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


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

                                   FORM 10-QSB

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


           X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          ---  SECURITIES EXCHANGE ACT OF 1934 for the quarterly period
               ended March 31, 2000

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



                           Commission File No. 0-28348



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

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


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

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


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

                          Yes  X                  No
                              ---                    ---

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

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

Shares Outstanding as of April 30, 2000:    14,460,557

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

<PAGE>

                                      INDEX


                                                                            PAGE

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

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

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

Condensed Consolidated Statements of Operations (unaudited):
For the Three Months Ended March 31, 2000 and March 31, 1999
and for the period from April 25, 1990 (Inception) to March 31, 2000...........2

Condensed Consolidated Statements of Cash Flows (unaudited):
For the Three Months Ended March 31, 2000 and March 31, 1999
and for the period from April 25, 1990 (Inception) to March 31, 2000 ..........3

Notes to Condensed Consolidated Financial Statements.........................4-7

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

PART II - OTHER INFORMATION...................................................12

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

ITEM  2. Recent Sales in Unregistered Securities..............................12

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

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

                                       ii

<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


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

                                     ASSETS

                                                      March 31,     December 31,
                                                        2000            1999
                                                     (Unaudited)
                                                     -----------    ------------

Current assets:
     Cash and cash equivalents                      $    351,574   $    282,945
     Prepaid and other current assets                     80,336        114,439
                                                    ------------   ------------

       Total current assets                              431,910        397,384
                                                    ------------   ------------

Furniture and equipment, net                              46,321         48,211
Investments, advances and other                        2,369,989      2,370,618
Satellite construction costs                          12,108,320     12,072,873
Deferred stock offering costs                            673,500        673,500
                                                    ------------   ------------

                                                      15,198,130     15,165,202
                                                    ------------   ------------

              Total assets                          $ 15,630,040   $ 15,562,586
                                                    ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                               $    363,277   $    478,334
     Customer advances                                   400,000        400,000
     Accrued liabilities                                 973,273        460,577
                                                    ------------   ------------

       Total current liabilities                       1,736,550      1,338,911
                                                    ------------   ------------

Stockholders' equity:
     Preferred stock, $0.0004 par value; 5,000,000
       shares authorized; 29,564 issued and
       outstanding at March 31, 2000                          12           --
     Common stock, $0.0004 par value; 50,000,000
       shares authorized; 14,453,958 and
       14,354,911 issued and outstanding at
       March 31, 2000 and December 31, 1999,
       respectively                                        5,801          5,762
     Capital in excess of par value                   27,921,481     26,968,174
     Warrants                                          1,885,096      1,890,436
     Note receivable from stockholder                    (60,000)       (60,000)
     Deferred stock-based compensation                (1,285,303)    (1,532,582)
     Deficit accumulated during the development
       stage                                         (14,573,597)   (13,048,115)
                                                    ------------   ------------
         Total stockholders' equity                   13,893,490     14,223,675
                                                    ------------   ------------

              Total liabilities and stockholders'
                equity                              $ 15,630,040   $ 15,562,586
                                                    ============   ============

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

                                       1
<PAGE>

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

                                                                  April 25, 1990
                                          Three Months Ended      (Inception) to
                                               March 31,             March 31,
                                          2000           1999          2000
                                     -------------  -------------  -------------

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

Cost and operating expenses:
   Cost of revenue                           --             --          127,580
   Marketing and sales                    362,500           --        1,285,123
   General and administrative             987,833        898,042     13,710,432
   Research and development               174,707        220,601      4,186,721
                                     ------------   ------------   ------------
                                        1,525,040      1,118,643     19,309,856
                                     ------------   ------------   ------------
     Loss from operations              (1,525,040)    (1,118,643)   (19,148,436)
                                     ------------   ------------   ------------

Other income (expense):
   Interest, net                            1,279         12,369       (594,844)
   Equity in loss of investees, net          --             --         (512,920)
   Gain on sales of investments              --             --        5,829,218
   Other, net                              (1,721)          --          (58,355)
                                     ------------   ------------   ------------
                                             (442)        12,369      4,663,099
                                     ------------   ------------   ------------
     Loss before provision
      for income taxes and
      minority interests               (1,525,482)    (1,106,274)   (14,485,337)

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

     Loss before minority interests    (1,525,482)    (1,106,274)   (14,582,172)

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

     Net loss                        $ (1,525,482)  $ (1,106,274)  $(14,573,597)
                                     ============   ============   ============

