Document/Exhibit Description Pages Size
1: 10KSB Annual Report -- Small Business 63 338K
2: EX-3.(I) Exhibit 3.6 1 6K
3: EX-3.(I) Exhibit 3.7 5 22K
4: EX-10 Exhibit 10.62 Registration Rights Agreement 6 24K
5: EX-10 Exhibit 10.63 Voting Agreement 7 32K
6: EX-21 Exhibit 21.1 1 4K
7: EX-23 Exhibit 23.1 1 7K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________________ to ____________________
Commission File No. 0-28348
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DBS INDUSTRIES, INC.
(Name of small business issuer 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, California 94941
(Address of principal executive (Zip Code)
offices)
Issuer's telephone number: (415) 380-8055
Securities registered under Section
12(b) of the Exchange Act: None
Securities registered under Section
12(g) of the Exchange Act: Common Stock, par value $.0004 per share
Indicate by check mark whether the issuer (1) has 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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
-------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is contained herein, or will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: $ -0-.
As of March 15, 2001, the aggregate market value for the 19,001,861 shares
of the Common Stock, par value $.0004 per share, held by non-affiliates was
approximately $7,125,698.
The number of shares outstanding of registrant's only class of Common
Stock, as of March 15, 2001, was 19,704,331 shares of its Common Stock, par
value $.0004 per share.
DOCUMENTS INCORPORATED BY REFERENCE:
Certain exhibits required by Item 13 have been incorporated by reference
from the Company's previous Form 10-KSBs, Form 8-Ks, and its Registration
Statements on Form SB-2.
Information called for by Items 9 through 12 of Part III have been
incorporated by reference to the Company's Proxy Statement for its annual
meeting of shareholders to be filed within 120 days of its fiscal year end.
Exhibit Index is located at Page 29.
PART I
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, as that term is defined in
the Private Securities Litigation Reform Act of 1995, in the items entitled
"Business," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and elsewhere. These statements relate to future events
or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks set forth below
under "Risk Factors," that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable,
we cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements after the date of this report to conform these statements to actual
results.
ITEM 1. BUSINESS
BUSINESS
Overview
We are a telecommunications company dedicated to providing a low-cost
satellite-to-Internet data messaging service to and from remote locations.
Through our ownership interest in E-SAT, Inc., we are the only company currently
licensed by the FCC to provide commercial two-way data messaging services using
the code division multiple access, or CDMA, technology and Little LEO,
low-earth-orbiting satellites, known as the NewStar System. We expect to begin
providing our data messaging services in 2002. Our initial target market is data
collection and communications with energy meters in hard to access locations.
Historically, remote and hard to access energy meters have been expensive for
utility companies to read as a result of the significant time and labor costs
involved in collecting the data. Using low earth orbit satellites, we believe
that we will be able to collect data from those meters at a significantly lower
cost to utility companies and in a more timely manner. This should also improve
the ability of utility companies to manage the distribution of valuable energy
resources. By focusing on the collection of data in remote or hard to access
locations, we believe we can limit the competition from terrestrial based
technologies, like cellular communications, where the infrastructure costs are
generally too high to justify implementation.
We have also identified other significant follow-on markets for our data
messaging services including, the collection of data from propane tanks, oil and
gas wellheads and gas pipelines, checking the inventory and cash status of
vending machines and the monitoring of air and water quality of waste disposal
sites in various geographic regions.
The NewStar System is designed for use with a small constellation of low earth
orbiting satellites. The term "LEO" is shorthand for low-earth-orbit satellites
and the term "Little LEO" is shorthand for low-earth-orbit satellites operating
in a lower frequency band. The system is designed to use a radio terminal unit
that attaches to a customer's meter or other device and transmits data to Little
LEO satellites. From the satellites, the information is then transmitted to a
ground station that sorts the data and transmits it, via the Internet, to the
end user. The two-way features will also allow us to send instructions, messages
and updates to the radio terminal unit. Through use of the CDMA technology, the
NewStar System is designed to require less transmission power and provide
superior noise tolerance. The store and forward design also allows the Little
LEO satellites to store data for later transmission to a ground station,
minimizing the number of necessary ground stations.
Our Strategy
To achieve our business objectives, we have identified the following key
components to our business strategy:
Providing a reliable, worldwide, two-way data communications network based
on existing technologies. We believe that, by incorporating existing and
proven technologies such as CDMA
communications technology and a store-and-forward design into the NewStar
System and by using six Little LEO satellites in polar orbits, we will be
able to provide reliable, global, two-way data and messaging communications
services. The distribution of our satellite constellation in polar orbits
is designed to provide us access to all of the earth's populated land mass
approximately every hour with each satellite, reducing the potential risks
from the loss or outage of one or more satellites.
Offering a low-cost service. We believe the relatively lower costs involved
in designing, constructing, launching and operating the NewStar System,
together with lower-powered, relatively inexpensive ground transceivers,
will allow us to provide data messaging services to customers in
hard-to-access or remote locations at substantially lower rates than
competing systems. We have designed our system specifically for the two-way
communication of short messages, using fewer satellites than competing
near-real time low earth orbit systems. Our system should utilize less
complex and less expensive components than those required for larger
satellite systems designed to carry voice, video and high-intensity data
traffic. Competing Little LEO systems using the older TDMA communications
technology will require more satellites and more gateway earth stations
than the NewStar System.
Offering a low-cost ground transceiver. We expect to offer a smaller and
lower cost ground transceiver than competing systems by using CDMA
technology and an application specific integrated circuit, or ASIC,
technology. This should provide us with significant competitive advantage
in the marketplace.
Capitalizing on not being the first to market. We have learned a great deal
from earlier commercial satellite operators whose services have not
developed as they may have anticipated. This experience has provided us
with the ability to market what we believe is a superior system using,
among other things, the CDMA technology and lower cost transceivers, to
help differentiate our services from those of our competitors.
Capitalizing on the barriers to entry into our marketplace. The primary
barrier to entry into the Little LEO satellite service market in the United
States is the acquisition of an operating license from the FCC. Before the
FCC issues any additional licenses, it must allocate an additional portion
of the frequency spectrum for use, which we do not expect to happen in the
near future.
Directly marketing to large industrial customers and governmental entities.
We believe that marketing directly to large industrial customers and
governmental entities will ensure greater customer service and support in
each geographic region or targeted market than will value-added resellers,
and will reduce our selling and administrative expenses for bringing the
NewStar System to market. Outside of the United States, it will also aid us
in securing any necessary local regulatory and other approvals.
Capitalizing on the commitment and expertise of our strategic partners. We
have successfully assembled a group of investors who we believe are highly
qualified strategic partners. We negotiated equity investments totaling $10
million. We received a total investment of $5 million from Eurockot Launch
Services, our launch service provider, and Surrey Satellite Technology
Limited, our satellite manufacturer. We have received a commitment for an
additional $5 million investment from Alcatel Space Industries, our
end-to-end system prime contractor, which is contingent on our paying
Alcatel $14.1 million to bring into effect the prime contract effective
date. As of March 15, 2001 this payment, which was originally due in
November, 1999, has not been made and therefore the agreement with Alcatel
is not currently in effect. (See "Risk Factors - The contract with our
prime contractor could be declared void.").
Development Milestones
The deployment of the NewStar System's six Little LEO satellites is expected to
begin in 2002. To date, we have achieved the following milestones:
Development of the system. We initially conducted research and testing to
develop our NewStar System design and were successful in integrating our
satellite transmitter and antenna completely within a utility meter.
Completed proof-of-concept trials. We conducted proof-of-concept
demonstrations with 36 electric and natural gas utilities demonstrating
Little LEO satellite technology as a viable method to collect data from
hard-to-access locations. We conducted a proof-of-concept trial for Pacific
Gas & Electric Company, in which data from several natural gas wellhead
meters was collected and transmitted by Little LEO satellites to the
customer. This trial was completed in April 1995. Subsequently, a series of
proof-of-concept demonstrations were conducted in conjunction with ABB
Power T&D Company, Inc., commonly referred to as ABB, in which prototype
radio terminal units and electric meters were installed at 34 electric
utilities in the continental United States and two international utility
companies in South America and Canada. Typical trial demonstrations lasted
for a 30-day period, and the demonstrations were completed in late 1997.
These early trials utilized the Argos System, a satellite location and data
collection system operated and controlled by the Centre National d'Etudes
Spatiales (France) and the National Oceanic and Atmospheric Administration,
or NOAA.
Granting of FCC License. On March 31, 1998, E-SAT was issued a license by
the FCC to provide Little LEO satellite services in the United States.
Commenced construction of the satellites. On March 31, 1999, we signed a
contract with Surrey Satellite Technology Limited for the construction of
our constellation of six Little LEO satellites. Should we bring into effect
our prime contract with Alcatel Space Industries (see below in this
section, "Entered into an agreement with an end-to-end prime contractor for
the NewStar System"), our contract with Surrey would be assigned to
Alcatel.
Engaged a launch service provider to deliver our satellites into orbit. On
March 31, 1999, we signed a contract with Eurockot Launch Services GmbH,
for two launches. Two launches are currently expected to occur in 2002,
each for a set of three satellites.
Acquired controlling interest, subject to FCC approval, of the FCC license
and subsequently received FCC approval. On July 31, 1999, we signed a
contract with EchoStar to increase our ownership in E-SAT to 80.1%.
Pursuant to that agreement, EchoStar has the right to use 20% of the
NewStar System's communications capacity. The transfer of control was
subject to FCC approval, which was subsequently granted.
Entered into an agreement with an end-to-end prime contractor for the
NewStar System. On October 8, 1999, we signed a contract with Alcatel Space
Industries for the final design, construction and delivery to the launch
site of six Little LEO satellites. This agreement also includes the final
design, construction and delivery of the ground infrastructure, including
the gateway earth station, mission center, satellite control center, ground
communications network and ground-based transceivers to be
installed into devices, like utility meters. Alcatel is also responsible
for providing in-orbit testing of the NewStar System. The total contract
price for the end-to-end system is $88.5 million. Either party has the
right to terminate this agreement under certain circumstances. We have paid
$2 million in construction payments to Alcatel, pursuant to which Alcatel
completed the preliminary engineering design review for the Company's
system, including the payload design and designs for the gateway earth
station and tracking facilities, as well as the satellite orbital analysis
and communications link margins to and from space. As of March 15, 2001
this payment, which was originally due in November, 1999, has not been made
and therefore the agreement with Alcatel is not currently in effect. (See
also, "Risks--The contract with our prime contractor could be declared
void.")
Negotiated equity investments in us by all of our strategic partners. We
negotiated equity investments totaling $10 million by Eurockot Launch
Services and Surrey Satellite Technology Limited. We also negotiated a
potential investment by Alcatel, but that is subject to making the
milestone payments necessary to establish the effective date of contract.
Organized our risk management through insurance. On July 14, 1999, we
engaged Frank Crystal and Co. and its subsidiary, International Space
Brokers as our exclusive risk management advisors and insurance brokers for
both space and ground segments.
Successfully launched and commissioned first satellite payload. On June 28,
2000, we launched our first satellite payload aboard a SNAP-1
nanosatellite, and completed the in-orbit commissioning in August and
September. The satellite, which is not being used for commercial service,
has succeeded in its purpose of validating critical design elements that we
believe will lead to the successful deployment of our NewStar commercial
satellite services in 2002. Surrey Satellite Technology Ltd. completed the
payload from design to commissioning in only seven months. On October 20,
2000, the FCC informed the International Telecommunications Union that this
payload brought into use the LEOTELCOM-2 international frequency license,
under which the Company operates, into service.
Obtained FCC approval of and completed the transfer of controlling interest
of E-Sat to us. On November 21, 2000, the Federal Communications Commission
granted our joint application with EchoStar Communications Corporation to
transfer control of E-SAT, Inc.'s mobile satellite service license to us.
On December 29, 2000, we executed documents for the formal transfer from
EchoStar.
Targeted Markets
We have designed the NewStar System to provide low cost, two-way data messaging
services to industrial customers throughout the world who need regular, but not
real-time, information. By focusing on the non-real-time market, where some
delay between data collection and transmission to the customer has insignificant
business consequence, we are able to substantially lower the costs of our
system, and therefore lower the price to the customer. By focusing on collecting
data that is in remote or hard-to-access locations, we reduce our competition
from terrestrial technologies, such as cellular communications, which cannot
justify the infrastructure expense in each remote location, and we increase the
value offered to the customer as a result of their higher costs in those areas.
Energy Meters
Our initial focus is on energy meters in remote locations. One of our target
markets is the United States electric and natural gas utility industries,
particularly their high-cost-to-read metering segment which historically
required such "meter reading" to be conducted by utility personnel. This labor
intensive activity presents logistical issues such as significant travel time to
a meter site, rugged terrain, physical risk, restricted sites, environmental
issues, and mis-reads requiring additional site visits, all of which can
contribute to higher costs for utilities.
Our proposed messaging services are designed to provide a reduction in the cost
to gather data from hard-to-access meters. We expect to charge significantly
less than the costs utility companies normally incur in sending meter reading
personnel out to each of those difficult to reach locations. This provides
several advantages including:
o Planning and decision-making is improved through greater and more
timely availability of their consumers' energy-related information.
o Estimated billing is eliminated.
o Service connects and disconnects can be scheduled and performed
automatically.
o Value added features are available such as meter diagnostics, tamper
detection, outage reporting, and power quality information.
o Two-way communication capabilities can substantially reduce customer
costs while enabling new customer applications such as initiating
remote diagnostics and remote turn-on/turn-off of electric meters.
In the United States, the emergence of automatic meter reading as an accepted
technology and the deregulation of the utility industry in a number of states,
which has forced utility companies to focus on all aspects of their costs and,
in some cases, to compete to retain the meter reading activity, has provided a
foundation for us to market our services.
There is also a significant potential market for our services in countries that
do not broadly monitor energy consumption. For those countries, implementing or
expanding coverage of metering is of significant strategic and economic benefit
both as a source of revenue and as a critical component of implementing their
energy infrastructure. By working with these countries as they develop their
services and providing them with a low-cost alternative to traditional meter
reading methods, we believe we can succeed in becoming an integral part of their
utility infrastructure.
Other Markets
We believe other significant markets for our data messaging services include:
Propane tanks. Currently, most propane tanks are not metered and customers
can be invoiced only on fuel delivery. Automated meter reading enables
monthly billing based on actual consumption, which improves the
distributor's cash flow and, even more important, creates an opportunity
for fuel arbitrage. Since the consumer would not need to pay for fuel upon
delivery, the distributor can fill customer tanks in the summer or other
times, when fuel prices are lower. The consumer also avoids the
inconvenience of running out of fuel and enjoys a reduction in the safety
issues associated with re-lighting the pilots on their appliances.
Oil and gas wellheads. In the energy sector, data from particularly remote
and hard-to-access oil and gas wellheads can be collected electronically,
providing material savings in costs per read. Some of these wellheads are
located in areas that are not only extremely remote, but are also high-risk
and the physical safety of the meter reader is a real concern. In addition
to eliminating the personal safety risk this also will create an
opportunity to aggregate data internationally, if the service provider has
global coverage.
Gas pipelines. Monitoring for cathodic protection, flow control and leakage
from gas pipelines is another market appropriate for the periodic data
transmission from sensors located in isolated areas. Most of the cathodic,
flow control and leakage sensors around the world are read manually, which
is a tedious process, frequently using helicopters for typical pipeline
terrain. Given the cost of product flowing through the pipeline and the
ecological impact of a pipeline failure, energy companies are motivated to
quickly identify any failures as well as the sources of the problem.
Vending machines. Vending machines can use our proposed data messaging
service for inventory and cash control. By collecting data from each
machine on a timely basis, distributors can deliver the right product to
the right machine at the right time, thereby improving sales, the
productivity of their route personnel, and greatly simplifying the cash
reconciliation process. While most vending machines are not located in
hard-to-access places, a system that offers both ease-of-use and complete
geographic coverage offers significant benefits to the distributor.
Environmental and Agriculture. The waste disposal industry, faced with
increased public awareness of pollution problems, is required by federal,
state, and local governments to closely monitor air and water quality at
all waste disposal sites. Collecting data from these locations and
reporting it to both operating and regulatory agencies is well suited to
our proposed services. In addition, we believe that existing irrigation
systems can become more efficient through timely monitoring of usage data.
The NewStar System
The NewStar System is designed to minimize infrastructure investment and
maximize efficiency by utilizing a small constellation of Little LEO satellites
with the ability to reach markets not readily accessible by terrestrial
technologies. We expect that the aggregate cost to construct and launch the
NewStar System into commercial service will be approximately $120 million, in
addition to the approximately $12.2 million which has been spent through
December 31, 2000.
The NewStar System's radio terminal units will attach to a customer's meter or
other device and transmit data to the satellites using CDMA technology. From
these Little LEO satellites, the data is transmitted to ground stations, which
sort the data and transmit the information to our customers via the Internet.
The two-way service also allows our customers to send instructions, messages,
and updates to their remote meters or other devices. The following illustrates
the data collection and dissemination process:
[GRAPHIC OMITTED]
Space Segment
The constellation to be launched will consist of six satellites. We plan to
initially launch three satellites on a single launch vehicle in a circular, near
polar orbit at an altitude of approximately 550 miles and a 99 degree
inclination angle. At this altitude, there will be fourteen revolutions per
satellite per day, taking about 100 minutes per orbit. After the initial three
satellites are deployed and become operational, and the system is established,
an additional three satellites will be deployed in a second near-polar orbital
plane within FCC guidelines. These Little LEO satellites, which will weigh about
110 kg each, will be almost constantly illuminated by the sun, thereby
significantly reducing battery usage. Supplemental battery power will be
required only for power load leveling, occasional brief eclipse periods and
contingencies. Based on the current design, we estimate that each satellite will
operate for a period of five years.
