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

                                   FORM 10-QSB

        [X]    QUARTERLY  REPORT  UNDER  SECTION  13 OR 15(d) OF THE  SECURITIES
               EXCHANGE ACT OF 1934 for the quarterly period ended June 30, 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 Common Stock, $.0004 Par Value

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

Transitional Small Business Disclosure Format:   Yes: ___     No    X


<PAGE>ii



                                      INDEX

<TABLE>
<S>                                                                                                       <C>
                                                                                                            PAGE

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

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

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

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

Condensed Consolidated Statements of Cash Flows (unaudited):
For the Six Months Ended June 30, 1999 and June 30, 1998
and for the period from April 25, 1990 (Inception) to June 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...................................................................................10

ITEM  4.Submission of Matters to a Vote of Security Holders...................................................10

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>

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

Current assets:

     Cash and cash equivalents                                                   $      4,944,917     $     1,291,711
     Prepaid and other current assets                                                     544,776              71,138
                                                                                ------------------    ---------------
        Total current assets                                                            5,489,693           1,362,849

Furniture and equipment (at cost)                                                          68,596              65,516
Less accumulated depreciation                                                              48,641              42,989
                                                                                ------------------    ---------------
                                                                                           19,955              22,527
                                                                                ------------------    ---------------
Other assets:
     Investments and advances                                                             851,490             851,490
     Goodwill, net of accumulated amortization of
       $88,685 and $87,428 respectively                                                     2,305               3,562
     Satellite construction costs                                                      10,282,667           1,272,083
                                                                                ------------------    ---------------
                                                                                       11,136,462           2,127,135
                                                                                ------------------    ---------------
            Total assets                                                         $     16,646,110     $     3,512,511
                                                                                ==================    ===============
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable                                                            $         92,275     $       240,240
     Customer advances                                                                    400,000             400,000
     Accrued liabilities                                                                   62,615             489,531
                                                                                ------------------    ---------------
        Total current liabilities                                                         554,890           1,129,771
                                                                                ------------------    ---------------
Stockholders' equity:

     Common stock                                                                           5,697               3,452
     Capital in excess of par value                                                    24,129,383           8,511,410
     Warrants                                                                           1,194,136           1,085,500
     Note receivable from shareholder                                                     (60,000)                  -
     Deficit accumulated during the development stage                                  (9,092,996)         (7,132,622)
     Treasury stock                                                                       (85,000)            (85,000)
                                                                                ------------------    ---------------
        Total stockholders' equity                                                     16,091,220           2,382,740
                                                                                ------------------    ---------------
            Total liabilities and stockholders' equity                           $     16,646,110     $     3,512,511
                                                                                ==================    ===============
</TABLE>

The accompanying notes are an integral part of these condensed 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                 Six Months Ended             (Inception) to
                                                       June 30,                          June 30,                     June 30,
                                                1999              1998             1999              1998               1999
                                            --------------    --------------   --------------   ---------------    ----------------

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

Cost and operating expenses:
    Cost of revenue                                     -                 -                -                 -             127,580
    General and administrative                    778,757           340,898        1,676,799           646,380          10,338,488
    Research and development                      138,623           285,349          359,224           347,413           3,325,942
                                            --------------    --------------   --------------   ---------------    ----------------
                                                  917,380           626,247        2,036,023           993,793          13,792,010
                                            --------------    --------------   --------------   ---------------    ----------------
        Loss from operations                     (917,380)         (626,247)      (2,036,023)         (993,793)        (13,630,590)
                                            --------------    --------------   --------------   ---------------    ----------------

Other income (expense):
    Interest, net                                  63,280             3,872           75,649             2,194            (633,810)
    Equity in loss of investees, net                    -           (56,492)               -           (93,410)           (512,920)
    Gain (loss) on sale of investment                   -          (228,323)               -          (228,323)          5,829,218
    Other, net                                          -                 -                -                 -             (56,634)
                                            --------------    --------------   --------------   ---------------    ----------------
                                                   63,280          (280,943)          75,649          (319,539)          4,625,854
                                            --------------    --------------   --------------   ---------------    ----------------
        Loss before provision for income
         taxes and minority interests            (854,100)         (907,190)      (1,960,374)       (1,313,332)         (9,004,736)

Provision for income taxes                              -             4,265                -             4,265              96,835
                                            --------------    --------------   --------------   ---------------    ----------------
                                            --------------    --------------   --------------   ---------------

        Loss before minority interests           (854,100)         (911,455)      (1,960,374)       (1,317,597)         (9,101,571)

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

        Net  loss                         $      (854,100)  $      (911,455) $    (1,960,374)  $    (1,317,597)  $      (9,092,996)
                                            ==============    ==============   ==============   ===============    ================

Basic net loss per share                  $         (0.06)   $        (0.15) $         (0.17)  $         (0.22)
                                            ==============    ==============   ==============   ===============

