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 June 30, 2001

[ ]  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 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, 2001: 21,997,407

Transitional Small Business Disclosure Format: Yes: ___    No X

<PAGE>ii

                                      INDEX

                                                                            PAGE

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

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

Condensed Consolidated Balance Sheets (unaudited):
As of June 30, 2001 and December 31, 2000......................................1

Condensed Consolidated Statements of Operations (unaudited):
For the Three and Six Months Ended June 30, 2001 and June 30, 2000
and for the period from April 25, 1990 (Inception)  to June 30, 2001...........2

Condensed Consolidated Statements of Cash Flows (unaudited):
For the Six Months Ended June 30, 2001 and June 30, 2000
and for the period from April 25, 1990 (Inception) to June 30, 2001 ...........3

Notes to Condensed Consolidated Financial Statements........................4-10

ITEM  2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations........................................11-15

PART II - OTHER INFORMATION

ITEM  1.  Legal Proceedings...................................................16

ITEM  2.  Changes in Securities...............................................16

ITEM  4.  Submission of Matters to a Vote of Security Holders.................16

ITEM  6.  Exhibits and Reports on Form 8-K....................................17

<PAGE>1


                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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


<TABLE>
<CAPTION>
                                     ASSETS
                                                                    June 30,     December 31,
                                                                       2001          2000
                                                                   -----------   -----------
<S>                                                              <C>           <C>
Current assets:
    Cash and cash equivalents                                      $     2,397   $   389,319
    Prepaid and other current assets                                    96,071        57,378
                                                                   -----------   -----------
      Total current assets                                              98,468       446,697
                                                                   -----------   -----------
Furniture and equipment (net)                                           27,915        32,393
Investments, advances and other                                      2,369,088     2,369,088
Satellite construction costs                                        12,229,907    12,229,907
                                                                   -----------   -----------
      Total other assets                                            14,626,910    14,631,388
                                                                   -----------   -----------
           Total assets                                            $14,725,378   $15,078,085
                                                                   ===========   ===========

  LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                               $ 1,154,326   $ 1,482,476
    Customer advances                                                  400,000       400,000
    Accrued compensation                                               704,083       601,132
    Related party loans                                                 55,000             -
    Other accrued liabilities                                          325,649       179,410
                                                                   -----------   -----------
      Total current liabilities                                      2,639,058     2,663,018
                                                                   -----------   -----------

Series B Mandatorily Redeemable Convertible Preferred Stock,
    $0.0004 par value; 550 Shares authorized; 440 issued
    and outstanding at June 30, 2001 and December 31, 2000
    (liquidation preference $400,000)                                  400,000       347,971
                                                                   -----------   -----------
Stockholders' equity:
    Series A Convertible Preferred Stock, $0.0004 par value
      35,897 share authorized; 25,899 issued and outstanding
      at June 30, 2001 and December 31, 2000;
      (liquidation preference $ 776,970)                                    11            11
    Common stock, $0.0004 par value; 100,000,000 shares
      authorized; 19,755,055 and 15,601,143 issued and
      outstanding at June 30, 2001 and December 31, 2000,
      respectively                                                       7,922         6,260
    Capital in excess of par value                                  29,882,010    29,204,964
    Warrants                                                         3,231,113     2,911,654
    Deferred stock-based compensation                                 (225,064)     (450,129)
    Deficit accumulated during the development stage               (21,209,672)  (19,605,664)
                                                                  ------------   -----------
        Total stockholders' equity                                  11,686,319    12,067,096
                                                                   -----------   -----------
          Total liabilities, mandatorily redeemable preferred
            stock, and stockholders' equity                        $14,725,378   $15,078,085
                                                                   ===========   ===========

</TABLE>

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

<PAGE>2

                     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,
                                           2001           2000            2001            2000            2001
                                       -----------    ------------    ------------    ------------    -------------
<S>                                    <C>            <C>             <C>             <C>             <C>
Revenue                                $         -    $          -    $          -    $          -    $     161,420
                                       -----------    ------------    ------------    ------------    -------------
Cost and operating expenses:
  Cost of revenue                                -               -               -               -          127,580
  Marketing and sales                       41,922         304,472          86,761         666,972        2,731,109
  General and administrative               479,687       1,662,360       1,296,161       2,650,193       18,054,669
  Research and development                     618          63,096           1,132         237,803        4,749,921
                                       -----------    ------------    ------------    ------------    -------------
                                           522,227       2,029,928       1,384,054       3,554,968       25,663,279
                                       -----------    ------------    ------------    ------------    -------------
    Loss from operations                  (522,227)     (2,029,928)     (1,384,054)     (3,554,968)     (25,501,859)

Other income (expense):
  Interest, net                            (11,860)            648         (24,154)          1,927         (680,216)
  Equity in loss of investees, net               -               -               -               -         (512,920)
  Gain on sales of investments                   -               -               -               -        5,829,218
  Other, net                                     -               -               -          (1,721)         (56,634)
                                       -----------    ------------    ------------    ------------    -------------
                                           (11,860)            648         (24,154)            206        4,579,448
                                       -----------    ------------    ------------    ------------    -------------
    Loss before provision
     for income taxes and
     minority interest                    (534,087)     (2,029,280)     (1,408,208)     (3,554,762)     (20,922,411)