The satellites will consist of two functional segments, the platform and the
payload. Put simply, the platform is the structure part of the satellite. The
payload is the radio frequency equipment on board the satellite that allows it
to communicate with earth-based transceivers. The platform provides the payload
with power and thermal control, allowing it to operate and perform the mission.
The platform provides the altitude control in order to keep the payload antenna
pointing towards the earth. Orbit determination and control is performed by the
platform in order to maintain the proper constellation configuration.
The FCC license will allow us to operate from earth to the satellites in the
148.0000 - 148.905 MHz band and from the satellites to the earth in the 137.0725
to137.9275 MHz band. The communications plan for our system will utilize direct
sequence spread spectrum multiple access transmission for service links, from
meter to satellite, and feeder links, from ground station to satellite. This
modulation technique is designed to allow the communications to distinguish
between messages and the background noise emanating into space.
Due to the continuing growth of electrical and electronic equipment, such as
personal paging systems that incorporate wireless communication technology, the
radio frequency spectrum has become crowded or "noisy." Commercial applications
demand reliable communication systems. This objective is harder to achieve with
conventional solutions because of numerous wireless systems creating more noise
in the frequency bands of operation. CDMA is designed to enable our system to
provide high functionality in a noisy radio frequency environment and achieve
those particular data transmission objectives.
With most conventional modulation techniques, energy concentration is maximized
for a narrowband transmission channel. While narrowband solutions opt for a
single carrier channel, the transmitted signal must be strong enough to be
recognized over the background noise. Therefore, terminals operating in a
narrowband technique must have relatively high power capability. CDMA spreads
the data signal over the entire band of
operations reducing the power required by a terminal unit to transmit data to a
satellite. Through E-SAT, we are presently the only commercial Little LEO system
operator licensed in the United States to implement CDMA in its communications
protocol.
Ground Segment
Rather than using traditional technology that transmits the data to a ground
station as soon as it is received, the non-real-time nature of our markets
allows us to use a store-and-forward design. Our satellites are designed to
receive the information from terminals on the ground, store it in memory and
hold all of the data until they pass over a ground station. This allows us to
use fewer ground stations, reducing costs and radio frequency licensing and
coordination requirements. We currently intend to locate our initial ground
station on Svalbard Island in Spitzbergen, Norway, and are evaluating certain
sites in other countries for additional service.
The mission control center will manage the collection and retrieval of data. It
will interface with ground stations and a satellite control center. The
satellite control center will communicate directly with and provide overall
operational control of the satellites. The mission center location is currently
in review and the satellite control center is currently planned to be located in
the United Kingdom.
Secure Internet communication with customers is a crucial part of the NewStar
System. Data collected or delivered will utilize the Internet as a global,
cost-effective vehicle to disseminate data and maximally automate the customer
servicing system. Data will lack meaningful descriptors or customer
identification and so should have no meaning if intercepted, but may also be
encrypted.
Terminals
The system is also comprised of remote terminal units that will connect to a
device such as an electric utility meter and allow that device to send and
receive signals to and from the system. The terminal will provide the
communication link between the meter and our satellites. A relatively low-cost
terminal is a key success factor for this business plan and, for that reason, we
intend to strictly control the development and manufacturing of the terminals.
The complete terminal unit will consist of two parts, the core engine and the
fixed asset interface module. The core engine will include a programmable
controller unit and will incorporate the cost-saving benefits of the ASIC
technology. This will allow us to manufacture the terminals at a lower cost. The
fixed asset interface module will be optimized for the specific application,
such as an electric meter, vending machine or propane tank, and will contain all
the application specific functions required to interface the device with the
core engine. The interface will also contain any necessary power conditioning
components to allow reliable communication between the terminal and the
satellites.
During 1998, we worked with SAIT Radio Holland SA to perform studies on antennas
for the proposed terminal units and to develop and test prototypes. The
development of terminal units was also included as an item under our agreement
with Alcatel. (See "Development Milestones--Entered into an agreement with an
end-to-end prime contractor for the NewStar System".) We have not yet identified
a main subcontractor for the engineering, development and provision of hardware
and software for terminal units, or for the manufacture of terminals.
Regulatory Environment
United States
All commercial non-voice, non-geostationary mobile-satellite services, such as
Little LEO satellites, in the United States are subject to the regulatory
authority of the FCC. Little LEO operators must obtain authorization from the
FCC to launch and operate their satellites and to provide permitted services in
assigned spectrum segments.
In November 1994, E-SAT filed an application with the FCC for a license to
develop a commercial Little LEO satellite system for data collection and
transmission. E-SAT was one of five applicants requesting approval for
essentially the same frequency band but proposing a different use. The five
applicants mutually agreed upon a spectrum sharing plan which requires the
applicants to share an uplink and downlink frequency band with other satellite
systems. In October 1997, the FCC released a report and order which concluded
that with use of appropriate transmission techniques, proper system
coordination, the time-sharing of frequencies and the adoption of the spectrum
sharing plan, there was sufficient spectrum to license all five applicants.
Thereafter, E-SAT filed an amendment conforming its application to the
guidelines adopted by the FCC report and order.
On March 31, 1998, the FCC approved E-SAT's application for a Little LEO
satellite license. Under the license, E-SAT is authorized to launch and operate
six Little LEO satellites to provide a two-way, low-cost messaging service in
the United States in the 148 to 148.905 MHz for service and feeder uplinks, and
the 137.0725 to 137.9725 MHz frequency band for service and feeder downlinks.
For its uplink, E-SAT is licensed to utilize 500 kHz of contiguous spectrum in
the 148 to 148.855 MHz band that is not shared with the other United States
licensees. Some of this spectrum may be required to be operated co-frequency
with the French S-80 system, based on inter-governmental agreements between the
United States and France. In December 1998, we completed our coordination with
France on this shared use. E-SAT is licensed to utilize 148.855 to 148.905 MHz
for feeder uplinks. E-SAT will operate in the other 355 kHz of the 148 to
148.905 MHz band on a co-frequency basis with three other companies, Leo One USA
Corporation, Final Analysis Communication Services and Orbcomm Corp. In the
downlink direction, E-SAT will operate in the band 137.0725 to 137.9275 MHz
co-frequency with NOAA satellites, Orbcomm and Final Analysis. E-SAT is
obligated to coordinate with the other Little LEO licensees and NOAA, coordinate
internationally and engage in consultations as required by Article 14 of the
INTELSAT Agreement and Article 8 of the Inmarsat Convention.
In order to maintain the validity of the FCC license, E-SAT must comply at all
times with the terms of the FCC license, unless specifically waived or modified
by the FCC. The terms include, among other things, system construction
milestones. In order to comply with the milestone requirements of the FCC
license, E-SAT was required to commence construction of the first two satellites
by March 1999 and the remaining four satellites by March 2001. On March 31,
1999, we, on E-SAT's behalf, entered into an agreement with Surrey Satellite for
the construction of the Little LEO satellites, and we notified the FCC on April
8, 1999, that we had met the first milestone of the license, commencement of
satellite construction by March 1999. The FCC has neither confirmed nor denied
our assertion. Because of the competitive nature of the Little LEO market, the
other licensees may challenge in the future our timeliness or our ability to
meet the conditions of the license. The terms of the FCC license also require
that construction, launch and operation of the NewStar System be accomplished in
accordance with the technical specifications set forth in the FCC application
and consistent with the FCC's rules, unless specifically waived. During the
process of constructing the NewStar System, there may be certain modifications
to the design set forth in the FCC application that may necessitate regulatory
approval.
Assuming continued compliance, the FCC license will remain effective for ten
years from the date on which we certify to the FCC that the initial satellites
have been successfully placed into orbit and that the operations of the
satellites conform to the terms and conditions of the FCC license.
In addition, the FCC must approve the integration of NewStar System's ground
transceivers with the fixed devices. If received, the approval would apply to
all transceivers to be operated in the United States.
International Regulations
Landing Rights. In addition to the FCC license for operation of the NewStar
System in the United States, we will be required to seek certain "landing
rights" in each country in which our ground transceivers will be located. We
intend to utilize international clients, partners or affiliates in each country
we intend to operate in to obtain such authority. In the event we are
unsuccessful in obtaining a foreign license in a particular country, we will be
able to offer only one-way, broadcasting from the satellite, data and messaging
services in that country.
International Telecommunications Union Coordination. The E-SAT System operates
in frequencies that are allocated on an international basis under the authority
of the International Telecommunications Union, or ITU. The United States, on
behalf of various Little LEO service providers, pursued international
allocations of additional frequencies for use by Little LEO systems. In addition
to cooperation through the FCC, E-SAT will be required to engage in
international coordination with respect to other satellite systems, and in some
cases, with terrestrial communication systems. The purpose of this coordination
is to ensure, to the maximum extent feasible, that communication systems will be
able to operate without unacceptable radio frequency interference from other
communication systems. This process, called "satellite coordination," takes
place under the auspices of the ITU and is essentially a first come, first
served process. That is, earlier filings generally establish some priority over
later filings although the ITU encourages applicants to cooperate to enable as
many satellite systems as possible to be implemented.
Ownership Interest in E-SAT
E-SAT was incorporated in 1994 in partnership with EchoStar. In connection with
the formation agreement, we hold 80.1% of the outstanding shares of E-SAT and
EchoStar holds the remaining 19.9%. E-SAT was formed for the purpose of
acquiring an FCC license to develop, construct and operate a Little LEO
satellite system. In March 1998 the FCC issued the license to E-SAT. In July
1999, we entered into an agreement to acquire an additional 60.1% from EchoStar,
to bring our total ownership of E-SAT to 80.1%. The agreement and transfer of
control of E-SAT is subject to FCC approval, which was formally requested on May
2, 2000 and approved by the FCC on November 21, 2000. The transfer agreements
were executed in December 2000. The terms of the agreement grant EchoStar a 20%
undivided interest in the satellite transmission capacity associated with the
FCC E-SAT license.
Competition
Competition in the communications industry is intense, fueled by rapid and
continuous technological advances and alliances between industry participants
seeking competitive advantages on an international scale to capture greater
share of existing and emerging markets.
In addition to E-SAT, three other commercial entities have been licensed by the
FCC to provide Little LEO satellite services in the United States although no
other entity has been issued a license to use CDMA communication protocols:
Orbcomm Global, Leo One, and Final Analysis. The FCC also granted a license in
1998 to Volunteers in Technical Assistance to transmit health, research and
scientific data on a delayed basis between developing countries and the United
States.
Of the three commercial entities, only Orbcomm is currently in service. Orbcomm
failed to generate revenue sufficient to cover its debt and filed for Chapter 11
bankruptcy protection in September 2000. Over $800 million has been invested to
date in the Orbcomm service, which was initiated in 1996 and consists of
approximately thirty satellites, 5 gateway control centers, and 10 gateway Earth
stations. Orbcomm aimed at serving on a near-real-time basis the broad data
markets of mobile asset tracking of trailers, containers, rail cars, heavy
equipment, autos, fishing vessels and barges and U.S. government assets; fixed
asset monitoring of oil and gas tanks, pipelines, chemical tanks, electric
utility meters, and environmental projects; two-way commercial and U.S.
government messaging; home and commercial security systems; and personal
messaging. Orbcomm uses time division multiple access (TDMA) narrow band
communication protocols.
Other than Orbcomm's existing TDMA based system, we do not believe that any of
the other proposed Little LEO systems will be commercially operational in the
near term. We believe that we hold an advantage over these potential competitors
by having obtained an FCC license for the only CDMA based store-and-forward
Little LEO system in the United States; by focusing on a low-cost and highly
targeted market; and by achieving international coordination of our designated
frequencies through the ITU. Over the course of the next several years, we
expect to obtain further advantages over these potential competitors by
demonstrating that a CDMA store-and-forward system can offer service at lower
cost than those offered by the competition.
Plans for Little LEO systems have also been announced in Australia, Brazil,
France, Russia, South Korea, Tonga and Uganda, although we believe that, without
additional allocations of spectrum in the United States, these systems will be
unable to offer services in the United States, and they will have to reach
coordination agreements with all countries who have prior ITU filings for the
same spectrum, namely the spectrum license filed by the FCC which it awarded to
us.
We expect that potential competitors will include other Little LEO systems,
certain geosynchronous or geostationary orbit, or GEO-based systems,
terrestrial-based communications systems, LEO satellite systems operating above
1GHz, often called Big LEO systems, and various medium earth orbit, or MEO,
systems.
We believe further that we will compete in certain of our market segments with
existing operators and users of certain GEO-based systems such as American
Mobile and Qualcomm, and companies providing services using the Inmarsat system.
American Mobile offers data services, both satellite only and dual-mode,
satellite and terrestrial, through a public data network that can reach both
densely populated urban areas and sparsely populated rural areas. In 1998,
American Mobile acquired Motorola's ARDIS two-way terrestrial-based wireless
messaging network, which complements American Mobile's existing satellite-based
voice and data communications services. This allows American Mobile to offer a
hybrid solution that has the ability, among other things, to serve urban areas
and to penetrate buildings. Qualcomm designs, manufactures, distributes and
operates a satellite-based, two-way mobile communications and tracking system
that provides messaging, position reporting and other services for
transportation companies and other mobile and fixed site customers using GEO
satellites. In addition, various companies using the Inmarsat system are
providing fishing vessel and other marine tracking applications. We believe that
the NewStar System will have certain advantages over these other systems,
including worldwide coverage and lower equipment costs.
The Big LEO and MEO systems mentioned earlier are expected to provide real time,
uninterrupted service. These systems are designed primarily to provide two-way
voice services that require larger, more complex satellites than our satellites
and larger constellations to provide coverage. As a result, the cost of the Big
LEO and MEO systems is significantly greater than those of the NewStar System.
However, the marginal cost on a per-message basis of providing services similar
to those we will offer could be relatively low for a Big LEO or MEO system that
is unable to sell its capacity for voice services. For example, the satellite
system operated by Globalstar, L.P. is expected to utilize a multi-billion
dollar constellation of 48 satellites--as compared with DBSI's planned system of
6 satellites with an expected construction, marketing and operating cost of
approximately $110 million--with those system costs then having to be allocated
into each company's pricing structure and pricing strategy.
We also face competition from a wide range of terrestrial technologies,
including paging, cellular, and power line carrier systems. Generally, our focus
is not to compete with existing and planned terrestrial-based communications
systems. However, in particular segments of our market, we believe we may
encounter certain of these systems. While providing cost-effective services
primarily in metropolitan areas where subscriber densities justify construction
of radio towers, terrestrial systems generally do not have sufficient coverage
outside metropolitan areas, which makes them less attractive to the
hard-to-access and remote location markets that we initially targeted. In
addition, we believe that the NewStar System will present an attractive
complement to tower-based services because NewStar can provide geographic
gap-filler service at affordable costs without the need for additional
infrastructure investment. Because of the inherent coverage limitations of a
terrestrial-based communications system, we believe that the NewStar System will
complement such systems.
SkyTel, for example, provides paging messaging services in U.S. cities and is
using its messaging network to provide fixed location services, specifically
utility meter reading in urban areas. Hunt Technologies and Distribution Control
Systems provide power line carriers (PLC) solutions, using very low frequencies
to transmit messages over power distribution lines, typically transmit data
one-way and very slowly. Phone line carriers, which use a dedicated common
carrier telephone service, are constrained by industry infrastructure
transaction volume and addressability limitations. Cellemetry, which operates
within the control channel of common carrier cellular frequencies, and Cellular
Digital Packet Data, which uses common carrier cellular frequencies to send
messages in high speed bursts during the idle time in voice transmission,
require local infrastructures to operate. The triple shortcomings of these
systems - namely (1) lack of instantaneous, cross-continental data collection,
(2) "black holes" and lack of ubiquitous coverage, and (3) high incremental
infrastructure and per message costs outside concentrated population centers -
are all competitive advantages for the NewStar system.
Employees
As of December 31, 2000, we had eight full-time employees. We consider our
relationship with our employees to be good.
RISK FACTORS
RISK FACTORS
An investment in shares of our Common Stock is very risky. You should carefully
consider the risks described below in addition to other information in this
filing. Our business, operating results and financial condition could be
seriously harmed due to any of the following risks. The trading price of the
shares of our Common Stock could decline due to any of these risks, and you
could lose all or part of your investment.
We are a development stage company and we do not have any customers.
We are a development stage company and as of March 15, 2001, we had no
customers. Although we previously recorded gains from the sale of interests in
entities which own direct broadcast satellites licenses, we have not earned any
significant operating revenues since our formation. Given our limited operating
history and lack of revenues, we cannot assure you that we will be able to
construct and implement the NewStar System, and, if implemented, to develop a
sufficiently large customer base to be profitable.
We have incurred significant losses and expect to continue to do so.
Additionally, we will require further financing. These circumstances raise
substantial doubt about our ability to continue as a going concern.
We expect our operating expenses to significantly increase as our satellite
system reaches its critical stages of development. We recorded operating losses
of approximately $6,557,000 for 2000 and approximately $6,029,000 for 1999, and
do not anticipate any revenues during the year 2001. We expect to continue to
incur substantial and increasing operating losses and negative net cash flow
until our satellite system is developed, deployed and operating in a profitable
manner. These circumstances raise substantial doubt about our ability to
continue as a going concern as discussed in the report of our independent
accountants. Our management is actively pursuing various financing alternatives
to finance our operations.
