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 March 31, 2003
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.
(Exact name of Registrant as specified in its charter)
Delaware 11-2820379
(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
(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 ___.
6,548,870 Common Shares, $.001 par value were issued and outstanding at May
15, 2003.
NATIONAL DIVERSIFIED SERVICES, INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 3
March 31, 2003 (Unaudited) and
December 31, 2002
Consolidated Statements of Operations 4
Three Months ended March 31, 2003,
and March 31, 2002 (Unaudited)
Consolidated Statements of Cash Flows 5
Three Months Ended March 31, 2003 and
March 31, 2002 (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
MARCH 31, DECEMBER 31,
2003 2002
(Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents $ 119,559 $ 123,337
Securities available-for-sale 103,692 101,993
----------- -----------
Total assets $ 223,251 $ 225,330
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 76,454 $ 74,232
----------- -----------
Total liabilities 76,454 74,232
----------- -----------
COMMITMENT
STOCKHOLDERS' EQUITY
Common stock, $.001 par value;
Authorized - 30,000,000 shares; issued and
outstanding - 6,553,870 shares 6,549 6,549
Additional paid-in capital 705,755 705,755
Accumulated deficit (565,615) (560,968)
Accumulated other comprehensive gain (loss) 108 (238)
----------- -----------
Total stockholders' equity 146,797 151,098
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 223,251 $ 225,330
=========== ===========
See accompanying notes to consolidated financial statements (unaudited).
3
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
2003 2002
----------- -----------
REVENUES $ 1,665 $ 46
GENERAL AND ADMINISTRATIVE
EXPENSES 6,312 2,691
----------- -----------
NET LOSS (4,647) (2,645)
OTHER COMPREHENSIVE LOSS, NET OF TAX:
Unrealized gains on securities:
Unrealized holding gain arising during period 346 -
----------- -----------
COMPREHENSIVE LOSS $ (4,301) $ (2,645)
=========== ===========
BASIC AND DILUTED NET LOSS PER SHARE $ - * $ - *
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 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 STATEMENT OF
STOCKHOLDERS' EQUITY
ACCUMULATED
ADDITIONAL OTHER
COMMON STOCK PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT GAIN (LOSS) TOTAL
-------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2002
(Audited) .......................... 6,548,870 $ 6,549 $ 705,755 $ (560,968) $ (238) $ 151,098
COMPREHENSIVE LOSS (Unaudited):
Net loss ........................... -- -- -- (4,647) -- (4,647)
Other comprehensive gain (loss),
net of tax:
Unrealized gains on securities:
Unrealized holding gains arising
during the period ............ -- -- -- -- 346 346
---------- ---------- ---------- ----------- ----------- ------------
Total comprehensive loss ....... (4,301)
BALANCE AT MARCH 31, 2003
(Unaudited) ........................ 6,548,870 $ 6,549 $ 705,755 $ (565,615) $ 108 $ 146,797
========== ========== ========== =========== =========== ============
See accompanying notes to consolidated financial statements.
5
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE
MONTHS ENDED
MARCH 31,
2003 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,647) $ (2,645)
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in assets and liabilities:
Interest receivable - 1,799
Accounts payable and accrued expenses 2,222 (2,100)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (2,425) (2,946)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available-for-sale (1,353) -
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,353) -
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (3,778) (2,946)
CASH AND CASH EQUIVALENTS - beginning 123,337 242,603
----------- -----------
CASH AND CASH EQUIVALENTS - ending $ 119,559 $ 239,657
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 380 $ 300
=========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain on securities available-for-sale $ 346 $ -
=========== ===========
See accompanying notes to consolidated financial statements (unaudited).
6
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(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 three month
period ended March 31, 2003 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2003. 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
20, 2003 for the year ended December 31, 2002.
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.
NOTE 4 - REVENUE RECOGNITION
The Company's only revenues are derived from investments. Investment
income is recognized when earned.
7
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
During the three months ended March 31, 2003 and 2002, the Company had no
revenues other than investment 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 three months ended March 31, 2003, there were no material
changes in the financial condition of the Company other than a net loss of
$4,647 as compared to a net loss of $2,645 for the comparable period of the
prior year. 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 March 31, 2003, the Company's working capital
amounted to $146,797 with cash and cash equivalents and securities available for
sale aggregating $223,251. 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. At March 31, 2002, the Company's working capital amounted to
$168,515 with cash assets of $239,657.
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
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's securities available for sale consist of an investment in a
mutual fund whose value is subject to change with market conditions. The mutual
fund invests in U.S. Government obligations whose terms may be more than one
year. In addition, the Company's cash equivalents are invested in a brokerage
account subject to changes in interest rates. The Company manages its market
risk by periodically changing its investments. The Company has no assets and
liabilities which are denominated in a currency other than U.S. dollars or
involve commodity price risks.
Item 4. 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.
9
NATIONAL DIVERSIFIED SERVICES, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders:
None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K:
(a) 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)
99.1 Certification of Chief Executive Officer and Chief
Financial Officer (3)
________________
(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) Filed herewith.
(b) No reports on Form 8-K were filed during the quarter ended March 31,
2003.
10
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: May 15, 2003 /s/Morry Rubin
Morry F. Rubin, President, Chief Executive,
Financial and Accounting Officer
11
CERTIFICATION
I, Morry F. Rubin, Chief Executive Officer and Chief Financial Officer of
the Registrant, certify that:
1. I have reviewed this quarterly report on Form 10-Q of National
Diversified Services, Inc.;
2. Based on my knowledge, this quarterly 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officers and I am 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 quarterly 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
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly 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
quarterly 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: May 15, 2003 /s/ Morry F. Rubin
Morry F. Rubin,
Chief Executive Officer and
Chief Financial Officer
12