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

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

Weighted average number of
   shares of common stock, basic       14,378,881      9,632,620
                                      ===========   ============

Weighted average number of
   shares of common stock, diluted     14,378,881      9,632,620
                                      ===========   ============

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

                                       2
<PAGE>
                      DBS INDUSTRIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                   April 25, 1990
                                                         Three Months Ended        (Inception) to
                                                              March 31,               March 31,
                                                         2000           1999            2000
                                                     ------------   -------------  -------------

<S>                                                  <C>            <C>            <C>
Reconciliation of net loss to net cash
   used in operating activities
   Net loss                                          $ (1,525,482)  $ (1,106,274)  $(14,573,597)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                          3,502          2,749        450,477
     Minority interest's share of net loss                   --             --           (8,575)
     Noncash charges                                         --             --        1,084,545
     Amortization of stock-based compensation             247,279           --        1,205,034
     Issuance of options and warrants
       for services rendered                                 --           28,859        774,298
     Issuance of common stock in connection
       with litigation settlement                            --          324,391        324,391
     Equity in loss of investees, net                        --             --          529,972
     Gain on sales of investments                            --             --       (5,829,218)
     Loss on disposal of equipment                          1,721           --            1,721
     Allowance for losses on advances                        --             --          216,932
     Common stock issued as payment for interest             --             --            7,000
     Decrease (increase) in accounts receivable and
       other assets                                        34,103         13,675        (61,132)
     Increase (decrease) in accounts payable and
       accrued liabilities                                408,389       (492,475)     1,018,304
     Increase in customer advances                           --             --          400,000
                                                     ------------   ------------   ------------
       Net cash used in operating activities             (830,488)    (1,229,075)   (14,459,848)
                                                     ------------   ------------   ------------

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)          --         (148,145)
   Satellite construction costs                           (35,447)    (1,066,342)   (12,108,320)
   Organization costs                                        --             --          (28,526)
   Advances to officer                                       --          (60,000)       (91,187)
   Purchase of interest in Continental                       --             --       (2,292,409)
   Investments, advances and other                           --             --       (2,726,807)
   Net assets of purchased subsidiaries                      --             --         (147,500)
   Cash transferred from Fi-Tek IV, Inc.
     pursuant to the merger and reorganization               --             --          156,648
   Cash of divested subsidiary                               --             --             (277)
   Purchase of patents                                       --             --          (18,251)
   Proceeds from repayment of advances to affiliate          --             --          152,500
   Restricted cash on credit line                            --             --          300,000
                                                     ------------   ------------   ------------
       Net cash used in investing activities              (38,151)    (1,126,342)   (12,278,657)
                                                     ------------   ------------   ------------

Cash flows from financing activities:
   Repayment of borrowing under credit line                  --             --         (300,000)
   Issuance of debentures                                    --             --        4,817,501
   Issuance of preferred and common stock               1,021,902     10,449,705     24,413,199
   Redemption of common stock warrants                       --             --          (19,490)
   Stock issue costs                                      (84,634)       (79,725)      (738,469)
   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          937,268     10,369,980     27,090,079
                                                     ------------   ------------   ------------

Net increase in cash and cash equivalents                  68,629      8,014,563        351,574
Cash and cash equivalents, beginning of period            282,945      1,291,711           --
                                                     ------------   ------------   ------------
Cash and cash equivalents, end of period             $    351,574   $  9,306,274   $    351,574
                                                     ============   ============   ============
</TABLE>

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


                                       3
<PAGE>

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


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

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

                  The financial statements include all adjustments consisting of
           only  normal  recurring  adjustments  which  are,  in the  opinion of
           management,  necessary to present  fairly the condensed  consolidated
           financial   position  of  DBSI  at  March  31,  2000  and   condensed
           consolidated  results of  operations  and cash flows for the  interim
           periods  reported.  The results of  operations  for the 2000  interim
           period  presented are not necessarily  indicative of expected results
           for the full 2000 fiscal year.

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

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


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

           E-SAT, Inc. (E-SAT)

                  In October 1994, the Company and EchoStar Communications, Inc.
           formed   E-SAT  for  the   purpose   of  filing   with  the   Federal
           Communications  Commission (FCC) for a license to operate a low earth
           satellite system.  E-SAT filed a license  application with the FCC on
           November 16,  1994.  The Company  holds a 20% interest in E-SAT.  The
           Company's  total  investments  in and  advances to E-SAT and EchoStar
           Communications  were  $2,369,989 as of March 31, 2000. The investment
           is accounted for using the equity method.

