<PAGE>
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, 1995
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.)
104 East 25th Street
Tenth Floor
New York, New York 10010
- --------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (212) 353-8280
---------------
Securities registered pursuant to Section 12(b) of the Act:
None
- -----------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
None
- -----------------------------------------------------------------
(Title of Class)
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 (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 25, 1996, 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 25, 1996 was 6,548,870.
<PAGE>
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 completed a public offering of 758,570 Units in
December 1986 as more fully discussed under "Item 5" and raised
net proceeds of approximately $600,000. National was a blind
pool offering which at the time did not specifically allocate the
proceeds raised thereby to any business or operations.
National's business purpose is to seek and review
acquisition possibilities, and to make one or more acquisitions
or enter into business endeavors as best as its limited assets
will allow.
Business Strategy
The Company is seeking one or more potential business
opportunities that in the opinion of Management may provide an
ultimate profit to the Company. Such involvement may be by way
of the acquisition of existing businesses, the acquisition of
assets to establish subsidiary businesses for the Company, a
statutory merger or consolidation or the establishment of a new
business. 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.
<PAGE>
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 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 stockholders.
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.
3
<PAGE>
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. 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.
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 does not plan to enhance the
value of such subsidiaries with the primary objective of resale
4
<PAGE>
of the subsidiary's stock, but rather to further the Company's
long-term investment and management objectives.
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 and employment outside the Company, 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 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 25, 1996.
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
5
<PAGE>
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 two 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.
Competition
There are numerous similar companies which are larger, have
more experience, and are better financed than the Company. The
Company will thus assuredly 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 intense competition seeking relatively
more desirable equity investments. Accordingly, the Company's
proposed equity investments, if any, will entail an unusually
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
6
<PAGE>
Company's President, who 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 Mr.
George Rubin 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.
PART II
Item 5. Market for Registrant's Securities and Related
Stockholder Matters.
The Company completed its public offering of 758,570 Units
in December 1986, each Unit consisting of one share of Common
Stock and six Redeemable Common Stock Purchase Warrants. The
Redeemable Warrants expired in July 1990. The Company received
net proceeds of approximately $600,000 from the offering. From
the completion of the Company's public offering until the present
time, the Company's securities have been available to be 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
sporadic. 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 Company) that the approximate number of holders of
the Company's Common Stock as of March 25, 1996 was 335.
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 25, 1996, 5,790,300 shares of the
Company's restricted Common Stock may be sold 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 two years 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.
7
<PAGE>
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 recently 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 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 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.
8
<PAGE>
Item 6. Selected Financial Data.
Consolidated Statements of Operations Summary:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31
1994 1993 1992 1991 1995
<S> <C> <C> <C> <C> <C>
Net Sales $ -0- $ -0- $ -0- $ -0- $ -0-
Net Income $ 3,204 $ (2,438) $ (12,369) $ (2,870) $ (3,875)
(Loss)
Net Income
(Loss) Per
Common * * * * *
Share
</TABLE>
* Less than $.01 per share.
Consolidated Balance Sheets Summary:
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Working
Capital $268,345(1) $264,962(1) $267,208(1) $220,635 $223,129
Total
Share-
holders'
Equity $209,595 $206,391 $208,829 $221,198 $224,068
Total
Assets $274,734 $269,281 $271,300 $282,159 $285,823
</TABLE>
____________________
(1) If accrued salary which is not included in current liabilities
were paid, working capital would have been reduced by $58,750
to $209,595 at December 31, 1995, $210,352 at December 31, 1994
and $208,458 at December 31, 1993.
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
<PAGE>
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."
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 December 31, 1995, the Company's
working capital amounted to $268,345 with cash and cash
equivalent assets of $272,574. The Company believes that its
presently available cash and cash equivalents are sufficient to
fund the Company's search for a business opportunity. If
successful in entering into such a business opportunity, the
Company may require additional financing. No assurances can be
given that the Company will be successful in entering into a
business opportunity and if successful in securing additional
financing for the Company on terms satisfactory to it, if at all.