Provision for income taxes                    (400)              -            (800)              -         (100,835)
                                       -----------    ------------    ------------    ------------    -------------
    Loss before minority interest         (534,487)     (2,029,280)     (1,409,008)     (3,554,762)     (21,023,246)

Minority interest in income of
  consolidated subsidiaries                      -               -               -               -            8,575
                                       -----------    ------------    ------------    ------------    -------------
    Net loss                           $  (534,487)   $ (2,029,280)   $ (1,409,008)   $ (3,554,762)   $ (21,014,671)
                                       ===========    ============    ============    ============    =============
Dividend relating to the issuance
  of warrants to Series B Preferred
  Stockholders                         $  (195,000)             -     $   (195,000)              -         (195,000)
                                       -----------    ------------    ------------    ------------    -------------
    Net loss attributable
    to Common Stockholders             $  (729,487)   $ (2,029,280)   $ (1,604,008)   $ (3,554,762)   $ (21,209,671)
                                       -----------    ------------    ------------    ------------    -------------
Basic and diluted net loss per share   $     (0.04)   $      (0.14)   $      (0.08)   $      (0.25)
                                       ===========    ============    ============    ============
Weighted average number of
  shares of common stock, basic
  and diluted                           19,755,055      14,517,748      18,930,281      14,448,316
                                       ===========    ============    ============    ============
</TABLE>

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


<PAGE>3
                      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,
                                                                  2001            2000            2001
                                                              ------------   ------------    -------------

<S>                                                       <C>              <C>              <C>
Reconciliation of net loss to net cash
  used in operating activities
  Net loss                                                    $ (1,409,008)  $ (3,554,762)   $ (21,014,672)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization                                    4,479          9,427          468,320
    Minority interest's share of net loss                                -              -           (8,575)
    Noncash charges                                                216,000        (60,000)       1,974,045
    Amortization of stock-based compensation                       225,064        494,558        2,261,676
    Issuance of options and warrants
      for services rendered                                         40,950        470,700        1,836,466
    Issuance of common stock in connection
      with litigation settlement                                         -              -          324,391
    Equity in loss of investees, net                                     -              -          529,972
    Loss (gain) on sales of investments                                  -              -       (5,829,218)
    Allowance for losses on advances                                     -              -          216,932
    Common stock issued as payment for interest                          -              -            7,000
    Decrease (increase) in accounts receivable and
      other assets                                                 (38,693)        45,463          (76,867)
    Increase (decrease) in accounts payable
      and accrued liabilities                                      (23,960)     1,164,998        1,910,062
    Increase in customer advances                                        -              -          400,000
                                                              ------------   ------------    -------------
      Net cash used in operating activities                       (985,169)    (1,429,616)     (17,000,469)
                                                              ------------   ------------    -------------
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)        (145,441)
  Satellite construction costs                                           -       (125,644)     (12,229,907)
  Organization costs                                                     -              -          (28,526)
  Repayment (issuance) of note receivable from stockholder               -              -          (31,187)
  Purchase of interest in Continental                                    -              -       (2,292,409)
  Investments, advances and other                                        -              -       (2,726,325)
  Net assets of purchased subsidiaries                                   -              -         (147,500)
  Cash transferred from Fi-Tek IV, Inc.
    pursuant to the merger and reorganization                            -              -          156,648
  Cash of divested subsidiary                                            -              -             (277)
  Purchase of patents                                                    -              -          (18,251)
  Proceeds from repayment of advances to affiliate                       -              -          152,500
  Restricted cash on credit line                                         -              -          300,000
                                                              ------------   ------------    -------------
      Net cash used in investing activities                              -       (128,348)     (12,337,057)
                                                              ------------   ------------    -------------
Cash flows from financing activities:
  Repayment of borrowing under credit line                               -              -         (300,000)
  Issuance of debentures                                                 -              -        4,817,501
  Issuance of Common and Preferred Stock                           675,371      1,410,395       27,292,110
  Redemption of common stock warrants                                    -              -          (19,490)
  Stock issue costs                                                (77,125)      (103,307)      (1,367,536)
  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                   598,246      1,307,088       29,339,923
                                                              ------------   ------------    -------------
Net increase (decrease) in cash and cash equivalents              (386,922)      (250,876)           2,397
Cash and cash equivalents, beginning of period                     389,319        282,945                -
                                                              ------------   ------------    -------------
Cash and cash equivalents, end of period                      $      2,397   $     32,069    $       2,397
                                                              ============   ============    =============

</TABLE>

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

<PAGE>4

                      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), its wholly owned
     subsidiaries,  Global Energy Metering  Services,  Inc. and Newstar Limited,
     and its majority  owned  subsidiary,  E-SAT,  Inc. (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, 2001 and condensed  consolidated  results of operations
     and cash flows for the interim periods reported.  The results of operations
     for the 2001 interim  period  presented are not  necessarily  indicative of
     expected results for the full 2001 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 2000 Annual Report on
     Form 10-KSB.