Diluted net loss per share                $         (0.06)   $        (0.15) $         (0.17)   $        (0.22)
                                            ==============    ==============   ==============   ===============

Weighted average number of
    shares of common stock, basic              14,019,273         5,897,652       11,838,062         5,897,281
                                            ==============    ==============   ==============   ===============

Weighted average number of
    shares of common stock, diluted            14,019,273         5,897,652       11,838,062         5,897,281
                                            ==============    ==============   ==============   ===============

</TABLE>

<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
                                                                                     Six Months Ended              (Inception) to
                                                                                           June 30,                   June 30,
                                                                                    1999              1998              1999
                                                                                --------------    -------------    ---------------

Net cash used in operating activities                                           $  (2,148,734) $      (451,507)  $    (12,096,138)
                                                                                --------------    -------------    ---------------

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                                                           (3,080)               -           (114,127)
    Satellite construction payments                                                (9,010,584)               -        (10,282,667)
    Organization costs                                                                      -                -            (28,526)
    Advances to officers and shareholders                                             (60,000)               -            (91,187)
    Purchase of interest in Continental                                                     -                -         (2,292,409)
    Investments and advances                                                         (500,000)        (204,848)        (1,708,726)
    Net assets of purchased subsidiaries                                                    -                -           (147,500)
    Cash transferred from Fi-Tek IV, Inc.
      pursuant to the merger and reorganization                                             -                -            156,648
    Cash of divested subsidiary                                                             -                -               (277)
    Purchase of patents                                                                     -                -            (18,251)
    Proceeds from repayment of advances to affiliate                                        -                -            152,500
    Restricted cash on credit line                                                          -                -            300,000
                                                                                --------------    -------------    ---------------
Net cash used in investing activities                                              (9,573,664)          (4,908)        (9,400,905)
                                                                                --------------    -------------    ---------------

Cash flows from financing activities:
    Repayment of borrowing under credit line                                                -                -           (300,000)
    Issuance of debentures                                                                  -                -          4,817,501
    Issuance of common stock                                                       15,479,704           97,929         23,630,446
    Redemption of common stock warrants                                                     -                -            (19,490)
    Stock issue costs                                                                (104,100)               -           (603,835)
    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                                          15,375,604           97,929         26,441,960
                                                                                --------------    -------------    ---------------
Net increase (decrease) in cash                                                     3,653,206         (358,486)         4,944,917

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

Cash and cash equivalents,
    end of period                                                                $  4,944,917  $        24,568   $      4,944,917
                                                                                ==============    =============    ===============

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

<PAGE>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 June 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, Inc.

            In  October  1994,   the  Company  and  Echostar   Communications
            Corporation  formed  E-SAT,  Inc.  ("E-SAT")  for the  purpose of
            filing with the Federal  Communications  Commission for a license
            to operate a low earth orbiting  satellite system.  E-SAT filed a
            license  application with the Federal  Communications  Commission
            (FCC) 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 June 30,
            1999. The investment is accounted for using the equity method. As
            of June 30, 1999,  the Company had a net  receivable  of $724,225
            from Echostar, which represents the excess of advances to date to
            E-SAT in excess of its  proportionate 20% share of its investee's
            financing requirements.

            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
            June 30, 1999, the Company had paid $500,000 on this contract.


NOTE 3     SATELLITE CONSTRUCTION COSTS

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

<PAGE>5


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




           During  the  construction  of  the  E-SAT  System,   the  Company  is
           capitalizing   all   construction   costs.   Included  in   satellite
           construction  costs are engineering  and construction costs incurred
           in connection  with the design of the satellites  and the $2 million
           payments to Alcatel for design services.

           On March  31,  1999,  the  Company  signed  construction  and  launch
           contracts  with two European  entities  and made advance  payments of
           $7.8 million in April 1999.  Total  payments  under 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  3,509,906  shares of common  stock  with
           exercise  prices from $.531 to $5.60 were  outstanding as of June 30,
           1999 and were  excluded from the loss per share  calculation  for the
           quarter and the six month  periods then ended as they have the effect
           of  decreasing  loss per share.  Options  and  warrants  to  purchase
           2,507,733  shares of common stock with  exercise  prices from $.40 to
           $5.60 were outstanding as of June 30, 1998 and were excluded from the
           loss per share calculation for the quarter and six month periods then
           ended as they have the effect of decreasing loss per share.


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.


<PAGE>6


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




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

           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.

