U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB

        [X]    QUARTERLY  REPORT  UNDER  SECTION  13 OR 15(d) OF THE  SECURITIES
               EXCHANGE  ACT OF 1934 for the  quarterly  period  ended March 31,
               1999

        [      ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES
               EXCHANGE  ACT OF 1934 for the  transition  period from _______ to
               _______

                         COMMISSION FILE NUMBER 0-28348

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


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

                        100 Shoreline Highway, Suite 190A
                              Mill Valley, CA 94946
                    (Address of principal executive offices)

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


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

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

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

Shares Outstanding as of April 30, 1999:  14,195,427

Transitional Small Business Disclosure FormaYes: ___      No    X  



<PAGE>ii



                                                      INDEX

<TABLE>
<S>                                                                                                      <C>  

                                                                                                            PAGE

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

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

Condensed  Consolidated Balance Sheets:
As of March 31, 1999 (unaudited) and December 31, 1998.........................................................2

Condensed Consolidated Statements of Operations (unaudited):
For the Three Months Ended March 31, 1999 and March 31, 1998
and for the period from April 25, 1990 (Inception)  to March 31, 1999..........................................3

Condensed Consolidated Statements of Cash Flows (unaudited):
For the Three Months Ended March 31, 1999 and March 31, 1998
and for the period from April 25, 1990 (Inception) to March 31, 1999 ..........................................4

Notes to Condensed Consolidated Financial Statements.........................................................5-7

ITEM  2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations.........................................................................8-11

PART II - OTHER INFORMATION

ITEM  1.  Legal Proceedings...................................................................................12

ITEM  4.  Submission of Matters to a Vote of Security Holders.................................................12

ITEM  6.  Exhibits and Reports on Form 8-K....................................................................12

</TABLE>



<PAGE>1



                                                     PART I

                                              FINANCIAL INFORMATION

ITEM 1.        FINANCIAL STATEMENTS

   
<PAGE>2


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

                                     ASSETS

<TABLE>
<S>                                                                              <C>                 <C>


                                                                                      March 31,         December 31,
                                                                                        1999                1998
Current assets:                                                                     (Unaudited)
                                                                                   ---------------     ---------------
     Cash and cash equivalents                                                   $      9,306,274     $     1,291,711
     Prepaid and other current assets                                                      58,091              71,138
                                                                                   ---------------     ---------------
        Total current assets                                                            9,364,365           1,362,849
                                                                                   ---------------     ---------------

Furniture and equipment (at cost)                                                          65,516              65,516
Less accumulated depreciation                                                              45,738              42,989
                                                                                   ---------------     ---------------
                                                                                           19,778              22,527
                                                                                   ---------------     ---------------

Other assets:
     Investments and advances                                                             851,490             851,490
     Goodwill, net of accumulated amortization of
       $88,056 and $87,428 respectively                                                     2,934               3,562
     Satellite construction costs                                                       2,338,425           1,272,083
                                                                                   ---------------     ---------------
                                                                                        3,192,849           2,127,135
                                                                                   ---------------     ---------------

            Total assets                                                         $     12,576,992     $     3,512,511
                                                                                   ===============     ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:                                                                
     Accounts payable                                                            $        143,431     $       240,240
     Customer advances                                                                    400,000             400,000
     Accrued liabilities                                                                   93,865             489,531
                                                                                   ---------------     ---------------
        Total current liabilities                                                         637,296           1,129,771
                                                                                   ---------------     ---------------

Stockholders' equity:
     Common stock                                                                           5,023               3,452
     Capital in excess of par value                                                    19,124,433           8,511,410
     Warrants                                                                           1,194,136           1,085,500
     Note receivable from stockholder                                                     (60,000)                  -
     Deficit accumulated during the development stage                                  (8,238,896)         (7,132,622)
     Treasury stock                                                                       (85,000)            (85,000)
                                                                                   ---------------     ---------------
        Total stockholders' equity                                                     11,939,696           2,382,740
                                                                                   ---------------     ---------------

