<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 March 31, 2002.

                                       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 MAY 8, 2002
--------------------------------------------------------------------------------

<PAGE>

                                      INDEX

                        DUALSTAR TECHNOLOGIES CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

       Condensed consolidated balance sheets - March 31, 2002 and June 30, 2001

       Condensed consolidated statements of operations - Three and nine months
           ended March 31, 2002 and 2001

       Condensed consolidated statements of cash flows - Nine months ended
           March 31, 2002 and 2001

       Notes to condensed consolidated financial statements - March 31, 2002


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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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>
                                                                                MARCH 31,           JUNE 30,
                                                                                  2002                2001
                                                                           ---------------------------------------
                                                                               (UNAUDITED)
<S>                                                                           <C>                  <C>
                                 ASSETS
Current assets:
  Cash and cash equivalents                                                      $1,239,553           $3,711,287
  Accounts receivable - net of allowance for doubtful accounts                   25,020,476           23,761,367
  Retainage receivable                                                            3,421,961            3,926,902
  Costs and estimated earnings in excess of billings on uncompleted
    contracts                                                                     1,628,449            1,236,557
  Deferred tax asset                                                                      -              377,000
  Prepaid expenses and other current assets                                         333,616            1,278,469
                                                                           ---------------------------------------
Total current assets                                                             31,644,055           34,291,582
  Property and equipment - net of accumulated depreciation and
    amortization                                                                  4,080,935            7,621,297
  Deferred tax asset                                                                      -              699,000
  Intangible assets - net of accumulated amortization                               154,280              365,219
  Other                                                                             526,735              595,883
                                                                           ---------------------------------------
Total assets                                                                    $36,406,005          $43,572,981
                                                                           =======================================

                  LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                              $10,379,776          $12,437,911
  Billings in excess of costs and estimated earnings on uncompleted
    contracts                                                                     6,014,672            3,572,160
  Accrued expenses and other current liabilities                                  4,810,568            4,445,041
                                                                           ---------------------------------------
Total current liabilities                                                        21,205,016           20,455,112

  Senior secured promissory note payable                                         14,512,982           12,500,000
  Mortgage payable - net of current portion                                               -            1,691,744
  Other liabilities                                                                       -              148,613
                                                                           ---------------------------------------
Total liabilities                                                                35,717,998           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                                                           (41,052,430)         (32,760,425)
  Accumulated other comprehensive loss                                                    -             (202,500)
                                                                           ---------------------------------------
Total shareholders' equity                                                          688,007            8,777,512
                                                                           ---------------------------------------
Total liabilities and shareholders' equity                                      $36,406,005          $43,572,981
                                                                           =======================================
</TABLE>

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>

               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                        FOR THE THREE MONTHS ENDED             FOR THE NINE MONTHS ENDED
                                                                MARCH 31,                               MARCH 31,
                                                   -----------------------------------    -----------------------------------
                                                        2002                 2001              2002                 2001
                                                   ---------------      --------------    --------------        -------------
<S>                                                <C>                  <C>               <C>                   <C>
Revenues earned                                    $    19,715,569      $   23,562,991    $   56,985,364        $  66,198,532
Costs of revenues earned, excluding depreciation
  and amortization                                      17,454,638          18,926,463        49,711,780           57,474,082
                                                   ---------------      --------------    --------------        -------------

Gross profit                                             2,260,931           4,636,528         7,273,584            8,724,450
Operating expenses:
  General and administrative expenses, excluding
    depreciation and amortization                        2,639,883           4,703,116         8,612,211           15,871,646
  Impairment of assets                                   2,500,000                --           2,500,000                 --
  Depreciation and amortization                            624,861             557,860         1,758,689            1,504,163
                                                   ---------------      --------------    --------------        -------------

Operating loss                                          (3,503,813)           (624,448)       (5,597,316)          (8,651,359)
                                                   ---------------      --------------    --------------        -------------

Other (income) expense:
  Interest income                                             --              (113,509)         (152,808)            (453,730)
  Interest expense                                         438,521             372,531         1,433,997              947,528
  Loss on sale of marketable securities                       --                  --             337,500                 --
                                                   ---------------      --------------    --------------        -------------