                  On March  31,  1998,  the  Federal  Communications  Commission
           approved E-SAT's application for a low earth orbit satellite license.
           E-SAT is required to meet certain  milestones and other  covenants in
           order to maintain its license.

                  On April 8, 1999,  the  Company  notified  the FCC that it had
           entered into a construction  contract for the first two satellites of
           the E-SAT system on March 31, 1999.

                  On July 30, 1999,  the Company  entered into an agreement with
           EchoStar  under which it will  receive  60.1% of E-SAT's  shares from
           EchoStar in exchange for consideration, including the grant of rights
           to use up to 20% of the  satellite  capacity  of the E-SAT  system by
           EchoStar. As a result of this transaction, the Company will own 80.1%
           of the E-SAT shares. This transfer of control agreement is subject to

                                       4
<PAGE>

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


           approval by the FCC, which was formally  requested by the Company and
           EchoStar on May 2, 2000.


NOTE 3     SATELLITE CONSTRUCTION COSTS
           ----------------------------

                  During  the  construction  of  the  System,   the  Company  is
           capitalizing all design, engineering,  launch and construction costs.
           Such costs  amounted to  approximately  $12.1 million as of March 31,
           2000.

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

                  In January and  February  1999,  the Company  made  additional
           payments to Alcatel totaling $1 million.

                  On March 31, 1999, the Company signed  construction and launch
           contracts with Surrey  Satellite  Technology  Limited  ("Surrey") and
           Eurockot,  respectively, and made advance payments of $9.8 million in
           1999.  During the quarter  ended  March 31, 2000 the Company  made an
           additional payment of $50,000.  Total payments under these cancelable
           contracts will amount to  approximately  $47 million  through January
           2001.  In  July  1999,  the  Company,  Surrey  and  Eurockot  reached
           agreements  under  which  $3.2  million  of  the  required  milestone
           payments due in July 1999  totaling $4.8 million were deferred to yet
           to be agreed upon dates.

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


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

                  The Company's wholly-owned subsidiary,  Global Energy Metering
           Services,  Inc.  (GEMS),  is party to a contract  to  deliver  10,000
           satellite  radio units.  The  purchase  order is for $1.2 million and
           under the terms of the purchase order,  GEMS would receive a total of
           $500,000  in  advance  payments  on the  contract,  based on  certain
           milestone achievements.  As of December 31, 1998, this purchase order
           had been  suspended  by both  parties  when the Argos  System  became
           unavailable.  The $400,000 in milestone payments received is reported
           as  customer  advances  on  the  accompanying  balance  sheet.  These
           milestone payments could be subject to refund in whole or in part.


                                       5
<PAGE>

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


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

                  Basic net  income  (loss) per share is  computed  based on the
           weighted average number of common shares outstanding and excludes any
           potential  dilution.  Diluted net income per share  reflects  diluted
           effects of all outstanding  common stock  equivalents.  Options,  and
           warrants to purchase  6,034,797  shares of common stock with exercise
           prices from $0.39 to $5.60 were  outstanding as of March 31, 2000 and
           were excluded from the loss per share calculation for the three month
           period  then  ended as they have the  effect of  decreasing  loss per
           share.  Options and warrants to purchase  3,607,906  shares of common
           stock with exercise prices from $0.53 to $5.60 were outstanding as of
           March 31, 1999 and were excluded from the loss per share  calculation
           for the quarter then ended as they have the effect of decreasing loss
           per share.


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

           Preferred Stock

                  The  Company's  Certificate  of  Incorporation,  as amended in
           1999,  authorizes the issuance of 5,000,000 shares of preferred stock
           with par value of $0.0004 per share.  The Board of  Directors  of the
           Company is authorized to issue  preferred  stock from time to time in
           series and is further authorized to establish such series, to fix and
           determine the  variations in the relative  rights and  preferences as
           between  the series,  and to allow for the  conversion  of  preferred
           stock into  common  stock.  As of March 31,  2000,  29,564  preferred
           shares were issued and outstanding.

           Common Stock

                  The  Company's  Certificate  of  Incorporation,  as amended in
           1999,  authorizes  the issuance of 50,000,000  shares of common stock
           with a par value of $0.0004 per share.  Each record  holder of common
           stock is  entitled  to one vote for each  share  held on all  matters
           properly  submitted to the  stockholders  for their vote.  Cumulative
           voting  for  the  election  of  directors  is  not  permitted  by the
           Certificate of Incorporation.

