<PAGE>



                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended September 30, 2001.
                                       Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period From                        to                       .
                               ----------------------    ----------------------

Commission file number    0-25552
                       ----------

                        DUALSTAR TECHNOLOGIES CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            DELAWARE                                           13-3776834
--------------------------------                          ----------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

                  11-30 47TH AVENUE, LONG ISLAND CITY, NY 11101
--------------------------------------------------------------------------------
          (Address, including zip code of principal executive offices)

                                 (718) 340-6655
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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       .
                                             -------   -------

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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

    COMMON STOCK, $.01 PAR VALUE --- 16,501,568 SHARES AS OF NOVEMBER 9, 2001
--------------------------------------------------------------------------------

<PAGE>



                                      INDEX

                        DUALSTAR TECHNOLOGIES CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

        Condensed consolidated balance sheets - September 30, 2001 and June
          30, 2001

        Condensed consolidated statements of operations - Three months ended
          September 30, 2001 and 2000

        Condensed consolidated statements of cash flows - Three months ended
          September 30, 2001 and 2000

        Notes to condensed consolidated financial statements - September 30,
          2001


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


PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

Signatures










<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                              September 30,         June 30,
                                                                                  2001                2001
                                                                           -------------------- ------------------
                                                                               (unaudited)
<S>                                                                              <C>                  <C>

                                 ASSETS
Current assets:
  Cash and cash equivalents                                                      $2,208,474           $3,711,287
  Accounts receivable - net of allowance for doubtful accounts                   21,901,989           23,761,367
  Retainage receivable                                                            3,892,597            3,926,902
  Costs and estimated earnings in excess of billings on uncompleted
    contracts                                                                     1,046,489            1,236,557
  Deferred tax asset                                                                377,000              377,000
  Prepaid expenses and other current assets                                       1,129,289            1,278,469
                                                                           -------------------- ------------------
Total current assets                                                             30,555,838           34,291,582
  Property and equipment - net of accumulated depreciation and
    amortization                                                                  7,380,473            7,621,297
  Deferred tax asset                                                                699,000              699,000
  Intangible assets - net of accumulated amortization                               294,906              365,219
  Other                                                                             570,088              595,883
                                                                           -------------------- ------------------
Total assets                                                                    $39,500,305          $43,572,981
                                                                           ==================== ==================

                  LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                              $10,381,069          $12,437,911
  Billings in excess of costs and estimated earnings on uncompleted
    contracts                                                                     2,653,397            3,572,160
  Accrued expenses and other current liabilities                                  5,085,432            4,445,041
                                                                           -------------------- ------------------
Total current liabilities                                                        18,119,898           20,455,112

  Senior secured promissory note payable                                         12,500,000           12,500,000
  Mortgage payable - net of current portion                                       1,686,226            1,691,744
  Other liabilities                                                                  54,272              148,613
                                                                           -------------------- ------------------
Total liabilities                                                                32,360,396           34,795,469
                                                                           -------------------- ------------------

  Commitments and contingencies

Shareholders' equity:
  Common stock                                                                      165,016              165,016
  Additional paid-in capital                                                     41,575,421           41,575,421
  Accumulated deficit                                                           (34,278,028)         (32,760,425)
  Accumulated other comprehensive loss                                             (322,500)            (202,500)
                                                                           -------------------- ------------------
Total shareholders' equity                                                        7,139,909            8,777,512
                                                                           -------------------- ------------------
Total liabilities and shareholders' equity                                      $39,500,305          $43,572,981
                                                                           ==================== ==================
</TABLE>

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  2001                2000
                                                                           -------------------- -----------------
<S>                                                                            <C>                 <C>
Revenues earned                                                                $17,556,079         $21,965,660
Costs of revenues earned, excluding depreciation and amortization               15,063,500          19,503,540
                                                                           -------------------- -----------------

Gross profit                                                                     2,492,579           2,462,120
                                                                           -------------------- -----------------

Operating expenses:
  General and administrative expenses, excluding depreciation and
    amortization                                                                 3,132,954           5,415,211
  Depreciation and amortization                                                    561,262             424,658
                                                                           -------------------- -----------------

Total operating expenses                                                         3,694,216           5,839,869
                                                                           -------------------- -----------------

Operating loss                                                                  (1,201,637)         (3,377,175)
                                                                           -------------------- -----------------

Interest (income) expense:
  Interest income                                                                  (91,189)           (212,292)
  Interest expense                                                                 407,155             242,084
                                                                           -------------------- -----------------

