UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                            -------------------------

                                   FORM 10-QSB

                            -------------------------


           X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          ---  SECURITIES EXCHANGE ACT OF 1934 for the quarterly period
               ended June 30, 2000

               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          ---  SECURITIES EXCHANGE ACT OF 1934 for the transition period
               from _______ to ________



                           Commission File No. 0-28348



                              DBS INDUSTRIES, INC.
        (Exact name of small business issuer as specified in its charter)

                Delaware                                 84-1124675
       (State or other jurisdiction         (I.R.S. Employer Identification No.)
     of incorporation or organization)


                        100 Shoreline Highway, Suite 190A
                             Mill Valley, CA 94941
                    (Address of principal executive offices)

                                 (415) 380-8055
                          (Issuer's telephone number)


Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                          Yes  X                  No
                              ---                    ---

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Class of Securities:       Common Stock, $.0004 Par Value

Shares Outstanding as of July 31, 2000:    14,883,988

Transitional Small Business Disclosure Format:  Yes:           No:  X
                                                     ---           ---

<PAGE>

                                      INDEX


                                                                            PAGE

PART I - FINANCIAL INFORMATION................................................1

ITEM  1.  Financial Statements................................................1

Condensed Consolidated Balance Sheets:
As of June 30, 2000 (unaudited) and December 31, 1999.........................1

Condensed Consolidated Statements of Operations (unaudited):
For the Three and Six Months Ended June 30, 2000 and June 30, 1999
and for the period from April 25, 1990 (Inception) to June 30, 2000...........2

Condensed Consolidated Statements of Cash Flows (unaudited):
For the Six Months Ended June 30, 2000 and June 30, 1999
and for the period from April 25, 1990 (Inception) to June 30, 2000 ..........3

Notes to Condensed Consolidated Financial Statements........................4-8

ITEM 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.........................................9-13

PART II - OTHER INFORMATION..................................................14

ITEM  1. Legal Proceedings...................................................14

ITEM  2. Recent Sales in Unregistered Securities.............................14

ITEM  4. Submission of Matters to a Vote of Security Holders.................15

ITEM  6. Exhibits and Reports on Form 8-K....................................15


                                       ii
<PAGE>


                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.                       FINANCIAL STATEMENTS


                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                      June 30,     December 31,
                                                        2000           1999
                                                     (Unaudited)
                                                    ------------   ------------

Current assets:
     Cash and cash equivalents                      $     32,069   $    282,945
     Prepaid and other current assets                     68,976        114,439
                                                    ------------   ------------

       Total current assets                              101,045        397,384
                                                    ------------   ------------

Furniture and equipment, net                              42,535         48,211
Investments and license acquisition costs              2,369,571      2,370,618
Satellite construction costs                          12,198,517     12,072,873
Deferred stock offering costs                            733,500        673,500
                                                    ------------   ------------

                                                      15,344,123     15,165,202

              Total assets                          $ 15,445,168   $ 15,562,586
                                                    ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                               $  1,152,526   $    478,334
     Customer advances                                   400,000        400,000
     Accrued liabilities                                 840,633        460,577
                                                    ------------   ------------

       Total current liabilities                       2,393,159      1,338,911
                                                    ------------   ------------

Stockholders' equity:
     Preferred stock, $0.0004 par value;
       5,000,000 shares authorized; 35,897
       issued and outstanding at June 30, 2000                15           --
     Common stock, $0.0004 par value;
       50,000,000 shares authorized;
       14,738,923 and 14,354,911 issued and
       outstanding at June 30, 2000 and
       December 31, 1999, respectively                     5,915          5,762
     Capital in excess of par value                   28,391,184     26,968,174
     Warrants                                          2,355,796      1,890,436
     Note receivable from stockholder                    (60,000)       (60,000)
     Deferred stock-based compensation                (1,038,024)    (1,532,582)
     Deficit accumulated during the development
       stage                                         (16,602,877)   (13,048,115)
                                                    ------------   ------------
         Total stockholders' equity                   13,052,009     14,223,675
                                                    ------------   ------------

              Total liabilities and stockholders'
                equity                              $ 15,445,168   $ 15,562,586
                                                    ============   ============

                  The accompanying notes are an integral part
             of these condensed consolidated financial statements.