          Certain  reclassifications  have  been  made  to  the  2000  financial
     statements to conform to the 2001  presentation  with no effect on net loss
     as previously reported.


NOTE 2 INVESTMENTS, ADVANCES AND OTHER ASSETS

     E-SAT, Inc. (E-Sat)

          In October 1994, the Company and EchoStar formed E-SAT for the purpose
     of filing  with the FCC for a license  to operate a low earth  orbit  (LEO)
     satellite system. E-SAT filed with the FCC on November 16, 1994.


          On March 31,  1998,  the Federal  Communications  Commission  approved
     E-SAT's application for a LEO 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.

<PAGE>5

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


          On July 30, 1999, the Company  entered into an agreement with EchoStar
     under  which it would  receive  60.1% of E-SAT's  shares  from  EchoStar in
     exchange for consideration,  including the grant of rights to use up to 20%
     of the satellite  capacity of the E-SAT system by EchoStar.  As a result of
     this   transaction,   which  was  subsequently   approved  by  the  Federal
     Communications  Commission, the Company now owns 80.1% of the E-SAT shares.
     In connection with the  negotiations  of the share purchase  agreement with
     EchoStar,  the Company  paid  $1,517,187  to a  consultant  during 1999 and
     capitalized such costs in the E-SAT investment account.

          The Company's total  investments in, and advances to, E-SAT as of June
     30, 2001 and December 31, 2000 were  $851,490.  The investment is accounted
     for using the equity  method.  The Company's  equity in losses of E-SAT for
     the six months ended June 30, 2001 and 2000, were $0.

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,  2001.  The  Company  reviews
     capitalized  satellite  construction  and FCC license costs for  impairment
     whenever  events or changes in  circumstances  indicate that their carrying
     amounts may not be  recoverable.  Lack of receipt of adequate  financing to
     build and prepare to launch two LEO satellites  sufficiently  in advance of
     the required FCC launch date in September 2002, may represent an impairment
     event  and  result  in the write  down of such  capitalized  costs to their
     recoverable value.

          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 $7.8 million in April 1999 and
     $2.0 million in July 1999. Total payments under these cancelable  contracts
     will amount to approximately $47 million. 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  signed a contract with Alcatel Space
     Industries  for the final design,  construction  and delivery to the launch
     site of six Little LEO  satellites.  This agreement also includes the final
     design,  construction and delivery of the ground infrastructure,  including
     the gateway earth station, mission center, satellite control center, ground
     communications  network and ground-based  transceivers to be installed into
     devices,  like utility  meters.  Alcatel is also  responsible for providing
     in-orbit  testing of the NewStar  System.  The total contract price for the
     end-to-end system is $88.5 million. Either party has the right to terminate
     this agreement under certain circumstances.  The Company paid $2 million in
     construction  payments to Alcatel,  pursuant to which Alcatel completed the
     preliminary  engineering design review for the Company's system,  including

<PAGE>6

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


     the payload  design and designs for the gateway  earth station and tracking
     facilities,  as well as the satellite  orbital analysis and  communications
     link  margins to and from space.  The  Agreement  with  Alcatel  required a
     payment at the end of 1999 of  approximately  $9.1  million in cash and the
     equivalent  of $5 million in Common  Stock.  This payment was necessary for
     Alcatel to  continue  work and to trigger  an  effective  date for our full
     system development schedule. As of July 31, 2001, this payment has not been
     made, and Alcatel therefore has the right to consider this contract void as
     to further  work,  and that the  contract is  therefore  not  currently  in
     effect.

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  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

          Basic net loss per share is  computed  based on the  weighted  average
     number of common shares  outstanding and excludes any potentially  dilutive
     securities.  Options and warrants to purchase  10,104,075  shares of common
     stock with exercise prices from $0.17 to $5.60 were  outstanding as of June
     30,  2001 and were  excluded  from the loss per share  calculation  for the
     three  and six  month  periods  then  ended  as they  have  the  effect  of
     decreasing  loss per share.  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 three and six month periods 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. At the June 2001 annual meeting,  the Company's
     stockholders  voted to increase  this number from  5,000,000 to  10,000,000
     shares.  This increase will take effect when management  files an amendment
     with the State of Delaware to the Company's Articles of Incorporation.  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.

<PAGE>7

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


     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. At the June 2001 annual meeting,  the Company's
     stockholders  voted to increase this number from  50,000,000 to 100,000,000
     shares.  This increase will take effect when management  files an amendment
     with the State of Delaware to the Company's Articles of Incorporation. 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

          In January  2001,  we  received  proceeds  in a private  placement  of
     $200,000  from an  accredited  investor in exchange  for 400,000  shares of
     Common  Stock and a warrant  to  purchase  100,000  shares of Common  Stock
     exercisable  at $1.00 per share.  In connection  with this  transaction,  a
     finder's fee of $14,000 was paid and a warrant was issued for 40,000 shares
     of Common  Stock  exercisable  at $1.00 per  share.  The fair value of such
     warrants of $16,120 was recorded as stock  issuance costs and was estimated
     on the date of grant using the Black Scholes  model.  The  transaction  was
     exempt from  registration  in reliance upon Section 4(2) of the  Securities
     Act.