Interest expense - net                                                             315,966              29,792
                                                                           -------------------- -----------------

Net loss                                                                       ($1,517,603)        ($3,407,541)
                                                                           ==================== =================

Basic and diluted loss per share
                                                                                    ($0.09)             ($0.21)
Weighted average shares outstanding                                             16,501,568          16,485,303
</TABLE>


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                  2001                2000
                                                                           -------------------- ------------------
<S>                                                                            <C>                <C>
Net cash used in operating activities                                          ($1,230,324)       ($4,255,494)
                                                                           -------------------- ------------------

Cash flows from investing activities:
     Acquisition of property and equipment                                        (228,447)          (798,954)
                                                                           -------------------- ------------------
Net cash used in investing activities                                             (228,447)          (798,954)
                                                                           -------------------- ------------------

Cash flows from financing activities:
     Principal payments on capital lease obligations                               (38,524)           (38,813)
     Principal payments on mortgage
                                                                                    (5,518)            (4,640)
                                                                           -------------------- ------------------
Net cash used in financing activities                                              (44,042)           (43,453)
                                                                           -------------------- ------------------

Net decrease in cash and cash equivalents                                       (1,502,813)        (5,097,901)
Cash and cash equivalents at beginning of period                                 3,711,287         14,800,310
                                                                           -------------------- ------------------
Cash and cash equivalents at end of period                                      $2,208,474         $9,702,409
                                                                           ==================== ==================
</TABLE>

NON-CASH TRANSACTION:

In connection with the Casden agreement in exchange for access rights, the
Company issued 22,231 shares of Company common stock and warrants to purchase
876 shares of Company common stock in August and September 2000. The warrants
are non-forfeitable, fully vested and immediately exercisable at a price of
$4.446 per share. Accordingly, the Company's common stock was increased by $222
and additional paid-in capital was increased by $74,589.


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

DualStar Technologies Corporation ("DualStar" or the "Company"), through its
wholly owned subsidiaries, operates two separate lines of business: (a)
construction businesses; and (b) communications businesses. As a result of the
limited availability of capital and a significant change in market conditions,
in December 2000 the Company's board of directors adopted a plan to refocus its
communications business efforts by concentrating on core communications assets
located in the New York City and Los Angeles areas and by operating subscription
video provider, ParaComm Inc. In connection with this effort, the Company's
communications subsidiaries have implemented and will continue to implement cost
reductions, including reductions in personnel, infrastructure and capital
expenditures to minimize operating losses. The Company expects the
communications segment will continue to incur operating losses going forward.
There can be no assurance that the Company will be able to raise and provide the
capital resources to fund the expected communications operating losses. In
addition, in the event that additional working capital becomes necessary to fund
communications operations, there can be no assurance that the Company will be
able to obtain financing on terms satisfactory to it. Should the Company be
unable to secure such financing, the Company may have to curtail its
communications operations.

Due to the refocus of its communications business expansion efforts, in January
2001, the Company's board of directors determined not to divest most of
DualStar's construction-related businesses and determined to terminate and not
seek stockholder approval of a stock purchase agreement (the "M/E Agreement")
entered in March 2000 with M/E Contracting Corp., an affiliate of Blackacre
Capital Management L.L.C. Under the M/E Agreement, the Company could be liable
for a $1 million "break-up" or termination fee if, within six months from the
termination of the M/E Agreement, there is a 50% change of control (as defined
in the M/E Agreement) or, if within one year of such termination, the
construction-related businesses' assets or stock are sold to another party.
Accordingly, the financial results and cash flows of such businesses for the
three months ended September 30, 2000 are no longer presented as discontinued
operations in the accompanying condensed consolidated financial statements. In
addition, certain reclassifications have been made to prior period amounts to
conform to the September 30, 2001 presentation.

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended September 30,
2001 are not necessarily indicative of the results that may be expected for the
fiscal year ending June 30, 2002. For further information, refer to the
financial statements and footnotes included in the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2001.


<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE B - PER SHARE DATA

The computation of basic and diluted net income (loss) per share is based on the
weighted average number of shares of common stock outstanding. For diluted net
income per share, when dilutive, stock options and warrants are included as
share equivalents using the treasury stock method, and shares available for
conversion under the convertible note are included as if converted at the date
of issuance. For the three months ended September 30, 2001 and 2000, stock
options and warrants have been excluded from the calculation of diluted loss per
share as their effect would have been antidilutive.

