SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE
REQUIRED)
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________
Commission File Number: 2-99080-NY
National Diversified Services, Inc.
-------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 11-2820379
- ----------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
c/o Lester Morse P.C.
111 Great Neck Road, Suite, 420
Great Neck, New York 11021
--------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (516) 487-1419
---------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
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 .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in part III of this
Form 10-K or any amendment to this Form 10-K [x].
As of March 20, 2003, the aggregate number of shares of the voting stock
held by non-affiliates was 1,762,870 shares of Common Stock, $.001 par value.
See "Item 5" regarding a sporadic market for the Company's Common Stock.
The number of shares outstanding of the Issuer's Common Stock, as of March
20, 2003 was 6,548,870.
PART I
Item 1. Business
General
National Diversified Services, Inc. ("National" or the "Company") was
incorporated under the laws of the State of Delaware on May 30, 1985.
National's business purpose is to seek and review acquisition
possibilities, and to make one or more acquisitions or enter into business
endeavors and provide opportunities for strong organic growth.
Business Strategy
The Company is seeking one or more potential business opportunities
through the acquisition of existing businesses, assets to establish subsidiary
businesses for the Company, a statutory merger or consolidation or the
establishment of a new business or industry. However, due to the limited working
capital of the Company, it is likely that the Company will enter into only one
business transaction.
The Company may also seek to acquire one or more majority and/or wholly
owned equity positions in other companies through the direct purchase of stock.
Such equity positions will be limited by Section 3(a)(3) of the Investment
Company Act of 1940 (the "1940 Act"), in that the Company will not be permitted
to own or propose to acquire investment securities having a value exceeding 40%
of the Company's total assets (exclusive of government securities and cash
items) on an unconsolidated basis.
The Company may provide debt financing to companies in which it has
taken (or intends to take) an equity position. Such financing would generally be
made on an unsecured basis. In no event will the Company provide financing for
or take equity positions in companies where the aggregate of such investments
would cause the Company to be required to register under the 1940 Act.
Present Management of the Company may or may not become involved as
management in the aforementioned business or subsidiary or may hire qualified
but as yet unidentified management personnel. There can, however, be no
assurance whatsoever that the Company will be able to acquire a business.
A potential acquisition of a business may involve the acquisition of,
or merger with, a company which does not need additional capital but which
desires to establish a public trading market for its shares. A company that
seeks the Company's participation in attempting to consolidate its operations
through a merger, reorganization, asset acquisition, or some other form of
combination may desire to do so to avoid what it may deem to be adverse
consequences of itself undertaking a public offering including the inability or
unwillingness to comply with various federal and state laws enacted for the
protection of investors. Factors considered may include time delays, significant
2
expense, loss of voting control. In connection with such acquisition, it is
possible that an amount of stock constituting control of the Company would be
purchased from the Company or its current officers, directors and stockholders
resulting in substantial profits to such persons without similar profits being
realized by other stockholder. Moreover, no assurance can be given with respect
to the experience or qualifications of as yet unknown persons who may, in the
future, engage in the operations of the Company or any business or subsidiary
acquired by the Company. In the event of a change in control of the Company and
its Board of Directors, the payment of dividends would be wholly dependent upon
such persons. Furthermore, it is impossible as yet to determine what, if any,
consequences applicable state law may provide to the Company's shareholders in
any merger or reorganization.
General Policy
The Company may establish or acquire a business and/or invest in one or
more new and developing corporations, whether directly or by way of statutory
merger, which the Management of the Company determines will offer significant
long-term growth potential. In the case of an equity position, the Company will
seek to acquire primarily a majority owned and wholly owned capital stock
position in such corporation. The Company is not restricted to any particular
industry and may engage in any line of business. Accordingly, Management's
discretion as to the type of businesses and equity investments is unlimited.
Management assumes that any business to be acquired and/or equity
investment made by the Company, whether directly or by way of statutory merger,
will involve a business that is new and unseasoned, or a business that has been
operating for a limited period of time and has a limited or unsuccessful record
of revenues or earnings. Investments in start-up enterprises result in a higher
risk of total loss of investment by the Company. Except in cases of a merger or
other instances where stockholders' approval may be required by applicable law,
the Company's stockholders will not have the opportunity to review the relative
merits or weaknesses of any proposed business to be acquired or equity
investment to be made and, accordingly, will have to rely upon the discretion of
Management in selecting a business or investment.
The Company has identified certain general policies which will be
considered by the Company in evaluating business acquisition candidates and
investment possibilities. These policies are listed below. In no event will the
Company provide financing or take equity positions in companies where the
aggregate of such investments would cause the Company to be required to register
under the 1940 Act.
1. The Company will examine the products or services of a business
being considered to determine whether a market exists for the products or
services and whether the business can manufacture and/or market the products or
produce the services at a competitive cost.
2. The Company will invest in a corporation that it believes has a
strong potential for growth. The Company will evaluate the corporation's
business and determine the quality and experience of its management.
3
3. The Company may invest in an operating corporation that has
experienced increases in gross revenues which exceed industry averages. The
market for the corporation's products will be evaluated by determining the
relationship of size, growth potential and competitive factors in that
corporation's industry. This may include the purchase of businesses which offer
opportunities for consolidation.
4. The Company will also consider the following factors: (1) special
risks associated with the business and the industry, (2) equity available to the
business, (3) capital requirements of the business, (4) potential for
profitability and (5) the effect of market and economic conditions and
governmental policies on the business and its products.