Other expense - net                                        438,521             259,022         1,618,689              493,798
                                                   ---------------      --------------    --------------        -------------

Loss before provision for income taxe                   (3,942,334)           (883,470)       (7,216,005)          (9,145,157)
Provision for income taxes                               1,076,000                --           1,076,000              676,000
                                                   ---------------      --------------    --------------        -------------

Net loss                                           $    (5,018,334)     $     (883,470)   $   (8,292,005)       $  (9,821,157)
                                                   ===============      ==============    ==============        =============

Basic and diluted loss per share                   $         (0.30)     $        (0.05)   $        (0.50)       $       (0.60)

Weighted average shares outstanding                     16,501,568          16,495,509        16,501,568           16,495,509
</TABLE>

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>

               DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       FOR THE NINE MONTHS ENDED MARCH 31,
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                  2002            2001
                                                              ------------    ------------
<S>                                                           <C>             <C>
Net cash used in operating activities                         $ (2,463,744)   $(11,842,114)
                                                              ------------    ------------

Cash flows from investing activities:
   Acquisition of property and equipment                          (442,359)     (2,523,526)
   Proceed from sale (acquisition) of marketable securities        555,000        (943,417)
   Increase in capitalized access costs                                --          (123,985)
                                                              ------------    ------------
Net cash provided by (used in) investing activities                112,641      (3,590,928)
                                                              ------------    ------------

Cash flows from financing activities:
   Principal payments on capital lease obligations                (102,559)       (125,540)
   Principal payments on mortgage                                  (18,072)        (14,706)
   Proceeds from promissory notes                                     --         5,500,000
                                                              ------------    ------------
Net cash provided by (used in) financing activities               (120,631)      5,359,754
                                                              ------------    ------------

Net decrease in cash and cash equivalents                       (2,471,734)    (10,073,288)
Cash and cash equivalents at beginning of period                 3,711,287      14,800,310
                                                              ------------    ------------
Cash and cash equivalents at end of period                    $  1,239,553    $  4,727,022
                                                              ============    ============
</TABLE>

NON-CASH TRANSACTION:

(1) During the nine months ended March 31, 2002, accrued interest of $2,012,982
was capitalized to the senior secured promissory note payable.

(2) In connection with the Casden agreement in exchange for access rights, the
Company issued 25,000 shares of Company common stock and warrants to purchase
2,636 shares of Company common stock in the nine months ended March 31, 2001.
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 $250 and additional paid-in capital was increased by $87,872.

(3) In November 2000, the Company sold to Madeleine L.L.C. a $12.5 million
senior secured promissory note. The note, due and payable on November 8, 2007,
bears interest at a fixed rate of 11% per annum. A portion of the proceeds was
used to retire an existing indebtedness of the Company in the principal amount
of $7.0 million owed to Madeleine L.L.C. No value was allocated to the Class E
warrants issued to DSTR Warrant Co., LLC, an affiliate of Madeleine L.L.C., in
connection with the note because the value was deemed immaterial.

            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 several southern and western states. 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 sell or curtail its communications operations.

In the three months ended March 31, 2002, the Company decided to further limit
its communications business efforts and resources to the Internet and
subscription video businesses in the New York City metropolitan area and in
Florida. The Company's communications subsidiaries intend to discontinue the
telephone business in New York City and, in April 2002, informed their telephone
customers and the FCC that telephone services would no longer be provided as of
June 2002. In addition, the Company decided to sell certain communications
assets in locations outside of the New York City metropolitan area and Florida.
Due to the Company's continuing re-focus of its communications business efforts
and resources, a $2.5 million charge for the impairment of certain remaining
communications assets was recorded in the three and nine months ended March 31,
2002.

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States 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 in the United States for complete financial statements. These
statements should be read in conjunction with the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2001.

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- and nine-month period ended March 31, 2002 are
not necessarily indicative of the results that may be expected for the fiscal
year ending June 30, 2002.