NOTE C - OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) includes unrealized gains and losses on
marketable securities classified as available-for-sale. As of September 30,
2001, the unrealized loss on the Company's available-for-sale securities is
$322,500 and has been reported as a component of shareholders' equity. Other
comprehensive loss for the three months ended September 30, 2001 is $1,637,603.

NOTE D - CONTINGENCIES

(1) On August 11, 1999, Triangle Sheet Metal Works, Inc. ("Triangle"), a
subcontractor of Centrifugal/Mechanical Associates, Inc. ("CMA"), filed a
petition under Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court"). Triangle's Chapter 11 case was subsequently converted to a case under
Chapter 7 of the Bankruptcy Code and a Chapter 7 trustee was appointed to
administer Triangle's estate. Triangle was a sheet metal subcontractor for CMA
on six projects in New York City (the "Subcontractor Projects"). CMA was also
the subcontractor of Triangle on one additional project in New York City (the
"Contractor Project"). Prior to Triangle's Chapter 11 filing, Triangle ceased
operation and defaulted on its obligations under the Subcontractor Projects and
Contractor Project. In pleadings filed with the Bankruptcy Court prior to the
appointment of a Chapter 7 trustee, Triangle alleged, among other things, that
CMA is indebted to Triangle in an amount ranging between $1,400,000 and
$3,000,000. Triangle also suggested in such pleadings that there may exist
potential causes of action by Triangle against the Company and/or CMA, including
breach of contract, tortious interference and unfair competition. Triangle did
not commence any formal legal actions or proceedings with respect to any of such
allegations (other than seeking to obtain discovery from CMA and DualStar). On
or about January 18, 2000, Triangle's Chapter 7 trustee made a written request
on CMA stating that Triangle's records reflected that CMA was indebted to
Triangle in the aggregate sum of $2,435,097 based upon work performed by
Triangle on the Subcontractor Projects. Triangle's Chapter 7 trustee stated CMA
was not entitled, under applicable law, to offset amounts owed to CMA on
particular Subcontractor Projects against amounts owed by CMA to Triangle on
other Subcontractor Projects. Triangle's Chapter 7 trustee stated its intention
to institute legal proceedings in the Bankruptcy Court against CMA and the
owners of the Subcontractor Projects to recover such funds. CMA and DualStar
dispute Triangle's and the Chapter 7 trustee's allegations and assertions and
believe that they are without merit.



<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE D (CONTINUED)

CMA has claims and counterclaims against Triangle for breaches, defaults,
completion costs and damages in respect of the Subcontractor Projects and the
Contractor Project. Although such claims and counterclaims are not fully
liquidated and cannot be fully ascertained at this time, CMA believes that it is
entitled setoff and/or recoup part of the damages by offsetting any monies owed
by CMA to Triangle. The Company can make no assurances, however, that such
offsets and recoupment will be either (a) allowed and that CMA will prevail in
any such litigation with Triangle's Chapter 7 trustee, or (b) sufficient to
cover all of CMA's damages resulting from Triangle's defaults under the
Subcontractor Projects and Contractor Project. Based upon currently available
information, it appears that all or substantially all of CMA's claims against
Triangle may not be recoverable after such setoff and/or recoupment.

To date, Triangle's Chapter 7 trustee has commenced five (5) lawsuits against
CMA, Trident Mechanical Systems, Inc. ("Trident") (a dormant, wholly owned
subsidiary of the Company) and CMA's bonding company arising from the various
Subcontractor Projects and the Contractor Project. On June 1, 2000, Triangle's
Chapter 7 trustee commenced its first adversary proceeding in the Bankruptcy
Court against CMA and its bonding company claiming CMA owed it $411,002 in
connection with a project known as the Chelsea Mercantile Project, and seeking
to foreclose on a bonded lien. CMA and its bonding company filed a motion to
dismiss the complaint or have the Bankruptcy Court abstain from exercising its
jurisdiction. The Bankruptcy Court dismissed one of the two claims for relief in
the complaint and granted Triangle's Chapter 7 trustee leave to amend the
complaint with respect to the remaining claim. The Bankruptcy Court denied CMA's
motion to abstain. On or about September 28, 2000, Triangle's Chapter 7 trustee
filed and served its amended complaint. CMA and its bonding company have filed
an answer to the complaint and have asserted counterclaims claiming damages in
the aggregate amount of $9,610,647 arising from the Subcontractor Projects. The
parties are currently undertaking discovery. The Bankruptcy Court has not set a
final discovery cut-off date in this matter.