It is unlikely that any one prospective corporation with which the
Company may seek to enter a relationship will conform in all respects to the
policies described above. Accordingly, this description is intended to serve
only as a general guide for the Company's projected investment activities. These
policies are not fundamental policies of the Company and may be changed at any
time by the Company's Board of Directors.
The Company intends to actively participate (through present Management
or presently unidentified individuals who may be hired by the Company) in the
management of the operations of any business or subsidiary in which it acquires
an interest. In order to accomplish this objective in the case of a subsidiary,
the Company will be represented on the board of directors of such target
corporation through a nominee of its choice. In addition, where the Company
deems it beneficial, the Company may also have a nominee of its choice elected
as an officer. Such nominee is expected to be an officer or director of the
Company. The objective of such acquisition(s) will be to enhance that
corporation's capabilities through active management as well as financial
support.
The Company anticipates that it will be brought into contact with a
prospective business acquisition or equity investment primarily through the
efforts of its officers, directors and principal stockholders who in the course
of their professional activities frequently come into contact with corporations
whose products, services or concepts may be subject to successful development
and marketing. In such connection, the Company may pay a finder's fee to such
officers, directors, principal stockholders or their affiliates. Any such
payment would not be higher than that which would ordinarily be paid to a
non-affiliated person. The Company proposes to make a business acquisition or
equity investment and to provide interim financing which will assist such
organization in the development of these products, services and concepts. To
date, the Company does not have any contracts or commitments with anyone or any
firm with regard to these business activities. The Company also does not have
any arrangements or understandings with respect to the acquisition of any
business entity or the acquisition of any interest therein.
The Company may use independent consultants (who may agree to receive
stock of the Company in payment for their services in lieu of cash) to explore
areas of, and to seek out, acquisition prospects. Such independent consultants
4
would be expected to have such expertise or knowledge which would be of use to
Management in any investment decision. The Company has not engaged any
independent consultants as of March 20, 2003.
At this time, Management believes the Company's equity investments will
be made in private transactions with privately owned corporations. Securities
acquired in this manner are restricted from public sale unless they are
registered under the Securities Act of 1933, or unless an exemption from
registration is available.
Government Regulation
The Company may be subject to government regulations promulgated by
various local, state and Federal government agencies with regard to its proposed
business. Additionally, the Company, in the purchase of equity positions, will
be subject to various rules and regulations promulgated by the Securities and
Exchange Commission and the various state securities commissions. Company does
not intend to engage in the business of investing, reinvesting, owning, holding
or trading in securities or otherwise engaging in activities which would render
the Company an "investment company" as defined in the Investment Company Act of
1940, as amended.
The Company's financing activities will be limited by Section 3(a)(3)
of the Investment Company Act of 1940 in that the Company will not be permitted
to own or propose to acquire investment securities having a total value
exceeding 40% of the value of the Company's total assets (excluding government
securities and cash items) on an unconsolidated basis. The Company is permitted
under Section 3(a)(3) of the 1940 Act to own or propose to own securities of a
majority owned subsidiary which is defined under Section 2(a)(24) of the 1940
Act to mean 50% or more of the outstanding securities of which are owned by the
Company or a majority owned subsidiary of the Company. Notwithstanding Section
3(a)(3) of the 1940 Act, the Company would not be considered an investment
company where it is engaged directly or indirectly through a wholly-owned
subsidiary (which is defined to mean at least 95% ownership of the outstanding
voting stock), in a business or businesses, other than that of investing,
owning, holding or trading in securities.
In addition to the limitations by the Investment Company Act of 1940 as
mentioned above, there are a number of other provisions of the Federal
securities laws which will affect the Company's proposed investments.
Most, if not all, of the securities which the Company acquires as
equity investments will be "restricted securities" within the meaning of the
Securities Act of 1933 ("Securities Act") and will not be permitted to be resold
without compliance with the Securities Act. The registration of securities owned
by the Company is likely to be a time consuming and expensive process, and the
Company always bears the risk, because of these delays, that it will be unable
to resell such securities, or that it will not be able to obtain an attractive
price for the securities. In the event the Company does not register securities
it acquires for sale, it will seek to rely upon an exemption from registration.
Among other exemptions, Rule 144 of the Securities Act of 1933, as amended,
imposes a one year holding period prior to the sale of restricted securities and
established volume limitations on the amount of any restricted securities that
can be sold within certain defined time periods.
5
Competition
There are numerous similar companies which are larger, have more
experience, and are better financed than the Company. The Company may encounter
intense competition from numerous other firms engaged in its field. In view of
the Company's lack of operating history, it may be anticipated that the Company
will encounter competition seeking relatively more desirable equity investments.
Accordingly, the Company's proposed equity investments, if any, will entail a
high degree of business and financial risk that may result in substantial losses
to the Company.
Personnel
The Company presently has no full-time employees. The day-to-day
operations of the Company are managed by George Rubin, the Company's Chairman,
and Morry F. Rubin, its President, each of whom devotes such time to the affairs
of the Company which is necessary for the performance of his duties.
Item 2. Properties
Currently the Company is utilizing the office space of its counsel,
Lester Morse P.C., at no cost to the Company until an acquisition is consummated
or a business is established. The amount of office space utilized by the Company
is currently insignificant.
Item 3. Legal Proceedings
There are no material legal proceedings pending against the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
6
PART II
Item 5. Market for Registrant's Securities and Related Stockholder Matters.