                                       1
<PAGE>


                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          April 25, 1990
                                    Three Months Ended            Six Months Ended        (Inception) to
                                         June 30,                      June 30,              June 30,
                                   2000           1999           2000           1999           2000
                               ------------   ------------   ------------   ------------   ------------


<S>                            <C>            <C>            <C>            <C>            <C>
Revenue                        $       --     $       --     $       --     $       --     $    161,420
                               ------------   ------------   ------------   ------------   ------------

Cost and operating expenses:
   Cost of revenue                     --             --             --             --          127,580
   Marketing and sales              304,472           --          666,972           --        1,589,595
   General and administrative     1,662,360        778,757      2,650,193      1,676,799     15,372,792
   Research and development          63,096        138,623        237,803        359,224      4,249,817
                               ------------   ------------   ------------   ------------   ------------
                                  2,029,928        917,380      3,554,968      2,036,023     21,339,784
                               ------------   ------------   ------------   ------------   ------------
     Loss from operations        (2,029,928)      (917,380)    (3,554,968)    (2,036,023)   (21,178,364)
                               ------------   ------------   ------------   ------------   ------------

Other income (expense):
   Interest, net                        648         63,280          1,927         75,649       (594,196)
   Equity in loss of
     investees, net                    --             --             --             --         (512,920)
   Gain on sales of
     investments                       --             --             --             --        5,829,218
   Other, net                          --             --           (1,721)          --          (58,355)
                               ------------   ------------   ------------   ------------   ------------
                                        648         63,280            206         75,649      4,663,747
                               ------------   ------------   ------------   ------------   ------------
     Loss before provision
      for income taxes and
      minority interests         (2,029,280)      (854,100)    (3,554,762)    (1,960,374)   (16,514,617)

Provision for income taxes             --             --             --             --          (96,835)
                               ------------   ------------   ------------   ------------   ------------

     Loss before minority
       interests                 (2,029,280)      (854,100)    (3,554,762)    (1,960,374)   (16,611,452)

Minority interests in income
   of consolidated
   subsidiaries                        --             --             --             --            8,575
                               ------------   ------------   ------------   ------------   ------------

     Net loss                  $ (2,029,280)  $   (854,100)  $ (3,554,762)  $ (1,960,374)  $(16,602,877)
                               ============   ============   ============   ============   ============

Basic net loss per share       $      (0.14)  $      (0.06)  $      (0.25)  $      (0.17)
                               ============   ============   ============   ============

Diluted net loss per share     $      (0.14)  $      (0.06)  $      (0.25)  $      (0.17)
                               ============   ============   ============   ============

Weighted average number of
   shares of common stock,
   basic                         14,517,748     14,019,273     14,448,316     11,838,062
                               ============   ============   ============   ============

Weighted average number of
   shares of common stock,
   diluted                       14,517,748     14,019,273     14,448,316     11,838,062
                               ============   ============   ============   ============
</TABLE>

                  The accompanying notes are an integral part
             of these condensed consolidated financial statements.

                                       2
<PAGE>
                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  April 25, 1990
                                                          Six Months Ended        (Inception) to
                                                               June 30,              June 30,
                                                         2000           1999           2000
                                                     ------------   ------------   ------------

<S>                                                  <C>            <C>             <C>
Reconciliation of net loss to net cash
   used in operating activities:
   Net loss                                          $ (3,554,762)  $ (1,960,374)   (16,602,877)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                          7,706          6,909        454,681
     Minority interest's share of net loss                   --             --           (8,575)
     Non-cash charges                                     (60,000)          --        1,024,545
     Amortization of stock-based compensation             494,558           --        1,452,313
     Issuance of options and warrants
       for services rendered                              470,700         28,859      1,244,998
     Issuance of common stock in connection
       with litigation settlement                            --          324,391        324,391
     Equity in loss of investees, net                        --             --          529,972
     Gain on sales of investments                            --             --       (5,829,218)
     Loss on disposal of equipment                          1,721           --            1,721
     Allowance for losses on advances                        --             --          216,932
     Common stock issued as payment for interest             --             --            7,000
     Decrease (increase) in prepaid and other
       current assets                                      45,463         26,363        (49,772)
     Increase (decrease) in accounts payable and
       accrued liabilities                              1,164,998       (574,882)     1,774,913
     Increase in customer advances                           --             --          400,000
                                                     ------------   ------------   ------------
       Net cash used in operating activities           (1,429,616)    (2,148,734)   (15,058,976)
                                                     ------------   ------------   ------------