          In January  2001,  we  received  proceeds  in a private  placement  of
     $50,000 from three  accredited  investors in exchange for 100,000 shares of
     Common  Stock and  warrants  to  purchase  12,500  shares  of Common  Stock
     exercisable  at $1.00 per share.  In connection  with this  transaction,  a
     finder's  fee of $3,500 was paid and a warrant was issued for 5,000  shares
     of Common  Stock  exercisable  at $1.00 per  share.  The fair value of such
     warrants of $2,155 was recorded as stock issuance cost and was estimated on
     the date of grant using the Black Scholes model. The transaction was exempt
     from registration in reliance upon Section 4(2) of the Securities Act.

          In March 2001, we received proceeds in a private placement of $250,000
     from an accredited  investor in exchange for 568,000 shares of Common Stock
     and a warrant to purchase  113,636  shares of Common Stock  exercisable  at
     $0.90 per share. An additional warrant to purchase 450,000 shares of Common
     Stock  exercisable  at $0.50 per share  was  issued to the same  accredited
     investor,  relative to the same  transaction,  in April 2001. In connection
     with this transaction, a finder's fee of $17,500 was paid and a warrant was
     issued for 56,818 shares of Common Stock exercisable at $.90 per share. The
     fair value of such warrants of $19,034 was recorded as stock  issuance cost
     and was estimated on the date of grant using the Black Scholes  model.  The
     transaction  was exempt from  registration in reliance upon Section 4(2) of
     the Securities Act.

          In March 2001,  the  Company  received  proceeds  of $47,700  from the
     exercise  of options to  purchase  90,000  shares of the  Company's  Common
     Stock.

          In March 2001, we issued 488,136 shares of Common Stock of the Company
     to a consultant  for services  rendered for a total fair value of $216,000.
     The transaction was exempt from  registration in reliance upon Section 4(2)
     of the Securities Act.

<PAGE>8

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


          In May 2001, the Company  received  six-month loans from three current
     stockholders  and a director of the  Company in the amount of  $30,000.  In
     consideration  for the loans,  the Company will pay interest at the rate of
     6.5% per annum,  and has issued warrants to said  stockholders and director
     to  purchase  a  total  of  200,000  shares  of  restricted   Common  Stock
     exercisable at $0.25 per share.

          In June 2001, the Company received a six-month loan from a director of
     the Company in the amount of $25,000.  In  consideration  for the loan, the
     Company will pay  interest at the rate of 6.5% per annum,  and has issued a
     warrant to the director to purchase a total of 125,000 shares of restricted
     Common Stock exercisable at $0.45 per share.

          The fair value of such  warrants  of  approximately  $41,000  has been
     capitalized and is being amortized over the term of the loans.

          On June 26, 2001, the Company's Series B preferred stockholders agreed
     to modify their preferred stock agreement with the Company.  As a result of
     the modification, the Company was required to file a registration statement
     for the Series B equity by August 4, 2001.  The  Company has not filed such
     registration statement as of the date of this filing and is now required to
     record  a  monthly  accretion  of 5% of  the  Series  B  preferred  stock's
     liquidation  amount of  $400,000  beginning  in August  2001 as long as the
     filing is delinquent.  The preferred stockholders have the right to require
     redemption of the Series B preferred stock amounts,  including  accretions,
     90 days  subsequent  to August 4, 2001 in the event  that the  registration
     statement is not declared effective at that time.

          In  conjunction  with this  modification,  the  Company  issued to the
     Series B preferred  stockholders warrants to purchase 500,000 shares of the
     Company's  common  stock at an exercise  price of $.17 per share.  The fair
     value of $195,000 of such warrants was  calculated  using the Black Scholes
     option model with the following variables:  exercise price of $.17, closing
     stock  price  on June  26,  2001 of  $.44,  life of  warrants  of 3  years,
     volatility of 150% and risk free  interest rate of 5.5%.  The value of such
     warrants  was  deemed  to be  analogous  to a  dividend  to  the  preferred
     stockholders  as prescribed  under the provisions of EITF 98-5,  Accounting
     for  Convertible   Securities  with  Beneficial   Conversion   Features  on
     Contingently  Adjustable  Conversion Ratios, and was recognized at the date
     of issuance as the warrants were immediately exercisable.

     Equity Transactions with Employees

          In January 2001,  6,375 shares of Common Stock of the Company,  valued
     at $10,000, were issued to one of the Company's  non-employee Directors for
     service on the Board.

          In January 2001, the Company  received  approximately  $3,150 from the
     sale of stock to an employee  pursuant to the 1999 Employee  Stock Purchase
     Plan.