<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 and nine months ended March 31, 2002 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 LOSS

Other comprehensive loss includes unrealized gains and losses on marketable
securities classified as available-for-sale. As of June 30, 2001, the unrealized
loss on the Company's available-for-sale securities was $202,500 and was
reported as a component of shareholders' equity. The company subsequently sold
the securities in the current fiscal period and the unrealized loss was
reversed. Comprehensive losses for the three and nine months ended March 31,
2002 are $5,018,334 and $7,969,505, respectively.

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
the Contractor Project. 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 $2.4 million 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. CMA had claims and
counterclaims against Triangle for breaches, defaults, completion costs and
damages in respect of the Subcontractor Projects and the Contractor Project. CMA
believed that it was entitled setoff and/or recoup part of the damages by
offsetting any monies owed by CMA to Triangle.

Subsequently, Triangle's Chapter 7 trustee 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, and claimed CMA owed Triangle
a total of $2.9 million. CMA and its bonding company asserted counterclaims
claiming damages in the aggregate amount of $9.6 million arising from the
Subcontractor Projects.

<PAGE>

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

NOTE D (CONTINUED)

To minimize legal and other costs in connection with these claims, in April
2002, CMA paid $220,000 to settle with Triangle and, in return, mutual releases
from liability were given by the parties, including Trident and CMA's bonding
company.

(2) Until 1995, Centrifugal was a partner with DAK Electric Contracting Corp.
("DAK") in a joint venture that performed mechanical and electrical services for
a general contractor on a construction project in Manhattan known as 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.
In 1995, DAK became insolvent, thereby obligating Centrifugal to complete the
work on this project. As a result, in fiscal 1996 the Company wrote off
approximately $3.7 million with respect to accounts receivable, loans
receivable, claims and other costs that the Company incurred on behalf of DAK in
fulfillment of DAK's obligations under the contract on the Lincoln Square
project.

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.

<PAGE>

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

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
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.

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 incurred
by the parent company to its segments. Segment profit (loss) is based on profit
(loss) from operations before income taxes (benefits) and does not include those
corporate expenses incurred by the parent company. 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.

REPORTABLE SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                                     CONSTRUCTION         COMMUNICATIONS           TOTALS
----------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                      <C>                <C>
FOR THE THREE MONTHS ENDED MARCH 31, 2002
Revenues from external customers                      $18,798,776              $916,793           $19,715,569
Intersegment revenues                                           -                 6,250                 6,250
Segment profit (loss)                                     308,372            (3,595,711)           (3,287,339)
Segment assets at March 31, 2002                       31,128,968             4,012,818            35,141,786

FOR THE THREE MONTHS ENDED MARCH 31, 2001
Revenues from external customers                      $22,705,494              $857,497           $23,562,991
Intersegment revenues                                           -                 1,250                 1,250
Segment profit (loss)                                   2,339,453            (2,280,635)               58,818
Segment assets at June 30, 2001                        31,377,606             7,805,246            39,182,852

FOR THE NINE MONTHS ENDED MARCH 31, 2002
Revenues from external customers                      $54,392,132            $2,593,232           $56,985,364
Intersegment revenues                                           -                18,750                18,750
Segment profit (loss)                                   1,401,381            (6,097,478)           (4,696,097)

FOR THE NINE MONTHS ENDED MARCH 31, 2001
Revenues from external customers                      $63,691,564            $2,506,968           $66,198,532
Intersegment revenues                                           -                11,250                11,250
Segment profit (loss)                                   2,435,832            (9,158,564)           (6,722,732)
</TABLE>

<PAGE>

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

NOTE E (CONTINUED)

RECONCILIATION TO CONSOLIDATED AMOUNTS

<TABLE>
<CAPTION>
                                                  FOR THE THREE MONTHS ENDED               FOR THE NINE MONTHS ENDED
                                                           MARCH 31,                                MARCH 31,
                                            --------------------------------------    -----------------------------------
                                                   2002                2001                 2002              2001
                                                   ----                ----                 ----              ----
<S>                                              <C>                     <C>               <C>               <C>
     LOSS
Total loss for reportable segments               $(3,287,339)            $58,818           $(4,696,097)      $(6,722,732)
Unallocated amounts:
  Corporate                                         (654,995)           (942,288)           (2,519,908)       (2,422,425)
                                            --------------------------------------    -----------------------------------
Loss before provision for income taxes           $(3,942,334)          $(883,470)          $(7,216,005)      $(9,145,157)
                                            ======================================    ===================================
</TABLE>

NOTE F - 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
Capital Management L.L.C. ("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.

