance. As
part of ongoing contract negotiations, the Company will request and determine
the vendors' Year 2000 readiness. In the event that it is determined that a key
vendor will not be Year 2000 compliant, this may have an adverse effect on the
Company's business plans.
<PAGE>12
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings. In July 1998, a
complaint was filed in the Superior Court of California, County of Marin, by
Bridge Group (HK) International, Ltd. (the "Bridge Group") against the Company's
president, alleging that the Bridge Group was promised shares of the Company's
common stock. The Company agreed to indemnify its president for any damages or
settlement related to this lawsuit. During the quarter ended March 31, 1999,
this case was settled by issuing 63,239 shares of the Company's common stock and
paying $15,000 to the Bridge Group.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the first quarter of 1999, the Company solicited stockholder
approval to increase the number of authorized shares of common stock from
20,000,000 to 50,000,000. The solicitation was made by stockholder consent
without a meeting. The stockholder solicitation resulted in 6,872,666 shares
voting for the increase; 162,987 shares voting against the increase; and 31,301
shares abstaining. Consequently, the requisite stockholder approval was
achieved.
ITEM 6.
(a) Exhibits:
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
None.
<PAGE>13
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DBS INDUSTRIES, INC.
DATE: May 19, 1999 By: /s/ FRED W. THOMPSON
----------------------------
Fred W. Thompson,
President and Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
10-QSB FOR THE PERIOD ENDED MARCH 31, 1999 FOR DBS INDUSTRIES, INC. AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 9,306,274
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,364,365
<PP&E> 65,516
<DEPRECIATION> 45,738
<TOTAL-ASSETS> 12,576,992
<CURRENT-LIABILITIES> 637,296
<BONDS> 0
0
0
<COMMON> 5,023
<OTHER-SE> 11,934,673
<TOTAL-LIABILITY-AND-EQUITY> 12,576,992
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
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