Cash flows from investing activities:
   Proceeds from sale of investment                          --             --        1,099,940
   Proceeds from Loral settlement                            --             --        3,573,677
   Purchase of furniture and equipment                     (2,704)        (3,080)      (148,145)
   Satellite construction costs                          (125,644)    (9,010,584)   (12,198,517)
   Organization costs                                        --             --          (28,526)
   Advances to officer                                       --          (60,000)       (91,187)
   Purchase of interest in Continental                       --             --       (2,292,409)
   Investments and license acquisition costs                 --         (500,000)    (2,726,807)
   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             (128,348)    (9,573,664)   (12,368,854)
                                                     ------------   ------------   ------------

Cash flows from financing activities:
   Repayment of borrowing under credit line                  --             --         (300,000)
   Issuance of debentures                                    --             --        4,817,501
   Issuance of preferred and common stock               1,410,395     15,479,704     24,801,692
   Redemption of common stock warrants                       --             --          (19,490)
   Stock issue costs                                     (103,307)      (104,100)      (757,142)
   Purchase of shares                                        --             --           (5,000)
   Payment of debentures                                     --             --       (1,168,445)
   Proceeds from stockholders' loans                         --             --          442,750
   Payment of stockholders' loans                            --             --         (351,967)
                                                     ------------   ------------   ------------

       Net cash provided by financing activities        1,307,088     15,375,604     27,459,899
                                                     ------------   ------------   ------------

Net increase in cash and cash equivalents                (250,876)     3,653,206         32,069
Cash and cash equivalents, beginning of period            282,945      1,291,711           --
                                                     ------------   ------------   ------------
Cash and cash equivalents, end of period             $     32,069   $  4,944,917   $     32,069
                                                     ============   ============   ============
</TABLE>

                  The accompanying notes are an integral part
             of these condensed consolidated financial statements.

                                      3

<PAGE>


                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1     UNAUDITED INTERIM FINANCIAL STATEMENTS
           --------------------------------------

                  The  information  presented  in these  condensed  consolidated
           financial  statements of DBS  Industries,  Inc. (DBSI or the Company)
           and its wholly owned  subsidiaries,  Global Energy Metering Services,
           Inc. and NewStar Limited (the subsidiaries), is unaudited.

                  The financial statements include all adjustments consisting of
           only  normal  recurring  adjustments  which  are,  in the  opinion of
           management,  necessary to present  fairly the condensed  consolidated
           financial   position  of  DBSI  at  June  30,   2000  and   condensed
           consolidated  results of  operations  and cash flows for the  interim
           periods  reported.  The results of  operations  for the 2000  interim
           period  presented are not necessarily  indicative of expected results
           for the full 2000 fiscal year.

                  These condensed  consolidated  financial  statements have been
           prepared assuming the Company will continue as a going concern. Since
           inception,  the Company has devoted  substantially all of its efforts
           to  developing  its  business.  The  Company has  therefore  incurred
           substantial losses and negative cash flows from operating  activities
           and requires  substantial  capital.  To address  financing needs, the
           Company is pursuing  various  financing  alternatives.  These factors
           raise  substantial doubt about the Company's ability to continue as a
           going  concern.   These  financial  statements  do  not  reflect  any
           adjustments that might result from the outcome of this uncertainty.

                  Certain   information   and  footnote   disclosures   normally
           contained  in  financial   statements  prepared  in  accordance  with
           generally  accepted  accounting  principles  have been  condensed  or
           omitted.  The condensed  consolidated  financial statements should be
           read in conjunction with the financial statements and notes contained
           in DBSI's 1999 Annual Report to Shareholders.