We currently estimate that we will require approximately $120 million in capital
related to the construction, launch and operations costs associated with our
satellite system. Given the risks in an undertaking of this nature, we cannot
assure you that actual cash requirements will not exceed our estimates. In
particular, additional capital, over and above amounts anticipated, will be
required in the event that we:
o incur unexpected costs in completing the NewStar System design or
encounter any unexpected technical or regulatory difficulties;
o incur delays and additional expenses as the result of a launch or
satellite failure;
o are unable to enter into marketing agreements with third parties or
sell our metering services; or
o incur any other significant unanticipated expenses.
The occurrence of any of these events would adversely affect our ability to meet
our business objectives. If we are unable to obtain a sufficient amount of
financing necessary to complete our system and on commercially acceptable terms,
our business and future success will be adversely affected.
Difficulties within the satellite industry have increased the difficulty to
raise capital.
The difficulties facing the satellite industry, as well as the broad stock
market and technology stocks in particular, have led to delays in raising
short-term operating capital. If we are unable to obtain a sufficient amount of
financing necessary to complete our system and on commercially acceptable terms,
our business and future success will be adversely affected.
Future financings will likely result in significant stockholder dilution and may
have restrictive conditions.
With the decreased availability of bond markets for satellite financings, we
anticipate that we will depend on principally on equity financings to pay for
our satellite system. Capital may not be available to us in sufficient amounts
to meet the development costs or on terms acceptable to us. The issuance of
additional equity securities by us will result in significant dilution to the
equity interests of the current stockholders. Should we instead sell debt
securities, such as bonds, this would increase our liabilities and future cash
commitments. Regardless of whether financing is structured as equity or debt,
investors may require pledges of assets, including our ownership interest in
E-SAT, or may impose restrictive conditions on the conduct of our business. In
the event of a default on such pledges or conditions, it would be unlikely that
there will be any assets remaining to be distributed to equity holders.
We are subject to development contract commitments.
In order to comply with development milestones required by the FCC license, we
have entered into various development contracts including a satellite
construction contract and a satellite launch contract. Entering into these and
other development and service contracts are critical to the overall development
of the NewStar System. The satellite construction and launch contracts require
progress payments of approximately $60 million over a 12 month period. Failure
to maintain these contracts would adversely affect our ability to construct the
NewStar System. (See "Risk Factor below -- The contract with our prime
contractor could be declared void.)
The contract with our prime contractor could be declared void.
We have not made the necessary payments to our prime contractor and, as a
result, that contract could be declared void. The Agreement with our prime
contractor, Alcatel Space Industries, required a payment at the end of 1999 of
approximately $9.1 million in cash and the equivalent of $5 million in Common
Stock. This payment was necessary for Alcatel to continue work and to trigger an
effective date for our full system development schedule. As of March 15, 2001,
this payment has not been made, and Alcatel therefore has the right to consider
this contract void. Although Alcatel has verbally indicated that it does not
intend to terminate the contract, it has the right to do so. Until the effective
date of contract, or "EDC", we continue to have a direct satellite construction
contract with Surrey Satellite Technology Limited. At EDC, this contract would
be assigned to Alcatel. Any cancellation or termination of these contracts could
cause delay in construction of the system and which could result in the loss of
the FCC license. (See also "Development Milestones--Entered into an agreement
with an end-to-end prime contractor for the NewStar System".)
The technology, design and construction of our satellite system is subject to
numerous risks.
The design and construction of the NewStar System is subject to risks associated
with a space--based communications system. Although we believe that the NewStar
System is based on sound technology, its design will contain certain technology
that has not been used in a commercial application. Although we intend to engage
contractors that are experienced in the satellite and communications industry,
we have no experience in developing, constructing, and operating a satellite
based data communications system. The failure of the NewStar System to be
constructed, function as designed, or the failure of system components to
function with other components or to specification could result in delays,
unanticipated costs, and loss of system performance, thereby rendering the
NewStar System unable to perform at the quality and capacity levels anticipated.
Future advances in the industry could make our services obsolete.
Future advances in the telecommunications industry could lead to new
technologies, products or services competitive or superior to the products or
services to be provided by us. Such technological advances could also lower the
costs of other products or services that may compete with the NewStar System,
resulting in pricing pressures on our products and services, which could
adversely affect our business and results of operations.
Our satellite system may experience unscheduled delays that could harm our
business or lead to the loss of the FCC license.
Delays and related increases in costs in the construction, launch and
implementation of the NewStar System could result from a variety of causes,
including:
o delays encountered in the construction, integration and testing of the
NewStar System;
o launch delays or failures;
o delays caused by design reviews in the event of a launch vehicle
failure or a loss of satellites or other events beyond our control;
o further modification of the design of all or a portion of the NewStar
System in the event of, among other things, technical difficulties or
changes in regulatory requirements;
o our failure to enter into agreements with marketing providers on terms
acceptable to us; and
o the failure to develop or acquire effective applications for use with
the NewStar System.
We cannot assure you that the Little LEO satellites or the data and messaging
services we intend to provide will be available on a timely basis, or at all. A
significant delay in the completion of the NewStar System could erode our
competitive position, could result in cancellation of the FCC license, and could
have a material adverse effect on our financial condition and results of
operations.
We will face many risks associated with the launching of satellites.
Satellite launches are subject to considerable risks, including the possible
failure of the launch vehicle, which may result in the loss or damage to the
satellite or its deployment into an incorrect or unusable orbit. Each
launch is expected to carry three Little LEO satellites. Consequently, an
unsuccessful launch could adversely affect one-half of our planned satellite
constellation. We intend to obtain a certain amount of insurance to cover some
of our potential losses in this area, but we cannot assure you that the
insurance will cover all incidents or be in a sufficient amount to cover the
losses.
We have entered into a launch services agreement with Eurockot Launch Services
GmbH, headquartered in Bremen, Germany to provide for two payload launches from
a launch site in Plesetzk, Russia during specified periods. Eurockot has limited
experience in launching commercial satellites. Further, it is anticipated that
any launch must be approved by a governmental agency of the Russian Federation.
We do not know whether the launches will be approved by the Russian Federation
or if the launches will take place as planned. The failure of the launches or
the occurrence of any problems generally associated with satellite launches
would have an adverse effect on us.
Our satellites may malfunction or fail prematurely.
A number of factors will affect the useful lives of the NewStar System's Little
LEO satellites, including the quality of construction, the expected gradual
environmental degradation of solar panels, the amount of fuel on board and the
durability of component parts. Random failure of satellite components could
result in damage to or loss of a satellite. In rare cases, satellites could also
be damaged or destroyed by electrostatic storms, high levels of radiation or
collisions with other objects in space. Any premature loss of satellite
performance or capacity could have a material and adverse effect on the
efficiency of the overall system and the operation of the NewStar System.
We will only be able to obtain a limited amount of satellite insurance.
We expect to obtain launch insurance for each of our satellite launches and have
engaged Frank Crystal & Co. and its subsidiary, International Space Brokers,
Inc. to provide risk management counsel in obtaining insurance coverage for our
planned Little LEO satellite constellation. This insurance would, in the event
of a launch failure, provide funds for replacement launch satellites. In
addition, we expect to obtain satellite replacement insurance, which would
provide funds for rebuilding satellites damaged in construction, shipment or
launch. In the event a covered loss occurs, we will need to satisfy the
insurance underwriters that the technological or other problems associated with
the covered loss have been addressed prior to continuing the launch process. The
launch and replacement insurance marketplace is volatile and we do not know
whether launch or replacement insurance, or both, will be available to us, or if
available, will be available on terms acceptable to us. We will continue to
evaluate the insurance marketplace to determine the level of risk we are willing
and able to absorb internally as well as the amount of risk we may be able to
transfer to third parties.
We are subject to governmental regulation which can be difficult to satisfy.
Our business is subject to both United States and international regulations and
licensing. The E-SAT license has several milestones, including:
o the completion of construction of the first two satellites by March
2002,
o the launch of those satellites by September 2002, and
o the construction and launch of the remaining four satellites by March
2004.
Our ability to meet these milestones is dependent on a number of factors many of
which are outside of our control. The failure to meet the milestones could
result in loss of the FCC license. Furthermore, we will need to secure "landing
rights" in various countries where we hope to do business. Failure to secure
foreign rights would preclude us from offering our full services in such
countries, which would adversely affect our anticipated results of operation. In
addition, if financial difficulties arise, we may be unable to meet our
obligations under our construction and launch agreements. Any cancellation or
termination of these contracts could also result in loss of the FCC license.
The services we intend to provide must be acceptable to the utility industry.
Our success is largely dependent on whether utility and other related companies
will contract for services utilizing the NewStar System. Although we have other
proposed uses for the data messaging services, utility companies, such as gas,
electrical and water utility companies, remain the primary focus of our
marketing and development efforts. We cannot assure you that we will be
successful in completing the development and commercial implementation of our
services using the NewStar System. We must complete a number of technical
developments and continue to expand and upgrade the NewStar System's
capabilities prior to implementing our services on a full commercial basis.
Utility companies typically go through numerous steps before making final
decisions which can take up to several years to complete.
Further, utilizing satellite data messaging services is a relatively new and
evolving business. It is difficult to predict the future growth of the market or
the potential size of the market. Utility companies are testing products from a
number of entities developing various communication technologies. The use of the
NewStar System is only one possible solution for hard-to-access meter sites. We
may not be successful in achieving the adoption of the NewStar System by the
utility industry or to a significant extent. In the event that utility companies
do not adopt our technology, or do so less rapidly than expected, our future
results, including our ability to achieve profitability, will be materially and
adversely affected.
The price of ground transceivers will affect the success of our service.
The development of low-cost ground transceivers to collect and transmit data
from fixed devices such as meters will be important in the development of a
broad utility market for our data messaging services. Ground transceivers must
be manufactured and operated at a low cost in order to make our data messaging
services attractive to commercial users. It is expected that the cost of ground
transceivers will decline as the volume of units produced increases. We must
develop a low-cost ground transceiver which requires less power to operate and
will be attractive to utility and other companies. However, we cannot assure you
that ground transceivers can be developed at a cost and with the capabilities
that will attract a large enough commercial subscriber base for us to receive
significant revenues or achieve profitability.
We are dependent on third party vendors and consultants.
We have relied on, and will continue to rely on, vendors and consultants that
are not our employees to complete the design, construction and implementation of
the NewStar System, to market our data messaging services and for representation
on regulatory issues. These vendors and consultants must continue to provide the
expertise necessary to complete the design and construction of the NewStar
System, and we cannot assure you that suitable vendors and consultants will be
available in the future, and if available, will be available on terms deemed
acceptable to us.
We are dependent on third party manufacturers.
We rely on, and will continue to rely on, outside parties to manufacture parts
and equipment for the NewStar System such as meters, transceivers, antennas, and
other Little LEO satellite related devices. We cannot assure you that these
manufacturers will be able to meet our needs in a satisfactory and timely manner
or that we will be able to obtain additional manufacturers when and if
necessary. A significant price increase, a quality control problem, an
interruption in supply or other difficulties with third party manufacturers
could have a material and adverse effect on our ability to successfully provide
our proposed services. Further, the failure of third parties to deliver the
products, components, necessary parts or equipment on schedule, or the failure
of third parties to perform at expected levels, could delay our deployment of
the NewStar System. Any such delay or increased costs could significantly harm
our business and operating results.
Our failure to effectively manage our growth would harm our future business
results.
As we proceed with the development of our satellite system, we expect to
experience significant and rapid growth in the scope and complexity of our
business. We will need to add staff to market our services, manage operations,
control the operations of the proposed satellites, handle sales and marketing
efforts and perform finance and accounting functions. We will be required to
hire a broad range of additional personnel before we begin commercial
operations. This growth is likely to place a strain on our management and
operational resources. The failure to develop and implement effective systems,
or to hire and train sufficient personnel for the performance of all of the
functions necessary to effectively service and manage our potential subscriber
base and business, or the failure to manage growth effectively, could have a
material adverse effect on our business and financial condition.
We are dependent on key personnel.
Our success is substantially dependent on the performance of our executive
officers and key personnel and on our ability to retain and motivate our
personnel. The loss of any of our key personnel, particularly Fred W. Thompson,
our president, would harm our ability to manage operations and development of
the NewStar System, and could have a material and adverse effect on our
business, financial condition, and operating results.
Intense competition from existing and new entities could adversely affect our
business.
We will encounter competition from other Little LEO satellite systems, as well
as from competitive terrestrial-based communication companies. The market for
collection and transmission of data from fixed devices such as meters and the
potential market for other applications of data messaging services has led to
substantial and increasing competition. Many of our present and future
competitors using Little LEO satellites have begun to address the collecting and
transmitting data from fixed devices and at least one of these competitors has
substantially greater
o financial, marketing, technical and manufacturing resources,
o name recognition, and
o experience.
Such competitors may be able to respond more quickly to new or emerging
advancements in the industry and to devote greater resources to the development,
promotion and sale of their products and services. Our
technology must be competitive so that the NewStar System can provide the data
transmission service at a cost lower than most of our competitors' systems. We
cannot assure you that such competitors will not succeed in developing better or
more cost-effective data transmission systems.
We face increased competition as a result of strategic alliances and other
consolidation in the industry.
Our current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties that
could increase their ability to reach commercial customers or subscribers of
data messaging services. Further, terrestrial-based wireless communication
systems are already providing data messaging services to the utility industry.
Such existing and future competition could affect our ability to form and
maintain agreements with utility companies and other customers. We cannot assure
you that we will be able to compete successfully against our current and future
competitors, and our failure to do so would have a material adverse effect on
our business.
Substantially all of our assets consist of our capitalized satellite
construction costs and acquisition costs relating to the E-SAT license and these
assets may be significantly impaired if we are unable to obtain the necessary
financing.
We cannot assure you that we will be able to obtain financing in a sufficient
amount for the construction and deployment of our satellite constellation. Our
failure to obtain sufficient and timely financing will likely result in our
conclusion that the carrying amounts of the capitalized satellite construction
costs and the investment in E-SAT are not recoverable. Under generally accepted
accounting principles relating to the impairment of assets, we would then be
required to write off all or a portion of the capitalized satellite construction
costs and our acquisition costs relating to the E-SAT license which would have a
material and adverse effect on our business, results of operations and financial
position.
Our certificate of incorporation and Delaware law contain certain provisions
which could deter takeovers which may prevent you from receiving a premium for
your shares.
Provisions of our certificate of incorporation and Delaware law could delay,
defer or prevent a change in our control. Our certificate of incorporation
contains a fair price provision that requires a certain threshold approval by
our board of directors in the event of a merger, sale of assets or other types
of business combinations. In addition, our board consists of members who serve
staggered three year terms so that only a portion of our board can be removed at
the annual meeting of stockholders. Further, the board is authorized to issue
preferred stock, the classes and terms of which may be determined by the board.
We are also subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation law, which prohibits us from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner,
under Delaware law. These provisions in our certificate of incorporation and
Delaware law could have the effect of delaying, deferring or preventing a change
in control, even if doing so would be beneficial to our stockholders.
We have not paid dividends and are not likely to pay dividends on our Common
Stock in the future.
We have not declared or paid any dividends on our Common Stock, and do not
anticipate paying any dividends for the foreseeable future. In addition, the
holders of our shares of Series A Preferred Stock and Series B Preferred Stock
are entitled to receive, out of any legally available funds, annual cumulative
dividends equal to five percent and ten percent, respectively, of the
liquidation preference of their shares. All dividends must
be paid on the Series A Preferred Stock and Series B Preferred Stock before any
may be declared or paid on the Common Stock. It is also anticipated that if we
obtain bond financing or other financing facilities, we will be restricted in
our ability to declare future dividends on our Common Stock.
Our stock price is volatile.
Our Common Stock is quoted on the OTC Bulletin Board and is thinly traded. In
the past, our trading price has fluctuated widely, depending on many factors
that may have little to do with our operations or business prospects. In
addition, the OTC Bulletin Board is not an exchange and, because trading of
securities on the OTC Bulletin Board is often more sporadic than the trading of
securities listed on an exchange such as NASDAQ, you may have difficulty
reselling any of the shares that you purchase.
The exercise of outstanding options and warrants, and conversion of Series B
Preferred Stock may adversely affect our stock price and your percentage of
ownership.
In addition to the shares issuable to Torneaux Ltd., as of March 15, 2001, there
were outstanding warrants and options to purchase an aggregate of 9,139,609
shares of our Common Stock. Most of the options and warrants have exercise
prices greater than the current trading price of our Common Stock. In addition,
if the Company does not redeem the Series B Preferred Stock within 180 days of
the closing date of October 6, 2000, then the holders have the option to convert
their shares into Common Stock at approximately 80% of the then current market
price. Conversion of the Series B Preferred Stock and exercise of the
outstanding options and warrants may have a detrimental impact on the terms
under which we may obtain financing through a sale of our Common Stock in the
future since they may hinder our ability to raise capital at a higher market
price due to the dilutive effect to new investors. For these reasons, any
evaluation of the favorability of market conditions for a subsequent stock
offering must take into account any outstanding warrants and options.
ITEM 2. PROPERTIES
We have leased 3,550 square feet at a monthly rate of $12,353, for our principal
offices at 100 Shoreline Highway, Suite 190A, Mill Valley, California, on a
three-year lease which expires on July 31, 2003.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Price Range of Common Stock
The following table sets forth the high and low bids quoted for our common stock
during each quarter for the past two fiscal year ends and until the quarter
ended December 31, 2000, as quoted on the OTC Bulletin Board.
Common Stock
Quarter Ended High Low
December 31, 2000 $0.44 $0.38
September 30, 2000 1.06 0.94
June 30, 2000 1.69 1.59
March 31, 2000 3.00 2.19
December 31, 1999 2.25 2.16
September 30, 1999 2.56 2.44
June 30, 1999 3.00 2.75
March 31, 1999 4.97 4.06
These quotations reflect inter-dealer prices, without retail markup, mark-down
or commission, and may not represent actual transactions.