From the completion of the Company's public offering in December 1986
until the present time, the Company's securities have been traded in the
over-the-counter market. The Company believes that there is not an active
trading market for the Company's Common Stock and quotations for, and
transactions in the securities are limited. Price quotations for prior periods
are not being supplied herein because in view of the infrequent trading in the
securities, they would not be meaningful.
Management has been advised by its transfer agent (American Stock
Transfer & Trust Company) that the approximate number of holders of the
Company's Common Stock as of March 20, 2003 was approximately 325.
No cash dividends have been paid by the Company on its Common Stock and
no such payment is anticipated in the foreseeable future.
Of the Company's issued and outstanding 6,548,870 shares of Common
Stock as of March 20, 2003, 5,790,300 shares of the Company's restricted Common
Stock may be eligible for sale in compliance with Rule 144. Rule 144 provides
among other things and subject to certain limitations that a person holding
restricted securities for a period of one year may sell those securities in
brokerage transactions, in an amount equal to at least 1% of the Company's
outstanding Common Stock every three months. Possible or actual sales of the
Company's Common Stock under Rule 144 may have a depressive effect upon the
price of the Company's Common Stock if any meaningful market were to develop for
the Company's Common Stock. Notwithstanding anything contained herein to the
contrary, the Securities and Exchange Commission may take the position that the
restricted Common Stock of the Company is not eligible for sale under Rule 144
and must be registered for sale under the Securities Act of 1933, as amended.
Broker-Dealer Sales of Company's Registered Securities.
Except where the Company's Common Stock has a market price of at least
$5.00 per share, the Company's Registered Securities are covered by a Securities
and Exchange Commission ("SEC") rule that imposes additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and institutional accredited investors. For transactions
covered by the rule, the broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser's written agreement to
the transaction prior to the sale. Consequently, the rule affects the ability of
broker-dealers to sell the Company's securities and also may affect the ability
of purchasers in this offering to sell their securities in the secondary market.
The SEC has adopted seven rules ("Rules") under the Securities Exchange
Act of 1934 requiring broker/dealers engaging in certain recommended
transactions with their customers in specified equity securities falling within
the definition of "penny stock" (generally non-NASDAQ securities priced below $5
per share) to provide to those customers certain specified information. Unless
the transaction is exempt under the Rules, broker/dealers effecting customer
7
transactions in such defined penny stocks are required to provide their
customers with: (1) a risk disclosure document; (2) disclosure of current bid
and ask quotations, if any; (3) disclosure of the compensation of the
broker/dealers and its salesperson in the transaction; and (4) monthly account
statements showing the market value of each penny stock held in the customer's
account. These SEC Rules were adopted in April, 1992 pursuant to the
requirements of the Securities Enforcement Remedies and Penny Stock Reform Act
of 1990 ("Penny Stock Act").
As a result of the aforesaid rules regulating penny stocks, the market
liquidity for the Company's securities, if any, may be severely adversely
affected by limiting the ability of broker-dealers to sell the Company's
securities and the ability of purchasers of the Company's securities in the
secondary market.
Recent Sales of Unregistered Securities
During 2002, the Company did not issue any unregistered securities.
Item 6. Selected Financial Data.
Consolidated Statements of Operations Summary:
======================= ==================== ===================== ==================== ==================== =====================
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2002 2001 2000 1999 1998
- ----------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Net Sales** $ 4,531 $11,645 $15,851 $ 13,384 $ 13,319
- ----------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Net Income
(Loss) $(19,824) $(8,808) (13,323) (4,514) (14,750)
- ----------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Net Income
(Loss) Per Common
Share * * * * *
======================= ==================== ===================== ==================== ==================== =====================
* Less than $.01 per share.
** Represents interest and dividend income.
8
Consolidated Balance Sheets Summary:
========================== =================== ==================== ==================== ==================== ====================
December 31, December 31, December 31, December 31, December 31,
2002 2001 2000 1999 1998
- -------------------------- ------------------- -------------------- -------------------- -------------------- --------------------
Working Capital $151,098 $ 171,160 $179,968 $ 252,041 $256,555
- -------------------------- ------------------- -------------------- -------------------- -------------------- --------------------
Total Share-
holders'Equity $151,098 $ 171,160 179,968 193,291 197,805
- -------------------------- ------------------- -------------------- -------------------- -------------------- --------------------
Total
Assets $225,330 $ 246,122 253,905 256,885 264,072
========================== =================== ==================== ==================== ==================== ====================
------------
The foregoing is selected financial information only, and is qualified by the
consolidated Financial Statements and the Notes thereto, in their entirety,
which are set forth elsewhere herein.
9
Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
During the past three years, except for interest income, no revenues
were received by the Company. The Company is presently exploring various
business opportunities that may be available to it. See "Item 1." No assurances
can be given that the Company will be successful in completing a transaction to
acquire an operating business.
During 2002, there were no material changes in the financial condition
of the Company other than a net loss of $19,824 as compared to a net loss of
$8,808 for 2001 and $13,323 for 2000. Further, 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
December 1986 initial public offering of its securities for cash amounting to a
net of approximately $600,000. At December 31, 2002, the Company's working
capital amounted to $151,098 with cash and cash equivalents and securities
available for sale aggregating $225,330. 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 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-K, 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.
10
Item 7(a). Quantitative and Qualitative Disclosures about Market Risk.
The Company is not exposed to financial market risks from changes in
foreign currency exchange rates or changes in interest rates. The Company does
not use derivative financial instruments.