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. Madeleine and the Company have discussed and continue
to discuss terms for an amendment of the loan agreement.

<PAGE>

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

NOTE G - MORTGAGE PAYABLE

On November 22, 1999, the Company refinanced its mortgage loan, borrowing an
additional $996,000. The new mortgage loan will expire on December 1, 2004 and
can be renewed for an additional five years. The mortgage loan bears interest at
a fixed rate of 8.5% per annum. Interest during the renewal term will be paid at
a fixed rate per annum equal to the prime rate in effect on November 1, 2004.
Principal of the loan is amortized on a 25-year basis. The mortgage loan
agreement requires the Company to comply with certain covenants, including
maintaining certain net working capital and tangible net worth amounts. If the
Company fails to meet any of the requirements, the loan shall become immediately
due and payable. At March 31, 2002, the Company failed to maintain the tangible
net worth requirement. Accordingly, the mortgage payable of $1,679,000 was
reclassified as a current liability although the Company has not been notified
of any intention by the bank to accelerate payments.

NOTE H - 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.

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 27A of the
Securities Act of 1933 and 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 March 31, 2002 and June 30, 2001 were $1.2 million and
$3.7 million, respectively. The Company used $2.5 million of cash in the nine
months ended March 31, 2002 for operating activities. The net use of cash was
primarily used to fund operating losses of the communications businesses. The
Company's operating cash flows are primarily generated from the construction
segment. Due to the relatively high dollar value of each construction contract,
generally ranging from $5 million to $10 million, should the collection of
contract receivables be delayed, this may have a material adverse effect on the
Company's operations.

         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 sell or curtail its communications operations further.

<PAGE>

         In the three months ended March 31, 2002, the Company decided to
further limit its communications business efforts and resources to the Internet
and subscription video businesses in the New York City metropolitan area and in
Florida. The Company's communications subsidiaries intend to discontinue the
telephone business in New York City and, in April 2002, informed their telephone
customers and the FCC that telephone services would no longer be provided as of
June 2002. In addition, the Company decided to sell certain communications
assets in locations outside of the New York City metropolitan area and Florida.
Due to the Company's continuing re-focus of its communications business efforts
and resources, a $2.5 million charge for the impairment of certain remaining
communications assets was recorded in the three and nine months ended March 31,
2002.

         In the nine months ended March 31, 2002 and 2001, the Company acquired
capital assets of $0.4 million and $2.5 million, respectively, primarily for
investment in communications infrastructure systems for high-rise buildings to
enable the Company to provide Internet, video and other services to the
buildings' residents.

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.

         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. Madeleine and the Company have discussed and continue
to discuss terms for an amendment of the loan agreement.

<PAGE>

Mortgage payable

         On November 22, 1999, the Company refinanced its mortgage loan,
borrowing an additional $996,000. The new mortgage loan will expire on December
1, 2004 and can be renewed for an additional five years. The mortgage loan bears
interest at a fixed rate of 8.5% per annum. Interest during the renewal term
will be paid at a fixed rate per annum equal to the prime rate in effect on
November 1, 2004. Principal of the loan is amortized on a 25-year basis. The
mortgage loan agreement requires the Company to comply with certain covenants,
including maintaining certain net working capital and tangible net worth
amounts. If the Company fails to meet any of the requirements, the loan shall
become immediately due and payable. At March 31, 2002, Company failed to
maintain the tangible net worth requirement. Accordingly, the mortgage payable
of $1,679,000 was reclassified as a current liability although the Company has
not been notified of any intention by the bank to accelerate payments.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                   NET REVENUES BY SEGMENT
                                                FOR THE THREE MONTHS ENDED MARCH 31,
                                                  2002                          2001
                                                  ----                          ----
               SEGMENTS                ($ million)     % of Total     ($ million)     % of Total
                                      --------------- ------------- ---------------- -------------
<S>                                        <C>              <C>          <C>               <C>
  Construction                             $18.8            95.4         $22.7             96.2
  Communications                             0.9             4.6           0.9              3.8
                                      --------------- ------------- ---------------- -------------
  Total revenues                           $19.7           100.0         $23.6            100.0
                                      =============== ============= ================ =============