NOTE 2     INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES
           ---------------------------------------------------

           E-SAT, Inc. (E-SAT)

                  In October 1994, the Company and EchoStar Communications, Inc.
           formed   E-SAT  for  the   purpose   of  filing   with  the   Federal
           Communications  Commission (FCC) for a license to operate a low earth
           satellite system.  E-SAT filed a license  application with the FCC on
           November 16,  1994.  The Company  holds a 20% interest in E-SAT.  The
           Company's  total  investments  in and  advances to E-SAT and EchoStar
           Communications were $2,369,571 as of June 30, 2000. The investment is
           accounted for using the equity method.

                  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, the Company will own 80.1%


                                       4
<PAGE>

                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


           of the E-SAT shares. This transfer of control agreement is subject to
           approval by the FCC, which was formally  requested by the Company and
           EchoStar on May 2, 2000.


NOTE 3     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 June 30,
           2000.

                  On December 15, 1998, the Company and Alcatel Space Industries
           ("Alcatel")   entered  into  a  Memorandum   of   Understanding   and
           authorization  to proceed  ("MOU")  pursuant to which  Alcatel  would
           become the General Contractor for the design, construction and launch
           services for the Company's planned low earth orbit  satellites.  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 $9.8 million in
           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.


NOTE 4     CUSTOMER ADVANCES
           -----------------

                  The Company's wholly-owned subsidiary,  Global Energy Metering
           Services,  Inc.  (GEMS),  is party to a contract  to  deliver  10,000
           satellite  radio units.  The  purchase  order is for $1.2 million and
           under the terms of the purchase order,  GEMS would receive a total of
           $500,000  in  advance  payments  on the  contract,  based on  certain
           milestone achievements.  As of 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.

                                       5
<PAGE>


                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5     NET LOSS PER SHARE
           ------------------

                  Basic net  income  (loss) per share is  computed  based on the
           weighted average number of common shares outstanding and excludes any
           potential  dilution.  Diluted net income per share  reflects  diluted
           effects of all outstanding  common stock  equivalents.  Options,  and
           warrants to purchase  5,938,906  shares of common stock with exercise
           prices from $0.39 to $5.60 were  outstanding  as of June 30, 2000 and
           were excluded from the loss per share calculation for the quarter and
           the  six  month  periods  then  ended  as they  have  the  effect  of
           decreasing loss per share. Options and warrants to purchase 3,509,906
           shares of common stock with exercise  prices from $0.53 to $5.60 were
           outstanding  as of June 30, 1999 and were  excluded from the loss per
           share calculation for the quarter and the six month period then ended
           as they have the effect of decreasing loss per share.


NOTE 6     EQUITY TRANSACTIONS
           -------------------

           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.  The Board is further authorized to establish such series, to
           fix  and  determine  the  variations  in  the  relative   rights  and
           preferences,  and to allow for the conversion of preferred stock into
           common stock.

                  Series A Preferred  Shares are  convertible  into 10 shares of
           Company's common stock.  Beginning three months from purchase, if the
           Company's common stock is trading for less than $3.00 per share, then
           the Series A Preferred  Shares will be  convertible  by the result of
           dividing $30.00 by the 5 day Average  Trading Price.  The Company has
           the right to redeem the Series A  Preferred  Shares,  if the  average
           trading price for the Company's  common stock is $6.00 or more for 20
           consecutive trading days. The holder of Series A Preferred Shares may
           choose to convert his or her shares  within 20 days of notice for the
           Company's  intention  to redeem the Series A  Preferred  Shares.  The
           redemption price is $30.00 per share, plus any unpaid  dividends;  as
           of June 30, 2000 accreted  dividends totaled $16,305.  As of June 30,
           2000,  35,897  shares of Series A  Preferred  Shares  were issued and
           outstanding.

           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  stockholders  for their vote.  Cumulative
           voting  for  the  election  of  directors  is  not  permitted  by the
           Certificate of Incorporation.