The Company's debt obligations are primarily fixed rate, with the
exception of its working capital loans. If the Company were to pursue
re-financing of its fixed rate debt or lease obligations, it could potentially
be exposed to changes in interest rates.
Item 8. Financial Statements and Supplementary Data.
The information required by Item 8, appears at pages F-1 through F-11
(inclusive) of this Report, which pages follow this page.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
11
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED BALANCE SHEETS F-2
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS F-3
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6 - F-10
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
National Diversified Services, Inc.
New York, New York
We have audited the accompanying consolidated balance sheets of National
Diversified Services, Inc. and Subsidiaries as at December 31, 2002 and 2001,
and the related consolidated statements of operations and comprehensive loss,
stockholders' equity and cash flows, for each of the three years ended December
31, 2002. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of National Diversified
Services, Inc. and Subsidiaries as at December 31, 2002 and 2001, and the
results of their operations and their cash flows for each of the three years
ended December 31, 2002, in conformity with accounting principles generally
accepted in the United States of America.
MILLER, ELLIN & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
New York, New York
March 20, 2003
F-1
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
DECEMBER 31,
2002 2001
CURRENT ASSETS:
Cash and cash equivalents $ 123,337 $ 242,603
Securities available-for-sale 101,993 -
Interest receivable - 1,863
Other current assets - 1,656
---------- ----------
Total assets $ 225,330 $ 246,122
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 74,232 $ 74,962
---------- ----------
Total liabilities 74,232 74,962
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value:
Authorized - 30,000,000 shares; issued and
outstanding - 6,548,870 and 6,553,870 shares
as of December 31, 2002 and 2001, respectively 6,549 6,554
Additional paid-in capital 705,755 705,755
Accumulated deficit (560,968) (541,144)
Accumulated other comprehensive loss (238) -
---------- ----------
151,098 171,165
Less: treasury stock, at cost - 5
---------- ----------
Total stockholders' equity 151,098 171,160
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 225,330 $ 246,122
========== ==========
See accompanying notes to consolidated financial statements.
F-2
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
YEARS ENDED DECEMBER 31,
2002 2001 2000
------------- ------------- -------------
Interest and dividend income $ 4,531 $ 11,645 $ 15,851
General and administrative expenses (24,355) (20,453) (29,174)
------------ ------------ ------------
NET LOSS (19,824) (8,808) (13,323)
Other comprehensive loss, net of tax:
Unrealized losses on securities:
Unrealized holding loss arising during the period (238) - -
------------ ------------ ------------
COMPREHENSIVE LOSS $ (20,062) $ (8,808) $ (13,323)
============ ============ ============
Loss per common share $ (0.00) $ (0.00) $ (0.00)
============ ============ ============
Weighted average number of common
shares outstanding 6,548,870 6,548,870 6,548,870
============ ============ ============
See accompanying notes to consolidated financial statements.
F-3
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
ACCUMULATED
ADDITIONAL OTHER
COMMON STOCK PAID-IN ACCUMULATED COMPREHENSIVE TREASURY STOCK
SHARES AMOUNT CAPITAL DEFICIT LOSS SHARES AMOUNT TOTAL
---------- -------- ---------- ---------- ---------- --------- ---------- ----------
BALANCE AT JANUARY 1, 2000 ........6,553,870 $ 6,554 $ 705,755 $(519,013) $ -- (5,000) $ (5) $ 193,291
Net loss ....................... -- -- -- (13,323) -- -- -- (13,323)
---------- -------- ---------- ---------- ---------- --------- ---------- ----------
BALANCE AT DECEMBER 31, 2000 ......6,553,870 6,554 705,755 (532,336) -- (5,000) (5) 179,968
Net loss ....................... -- -- -- (8,808) -- -- -- (8,808)
---------- -------- ---------- ---------- ---------- --------- ---------- ----------
BALANCE AT DECEMBER 31, 2001 ......6,553,870 6,554 705,755 (541,144) -- (5,000) (5) 171,160
----------
Retirement of treasury stock ... (5,000) (5) -- -- -- 5,000 5 --
COMPREHENSIVE LOSS:
Net loss ....................... -- -- -- (19,824) -- -- -- (19,824)
Other comprehensive loss,
net of tax: Unrealized
losses on securities:
Unrealized holding
losses arising
during the period ............. -- -- -- -- (238) -- -- (238)
---------- -------- ---------- ---------- ---------- -------- ---------- ----------
Total comprehensive loss ... (20,062)
----------
BALANCE AT DECEMBER 31, 2002 ......6,548,870 $ 6,549 $ 705,755 $(560,968) $ (238) $ -- $ -- $ 151,098
========== ========= ========== ========== ========== ========= ========== ==========
See accompanying notes to consolidated financial statements.
F-4
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
2002 2001 2000
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (19,824) $ (8,808) $ (13,323)
Adjustments to reconcile net loss to net
cash used in operating activities:
Bad debt expense 1,656 - -
Changes in assets and liabilities:
Interest receivable 1,863 (232) 1,132
Accounts payable and accrued expenses (730) 1,025 10,343
----------- ---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (17,035) (8,015) (1,848)
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available-for-sale (102,231) - -
----------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (102,231) - -
----------- ---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (119,266) (8,015) (1,848)
CASH AND CASH EQUIVALENTS - beginning 242,603 250,618 252,466
----------- ---------- ----------
CASH AND CASH EQUIVALENTS - ending $ 123,337 $ 242,603 $ 250,618
=========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-cash investing and financing activities:
Unrealized loss on securities available-for-sale $ (238) $ - $ -
=========== ========== ==========
Retirement of treasury stock $ 5 $ - $ -
=========== ========== ==========
See accompanying notes to consolidated financial statements.
