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 September 30,
               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 September 30, 1999: 14,345,427

Transitional Small Business Disclosure Forma  Yes: [ ]   No  x


<PAGE>ii

<TABLE>
<S>                                                                                  <C>

                                             INDEX


                                                                                          PAGE

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

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

Condensed  Consolidated Balance Sheets:
As of September 30, 1999 (unaudited) and December 31, 1998 (audited).........................1

Condensed Consolidated Statements of Operations (unaudited):
For the Three Months and Nine Months Ended September 30, 1999 and September 30, 1998
and for the period from April 25, 1990 (Inception) to September 30, 1999.....................2

Condensed Consolidated Statements of Cash Flows (unaudited):
For the Nine Months Ended September 30, 1999 and September 30, 1998
and for the period from April 25, 1990 (Inception) to September 30, 1999.....................3

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

ITEM  2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations........................................................7

PART II - OTHER INFORMATION.................................................................11

ITEM  5.       Other Information............................................................11

ITEM  6.       Exhibits and Reports on Form 8-K.............................................11

</TABLE>

<PAGE>1

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


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

                                                                                   September 30,
                                                                                       1999             December 31,
                                                                                    (Unaudited)             1998
                                                                                  ---------------       -------------
                                     ASSETS

Current assets:
     Cash and cash equivalents                                                   $      1,205,454     $     1,291,711
     Prepaid and other current assets                                                      57,711              71,138
                                                                                  ---------------       -------------
        Total current assets                                                            1,263,165           1,362,849
                                                                                  ---------------       -------------
Furniture and equipment (at cost)                                                          83,027              65,516
Less accumulated depreciation                                                              51,840              42,989
                                                                                  ---------------       -------------
                                                                                           31,187              22,527
                                                                                  ---------------       -------------
Other assets:
     Investments and advances                                                           2,368,677             851,490
     Goodwill, net of accumulated amortization of
       $89,314 and $87,428 respectively                                                     1,676               3,562
     Satellite construction costs                                                      13,164,729           1,272,083
                                                                                  ---------------       -------------
                                                                                       15,535,082           2,127,135
                                                                                  ---------------       -------------

            Total assets                                                         $     16,829,434     $     3,512,511
                                                                                  ===============        ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:

     Accounts payable                                                            $      1,337,776     $       240,240
     Customer advances                                                                    400,000             400,000
     Accrued liabilities                                                                   78,517             489,531
                                                                                  ---------------       -------------
        Total current liabilities                                                       1,816,293           1,129,771
                                                                                  ---------------       -------------
Stockholders' equity:
     Common stock                                                                           5,757               3,452
     Capital in excess of par value                                                    26,826,924           8,511,410
     Warrants                                                                           1,194,136           1,085,500
     Note receivable from shareholder                                                     (60,000)                  -
     Deferred stock compensation                                                       (1,594,226)                  -
     Deficit accumulated during the development stage                                 (11,274,450)         (7,132,622)
     Treasury stock                                                                       (85,000)            (85,000)
                                                                                  ---------------       -------------
                                                                                       15,013,141           2,382,740
                                                                                  ---------------       -------------
            Total liabilities and stockholders' equity                           $     16,829,434     $     3,512,511
                                                                                  ===============       =============
</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>
<S>                                       <C>                <C>             <C>               <C>                  <C>
                                                                                                                    April 25, 1990
                                                  Three Months Ended                  Nine Months Ended             (Inception) to
                                                     September 30,                      September 30,                September 30,
                                                1999              1998             1999              1998               1999
                                            --------------    --------------   --------------   ---------------    ----------------

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

Cost and operating expenses:
    Cost of revenue                                     -                 -                -                 -             127,580
    Marketing and sales                           297,791                 -          297,791                 -             297,791
    General and administrative                    743,384           688,424        2,420,183         1,339,069          11,081,872
    Research and development                      455,606           198,358          814,830           545,772           3,781,548
    Non-cash stock compensation                   710,477                 -          710,477                 -             710,477
                                            --------------    --------------   --------------   ---------------    ----------------
                                                2,207,258           886,782        4,243,281         1,884,841          15,999,268
                                            --------------    --------------   --------------   ---------------    ----------------
        Loss from operations                   (2,207,258)         (886,782)      (4,243,281)       (1,884,841)        (15,837,848)
                                            --------------    --------------   --------------   ---------------    ----------------