On September 21, 2000, Triangle's Chapter 7 trustee commenced an adversary
proceeding against Trident claiming Trident received an avoidable preference
from Triangle in the ninety (90) days prior to Triangle's bankruptcy filing in
the amount of $56,890. Triangle's Chapter 7 trustee has stated that she intends
to increase the amount claimed in this proceeding by approximately $103,000.
Trident has not yet, however, been served with an amended complaint. Trident has
filed an answer and affirmative defenses to the complaint. The parties are
currently undertaking discovery. The Bankruptcy Court has not set a final
discovery cut-off date in this matter.

On December 15, 2000, Triangle's Chapter 7 trustee commenced an adversary
proceeding in the Bankruptcy Court against CMA, Trident and its bonding company
claiming Trident owed it $750,623 in connection with a project known as the
Horace Mann Project, and seeking to foreclose on a bonded lien. CMA, Trident and
its bonding company have filed an answer to the Complaint and have asserted
counterclaims claiming damages in the aggregate amount of $1,353,894 arising
from the Subcontractor Projects and the Contractor Project. The parties are
currently undertaking discovery. The Bankruptcy Court has not set a discovery
cut-off date in this matter.





<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE D (CONTINUED)

On January 5, 2001, Triangle's Chapter 7 Trustee commenced an adversary
proceeding in the Bankruptcy Court against CMA and its bonding company claiming
CMA owed it $568,432 in connection with a project known as the Sotheby's
Project, and seeking to foreclose on a bonded lien. CMA and its bonding company
have filed an answer to the complaint and have asserted counterclaims claiming
damages in the aggregate amount of $9,610,647 arising from the Subcontractor
Projects. The parties have not yet started taking discovery. The Bankruptcy
Court has not set a discovery cut-off date in this matter.

On January 9, 2001, Triangle's Chapter 7 Trustee commenced an adversary
proceeding in the Bankruptcy Court against CMA and its bonding company claiming
CMA owed it $1,122,526 in connection with a project known as the Two Broadway
Project, and seeking to foreclose on a bonded lien. CMA and its bonding company
have filed an answer to the complaint and have asserted counterclaims to the
complaint claiming damages in the aggregate amount of $9,610,647 arising from
the Subcontractor Projects. The parties are engaged in pre-trial discovery. The
Bankruptcy Court has not set a final discovery cut-off date in this matter.

For the reasons discussed above, CMA believes it has no liability to Triangle
although the Company can make no assurances that CMA will prevail in the
litigation commenced by the Triangle's Chapter 7 trustee.

(2) On September 29, 1997, Centrifugal filed a complaint in the Supreme Court of
the State of New York, Kings County, against DAK Electric Contracting Corp.
("DAK") and two of DAK's officers, Donald Kopec and Al Walker, for breach of
contract in the amount of $4.1 million.

In prior years, Centrifugal was a partner in a joint venture that performed
mechanical and electrical services for a general contractor on the Lincoln
Square project. Centrifugal was responsible for the mechanical portion of the
contract, and its co-venturer, DAK, was responsible for the electrical portion.
The joint venture's work on this project has been completed. The joint venture
received demands for payment from certain vendors used by the co-venturer of
Centrifugal. These vendors filed liens and/or made demands against the joint
venture payment bond amounting to approximately $1.7 million. Some of these
vendors also filed lawsuits against the joint venture, the joint venture
partners and related bonding companies, to secure payment on their claims. These
claims were based on the alleged failure of the joint venture partner to pay for
electrical goods provided to it as the electrical subcontractor of the joint
venture. The joint venture's bonding companies proposed settling with the
claimants; the bonding companies would then seek indemnification from the joint
venture. It was management's opinion that it would cost the Company less if this
settlement process was managed and completed by the Company.

Based on these developments, the Company wrote off in fiscal 1996 approximately
$2.3 million with respect to accounts and loans receivable, and $1.4 million of
claims and other costs that the Company incurred on behalf of Centrifugal's
co-venturer in fulfillment of the electrical co-venturer's obligations under the
contract on the Lincoln Square Project. Nevertheless, the Company commenced the
above identified action in an attempt to recover its losses, expenses and costs
as above set forth. As of the date of this report, both the corporate defendant,
DAK and Donald Kopec have defaulted, and motions are being made for judgment
against each.