As of December 31, 2000, we had 15,601,143 shares of common stock outstanding
and 408 stockholders of record. The number of stockholders does not include
those who hold our securities in street name.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our Common Stock since our
inception. The holders of our shares of Series A Preferred Stock and Series B
Preferred Stock are entitled to receive, out of any legally available funds,
annual cumulative dividends equal to five percent and ten percent, respectively,
of the liquidation preference of their shares. All dividends must be paid on the
Series A Preferred Stock and Series B Preferred Stock before any may be declared
or paid on the Common Stock. We currently intend to retain any additional future
earnings for use in the operation and expansion of our business. We do not
intend to pay any cash dividends on our Common Stock in the foreseeable future.
23
SALES OF UNREGISTERED SECURITIES
Preferred Stock Transaction
On October 6, 2000, the Company received proceeds of $400,000 from the sale in a
private placement of (1) 400 shares of Series B Convertible Preferred Stock, (2)
warrants to purchase 83,660 shares of Common Stock with an exercise price of
$1.052 per share and (3) warrants to purchase 83,660 shares of Common Stock with
an exercise price of $1.434 per share. During the first 180 days following
October 6, 2000, the Series B Preferred Stock may not be converted; and the
Company has the right to redeem these shares if the Company repays the purchase
price plus an additional 5-7% depending on repayment date, plus dividends at a
rate of 10% per annum. After 180 days following October 6, 2000, the Series B
Preferred Stock are convertible into Common Stock at the lesser of (1)
approximately $.96 per share which was the closing bid price at the time of the
purchase or (2) 80% of the average of the three lowest closing bid prices of the
Common Stock for the 20-day trading period prior to the conversion date. The
Company also has the obligation to register the Common Stock underlying the
warrants and, after 180 days, Common Stock underlying any redeemed Series B
Preferred Stock. For this transaction, an agent received a fee of 40 shares of
Series B Preferred Stock and warrants to purchase 120,000 shares of Common Stock
of the Company with an exercise price of $1.052 per share. As of December 31,
2000, 440 shares of Series B Preferred Shares remain outstanding. During fiscal
2000 accreted dividends totaled $10,511. The transaction was exempt from
registration in reliance upon Section 4(2) of the Securities Act.
Common Stock Transactions
In September 2000, the Company issued 200,000 shares of Common Stock and a
warrant to purchase 200,000 shares of Common Stock to a consultant for services
rendered. The warrants are exercisable through September 2003 at an exercise
price ranging from $1.50 to $2.50 per share. The fair value of such warrants of
$194,500 was expensed and was estimated on the date of grant using the Black
Scholes model with volatility of 150%, expected life of 3 years, risk free
interest rate of 6% and a fair market value of the Common Stock of $1.25 per
share. The transaction was exempt from registration in reliance upon Section
4(2) of the Securities Act.
In October 2000, the Company granted a warrant to purchase 500,000 shares of the
Company's Common Stock at an exercise price of $1.31 per share to a financial
institution as consideration for its efforts to help raise capital. Warrants to
purchase the first 50,000 vested as of the grant date and will expire in October
2004. The remaining warrants to purchase 450,000 shares shall vest upon the
closing of transactions that provide cash to the Company based on the success of
the financial institution's efforts. The transaction was exempt from
registration in reliance upon Section 4(2) of the Securities Act.
In December 2000, the Company received from accredited investors proceeds of
$100,000 in exchange for 100,000 units, each unit consisting of two shares of
Common Stock at a price of $0.50 per share and a warrant to purchase one-quarter
of one share of Common Stock at an exercise price of $1.00 per share. In
connection with this transaction, a finder's fee of $7,000 was paid, and a
warrant was issued to purchase 10,000 shares of Common Stock exercisable at
$1.00 per share. The 200,000 shares of Commons Stock were issued in January
2001. The transaction was exempt from registration in reliance upon Section 4(2)
of the Securities Act.
In December 2000 the Company received from accredited investors proceeds of
$500,000 in exchange for 2,000,000 units, each unit consisting of one share of
Common Stock at a price of $0.25 per share and a warrant to purchase one share
of Common Stock at an exercise price of $0.50. In connection with this
transaction, a finder's fee of $35,000 was paid, and a warrant was issued to
purchase 100,000 shares of
Common Stock at an exercise price of $0.50 per share. The 2,000,000 shares of
common stock were issued in January 2001. The transaction was exempt from
registration in reliance upon Section 4(2) of the Securities Act.
During fiscal 2000, a total of 65,569 shares of Common Stock were issued for
services rendered to a consultant for a total fair value of $36,886 which was
expensed during the course of the year. The transaction was exempt from
registration in reliance upon Section 4(2) of the Securities Act.
During fiscal 2000, a total of 7,451 shares of Common Stock were issued to
employees under the 1999 Employee Stock Purchase Plan. The transaction was
exempt from registration in reliance upon Section 4(2) of the Securities Act.
ITEM 6. 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. ("DBSI" or "We" or the "Company") is a telecommunications
company dedicated to providing low-cost satellite-to-Internet data messaging to
and from remote locations. DBSI is the only company currently licensed by the
Federal Communications Commission (through the E-SAT license) to provide
commercial two-way data messaging using Code Division Multiple Access technology
and low-earth-orbiting satellites operating below the 1Ghz frequency range. We
expect to begin providing our data messaging services, currently marketed under
the "NewStar" name, during 2002.
Plan of Operations
It has been our plan to continue the construction and deployment of our system.
This plan has been, and continues to be, dependent upon our success in raising
adequate financing. As of March 15, 2001, difficulties in the satellite industry
continue to impede our financing efforts.
Based upon these financing difficulties, management initiated an intensive
effort to identify and commence negotiations with strategic partners who could
serve as both customers and financiers of the Company's system - both in and out
of the company's target meter reading market. The Company is involved in a
number of such discussions and we have retained outside advisors to assist us in
identifying and contacting other significant opportunities.
At the same time, management initiated efforts to reduce the overall cost of our
system and thereby reduce the investment required to commence commercial
service.
The difficulties facing the satellite industry, as well as the broad stock
market and technology stocks in particular, have also led to delays in raising
short-term operating capital. The Company's right to raise capital by selling
common shares to the Torneaux Fund has been limited by the Company's stock
price, which, as of March 15, 2001 is below the contractual minimum threshold
price of $1.00 per share. As a result, the Company has delayed payment to many
of its vendors and certain of its employees have deferred receipt of salaries
due. As of December 31, 2000, the Company's cash and cash equivalents amounted
to $389,319 while its current liabilities, including amounts owed to employees,
amounted to $3,103,019. Throughout the year, management has continued to focus
on reducing operating expenses while concentrating its efforts on raising short
term and strategic financing. (See "Subsequent Events").
During fiscal 2001 we will continue to seek to satisfy our cash requirements by
raising new equity and debt capital, as well as by seeking the exercise of
previously issued third-party warrants and stock options. During our fiscal year
ending December 31, 2000 we issued 35,897 shares of the Company's Series A
preferred stock
in exchange for gross proceeds of $1,076,910 in cash and the Company has
received $254,530 in options and warrants exercised. The Company has also
received $416,040 through the private sale of common stock. During the final
four months of fiscal 2000, our preferred shareholders converted 9,998 shares of
preferred stock into 179,103 shares of common stock. The Company accreted
dividends of $31,510 payable to Series A preferred stockholders as of December
31, 2000.
Also during fiscal 2000 we issued 440 shares of the Company's Series B Preferred
Stock in exchange of gross proceeds of $400,000 in cash. The Company accreted
dividends of $10,511 to Series B preferred stockholders as of December 31, 2000.
Revenues
The Company remains in the development stage and did not generate revenues in
either the year ending December 31, 2000 or the year ending December 31, 1999.
Operating Expenses
Total operating expenses for fiscal 2000 and fiscal 1999, were $6,496,009 and
$6,027,229 respectively. These costs are related to marketing and sales
expenses, general and administrative expenses, and research and development
expenses.
Marketing and Sales Expenses
Marketing and sales expenses are primarily the costs of personnel (including
non-cash stock compensation), consulting and travel. Marketing and sales
expenses totaled $1,721,725 (26.5% of operating expenses) and $922,623 (15.3% of
operating expenses) in fiscal 2000 and fiscal 1999 respectively. This increase
in expenses is due to the establishment of our dedicated marketing and sales
group in June 1999. The marketing group was terminated in the fourth quarter of
fiscal 2000 in order to reduce our cash expenditures.
General and Administrative Expenses
General and administrative expenses include the costs of finance, legal,
administrative and general management functions of DBSI. General and
administrative expenses for fiscal 2000 and 1999 were $4,037,509 (62.2% of
operating expenses), and $4,059,310 (67.4% of operating expenses) respectively.
Research and Development Expenses
Research and development expenses represent non-capitalized costs incurred to
develop our system. Research and development expenses for fiscal 2000 and fiscal
1999 were $736,775 (11.3% of operating expenses), and $1,045,296 (17.3% of
operating expenses) respectively. Our research and development staff was located
in Toulouse, France. During the fourth quarter of fiscal 2000 we terminated our
research and development office in France in order to reduce our operating
expenses.
Non-Cash Stock Compensation
In order to attract and retain qualified personnel, we have granted options to
purchase Common Stock to several employees. Some of the exercise prices were
below the fair market value of the Common Stock at the time of grant, resulting
in deferred stock compensation. The deferred stock compensation is being
amortized over the vesting periods of the granted options. The Company
recognized a total of $1,078,857 as non-cash stock compensation expense in
fiscal 2000 compared to $957,755 in fiscal 1999.
Other Income (Expense)
The Company experienced a non-operating loss of $59,940 during fiscal 2000 as
compared to a gain of $113,336 during fiscal 1999. The loss incurred in 2000 was
a result of increased interest expense due to ongoing cash shortages during the
year.
Net Loss
The Company's net loss for fiscal 2000 was $6,557,549 compared to $5,915,493 for
fiscal 1999.
Liquidity and Capital Resources
The Company has been in the development stage since its inception and has not
recognized any significant revenues. Our monthly cash expenditures averaged
approximately $309,000 per month during fiscal 2000. However, expenses will
increase during fiscal 2001 with the demands of increased efforts in both
systems and business development. Additional capital will be necessary to expand
operations or continue current operations, which will result in further dilution
to our stockholders. We cannot be certain that additional funding will be
available on acceptable terms or at all.
Traditionally, we have relied on equity and debt placements to finance our
operations. This financing was supplemented from the sale of our interest in
entities that held direct broadcast satellite licenses. We no longer have any
interest in direct broadcast satellite licensees.
During fiscal 2000, we received proceeds from the sale of common and preferred
stock totaling $3,225,442 before stock issuance costs of $636,576. These
transactions included:
- a private placement of 35,897 shares of the Company's Series A
preferred stock at $30 per share for an aggregate amount of $1,076,910
before stock issuance costs of $226,809;
- a private placement of 166,298 shares of the Company's common stock at
$1.00 per share for an aggregate of $166,298 before stock issuance
costs of $11,641;
- a private placement of 133,333 shares of the Company's common stock at
$0.75 per share for an aggregate of $100,000;
- a draw down of Equity 1-A for 84,490 shares of the Company's common
stock at $0.9863 for an aggregate of $83,333;
- a draw down of Equity 1-B for 63,092 shares of the Company's common
stock at $0.88 for an aggregate of $55,556;
- proceeds in the amount of $254,530 from the exercise of 271,870
options and warrants.
In addition to the above, the Company also received $10,851 from the sale of
7,451 shares of common stock to employees pursuant to the 1999 Employee Stock
Purchase Plan for the offering periods ended December 31, 1999 and June 30,
2000.
We had cash and cash equivalents of $389,320 and $282,945 as of December 31,
2000 and December 31, 1999 respectively. We had negative working capital of
$2,216,321 as of December 31, 2000, compared to a negative working capital of
$941,527 as of December 31, 1999. Until we are able to develop, construct and
operate the NewStar System and derive revenues therefrom, we must continue to
raise cash from outside sources for operations and for the development of the
NewStar System.
Net cash used in operating activities during fiscal 2000 was $2,385,941, as
compared to $3,681,956 for fiscal 1999. The $2,385,941 results from a net loss
of $6,557,549 offset primarily by:
- non-cash stock compensation of $1,078,857
- non cash warrants issues of $1,694,718
- an increase in accounts payable and accrued liabilities of $1,324,107
due primarily to difficulties in raising capital financing and
- a decrease in accounts receivable and other current assets of $57,061
due to a reduction in prepaid insurance and employee receivables.
Net cash used in investing activities for fiscal 2000 was $96,551 compared to
$12,413,265 for fiscal 1999. This decrease of $14,316,714 was as a result of a
decrease in satellite construction costs. Approximately $157,000 of the net cash
used in investing activities during fiscal 2000 was related to satellite
construction payments made to our satellite contractors in Europe.
Net cash provided by financing activities for fiscal 2000, was $2,588,867
compared to $15,086,455 for fiscal 1999. Net cash provided by financing
activities during fiscal 2000 was related primarily to the net proceeds from the
sale of units of preferred stock and the exercise of options and warrants by our
stockholders.
In 1996, we received milestone payments under the terms of a $1.2 million
purchase order for 10,000 satellite radio units from ABB. Under this agreement,
the Company was eligible to receive up to $500,000 towards development costs
upon meeting the milestone requirements of the contract. We met the first four
milestones of the contract and have received $400,000 in cash. The parties
agreed to suspend all development under this agreement due to the expiration of
the Company's agreement for the use of the Argos 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. We are a development stage company and as of December 31,
2000, we had no customers. Given our limited operating history and lack of
revenues, no assurances can be given that we will be able to construct and
implement our system, and, if implemented, to develop a sufficiently large
customer base to be profitable.
While we continue the strategic fund-raising efforts (see "Plan of Operations")
that are necessary to our ultimate success, our continued cost of operations
significantly exceeds our short-term capital. In addition, we currently estimate
that we will require approximately $120 million in capital related to the
construction and launch costs associated with our system. No assurance can be
given that capital will be available to us on commercially acceptable terms to
meet development costs or on terms acceptable to us. The issuance of additional
equity securities by us will result in significant dilution of the equity
interests of the current stockholders. Selling debt securities such as bonds
will increase our liabilities and future cash commitments. In order to comply
with development milestones required by the FCC license, we have entered into
various development contracts including a satellite construction contract and a
satellite launch contract. All of these contracts require that we have available
capital which is not currently available.
Other factors, in addition to those identified in this filing, which could
affect future results would include 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, unscheduled
delays or technological difficulties, satellite launch risks,
potential satellite malfunction, limited availability of insurance, results of
the Company's financing efforts and marketing conditions, competition, and other
risk factors related to the Company's business. Readers of this filing are
cautioned not to put undue reliance on "forward looking" statements that are, by
their nature, uncertain as reliable indicators of future performance.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The response to this item is being submitted in a separate section of this
report beginning on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEMS 9-12.
The information called for in Items 9-12 is hereby incorporated by
reference into the Company's Proxy Statement for its annual meeting of
shareholders, to be filed in 120 days of our fiscal year end.
ITEM 13. FINANCIAL STATEMENTS, EXHIBITS AND REPORTS ON FORM 8-K
Financial Statements
The following Financial Statements pertaining to the Company are filed as part
of this report:
Report of Independent Accountants F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Stockholders' Equity F-4
Consolidated Statements of Cash Flows F-13
Notes to Consolidated Financial Statements F-14 to F-29
Exhibits
The following Exhibits are filed with or incorporated by reference into this
report:
(2.1) Plan and Agreement of Reorganization, dated September 30, 1992,
entered into with DBS Industries, Inc., Network, Inc, and certain
of its shareholders which was previously filed in, and is hereby
incorporated by reference to, the Company's Current Report on Form
8-K, date of report, December 2, 1991.(1)
(3.0) Restated Certificate of Incorporation, effective May 28, 1997.(1)
(3.1) Bylaws, effective February 19, 1999.(1)
(3.2) Certificate of Amendment of Certificate of Incorporation, effective
April 28, 1999.(1)
(3.3) Certificate of Designations, creating the Series A Convertible
Preferred Stock effective January 25, 2000.(8)
(3.4) Certificate of Designations, creating the Series B Convertible
Preferred Stock effective September 25, 2000. (10)
(3.5) Certificate of Correction to Certificate of Designations of Series
B Convertible Preferred Stock, effective October 10, 2000.
(3.6) Certificate of Amendment to the Certificate of Designations of
Series A Convertible Preferred Stock effective March 6, 2001.
