SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 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: 2-99080
NATIONAL DIVERSIFIED SERVICES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 11-2820379
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
c/o Lester Morse P.C.
111 Great Neck Road, Suite #420
Great Neck, New York 11021
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (516) 487-1419
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 ___.
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6,548,870 Common Shares, $.001 par value were issued and outstanding at August
15, 2002.
NATIONAL DIVERSIFIED SERVICES, INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 3
June 30, 2002 (Unaudited) and
December 31, 2001
Consolidated Statements of Operations 4
Three Months and Six months ended June 30,
2002 and June 30, 2001 (Unaudited)
Consolidated Statements of Cash Flows 5
Six Months Ended June 30, 2002 and
June 30, 2001 (Unaudited)
Notes to Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION 9
SIGNATURES 10
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
2002 2001
--------------------- -------------------
(Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents $ 228,590 $ 242,603
Interest receivable 650 1,863
Other current assets 1,656 1,656
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Total assets $ 230,896 $ 246,122
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 74,819 $ 74,962
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Total liabilities 74,819 74,962
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COMMITMENT
STOCKHOLDERS' EQUITY
Common stock, $.001 par value;
Authorized - 30,000,000 shares; issued and
outstanding - 6,553,870 shares 6,554 6,554
Additional paid-in capital 705,755 705,755
Accumulated deficit (556,227) (541,144)
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156,082 171,165
Less: 5,000 shares of treasury stock, at cost 5 5
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Total stockholders' equity 156,077 171,160
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 230,896 $ 246,122
========== ==========
See accompanying notes to consolidated financial statements (unaudited).
3
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX THREE
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
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2002 2001 2002 2001
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REVENUES - interest $ 823 $ 6,206 $ 777 $ 2,662
GENERAL AND ADMINISTRATIVE
EXPENSES 15,906 11,426 13,215 6,786
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NET LOSS $ (15,083) $ (5,220) $ (12,438) $ (4,124)
========== ========= ========== ========
NET LOSS PER SHARE, BASED
ON THE WEIGHTED AVERAGE
SHARES OUTSTANDING $ - * $ - * $ - * $ - *
========== ========= ========== ========
NUMBER OF SHARES USED TO
COMPUTE LOSS PER SHARE 6,548,870 6,548,870 6,548,870 6,548,870
========= ========= ========= =========
*Less than $.01 per share
See accompanying notes to consolidated financial statements (unaudited).
4
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX
MONTHS ENDED
JUNE 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (15,083) $ (5,220)
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in assets and liabilities:
Interest receivable 1,213 (140)
Accounts payable and accrued expenses (143) 459
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NET CASH USED IN OPERATING ACTIVITIES (14,013) (4,901)
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NET CHANGE IN CASH AND CASH EQUIVALENTS (14,013) (4,901)
CASH AND CASH EQUIVALENTS - beginning 242,603 250,618
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CASH AND CASH EQUIVALENTS - ending $ 228,590 $ 245,717
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 300 $ -
========== ==========
See accompanying notes to consolidated financial statements (unaudited).
5
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements do
not include all disclosures required to be included in a complete set of
financial statements prepared in conformity with U.S. generally accepted
accounting principles. In the opinion of management, all adjustments
(consisting of normal recurring accruals) that are considered necessary for
a fair presentation have been included. The results for the six month
period ended June 30, 2002 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2002. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K filed on March
28, 2002 for the year ended December 31, 2001.
NOTE 2 - NATURE OF BUSINESS
The Company was organized under the laws of the State of Delaware on May
30, 1985 and was in the development stage until 1989. During November 1989,
the Company began setting up operations to import to the United States
products for sale principally to the hardware and construction markets. Two
wholly-owned subsidiaries were formed to conduct these operations. The
Company commenced operations during the first three months of 1990 and
began billing its customers in April 1990. Billings to customers ended in
June 1990 and the Company terminated its import business. Currently, the
Company is exploring various business opportunities that may be available
to it.