<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE D (CONTINUED)

As of June 30, 1996, all of the known claims and liens of subcontractors of the
joint venture were settled and discharged, and all of the vendor lawsuits which
arose out of these claims were also settled with the exception of the following:
The joint venture's bonding companies have claims over for indemnity against
Centrifugal and under a guarantee agreement against the Company in the event
that a judgment is rendered against the bonding companies in a suit brought by
an employee benefit fund for DAK's employees' union seeking contributions to the
fund which the fund claims were due but not paid by DAK. The complaint alleges
several causes of action against several defendants in connection with several
projects and seeks a total of approximately $450,000 in damages on all of these
causes against the named defendants; however, only one of the several causes of
action seeking an unspecified portion of the total damages demanded relates to
the Company. The Company has been informed that plaintiff will assert that more
than half of the total sums it seeks is due under the bond which the Company
provided, with the remainder of the sums demanded due on the claims unrelated to
the Company. The Company may also be exposed for interest. Additionally, it may
be exposed to such legal fees and other expenses as the Company's bonding
company may incur in its defense against plaintiff's claims; however, many years
into this matter, no demand for any of these sums has been made. The bonding
companies, Centrifugal and the Company have asserted, among other defenses, that
such contributions were not guaranteed under the terms of the joint venture's
bonds.

(3) In the ordinary course of business, the Company is involved in claims
concerning personal injuries and other matters, all of which the Company refers
to its insurance carriers. The Company believes that no loss to the Company is
probable and the claims are covered under its general and umbrella liability
policies. No provision for such claims has been made in the accompanying
financial statements.

NOTE E - SEGMENT INFORMATION

The Company has the following two reportable segments: construction and
communications. The construction segment primarily engages in electrical and
mechanical contracting services in the New York Metropolitan area. The
communications segment primarily installs communication systems and provides
telephone, Internet, cable television and other services to buildings in the New
York City and Los Angeles areas, and cable television and Internet services to
buildings in Florida and Texas.

The accounting policies used to develop segment information correspond to those
disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2001. The Company does not allocate certain corporate expenses to its
segments. Segment profit (loss) is based on profit (loss) from operations before
income taxes (benefits). Sales and transfers between segments are accounted for
at cost. The reportable segments are distinct business units operating in
different industries. They are separately managed, with separate marketing
systems.



<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE E (CONTINUED)

<TABLE>
<CAPTION>

           REPORTABLE SEGMENT INFORMATION                 CONSTRUCTION         COMMUNICATIONS           TOTALS
---------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>                <C>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001
Revenues from external customers                            $16,689,807               $866,272       $17,556,079
Intersegment revenues                                                 -                  6,250             6,250
Segment profit (loss)                                           653,558             (1,385,839)         (732,281)
Segment assets at September 30, 2001                         28,545,598              7,702,505        36,248,103

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
Revenues from external customers                            $20,997,105               $968,555       $21,965,660
Intersegment revenues                                                 -                  6,250             6,250
Segment profit (loss)                                           389,105             (3,044,212)       (2,655,107)
Segment assets at June 30, 2001                              38,023,897              8,495,106        46,519,003

RECONCILIATION TO CONSOLIDATED AMOUNTS

                                                                            FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                                            -----------------------------------------
                                                                                      2001               2000
                                                                                      ----               ----
     LOSS
Total loss for reportable segments                                                  ($732,281)       ($2,655,107)
Unallocated amounts:
  Corporate                                                                          (785,322)           (752,434)
                                                                            -----------------------------------------
Total consolidated loss from operations                                           ($1,517,603)       ($3,407,541)
                                                                            =========================================
</TABLE>

NOTE F - SENIOR SECURED PROMISSORY NOTE

On November 8, 2000, the Company consummated a $12.5 million senior secured loan
transaction with Madeleine, an affiliate of Blackacre. The loan, which is due
and payable on November 8, 2007, bears interest at a fixed rate of 11% per
annum. The loan is a senior secured obligation of the Company and is guaranteed
by certain subsidiaries of the Company, including OnTera which have pledged
substantially all of their respective assets to collateralize such guarantee. In
connection with the loan, the Company issued warrants to purchase 3,125,000
shares of common stock at an exercise price of $4.00 per share, expiring in
December 2007 and subject to antidilution provisions, to an affiliate of
Madeleine. A portion of the $12.5 million loan proceeds was used to retire
existing indebtedness of the Company in the principal amount of $7 million owed
to Madeleine and to pay expenses of obtaining the loan. The remaining proceeds
are being used for the Company's working capital purposes. No value was
allocated to the warrants because the value was deemed immaterial.