           Equity Transactions With Non-Employees

                  During the six months ended June 30, 2000,  the Company issued
           35,897 shares of the Company's  Preferred Stock in exchange for gross
           proceeds of $1,076,910 in cash. 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 based upon the
           5-day  average  closing  price of the  Company's  common  stock three

                                       6
<PAGE>

                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


           months after the shares were  issued,  because the  Company's  common
           stock was trading below $3.00 per share. In January 2000, the Company
           issued 4,687 shares of the Company's Common Stock, valued at $10,750,
           to one of the  Company's  directors for services  rendered,  prior to
           being appointed to the Board, under a consulting agreement.

                  In May 2000, the Company granted  warrants to purchase 300,000
           shares of common stock to a consultant  for  services  rendered.  The
           warrants  are  exercisable  through May 2003 at an exercise  price of
           $0.67 per share.  The fair value of such  warrants  of  $470,700  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 $1.75 per share. In June 2000, the Company issued 66,667 shares of
           the  Company's  Common  Stock,  valued  at  $100,000  to  one  of the
           Company's suppliers for services rendered.

                  In  June  2000,  the  Company  issued  166,298  shares  of the
           Company's Common Stock, in exchange for gross proceeds of $166,298 in
           cash, to three accredited investors.

                  As of June 30, 2000, the total year-to-date  proceeds from the
           exercise of warrants  and options to purchase  140,370  shares of the
           Company's Common Stock by non-employees  and a member of the Board of
           Directors was approximately $163,100.

                  During  May  and  June  2000,  for  service  on the  Board  of
           Directors,  the Company  granted to its  non-employee  directors,  in
           accordance  with the 2000 Stock Option  Plan,  options to purchase an
           aggregate of 56,109  shares of the  Company's  Common Stock at prices
           ranging from $1.1953 to $2.5875 per share.

                  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. To date, no sales have
           occurred under the agreement.  No commission was paid,  however,  the
           Company  issued a Warrant to  purchase  250,000  shares of its Common
           Stock at an exercise price of the lower of $1.5625 per share,  or the
           fair market value of the  Company's  stock at the  effective  date of
           registration, as a finder's fee.

           Equity Transactions With Employees

                  In January  2000,  the Company  received $900 from the sale of
           stock to employees pursuant to the 1999 Employee Stock Purchase Plan.

                  In April 2000,  the Company  received  proceeds of $3,212 from
           the  exercise of options by an employee to purchase  5,500  shares of
           the Company's Common Stock.

NOTE 7     SUBSEQUENT EVENTS

                  On July 10, 2000, the Company received $9,954 from the sale of
           6,961  shares  of  common  stock to  employees  pursuant  to the 1999
           Employee Stock Purchase Plan for the period ended June 30, 2000.

                  On July 10,  2000,  the Company  also issued  3,672  shares of
           Common  Stock  valued at $9,501 to a Director as payment for services
           rendered.
                                       7
<PAGE>


                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                  On July 25, 2000, the Company received $100,000 from a private
           placement of 133,333  shares of Common Stock and issued a warrant for
           10,000  shares  of  Common  Stock at an  exercise  price of $0.75 per
           share.


                                       8
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         This discussion,  other than the historical financial information,  may
consist of  forward-looking  statements  that involve  risks and  uncertainties,
including quarterly and yearly fluctuations in results,  the timely availability
of new communication  products, the impact of competitive products and services,
and the other risks  described  in the  Company's  SEC reports,  including  this
report.  These  forward-looking  statements speak only as of the date hereof and
should not be given undue reliance.  Actual results may vary  significantly from
those projected.

         The Company  undertakes no obligation to publicly  update or revise any
forward-looking  statements,  whether  as a result  of new  information,  future
events, or otherwise.

General

          DBS  Industries,   Inc.  ("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

         Throughout  fiscal  2000,  we plan to continue  the  deployment  of our
license and the  construction  of our system,  subject to our success in raising
adequate financing.

         We  established a dedicated  marketing and sales group in 1999 and plan
to increase our marketing activities during fiscal 2000.