          In February  2001,  stock  options to purchase  750,000  shares of the
     Company's  Common Stock were granted to seven  employees in accordance with
     the Company's 2000 Stock Option Plan.

<PAGE>9

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



NOTE 7 RECENT ACCOUNTING PRONOUNCEMENTS

          In July 2001 the Financial  Accounting  Standards  Board (FASB) issued
     SFAS No. 141  "BusinessCombinations"  and SFAS No. 142  "Goodwill and Other
     Intangible  Assets."SFAS No. 141 requires business  combinations  initiated
     after  June 30,  2001 to be  accounted  for  using the  purchase  method of
     accounting,  and  broadens the criteria  for  recording  intangible  assets
     separate from goodwill. Recorded goodwill and intangibles will be evaluated
     against  this new  criteria  and may  result in certain  intangibles  being
     subsumed into goodwill,  or alternatively,  amounts  initially  recorded as
     goodwill may be separately  identified and recognized  apart from goodwill.
     SFAS No. 142 requires the use of a nonamortization  approach to account for
     purchased  goodwill  and  certain  intangibles.   Under  a  nonamortization
     approach,  goodwill  and certain  intangibles  will not be  amortized  into
     results of  operations,  but instead would be reviewed for  impairment  and
     written  down and charged to results of  operations  only in the periods in
     which the recorded  value of goodwill and certain  intangibles is more than
     its fair value.  The provisions of each  statement  which apply to goodwill
     and  intangible  assets  acquired prior to June 30, 2001 will be adopted by
     the  Company on January 1,  2002.  We do not expect the  adoption  of these
     accounting  standards  will  have a  significant  impact  on our  financial
     position or results of operations.

NOTE 8 SUBSEQUENT EVENTS

          In July 2001,  the Company  received  approximately  $375,000 from the
     Torneaux  Fund and  accredited  investors  in  connection  with the sale of
     1,909,458 shares of Common Stock and 600,000 warrants to purchase shares of
     the  Company's  Common  Stock at an  exercise  price of $.17 per share.  In
     addition,  the Company  agreed to reprice  73,791  existing  Torneaux  Fund
     warrants  ranging in price from  $1.0126 to $1.1342 to $.17 per share.  The
     sales were made to the accredited investors in reliance by the Company upon
     the exemption from registration  provided by Section 4(2) of the Securities
     Act.

          On July 9, 2001,  the Company  issued  43,411  shares of Common  Stock
     valued at $18,000 to two  Directors  as payment for service on the Board of
     Directors.

          On July 9, 2001,  the Company  granted a warrant to  purchase  250,000
     shares of its Common  Stock to a consultant  as part of an agreement  dated
     July 9, 2001.  The  warrant has an  exercise  price of $.38 per share.  The
     transaction was exempt from  registration in reliance upon Sec. 4(2) of the
     Securities Act.

          Also on July 9,  2001,  the  Company  granted  a warrant  to  purchase
     250,000  shares of its Common Stock to a consultant as part of an agreement
     dated July 9, 2001.  The warrant  has an exercise  price of $.38 per share.
     The transaction was exempt from  registration in reliance upon Sec. 4(2) of
     the Securities Act.

<PAGE>10

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


          On July 17, 2001, the Company received  approximately  $4,350 from the
     sale of 12,083  shares of Common  Stock to  employees  pursuant to the 1999
     Employee Stock Purchase Plan for the period ended June 30, 2001.

          On July 27, 2001,  the Company sold 250,000 shares of its Common Stock
     to an accredited investor.  The stock was sold for $.60 per share resulting
     in gross  proceeds to the Company of  $150,000.  In  addition,  the Company
     issued a warrant to purchase  25,000 shares of its Common Stock at $.60 per
     share.  The  transaction  was performed by the Company in reliance upon the
     exemption from registration provided by Section 4(2) of the Securities Act.

          On July 27, 2001,  the Company sold 333,334 shares of its Common Stock
     to an accredited investor.  The stock was sold for $.60 per share resulting
     in gross  proceeds to the Company of  $200,000.  In  addition,  the Company
     issued a warrant to purchase  33,333 shares of its Common Stock at $.60 per
     share.  The  transaction  was performed by the Company in reliance upon the
     exemption from registration provided by Section 4(2) of the Securities Act.

          On July 27, 2001,  the Company sold 16,666  shares of its Common Stock
     to an accredited investor.  The stock was sold for $.60 per share resulting
     in gross  proceeds  to the  Company of $10,000.  In  addition,  the Company
     issued a warrant to purchase  1,666  shares of its Common Stock at $.60 per
     share.  The  transaction  was performed by the Company in reliance upon the
     exemption from registration provided by Section 4(2) of the Securities Act.

          On July 27, 2001,  the Company  received  proceeds of $16,500 from the
     exercise  of  options by a Director  under the 1996  Stock  Option  Plan to
     purchase 27,500 shares of the Company's Common Stock.

          On August 7,  2001,  in order to  continue  to retain  and  incent the
     employees  of the  Company,  non-plan,  non-qualified  stock  options  were
     granted to employees to purchase a total of 2,362,505 shares of the Company
     at current market value of $.77 per share.