There are no material commitments for capital expenditures
or other long term credit arrangements.
Item 8. Financial Statements and Supplementary Data.
The information required by Item 8, appears at pages F-1
through F-9 (inclusive) of this Report, which pages follow this
page.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Not applicable.
10
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED BALANCES SHEETS F-2
CONSOLIDATED STATEMENTS OF OPERATIONS F-3
CONSOLIDATED STATEMENTS OF CASH FLOWS F-4
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6 - F-7
</TABLE>
<PAGE>
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, 1995 and 1994, and the related consolidated
statements of operations, cash flows, and changes in
stockholders' equity for the years then ended. 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 generally accepted
auditing standards. 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, 1995 and 1994, and the results of their
operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
MILLER, ELLIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
New York, New York
March 18, 1996
F-1
<PAGE>
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $272,574 $269,102
Interest receivable 2,160 -
-------- --------
Total current assets $274,734 $269,102
======== ========
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation of $1,534 in 1995
and $1,356 in 1994 (Note A) - 179
-------- --------
TOTAL $274,734 $269,281
======== ========
LIABILITIES
CURRENT LIABILITIES:
Accounts payable and accrued expenses $6,389 $4,140
-------- --------
Total current liabilities 6,389 4,140
ACCRUED SALARIES - officer (Note B) 58,750 58,750
-------- --------
Total liabilities 65,139 62,890
-------- --------
</TABLE>
STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Common stock, $.001 par value
authorized 30,000,000 shares, issued
6,553,870 shares in 1995 and 1994 6,554 6,554
Additional paid-in capital 705,755 705,755
-------- --------
Total 712,309 712,309
Deficit (502,709) (505,913)
--------- --------
209,600 206,396
Less 5,000 shares of treasury stock, at cost 5 5
-------- --------
Total stockholders' equity 209,595 206,391
-------- --------
TOTAL $274,734 $269,281
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F-2
<PAGE>
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Interest income $16,513 $12,375 $8,582
-------- -------- --------
Total income 16,513 12,375 8,582
General and administrative expenses 13,309 14,813 20,951
-------- -------- --------
NET INCOME (LOSS) $ 3,204 $(2,438) $(12,369)
======== ======== ========
Net income (loss) per share, based on
the weighted average shares
outstanding $ - * $ - * $ - *
Number of shares used to compute
Net income (loss) per share (Note D) 6,548,870 6,548,870 6,548,870
========= ========= =========
</TABLE>
* Less than $.01 per share
See accompanying notes to consolidated financial statements
F-3
<PAGE>
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $3,204 $(2,438) $(12,369)
------- -------- --------
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 179 192 193
Changes in assets and liabilities:
Interest receivable (2,160) - -
Prepaid expenses and other current assets - - 2,355
Accounts payable and accrued expenses 2,249 419 1,509
------- ------- -------
Total adjustments 268 611 4,057
------- ------- -------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 3,472 (1,827) (8,312)
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,472 (1,827) (8,312)
CASH AND CASH EQUIVALENTS - beginning of year 269,102 270,929 279,241
-------- -------- --------
CASH AND CASH EQUIVALENTS - end of year $272,574 $269,102 $270,929
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F-4
<PAGE>
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY
$.001 PAR VALUE PAID-IN STOCK
SHARES AMOUNT CAPITAL DEFICIT SHARES COST
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT
January 1, 1993 6,553,870 $6,554 $705,755 $(491,106) 5,000 $ 5
Net loss for year - - - (12,369) - -
--------- ------ -------- -------- ----- ---
BALANCE AT
December 31, 1993 6,553,870 6,554 705,755 (503,475) 5,000 5
Net loss for year - - - (2,438) - -
--------- ------ -------- -------- ----- ---
BALANCE AT
December 31, 1994 6,553,870 6,554 705,755 (505,913) 5,000 5
Net income for year - - - 3,204 - -
--------- ------ -------- --------- ----- ---
BALANCE AT
December 31, 1995 6,553,870 $6,554 $705,755 $(502,709) 5,000 $ 5
========= ====== ======== ========== ===== ===
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE>
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and History
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.