F-5
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Operations
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.
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.
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. Significant estimates made by management include the valuation
of securities and the deferred tax asset allowance.
Fair Value of Financial Instruments
The amounts at which current assets and current liabilities are presented
approximate their fair value due to their short-term nature.
Valuation of Securities
Quoted market prices are used to value securities. Purchases and sales of
securities are recorded on a trade date basis. Interest and dividend income
is recorded on an accrual basis. Unrealized gains and losses are reported
in accumulated other comprehensive income or loss as a separate component
of stockholders' equity.
Concentrations of Credit Risk
The Company maintains its securities and a money market account with a high
credit quality financial institution. These balances are not insured.
F-6
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
The carrying amount of the Company's property and equipment is zero.
Property and equipment have been fully depreciated over the estimated
useful lives of the individual classes of assets. No depreciation expense
has been recorded during the years ended December 31, 2002, 2001 and 2000.
Cash Equivalents
Cash equivalents represents an investment in short-term commercial paper
with a maturity of less than ninety days and/or a money market fund.
Revenue Recognition
The Company's only revenue is investment income, which is recognized as
earned.
Comprehensive Income
The Company accounts for comprehensive income in accordance with Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive Income,"
which requires comprehensive income and its components to be reported when
a company has items of other comprehensive income. Comprehensive income
includes net income plus other comprehensive income (i.e., certain
revenues, expenses, gains and losses reported as separate components of
stockholders' equity rather than in net income). The Company's other
comprehensive losses represent unrealized holding losses on securities
available-for-sale.
Income Taxes
The Company utilized SFAS No. 109, "Accounting for Income Taxes," which
requires the use of the liability method of accounting for income taxes.
The liability method measures deferred income taxes by applying enacted
statutory rates in effect at the balance sheet date to the differences
between the tax basis of assets and liabilities and their reported amounts
of the financial statements. The resulting deferred tax assets or
liabilities are adjusted to reflect changes in tax laws as they occur.
Loss Per Share
Basic loss per share is calculated by dividing net loss by the weighted
average number of shares of common stock outstanding. Stock warrants have
not been included in the calculation of diluted loss per share, as the
exercise price of the stock warrants was greater than market price of the
common stock and, therefore, the effect would have been antidilutive.
Accordingly, basic and dilutive loss per share are the same for the
Company.
F-7
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements
In December 2002, the Financial Accounting Standards Board issued SFAS No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure."
This statement amends SFAS No. 123 "Accounting for Stock-Based
Compensation," by providing alternative methods of transition for an entity
that voluntarily changes to the fair value based method of accounting for
stock-based employee compensation. Effective January 1, 2003, the Company
adopted the fair value recognition provisions, prospectively to all
employee awards granted, modified, or settled after January 1, 2003. The
effect of adopting the prospective method of accounting for stock-based
compensation cannot yet be determined, but the Company does not expect its
impact to be material.
NOTE B - SECURITIES AVAILABLE-FOR-SALE
The following table presents the fair values of securities
available-for-sale at December 31, 2002 and 2001:
2002 2001
------------- -------------
Vanguard GNMA Mutual Fund $ 101,993 $ -
---------- ----------
$ 101,993 $ -
========== ==========
NOTE C - INCOME TAXES
Deferred tax assets at December 31, is summarized below.
2002 2001
------------- -------------
Net operating loss carryforwards $ 204,960 $ 196,631
Valuation allowance (204,960) (196,631)
----------- -----------
$ - $ -
=========== ===========
At December 31, 2002 and 2001, a valuation allowance of 100% is provided as
it is uncertain if the deferred tax asset will be utilized in the future.
The Company's valuation allowance increased by $8,329, $3,523 and $5,329
during 2002, 2001 and 2000, respectively.
F-8
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
NOTE C - INCOME TAXES (CONTINUED)
Reconciliation of the statutory rate to the effective income tax rate is as
follows:
2002 2001 2000
------------- ------------- -------------
Net loss $ (19,824) $ (8,808) $ (13,323)
----------- ----------- -----------
Tax at federal statutory rate (7,080) (2,995) (4,530)
State income tax (1,249) (528) (799)
Valuation allowance 8,329 3,523 5,329
Deferred income taxes 204,960 196,631 193,108
Net operating loss carryforward (204,960) (196,631) (193,108)
----------- ----------- -----------
$ - $ - $ -
=========== =========== ===========
At December 31, 2002, the Company had unused net operating loss
carryforwards of approximately $470,000 expiring at various dates through
2017.
NOTE D - CAPITAL TRANSACTIONS
Effective December 31, 2002, the Company passed a resolution to retire its
5,000 shares of treasury stock.
NOTE E - STOCK AWARDS
During 1997, the Company entered into an arrangement with certain officers
and stockholders pursuant to which they received warrants to purchase
2,000,000 shares of the Company's common stock at an exercise price of
$0.03 per share at any time until November 21, 2007. In exchange, they will
make available to the Company an aggregate line of credit of up to
$500,000. In November 1997, the Company granted to an officer warrants to
purchase 100,000 shares of the Company's common stock identical to those
granted to the officers and stockholders referred to above in consideration
of continuing to serve as an officer and a director of the Company.
During 1997, the Company also granted warrants to purchase an aggregate of
200,000 shares of the Company's common stock at an exercise price of $0.03
per share to certain non-affiliated persons in connection with legal
services rendered to the Company. These warrants expire on November 21,
2007.