<PAGE>11

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     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 development
stage    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 (LEO) satellites
operating  below the 1Ghz frequency  range.  In June of 2001, we entered into an
operator-to-operator   agreement  with  Iridium   Satellite  LLC.  Through  this
agreement,  we expect to begin providing data messaging services this year using
a system that we believe will ultimately be complementary to E-SAT.

Plan of Operations

     We have  continued  our plan to  construct  and  deploy a  low-cost  global
satellite   system   utilizing  our  E-Sat  FCC  and   international   licenses.
Bankruptcies  in the satellite  sector and sharp declines in  telecommunications
and  technology  sectors have impeded our  financing  efforts and required us to
modify our business  strategy.  Our current strategy is to take advantage of the
telecommunications  downturn to secure low-cost  capacity on existing  satellite
systems and combine it with the energy communications  technologies developed by
the  Company   over  the  past  ten  years,   with  an  objective  of  achieving
profitability and proving our market potential in fiscal 2002.

     On June 2, 2001 DBSI signed an operator-to-operator  agreement with Iridium
Satellite LLC to provide remote  monitoring  and control  services to the energy
industry.  Through  this  agreement,  the  Company  expects  to begin  providing
specialized satellite-based data services using Iridium's commercially available
satellite  network by late 2001,  significantly  ahead of our planned  satellite
launch in late 2002.

     On June 14,  2001 we  demonstrated  to the  media and to  California  state
officials how a satellite-based  energy control system could curtail electricity
consumption by deactivating  air  conditioning  units located on the rooftops of
California shopping malls.

     At the same time,  management  has continued  efforts to reduce the overall
cost  of its  E-Sat  system  and to  identify  and  commence  negotiations  with
strategic  partners  who could serve as both  customers  and  financiers  of the
Company's satellite-based energy management systems.

     The current circumstances in the satellite and telecommunications industry,
as well as in the broad stock market and technology  stocks in particular,  have
also led to delays in raising short-term  operating capital. The Company's right
to raise capital by selling  common shares to the Torneaux Fund has been limited

<PAGE>12

by the  Company's  stock price,  which,  during the first two quarters of fiscal
2001, has been below the contractual minimum threshold price of $1.00 per share.
Any sale of shares to the  Torneaux  Fund at prices below that  threshold  price
requires  Torneaux  Fund  approval.  As a result of  deficiencies  in short-term
capital  raising,  the Company has delayed  payment to many of its vendors,  and
certain of its employees  have deferred  receipt of salaries due. As of June 30,
2001,  the  Company's  cash and cash  equivalents  amounted to $2,397  while its
current   liabilities,   including  amounts  owed  to  employees,   amounted  to
$2,639,058.  Throughout the year,  management has continued to focus on reducing
operating  expenses while  concentrating  its efforts on raising  short-term and
strategic  financing and  establishing a current  operating  business  utilizing
existing satellite capacity.

     Until the  Company  has begun to generate  positive  cash flow  through its
commercial operations, we will continue to seek to satisfy our cash requirements
by raising new equity and debt  capital,  as well as by seeking the  exercise of
previously  issued  third-party  warrants  and stock  options.  The  issuance of
additional  equity  securities by us will result in significant  dilution of the
equity interests of the current stockholders.

Results of Operations

Revenues

     The Company remains in the development  stage and did not generate revenues
in either the quarter ended June 30, 2001 or June 30, 2000.

Operating Expenses

     Total  operating  expenses for the  quarters  ended June 30, 2001 and 2000,
were $522,227 and $2,029,928 respectively.  Total operating expenses for the six
months ended June 30, 2001 were $1,384,054 as compared to $3,554,968 for the six
months ended June 30, 2000. The decrease is  attributable  to the cost reduction
plan put into effect by management  in October 2000 and  continued  through July
2001.  This plan  included the  reduction of our  Marketing and our Research and
Development staff in November 2000 as well as a significant reduction in General
and Administration costs.

Marketing and Sales Expenses

     Marketing  and sales  expenses for the three months ended June 30, 2001 and
2000 were $41,922 (8.0% of operating  expenses) and $304,472 (15.0% of operating
expenses)  respectively.  The decrease of $580,211 to $86,761 (6.3% of operating
expenses) during the six months ended June 30, 2001, compared to $666,972 (18.8%
of  operating  expenses)  in the six months  ended June 30,  2000 was due to the
reduction of our marketing and sales group in the fourth  quarter of fiscal 2000
in order to reduce our cash expenditures.