Concentrations of Credit Risk
The Company places its cash balances with high credit quality
financial institutions. At times, such balances may be in
excess of the FDIC insurance limit.
Property, Plant and Equipment and Depreciation
Property, plant and equipment are being depreciated primarily
by accelerated methods over the estimated useful lives of the
individual classes of assets.
Cash Equivalents
Cash equivalents comprised an investment in short-term
commercial paper with a maturity of less than ninety days.
Income Taxes
Effective January 1, 1993, the Company changed its method of
accounting for income taxes to comply with SFAS No. 109,
"Accounting for Income Taxes." A requirement of SFAS No. 109
is that deferred tax assets and liabilities are recorded for
temporary differences between the financial statement and tax
bases of assets and liabilities using the currently enacted
tax rate expected to be in effect when the taxes are actually
paid or recovered.
F-6
<PAGE>
NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE B - ACCRUED SALARIES - OFFICER
Accrued salaries, officer represents $58,750 for the period
December 1986 to November 22, 1989.
NOTE C - INCOME TAXES
At December 31, 1995, the Company had net operating loss
carryforwards of approximately $460,000 which expire from 2001
through 2010. In accordance with SFAS No. 109 (Note A), these
operating loss carryforwards result in deferred tax assets to
the Company. Management is uncertain as to the utilization of
these loss carryforwards and has provided for a 100% valuation
allowance for such deferred tax assets as follows:
Federal net operating loss carryforwards $ 138,000
State net operating loss carryforwards 55,000
--------
Total 193,000
Less valuation allowance 193,000
--------
Net deferred tax assets $-0-
========
NOTE D - NET INCOME (LOSS) PER SHARE
Net income (loss) per share is based on the weighted average
number of shares of common stock outstanding.
F-7
<PAGE>
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 68 (1) 1989 Chairman of the
Board of ATC
Environmental
Inc.
Stacy Goldberg 33 (1) 1995 Office Manager
of ATC Environ-
mental Inc.
__________________
(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,
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, a principal stockholder. The Company's By-Laws provide
that the terms of all officers expire at the annual meeting of
directors following the annual stockholders meeting.
(c) Business Experience
George Rubin has been Chairman of the Board of Directors of
the Company since December 1989 and President, Chief Executive
Officer and Chief Financial and Accounting Officer and Treasurer
of the Company since August 1995. George Rubin is Chairman of
the Board of ATC Environmental Inc. since June 1988. Mr. Rubin
is responsible for assisting in long and short term financial
planning including reviewing budgets, liaison with financial
institutions and in charge of merger and acquisition activities.
Mr. Rubin served as President, Treasurer and a director of Staff
Builders, Inc. from its organization in 1961 to May, 1987 and as
a consultant from May, 1987 to August, 1987. Staff Builders,
Inc., was then a publicly held corporation with over $100,000,000
in revenues operating through 100 offices (including franchises),
engaged in the business of providing temporary personnel
primarily in the health care field. Mr. Rubin devotes such time
to the Company as is necessary for the performance of his duties.
11
<PAGE>
Stacy Goldberg, a director and Secretary of the Company
since August 1995, has been an Office Manager of ATC
Environmental Inc. for more than the past five years.
Principal Stockholder and Founder
Morry F. Rubin has been President, Chief Executive Officer,
Treasurer and a director of ATC Environmental Inc. since January
1988. Mr. Rubin also served as President, Chief Executive
Officer and Treasurer of Aurora from May 1985 through June 1995,
and as a director of Aurora from September 1983 through June
1995. From June 1985 to August 1995, Mr. Rubin served as an
executive officer and director of the Company. From June 1981 to
May 1987, Mr. Rubin was employed in sales and as director of
acquisitions for Staff Builders, Inc.