         We seek to satisfy  our fiscal  2000 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.  Through June 30, 2000, we issued 35,897
shares of the  Company's  preferred  stock in  exchange  for gross  proceeds  of
$1,076,910 in cash and the Company has received $163,094 in options and warrants
exercised.

Revenues

         The  Company  remains  in the  development  stage and did not  generate
revenues in either the three or six months ended June 30, 2000 or June 30, 1999.

Operating Expenses

         Total  operating  expenses for the three months ended June 30, 2000 and
1999, were $2,029,928 and $917,380  respectively.  Total operating  expenses for
the six months ended June 30, 2000 were $3,554,968 as compared to $2,036,023 for
the six months  ended June 30, 1999.  These costs are related to  marketing  and
sales  expenses,   general  and  administrative   expenses,   and  research  and
development expenses.

                                       9
<PAGE>

Marketing and Sales Expenses

         Marketing  and sales  expenses  are  primarily  the costs of  personnel
(including non-cash stock compensation) and travel. Marketing and sales expenses
for the three  months  ended June 30,  2000 were  $304,472  (15.0% of  operating
expenses).  No marketing  and sales  expenses were incurred for the three or six
months  ended June 30, 1999.  For the six months ended June 30, 2000,  marketing
and sales expenses totaled $666,972 (18.8% of operating expenses). This increase
in expenses is due to the  establishment  of our  dedicated  marketing and sales
group in June  1999,  which  included  non-cash  compensation  of  approximately
$114,000.

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 the three months ended June 30, 2000 and 1999 were
$1,662,360  (81.9% of  operating  expenses),  and  $778,757  (84.9% of operating
expenses)  respectively.  The  increase  of  $973,394  to  $2,650,193  (74.5% of
operating  expenses)  during the six months  ended June 30,  2000,  compared  to
$1,676,799 (82.4% of operating  expenses) in the six months ended June 30, 1999,
was primarily  due to increased  personnel  related costs of $253,000,  non-cash
compensation of approximately  $355,000 and consulting fees of $742,000,  netted
against a decrease in the cost of options for services  provided by  consultants
of approximately $353,000.

Research and Development Expenses

         Research  and  development  expenses  represent  non-capitalized  costs
incurred to develop our system.  Research and development expenses for the three
months ended June 30, 2000 and 1999 were $63,096  (3.1% of operating  expenses),
and  $138,623  (15.1% of  operating  expenses)  respectively.  The  decrease  of
$121,421 to $237,803  (6.7% of operating  expenses)  during the six months ended
June 30, 2000,  compared to $359,224  (17.6% of  operating  expenses) in the six
months  ended June 30,  1999,  was  primarily  due to a decrease  in  consulting
expenses of $163,000 and a decrease in travel expenses of $39,000,  offset by an
increase in personnel cost of $60,000 and non-cash compensation of approximately
$26,000.

Non-Cash Stock Compensation

         In order to attract and retain  personnel,  we have granted  options to
purchase  1,913,106 shares of Common Stock at exercise prices ranging from $0.39
to $2.81 to several employees and service providers. 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  of  $2,490,337.  This amount is being
amortized over the vesting  periods of the granted  options.  As of December 31,
1999 the Company had amortized $957,755 of this expense.  The Company recognized
a total of  $494,558  as non-cash  stock  compensation  expense in the first two
quarters  ended June 30, 2000 in the  relevant  expense  category  as  described
above. No similar expenses were incurred in the quarter ended June 30, 1999.

Other Income (Expense)

         The  Company  experienced  a  non-operating  gain of $648 for the three
months  ended June 30,  2000,  as  compared  to a gain of $63,280  for the three
months ended June 30, 1999. The Company had a non-operating gain of $206 for the
six months  ended June 30,  2000,  as  compared to a gain of $75,649 for the six
months ended June 30, 1999.  The reduced gains incurred in 2000 were a result of
the reduction in net interest due to the reduction of cash and cash equivalents.