(3.7) Certificate of Amendment to the Articles of Incorporation of E-SAT,
Inc. dated December 29,2000
(4.1) Form of Unit Warrant Agreement, which was previously filed in, and
is hereby incorporated by reference to, the Company's Registration
Statement on Form S-18, No. 33-31868-D, effective May 11, 1990.(1)
(4.2) Specimen Stock Certificate.(1)
(4.3) Form of Warrant issued to SJ Capital.(8)
(10.6) 1993 Incentive Stock Option Plan for DBS Industries, Inc.(1)
(10.7) 1993 Non-Qualified Stock Option Plan for Non-Employee Directors of
DBS Industries, Inc.(1)
(10.8) 1993 Non-Qualified Stock Option Plan for Consultants of DBS
Industries, Inc.(1)
(10.9) Commercial Lease and Sublease and Consent pertaining to Mill
Valley, CA office space.(1)
(10.20) AXION Royalty Agreement incorporated by reference to the Company's
Current Report on Form 8-K dated May 16, 1994.(1)
(10.24) DBS Industries, Inc. $3,000,000, Three-Year Convertible Debenture
Series B due January 12, 1999, incorporated by reference to the
Company's Current Report on Form 8-K dated February 1, 1996.(1)
(10.25) Memorandum of Understanding between ABB Power T&D Company, Inc. and
Global Energy Metering Service, Inc. dated February 9, 1996.(1)
(10.26) Stock Purchase Agreement between Seimac Limited and DBS Industries,
Inc., comprised of Common Stock Exchange Agreement and Shareholders
Agreement both dated December 13, 1995.(1)
(10.30) DBS Industries, Inc,. $640,000 Three-Year Convertible Debenture,
Series C. due December 31, 1999.(1)
(10.31) Employment Agreement between Fred W. Thompson and the Company,
dated April 18, 1996.(1)
(10.32) Employment Agreement between Randall L. Smith and GEMS (the
Company's Subsidiary), dated March 1, 1996.(1)
(10.33) Employment Agreement between E.A. James Peretti and GEMS (the
Company's subsidiary) dated April 18, 1996.(1)
(10.34) 1996 Stock Option Plan.(1)
(10.36) 1998 Stock Option Plan.(1)
(10.37) Memorandum of Understanding Between DBS Industries, Inc. and Matra
Marconi Space.(2)
(10.38) Letter of Intent with SAIT-Radio Holland SA.(2)
(10.39) Purchase Agreement with Astoria Capital, L.P. and Microcap
Partners, L.P.(2)
(10.40) Warrant Agreement with Astoria Capital, L.P. and Microcap Partners,
L.P.(2)
(10.41) Employment Agreement between Gregory T. Leger and DBS Industries,
Inc. dated March 1, 1998.(3)
(10.42) Unit Purchase Agreement with Michael Associates.(4)
(10.43) Unit Purchase Agreement with Lodestone Capital Fund LLC, Fourteen
Hill Capital, LP, High Peak Limited and Michael Fitzsimmons.(3)
(10.44) Launch Services Agreement with Eurockot Launch Services GmbH dated
March 31, 1999.(4) (Redacted per Confidential Treatment Request)
(10.45) Satellite Construction Agreement with Surrey Satellite Technology
Limited dated March 31,1999.(4)(Redacted per Confidential Treatment
Request)
(10.46) Amendment to Employment Agreement between Fred W. Thompson and DBS
Industries, Inc. dated September 1, 1999.(5)
(10.47) Amendment to Employment Agreement between Gregory T. Leger and DBS
Industries, Inc., dated September 1, 1999.(5)
(10.48) Employment Agreement between Frederick R. Skillman, Jr., and DBS
Industries, Inc., dated July 28, 1999.(5)
(10.49) Amendment to Employment Agreement between Frederick R. Skillman,
Jr., and DBS Industries, Inc. dated September 1, 1999.(5)
(10.50) Employment Agreement between H. Tate Holt and DBS Industries, Inc.
dated June 1, 1999.(5)
(10.51) Employment Agreement between Stanton C. Lawson and DBS Industries,
Inc. dated October 18, 1999.(5)
(10.52) Employment Agreement between Randy Stratt and DBS Industries, Inc.
dated November 8, 1999.(5)
(10.53) Prime Contract for E-SAT Communications System between DBS
Industries, Inc. and Alcatel Space Industries dated October 8,
1999, and as amended on December 22, 1999.(5) (Redacted per
Confidential Treatment Request)
(10.54) Share Purchase Agreement between EchoStar DBS Corporation and DBS
Industries, Inc. dated July 30, 1999.(5)(Redacted per Confidential
Treatment Request)
(10.55) 2000 Stock Option Plan.(6)
(10.56) Common Stock Purchase Agreement between Torneaux Ltd. and DBS
Industries, Inc. dated June 2, 2000.(7)
(10.57) Amendment to Common Stock purchase Agreement between Torneaux Ltd.
and DBS Industries, Inc. dated June 30, 2000. (9)
(10.58) Stock Purchase Agreement between Courtney Benham and DBS
Industries, Inc. dated June 2, 2000. (10)
(10.59) Stock Purchase Agreement between Codera Wine Group Pension Plan and
DBS Industries, Inc. dated June 2, 2000. (10)
(10.60) Stock Purchase Agreement between Patrick Watt House Living Trust
and DBS Industries, Inc. dated June 2, 2000. (10)
(10.61) Stock Purchase Agreement between Barbara J. Drew and DBS
Industries, Inc. dated July 25, 2000. (10)
(10.62) Registration Rights Agreement between EchoStar DBS Corporation and
DBS Industries, Inc. dated December 29, 2000.
(10.63) Voting Agreement between EchoStar DBS Corporation and DBS
Industries, Inc. dated December 29, 2000.
(21.1) List of Subsidiaries of DBS Industries, Inc.
(23.1) Consent of PricewaterhouseCoopers, LLP.
(1) Previously filed in, and incorporated by reference to, Form 10-KSB for
Fiscal Years July 31, 1993, July 31, 1994, July 31, 1995 and December
31, 1995, December 31, 1996, December 31, 1997, December 31, 1998, and
December 31, 1999 or Form 8-K where indicated.
(2) Previously filed with Registration Statement on Form SB-2 filed on
September 16, 1998.
(3) Previously filed with Registration Statement on Form SB-2 filed on
November 30, 1998.
(4) Previously filed with Registration Statement on Form SB-2 filed on May
3, 1999.
(5) Previously filed in the Form 10-KSB for the Fiscal Year ended December
31, 1999.
(6) Previously filed in the Proxy Statement on Schedule 14A filed on April
11, 2000.
(7) Previously filed in the Form 8-K filed on June 15, 2000.
(8) Previously filed with Registration Statement on Form SB-2 filed on
August 11, 2000.
(9) Previously filed with Form 10-Q for period ended June 30, 2000.
(10) Previously filed with Form 10-Q for period ended September 30, 2000.
Reports on Form 8-K
On June 2, 2000, the Company filed a Form 8-K announcing the Company's common
stock purchase agreement and related agreements with Torneaux Ltd.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: March 30, 2001 DBS INDUSTRIES, INC.
By: /s/ Fred W. Thompson
--------------------
FRED W. THOMPSON, President
In accordance with the Securities Exchange Act of 1934, this Annual report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Name Title Date
FRED W. THOMPSON President, Chairman March 30, 2001
Fred W. Thompson Principal Executive Officer
MICHAEL T. SCHIEBER Director March 30, 2001
Michael T. Schieber
JEROME W. CARLSON Director March 30, 2001
Jerome W. Carlson
H. TATE HOLT Director March 30, 2001
H. Tate Holt
JESSIE J. KNIGHT, JR. Director March 30, 2001
Jessie J. Knight, Jr.
STANTON C. LAWSON Director March 30, 2001
Stanton C. Lawson Principal Financial Officer
ROY T. GRANT
Roy T. Grant Director March 30, 2001
F-1
Report of Independent Accountants
To the Board of Directors and Stockholders of
DBS Industries, Inc. and Subsidiaries:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity, and of cash
flows present fairly, in all material respects, the financial position of DBS
Industries, Inc. and Subsidiaries (a development stage company) as of December
31, 2000 and 1999, and the results of their operations and their cash flows for
the three years ended December 31, 2000 and for the period from April 25, 1990
(date of inception) to December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the consolidated
financial statements, the Company has incurred losses and negative cash flows
from operating activities since inception and will require additional financing.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans as to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
March 15, 2001
F-2
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheets
December 31,
---------------------------------
2000 1999
Assets
Current assets
Cash and cash equivalents $ 389,319 $ 282,945
Prepaid and other current assets 57,378 114,439
------------- -------------
Total current assets 446,698 397,384
------------- -------------
Furniture and equipment, net 32,393 48,211
Investments, advances and other 2,369,088 2,370,618
Satellite construction costs 12,229,907 12,072,873
Deferred stock offering costs - 673,500
------------- -------------
14,631,387 15,165,202
------------- -------------
Total assets $ 15,078,085 $ 15,562,586
============= =============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $1,482,476 $ 478,334
Customer advances 400,000 400,000
Accrued compensation 601,132 207,008
Other liabilities 179,410 253,569
------------- -------------
Total current liabilities 2,663,019 1,338,911
------------- -------------
Commitments (Notes 4 and 7)
Stockholders' equity
Series A Convertible Preferred stock,
$0.0004 par value; 35,897 shares
authorized; 25,899 issued and
outstanding at December 31, 2000
(liquidation preference $1,076,910) 10 -
Series B Convertible Preferred stock,
$0.0004 par value; 550 authorized;
440 issued and outstanding at
December 31, 2000 - -
Common stock, $0.0004 par value;
50,000,000 shares authorized;
15,601,143 and 14,354,911 issued
and outstanding at December 31, 2000
and 1999, respectively 6,260 5,762
Capital in excess of par value 29,552,935 26,968,174
Warrants 2,911,654 1,890,436
Note receivable from stockholder - (60,000)
Deferred stock compensation (450,129) (1,532,582)
Deficit accumulated during the
development stage (19,605,664) (13,048,115)
------------- -------------
Total stockholders' equity 12,415,066 14,223,675
------------- -------------
Total liabilities and
stockholders' equity $ 15,078,085 $ 15,562,586
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Operations
[Enlarge/Download Table]
April 25, 1990
December 31, (Inception) to
------------------------------------------- December 31,
2000 1999 1998 2000
Revenue $ - $ - $ - $ 161,420
------------ ------------ ------------ -------------
Cost and operating expenses
Cost of revenue - - - 127,580
Marketing and sales 1,721,725 922,623 - 2,644,348
General and administrative 4,037,509 4,059,310 2,198,701 16,758,508
Research and development 736,775 1,045,296 797,147 4,748,789
------------ ------------ ------------ -------------
6,496,009 6,027,229 2,995,848 24,279,225
------------ ------------ ------------ -------------
Loss from operations (6,496,009) (6,027,229) (2,995,848) (24,117,805)
------------ ------------ ------------ -------------
Other income (expense)
Interest, net (59,940) 113,336 32,421 (656,063)
Equity in loss of investees, net - - (100,143) (512,920)
Gain (loss) on sale of investments - - (228,323) 5,829,218
Other, net - - - (56,634)
------------ ------------ ------------ -------------
(59,940) 113,336 (296,045) 4,603,601
------------ ------------ ------------ -------------
Loss before provision for income taxes
and minority interest (6,555,949) (5,913,893) (3,291,893) (19,514,204)
Provision for income taxes (1,600) (1,600) (1,600) (100,035)
------------ ------------ ------------ -------------
Loss before minority interest (6,557,549) (5,915,493) (3,293,493) (19,614,239)
Minority interest in income of consolidated
subsidiaries - - - 8,575
------------ ------------ ------------ -------------
Net loss $ (6,557,549) $ (5,915,493) $(3,293,493) $(19,605,664)
============ ============ ============ =============
Basic and diluted net loss per share $ (0.44) $ (0.45) $ (0.47)
============ ============ ============ =============
Weighted average number of shares of common
stock, basic and diluted 14,832,155 13,088,723 6,979,818
============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
[Enlarge/Download Table]
Deficit
Preferred Stock Common Stock Accumulated Total
--------------- -------------- Capital in Deferred During the Stock-
Par Par Excess of Notes Stock-Based Development holders'
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
Balance at December
31, 1990, of DBSN
as restated
pursuant to the
merger on
December 2, 1992 301,000 $ 120 $ 46,375 $ - $ - $ - $(219,990) $ (173,495)
Issuance of common
stock for
professional
services at $1.01
to $2.14 per share 520,000 208 47,542 - - - - 47,750
Issuance of common
stock for cash
at $.01 to $1.00
per share 244,500 98 124,507 - - - - 124,605
Stock issue costs
for the twelve
months ended
December 31, 1991 - - (15,774) - - - - (15,774)
Net loss for the
twelve months
ended
December 31, 1991 - - - - - - (115,339) (115,339)
------------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1991 1,065,500 426 202,650 - - - (335,329) (132,253)
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common
stock for cash
at $.01 to $1.00
- per share 1,317,290 527 538,998 - - - - 539,525
Issuance of common
stock for
professional
services at
$.01 to $.10
- per share 214,240 86 12,338 - - - - 12,424
Issuance of common
stock in payment
of stockholder
loans: June 1992
at $.01 per share 230,000 92 2,208 - - - - 2,300
Net loss for the
seven months ended
July 31, 1992 - - - - - - (90,750) (90,750)
------------------------------------------------------------------------------------------------------------------------------------
Balance at
July 31, 1992 2,827,030 1,131 756,194 - - - (426,079) 331,246
------------------------------------------------------------------------------------------------------------------------------------
Shares of Fi-Tek IV,
Inc. from
August 3, 1989
(inception) through
December 2, 1992 817,540 327 155,450 - - - - 155,777
Issuance of common
stock for cash at
$.01 to $3.20 per
share 1,313,926 527 998,088 - - - - 998,615
Issuance of common
stock for interest
at $5.00 per share 10,000 4 4,996 - - - - 5,000
Issuance of common
stock for JPS
common stock on
September 11, 1992
at $.80 per share 61,447 24 49,134 - - - - 49,158
Issuance of common
stock for
professional
services on
September 11, 1992
at $.10 per share 6,679 3 665 - - - - 668
F-5
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Deficit
Preferred Stock Common Stock Accumulated Total
--------------- -------------- Capital in Deferred During the Stock-
Par Par Excess of Notes Stock-Based Development holders'
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
Issuance of common
stock in exchange
for DBSC common
stock on
October 9, 1992,
at $2.00 per share 6,375 2 12,748 - - - - 12,750
Redemption of 97,450
common stock
warrants on
October 2, 1992, at
$8.00 per share - - (19,490) - - - - (19,490)
Issuance of common
stock
December 2, 1992,
at closing of
acquisition of DBSN
as a finder's
fee at $.0004 per
share 25,000 10 - - - - - 10
Issuance of common
stock for Axion
common stock during
March 1993 at
$1.60 per share 50,000 20 79,980 - - - - 80,000
Issuance of common
stock for DBSC
common stock on
July 2, 1993, at
$1.60 per share 133,306 53 213,238 - - - - 213,291
Stock issue costs for
the period from
August 1, 1992
through July 31, 1993 - - (6,374) - - - - (6,374)
Net loss for the
twelve months ended
July 31, 1993 - - - - - - (755,040) (755,040)
------------------------------------------------------------------------------------------------------------------------------------
Balance at
July 31, 1993 5,251,303 2,101 2,244,629 - - - (1,181,119) 1,065,611
------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
[Enlarge/Download Table]
Deficit
Preferred Stock Common Stock Accumulated Total
--------------- ------------ Capital in Deferred During the Stock-
Par Par Excess of Notes Stock-Based Development Holder
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
------------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1993 - - 5,251,303 2,101 2,244,629 - - - (1,181,119) 1,065,611
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common
stock for cash
at $4.00 per
share(August 1993
through April 1994) 102,256 41 411,943 - - - - 411,984
Stock issued in
exchange for 46%
of JPS stock on
November 19, 1993 3,379 1 10,137 - - - - 10,138
Stock issued for
professional
services:
January 28, 1994,
at $3.60
per share 5,331 2 19,188 - - - - 19,190
July 29, 1994,
at $2.00
per share 3,833 2 7,663 - - - - 7,665
Stock issued due
to exercise of
warrants, at $2.00
per share
(March and April 1994) 2,500 1 4,999 - - - - 5,000
Stock issued for
interest on
July 31, 1994,
at $2.00
per share 1,000 - 2,000 - - - - 2,000
Purchase of shares
of common
stock on
January 28, 1994,
at $3.20 per share (1,563) - (5,000) - - - - (5,000)
Reacquisition of
common stock
pursuant to sale of
investment in Axion
in May 1994, at $1.60
per share (50,000) - (80,000) - - - - (80,000)
Net loss for the twelve
months
ended July 31, 1994 - - - - - - (26,909) (26,909)
------------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1994 5,318,039 2,148 2,615,559 - - - (1,208,028) 1,409,679
------------------------------------------------------------------------------------------------------------------------------------
Stock issued for services:
November 30, 1994,
at $1.88
per share 10,000 4 18,796 - - - 18,800
May 15, 1995,
at $2.00
per share 10,724 4 21,443 - - - 21,447 -
July 15, 1995,
at $1.60
per share 11,373 5 18,192 - - - 18,197
Net loss for the
twelve months ended
July 31, 1995 - - - - - - (1,284,558)(1,284,558)
------------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1995 5,350,136 2,161 2,673,990 - - - (2,492,586) 183,565
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common
stock for 1%
JPS common stock on
September 21, 1995
at $1.20 per share 9,450 4 11,336 - - - - 11,340
F-7
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Deficit
Preferred Stock Common Stock Accumulated Total
--------------- ------------ Capital in Deferred During the Stock-
Par Par Excess of Notes Stock-Based Development Holder
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
Issuance of common
stock for 20%
Seimac Limited
common stock on
December 13, 1995
at $4.00 per share 165,519 66 662,010 - - - - 662,076
Issuance of common
stock for
professional services
at $5.60 per share 2,934 1 16,427 - - - - 16,428
Net loss for the twelve
months ended
December 31, 1995 - - - - - - (662,877) (662,877)
------------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1995 5,528,039 2,232 3,363,763 - - - (3,155,463) 210,532
------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-8
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
[Enlarge/Download Table]
Deficit
Preferred Stock Common Stock Accumulated Total
--------------- -------------- Capital in Deferred During the Stock-
Par Par Excess of Notes Stock-Based Development holders'
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
------------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1995 - - 5,528,039 2,232 3,363,763 - - - (3,155,463) 210,532
------------------------------------------------------------------------------------------------------------------------------------
Warrants issued on
January 13, 1996,
to purchase 75,000 shares
of common stock for
services rendered at an