NOTE 3 - PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries, which are all wholly-owned and totally inactive. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
6
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(UNAUDITED)
NOTE 4 - USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The amounts at which current assets and current liabilities are presented
in the balance sheet approximate their fair value due to their short-term
nature.
NOTE 6 - CASH EQUIVALENTS
Cash equivalents represent short-term commercial paper with maturities of
less than ninety days.
7
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
During the three months and six months ended June 30, 2002, the Company
had no revenues other than interest income since the Company terminated its
import and sale business operations in 1990. The Company is presently exploring
various business opportunities that may be available to it. No assurances can be
given that the Company will be successful in completing a transaction to acquire
an operating business.
During the six months ended June 30, 2002, there were no material
changes in the financial condition of the Company other than a net loss of
$15,083 as compared to a net loss of $5,220 for the comparable period of the
prior year. Due to the Company lacking any current business activities or
operations, other than searching for a new business opportunity or merger
candidate, there are no trends or uncertainties that have had or reasonably
expect to have a material favorable or unfavorable impact on revenues or income
(loss) from continuing operations. Further, there are no unusual or infrequent
events or transactions or any significant economic changes that materially
effected the amount of reported income (loss) from continuing operations.
Liquidity and Capital Resources
Financing of the Company's activities has been provided from the public
sale of its securities for cash amounting to a net of approximately $600,000. At
June 30, 2002, the Company's working capital amounted to $156,077 with cash
assets of $228,590. Management believes that its cash assets are adequate to
meet the Company's short term and long term liquidity and cash requirements
until such time, if ever, as the Company completes a transaction to establish an
operating business.
The Company has been unable to find a suitable business opportunity or
merger candidate over the last ten years, considering the limited cash resources
available to the Company and that the Company's Common Stock has no active and
established trading market. Nevertheless, Management is continuing to explore
various business opportunities that may be available to it. As of the filing
date of this Form 10-Q, there are no known trends or any known demands,
commitments, events or uncertainties that will result in or that are reasonably
likely to result in the Registrant's liquidity increasing or decreasing in any
material way. Further, at the present time, the Company has no commitments for
capital expenditures and does not anticipate same until it establishes a
business or acquires an operating business, of which there can be no assurances
given.
8
NATIONAL DIVERSIFIED SERVICES, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings: None
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Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders:
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None
Item 5. Other Information: None
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Item 6. Exhibits and Reports on Form 8-K:
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(a) Exhibits - 11 Statement re: computation of per share earnings-See
consolidated statement of operations
99.1 Certification of Executive Officers
(b) No reports on Form 8-K were filed during the quarter ended June 30,
2002.
9
NATIONAL DIVERSIFIED SERVICES, INC.
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.
NATIONAL DIVERSIFIED SERVICES, INC.
(Registrant)
Dated: August 16, 2002 /s/Morry Rubin
Morry Rubin, President, Chief Executive,
Financial and Accounting Officer
10
Certification Pursuant to 18 U.S.C.ss.1350
In connection with the filing with the United States Securities and
Exchange Commission of National Diversified Services, Inc.'s (the "Company")
Quarterly Report on Form 10-Q for the period ended June 30, 2002 (the "Report"),
the undersigned, the Chief Executive Officer and the Chief Financial Officer of
the Company, hereby certify that (i) in our capacities as officers of the
Company, (ii) to each of our own respective actual knowledge, and (iii) solely
for the purpose of compliance with 18 U.S.C.ss.1350, that:
(1) the Report fully complies with the requirements of ss.13(a)
or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) the information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
The above certification is given as of the date of the Report
and is limited to the periods covered by the Report.
IN WITNESS WHEREOF, the undersigned have executed this
Certificate on August 16, 2002.
By: /s/Morry F. Rubin
Chief Executive Officer
By: /s/ Morry F. Rubin
Chief Financial Officer