F-9
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
NOTE E - STOCK AWARDS (CONTINUED)
Officers & Officer &
Directors Non-Affiliates Director
Date of grant November 21, 1997 November 24, 1997 November 25, 1997
Expiration date November 21, 2007 November 21, 2007 November 21, 2007
Warrants outstanding and
exercisable 2,000,000 200,000 100,000
Exercise price $0.03 $0.03 $0.03
Quoted market price at date of grant $0.00 $0.00 $0.00
F-[PG NUMBER]
The Company applies Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its stock-based compensation plans. Accordingly, no
compensation expense has been recorded for stock warrants granted. There
were no stock awards granted during 2002, 2001 and 2000.
NOTE F - RELATED PARTY TRANSACTIONS
The Company has available to it a line of credit totaling $500,000 from two
of its stockholders and officers, as further discussed in Note E. The
Company has not drawn down on this line of credit as of the date of this
report.
Accrued salaries payable to an officer and stockholder of the Company
aggregated $58,750 at December 31, 2002 and 2001, and are included in
accounts payable and accrued expenses.
During 2002, 2001 and 2000, the Company utilized the office space of its
general counsel at no cost to the Company. The amount of office space
utilized by the Company is considered insignificant.
F-10
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) Identification of Directors
The names, ages and principal occupations of the Company's
present directors, and the date on which their term of office commenced and
expires, are as follows:
First
Term of Became Principal
Name Age Office Director Occupation
George Rubin 75 (1) 1989 Private Investor
Morry Rubin 43 (1) 1998 Private Investor
Stacy Goldberg 40 (1) 1995 Private Investor
- ------------------
(1) Directors are elected at the annual meeting of stockholders and hold
office to the following annual meeting.
(b) Identification of Executive Officers.
George Rubin is Chairman of the Board of Directors. Morry F. Rubin is
President, Chief Executive Officer, Principal Financial Officer and Treasurer of
the Company. Stacy Goldberg is Secretary of the Company. George Rubin is the
father of Stacy Goldberg and Morry F. Rubin. The Company's By-Laws provide that
the terms of all officers expire at the annual meeting of directors following
the annual stockholders meeting.
12
(c) Business Experience
George Rubin has been Chairman of the Board of Directors of the Company
since December 1989 and served as its and President, Chief Executive Officer and
Chief Financial and Accounting Officer and Treasurer of the Company from August
1995 until February, 1998. George Rubin has been Executive Vice President of
Preferred People Staffing LLC since September 1998 and is a Member-Manager of
Venturesforth LLC. Preferred People Staffing is a provider of temporary workers
for light industrial and unskilled manual labor jobs. Venturesforth is a holding
company and is currently the owner of the governance units of Preferred People
Staffing. George Rubin served as Chairman of the Board of ATC Group Services
Inc. (formerly ATC Environmental Inc.) from June 1988 until February 1998. Mr.
Rubin devotes such time to the Company as is necessary for the performance of
his duties.
Morry F. Rubin has served as President, Chief Executive Officer,
Treasurer and Chief Financial Officer of the Company since February 1998. From
June 1985 to August 1995, Mr. Rubin served as an executive officer and director
of the Company. Morry Rubin has been Chairman of Preferred People Staffing LLC
since September 1998 and a Member-Manager of Venturesforth LLC. Preferred People
Staffing is a provider of temporary workers for light industrial and unskilled
manual labor jobs. Venturesforth is a holding company and is currently the owner
of the governance units of Preferred People Staffing. Mr. Rubin was President,
Chief Executive Officer and Treasurer of ATC Group Services Inc. (formerly ATC
Environmental Inc.) from January 1988 to February 1998 and a director of ATC
from January 1988 to January 1998. Mr. Rubin devotes such time to the Company as
is necessary for the performance of his duties.
Stacy Goldberg has served as a director and Secretary of the Company
since August 1995. From 1987 to January 1998, she was an Office Manager of ATC
Group Services Inc. Ms. Goldberg devotes such time to the Company as is
necessary for the performance of her duties.
Committees
The Company has no standing audit, nominating and compensation
committees of the Board of Directors or committees performing similar functions.
Under the Sarbanes-Oxley Act of 2002, each public company is required to have an
audit committee consisting solely of independent directors. In the event the
public company does not have an audit committee, the Board of Directors becomes
charges with the duties of the audit committee. Since the enactment of the
Sarbanes-Oxley Act of 2002 which was signed into law by President Bush in July
2002, the Company's directors have, without success, attempted to obtain
independent directors to serve on the Board of Directors and on a newly formed
audit committee. In the event the Company is successful in the future in
obtaining independent directors to serve on the Board of Directors and on a
newly formed audit committee, of which there can be no assurances given, the
Board of Directors would first adopt a written charter. Such charter would be
expected to include, among other things:
13
. annually reviewing and reassessing the adequacy of the committee's
formal charter;
. reviewing the annual audited financial statements with the Company's
management and its independent auditors and the adequacy of its
internal accounting controls;
. reviewing analyses prepared by the Company's management and independent
auditors concerning significant financial reporting issues and
judgments made in connection with the preparation of its financial
statements;
. being directly responsible for the appointment, compensation and
oversight of the independent auditor, which shall report directly to
the Audit Committee, including resolution of disagreements between
management and the auditors regarding financial reporting for the
purpose of preparing or issuing an audit report or related work;
. reviewing the independence of the independent auditors;
. reviewing the Company's auditing and accounting principles and
practices with the independent auditors and reviewing major changes to
its auditing and accounting principles and practices as suggested by
the independent auditor or its management;
. reviewing all related party transactions on an ongoing basis for
potential conflict of interest situations; and
. all responsibilities given to the Audit Committee by virtue of the
Sarbanes-Oxley Act of 2002, which was signed into law by President
George W. Bush on July 30, 2002.