exercise price of $7.30
per share - - - 112,500 - - - 112,500
Issuance of common stock
for cash January 15, 1996,
at $4.00 per share, less
noncash issuance cost of
$63,900 200,000 80 736,020 - - - - 736,100
February 15, 1996, at $5.20
per share, less noncash
issuance cost of $19,999 38,462 15 179,988 - - - - 180,003
Stock issued for services
January 1 - June 30, 1996,
at $3.75 per share 22,743 9 85,277 85,286
August 15, 1996, at $4.80
per share 6,018 2 28,884 28,886
September 21, 1996, at
$5.60 per share 4,821 2 26,996 26,998
July 1 - December 31, 1996,
at $2.00 per share 7,605 3 15,207 15,210
Placement fee associated
with January 15 and
February 15, 1996,
issuances settled through
issuance 19,821 8 83,891 83,899
of common stock
Net loss for the twelve months
ended December 31, 1996 - - - - - - (3,752,583)(3,752,583)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 5,827,509 2,351 4,520,026 112,500 - - (6,908,046)(2,273,169)
------------------------------------------------------------------------------------------------------------------------------------
Stock issued for services
January 31, 1997, at $1.69
per share 5,088 2 8,586 8,588
February 14, 1997, at $1.75
per share 4,701 2 8,225 8,227
February 28, 1997, at $2.00
per share 7,918 3 15,834 15,837
March 31, 1997, at $1.63
per share 302 - 491 491
April 10, 1997, at $2.00
per share 7,500 3 14,997 15,000
April 30, 1997, at $1.50
per share 332 - 498 498
June 30, 1997, at $1.13
per share 14,578 6 16,394 16,400
July 9, 1997, at $0.75
per share 15,000 6 11,244 11,250
Net income for the twelve
months ended December 31, 1997 - - - - - - 3,068,917 3,068,917
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 5,882,928 2,373 4,596,295 112,500 - - (3,839,129) 872,039
------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
[Enlarge/Download Table]
Preferred Deficit
Stock Common Stock Accumulated Total
-------------- ----------------- Capital in Deferred During the Stock-
Par Par Excess of Notes Stock-Based Development holders'
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
------------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1997 - - 5,882,928 2,373 4,596,295 112,500 - - (3,839,129) 872,039
------------------------------------------------------------------------------------------------------------------------------------
Common stock issued for
cash, on April 16, 1998,
at $2.00 per share 102,000 41 203,959 - - - - 204,000
Common stock issued upon
exercise of options, on
June 11, 1998, at $1.44
per share 12,500 5 17,964 17,969
Common stock issued (voided)
in connection with
services rendered
February 12, 1998, at $0.53
per share 26,209 10 13,906 13,916
April 1, 1998, at $3.25
per share 10,000 4 32,496 32,500
May 14, 1998, at $3.75
per share 13,646 6 51,168 51,174
May 14, 1998, at $3.75
per share (22,743) (9) (85,277) (85,286)
Common stock issued for cash
in August and September 1998
at $2.00 per share net of
issuance costs of $485,826 2,800,000 1,120 5,113,054 5,114,174
Common stock issued upon
exercise of options at $0.53
per share 17,202 6 9,128 9,134
Fair value of Common Stock
warrants committed to
representing stock issuance
costs (973,000) 973,000 -
Fair value of options granted
in connection with services
rendered 159,000 159,000
Common stock issued for
exercise of options $0.60 per
share 10/1/98 37,500 15 22,485 22,500
Common stock returned to
investees at $2.00 per share
in October 1998 (400,000) (160) (799,840) (800,000)
Common stock issued upon
exercise of options $0.531 per
share in October 1998 94,375 38 50,075 50,113
Common stock issued representing
stock issuance costs 7,500 3 14,997 15,000
Net loss for the year ended
December 31, 1998 - - - - - - (3,293,493)(3,293,493)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 8,581,117 3,452 8,426,410 1,085,500 - - (7,132,622) 2,382,740
------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
[Enlarge/Download Table]
Preferred Deficit
Stock Common Stock Accumulated Total
------------- --------------- Capital in Deferred During the Stock-
Par Par Excess of Notes Stock-Based Development holders'
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
------------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1998 - - 8,581,117 3,452 8,426,410 1,085,500 - - (7,132,622) 2,382,740
------------------------------------------------------------------------------------------------------------------------------------
Common stock issued for
cash February 1999 at
$2.50, net of issuance
costs of $2,104 50,000 20 122,876 122,896
February 1999 at $3.00,
net of issuance costs
of $25,246 500,000 200 1,474,554 1,474,754
April 1999 at $3.00 per
share 1,666,667 667 4,999,333 5,000,000
Common stock issued upon
exercise of options
January, March, August,
and December 1999
at $0.53 per share 195,227 78 103,557 103,635
February 1999 at $0.58 12,625 5 7,368 7,373
January and February 1999
at $0.60 26,667 11 15,990 16,001
February 1999 at $1.44 37,500 15 53,891 53,906
February and March 1999
at $1.45 200,000 80 289,920 290,000
January, February, and
March 1999 at $1.50 195,084 78 292,548 292,626
January 1999 at $2.80 8,125 3 22,747 22,750
Common stock issued upon
exercise of warrants
January 1999 at $0.50
per share 200,000 80 99,920 100,000
January 1999 at $1.44
per share 11,080 4 15,923 15,927
January and February 1999
at $1.50 per share 64,380 26 183,251 (86,707) 96,570
March 1999 at $2.00
per share 7,500 2 24,673 (9,675) 15,000
February and March 1999
at $2.10 per share 33,700 13 111,534 (40,777) 70,770
January - March 1999 at
$3.00 per share, net of
issuance costs of $123,80 2,452,000 983 7,239,689 (8,475) 7,232,197
March 1999 at $3.50
per share net of issuance
costs of $3,344 50,000 20 172,035 172,055
Expiration of warrants 15,730 (15,730)
Deferred stock compensation 2,490,337 (2,490,337) -
Options issued in connection
with services rendered 751,497 751,497
Amortization of deferred stock
compensation 957,755 957,755
Warrants issued in connection
with services rendered in
November and December 1999 22,800 22,800
Issuance of common stock in
connection with Litigation
settlement in March 1999
at $5.00 per share 63,239 25 324,391 324,416
Fair value of Common Stock
warrants committed to
representing deferred stock
issuance costs 673,500 673,500
in December 1999 -
Warrant issued in connection
with stock issuance costs (270,000) 270,000 -
Note Receivable from
Stockholder (60,000) (60,000)
Retirement of Treasury Stock -
Net loss for the year ended
December 31, 1999 (5,915,493)(5,915,493)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 14,354,911 5,762 26,968,174 1,890,436 (60,000) (1,532,582) (13,048,115) 14,223,675
------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-11
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
[Enlarge/Download Table]
Preferred Deficit
Stock Common Stock Accumulated Total
------------- ----------------- Capital in Deferred During the Stock-
Par Par Excess of Notes Stock-Based Development holders'
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
------------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1999 - - 14,354,911 5,762 26,968,174 1,890,436 (60,000) (1,532,582) (13,048,115) 14,223,675
------------------------------------------------------------------------------------------------------------------------------------
Common stock issued
for cash
January 2000
under Employee
Stock Purchase
Plan at $1.83 490 900 900
July 2000
under Employee
Stock Option
Plan at $1.43 6,961 3 9,951 9,954
June 2000
at $1.00 166,298 67 166,231 166,298
July 2000
at $.75 133,333 53 99,946 100,000
September 2000
at $.9863 84,490 34 83,299 83,333
October 2000
at $.8805 63,092 25 55,531 55,556
Common stock issued
upon exercise of options
February 2000
at $2.1875 15,000 6 32,807 32,813
March 2000
at $.531 15,000 6 7,959 7,965
March 2000
at $1.45 50,000 20 72,480 72,500
March 2000
at $1.50 10,000 4 14,996 15,000
April 2000
at $.5840 5,500 2 3,210 3,212
June 2000
at $.60 37,500 15 22,485 22,500
June and August 2000
at $.7235 10,000 4 7,231 7,235
December 2000
at $.584 1,375 1 802 803
Cash received for
common stock to
be issued 600,000 600,000
Common stock issued
upon exercise of
warrants
March 2000
at $1.50 2,495 1 5,001 5,002
September 2000
at $.70 125,000 50 87,450 87,500
Common stock issued
in connection with
services rendered
January 2000
at $2.2937 4,687 2 10,748 10,750
June 2000
at $1.50 66,667 26 99,974 100,000
September 2000
at $1.25 200,000 80 249,920 250,000
December 2000
at $0.5625 65,569 26 36,856 36,883
July 2000
at $2.5875 3,672 1 9,500 9,501
Series A Preferred
Shares issued
January - July
2000 at $30.00 35,897 14 1,076,896 1,076,910
Series B Preferred
share issued in
October, 2000 at
$1,000 440 0 440,000 440,000
Stock issuance costs -
January to December 2000 (636,576) (636,576)
The accompanying notes are an integral part of these consolidated financial
statements.
F-12
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
[Enlarge/Download Table]
Preferred Commmon Deficit
Stock Stock Accumulated
------------- ------------- Capital in Deferred During the Total
Par Par Excess of Notes Stock-Based Development Stockholders'
Shares Value Shares Value Par Value Warrants Receivable Compensation Stage Equity
Series A Preferred
Shares converted
September 2000
at $1.6812 (1,666) (1) 29,728 12 (11)
Series A Preferred
Shares converted
October 2000
at $1.6812 (1,666) (1) 29,728 12 (11)
Series A Preferred
Shares converted
November 2000
at $1.70 (3,333) (1) 58,817 24 (23)
Series A Preferred
Shares converted
November 2000
at $1.6438 (3,333) (1) 60,830 24 (23)
Options and Warrants
issued in connection
with services rendered 30,828 693,919 724,747
Warrants issued in
connection with
stock issuance costs 327,299 327,299
Amortization of
deferred stock
compensation 1,078,856 1,078,856
Cancellation of
deferred stock
compensation (3,597) 3,597 -
Repayment of Note
Receivable from
Stockholder 60,000 60,000
Net loss for the
year ended
December 31, 2000 (6,557,549) (6,557,549)
------------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 2000 26,339 10 15,601,143 6,260 29,552,935 2,911,654 - (450,129) (19,605,664) 12,415,066
------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-13
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows
[Enlarge/Download Table]
April 25, 1990
Year Ended December 31, (Inception) to
---------------------------------------- December 31,
2000 1999 1998 2000
Cash flows from operating activities
Net loss $(6,557,549) $(5,915,493) $(3,293,493) $(19,605,664)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 16,866 15,719 73,122 463,841
Minority interest's share of net loss - - - (8,575)
Noncash charges 673,500 - 573,999 1,758,045
Amortization of deferred stock-based compensation 1,078,857 957,755 - 2,036,612
Issuance of options and warrants for services rendered 1,021,218 774,298 - 1,795,516
Issuance of common stock in connection
with litigation settlement - 324,391 - 324,391
Equity in loss of investees, net - - 100,143 529,972
Loss (gain) on sale of investments - - 228,323 (5,829,218)
Allowance for losses on advances - - 216,932 216,932
Common stock issued as payment for interest - - - 7,000
Decrease (increase) in accounts receivable and -
other assets 57,060 (43,301) 48,127 (38,175)
Increase (decrease) in accounts payable and
accrued liabilities 1,324,107 204,675 (108,264) 1,934,022
Increase in customer advances - - - 400,000
Net cash used in operating activities (2,385,941) (3,681,956) (2,161,111) (16,015,301)
Cash flows from investing activities
Proceeds from sale of investment - - 199,940 1,099,940
Proceeds from Loral settlement - - - 3,573,677
Purchase of fixed assets - (34,394) (5,523) (145,441)
Satellite construction payments (157,034) (10,800,790) (1,272,083) (12,229,907)
Organization costs - - - (28,526)
Repayment (issuance) of note receivable from stockholder 60,000 (60,000) - (31,187)
Purchase of interest in Continental - - - (2,292,409)
Investments and advances 482 (1,518,081) (407,292) (2,726,325)
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 used in investing activities (96,551) (12,413,265) (1,484,958) (12,337,057)
Cash flows from financing activities
Repayment of borrowing under credit line - - - (300,000)
Issuance of debentures - - - 4,817,501
Issuance of common stock 2,008,472 15,240,555 4,997,226 25,399,769
Issuance of Preferred Stock 1,216,970
Redemption of common stock warrants - - - (19,490)
Stock issuance costs (636,576) (154,100) (442,500) (1,290,411)
Purchase of shares - - - (5,000)
Issuance (Payment) of debentures - - - (1,168,445)
Proceeds from stockholders' loans - - - 442,750
Payment of stockholders' loans - - - (351,967)
Net cash provided by financing activities 2,588,867 15,086,455 4,554,726 27,524,708
Net increase (decrease) in cash 106,374 (1,008,766) 908,657 389,319
Cash and cash equivalents, beginning of period 282,945 1,291,711 383,054 -
Cash and cash equivalents, end of period $ 389,319 $ 282,945 $1,291,711 $ 389,319
Supplemental disclosures of cash flow information
Interest $ 59,940 $ 4,672 $ - $ 84,832
Income taxes $ 1,600 $ 1,600 $ 1,600 $ 23,420
The accompanying notes are an integral part of these consolidated financial
statements.
F-14
DBS Industries, Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. Organization and Basis of Presentation
These consolidated financial statements include the accounts of DBS
Industries, Inc. (the "Company"), and its wholly-owned subsidiaries, Global
Energy Metering Service, Inc. ("GEMS"), and NewStar Limited ("NewStar").
Intercompany transactions and balances have been eliminated in
consolidation.
The Company was organized as a Delaware corporation on August 3, 1989.
Since inception the Company has been in the development stage. The
Company's current business plan is to develop a data communication service
using a constellation of low earth orbit satellites and the Internet. The
Company's 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 as reflected in these consolidated financial
statements. Accordingly, the Company has relied primarily upon obtaining
equity capital and debt financing to support its operations. The Company
does not expect revenue to exceed costs and expenses in 2001 and,
accordingly, will continue to incur losses and negative cash flows from
operating activities. To address financing needs, the Company is pursuing
various financing alternatives. These circumstances raise substantial doubt
about the Company's ability to continue as a going concern.
During fiscal 2000, the Company raised approximately $2.5 million, net of
stock issuance costs, from warrant exercises and sale of shares of common
and preferred stock. However, the Company will need substantial additional
capital, at least $120 million, to construct its proposed satellite
constellation. Such financing is likely to result in a significant dilution
in the equity interests of the current stockholders. The construction of
the first two of the six planned satellites was required to commence by
April 1999 pursuant to the terms of the Federal Communications Commission
(FCC) license granted to E-SAT. The Company notified the FCC that it has
achieved this milestone by entering into a construction contract on March
31, 1999. These financial statements do not reflect any adjustments that
might result from the outcome of this uncertainty.
GEMS is a Delaware corporation in the development stage whose primary
activity has been the development of satellite and radio systems for use in
automating the control and distribution of gas and electric power by
utility companies. GEMS had no significant activity during fiscal 2000.
In January 1998, the Company created NewStar Limited, a wholly-owned
subsidiary organized under the Laws of the Republic of Bermuda to market
and sell our service to international customers.
The Company's investments in E-SAT Corporation, in which the Company has an
ownership interest of 80.1%, are accounted for using the equity method. The
Company's interest in Seimac Limited was disposed of during 1998 (see Note
3).
F-15
2. Summary of Significant Accounting Policies
Hereafter, unless otherwise specified, all references to the "Company"
include DBS Industries, Inc. and its wholly-owned subsidiaries.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Such estimates
include the recoverability of satellite construction costs and the
investment in ESAT. Actual results could differ from those estimates.
Cash equivalents
The Company considers all money market instruments and other highly
liquid investments with original maturities of three months or less to
be cash equivalents.
Depreciation
Furniture and equipment are depreciated over the estimated useful
lives of the assets ranging from five to seven years using the
straight-line method of depreciation. When assets are disposed of, the
related cost and accumulated depreciation are removed from the books
and the resulting gain or loss is recognized in the year of disposal.
Satellite construction costs
Satellite construction costs will be depreciated over the useful
economic lives of the satellites once they enter into service.
The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of". The Company reviews satellite
construction costs and other long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. The amount of the impairment loss,
if any, would be calculated based on the excess of the carrying amount
of the assets over their fair market value.
Goodwill
Goodwill is amortized using the straight-line method over five years.
Amortization expense charged to operations for the years ended
December 31, 2000, 1999, and 1998, was $1,047, $2,515, and $5,564
respectively.
Income taxes
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, Accounting for Income
Taxes. Under SFAS No. 109, deferred income tax liabilities and assets
are determined based on the difference between the financial reporting
amounts and tax bases of assets and liabilities that will result in
taxable or deductible amounts in
F-16
the future. Such amounts are based on enacted tax laws and rates in
effect for the years in which the differences are expected to affect
taxable income, net operating loss and tax credit carryforwards.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amounts expected to be realized. Income tax expense
is the tax payable for the period and the change during the period in
deferred tax assets and liabilities.
Stock-Based Compensation
The company accounts for stock-based employee compensation agreements
in accordance with the provisions of Accounting Principles Board
Opinion No.25, Accounting for Stock Issued to Employees (APB No.25)
and complies with the disclosure provisions of Statement of Financial
Accounting Standards No.123, Accounting for Stock-Based Compensation
(SFAS 123). Under APB No.25, compensation expense is based on the
difference, if any, between the fair value of the Company's stock and
the exercise price of the option on the measurement date, which is
typically the date of grant.