                                       10
<PAGE>


Net Loss

         The  Company's  net loss for the three  months  ended June 30, 2000 was
$2,029,280  compared to $854,100 for the three  months ended June 30, 1999.  Net
loss for the six months  ended June 30,  2000 was  $3,554,762  compared to a net
loss of $1,960,374 for the six months ended June 30, 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  expenses  averaged
approximately  $676,000  per month  during  the  second  quarter  of 2000  which
included approximately $101,000 per month for marketing and sales, approximately
$554,000 per month for finance,  legal,  administrative  and general  management
expenses and  approximately  $21,000 per month for E-SAT research & development.
However,  expenses will continue to increase during fiscal 2000 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 the six months ended June 30, 2000,  we received  proceeds  from
the sale of common and preferred stock totaling $1,409,495 before stock issuance
costs of $103,307.  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 $91,666; 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; and proceeds in
the amount of $166,307 from the exercise of 145,870 options and warrants.

         In addition to the above,  the Company also received $900 from the sale
of 490 shares of common stock to employees  pursuant to the 1999 Employee  Stock
Purchase Plan for the offering period ended December 31, 1999.

         Subsequent to June 30, 2000, the Company  received $9,954 from the sale
of 6,961 shares of common stock to employees pursuant to the 1999 Employee Stock
Purchase  Plan for the period  ended June 30,  2000.  These  proceeds  were used
primarily to fund our satellite construction costs and investing activities

         We had cash and cash  equivalents  of $32,069 and  $4,944,917 as of the
six months ended June 30, 2000 and 1999  respectively.  We had negative  working
capital of  $2,292,114  as of the six months  ended June 30,  2000,  compared to
working capital of $4,934,803 as of the six months ended June 30, 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 for the six months ended June 30,
2000 was $1,429,616, as compared to $2,148,734 for the six months ended June 30,
1999.  This  resulted  from a net loss of  $3,554,762  offset  primarily  by (1)
non-cash  stock  compensation  of  $494,558,  (2) non cash  warrants  issues  of
$470,700,  (3) an  increase  in accounts  payable  and  accrued  liabilities  of
$1,164,998 arising from increased marketing and general administrative  expenses
and (4) a decrease in accounts  receivable  and other current  assets of $45,463
due to a reduction in prepaid insurance and employee receivables.

         Net cash used in investing activities for the six months ended June 30,
2000, was $128,348 compared to $9,573,664 for the same six months ended June 30,

                                       11
<PAGE>

1999.  This was a decrease of  $9,445,316  over the six month period ending June
30, 1999, which was as a result of a decrease in satellite  construction  costs.
Approximately  $126,000 of the net cash used in investing  activities during the
six months  ended June 30, 2000 was related to satellite  construction  payments
made to our satellite contractors in Europe.

         Net cash provided by financing activities for the six months ended June
30, 2000, was $1,307,088  compared to $15,375,604  for the same six months ended
June 30, 1999. Net cash provided by financing  activities  during the six months
ended June 30, 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 June 30,
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.

         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 report,  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 (including but not limited to FCC approval of
our transfer of control of E-Sat,  Inc. from  EchoStar),  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  report  are  cautioned  not to put undue
reliance on "forward looking" statements that are, by their nature, uncertain as
reliable indicators of future performance.

         Successfully  addressing  the  factors  discussed  above is  subject to
various risks described in this report,  as well as other factors that generally
affect the market for stocks of development  stage,  high technology  companies.

                                       12
<PAGE>

These factors could affect the price of the Company's stock and could cause such
stock prices to fluctuate significantly over relatively short periods of time.


Impact of the Year 2000 Issue

         As of August 1, 2000,  we had not  encountered  any material  year 2000
problems  with the  hardware and software  systems  used in our  operations.  In
addition,  none of our  critical  vendors have  reported any material  year 2000
problems  nor have we  experienced  any  decline  in  service  levels  from such
vendors.

         We expect to continue to monitor  internal and external  issues related
to year 2000. While no material problems have been discovered,  we cannot assure
you that material problems will not materialize in the future.