<CAPTION>
                                                   NET REVENUES BY SEGMENT
                                                FOR THE NINE MONTHS ENDED MARCH 31,
                                                  2002                          2001
                                                  ----                          ----
               SEGMENTS                ($ million)     % of Total     ($ million)     % of Total
                                      --------------- ------------- ---------------- -------------
<S>                                        <C>              <C>          <C>               <C>
  Construction                             $54.4            95.4         $63.7             96.2
  Communications                             2.6             4.6           2.5              3.8
                                      --------------- ------------- ---------------- -------------
  Total revenues                           $57.0           100.0         $66.2            100.0
                                      =============== ============= ================ =============

<CAPTION>
                                                 OPERATING INCOME (LOSS) BY SEGMENT
                                                FOR THE THREE MONTHS ENDED MARCH 31,
                                                  2002                          2001
                                                  ----                          ----
               SEGMENTS                ($ million)     % of Total     ($ million)     % of Total
                                      --------------- ------------- ---------------- -------------
<S>                                        <C>              <C>          <C>               <C>
  Construction                              $0.3            (0.9)         $2.3            100.0
  Communications                            (3.6)          100.9          (2.3)          (100.0)
                                      --------------- ------------- ---------------- -------------
  Total operating (loss) income            $(3.3)          100.0          $0.0            100.0
                                      =============== ============= ================ =============

<CAPTION>

                                                    OPERATING INCOME (LOSS) BY SEGMENT
                                                  FOR THE NINE MONTHS ENDED MARCH 31,
                                                  2002                          2001
                                                  ----                          ----
               SEGMENTS                ($ million)     % of Total     ($ million)     % of Total
                                      --------------- ------------- ---------------- -------------
<S>                                        <C>              <C>          <C>               <C>
  Construction                              $1.4           (29.8)         $2.4            (35.8)
  Communications                            (6.1)          129.8          (9.1)           135.8
                                      --------------- ------------- ---------------- -------------
  Total operating (loss) income            $(4.7)          100.0         $(6.7)           100.0
                                      =============== ============= ================ =============
</TABLE>

<PAGE>


         Construction revenue decreased $3.9 million or 17.2% from $22.7 million
in the three months ended March 31, 2001 to $18.8 million in the three months
ended March 31, 2002. Construction revenue decreased $9.3 or 14.6% from $63.7
million in the nine months ended March 31, 2001 to $54.4 million in the nine
months ended March 31, 2002. The decreases were primarily due to fewer
construction contracts started in fiscal 2002.

         Revenues on long-term contracts are accounted for by the
percentage-of-completion method, whereby revenue is recognized based on the
estimated percentage of costs incurred to date to the estimated total costs of
each individual contract. Changes in job performance, job conditions, and
estimated profitability, including those arising from final contract
settlements, may result in revisions to costs and income, and such changes are
recognized in the period in which the revisions are determined. An amount equal
to costs incurred attributable to pending change orders is included in revenues
when recovery is probable. Management determines these estimates quarterly
through discussions with the construction managers of each contract and with
customers for changes and final contract settlement. These estimates require the
best judgment by management utilizing the information available, and it is
possible that final results could be materially different than those estimated.

         Cost of construction revenue decreased $1.4 million or 7.7% from $18.3
million in the three months end March 31, 2001 to $16.9 million in the three
months ended March 31, 2002. Cost of construction revenue decreased $7.4 million
or 13.3% from $55.7 million in the nine months end March 31, 2001 to $48.3
million in the nine months ended March 31, 2002. The decreases were primarily
due to the decreases in construction revenue. Gross margin percentages were
10.0% and 19.3% in the three months ended March 31, 2002 and 2001, respectively.
Gross margin percentages were 11.2% and 12.5% in the nine months ended March 31,
2002 and 2001, respectively. The decreases in gross margin percentage were due
primarily to projected unfavorable close-outs on two electrical contracting jobs
and under-estimation of costs to complete one electrical contracting job.