            Total liabilities and stockholders' equity                           $     12,576,992     $     3,512,511
                                                                                   ===============     ===============
</TABLE>

<PAGE>3

                     DBSI INDUSTRIES, INC. AND SUBSIDIARIES
                         (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                  (Unaudited)
<TABLE>
<S>                                                              <C>                <C>               <C> 

                                                                                                        April 25, 1990
                                                                         Three Months Ended             (Inception) to
                                                                              March 31,                    March 31,
                                                                        1999              1998               1999
                                                                    --------------   ---------------    ----------------

Revenue                                                           $             -  $              -   $         161,420
                                                                    --------------   ---------------    ----------------

Cost and operating expenses:                                                                             
    Cost of revenue                                                             -                 -             127,580
    General and administrative                                            898,042           305,482           9,559,731
    Research and development                                              220,601            98,982           3,187,319
                                                                    --------------   ---------------    ----------------
                                                                        1,118,643           404,464          12,874,630
                                                                    --------------   ---------------    ----------------
        Loss from operations                                           (1,118,643)         (404,464)        (12,713,210)
                                                                    --------------   ---------------    ----------------

Other income (expense):
    Interest, net                                                          12,369            (1,678)           (697,090)
    Equity in loss of investees, net                                            -                 -            (512,920)
    Gain on sale of investment                                                  -                 -           5,829,218
    Other, net                                                                  -                 -             (56,634)
                                                                    --------------   ---------------    ----------------
                                                                           12,369            (1,678)          4,562,574
                                                                    --------------   ---------------    ----------------
        Loss before provision
         for income taxes and
         minority interests                                            (1,106,274)         (406,142)         (8,150,636)

Provision for income taxes                                                      -                 -              96,835
                                                                    --------------   ---------------    ----------------
        Loss before minority interests                                 (1,106,274)         (406,142)         (8,247,471)

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

        Net  loss                                                 $    (1,106,274) $       (406,142)  $      (8,238,896)
                                                                    ==============   ===============    ================

Basic net loss per share                                          $         (0.11)  $         (0.07)
                                                                    ==============   ===============

Diluted net loss per share                                        $         (0.11)  $         (0.07)
                                                                    ==============   ===============

Weighted average number of
    shares of common stock, basic                                       9,632,620         5,896,906
                                                                    ==============   ===============

Weighted average number of
    shares of common stock, diluted                                     9,632,620         5,896,906
                                                                    ==============   ===============
</TABLE>


<PAGE>4


                     DBSI INDUSTRIES, INC. AND SUBSIDIARIES
                         (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (Unaudited)


<TABLE>
<S>                                                              <C>               <C>                <C>    

                                                                                                        April 25, 1990
                                                                         Three Months Ended             (Inception) to
                                                                              March 31,                   March 31,
                                                                        1999              1998               1999
                                                                    --------------   ---------------    ----------------

Net cash used in operating activities                             $    (1,229,075) $        (50,007)  $     (11,176,479)
                                                                    --------------   ---------------    ----------------

Cash flows from investing activities:
    Proceeds from sale of investment                                            -                 -           1,099,940
    Proceeds from Loral settlement                                              -                 -           3,573,677
    Purchase of fixed assets                                                    -                 -            (111,047)
    Satellite construction payments                                    (1,066,342)                -          (2,338,425)
    Organization costs                                                          -                 -             (28,526)
    Advances to officers and shareholders                                 (60,000)                -             (91,187)
    Purchase of interest in Continental                                         -                 -          (2,292,409)
    Investments and advances                                                    -          (204,848)         (1,208,726)
    Net assets of purchased subsidiaries                                        -                 -            (147,500)
    Cash transferred from Fi-Tek IV, Inc.
      pursuant to the merger and reorganization                                 -                 -             156,648
    Cash of divested subsidiary                                                 -                 -                (277)
    Purchase of patents                                                         -                 -             (18,251)
    Proceeds from repayment of advances to affiliate                            -                 -             152,500
    Restricted cash on credit line                                              -                 -             300,000
                                                                    --------------   ---------------    ----------------
Net cash provided by investing activities                              (1,126,342)         (204,848)           (953,583)
                                                                    --------------   ---------------    ----------------