<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE F (CONTINUED)

Under the terms of the loan agreement between the Company and Madeleine, an
additional loan of $7.5 million may be made to the Company by Madeleine, on the
same terms as the $12.5 million loan. This additional loan is subject to certain
conditions, including, without limitation, receipt of approval by the Company's
stockholders. The nature of the conditions precedent to Madeleine's obligation
to make the additional loan results in such additional loan being available at
Madeleine's sole discretion. The Company has no present plan to hold a
stockholder meeting for the purpose of seeking stockholder approval for the
additional loan. If Madeleine were to waive the conditions precedent and the
loan is made, the Company will issue to Madeleine additional warrants to
purchase 1,875,000 shares of its common stock at an exercise price of $4.00 per
share. The Company has no assurance that Madeleine will waive the conditions
precedent to the additional funding.

Since March 2001, the Company has not made regularly scheduled interest payments
to Madeleine pursuant to the $12.5 million loan agreement. In addition, the
de-listing of the Company's common shares from the Nasdaq National Market
created a default under the loan agreement. Madeleine has offered to amend the
loan agreement to defer the interest payment and remove the listing requirement
from the loan agreement. The Company is currently reviewing the loan amendment
language offered by Madeleine, and will continue to discuss with Madeleine the
terms of the amendment.

NOTE G - NEW ACCOUNTING STANDARDS NOT YET ADOPTED

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141, Business Combinations,
and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all
business combinations completed after June 30, 2001. SFAS 142 is effective for
fiscal years beginning after December 15, 2001; however, certain provisions of
this Statement apply to goodwill and other intangible assets acquired between
July 1, 2001 and the effective date of SFAS 142. Major provisions of these
Statements and their effective dates for the Company are as follows:

     - All business combinations initiated after June 30, 2001 must use the
     purchase method of accounting. The pooling of interest method of accounting
     is prohibited except for transactions initiated before July 1, 2001.
     - Intangible assets acquired in a business combination must be recorded
     separately from goodwill if they arise from contractual or other legal
     rights or are separable from the acquired entity and can be sold,
     transferred, licensed, rented or exchanged, either individually or as part
     of a related contract, asset or liability
     - Goodwill, as well as intangible assets with indefinite lives, acquired
     after June 30, 2001, will not be amortized. Effective January 1, 2002, all
     previously recognized goodwill and intangible assets with indefinite lives
     will no longer be subject to amortization.
     - Effective January 1, 2002, goodwill and intangible assets with indefinite
     lives will be tested for impairment annually and whenever there is an
     impairment indicator
     - All acquired goodwill must be assigned to reporting units for purposes of
     impairment testing and segment reporting.



<PAGE>


               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE G (CONTINUED)

Although it is still reviewing the provisions of these Statements, management's
preliminary assessment is that these Statements will not have a material impact
on the Company's financial position or results of operations.

In August 2001, the FASB issued statement of Financial Accounting Standard
No. 144 "Accounting for the Impairment or Disposal of Long Lived Assets",
("SFAS 144"). This statement is effective for the fiscal years beginning after
December 15, 2001. This supercedes SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of", while retaining
many of the requirements of such statement. The Company is currently evaluating
the impact of the statement.


<PAGE>


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

GENERAL

DualStar Technologies Corporation ("DualStar" or the "Company"), through its
wholly owned subsidiaries, operates two separate lines of business: (a)
construction businesses; and (b) communications businesses. For a description of
the Company's businesses and operations, see Item 1 of the Company's Annual
Report on Form 10-K, as amended, for the fiscal year ended June 30, 2001.

The statements contained in this Quarterly Report on Form 10-Q, including the
exhibits hereto, relating to future operations of DualStar may constitute
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Please note that the words "intends,"
"expects," "plans," "estimates," "projects," "believes," "anticipates" and
similar expressions are intended to identify forward-looking statements. Actual
results of the Company may differ materially from those in the forward-looking
statements and may be affected by a number of factors including, without
limitation, the ability of the communications segment subsidiary of the Company,
to continue to implement its cost reduction plan, the ability of the Company to
raise and provide the capital resources to fund the expected communications
operating losses, regulatory or legislative changes, the Company's dependence on
key personnel, and the Company's ability to manage growth, in addition to those
risk factors, set forth in the section captioned "Risk Factors" and the
assumptions, risks, uncertainties and other factors set forth in the other
sections of the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2001 as well as in DualStar's other filings with the SEC. Although the
Company believes that its plans, intentions, and expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
plans, intentions, and expectations will be achieved and actual results could
differ materially from forecasts and estimates.