         Construction operating income decreased $2.0 million or 87.0% from $2.3
million in the three months ended March 31, 2001 to $0.3 million in the three
months ended March 31, 2002. Construction operating income decreased $1.0
million or 45.8% from $2.4 million in the nine months ended March 31, 2001 to
$1.4 million for the nine months ended March 31, 2002. The decreases were due
primarily to the decreases in construction revenues and in gross margin
percentages.

         Communications revenue was $0.9 million in three months ended March 31,
2002, unchanged compared with the three months ended March 31, 2001.
Communications revenue increased $0.1 million or 4.0% from $2.5 million in nine
months ended March 31, 2001 to $2.6 million in the nine months ended March 31,
2002. The increases were primarily due to an increase in the number of satellite
television and Internet customers.

         Cost of communications revenue decreased $0.1 million or 16.7% from
$0.6 million in three months ended March 31, 2001 to $0.5 million in the three
months ended March 31, 2002. Cost of communications revenue decreased $0.3
million or 17.6% from $1.7 million in nine months ended March 31, 2001 to $1.4
million in the nine months ended March 31, 2002. The decreases were primarily
due to better control of direct costs. Gross profit margin percentages were
41.5% and 28.6% in the three months ended March 31, 2002 and 2001, respectively.
Gross profit margin percentages were 44.9% and 31.1% in the nine months ended
March 31, 2002 and 2001, respectively. The improvements were primarily due to
better control of direct costs.

<PAGE>

         In the three and nine months ended March 31, 2002, the communications
segment recorded a $2.5 million charge for impairment of assets. Excluding the
charge, operating loss of the communications segment decreased $1.2 million or
52.2% from ($2.3) million in three months ended March 31, 2001 to ($1.1) million
in three months ended March 31, 2002. Operating loss of the communications
segment decreased $5.5 million or 60.4% from ($9.1) million in nine months ended
March 31, 2001 to ($3.6) million in nine months ended March 31, 2002. The
improvements were due primarily to decreases 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, including reductions
in personnel, infrastructure and capital expenditures to minimize such 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
sell or curtail its communications operations further.

         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 several southern
and western states. A restructuring charge of $1.1 million reflecting the impact
of such reductions and refocus of markets was recorded in the three months ended
March 31, 2001. A benefit from a reversal of bonus accruals of $0.9 million was
also recorded in the three month ended March 31, 2001 because those bonuses
would no longer be paid due to the restructuring.

         In the three months ended March 31, 2002, the Company decided to
further limit its communications business efforts and resources to the Internet
and subscription video businesses in the New York City metropolitan area and in
Florida. The Company's communications subsidiaries intend to discontinue the
telephone business in New York City and, in April 2002, informed their telephone
customers and the FCC that telephone services would no longer be provided as of
June 2002. In addition, the Company decided to sell certain communications
assets in locations outside of the New York City metropolitan area and Florida.
Due to the Company's continuing re-focus of its communications business efforts
and resources, a $2.5 million charge for the impairment of certain remaining
communications assets was recorded in the three and nine months ended March 31,
2002.

         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 $2.1 million or 44.7% from $4.7
million in the three months ended March 31, 2001 to $2.6 million in the three
months ended March 31, 2002. In addition to the restructuring charge and the
benefit from the reversal of bonus accruals recorded in fiscal 2001, the
decrease in general and administrative expenses included a $1.6 million decrease
in payroll and related costs, a $0.3 million decrease in professional fees, a
$0.1 million decrease in insurance, and a $0.1 million decrease in rent.

         The general and administrative expenses decreased $7.3 million or 45.9%
from $15.9 million in the nine months ended March 31, 2001 to $8.6 million in
the nine months ended March 31, 2002. In addition to the restructuring charge
and the benefit from the reversal of bonus accruals recorded in fiscal 2001, the
decrease in general and administrative expenses included a $4.9 million decrease
in payroll and related costs, a $1.5 million decrease in

<PAGE>

professional fees, a $0.4 million decrease in travel and entertainment, a $0.2
million decrease in telephone and office supplies, and a $0.2 million decrease
in rent.