Cash flows from financing activities:
    Repayment of borrowing under credit line                                    -                 -            (300,000)
    Issuance of debentures                                                      -                 -           4,817,501
    Issuance of common stock                                           10,449,705                 -          18,600,447
    Redemption of common stock warrants                                         -                 -             (19,490)
    Stock issue costs                                                     (79,725)                -            (579,460)
    Purchase of shares                                                          -                 -              (5,000)
    Payment of debentures                                                       -                 -          (1,168,445)
    Proceeds from stockholders' loans                                           -                 -             442,750
    Payment of stockholders' loans                                              -                 -            (351,967)
                                                                    --------------   ---------------    ----------------
Net cash provided by financing activities                              10,369,980                 -          21,436,336

Net increase (decrease) in cash                                         8,014,563          (254,855)          9,306,274

Cash and cash equivalents,
    beginning of period                                                 1,291,711           383,054                   -
                                                                    --------------   ---------------    ----------------

Cash and cash equivalents,
    end of period                                                 $     9,306,274  $        128,199   $       9,306,274
                                                                    ==============   ===============    ================

Supplemental disclosures:
    Noncash financing activities:
        Value of warrants granted to non-employees                $       300,250
        Value of warrants representing stock issue costs          $       270,000
        Amortization of options granted to non-employees          $        53,000


</TABLE>


<PAGE>5


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





NOTE 1   UNAUDITED INTERIM FINANCIAL STATEMENTS

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

             The financial statements include all adjustments consisting of only
         normal recurring  adjustments  which are, in the opinion of management,
         necessary  to  present  fairly  the  condensed  consolidated  financial
         position of DBSI at March 31, 1999 and condensed  consolidated  results
         of  operations  and cash flows for the interim  periods  reported.  The
         results of  operations  for the 1999 interim  period  presented are not
         necessarily  indicative  of  expected  results for the full 1999 fiscal
         year.

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

             Certain information and footnote  disclosures normally contained in
         financial  statements  prepared in accordance  with generally  accepted
         accounting  principles  have been  condensed or omitted.  The condensed
         consolidated  financial  statements  should be read in conjunction with
         the  financial  statements  and notes  contained  in DBSI's 1998 Annual
         Report to Shareholders.


NOTE 2   INVESTMENTS AND ADVANCES 

             E-SAT Corporation

             In October  1994,  the Company and  Echostar  Communications,  Inc.
         formed E-SAT for the purpose of filing with the Federal  Communications
         Commission for a license to operate a low earth satellite system. E-SAT
         filed a license application with the Federal Communications  Commission
         on November 16, 1994. In April 1998, the FCC formally  approved E-SAT's
         application.  The Company holds a 20% interest in E-SAT.  The Company's
         total  investments in and advances to E-SAT  and EchoStar Communication
         were  $851,490 as of March 31, 1999. The  investment is accounted for 
         using the equity method.  As of March 31, 1999, the Company had net 
         advances receivable of $724,225 from Echostar,  which  represents the
         excess of advances to date to E-SAT over its  proportionate  20%  share
         of its  investee's  financing requirements.

NOTE 3         SATELLITE CONSTRUCTION COSTS

        On  December  15,  1998,  the  Company  and  Alcatel  Space   Industries
        ("Alcatel") entered into a Memorandum of Understanding and authorization
        to proceed  ("MOU")  pursuant to which  Alcatel would become the General
        Contractor  for the design,  construction  and launch  services  for the
        Company's  planned low earth orbit  satellites.  The Company and Alcatel
        are  negotiating  a definitive  agreement.  Upon signing of the MOU, the
        Company made a $1 million advance payment to Alcatel.




<PAGE>6


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




        Under  the  terms of the MOU  signed  with  Alcatel,  the  Company  made
        additional  payments  totaling $1 million in January and February  1999.
        The Company and Alcatel are negotiating a definitive agreement.