Other income (expense):
    Interest, net                                  25,804             9,211          101,453            11,405            (608,006)
    Equity in loss of investees, net                    -            (6,733)               -          (100,143)           (512,920)
    Gain (loss) on sale of investment                   -                 -                -          (228,323)          5,829,218
    Other, net                                          -                 -                -                 -             (56,634)
                                            --------------    --------------   --------------   ---------------    ----------------
                                                   25,804             2,478          101,453          (317,061)          4,651,658
                                            --------------    --------------   --------------   ---------------    ----------------
        Loss before provision for income
         taxes and minority interests          (2,181,454)         (884,304)      (4,141,828)       (2,201,902)        (11,186,190)

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

        Loss before minority interests         (2,181,454)         (884,304)      (4,141,828)       (2,201,902)        (11,283,025)

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

        Net  loss                         $    (2,181,454)  $      (884,304) $    (4,141,828) $     (2,201,902)  $     (11,274,450)
                                            ==============    ==============   ==============   ===============    ================

Net loss per share, basic and diluted     $         (0.15)  $        (0.13)  $         (0.33) $         (0.35)
                                            ==============    ==============   ==============   ===============

Weighted average number of
    shares of common stock,
    basic and diluted                          14,266,067         6,857,472       12,665,510         6,220,861
                                            ==============    ==============   ==============   ===============

</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>
<S>                                                                              <C>             <C>             <C>
                                                                                                                     April 25, 1990
                                                                                       Nine Months Ended             (Inception) to
                                                                                         September 30,               September 30,
                                                                                     1999             1998               1999
                                                                                ---------------   --------------    ---------------

Net cash used in operating activities                                         $     (2,004,167) $    (1,205,423)  $    (11,951,571)
                                                                                ---------------   --------------    ---------------

Cash flows from investing activities:
    Proceeds from sale of investment                                                         -          199,940          1,099,940
    Proceeds from Loral settlement                                                           -                -          3,573,677
    Purchase of fixed assets                                                           (17,511)          (3,720)          (128,558)
    Satellite construction payments                                                (11,892,646)               -        (13,164,729)
    Organization costs                                                                       -                -            (28,526)
    Advances to officers and shareholders                                              (60,000)               -            (91,187)
    Purchase of interest in Continental                                                      -                -         (2,292,409)
    Investments and advances                                                        (1,517,187)        (407,292)        (2,725,913)
    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                                              (13,487,344)        (211,072)       (13,314,585)
                                                                                ---------------   --------------    ---------------

Cash flows from financing activities:
    Repayment of borrowing under credit line                                                 -                -           (300,000)
    Issuance of debentures                                                                   -                -          4,817,501
    Issuance of common stock                                                        15,559,354        5,781,103         23,710,096
    Redemption of common stock warrants                                                      -                -            (19,490)
    Stock issue costs                                                                 (154,100)        (442,500)          (653,835)
    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                                           15,405,254        5,338,603         26,471,610

Net increase (decrease) in cash                                                        (86,257)       3,922,108          1,205,454

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

Cash and cash equivalents, end of period                                      $      1,205,454  $     4,305,162   $      1,205,454
                                                                                ===============   ==============    ===============

Supplemental disclosures:
    Noncash activities:
        Amortization of deferred compensation to employees                    $        710,500
        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                      $        416,000


</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) 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  September  30, 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 financial
           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     EQUITY IN INCOME & LOSSES OF INVESTEES

           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 and  Echostar  holds the  remaining  80%. The  Company's  total
           investments  in and  advances to E-SAT were  $851,490 as of September
           30, 1999. The investment is accounted for using the equity method.

           On July 30, 1999, the Company entered into an agreement with Echostar
           under which it will receive 60.9% of E-SAT's  shares from Echostar in
           exchange for rights to use up to 20% of the satellite capacity of the
           E-SAT  system  by  Echostar.  As a result  of this  transaction,  the
           Company  will own  80.9% of the E-SAT  shares.  This  share  purchase
           agreement is subject to approval by the FCC. In  connection  with the
           negotiations  of the share  purchase  agreement  with  EchoStar,  the
           Company has entered into a service  contract with a consultant  for a
           minimum of $1.5 million in fees.  As of September 30, the Company had
           paid  $1,517,187 on this contract and  capitalized  such costs in the
           E-SAT investment account.