         Depreciation and amortization was $0.6 million in the three months
ended March 31, 2002, unchanged compared to in the three months ended March 31,
2001. Depreciation and amortization increased $0.3 million or 20.0% from $1.5
million in the nine months ended March 31, 2001 to $1.8 million in the nine
months ended March 31, 2002. The increases were primarily due to additional
property, equipment and infrastructure acquired during fiscal 2001 in connection
with the then expansion of the communications businesses.

         Interest income was immaterial in the three months ended March 31, 2002
compared to $0.1 million in the three months ended March 31, 2001. Interest
income decreased $0.3 million or 60.0% from $0.5 million in the nine months
ended March 31, 2001 to $0.2 million in nine months ended March 31, 2002. The
decreases were due to a decrease in investment of the Company's excess cash
which was used instead to fund the operating losses of the communications
businesses.

         Interest expense was $0.4 million in the three months ended March 31,
2002, unchanged compared to the three months ended March 31, 2001. Interest
expense increased $0.5 million or 55.6% from $0.9 million in the nine months
ended March 31, 2001 to $1.4 million in the nine months ended March 31, 2002.
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 and unpaid
interest was capitalized and added to the principal due to the proposed
amendment to the promissory note.

         The Company sold marketable securities to fund the operating losses of
the communications businesses in the three months ended December 31, 2001. The
transaction resulted a capital loss of $0.3 million in the nine months ended
March 31, 2002.

         Based on the Company's continuing refocus of its communications
business efforts and resources, in addition to the substantial losses incurred
in current fiscal year, management believes that the Company will less than
likely generate sufficient taxable earnings or utilize tax planning
opportunities to realize the deferred tax benefits of $1.1 million as June 30,
2001. Therefore, the Company has increased its valuation allowance by $1.1
million to $22.9 million as March 31, 2002. Accordingly, a provision for
deferred income taxes of $1.1 million was recorded in the three and nine months
ended March 31, 2002. In the nine months ended March 31, 2001, the Company
increased its valuation allowance by $0.7 million and recorded a provision for
deferred income taxes of $0.7 million.

         On April 30, 2002, the Company dismissed Grant Thornton LLP ("Grant
Thornton") as the Company's independent accountants. As previously reported in a
Current Report on Form 8-K filed with the Securities and Exchange Commission on
May 6, 2002 (to which reference is made), Grant Thornton's reports on the
financial statements of the Company for either of the fiscal years ended June
30, 2001 or June 30, 2000 did not contain an adverse opinion or a disclaimer of
opinion; they were not qualified or modified as to uncertainty, audit scope, or
accounting principles; and there were no reportable events or disagreements with
Grant Thornton on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement(s), if
not resolved to the satisfaction of Grant Thornton, would have caused Grant
Thornton to make reference to the subject matter of such disagreement(s) in
connection with their report. On May 2, 2002, the Company engaged Grassi & Co.,
CPAs, P.C. as the Company's independent accountants to review the Company's
financial statements for the quarter ended March 31, 2002 and to audit the
Company's financial statements for the fiscal year ending June 30, 2002.

<PAGE>

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.

         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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest rates. As of
March 31, 2002, the Company had debt of $16.2 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 March 31, 2002. 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

In the three months ended March 31, 2002, no Current Report on Form 8-K was
filed. A Current Report on Form 8-K was filed on May 6, 2002.

<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:      May 15, 2002            By:  GREGORY CUNEO
     --------------------------       -----------------------------------------
                                        Gregory Cuneo
                                        President and Chief Executive Officer


Date:       May 15, 2002           By:  ROBERT  BIRNBACH
     --------------------------       -----------------------------------------
                                        Robert Birnbach
                                        Executive Vice President and
                                        Chief Financial Officer


Date:       May 15, 2002           By:  JOSEPH CHAN
     --------------------------        -----------------------------------------
                                        Joseph Chan
                                        Vice President and Chief Accounting
                                        Officer