        During  the  construction  of the E-SAT  System,  the  Company is
        capitalizing  all  construction  costs.   Included  in  Satellite
        Construction Costs are approximately  $300,000 in engineering and other
        costs in connection  with the design of the  satellites and the
        $2 million payments to Alcatel for design services.

         On March 31,  1999,  the  Company  signed  construction  and launch
         contracts with two European  entities and made advance payments of $7.8
         million in April 1999.  Total payments under such cancelable  contracts
         will amount to approximately $47 million through January 2001. On April
         8,  1999,  the  Company  notified  the FCC that it had  entered  into a
         construction contract for the first two satellites of the E-SAT System.


NOTE 4   CUSTOMER ADVANCES

             The  Company's  wholly owned  subsidiary,  Global  Energy  Metering
         Services,  Inc.  (GEMS),  is  party to a  contract  to  deliver  10,000
         satellite radio units. The purchase order is for $1.2 million and under
         the terms of the purchase order, GEMS would receive a total of $500,000
         in  advance  payments  on the  contract,  based  on  certain  milestone
         achievements.  As of September 30, 1998,  this purchase  order had been
         suspended by both parties due to the  Company's  limited  access to the
         Argos System.  The $400,000 in milestone payments received are reported
         as customer advances on the accompanying balance sheet. These milestone
         payments could be subject to refund in whole or in part.


NOTE 5    NET LOSS PER SHARE

             In February 1997, the Financial  Accounting  Standards Board issued
         Statement of Financial  Accounting  Standards (SFAS) No. 128,  Earnings
         Per Share,  which  establishes  standards for computing and  presenting
         income  (loss)  per  share.  Under the new  standard,  basic net income
         (loss) per share is computed  based on the weighted  average  number of
         common shares outstanding and excludes any potential dilution.  Diluted
         net income per share reflects diluted effects of all outstanding common
         stock equivalents. Options and warrants to purchase 3,607,906 shares of
         common stock with exercise  prices from $.53 to $5.60 were  outstanding
         as of  March  31,  1999  and were  excluded  from  the  loss per  share
         calculation  for the three  month  period  then  ended as they have the
         effect of decreasing  loss per share.  Options and warrants to purchase
         1,418,233  shares of common  stock with  exercise  prices  from $.40 to
         $5.60 were  outstanding as of March 31, 1998 and were excluded from the
         loss per share  calculation for the quarter then ended as they have the
         effect of decreasing loss per share.


         NOTE 6     EQUITY TRANSACTIONS

             In February 1999, the Company issued 500,000 units each  consisting
         of a share of Common  Stock at a price of $3.00 per share and a warrant
         to purchase a share of Common Stock at an exercise price of $4.00. Sale
         of these  units  resulted  in gross  proceeds  to the  Company  of $1.5
         million.

             In March 1999, the Company received proceeds of approximately  $7.5
         million from the exercise of warrants to purchase 2.5 million shares of
         the Company's  Common Stock issued in  connection  with the 2.8 million
         unit offering discussed above.

            


<PAGE>7


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



             During April 1999, the two European contractors purchased 1,666,667
         shares of the Company's Common Stock for a total of $5 million in cash.

             Subsequent to December 31, 1998, the Company solicited  stockholder
         approval to increase  the number of  authorized  shares of Common Stock
         from 20,000,000 to 50,000,000.  The requisite  stockholder approval was
         obtained.



<PAGE>8



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

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

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

General

     DBS  Industries,  Inc.  ("the  Company") has  historically  recognized  its
operating costs and expenses primarily through its twenty percent interest (20%)
in E-SAT, Inc. ("E-SAT").

Plan of Operation

        Throughout 1999, the Company plans to advance the satellite  development
pursuant to the FCC license  granted to E-SAT,  Inc.  ("E-SAT")  by  negotiating
vendor  agreements  with the  objectives  of beginning  construction  of the LEO
satellites,  securing  a launch  service  provider,  and  developing  the ground
support network. The plan includes a research and development program to produce
low cost ASIC chip  remote  terminal  units.  The  Company  plans to satisfy all
milestone conditions expressed within the Little Leo license issued by the FCC.