In March of 2000, the Financial Accounting Standards Board ("FASB")
issued FIN 44, "Accounting for Certain Transactions Involving Stock
Compensation", an interpretation of APB No.25. Fin 44 was effective
July 1, 2000. The implementation of FIN 44 did not have a material
impact on the Company's financial statements.
The Company accounts for options granted to non-employees under SFAS
No.123. Under SFAS No.123, options are recorded at their fair value on
the measurement date, which is typically the date of grant.
Net loss per share
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings per Share, which establishes standards for computing
and presenting earnings (loss) per share. Under these standards, basic
earnings per share is computed based on the weighted average number of
common shares outstanding and excludes any potential dilution; diluted
earnings per share reflects diluted effects of all outstanding common
stock equivalents. Options and warrants are excluded from the EPS
calculation in loss years due to their antidilutive effect. Diluted
net loss per share does not include the effect of the following
potential common shares:
Year Ended December 31,
------------------------------------
2000 1999 1998
Shares issuable persuant
to options and warrants: 8,103,582 6,150,994 6,220,695
Recently issued accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities".
SFAS No. 133 established accounting and
F-17
reporting standards for derivative instruments, including derivative
instruments embedded in other contracts, and for hedging activities.
SFAS No. 133, as amended by SFAS No. 137, "Deferral of the Effective
Date of FASB Statement No. 133", is effective for fiscal years
beginning after June 15, 2000. The adoption of this statement on
January 1, 2001 did not have a material effect on our financial
position or results of operations.
Reclassifications
Certain prior period balances have been reclassified to conform to the
current year's presentation.
Segment reporting
We have determined that we have a single reportable operating segment
as defined by SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information".
Comprehensive income
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130").
SFAS No. 130 established standards for reporting and display of
comprehensive income and its components and is effective for periods
beginning after December 15, 1997. The Company had no other
comprehensive income for all periods presented.
3. Investments In and Advances to Affiliated Companies
Following is a summary of the Company's significant investment
activities:
E-SAT, Inc. (E-SAT)
In October 1994, the Company and EchoStar formed E-SAT for the purpose
of filing with the FCC for a license to operate a low earth orbit
satellite system. E-SAT filed with the FCC on November 16, 1994. The
Company holds an 80.1% interest in E-SAT. The Company's total
investments in, and advances to, E-SAT as of December 31, 2000 and
1999 was $851,490 for both years. The investment is accounted for
using the equity method. The Company's equity in losses of E-SAT for
the years ended December 31, 2000 and 1999, were $0.
On March 31, 1998, the Federal Communications Commission approved
E-SAT's application for a low earth orbit satellite license. E-SAT is
required to meet certain milestones and other covenants in order to
maintain its license.
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 on March 31, 1999.
On July 30, 1999, the Company entered into an agreement with EchoStar
under which it will receive 60.1% of E-SAT's shares from EchoStar in
exchange for consideration, including the grant of rights to use up to
20% of the satellite capacity of the E-SAT system by EchoStar. As a
result of this transaction, which was subsequently approved by the
Federal Communications Commission, the Company now owns 80.1% of the
E-SAT shares. In connection with the
F-18
negotiations of the share purchase agreement with EchoStar, the
Company paid $1,517,187 to a consultant during 1999 and capitalized
such costs in the E-SAT investment account.
Seimac Limited
On November 30, 1995, the Company acquired 232,829 shares representing
20% of the voting shares of common stock of Seimac Limited, a Canadian
company, pursuant to a stock purchase and exchange agreement in
exchange for 165,519 shares of common stock of the Company, valued at
$662,010. The Company's investments of $662,010 was $464,255 in excess
of the Company's proportionate share of the net book value of Seimac
as of November 30, 1995. This excess was amortized over a period of
five years. The amortization of this excess book value amounted to
$30,949 for the year ended December 31, 1998. This investment was
accounted for using the equity method.
For the year ended December 31, 1998, the Company has recorded its
proportionate share of Seimac Limited's net income of $34,381.
On April 30, 1998, the Company sold its entire interest consisting of
232,829 Seimac shares in exchange for $200,000 in cash and $51,417 in
forgiven debt. The Company recorded a loss of approximately $228,000
in connection with this transaction.
4. Satellite Construction Costs
During the construction of the System, the Company is capitalizing all
design, engineering, launch and construction costs. Such costs
amounted to approximately $12.2 million as of December 31, 2000.
On December 15, 1998, the Company and 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. Upon signing of the MOU, the Company made a $1
million advance payment to Alcatel.
In January and February 1999, the Company made additional payments to
Alcatel totaling $1 million. On March 31, 1999, the Company signed
construction and launch contracts with Surrey Satellite Technology
Limited ("Surrey") and Eurockot, respectively, and made advance
payments of $7.8 million in April 1999 and $2.0 million in July 1999.
Total payments under these cancelable contracts will amount to
approximately $47 million through January 2001. In July 1999, the
Company, Surrey and Eurockot reached agreements under which $3.2
million of the required milestone payments due in July 1999 totaling
$4.8 million were deferred to yet to be agreed upon dates.
On October 8, 1999, the Company and Alcatel entered into an agreement
under which Alcatel will serve as prime contractor for the
construction of the Company's low earth orbit satellite communications
system. This agreement becomes effective upon the Company's payment of
$14.1 million to Alcatel.
5. 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
F-19
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 December 31, 1998, this purchase order had been
suspended by both parties when the Argos System became unavailable.
The $400,000 in milestone payments received is reported as customer
advances on the accompanying balance sheet. These milestone payments
could be subject to refund in whole or in part.
6. Commitments
Operating leases
The Company and its wholly-owned subsidiaries lease their facilities
under noncancelable operating leases which run concurrently and expire
in July 2003. Minimum future rental payments under the leases are as
follows:
Year Ending December 31,
2001 $ 148,234
2002 148,234
2003 86,470
---------------
$ 382,938
===============
Total rent expense was $226,268, $150,084, and $82,615 for the years
ended December 31, 2000, 1999 and 1998, respectively.
Other
Refer to Note 4 for certain contract commitments.
7. Stockholders' Equity
Preferred stock
The Company's Certificate of Incorporation, as amended in 1999,
authorizes the issuance of 5,000,000 shares of preferred stock with
par value of $0.0004 per share. The Board of Directors of the Company
is authorized to issue preferred stock from time to time in series and
is further authorized to establish such series, to fix and determine
the variations in the relative rights and preferences as between the
series, and to allow for the conversion of preferred stock into common
stock.
Common stock
The Company's Certificate of Incorporation, as amended in 1999,
authorizes the issuance of 50,000,000 shares of common stock with a
par value of $0.0004 per share. Each record holder of common stock is
entitled to one vote for each share held on all matters properly
submitted to the
F-20
stockholders for their vote. Cumulative voting of the election of
directors is not permitted by the Certificate of Incorporation.
Equity transactions with non-employees
Preferred Stock Transactions
During fiscal 2000, the Company sold to accredited investors an
aggregate of 35,897 shares of its Series A Convertible Preferred Stock
at $30 per share, for an aggregate placement of $1,076,910. The shares
of preferred stock have a liquidation preference of $30.00 per share
and were initially convertible, at the option of the holder, into ten
shares of our common stock, or at a rate of $3.00 per common share.
Per the conversion terms, the conversion rate was adjusted to a range
between $1.6438 to $1.8625, based upon the 5-day average closing price
of the Company's common stock three months after the shares were
issued, because the Company's common stock was trading below $3.00 per
share. Commissions were paid to one placement agent in the aggregate
amount of approximately $7,000, plus a warrant was issued in July 2000
to the placement agent to purchase 57,586 shares of common stock at
the exercise price of $3.00 per share. As of December 31, 2000, 25,899
shares of Series A Preferred Shares remain outstanding. Accreted
dividends totaled $31,510, based upon a 5% dividend rate per annum.
On October 6, 2000, the Company received from accredited investors
proceeds of $400,000 from the sale in a private placement of (1) 400
shares of Series B Convertible Preferred Stock, (2) warrants to
purchase 83,660 shares of Common Stock with an exercise price of
$1.052 per share and (3) warrants to purchase 83,660 shares of Common
Stock with an exercise price of $1.434 per share. During the first 180
days following October 6, 2000, the Series B Preferred Stock may not
be converted; and the Company has the right to redeem these shares if
the Company repays the purchase price plus an additional 5-7%
depending on repayment date, plus dividends at a rate of 10% per
annum. After 180 days following October 6, 2000, the Series B
Preferred Stock are convertible into Common Stock at the lesser of (1)
approximately $.96 per share which was the closing bid price at the
time of the purchase or (2) 80% of the average of the three lowest
closing bid prices of the Common Stock for the 20-day trading period
prior to the conversion date. The Company also has the obligation to
register the Common Stock underlying the warrants and, after 180 days,
Common Stock underlying any redeemed Series B Preferred Stock. For
this transaction, an agent received a fee of 40 shares of Series B
Preferred Stock and warrants to purchase 120,000 shares of Common
Stock of the Company with an exercise price of $1.052 per share. As of
December 31, 2000, 440 shares of Series B Preferred Shares remain
outstanding. During fiscal 2000 accreted dividends totaled $10,511.
Common Stock Transactions
On January 13, 1996, the Company issued warrants for the purchase of
75,000 shares of the Company's Common Stock at an exercise price of
$7.30. On December 31, 1997, the Company replaced these with new
warrants to purchase 100,000 shares of the Company's Common Stock at
an exercise price of $1.44. These warrants were issued for services
rendered and are exercisable through January 2006. As of December 31,
2000, none of these warrants have been exercised.
On July 9, 1997, the Company issued warrants for the purchase of
200,000 shares of the Company's Common Stock at an exercise price of
$0.50 per share. These warrants were issued in connection with a
$100,000 short-term loan made by a stockholder of the Company. As of
December 31, 1997, the loan had been repaid. These warrants were
exercised during 1999.
F-21
In April 1998, the Company granted options to two consulting firms to
purchase 400,000 and 233,334 shares of the Company's Common Stock at
prices of $1.45 and $1.50 per share, respectively. These options have
terms of five years and vest over a one-year period.
In June 1998, the Company issued 102,000 shares of its Common Stock at
a price of $2.00 per share. In connection with this stock offering,
the Company issued warrants to purchase 102,000 shares of the
Company's Common Stock at an exercise price of $3.00 per share through
June 30, 2001.
In July 1998, the Company's president was named as a defendant in a
lawsuit filed by a firm claiming that it was promised shares of the
Company's Common Stock. In March 1999, the Company settled this matter
by issuing 63,239 shares of the Company's Common Stock, valued at
approximately $324,000, and paying $15,000 in cash to the plaintiff.
During the six months ended December 31, 1998, the Company issued
2,800,000 units each consisting of a share of Common Stock at a price
of $2.00 per share and a warrant to purchase a share of Common Stock
at an exercise price of $3.00. In connection with this stock offering,
the Company incurred the following stock issuance costs: (i) cash
payments of $442,500, (ii) 7,500 shares of Common Stock with a fair
value of $15,000, and (iii) warrants to purchase 728,000 shares of the
Company's Common Stock at exercise prices varying from $1.50 to $3.00.
The fair value of such warrants amounted to $973,000 and was recorded
as a separate element of the Company's equity.
In October 1998, at the request of two stockholders due to changes in
their financial condition, the Company rescinded stock purchase
agreements relating to 400,000 units and refunded $800,000 in proceeds
to the two stockholders.
In February 1999, the Company issued (a) 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, (b)
50,000 units consisting of a share of common stock at a price of $2.50
per share and a warrant to purchase a share of Common Stock at an
exercise price of $3.50. Sale of these units resulted in gross
proceeds to the Company of approximately $1.6 million. In connection
with this offering, the Company granted warrants to purchase 75,000
shares of the Company's Common Stock at an exercise price of $3.75.
Such grant represented stock issuance costs and therefore, its fair
value of $270,000 was recorded as an offset against the proceeds of
the offering.
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.
During April 1999, Surrey and Eurockot purchased 1,666,667 shares of
the Company's Common Stock for a total $5 million in cash.
During 1999, the Company granted options and warrants to purchase
347,273 shares of the Company's Common Stock at exercise prices
ranging from $0.79 to $2.75 to several service providers. The fair
value of such options and warrants, which amounted to approximately
$774,000, was recorded as an expense during 1999. The following
variables were used to determine the fair value of such instruments
under the Black-Scholes option pricing model:
F-22
volatility of 100%, expected life of 10 years for options and 2 to 3
years for warrants, risk free interest of 5% to 6% and underlying
stock prices equal to fair market value at the time of grant.
In December 1999, the Company granted warrants to purchase 500,000
shares of the Company's Common Stock at an exercise price of $2.81 per
share to a financial institution as consideration for its efforts to
help raise capital. The fair value of such warrants of $674,000 was
originally recorded as a long term asset and expensed in 2000. The
fair value of the warrants was estimated on the date of grant using
the Black-Scholes model with volatility of 100%, expected life of 3
years, risk-free interest rate of 5% and fair market value of the
Common Stock of $2.25 per share. As of December 31, 2000 a total of
400,000 of these warrants had been cancelled and 100,000 were
outstanding.
During 1999, the Company received proceeds of $598,526 from the
exercise of options to purchase 425,084 shares of the Company's Common
Stock, and proceeds of $320,768 from the exercise of warrants to
purchase 324,160 shares of the Company's Common Stock.
On June 2, 2000, the Company entered into an agreement to sell shares
of its Common Stock, at the Company's option, to Torneaux Ltd., a
corporation organized in the Bahamas, an accredited investor. The
Company issued a Warrant to purchase 250,000 shares of its Common
Stock at an exercise price of $1.01 per share as a finder's fee. In
September 2000, warrants for 125,000 shares of Common Stock were
exercised at the reduced price of $.70 per share and a new warrant to
purchase an additional 125,000 shares of Common Stock at an exercise
price of $1.1875 per share was issued. The transaction was exempt from
registration in reliance upon Section 4(2) of the Securities Act. In
September 2000, the Company sold 84,490 shares of Common Stock to
Torneaux Ltd. in accordance with the agreement, resulting in gross
proceeds to the Company of $83,333 and issued a warrant to purchase
42, 245 shares of Common Stock at an exercise price of $1.1342 per
share. In October 2000, the Company sold 63,092 shares of Common Stock
to Torneaux Ltd. in accordance with the agreement, resulting in gross
proceeds to the Company of $55,556 and issued a warrant to purchase
31,546 shares of Common Stock at an exercise price of $1.0126 per
share.
On June 2, 2000, the Company sold an aggregate of 166,298 shares of
its Common Stock to three accredited investors. The stock was sold for
$1.00 per share resulting in gross proceeds to the Company of
$166,298. A finder's fee of approximately $11,641 was paid in
connection with these transactions. The offers and sales during the
three month period ended June 30, 2000 were made by the Company in
reliance upon the exemption from registration provided by Section 4(2)
of the Securities Act.
In May 2000, the Company granted a warrant to purchase 300,000 shares
of its Common Stock to a consultant for past services. No commissions
were paid. The warrant has an exercise price of $0.6749 per share. The
transaction was exempt from registration in reliance upon Section 4(2)
of the Securities Act.
In July 2000, the Company received from an accredited investor
$100,000 from a private placement of 133,333 shares of Common Stock
and granted a warrant to purchase 10,000 shares of Common Stock per
previous agreement. The warrants are exercisable through July 2004 at
an exercise price of $0.75 per share. No commissions were paid. The
transaction was exempt from registration in reliance upon Section 4(2)
of the Securities Act.
F-23
In August 2000, the Company granted warrants to purchase 49,000 shares
of Common Stock to a consultant for services rendered. The warrants
are exercisable through August 2003 at an exercise price of $0.9062
per share. The fair value of such warrants of $36,309 was expensed and
was estimated on the date of grant using the Black Scholes model with
volatility of 150%, expected life of 3 years, risk free interest rate
of 6% and a fair market value of the Common Stock of $0.90 per share.
The transaction was exempt from registration in reliance upon Section
4(2) of the Securities Act.
In September 2000, the Company issued 200,000 shares of Common Stock
and a warrant to purchase 200,000 shares of Common Stock to a
consultant for services rendered. The warrants are exercisable through
September 2003 at an exercise price ranging from $1.50 to $2.50 per
share. The fair value of such warrants of $194,500 was expensed and
was estimated on the date of grant using the Black Scholes model with
volatility of 150%, expected life of 3 years, risk free interest rate
of 6% and a fair market value of the Common Stock of $1.25 per share.
The transaction was exempt from registration in reliance upon Section
4(2) of the Securities Act.
In October 2000, the Company granted a warrant to purchase 500,000
shares of the Company's Common Stock at an exercise price of $1.31 per
share to a financial institution as consideration for its efforts to
help raise capital. Warrants to purchase the first 50,000 vested as of
the grant date and will expire in October 2004. The remaining warrants
to purchase 450,000 shares shall vest upon the closing of transactions
that provide cash to the Company based on the success of the financial
institution's efforts. The transaction was exempt from registration in
reliance upon Section 4(2) of the Securities Act.
In December 2000, options to purchase 70,571 shares of the Company's
Common Stock that were previously issued to a Director at prices
ranging from $0.060 to $2.19, were transferred to his spouse in
connection with his divorce settlement. These warrants are fully
vested and have expiration dates ranging between December 18, 2004 and
May 22, 2008.