CAPITAL RESOURCES AND LIQUIDITY

Cash balances at September 30, and June 30, 2001 were $2.2 million and $3.7
million, respectively. The Company used $1.2 million of cash in the three months
ended September 30, 2001 for operating activities. The net use of cash was
primarily used to fund operating losses of the communications businesses.

In the three months ended September 30, 2001 and 2000, the Company acquired
capital assets of $0.2 million and $0.8 million, respectively, primarily for
investment in communications infrastructure systems for high-rise buildings to
enable the Company to provide telephone, Internet, video and other services to
the buildings' residents.



<PAGE>


Senior Secured Promissory Note

         On November 8, 2000, the Company consummated a $12.5 million senior
secured loan transaction with Madeleine L.L.C. ("Madeleine"), an affiliate of
Blackacre. The loan, which is due and payable on November 8, 2007, bears
interest at a fixed rate of 11% per annum. The loan is a senior secured
obligation of the Company and is guaranteed by certain subsidiaries of the
Company, including OnTera, which have pledged substantially all of their
respective assets to collateralize such guarantee. In connection with the loan,
the Company issued warrants to purchase 3,125,000 shares of common stock at an
exercise price of $4.00 per share, subject to antidilution provisions, to an
affiliate of Madeleine. A portion of the $12.5 million loan proceeds was used to
retire existing indebtedness of the Company in the principal amount of $7
million owed to Madeleine and to pay expenses of obtaining the loan. The
remaining proceeds are being used for the Company's working capital purposes. No
value was allocated to the warrants because the value was deemed immaterial.

         Under the terms of the loan agreement between the Company and
Madeleine, an additional loan of $7.5 million may be made to the Company by
Madeleine, on the same terms as the $12.5 million loan. This additional loan is
subject to certain conditions, including, without limitation, receipt of
approval by the Company's stockholders. The nature of the conditions precedent
to Madeleine's obligation to make the additional loan results in such additional
loan being available at Madeleine's sole discretion. The Company has no present
plan to hold a stockholder meeting for the purpose of seeking stockholder
approval for the additional loan. If Madeleine were to waive the conditions
precedent and the loan is made, the Company will issue to Madeleine additional
warrants to purchase 1,875,000 shares of its common stock at an exercise price
of $4.00 per share. The Company has no assurance that Madeleine will waive the
conditions precedent to the additional funding.

         Since March 2001, the Company has not made regularly scheduled interest
payments to Madeleine pursuant to the $12.5 million loan agreement. In addition,
the de-listing of the Company's common shares from the Nasdaq National Market
created a default under the loan agreement. Madeleine has offered to amend the
loan agreement to defer the interest payment and remove the listing requirement
from the loan agreement. The Company is currently reviewing the loan amendment
language offered by Madeleine, and will continue to discuss with Madeleine the
terms of the amendment.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                        NET REVENUES BY SEGMENT
                                               FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                  2001                          2000
                                                  ----                          ----
  Segments                              ($ million)    % of Total     ($ million)     % of Total
                                      --------------- ------------- ---------------- -------------
<S>                                      <C>           <C>             <C>            <C>
  Construction                              16.7          94.9            21.0           95.5
  Communications                             0.9           5.1             1.0            4.5
                                      --------------- ------------- ---------------- -------------
  Total revenues                            17.6         100.0            22.0          100.0
                                      =============== ============= ================ =============

                                                  OPERATING (LOSS) INCOME BY SEGMENT
                                               FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                  2001                          2000
                                                  ----                          ----
  Segments                             ($ million)     % of Total     ($ million)     % of Total
                                      --------------- ------------- ---------------- -------------
  Construction                               0.7        (100.0)            0.4          (14.8)
  Communications                            (1.4)        200.0            (3.1)         114.8
                                      --------------- ------------- ---------------- -------------
  Total operating (loss) income             (0.7)        100.0            (2.7)         100.0
                                      =============== ============= ================ =============
</TABLE>


<PAGE>

         Construction revenue decreased $4.3 million or 20.5% from $21.0 million
in the three months ended September 30, 2000 to $16.7 million in the three
months ended September 30, 2001. The decrease was primarily due to fewer
construction contracts started in 2001.

         Cost of construction revenue decreased $4.3 million or 22.8% from $18.9
million in the three months end September 30, 2000 to $14.6 million in the three
months ended September 30, 2001. The decrease was primarily due to the decrease
in construction revenue. Gross margin percentages were 12.6% and 10.0% in the
three months ended September 30, 2001 and 2000, respectively. The improvement in
gross margin percentage was due primarily to a higher gross margin percentage in
the new contracts started in 2001.