        The Company plans to attract  partners to the E-SAT project who would be
engaged in technical and  marketing  aspects to  effectuate  the business  plan.
Technical and marketing  personnel resources may be increased and will depend on
those resources provided by E-SAT partners.

        The  Company  expects  to  satisfy  its 1999  cash  requirements,  which
includes contract  milestone  payments of approximately  $19.8 million (of which
$7.8 million has been paid subsequent to March 31, 1999), by  supplementing  its
present  working  capital  resources with other outside  sources of capital,  in
addition to attracting new equity partners in the E-SAT project. For example, in
April 1999,  two  European  contractors,  who are  providing  satellite  design,
construction and launch services to the Company,  purchased  1,666,667 shares of
the Company's Common Stock for a total of $5 million in cash.

Results of Operations

Revenues

        The Company  remains in the  development  stage and did not generate any
revenues in either the quarter ended March 31, 1999 or March 31, 1998.

Cost and Operating Expenses

        Cost and operating  expenses for the quarter ended March 31, 1999,  were
$1,118,643 as compared to $404,464 for the quarter ended March 31, 1998. General


<PAGE>9


and  administrative  expenses  increased by  approximately  $592,560 to $898,042
during the  quarter  ended March 31,  1999,  compared to $305,482 in the quarter
ended March 31, 1998. This  significant  increase in general and  administrative
expenses was due primarily to  approximately  $260,000 in  compensation  expense
relating to stock  options  granted for  services  provided by  consultants  and
non-employee directors, and the expansion of the Company's business interests in
Europe and the U.S.

        Research and development  expenditures increased  approximately $121,619
to $220,601 during the quarter ended March 31, 1999,  compared to $98,982 in the
quarter  ended  March 31,  1998.  This  significant  increase  in  research  and
development  was due  primarily  to the issuance of E-SAT's FCC license in April
1998 and related  increases  in  engineering  and design costs  associated  with
meeting  the  terms of the FCC  license  and the  development  of the  satellite
system.  In addition,  $94,000 in compensation  expense was incurred relating to
options granted for services provided by a consultant for the E-SAT project.

Other Income (Expense)

        The Company  experienced a non-operating gain of $12,369 for the quarter
ended March 31, 1999,  compared to a loss of $1,678 for the quarter  ended March
31, 1998. During 1999, earned interest income was recognized on cash received in
connection with the exercise of  approximately  2.5 million warrants to purchase
the Common Stock of the Company at an exercise price of $3.00 per share.

Net Loss

        The  Company's  net loss for the  quarter  ended  March  31,  1999,  was
$1,106,274  compared to a net loss of $406,142  for the quarter  ended March 31,
1998.  During the first quarter of 1999,  the Company's net interest  income was
offset by operating and non-operating expenses.

Liquidity and Capital Resources

        The Company has been in the  development  stage since its  inception and
has not generated any significant  revenues or capital resources.  The Company's
monthly  expenses  averaged  approximately  $350,000  per month during the first
quarter of 1999 which included  approximately  $250,000 per month for operating,
legal and  consulting  expenses,  and  $100,000  per month for E-SAT  research &
development.  However,  expenses will continue to increase  during 1999 with the
demands of  developing  the  satellites  for the E-SAT  System (and  contractual
obligations related to such development) and business  applications of the E-SAT
System,  and  additional  capital  will be  necessary  to expand  operations  or
continue  current  operations.  During the  quarter  ended March 31,  1999,  the
Company  raised $1.5 million in gross  proceeds from a private  placement of its
Common Stock and $7.5 million from the  exercise of  outstanding  warrants.  The
Company  made  approximately  $1.1  million in payments  to several  contractors
during the first  quarter of 1999.  Subsequent  to the  quarter  ended March 31,
1999, the Company made additional contractual payments of $7.8 million.