           Equity Transactions With Non-Employees

                  During the three  months  ended  March 31,  2000,  the Company
           issued 29,564 shares of the Company's Preferred Stock in exchange for
           gross proceeds of $886,920 in cash.  Each share of preferred stock is
           convertible,  at the  election of the holder,  into ten shares of the
           Company's  Common Stock at a conversion  price based upon a $3.00 per
           common share price,  or the average trading price of the common stock
           within a specified period if the common stock is trading at less than
           $3.00 per share.

                  In  January  2000,  the  Company  issued  4,687  shares of the
           Company's  Common Stock,  valued at $10,750,  to one of the Company's
           directors  for  services  rendered,  prior to being  appointed to the
           Board, under a consulting agreement.

                  In March 2000, the Company received  proceeds of approximately
           $134,000 from the exercise of warrants and options to purchase 93,870
           shares of the Company's Common Stock.

                                       6
<PAGE>

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


           Equity Transactions With Employees

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


NOTE 7     SUBSEQUENT EVENTS
           -----------------

                  In April 2000, the Company received  proceeds of approximately
           $3,000 from the  exercise of options to purchase  5,500 shares of the
           Company's Common Stock.

                  In  April  2000,  the  Company  issued  6,333  shares  of  the
           Company's Preferred Stock in exchange for gross proceeds of $189,990.



                                       7
<PAGE>


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

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

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

GENERAL

          DBS  Industries,   Inc.  ("DBSI"  or  "We"  or  the  "Company")  is  a
telecommunications company dedicated to providing low-cost satellite-to-Internet
data messaging to and from remote locations.  DBSI is the only company currently
licensed by the Federal Communications Commission (through the E-SAT license) to
provide  commercial  two-way data messaging using Code Division  Multiple Access
technology and low-earth-orbiting  satellites operating below the 1Ghz frequency
range.  We expect to begin  providing  our data  messaging  services,  currently
marketed under the "NewStar" name, during 2002.

PLAN OF OPERATIONS

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

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

         We seek to satisfy  our fiscal  2000 cash  requirements  by raising new
equity and debt capital, as well as by seeking the exercise of previously issued
third-party warrants and stock options.  Through April 30, 2000, we committed to
issue  35,897  shares of the  Company's  preferred  stock in exchange  for gross
proceeds of $1,076,910 in cash.

REVENUES

         The  Company  remains  in the  development  stage and did not  generate
revenues in either the quarter ended March 31, 2000 or March 31, 1999.

OPERATING EXPENSES

         Total  operating  expenses  for the  quarters  ended March 31, 2000 and
1999,  were $1,525,040 and $1,118,643  respectively.  These costs are related to
marketing and sales expenses,  general and administrative expenses, and research
and development expenses.

                                       8
<PAGE>

Marketing and Sales Expenses
----------------------------

         Marketing  and sales  expenses  are  primarily  the costs of  personnel
(including non-cash stock compensation) and travel. Marketing and sales expenses
for the  quarter  ended  March  31,  2000  were  $362,500  (23.7%  of  operating
expenses).  No marketing and sales  expenses were incurred for the quarter ended
March 31,  1999.  This  increase is due to the  establishment  of our  dedicated
marketing and sales group in June,  1999 and included  non-cash  compensation of
approximately $57,000.

General and Administrative Expenses
-----------------------------------

         General  and  administrative  expenses  include  the costs of  finance,
legal,  administrative  and general  management  functions of DBSI.  General and
administrative  expenses  for the  quarters  ended  March 31, 2000 and 1999 were
$987,833  (64.8% of  operating  expenses),  and  $898,042  (80.3%  of  operating
expenses)  respectively.  The increase of $89,791 to $987,833 during the quarter
ended March 31, 2000,  compared to $898,042 in the quarter  ended March 31, 1999
was primarily  due to increased  personnel  related costs of $117,000,  non-cash
compensation of approximately  $177,000 and consulting fees of $114,000,  netted
against a decrease in the cost of options for services  provided by  consultants
of approximately $350,000.