<PAGE>5



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




NOTE 3     SATELLITE CONSTRUCTION COSTS

           During  the  construction  of  the  E-SAT  System,   the  Company  is
           capitalizing  all design,  engineering  and  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.  Upon
           signing of the MOU, the Company made a $1 million  advance payment to
           Alcatel  and,  in  January  and  February   1999,  the  Company  made
           additional payments totaling $1 million.

           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 and $2.8  million  in July  1999.  Total
           payments   under   these   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.

           In July 1999,  the Company and its two European  contractors  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.


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.  Under the terms of the $1.2 million  purchase
           order,  GEMS would receive a total of $500,000 in advance payments on
           the  contract,   based  on  certain  milestone  achievements.   These
           milestone  payments are refundable if the contractee does not qualify
           GEMS' automatic meter reading system.  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

           The Company  presents net loss per share in accordance with Statement
           of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share,
           whereby   basic  net  loss  per  share  is  computed   based  on  the
           weighted-average number of common shares outstanding and excludes any
           potential  dilution.  Diluted  net loss per  share  does not  include
           common stock equivalents due to their  antidilutive  effect.  Options
           and  warrants  to  purchase  5,273,012  shares of common  stock  with
           exercise  prices from $.39 to $5.60 were  outstanding as of September
           30, 1999 and were  excluded from the loss per share  calculation  for
           the  quarter and the nine month  periods  then ended as they have the
           effect of decreasing loss per share. Options and warrants to purchase
           6,018,531  shares of common stock with  exercise  prices from $.40 to
           $5.60 were  outstanding  as of September  30, 1998 and were  excluded
           from the loss per share  calculation  for the  quarter and nine month
           periods  then  ended as they have the effect of  decreasing  loss per
           share.


<PAGE>6




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




NOTE 6     EQUITY TRANSACTIONS

           In January  and  February  1999,  the  Company  received  proceeds of
           approximately   $1.45  million  from  the  exercise  of  options  and
           warrants.

           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 unit
           offering discussed above.

           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.

           Also in April 1999, the Company received proceeds of $30,000 from the
           exercise of options to purchase 20,000 shares of the Company's Common
           Stock.

           In August  1999,  the Company  received  proceeds of $79,650 from the
           exercise  of  options to  purchase  150,000  shares of the  Company's
           Common Stock.

           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.

           In August and September 1999, the Company granted options to purchase
           1,913,106  shares of the  Company's  Common Stock at exercise  prices
           ranging  from  $0.39  to  $2.81  to  several  employees  and  service
           providers.  Some of the  exercise  prices  were below the fair market
           value of the Common Stock at the time of grant, resulting in deferred
           stock  compensation  of  approximately  $2.7 million.  This amount is
           being amortized over the vesting periods of the granted options. As a
           consequence,  $710,477 was recognized as non-cash stock  compensation
           expense during the three months ended September 30, 1999.


NOTE 7     SUBSEQUENT EVENT

           On October 8, 1999, the Company and Alcatel entered into an agreement
           under  which  Alcatel  will  serve  as  prime   contractor   for  the
           construction   of   the   Company's   low   earth   orbit   satellite
           communications  system.  This  agreement  becomes  effective upon the
           Company's  payment  of $14.1 million  to  Alcatel within 40 days from
           October 8, 1999.


<PAGE>8



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

GENERAL

        DBS  Industries,  Inc. ("DBSI"  or  the  "Company")  intends to  provide
worldwide two-way data and messaging  service using a commercial low earth orbit
("Little LEO") satellite-based network communications system called the  NewStar
System.  DBSI intends to market its services  to industrial customers who do not
need "real time" access to information but instead need information  on a daily,
weekly,  or monthly  basis.  The  NewStar  System  will be based on the  Federal
Communications  Commission  ("FCC") license held by E-SAT,  Inc.  ("E-SAT"),  in
which DBSI  currently  has a 20%  interest.  DBSI designed this system and it is
currently  under   construction  by  DBSI's  prime  contractor,   Alcatel  Space
Industries  ("Alcatel"). On July 31, 1999,  we signed a contract  with  EchoStar
which  has  agreed  to  transfer  to  us, subject to the approval of the FCC, an
additional  60.1% of the ownership in E-SAT, in exchange for  the  right  to use
20% of the NewStar  System's  communications  capacity.  Assuming  the change in
control is approved by the FCC, DBSI will own 80.1% in E-SAT,  the holder of the
FCC license.