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

<PAGE>7



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

GENERAL

        The Company proposes to design, construct,  launch, and operate a system
of six  satellites  positioned in a low earth orbit which will provide  two-way,
low cost data messaging services worldwide (the "E-SAT Communications  System").
The  Company,  through  its  subsidiaries  including  Newstar  LTD.,  intends to
initially  develop data services  monitoring  energy related  industries such as
utilities,  heavy equipment, and environmental businesses, but may provide other
commercial data collection  services in other markets.  Subsequent to the end of
this quarter the Company successfully  negotiated an agreement with EchoStar DBS
Corporation  ("EchoStar")  to acquire a controlling  interest in E-SAT,  however
this agreement is subject to regulatory  approval.  Upon  approval,  the Company
would own 80.9% of E-SAT and  EchoStar  would own 19.1% and would have rights to
20% of E-SAT's satellite capacity.

RESULTS OF OPERATIONS

Revenues

        The Company  remains in the  development  stage and did not generate any
revenues or  significant  net interest  income in either the three or six months
ended June 30, 1999 or June 30, 1998.

Cost and Operating Expenses

        Cost and  operating  expenses  for the three  months ended June 30, 1999
were  $917,380 as compared to $626,247 for the three months ended June 30, 1998.
During  the three  months  ended  June 30,  1999,  cost and  operating  expenses
increased  primarily in General and  Administrative ("G & A") as a result of the
Company devoting substantial amounts of its financial and personnel resources on
developing its data services  business.  Cost and operating expenses for the six
months ended June 30, 1999 were  $2,036,023  as compared to $993,793 for the six
months  ended June 30,  1998. G & A expenses for the three months ended June 30,
1999 were $778,757 as compared to $340,898 for the three-month period ended June
30, 1998,  and  $1,676,799 for the six months ended June 30, 1999 as compared to
$646,380 for the six months ended June 30, 1998. Research & development expenses
decreased  slightly  to  $138,623  for the three  months  ended June 30, 1999 as
compared to $285,349 for the three months ended June 30, 1998.  The decrease was
due to the  transition  from  costs on the E-SAT  Communications  project  being
expensed  as  research  &  development,   to  the  implementation  of  satellite
construction contracts which are capitalized.

Other Income (Expense)

        The Company  experienced a  non-operating  gain of $63,280 for the three
months ended June 30, 1999,  as compared to an expense of $280,943 for the three
months ended June 30, 1998. The Company had a non-operating  gain of $75,649 for
the six months ended June 30, 1999 as compared to an expense of $319,539 for the
same period in 1998.

        During 1999 earned net interest income of $63,280 was recognized on cash
received  in  connection  with the  Company's  fundraising  efforts  through the
exercise of warrants and options as well as other equity  transactions  totaling
approximately $15.4 million.

        During  1998  the  Company   earned  net  interest  of  $3,872  for  the
three-month period ended June 30, 1998 and $2,194 for the six-month period ended
June 30, 1998. This income was offset by the loss of $56,492 of equity in the

<PAGE>8


Company's  investments  for the three  months  ended June 30, 1998 and a loss of
$93,410 for the six months ended June 30, 1998. The Company also recorded a loss
of $228,323 on the sale of its 20% interest in Seimac Limited which is reflected
in both periods.

Net Loss

     The Company's net loss for the three-month  period ended June 30, 1999, was
$854,100  compared to $911,455 for the  three-month  period ended June 30, 1998.
Net loss for the six months ended June 30, 1999 was $1,960,374 compared to a net
loss of $1,317,597 for the six-month period ended June 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.  The Company's  monthly
expenses averaged  approximately $350,000 per month during the second quarter of
1999 which included  approximately  $250,000 per month for operating,  legal and
consulting expenses,  and $100,000 per month for research & development relating
to the E-SAT  Communications  System.  However,  the  Company  anticipates  that
expenses  will  continue to increase  during  1999 with the  development  of the
satellites  for the E-SAT  Communications  System (and  contractual  obligations
related  to  such   development)   and  business   applications   of  the  E-SAT
Communications System. Additional capital will be necessary to expand operations
or continue  current  operations.  During the quarter  ended June 30, 1999,  the
Company  raised $5 million in gross  proceeds  from a private  placement  of its
Common Stock and $30,000 from the exercise of outstanding  options.  The Company
made  approximately  $7.8 million in payments to several  contractors during the
second quarter of 1999 in connection with the construction of the satellites for
the E-SAT Communications System.

     In connection with the  negotiations  of the share purchase  agreement with
EchoStar,  the Company has entered  into a service  contract  with a  consultant
requiring  payment of a minimum $1.5 million in fees.  As of June 30, 1999,  the
Company has paid $500,000 on this contract.

     Traditionally, the Company has relied on equity and debt financings to fund
its operations.  This financing was supplemented  from the sale of the Company's
interest in entities that held direct broadcast satellite licenses.  The Company
no longer has any interest in direct broadcast satellite licensees.  The Company
anticipates  needing  substantial  additional capital, an estimated $111 million
over the next 24 months,  to construct and launch the satellites  comprising the
E-SAT Communications  System.  Further, the construction of the first two of the
six planned  satellites  commenced prior to March 31, 1999 pursuant to the terms
of the FCC license  granted to E-SAT and will require  milestone  payments of an
additional  $24.5  million  over  the next 12  months,  through  June 30,  2000.
However,  the Company anticipates  signing additional  contracts relating to the
construction of the satellites which will likely result in milestone payments of
an additional $20 to $25 million over the next 12 months, through June 30, 2000.