Research and Development Expenses
---------------------------------

         Research  and  development  expenses  represent  non-capitalized  costs
incurred  to develop our  system.  Research  and  development  expenses  for the
quarters  ended  March 31,  2000 and 1999  were  $174,707  (11.5%  of  operating
expenses), and $220,601 (19.7% of operating expenses) respectively. The decrease
of $45,894 to $174,707  during the quarter  ended  March 31,  2000,  compared to
$220,601 in the quarter  ended March 31, 1999 was primarily due to a decrease in
consulting  expenses by $103,000  and a decrease in travel  expenses by $35,000,
offset by an increase in personnel cost of $74,000 and non-cash  compensation of
approximately $13,000.

Non-Cash Stock Compensation
---------------------------

         In order to attract and retain  personnel,  we have granted  options to
purchase  1,913,106 shares of Common Stock at exercise prices ranging from $0.39
to $2.81 to several employees and service providers. Some of the exercise prices
were  below  the fair  market  value of the  Common  Stock at the time of grant,
resulting in deferred stock  compensation  of  $2,490,337.  This amount is being
amortized  over the  vesting  periods of the granted  options,  and as a result,
$247,279 was  recognized as non-cash stock  compensation  expense in the quarter
ended March 31, 2000 in the relevant  expense  category as described  above.  No
similar expenses were incurred in the quarter ended March 31, 1999.

Other Income (Expense)
----------------------

         We experienced a non-operating loss of $442, consisting of net interest
income of $1,279  and a loss on the  disposal  of  equipment  of $1,721  for the
quarter ended March 31, 2000, a decrease of $12,811 over net interest  earned of
$12,369 for the quarter  ended March 31,  1999.  The  reduction  in net interest
income for the quarter ended March 31, 2000 was due to the reduction of cash and
cash equivalents.

Net Loss
--------

         Our net loss for the  quarter  ended  March 31,  2000,  was  $1,525,482
compared  to a net loss for the  quarter  ended  March 31,  1999 of  $1,106,274.
During the first  quarter of 2000,  we incurred  $362,500 in marketing and sales
expenses, which were not present during the first quarter of 1999.

                                       9
<PAGE>

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 $508,000 per month during the first quarter of 2000 which included
approximately $121,000 per month for marketing and sales, approximately $329,000
per month for operating, legal and consulting expenses and approximately $58,000
per month for E-SAT research & development.  However,  expenses will continue to
increase  during  fiscal  2000 with the  demands  of  increased  efforts in both
systems and business development. Additional capital will be necessary to expand
operations or continue current operations.

         Traditionally,  we have relied on equity and debt placements to finance
our operations. This financing was supplemented from the sale of our interest in
entities that held direct broadcast  satellite  licenses.  We no longer have any
interest in direct broadcast satellite licensees.

         During the quarter ended March 31, 2000, we received  proceeds from the
sale of common and preferred  stock  totaling  approximately  $1,022,000  before
stock issuance costs of approximately  $85,000.  These  transactions  included a
private  placement of 29,564 shares of the Company's  preferred stock at $30 per
share for an  aggregate  amount  of  $886,920  before  stock  issuance  costs of
$84,634; and proceeds in the amount of approximately  $134,000 from the exercise
of 93,870  options and warrants.  The Company also received  approximately  $900
from the sale of stock to employees pursuant to the 1999 Employee Stock Purchase
Plan.  These  proceeds were used  primarily to fund our  satellite  construction
costs and investing activities.

         We had cash and cash equivalents of $351,574 and $9,306,274 as of March
31, 2000 and 1999 respectively. We had negative working capital of $1,304,640 as
of March 31, 2000  compared  to working  capital of  $8,727,069  as of March 31,
1999. Until we are able to develop, construct and operate the NewStar System and
derive revenues  therefrom,  we must continue to raise cash from outside sources
for operations and for the development of the NewStar System.

         Net cash used in operating  activities  for the quarter ended March 31,
2000, was $830,488. This resulted from a net loss of $1,525,482 offset primarily
by (1) non-cash  stock  compensation  of  $247,279,  (2) an increase in accounts
payable of $408,389 arising from increased marketing and general  administrative
expenses and (3) a decrease in prepaid and other  current  assets of $34,103 due
to a reduction in prepaid insurance and employee  receivables.  Net cash used in
operating activities for the quarter ended March 31, 1999 was $1,229,075.

         Net cash used in investing  activities  for the quarter ended March 31,
2000, was $38,151.  This was a decrease of $1,088,191 over the same period ended
March  31,  1999.  Approximately  $35,000  of the net  cash  used  in  investing
activities  during the quarter  ended  March 31,  2000 was related to  satellite
construction payments made to our satellite contractors in Europe.