14
Code of Ethics
Effective March 3, 2003, the Securities & Exchange Commission requires
registrants like the Company to either adopt a code of ethics that applies to
the Company's Chief Executive Officer and Principal Financial Officer or explain
why the Company has not adopted such a code of ethics. For purposes of item 406
of Regulation S-K, the term "code of ethics" means written standards that are
reasonably designed to deter wrong doing and to promote:
o Honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
o Full, fair, accurate, timely and understandable disclosure in reports
and documents that the Company files with, or submits to, the Securities
& Exchange Commission and in other public communications made by the
Company;
o Compliance with applicable governmental law, rules and regulations;
o The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
o Accountability for adherence to the code.
While the Company has not adopted a code of ethics because of the short
time period that has followed between the effective date of March 3, 2003 and
the filing date of this Form 10-K, it intends to do so in the second quarter of
2003.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our officers and directors, and persons who own more than ten percent
of a registered class of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the
"Commission"). The Company is not subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934.
Item 11. Executive Compensation.
During the past three years, no executive officer or director has any
employment contract with the Company or received any cash or other compensation,
except for Warrants described herein. Directors do not presently receive
compensation (other than Warrants described herein) for serving on the board,
although the Company will reimburse its directors for out-of-pocket travel
expenditures. Depending upon the number of meetings and the time required for
the Company's operations, the Company may decide to compensate its directors in
the future. See Item 13.
George Rubin served as Chief Executive Officer of the Company during
1997 before his son, Morry F. Rubin, was elected Chief Executive Officer of the
Company on February 1, 1998. The following is the summary compensation table for
the Company's two Executive Officers for 2002, 2001 and 2000.
15
SUMMARY COMPENSATION TABLE
========================== =========== ================= ================= ================ ========================================
Long Term Compensation
- ------------------ ------- -------------- ----------------- -------- --------------- ----------------- --------------- -------------
Annual Compensation Awards Payouts
- ------------------ ------- -------------- ----------------- -------- --------------- ----------------- --------------- -------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted Other Compen-
and Compen- Stock Number of LTIP sation
Principal sation Award(s) Options/ Payouts ($)
Position Year Salary ($) Bonus ($) ($) ($) Warrants ($)
- ------------------ ------- -------------- ----------------- -------- --------------- ----------------- --------------- -------------
George Rubin,
Chairman of the
Board 2002 -0- -0- -0- -0- -0- -0- -0-
------- -------------- ----------------- -------- --------------- ----------------- --------------- -------------
2001 -0- -0- -0- -0- -0- -0- -0-
------- -------------- ----------------- -------- --------------- ----------------- --------------- -------------
2000 -0- -0- -0- -0- -0- -0- -0-
- ------------------ ------- -------------- ----------------- -------- --------------- ----------------- --------------- -------------
Morry F. Rubin,
Chief Executive
Officer 2002 -0- -0- -0- -0- -0- -0- -0-
------- -------------- ----------------- -------- --------------- ----------------- --------------- -------------
2001 -0- -0- -0- -0- -0- -0- -0-
------- -------------- ----------------- -------- --------------- ----------------- --------------- -------------
2000 -0- -0- -0- -0- -0- -0- -0-
================== ======= ============== ================= ======== =============== ================= =============== =============
16
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTIONS/WARRANTS VALUES
The information provided in the table below provides information with
respect to each exercise of the Company's stock options/warrants during fiscal
2002 by each of the executive officers named in the summary compensation table
and the fiscal year end value of unexercised options/warrants.
========================== ============== =============== ========================== ============================
(a) (b) (c) (d) (e)
Value
of
Number of Unexercised
Shares Unexercised In-the-Money
Acquired on Options/Warrants Options/Warrants
Exercise (#) Value at FY-End (#) at Fy-End($)
Realized Exercisable/ Exercisable/
Name ($)(1) Unexercisable Unexercisable(1)
- -------------------------- -------------- --------------- -------------------------- ----------------------------
George Rubin -0- -0- 1,000,000 / -0- N/A
- -------------------------- -------------- --------------- -------------------------- ----------------------------
Morry F. Rubin -0- -0- 1,000,000 / -0- N/A
========================== ============== =============== ========================== ============================
(1) The aggregate dollar values in column (c) and (e) are required to be
calculated by determining the difference between the fair market value
of the Common Stock underlying the options/warrants and the exercise
price of the options/warrants at exercise or fiscal year end,
respectively. In calculating the dollar value realized upon exercise,
the value of any payment of the exercise price is not included.
However, since there is a limited public market for The Company's
Common Stock, no calculation is included in column (e) and N/A (not
applicable) is placed in the table above.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of March 20, 2003, the only persons of record who held or were known
to own (or believed by the Company to own) beneficially more than 5% of the
outstanding 6,548,870 shares of Common Stock of the Company (the only voting
security) were as indicated in the table below. Such table also sets forth the
beneficial ownership of executive officers, directors, both individually and as
a group.