        Traditionally,  the Company has relied on equity and debt  financings to
fund  its  operations.  This  financing  was  supplemented  from the sale of the
Company's  interest in entities that held direct broadcast  satellite  licenses.
The Company no longer has any interest in direct broadcast satellite  licensees.
The Company will need substantial  additional capital, an estimated $111 million
over the next 24 months,  to construct and launch the satellites  comprising the
E-SAT  System.  Further,  the  construction  of the first two of the six planned
satellites  was required to commence by March 1999  pursuant to the terms of the
FCC  license  granted  to  E-SAT  and  will  require  milestone  payments  of an
additional $24.5 million over the next 12 months, through April of 2000.


<PAGE>10



        The Company had cash and cash  equivalents  of $9,306,274 and $1,291,711
as of March 31, 1999 and 1998, respectively.  The Company had working capital of
$8,727,069  as of March 31, 1999  compared to working  capital of $233,078 as of
March 31, 1998. Until the Company is able to develop,  construct and operate its
E-SAT System and derive  revenues  therefrom,  the Company will  continue to use
cash obtained from outside  sources for its  operations  and  development of the
E-SAT System.

        Net cash used in operating  activities  was  $1,229,075  for the quarter
ended March 31,  1999,  as  compared to $50,007 for the quarter  ended March 31,
1998. Net cash used in operating  activities  increased  during 1999 as compared
with the same quarter last year was a result of increased cash  expenditures  as
the Company expanded its development  activity relating to the E-SAT System. The
increased level of development costs is expected to continue through 1999.

        Net cash used in investing  activities  for the quarter  ended March 31,
1999, was $1,066,342. This net cash used represents a loan to a director secured
by the  Company's  stock for  $60,000 and  approximately  $1 million in progress
payments  relating  to  satellite  construction  costs.  Net  cash  provided  by
investing  activities  was $204,848 in 1998 and was comprised of  investments in
and advances to E-SAT or EchoStar.

        Net cash  provided by financing  activities  for the quarter ended March
31, 1999, was  $10,369,980  compared to no financing  activities for the quarter
ended March 31,  1998.  Net cash  provided by financing  activities  during 1999
related  to the net  proceeds  from the sale of units of  common  stock for $1.5
million,  exercise of warrants for $7.5 million,  and the exercise of options by
directors,  officers and employees of the Company, as well as other non-employee
grants.

        In July 1996, the Company began to receive milestone  payments under the
terms of a $1.2 million purchase order for 10,000  satellite radio units.  Under
this  agreement,  the  Company was  eligible  to receive up to $500,000  towards
development costs upon meeting the milestone  requirements of the contract.  The
Company met the first four milestones of the contract and has received  $400,000
in cash.  Currently,  the Company and ABB Power T&D Company, Inc. have suspended
their  development  under this  agreement due to the expiration of the Company's
agreement  for the use of the  Argos  System  (a  satellite  location  and  data
collection  system) on December 31 1997,  and the  subsequent  limits  placed on
future commercial use of the Argos System.  Therefore,  such milestone  payments
could be subject to refund, in whole or in part.

Risks and Uncertainties Affecting Future Operating Results

         A number of factors  could cause  future  results to differ  materially
from  historic  results.  Among  these  factors is the fact that the  Company is
currently   negotiating  with  EchoStar  regarding  the  Company's  obtaining  a
controlling interest in E-SAT, which owns the FCC license.  EchoStar owns 80% of
E-SAT. To date, negotiations have not produced acceptable terms for the transfer
of control of the FCC license. Other factors, in addition to those identified in
this report,  which could affect  future  results  would  include the  Company's
ability  to retain a prime  contractor  for the  development,  construction  and
deployment  of the E-SAT  System,  the  Company's  ability to raise  significant
additional capital from outside sources for the development of the E-SAT System,
the availability of capital on commercially  acceptable terms, the completion of