General and Administrative Expenses

     General and  administrative  expenses include the costs of finance,  legal,
administrative   and  general   management   functions  of  DBSI.   General  and
administrative  expenses  for the  quarters  ended  June 30,  2001 and 2000 were
$479,687  (91.9% of  operating  expenses)  and  $1,662,360  (81.9% of  operating
expenses)  respectively.  The decrease of  $1,354,032  to  $1,296,161  (93.6% of
operating  expenses)  during the six months  ended June 30,  2001,  compared  to
$2,650,193 (74.5% of operating  expenses) in the six months ended June 30, 2000,
was primarily  due the cost  reduction  plan put in place by DBSI  management in
October 2000. The  cost-savings  measures  adopted by the Company  resulted in a
decrease in personnel and travel costs of $328,000,  a decrease in Legal fees of
$293,000,  and a decrease in consulting  fees of $629,000  during the six months
ended June 30, 2001.

<PAGE>13

Research and Development Expenses

     Research and development  expenses  represent the costs incurred to develop
our system.  Research and  development  expenses for the quarters ended June 30,
2001 and 2000  were $618  (0.1% of  operating  expenses)  and  $63,096  (3.1% of
operating  expenses)  respectively.  The decrease of $236,671 to $1,132 (0.1% of
operating  expenses)  during the six months  ended June 30,  2001,  compared  to
$237,803  (6.7% of operating  expenses)  for the six months ended June 30, 2000,
was a result  of the cost  reduction  plan  put in place by DBSI  management  in
October 2000. The  cost-savings  measures  adopted by the Company  resulted in a
decrease  in  personnel  and travel  costs of  $172,000,  a decrease in rent and
occupancy costs of $41,000,  and a decrease in consulting fees of $33,000 during
the six months ended June 30, 2001.

Non-Cash Stock Compensation

     In order to  attract  and  retain  personnel,  we have  granted  options to
purchase  2,033,106 shares of Common Stock at exercise prices ranging from $0.39
to $2.81 to several  employees.  Some of the exercise prices were below the fair
market  value of the Common  Stock at the time of grant,  resulting  in deferred
stock  compensation  of  $2,490,337.  This  amount is being  amortized  over the
vesting periods of the granted options,  and as a result,  $112,532 and $247,277
was recognized as non-cash stock compensation expense in the quarters ended June
30,  2001 and 2000,  respectively.  For the six months  ended June 30,  2001 and
2000, the Company  recognized  Non-Cash Stock Compensation costs of $225,064 and
$494,555 respectively.

Net Loss

     Our net loss for the quarter  ended June 30, 2001 and 2000 was $534,487 and
$2,029,280  respectively.  The  decrease in net loss was due to cost  reductions
made  by  DBSI's  management  while  we  continue  to seek  system  construction
financing.

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  $174,000  per month  during  the second  quarter of fiscal  2001,
compared to $676,000  during the second quarter of fiscal 2000.  However,  if we
proceed to raise sufficient financing, expenses will increase during fiscal 2001
with  the  demands  of  increased  efforts  in  developing  our  systems  and in
implementing our business plan.  Additional  capital will be necessary to expand
operations or continue current operations.

     During the six months ended June 30, 2001,  we received  proceeds  from the
sale of common stock totaling approximately $675,000 before stock issuance costs
of  approximately  $77,000.  These  transactions  include private  placements of
1,358,182  shares  of the  Company's  common  stock for an  aggregate  amount of
$600,000 and proceeds in the amount of  approximately  $48,000 from the exercise
of 91,375 options and warrants.  The proceeds from these  transactions were used
primarily to fund our ongoing operations and investing activities.

     We had cash and cash  equivalents of $2,397 and $32,069 as of June 30, 2001
and 2000  respectively.  We had a negative  working  capital of $2,565,468 as of
June 30, 2001,  compared to a negative  working capital of $2,292,114 as of June
30, 2000.  Until we have  initiated our  commercial  operations,  and have begun
generating positive cash therefrom,  we must continue to raise cash from outside
sources for the  Company's  operations  and for the  development  of the NewStar
System.

<PAGE>14

     Net cash used in  operating  activities  for the six months  ended June 30,
2001 was  $985,168 as compared to  $1,429,616  for the six months ended June 30,
2000. This resulted from a net loss of $1,409,008 offset primarily by (1) Common
Stock issued for  consulting  services in the amount of  $216,000,  (2) non-cash
stock compensation of $225,064, (3) Warrants issued for services rendered in the
amount of $40,950,  and increased by (4) a reduction in accounts  receivable and
other  assets of $38,693  and (5) a reduction  in  accounts  payable and accrued
liabilities of $23,960.

     Net cash used in  investing  activities  for the six months  ended June 30,
2001, was $0 as compared to $128,348 for the quarter ended June 30, 2000. Due to
the Company's focus on its financing efforts, no fixed assets were purchased nor
payments made for the construction of its satellite system.

     Net cash provided by financing activities for the six months ended June 30,
2001,  was  $598,246  compared to  $1,307,088  for the six months ended June 30,
2000. 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 the
Company's  Common  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, 2001, 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
systems,  and, if implemented,  to develop a sufficiently large customer base to
be profitable.

     While  we  continue  the  strategic  fund-raising  efforts  (see  "Plan  of
Operations") that are necessary to our ultimate  success,  our continued cost of
operations  significantly  exceeds  our  short-term  capital.  In  addition,  we
currently  estimate that we will require  approximately  $120 million in capital
related to the  construction  and launch costs  associated  with our system.  No
assurance can be given that the 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  that  is  not  currently
available.