Approximate
Number of Percent
Name Shares of Class
----------------- --------- -------------
Morry F. Rubin
(1)(2)(3)(4) 3,403,000 45.1
George Rubin (1)(2)(3)(4) 3,383,000 44.8
Stacy Goldberg (3)(5) 100,000 *
All officers and
directors as a
group (two persons)(4) 6,786,000 79.4
17
- ---------------
* Represents less than one percent of the Company's outstanding shares of Common
Stock.
(1) May be deemed to be a founder, control person or affiliate of the
Company under the Securities Act of 1933, as amended.
(2) George Rubin is the father of Morry F. Rubin and Stacy Goldberg. Shares
owned by George Rubin do not include shares owned by Morry F. Rubin and
shares owned by Morry F. Rubin do not include shares owned by George
Rubin.
(3) All addresses are c/o Lester Morse P.C., 111 Great Neck Road, Great
Neck, New York 11021.
(4) Includes Warrants to purchase 1,000,000 shares at an exercise
price of $.03 per share and exercisable at any time until
November 21, 2007.
(5) Includes Warrants to purchase 100,000 shares at an exercise
price of $.03 per share and exercisable at any time until November
21, 2007.
The Company does not know of any arrangement or pledge of its
securities by persons now considered in control of the Company that might result
in a change of control of the Company.
Item 13. Certain Relationships and Related Transactions.
Between December 1986 to November 22, 1989, accrued salaries
payable to Morry Rubin amounted to $58,750. These monies are payable on demand
and are reflected in accounts payable and accrued expenses.
The Company has an arrangement with George Rubin and Morry
Rubin pursuant to which each received Warrants to purchase 1,000,000 shares of
the Company's Common Stock at an exercise price of $.03 per share at any time
until November 21, 2007 in exchange for them making available to the Company an
aggregate line of credit of up to $500,000. As of the filing date of this Form
10-K, the Company has not drawn down on its line of credit. In November 1997,
the Company granted Stacy Goldberg Warrants to purchase 100,000 shares of the
Company's Common Stock identical to those granted to George Rubin and Morry
Rubin in consideration of her continuing to serve as a director of the Company.
In November 1997, the Company also granted Warrants to
purchase an aggregate of 200,000 shares of the Company's Common Stock at an
exercise price of $.03 per share to certain non-affiliates persons in connection
with legal services rendered to the Company. These Warrants expire on November
21, 2007.
18
On December 31, 2002, the Company's Board of Directors adopted
a resolution to retire its 5,000 shares of treasury stock to the status of
authorized but unissued shares of Common Stock.
Item 14. Controls and Procedures.
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the Company's
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and that such information
is accumulated and communicated to the Company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure based closely on the definition of
"disclosure controls and procedures" in Rule 13a-14(c). In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Within 90 days
prior to the date of this report, the Company carried out an evaluation, under
the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and the Company's Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect the internal controls subsequent to the date the
Company completed its evaluation. Therefore, no corrective actions were taken.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1)(2) Financial Statements and Financial Statement
Schedules.
A list of the Financial Statements and Financial Statement
Schedules filed as a part of this Report is set
forth in Item 8, and appears at Page F-1 of this Report; which list is
incorporated herein by reference.
(a)(3) Exhibits
3 Certificate of Incorporation and Amendments
thereto (1)
3(A) By-Laws (1)
11. Statement Re: Computation of Earnings per share
(see "Financial Statements").
21 Subsidiaries of Registrant (2)
27 Financial Data Schedule (3)
19
99 Form of Warrants granted to Morry Rubin and
George Rubin (4)
99.1 Form of Warrant granted to Stacy Goldberg (3)
99.2 Form of Warrant granted to Lester Morse and
Steven Morse (4)
- ----------------
(1) Exhibits 3 and 3(A) are incorporated by reference from Registration
No. 99080 which were filed in a Registration Statement on Form S-18.
(2) The Company had no active subsidiaries during the year ended December
31, 2002.
(3) Incorporated by reference to the Company's Form 10-K for its fiscal
year ended December 31, 1998.
(b) Reports on Form 8-K.
No Form 8-K was filed or required to be filed during the
fourth quarter of 2002.
20
SIGNATURES
Pursuant to the requirements Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NATIONAL DIVERSIFIED SERVICES, INC.
BY: /s/ George Rubin
-----------------------------------
George Rubin, Chairman of the Board
Dated: March 26, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
President, Chief
Executive Officer,
Treasurer, Principal
Financial and
/s/ Morry Rubin Accounting Officer March 26, 2003
MORRY RUBIN and Director
/s/ Stacy Goldberg Director and Secretary March 26, 2003
STACY GOLDBERG
/s/ George Rubin Chairman of the Board March 26, 2003
GEORGE RUBIN
21
CERTIFICATION
I, Morry F. Rubin, Chief Executive Officer and Principal Financial Officer
of the Registrant, certify that:
1. I have reviewed this annual report on Form 10-K of National
Diversified Services, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure control and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entitles, particularly
during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 26, 2003 /s/ Morry F. Rubin
---------------------------
Morry F. Rubin,
Chief Executive Officer and
Principal Financial Officer
22
CORRESPONDENCE LETTER TO BE FILED WITH FORM 10-K
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of NATIONAL DIVERSIFIED SERVICES, INC. (the
"Company") on Form 10-K for the period ending DECEMBER 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
MORRY F. RUBIN, Chief Executive Officer and Principal Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
Date: March 26, 2003 /s/Morry F. Rubin
---------------------------
Morry F. Rubin,
Chief Executive Officer and
Principal Financial Officer