        During the three months ended September 30, 1999, DBSI began to actively
market its proposed data and messaging services through its subsidiary,  NewStar
Ltd.  NewStar has recently hired five new employees and it is currently  working
on certain  industry  studies and  reports,  and meeting  with  potential  joint
venture partners and customers.

Results of Operations

Revenues

        DBSI remains in the development  stage and did not generate any revenues
in either the three or nine months ended  September  30, 1999,  or September 30,
1998.

Cost and Operating Expenses

        Cost and  operating  expenses for the three months ended  September  30,
1999,  were  $2,207,258  as  compared  to $886,782  for the three  months  ended
September 30, 1998.  During the three months ended  September 30, 1999, cost and
operating  expenses  increased  primarily in marketing  and sales,  research and
development,  and non-cash stock compensation.  This increase is a result of the
Company devoting substantial amounts of its financial and personnel resources on
developing and marketing its  satellite-  based network  communications  system.
Cost and operating  expenses for the nine months ended  September 30, 1999, were
$4,243,281  as compared to  $1,884,841  for the nine months ended  September 30,
1998.  G & A expenses  for the three  months  ended  September  30,  1999,  were
$743,384 as compared to $688,424 for the three-month  period ended September 30,
1998, and  $2,420,183 for the nine months ended  September 30, 1999, as compared
to $1,339,069 for the nine months ended September 30, 1998.

        During the three months ended  September 30, 1999,  DBSI began to market
NewStar's  proposed  data and  messaging  services.  For the three  months ended
September  30, 1999,  DBSI  incurred  marketing  and sales  expenses of $297,791
related  primarily  to the  activation  of  NewStar,  Ltd.  for  which  five new
employees  were hired,  including a new  president,  H. Tate Holt, a director of
DBSI.

        Further,  in order to attract and retain  personnel, the Company granted
options to purchase 1,913,106 shares of Common Stock at exercise prices  ranging


<PAGE>8



from $0.39 to $2.81 to several  employees  and  service  providers.  Some of the
exercise prices were below the fair market value of the Common Stock at the time
of grant,  resulting  in  deferred  stock  compensation  of  approximately  $2.7
million.  This amount is being amortized over the vesting periods of the granted
options, and as a result, $710,477 was recognized as non-cash stock compensation
expense  during the three months ended  September 30, 1999. No similar  expenses
were incurred during 1998.

        Research &  development  expenses  increased  to $455,606  for the three
months ended  September  30, 1999,  as compared to $198,358 for the three months
ended September 3, 1998, and to $814,830 for the nine months ended September 30,
1999, as compared to $545,772 for the nine months ended  September 30, 1998. The
increase was related to costs on the NewStar System and to the implementation of
satellite construction contracts.

        DBSI  expects  that  its G & A  expenses  and its  marketing  and  sales
expenses   will   continue  to  increase   as  the  Company   hires   additional
administrative  and marketing  personnel to support its satellite- based network
communications  system. In this regard,  during October 1999, DBSI hired Stanton
C. Lawson as its new Senior Vice  President of Finance,  and Randy Stratt as its
new Senior Vice President, General Counsel.

Other Income (Expense)

        During  the nine  months  ended  September  30,  1999,  DBSI  earned net
interest  income of $101,453 on cash received in  connection  with the Company's
fund-raising  efforts  through the  exercise of warrants  and options as well as
other equity transactions totaling approximately $15.4 million.  During the nine
months ended September 30, 1998, DBSI earned interest income of $11,405.

        For the nine months ended  September  30,  1998,  DBSI had a loss in its
investee,  Seimac Limited,  of $100,143,  and incurred a loss of $228,323 on the
subsequent sale of DBSI's 20% interest in Seimac Limited.

Net Loss

        DBSI's net loss for the three-month period ended September 30, 1999, was
$2,181,454  compared to $884,304 for the three-month  period ended September 30,
1998.  Net loss for the nine months ended  September  30, 1999,  was  $4,141,828
compared to a net loss of $2,201,902 for the nine-month  period ended  September
30, 1998.