In December 2000, the Company received from accredited investors
proceeds of $100,000 in exchange for 100,000 units, each unit
consisting of two shares of Common Stock at a price of $0.50 per share
and a warrant to purchase one-quarter of one share of Common Stock at
an exercise price of $1.00 per share. In connection with this
transaction, a finder's fee of $7,000.00 was paid and a warrant was
issued to purchase 10,000 shares of Common Stock exercisable at $1.00
per share. The 200,000 shares of Commons Stock were issued in January
2001. The transaction was exempt from registration in reliance upon
Section 4(2) of the Securities Act.
In December 2000 the Company received from accredited investors
proceeds of $500,000 in exchange for 2,000,000 units, each unit
consisting of one share of Common Stock at a price of $0.25 per share
and a warrant to purchase one share of Common Stock at an exercise
price of $0.50. In connection with this transaction, a finder's fee of
$35,000.00 was paid and a warrant was issued to purchase 100,000
shares of Common Stock exercisable at $0.50 per share. The 2,000,000
shares of Commons Stock were issued in January 2001. The transaction
was exempt from registration in reliance upon Section 4(2) of the
Securities Act.
F-24
During fiscal 2000, the Company received proceeds of $87,500 from the
exercise of options to purchase 60,000 shares of the Company's Common
Stock, and proceeds of $5,805 from the exercise of warrants to
purchase 3,870 shares of the Company's Common Stock.
During 1999, for services rendered, three consultants who served in an
advisory capacity to NewStar Ltd. were issued fully vested options to
purchase 22,000 shares of Common Stock of the Company. The transaction
was exempt from registration in reliance upon Section 4(2) of the
Securities Act.
During 2000, a total of 136,923 shares of Common Stock were issued for
services rendered to three consultants for a total fair value of
$147,634 which was expensed during the course of the year. The
transaction was exempt from registration in reliance upon Section 4(2)
of the Securities Act.
Equity transactions with employees
Employee Stock Purchase Plan
The Company has established the 1999 Employee Stock Purchase Plan (the
"1999 Plan"), which was approved by the stockholders in June 1999 to
serve as a vehicle to attract and retain the services of key employees
and to help such key employees realize a direct proprietary interest
in the Company. Under the 1999 Plan, employees, including officers,
who do not beneficially own stock and/or options totaling 5% or more
of the voting power of the Company, will be eligible to participate.
However, no participant may be granted rights to purchase more than
$25,000 worth of Common Stock (valued at the time the purchase right
is granted) for each calendar year in which such purchase rights are
outstanding under any other stock purchase plans. An aggregate of
50,000 shares of Common Stock of the Company were reserved for
issuance under the 1999 Plan of which 17,295 were issued and
outstanding as of December 31, 2000. Employees electing to participate
in the 1999 Plan are allowed to deduct from 1% to 10% of their
compensation to purchase shares of Common Stock. Twice a year, the
employees' accumulated payroll deductions will be used to purchase
shares of Common Stock at a price equal to 85% of the closing price of
the Common Stock on either the first business day or last business day
of the offering period, whichever is lower.
Employee Stock Option Plans
In February 1996, the Company adopted the 1996 Stock Option Plan (the
1996 Plan) to consolidate its three existing plans. In May 1998, the
Company adopted the 1998 Stock Option Plan (the "1998 Plan"), which
provides for the issuance of a maximum of 500,000 shares of the
Company's Common Stock. In May 2000, the Company adopted the 2000
Stock Option Plan (the "2000 Plan"), which provides for the issuance
of a maximum of 1,750,000 shares of the Company's Common Stock.
Provisions of the 1996, 1998, and 2000 Plans are substantially similar
to those of the earlier plans. The overall purpose of the 1996, 1998,
and 2000 Plans is to advance the long-term interest of the Company by
attracting, motivating and retaining its employees, directors and
consultants with the opportunity to obtain an equity interest in the
Company.
Eligible employees, directors and consultants can receive options to
purchase shares of the Company's Common Stock at a price generally not
less than 100% of the fair market value of the Common Stock on the
date of the grant of incentive stock options. Nonqualified and nonplan
options may be granted at a price lower than fair market value. The
options granted under the 1996, 1998 and 2000 Plans are exercisable
over a maximum term of ten years from the date of
F-25
grant and generally vest over (i) one year in the case of directors
and consultants, and (ii) up to a five-year period in the case of
employees. Shares sold under the 1996, 1998 and 2000 Plans are subject
to various restrictions as to resale.
In addition, the Company granted non-plan options to certain employees
in connection with their employment agreements.
Information with respect to plan and non-plan activity is set forth
below:
[Download Table]
Weighted
Average
Number of Price per Aggregate Exercise
Shares Share Price Price
Balance, December 31, 1998 2,044,156 $0.40 - $5.60 $ 1,741,255 0.85
Granted 2,149,700 $0.39 - $5.50 2,759,768 1.28
Exercised (280,144) $0.53 - $2.80 (203,695) 0.73
Terminated (10,340) $0.53 (5,491) 0.53
---------- -------------
Balance, December 31, 1999 3,903,372 $0.40 - $5.60 4,291,837 1.10
Granted 218,461 $0.91 - $2.59 268,302 1.23
Exercised (84,375) $0.60 - $2.19 (74,527) 0.88
Terminated (95,571) $0.60 - $2.19 (145,065) 1.52
---------- -------------
Balance, December 31, 2000 3,941,887 $ 4,340,547 1.10
========== =============
The following table summarizes information with respect to stock
options outstanding at December 31, 2000:
[Download Table]
Options
Options Outstanding Exercisable
--------------------------------------- --------------------------
Weighted
Average
Remaining Weighted Weighted
Contractual Average Average
Range of Number Life Exercise Number Exercise
Exercise Price Outstanding (years) Price Exercisable Price
$0.53 - $0.75 1,683,867 7.30 $ 0.59 1,540,690 $ 0.57
$1.08 - $1.67 2,054,449 9.49 1.31 1,401,115 1.31
$2.00 - $2.86 147,287 8.22 2.40 147,287 2.40
$5.50 - $5.60 56,284 8.07 5.51 56,284 5.51
--------- ---------
3,941,887 3,145,376
========== =========
F-26
The stock based compensation for the twelve months ended December 31,
2000 and 1999 has been allocated across the relevant functional
expense categories within operating expense as follows:
Year Ended December 31,
------------------------------------
2000 1999 1998
Marketing and sales $ 358,332 $153,324 $ -
General and administrative 593,871 756,035 -
Research and development 126,654 48,396 -
Total stock based compensation $ 1,078,857 $957,755 $ -
The Company accounts for employee and board of director stock options
in accordance with the provisions of APB No. 25 and complies with the
disclosure provisions of SFAS No. 123.
Under APB No. 25, compensation expense is recognized based on the
amount by which the fair value of the underlying Common Stock exceeds
the exercise price of the stock options at the measurement date, which
in the case of employee stock options is typically the date of grant.
For financial reporting purposes, the Company has determined that the
deemed fair market value on the date of grant of certain employee
stock options was in excess of the exercise price of the options. This
amount is recorded as deferred compensation and is classified as a
reduction of stockholders' equity and is amortized as a charge to
operations over the vesting period of the applicable options. The
vesting period is generally four years. The fair value per share used
to calculate deferred compensation was derived by reference to the
preferred stock values and the Company's initial public offering price
range. Consequently, the Company recorded deferred stock compensation
of $0 and $2,490,337 during the year ended December 31, 2000 and 1999,
respectively. Amortization recognized for the years ended December 31,
2000, 1999 and 1998 totaled $1,078,857, $957,755 and $0 respectively.
The weighted average fair value of the options granted or modified for
the years ended December 31, 2000, 1999 and 1998 were $1.37, $0.90 and
$0.68 respectively. The fair value of each stock option is estimated
on the date of grant using the Black-Scholes option-pricing model with
the following weighted average assumptions:
2000 1999 1998
Risk free interest rate 6.0% 5.5% 5.7%
Expected life 4 years 4 years 4 years
Volatility 150% 100% 227%
Dividend yield - - -
F-27
The following pro forma net loss information has been prepared
following the provisions of SFAS No. 123:
December 31,
-----------------------------------------------
2000 1999 1998
Net loss
As reported $ (6,557,549) $ (5,915,493) $ (3,293,493)
Pro forma $ (7,226,245) $ (6,252,010) $ (3,713,942)
Net loss per share
As reported $ (0.44) $ (0.45) $ (0.47)
Pro forma $ (0.49) $ (0.48) $ (0.53)
8. Related Party Transactions
In October 1998, the Company paid its president the amount of $246,000
related to his deferred compensation through September 1998. The president
also received a cash bonus of $20,000 in connection with his efforts in
securing the E-SAT license.
In fiscal 2000, several executives of the Company deferred receipt of their
salaries due. The executives included the President ($125,000), the Chief
Financial Officer ($45,000), the Chief Legal Counsel ($41,250) and the Vice
President of Operations ($33,750).
9. Income Taxes
The provision for income taxes for all periods presented relates to current
minimum taxes.
The estimated tax effect of significant temporary differences and
carryforwards that gave rise to deferred income tax assets as of December
31, 2000 and 1999, is as follows:
[Enlarge/Download Table]
2000 1999
-------------------------- --------------------------
Federal State Federal State
Deferred tax assets:
Net operating loss carryforwards $ 5,325,000 $ 936,000 $ 3,439,000 $ 602,000
Research and development credit
carryforwards 177,000 - 147,000 -
Deferred compensation and other 35,000 6,000 64,000 12,000
------------- ---------- ------------- ----------
Deferred tax assets 5,537,000 942,000 3,650,000 614,000
Valuation allowance (5,537,000) (942,000) (3,650,000) (614,000)
------------- ---------- ------------- ----------
Net deferred tax assets $ - $ - $ - $ -
============= ========== ============= ==========
F-28
Due to the uncertainty of realization, a valuation allowance has been
provided to offset the net deferred tax assets. The increase in the
valuation allowance was $2,215,000 and $2,047,500 during the years ended
December 31, 2000 and 1999, respectively. The provision for income taxes
differs from the amount which would arise by applying the combined
statutory income tax rate of approximately 40% due to changes in the
deferred tax valuation allowance.
As of December 31, 2000, the Company has net operating loss carryforwards
of approximately $15,660,000 and $15,350,000 for federal income tax
purposes and California state franchise tax purposes, respectively. The
Company also has research and development credit carryforwards. Such
carryforwards expire in varying amounts between 2000 and 2020.
As a result of changes enacted by the 1986 Tax Reform Act, utilization of
net operating loss and tax credit carryforwards may be limited due to
equity transactions occurring on or after May 6, 1986.
10. Risks and Uncertainties
The Company periodically maintains cash balances at banks in excess of the
Federal Deposit Insurance Corporation insurance limit of $100,000.
11. Supplemental Disclosures of Non Cash Investing and Financing Activities
During fiscal 2000 the Company issued 132,236 shares of Common Stock in
lieu of cash for services rendered by two vendors. The total value of the
services provided was $ 138,882.
12. Subsequent Events
In January 2001, we received proceeds in a private placement of $100,000
from an accredited investor in exchange for 290,000 shares of Common Stock
and a warrant to purchase 36,250 shares of Common Stock exercisable at
$0.70 per share. No commissions were paid. The transaction was exempt from
registration in reliance upon Section 4(2) of the Securities Act.
In January 2001, we received proceeds in a private placement of $200,000
from an accredited investor in exchange for 400,000 shares of Common Stock
and a warrant to purchase 100,000 shares of Common Stock exercisable at
$1.00 per share. In connection with this transaction, a finder's fee of
$14,000 was paid and a warrant was issued for 40,000 shares of Common Stock
exercisable at $1.00 per share. The transaction was exempt from
registration in reliance upon Section 4(2) of the Securities Act.
In January 2001, we received proceeds in a private placement of $50,000
from three accredited investors in exchange for 100,000 shares of Common
Stock and warrants to purchase 12,500 shares of Common Stock exercisable at
$1.00 per share. In connection with this transaction, a finder's fee of
$3,500 was paid and a warrant was issued for 5,000 shares of Common Stock
exercisable at $1.00 per share. The transaction was exempt from
registration in reliance upon Section 4(2) of the Securities Act.
On March 6, 2001, we received proceeds in a private placement of $250,000
from an accredited investor in exchange for 568,000 shares of Common Stock
and a warrant to purchase 113,636 shares of Common Stock exercisable at
$.90 per share. In connection with this transaction, a finder's fee of
F-29
$17,500 was paid and a warrant was issued for 56,818 shares of Common Stock
exercisable at $.90 per share. The transaction was exempt from registration
in reliance upon Section 4(2) of the Securities Act.
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10KSB’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 5/22/08 | | 57 |
| | 12/18/04 | | 57 |
| | 7/31/03 | | 22 |
| | 12/31/01 | | 53 | | | | | 10KSB, 10KSB/A, NT 10-K |
| | 6/30/01 | | 55 | | | | | 10QSB |
| Filed as of: | | 4/3/01 | | | | | | | NT 10-K |
| Filed on: | | 4/2/01 | | | | | | | PRE 14A |
| | 3/30/01 | | 34 |
| | 3/15/01 | | 2 | | 35 |
| | 3/6/01 | | 31 | | 62 |
| | 1/1/01 | | 51 |
| For Period End: | | 12/31/00 | | 1 | | 62 | | | NT 10-K |
| | 12/29/00 | | 6 | | 33 |
| | 11/21/00 | | 6 | | 12 |
| | 10/20/00 | | 6 |
| | 10/10/00 | | 31 |
| | 10/6/00 | | 22 | | 54 |
| | 9/30/00 | | 33 | | | | | 10QSB |
| | 9/25/00 | | 31 |
| | 8/11/00 | | 33 | | | | | 10QSB |
| | 7/25/00 | | 33 |
| | 7/1/00 | | 50 |
| | 6/30/00 | | 28 | | 56 | | | 10QSB |
| | 6/28/00 | | 6 |
| | 6/15/00 | | 33 | | 51 | | | 8-K |
| | 6/2/00 | | 33 | | 56 | | | 8-K |
| | 5/2/00 | | 12 |
| | 4/11/00 | | 33 | | | | | DEF 14A |
| | 1/25/00 | | 31 |
| | 12/31/99 | | 27 | | 62 | | | 10KSB |
| | 12/22/99 | | 32 |
| | 11/8/99 | | 32 |
| | 10/18/99 | | 32 |
| | 10/8/99 | | 5 | | 52 |
| | 9/1/99 | | 32 |
| | 7/31/99 | | 5 |
| | 7/30/99 | | 33 | | 51 |
| | 7/28/99 | | 32 |
| | 7/14/99 | | 6 |
| | 6/1/99 | | 32 |
| | 5/3/99 | | 33 |
| | 4/28/99 | | 31 |
| | 4/8/99 | | 11 | | 51 |
| | 3/31/99 | | 5 | | 52 | | | 10-Q, 4, NT 10-K, NT 10-Q |
| | 2/19/99 | | 31 |
| | 1/12/99 | | 31 |
| | 12/31/98 | | 33 | | 60 | | | 10KSB, NT 10-K |
| | 12/15/98 | | 52 |
| | 11/30/98 | | 33 |
| | 9/16/98 | | 33 | | | | | SB-2 |
| | 6/11/98 | | 43 |
| | 5/14/98 | | 43 |
| | 4/30/98 | | 52 |
| | 4/16/98 | | 43 |
| | 4/1/98 | | 43 |
| | 3/31/98 | | 5 | | 51 | | | 10QSB, NT 10-K, NT 10-Q |
| | 3/1/98 | | 32 |
| | 2/12/98 | | 43 |
| | 12/31/97 | | 29 | | 54 | | | 10KSB, 10KSB/A, NT 10-K |
| | 12/15/97 | | 51 |
| | 7/9/97 | | 42 | | 54 |
| | 6/30/97 | | 42 | | | | | 10KSB40/A, 10QSB, NT 10-Q |
| | 5/28/97 | | 31 |
| | 4/30/97 | | 42 |
| | 4/10/97 | | 42 | | | | | PRE 14A |
| | 3/31/97 | | 42 | | | | | 10QSB |
| | 2/28/97 | | 42 |
| | 2/14/97 | | 42 |
| | 1/31/97 | | 42 |
| | 12/31/96 | | 33 | | 42 | | | 10KSB, 10KSB40, 10KSB40/A, NT 10-K |
| | 9/21/96 | | 42 |
| | 8/15/96 | | 42 |
| | 6/30/96 | | 42 | | | | | 10QSB |
| | 4/18/96 | | 32 |
| | 3/1/96 | | 32 |
| | 2/15/96 | | 42 |
| | 2/9/96 | | 31 |
| | 2/1/96 | | 31 |
| | 1/15/96 | | 42 |
| | 1/13/96 | | 42 | | 54 |
| | 12/31/95 | | 33 | | 42 |
| | 12/13/95 | | 31 | | 41 |
| | 11/30/95 | | 52 |
| | 9/21/95 | | 40 |
| | 7/31/95 | | 33 | | 40 |
| | 7/15/95 | | 40 |
| | 5/15/95 | | 40 |
| | 11/30/94 | | 40 |
| | 11/16/94 | | 51 |
| | 7/31/94 | | 33 | | 40 |
| | 7/29/94 | | 40 |
| | 5/16/94 | | 31 |
| | 1/28/94 | | 40 |
| | 7/31/93 | | 33 | | 40 |
| | 7/2/93 | | 39 |
| | 12/2/92 | | 39 |
| | 10/9/92 | | 39 |
| | 10/2/92 | | 39 |
| | 9/30/92 | | 31 |
| | 9/11/92 | | 38 |
| | 8/1/92 | | 39 |
| | 7/31/92 | | 38 |
| List all Filings |
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