     The Company had cash and cash  equivalents  of $4,944,917 and $24,568 as of
June 30,  1999 and 1998,  respectively.  The  Company  had  working  capital  of
$4,934,803  as of June 30,  1999  compared  to a  negative  working  capital  of
$1,087,438 as of June 30, 1998. Until the Company is able to develop,  construct
and operate its E-SAT Communications  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  $2,648,734  for the six months
ended June 30,  1999,  as compared to $451,507 for the six months ended June 30,
1998. Net cash used in operating  activities  increased  during 1999 as compared
with the same quarter last year as a result of increased  cash  expenditures  as
the  Company   expanded  its   development   activity   relating  to  the  E-SAT
Communications  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 six months  ended June 30,
1999, was $9,073,644. This net cash used represents a loan to a director secured
by the  Company's  stock for  $60,000 and  approximately  $9 million in progress
payments relating to satellite construction costs. Net cash used by investing

<PAGE>9



activities  was $4,908 for the six months ended June 30, 1998 and was  comprised
of investments in and advances to E-SAT of $204,848  offset by net proceeds from
the sale of the Company's 20% interest in Seimac Limited of $199,940.

     Net cash provided by financing activities for the six months ended June 30,
1999,  was  $15,375,604  compared to $97,929  for the six months  ended June 30,
1998. Net cash provided by financing  activities during 1999 was $15,479,704 and
related  to the 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  $104,100  in the  six-month
period ended June 30, 1999.

        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
("E-SAT  Communications  System")  technology  and  development of its automated
meter  reading  ("AMR")  business and the fact that the Company was  negotiating
with EchoStar regarding the Company's obtaining a controlling interest in E-SAT,
which  owns the FCC  license.  EchoStar  owns 80% of E-SAT.  Other  factors,  in
addition to those  identified in this report,  which could affect future results
would include:  (i) the Company's ability to retain the prime contractor for the
development,  construction  and deployment of the E-SAT  Communications  System;
(ii) the  Company's  ability  to raise  significant  additional  debt and equity
capital from outside  sources for the  development  of the E-SAT  Communications
System and the availability of capital on commercially  acceptable terms;  (iii)
the completion of a  commercially  viable E- SAT  Communications  System and AMR
service;  (iv) the dependence and uncertainty of commercial customers to utilize
the Company's AMR service; (v) the reliance on third parties for the advancement
of the design,  manufacturing and marketing of the E-SAT Communications  System;
(vi)  satisfying  the  milestones  of  E-SAT's  FCC  license  and   construction
contracts;  (vii) the fulfillment of contract obligations by suppliers and other
third parties and the availability of qualified personnel and equipment;  (viii)
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

<PAGE>10



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.

Impact of the Year 2000 Issue

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

        In addition, in developing the E-SAT Communications  System, the Company
will be relying on vendors to, among other  things,  manufacture  the Little LEO
satellites,  launch the Little LEO  satellites,  manufacture the remote terminal
units and build the E-SAT  infrastructure  including the control  stations which
are Y2K compliant.  The Company has entered into contracts with several  vendors
to develop the E- SAT Communications 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 4.   Submission of Matters to a Vote of Security Holders.

         On June 18, 1999, the Company held its annual  meeting of  shareholders
for the  election  of three  directors  and to adopt  the  1999  Employee  Stock
Purchase Plan.

        Election of Director                 For                 Votes Withheld
        --------------------                 ----------          --------------
        Fred W. Thompson                     9,073,684               16,384
        E. A. James Peretti*                 8,810,650              179,418
        Jessie J. Knight, Jr.                9,068,459               21,609


                                                For          Against    Abstain
        Approval to adopt the 1999 Employee   ---------     ---------  --------
               Stock Purchase Plan            8,748,052     313,004     29,012

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

        *On July 26, 1999 Mr. Peretti resigned as an officer and director of the
         Company.



<PAGE>11



        Item 5.   Other Information.

             On July 26, 1999, Mr. James Peretti, the Company's Chief Operating
Officer and a Director, resigned from the Company.

        Item 6.   Exhibits and Reports on Form 8-K

             ExhibitFinancial Data Schedule



<PAGE>11




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

                                                        DBS INDUSTRIES, INC.



        DATE:    August 19, 1999                    BY:   /S/ FRED W. THOMPSON
                                                             -------------------
                                                             Fred W. Thompson
                                                             President and Chief
                                                             Financial Officer