Item 11. Executive Compensation.
During 1995, no executive officer has any employment
contract with the Company or received any cash or other
compensation. The Company presently has an incentive and non-
statutory stock option plan; however, no options have been
granted under the plan. See "Stock Option Plan." Directors do
not presently receive compensation 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.
Stock Option Plan
On June 30, 1985, the Board of Directors of the Company
adopted a Stock Option Plan (the "Plan") which was ratified by
the stockholders of the Company on September 19, 1985. As of
March 25, 1996, no options have been granted under the Plan. The
Plan covers 250,000 shares of Common Stock and is intended to
strengthen the Company's ability to attract and retain in its
employ, and in the employ of its subsidiaries, people of
training, experience and ability and to attract other persons to
become associated with, and/or to maintain their association
with, the Company in various capacities other than that of an
employee, by affording such employees and other persons an
opportunity to hold a proprietary interest in the Company and/or
to increase their existing proprietary interest. The Plan
authorizes the issuance of the options covered thereby as either
"Incentive Stock Options" within the meaning of the Internal
Revenue Code or as "Non-Statutory Stock Options." While
directors are eligible to receive Non-Statutory Options, only
persons who are within the class eligible to receive an Incentive
Option under the provisions of applicable law may be granted an
Incentive Option.
The Plan is administered by the Company's Board of
Directors, which has the authority to determine the persons to
whom options shall be granted, whether any particular option
12
<PAGE>
shall be an Incentive Option or a Non-Statutory Option, the
number of shares to be covered by each option, the time or times
at which options will be granted or may be exercised and the
other terms and provisions of the options. The Plan also
provides that: (i) the exercise price of options granted
thereunder shall not be less than 100% (or in the case of an
Incentive Option, 110% if the optionee owns 10% or more of the
outstanding voting securities of the Company) of the fair market
value of such shares on the date of grant, as determined by the
Board, and (ii) no option by its terms may be exercised more than
ten years (five years in the case of an Incentive Option, where
the optionee owns 10% or more of the outstanding voting
securities of the Company) after the date of grant. Any options
which are canceled or not exercised within the option period
become available for future grants.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
As of March 25, 1996, 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.
<TABLE>
<CAPTION>
Approximately
Number of Percent
Name Shares of Class
<S> <C> <C>
Morry F. Rubin
(1)(2)(3) 2,403,000 36.7
George Rubin (1)(2)(3) 2,383,000 36.4
Stacy Goldberg (3) -0- -0-
All officers and
directors as a
group (two persons) 2,383,000 36.4
</TABLE>
(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 104 East 25th Street, Tenth Floor, New
York, New York 10010.
The Company does not know of any arrangement or pledge of
its securities by persons now considered in control of the
13
<PAGE>
Company that might result in a change of control of the Company.
Item 13. Certain Relationships and Related Transactions.
None.
Item 14. 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)
21 Subsidiaries of Registrant (2)
27 Financial Data Schedule (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, 1995.
(3) Filed herewith.
(b) Reports on Form 8-K.
No Form 8-K was filed or required to be filed during
the fourth quarter of 1995.
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,
President, Chief Executive Officer,
Chief Financial and Accounting Officer
Dated: March 28, 1996
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
Chairman of the Board
President, Chief
Executive Officer,
Treasurer, Principal
Financial and
/s/ George Rubin Accounting Officer March 28, 1996
GEORGE RUBIN
/s/ Stacy Goldberg Director and Secretary March 28, 1996
STACY GOLDBERG
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 272,574
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 274,734
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 274,734
<CURRENT-LIABILITIES> 6,389
<BONDS> 0
<COMMON> 6,554
0
0
<OTHER-SE> 705,755
<TOTAL-LIABILITY-AND-EQUITY> 274,734
<SALES> 0
<TOTAL-REVENUES> 16,513
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,309
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,204
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,204
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