<PAGE>11


a commercially  viable E-SAT System,  the dependence and  uncertainty of utility
companies or other commercial  customers to utilize such data messaging service,
the reliance on third parties for the  advancement of the design,  manufacturing
and  marketing of the E-SAT  System,  satisfying  the  milestones of E-SAT's FCC
license and construction  contracts,  the fulfillment of contract obligations by
suppliers and other third parties,  the availability of qualified  personnel and
equipment, delays in the receipt of or failure to receive necessary governmental
approvals,  obtaining  permits  and  licenses  or  renewals  thereof,  risks and
uncertainties  relating  to general  economic  and  political  conditions,  both
domestically and internationally,  changes in the law and regulations  governing
the Company's activities in the Little LEO satellite technology,  results of the
Company's  financing  efforts and marketing  conditions,  and other risk factors
related to the Company's  business.  Readers of this report are cautioned not to
put undue reliance on "forward  looking"  statements which are, by their nature,
uncertain as reliable indicators of future performance.

         Successfully  addressing  the  factors  discussed  above is  subject to
various risks described in this report, as well as other factors which generally
affect the market for stocks of development  stage,  high technology  companies.
These factors could affect the price of the Company's stock and could cause such
stock prices to fluctuate significantly over relatively short periods of time.


Impact of the Year 2000 Issue

        The Year 2000 Issue is the result of  computer  programs  being  written
using two digits  rather  than four to define the  applicable  year.  Any of the
Company's,  or  its  suppliers'  and  customers'  computer  programs  that  have
date-sensitive  software may recognize a date using "00" as the year 1900 rather
than the year 2000.  This could  result in system  failures  or  miscalculations
causing  disruptions of operations  including,  among other things,  a temporary
inability to process  transactions,  send invoices,  or engage in similar normal
business activities. In the Company's assessment,  because the Company's and its
subsidiaries'  information systems are primarily comprised of recently purchased
personal computers and software, the Company does not believe that the Year 2000
Issue will materially affect its operations.

        In addition, in developing the E-SAT System, the Company will be relying
on vendors to, among other things, manufacture the Little LEO satellites, launch
the Little LEO  satellites,  manufacture the remote terminal units and build the
E-SAT infrastructure including the control stations which are Y2K compliant. The
Company has entered into  contracts  with  several  vendors to develop the E-SAT
System,  and, an assessment has been made as to their Year 2000  compliance.  As
part of ongoing  contract  negotiations,  the Company will request and determine
the vendors' Year 2000 readiness.  In the event that it is determined that a key
vendor will not be Year 2000  compliant,  this may have an adverse effect on the
Company's business plans.



<PAGE>12



                                                     PART II

                                                OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

        The  Company is not a party to any legal  proceedings.  In July 1998,  a
complaint was filed in the Superior  Court of  California,  County of Marin,  by
Bridge Group (HK) International, Ltd. (the "Bridge Group") against the Company's
president,  alleging that the Bridge Group was promised  shares of the Company's
common stock.  The Company  agreed to indemnify its president for any damages or
settlement  related to this  lawsuit.  During the quarter  ended March 31, 1999,
this case was settled by issuing 63,239 shares of the Company's common stock and
paying $15,000 to the Bridge Group.

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

        During the first  quarter of 1999,  the  Company  solicited  stockholder
approval  to  increase  the  number of  authorized  shares of common  stock from
20,000,000 to  50,000,000.  The  solicitation  was made by  stockholder  consent
without a meeting.  The stockholder  solicitation  resulted in 6,872,666  shares
voting for the increase;  162,987 shares voting against the increase; and 31,301
shares  abstaining.   Consequently,   the  requisite  stockholder  approval  was
achieved.

ITEM 6.

        (a)     Exhibits:

                 27.1  Financial Data Schedule

        (b)     Reports on Form 8-K:

                 None.



<PAGE>13


                                   SIGNATURES

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


                              DBS INDUSTRIES, INC.



        DATE:  May 19, 1999               By: /s/ FRED W. THOMPSON
                                                  ----------------------------
                                                  Fred W. Thompson,
                                                  President and Chief Financial
                                                  Officer