Liquidity and Capital Resources

        The Company has been in the  development  stage since its  inception and
has not generated any significant  revenues from operations.  Excluding non-cash
compensation  expense,  the Company's  monthly expenses  averaged  approximately
$390,000 per month during the third quarter of 1999 which included approximately
$300,000 per month for operating, legal and consulting expenses, and $90,000 per
month for research &  development  relating to the NewStar  System.  The Company
anticipates  that expenses  will continue to increase  during 1999 and 2000 with
the  construction  of the  satellites  for the NewStar  System (and  contractual
obligations  related  to such  development)  and  the  development  of  business
applications  of the NewStar  System.  Additional  capital  will be necessary to
expand operations or continue current  operations.  During the nine months ended
September 30, 1999,  the  Company  raised $15.5 million in gross proceeds from a

<PAGE>9



private  placement  of its  Common  Stock  and  $30,000  from  the  exercise  of
outstanding options. The Company made approximately $11.9 million in payments to
several  contractors  during  the nine  months  ended  September  30,  1999,  in
connection  with the  construction  and launch of the satellites for the NewStar
System.

        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  has  sold  all of its  interests  in  direct  broadcast  satellite
licensees.  DBSI expects  that the  aggregate  cost to construct  and launch the
NewStar System into commercial  service will be approximately  $120.0 million of
which  approximately  $67.0  million  will be required  over the next 15 months.
Approximately  $11.9 in  construction  and launch  costs had been spent  through
September 30, 1999.  The satellite  construction  and launch  contracts  require
periodic  progress  payments  throughout the term of the contracts.  Anticipated
periodic   progress   payments   through  December  31,  1999,  will  amount  to
approximately $16.1 million. Failure to maintain these contracts would adversely
affect our  ability to  construct  the NewStar  System.  In order to finance the
construction  of the NewStar System and to provide the Company  working  capital
until  construction  can  be  completed,   DBSI  has  engaged  an  international
investment bank to assist it in raising capital through the issuance of bonds to
finance construction,  launch and deployment of the NewStar System. In addition,
DBSI is seeking to raise up to $20.0  million  through  the  issuance  of common
stock for working capital.

        The Company had cash and cash  equivalents  of $1,205,454 and $4,305,162
as of September 30, 1999 and 1998, respectively. The Company had working capital
(deficit) of $(553,128) as of September 30, 1999,  compared to a working capital
of $3,300,170  as of September  30, 1998.  Until the Company is able to develop,
construct  and operate its NewStar  System and derive  revenues  therefrom,  the
Company  will  continue  to use  cash  obtained  from  outside  sources  for its
operations and development of its data services business.

        Net cash used in operating activities was $2,004,167 for the nine months
ended  September 30, 1999,  as compared to $1,205,423  for the nine months ended
September 30, 1998. Net cash used in operating  activities  increased during the
nine months  ended  September  30, 1999,  as compared  with the same period last
year, as a result of increased  cash  expenditures  as the Company  expanded its
development  activity  relating to the NewStar  System.  This increased level of
development  costs is expected to continue  through the launch of the satellites
in 2001.

        Net  cash  used in  investing  activities  for  the  nine  months  ended
September 30, 1999, was $13,487,344. This net cash used represents approximately
$11.9 million in progress payments relating to satellite  construction costs and
approximately  $1.5  million  in  investments  and  advances.  Net cash  used in
investing  activities was $211,072 for the nine months ended September 30, 1998,
and was  comprised  of  investments  in and  advances to E-SAT of  approximately
$400,000  offset by net proceeds  from the sale of the Company's 20% interest in
Seimac Limited of $199,940.

        Net  cash  used in  financing  activities  for  the  nine  months  ended
September 30, 1999, was $15,405,254,  compared to $5,338,603 for the nine months
ended September 30, 1998. Net cash used in financing  activities during 1999 was
primarily  attributed to net proceeds from the sale of units of common stock for
$1.5 million, exercise of warrants for $7.5 million, the sale of common stock to
two  European  contractors  for $5  million,  and the  exercise  of  options  by
directors,  officers and employees of the Company, as well as other non-employee
grants.  Net cash  provided  was offset by stock  issue  costs of  approximately
$154,000 in the nine month period ended September 30, 1999.