     Other factors, in addition to those identified in this filing,  which could
affect future results would include the  dependence  and  uncertainty of utility
companies or other commercial  customers to utilize our data messaging  service,
the reliance on third parties for the  advancement of the design,  manufacturing
and marketing of the NewStar  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

<PAGE>15

our  activities in the Little LEO satellite  technology,  unscheduled  delays or
technological   difficulties,   satellite  launch  risks,   potential  satellite
malfunction, limited availability of insurance, results of our financing efforts
and marketing  conditions,  competition,  and other risk factors  related to our
business.  Readers of this  filing are  cautioned  not to put undue  reliance on
"forward  looking"  statements that are, by their nature,  uncertain as reliable
indicators of future performance.

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

<PAGE>16

                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     None.

ITEM 2.  CHANGES IN SECURITIES

          In May 2001, the Company  received  six-month loans from three current
     stockholders  and a director of the  Company in the amount of  $30,000.  In
     consideration  for the loans,  the Company will pay interest at the rate of
     6.5% per annum,  and has issued warrants to said  stockholders and director
     to  purchase  a  total  of  200,000  shares  of  restricted   Common  Stock
     exercisable at $0.25 per share.

          In June 2001, the Company received a six-month loan from a director of
     the Company in the amount of $25,000.  In  consideration  for the loan, the
     Company will pay  interest at the rate of 6.5% per annum,  and has issued a
     warrant to the director to purchase a total of 125,000 shares of restricted
     Common Stock exercisable at $0.45 per share.

          The fair value of such  warrants  of  approximately  $41,000  has been
     capitalized and is being amortized over the term of the loans.

          On June 26, 2001, the Company's Series B preferred stockholders agreed
     to modify their preferred stock agreement with the Company.  As a result of
     the modification, the Company was required to file a registration statement
     for the Series B equity by August 4, 2001.  The  Company has not filed such
     registration statement as of the date of this filing and is now required to
     record  a  monthly  accretion  of 5% of  the  Series  B  preferred  stock's
     liquidation  amount of  $400,000  beginning  in August  2001 as long as the
     filing is delinquent.  The preferred stockholders have the right to require
     redemption of the Series B preferred stock amounts,  including  accretions,
     90 days  subsequent  to August 4, 2001 in the event  that the  registration
     statement is not declared effective at that time.

          In  conjunction  with this  modification,  the  Company  issued to the
     Series B preferred  stockholders warrants to purchase 500,000 shares of the
     Company's  common  stock at an exercise  price of $.17 per share.  The fair
     value of $195,000 of such warrants was  calculated  using the Black Scholes
     option model with the following variables:  exercise price of $.17, closing
     stock  price  on June  26,  2001 of  $.44,  life of  warrants  of 3  years,
     volatility of 150% and risk free  interest rate of 5.5%.  The value of such
     warrants  was  deemed  to be  analogous  to a  dividend  to  the  preferred
     stockholders  as prescribed  under the provisions of EITF 98-5,  Accounting
     for  Convertible   Securities  with  Beneficial   Conversion   Features  on
     Contingently  Adjustable  Conversion Ratios, and was recognized at the date
     of issuance as the warrants were immediately exercisable.

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

          On June 5,  2001,  the  Company  held its annual  shareholder  meeting
     wherein the following matters were acted upon:

<PAGE>17

     (a)  A majority of the voting stock of the Company approved the election of
          one  director  of the  Company to hold  office for a  three-year  term
          ending at the  Annual  Meeting of  Stockholders  in 2004 and until his
          successor is elected and qualified. Votes cast:

           Director                 For            Withheld
           ------------------------------------------------
           Michael T. Schieber    15,733,778      1,638,823

     (b)  The affirmative vote of a majority of the outstanding shares of Common
          Stock  of the  Company  was  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:

          For:         10,940,669
          Against:         76,319
          Abstain:          7,825

          Previously,  the  Company's  Certificate  of  Incorporation,  as  last
          amended in 1999,  authorized  the  issuance  of  50,000,000  shares of
          Common  Stock  with a par value of  $0.0004  per  share and  5,000,000
          shares of Preferred Stock with par value of $0.0004 per share. Both of
          these  increases will take effect when  management  files an amendment
          with the State of Delaware to the Company's Articles of Incorporation.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

     (10.64) Operator-to-Operator Agreement  between Iridium  Satellite  LLC and
             DBS Industries  dated  May 24,  2001.  (Confidential  Treatment has
             been requested with regards to certain portions of this agreement.)

(b)  Reports on Form 8-K:

     None.

<PAGE>18

                                   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, 2001                        By:    /s/ FRED W. THOMPSON
                                                      --------------------
                                                       FRED W. THOMPSON
                                                       President

                                                By:    /s/ STANTON C. LAWSON
                                                       ---------------------
                                                       STANTON C. LAWSON
                                                       Chief Financial Officer