                                       13
<PAGE>


                                     PART II

                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  RECENT SALES IN UNREGISTERED SECURITIES

(a)      The Company  completed a private  placement of its Series A Convertible
         Preferred Stock ("Preferred Stock") to two accredited investors. During
         the three  month  period  ended  June 30,  2000,  the  Company  sold an
         aggregate of 6,333 shares of its Series A Convertible  Preferred  Stock
         at $30 per share, for an aggregate placement of $189,990. 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 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
         to the placement  agent to purchase the equivalent of 10% of the number
         of shares of Common Stock sold in the private placement. 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.

(b)      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.  To date, no sales have occurred
         under the  agreement.  No  commission  was paid,  however,  the Company
         issued a Warrant to purchase  250,000  shares of its Common Stock at an
         exercise  price of the lower of $1.5625  per share,  or the fair market
         value of the Company's stock at the effective date of registration,  as
         a finder's  fee.  The  transaction  was  exempt  from  registration  in
         reliance upon Section 4(2) of the Securities Act.

(c)      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.

(d)      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.

(e)      In May 2000,  the Company  granted to an employee an option to purchase
         20,000 shares of Common Stock at $1.75 per share.

(f)      During May and June 2000,  for service on the Board of  Directors,  the
         Company granted to its non-employee  directors,  in accordance with the
         2000 Stock  Option  Plan,  options to purchase an  aggregate  of 56,109
         shares of the Company's  Common Stock at prices ranging from $1.1953 to
         $2.5875 per share.

(g)      On June 21, 2000,  the Company issued 66,667 shares of its Common Stock
         to its outside legal counsel for past services.  No commission was paid
         in connection  with this  transaction.  The transaction was exempt from
         registration in reliance upon Section 4(2) of the Securities Act.

                                       14
<PAGE>


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On May 22,  2000,  the  Company  held its  annual  shareholder  meeting
         wherein the following matters were acted upon:

(a)      A majority of the voting stock of the Company  approved the election of
         three  directors  of the Company to hold office for a  three-year  term
         ending at the Annual  Meeting of  Stockholders  in 2003 and until their
         successors are elected and qualified. Votes cast:

                  Directors                 For               Withheld
                  -----------------         ----------        --------

                  Jerome W. Carlson         12,647,542        214,003
                  Roy T. Grant              12,645,542        216,003
                  Stanton C. Lawson         12,642,542        219,003

(b)      The affirmative vote of a majority of the outstanding  shares of Common
         Stock of the  Company  was not  received  to amend the  Certificate  of
         Incorporation to (i) increase the number of authorized shares of Common
         Stock from  50,000,000 to  100,000,000  and (ii) increase the number of
         authorized  shares of Preferred  Stock from  5,000,000  to  10,000,000.
         Votes cast were  approximately  97% in favor of the  amendment but were
         short of the 7,407,015  votes required to approve the amendments to the
         Company's Articles of Incorporation:

                  For:       7,092,841
                  Against:     200,310
                  Abstain:      36,949

(c)      The  affirmative  vote of a majority of the Common Stock of the Company
         represented  and voting at the meeting  was  received to adopt the 2000
         Stock Option Plan. Votes cast:

                  For:       6,791,369
                  Against:     521,707
                  Abstain:      17,024



ITEM 6.

         (a)    Exhibits:

                27.1  Financial Data Schedule

         (b)    Reports on Form 8-K:


                10.57 Amendment  to  Common  Stock  Purchase  Agreement  between
                      Torneaux  Ltd. and DBS  Industries,  Inc.,  dated June 30,
                      2000.


         Reports on Form 8-K

         The Company filed a report on Form 8-K on June 2, 2000  announcing  the
         Company's common stock purchase  agreement and related  agreements with
         Torneaux Ltd.



                                       15
<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of the  Securities  and  Exchange Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

                                       DBS INDUSTRIES, INC.



         DATE:  August 10, 2000        By:  /S/FRED W. THOMPSON
                                            -------------------------------
                                            FRED W. THOMPSON
                                            President

                                       By:  /S/STANTON C. LAWSON
                                            -------------------------------
                                            STANTON C. LAWSON
                                            Director Principal Financial Officer


                                       17