         Construction operating income increased $0.3 million or 75.0% from $0.4
million in the three months ended September 30, 2000 to $0.7 million for the
three months ended September 30, 2001. The improvement was due primarily to a
decrease in payroll and payroll related expenses.

         Communications revenue decreased $0.1 million or 10.0% from $1.0
million in three months ended September 30, 2000 to $0.9 million in the three
months ended September 30, 2001. The decrease was primarily due to a decrease in
the amortization of satellite television commission income as a result of fewer
new customers in the three months ended September 30, 2001 compared to the
comparable period in 2000.

         Cost of communications revenue decreased $0.1 million or 16.7% from
$0.6 million in three months ended September 30, 2000 to $0.5 million in the
three months ended September 30, 2001. The decrease was primarily due to the
decrease in communications revenue. Gross profit margin percentages were 44.4%
and 40.0% in the three months ended September 30, 2001 and 2000, respectively.
The improvement was primarily due to better control of direct costs.

         Operating loss of the communications segment decreased $1.7 million or
54.8% from ($3.1) million in three months ended September 30, 2000 to ($1.4)
million in three months ended September 30, 2001. The improvement was due
primarily to a decrease in general and administrative expenses as a result of a
restructuring of the communications businesses commenced in the second half of
fiscal 2001. The communications segment has implemented and will continue to
implement cost reductions to minimize such losses. There can be no assurance
that the Company will be able to raise and provide the capital resources to fund
the expected communications operating losses. In addition, in the event that
additional working capital becomes necessary to fund communications operations,
there can be no assurance that the Company will be able to obtain financing on
terms satisfactory to it. Should the Company be unable to secure such financing,
the Company may have to curtail its communications operations.

         As a result of a restructuring of the communications businesses
commenced in the second half of the fiscal 2001, on a consolidated basis, the
general and administrative expenses decreased $2.3 million or 42.6% from $5.4
million in the three months ended September 30, 2000 to $3.1 million in the
three months ended September 30, 2001. The decrease in general and
administrative expenses included a $1.4 million decrease in payroll and related
costs, a $0.6 million decrease in professional fees, a $0.2 million decrease in
travel and entertainment, and a $0.1 million decrease in telephone and office
supplies.

         Depreciation and amortization increased $0.2 million or 50.0% from $0.4
million in the three months ended September 30, 2000 to $0.6 million in the
three months ended September 30, 2001. The increase was primarily due to
additional property, equipment and infrastructure acquired during fiscal 2000 in
connection with the then expansion of the communications businesses.

<PAGE>

         Interest income decreased $0.1 million or 50.0% from $0.2 million in
the three months ended September 30, 2000 to $0.1 million in three months ended
September 30, 2001. The decrease was due to a decrease in investment of the
Company's excess cash to fund the operating loss of the communications
businesses.

         Interest expense increased $0.2 million or 100.0% from $0.2 million in
the three months ended September 30, 2000 to $0.4 million in the three months
ended September 30, 2001. The increases were due primarily to the Company's
issuance of a $12.5 million senior secured promissory note to Madeleine L.L.C.
in November 2000.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest rates. As of
September 30, 2001, the Company had debt of $14.9 million with various fixed
interest rates from 8.5% to 11.0%. The fixed rate debt may have its fair value
adversely affected if interest rates decline; however, the amount is not
expected to be material. The Company does not have any derivative financial
instruments as of September 30, 2001. The Company believes that the interest
rate risk associated with its investments is not material to the results of
operations of the Company.

PART II - OTHER INFORMATION

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

A Current Report on Form 8-K/A was filed on August 8, 2001 with respect to
Item 5 of Form 8-K.



<PAGE>


                                   Signatures

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


                                            DualStar Technologies Corporation


Date:      November 14, 2001             By:      GREGORY CUNEO
     ------------------------                  ----------------
                                                    Gregory Cuneo
                                                    President
                                                    and Chief Executive Officer


Date:       November 14, 2001            By:      ROBERT  BIRNBACH
     --------------------------                -------------------
                                                    Robert Birnbach
                                                    Executive Vice President
                                                    and Chief Financial Officer


Date:       November 14, 2001            By:      JOSEPH CHAN
     --------------------------                --------------
                                                    Joseph Chan
                                                    Vice President and
                                                    Chief Accounting Officer