         Net cash provided by financing  activities  for the quarter ended March
31, 2000, was $937,268  compared to $10,369,980  for the same period ended March
31, 1999.  Net cash  provided by financing  activities  during the quarter ended
March 31, 2000 was related  primarily to the net proceeds from the sale of units
of preferred stock and the exercise of options and warrants by our stockholders.

         In 1996,  we  received  milestone  payments  under  the terms of a $1.2
million  purchase  order for  10,000  satellite  radio  units from ABB Power T&D
Company.  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

                                       10
<PAGE>

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 March 31,
2000,  we had no  customers.  Given our  limited  operating  history and lack of
revenues,  no  assurances  can be given  that we will be able to  construct  and
implement our systems,  and, if  implemented,  to develop a  sufficiently  large
customer base to be profitable.

         In addition,  we currently estimate that we will require  approximately
$120 million in capital related to the  construction and launch costs associated
with our system.  No assurance can be given that capital will be available to us
on  commercially  acceptable  terms  to  meet  development  costs  or  on  terms
acceptable to us. The issuance of additional equity securities by us will result
in  significant  dilution of the equity  interests of the current  stockholders.
Selling debt  securities  such as bonds will increase our liabilities and future
cash commitments. In order to comply with development milestones required by the
FCC license,  we have entered into  various  development  contracts  including a
satellite  construction  contract and a satellite launch contract.  All of these
contracts  require  that  we  have  available  capital  which  is not  currently
available.

         Other factors,  in addition to those  identified in this report,  which
could affect future  results would include the  dependence  and  uncertainty  of
utility  companies or other commercial  customers to utilize such data messaging
service,  the  reliance  on third  parties  for the  advancement  of the design,
manufacturing  and marketing of the E-SAT System,  satisfying  the milestones of
E-SAT's FCC license and  construction  contracts,  the  fulfillment  of contract
obligations by suppliers and other third parties,  the availability of qualified
personnel  and  equipment,  delays  in the  receipt  of or  failure  to  receive
necessary  governmental  approvals (including but not limited to FCC approval of
our transfer of control of E-SAT,  Inc. from  EchoStar),  obtaining  permits and
licenses  or  renewals  thereof,  risks and  uncertainties  relating  to general
economic  and  political  conditions,  both  domestically  and  internationally,
changes in the law and  regulations  governing the  Company's  activities in the
Little  LEO   satellite   technology,   unscheduled   delays  or   technological
difficulties,  satellite launch risks, potential satellite malfunction,  limited
availability  of  insurance,  results of the  Company's  financing  efforts  and
marketing  conditions,  competition,  and  other  risk  factors  related  to the
Company's  business.  Readers  of this  report  are  cautioned  not to put undue
reliance on "forward looking" statements that are, by their nature, uncertain as
reliable indicators of future performance.

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


IMPACT OF THE YEAR 2000 ISSUE

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

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


                                       11
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  RECENT SALES IN UNREGISTERED SECURITIES

         The Company is currently engaged in a private placement of its Series A
Convertible  Preferred Stock ("Preferred Stock").  Each share of Preferred Stock
is  convertible,  at the  option  of the  holder  into  ten (10)  shares  of the
Company's Common Stock.  During the three month period ended March 31, 2000, the
Company sold 29,564  shares of its Preferred  Stock at $30.00 per share,  for an
aggregate  placement of  approximately  $900,000.  Commissions  were paid to one
placement  agent  in the  aggregate  amount  of  approximately  $60,000.  At the
completion of the private placement the Company will also issue a warrant to the
placement  agent to purchase  the  equivalent  of 10% of the number of shares of
Common Stock sold in the private placement, on an as converted basis.

         The offers and sales were made to twelve (12) accredited investors,  as
that term is defined in Rule 501(a)  under the  Securities  Act.  The offers and
sales  during  the three  month  period  ended  March 31,  2000 were made by the
Company in reliance upon the  exemption  from  registration  provided by Section
4(2) of the Securities Act.

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

         None.

ITEM 6.

         (a)    Exhibits:

                27.1  Financial Data Schedule

         (b)    Reports on Form 8-K:

                None.


                                       12
<PAGE>

                                   SIGNATURES

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

                                       DBS INDUSTRIES, INC.



         DATE:  May 12, 2000           By:  /S/FRED W. THOMPSON
                                            -------------------------------
                                            FRED W. THOMPSON
                                            President

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


                                       13