<PAGE>10



        The Company  continues  to carry a liability  of $400,000  for  customer
advances  stemming  from a 1996  development  agreement  that  was  subsequently
suspended in 1997,  prior to completion.  Under the terms of the agreement,  the
Company may be required to refund these payments in whole or in part.
(See:  Notes to Condensed Consolidated Financial Statements, Note 4.)

Risks and Uncertainties Affecting Future Operating Results

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995.

        With the  exception  of  historical  facts  stated  herein,  the matters
discussed in this report are "forward looking" statements that involve risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
projected  results.  Such  "forward  looking"  statements  include,  but are not
necessarily  limited  to,  statements  regarding  anticipated  levels  of future
revenue and earning from the  operations  of the Company,  and its  subsidiaries
including  NewStar Limited  (collectively  the  "Company"),  projected costs and
expenditures relating to the Company's interest in low earth orbiting satellites
("NewStar  System")  technology and  development of its automated  meter reading
("AMR") business and the fact that the Company has reached an agreement, subject
to the approval of the FCC, with EchoStar for the transfer from EchoStar to DBSI
a controlling interest in E-SAT, which owns the FCC license. Currently, EchoStar
owns 80% of E-SAT.  On July 31, 1999, we signed a Stock Purchase  Agreement with
EchoStar in which has agreed to transfer to us,  subject to the  approval of the
FCC, an additional 60.1% of the ownership in E-SAT, in exchange for the right to
use 20% of the NewStar System's communications capacity.  Assuming the change in
control is approved  by the FCC,  we will own 80.1% in E-SAT,  the holder of the
FCC license.  Other  factors,  in addition to those  identified  in this report,
which could affect future  results would include:  (i) the Company's  ability to
raise  significant  additional  debt and equity capital from outside sources for
the  development of the NewStar System and the  availability  of such capital on
commercially  acceptable  terms;  (ii) the completion of a  commercially  viable
NewStar  System  and AMR  service;  (iii)  the  dependence  and  uncertainty  of
commercial customers to utilize the Company's AMR service;  (iv) the reliance on
third parties for the design, manufacturing and marketing of the NewStar System;
(v)  satisfying  the  milestones  of  the  FCC  license  granted  to  E-SAT  and
construction  contracts;   (vi)  the  fulfillment  of  contract  obligations  by
suppliers and other third parties and the  availability  of qualified  personnel
and  equipment;  (vii) delays in the receipt of or failure to receive  necessary
governmental  approvals or obtaining  permits and licenses or renewals  thereof.
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.  The  Company  disclaims  any  intent or  obligation  to
publicly update these "forward looking"  statements,  whether as a result of new
information, future events, or otherwise.

        Successfully  addressing  the  factors  discussed  above is  subject  to
various risks  described in this report,  as well as other factors such as 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  set  forth in the  Company's  registration
statement on Form SB-2, SEC File No.  333-77687 which was declared  effective on
June 1, 1999.  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.


<PAGE>11



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 NewStar  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  NewStar  System  infrastructure  including  the  satellite
control stations which are Y2K compliant. The Company has entered into contracts
with several vendors to develop the NewStar  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.

PART II.  OTHER INFORMATION

Item 5.   Other Information.

        On October 8, 1999, DBSI signed a contract with Alcatel Space Industries
of Toulouse,  France,  for the final design,  construction,  and delivery to the
launch site of our  constellation  of six Little LEO  satellites,  using  Surrey
Satellite  Technology  Limited,  of  Guildford-Surrey,   United  Kingdom,  as  a
subcontractor, and for the final design, construction and delivery of the ground
infrastructure,  including the gateway earth station,  mission center, satellite
control center, ground communications network, and the ground based transceivers
to be installed  into fixed assets such as electric  utility  meters.  The total
contract  price for the  end-to-end  system  is $88.5  million,  which  does not
include launch and insurance costs of approximately  $30 million.  This contract
becomes effective upon the Company's payment to Alcatel of $14.1  million within
40 days of the signing of the agreement.

Item 6.   Exhibits and Reports on Form 8-K

        Exhibit 27.1  Financial Data Schedule



<PAGE>12


                                          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:    October 27, 1999                       By:/s/ FRED W. THOMPSON
                                                       --------------------
                                                       Fred W. Thompson
                                                       President


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