<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)
  [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                  1934 FOR THE FISCAL YEAR ENDED April 30, 2003

 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF 1934 FOR THE TRANSITION PERIOD ______________ to _______________.

                        COMMISSION FILE NUMBER: 000-28307
            --------------------------------------------------------

                             NESCO INDUSTRIES, INC.
                     --------------------------------------
             (Exact name of registrant as specified in its charter)

             NEVADA                                       13-3709558
----------------------------------------       ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)


    22-09 Queens Plaza North, Long
         Island City, New York                               11101
----------------------------------------       ---------------------------------
(Address of principal executive offices)                  (Zip Code)


     Registrant's telephone number, including area code: (718) 752-2400
     ------------------------------------------------------------------

         Securities registered pursuant to Section 12(b) of the Act:

    (Title of each class)         (Name of each exchange on which registered)

             None                                    None
             ----                                    ----

           Securities registered pursuant to section 12(g) of the Act:

                         Common Stock, par value $0.001
                    -----------------------------------------
                                (Title of Class)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [ ]

The issuer's revenues for its most recent fiscal year were $4,589,693.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, at August 7,
2003, was $768,791.

At August 7, 2003, the registrant had 6,769,963 shares of Common Stock
outstanding.

Transitional Small Business Disclosure Format: Yes [ ] No  [X]

Documents incorporated by reference:  None


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                                TABLE OF CONTENTS
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<TABLE>
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<S>            <C>
                                                                                    Page
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PART I

Item 1.        Description of Business................................................ 2

Item 2.        Description of Property................................................10

Item 3.        Legal Proceedings......................................................11

Item 4.        Submission of Matters to a Vote of Security Holders....................13

PART II

Item 5.        Market for Common Equity and Related Stockholder Matters...............14

Item 6.        Management's Discussion and Analysis or Plan of Operation..............16

Item 7.        Financial Statements (F-1 to F-25).....................................29

Item 8.        Changes In and Disagreements With Accountants on
               Accounting and Financial Disclosure....................................30

PART III

Item 9.        Directors, Executive Officers, Promoters and Control Persons;
               Compliance with Section 16(a) of the Exchange Act......................31

Item 10.       Executive Compensation.................................................33

Item 11.       Security Ownership of Certain Beneficial Owners and
               Management and Related Stockholder Matters.............................36

Item 12.       Certain Relationships and Related Transactions.........................39

Item 13.       Exhibits and Reports on Form 8-K.......................................40

Item 14.       Controls and Procedures................................................42

Signatures     .......................................................................43

Exhibit 31

Exhibit 32
</TABLE>


<PAGE>


                           FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-KSB of NESCO Industries, Inc. for the fiscal year
ended April 30, 2003, contains statements that constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements can be identified by introductory words such as
"expects," "plans," "intends," "believes," "will," "estimates," "forecasts,"
"projects" or words of similar meaning, and by the fact that they do not relate
strictly to historical or current facts. Forward-looking statements frequently
convey our current expectations regarding, among other things,

     o   success of management;
     o   transition in business focus;
     o   achievement of operational goals;
     o   current and new products and services;
     o   dependence on a small number of customers;
     o   ability to secure financing;
     o   merger and acquisition prospects;
     o   formation of strategic relationships;
     o   current and potential claims, actions and proceedings;
     o   research and development activities;
     o   regulatory submissions and approvals;
     o   financial condition, results of operations and cash flows; and

similar operating matters. Any or all of our forward-looking statements may turn
out to be wrong. Many factors may cause actual results to differ from
forward-looking statements, including inaccurate assumptions and a broad variety
of risks and uncertainties, some of which are known and others of which are not.
Known risks and uncertainties include those identified from time to time in our
reports filed with the Securities and Exchange Commission ("SEC"), which should
be considered together with any forward-looking statement. No forward-looking
statement is a guarantee of future results or events, and one should avoid
placing undue reliance on such statements. We expressly disclaims any obligation
or undertaking to update or revise forward-looking statements made in this
report or in our other reports filed with the SEC.








                                        1
<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

NESCO Industries, Inc. (hereinafter sometimes referred to as "we" or the
"Company") is a provider of asbestos abatement and indoor air quality testing,
monitoring and remediation services. In the fiscal year ended April 30, 2003,
the Company consolidated the operations of its various subsidiaries, through
which it provides services, into a single environmental services operating unit
organized under the banner of its wholly-owned subsidiary National Abatement
Corporation. Prior to consolidation, the Company provided asbestos abatement,
indoor air quality and a variety of other environmental services through its
wholly-owned subsidiaries, National Abatement Corporation ("NAC"), NAC/Indoor
Air Professionals, Inc. ("IAP") and NAC Environmental Services, Inc. ("NACE").
In May 2003, the Company ceased business operations and became inactive.

The Company's fiscal year ends on April 30 and, therefore, references to fiscal
2002 and fiscal 2003 refer to the fiscal years ended April 30, 2002 and April
30, 2003, respectively.

         A.    History

                  1.       In General

The Company was incorporated in Nevada in March 1993, and was inactive for a
number of years until it acquired NAC and NACE in March 1998. As a result of
this acquisition, which was the result of arms length negotiations between
previously non-affiliated parties, the former shareholders of NAC and NACE
acquired 5,000,000 shares of the Company's common stock, or 80% of the total
outstanding, immediately following the acquisition. The former shareholders of
NAC were the same as the former shareholders of NACE. For accounting purposes,
NAC was treated as the acquiring corporation. Thus, the historical financial
statements of NAC prior to this acquisition date are deemed to be the historical
financial statements of the Company.

NAC was incorporated in May 1988 to provide asbestos abatement services
primarily in the greater metropolitan New York City area, and today is a full
service asbestos and lead abatement contractor and indoor air quality service
provider.

NACE was incorporated in May 1993 and, in the past, provided environmental
services such as subsurface soils/groundwater remediation, Phase I and Phase II
environmental site assessments, underground storage tank management and
remediation.

In June 1999, the Company incorporated IAP to provide indoor air quality
testing, monitoring and remediation services, primarily in New York, New Jersey
and Connecticut. Prior to the organization of IAP, the Company provided limited
indoor air quality services through NACE.

                                       2

<PAGE>


                  2.       Developments in Fiscal 2003

In the first part of fiscal 2003, the Company began to implement strategies for
achieving its operational goals which included changes in the way the business
was managed and operated. The Company consolidated the operations and activities
of its various subsidiaries into a single operating unit, under the banner of
NAC, to cut costs and improve efficiency. As a result, the Company believes that
it now operates in one business segment.

In the first part of fiscal 2003, the Company focused on increasing revenues and
margins by expanding its indoor air quality services to businesses and
organizations primarily in the tri-state metropolitan New York City area through
strategic mergers, acquisitions or relationships with leaders in the indoor air
quality business. The Company engaged in confidential negotiations with certain
merger and acquisition targets, but was unable to complete any merger or
acquisition due primarily to inadequate financing. The Company also attempted to
expand its indoor air quality services through promotions and marketing, but
achieved limited success. The Company also phased out the business conducted by
NACE in order to focus on indoor air quality services. In October 2002, the
Company's then chief executive officer and then chief financial officer
resigned.

Due primarily to the inability of the Company to implement its growth strategy
for the indoor air quality services, the change in management in October 2002,
and the trend of lower revenues and margins from the environmental services
operating unit, the Company elected in the third quarter of fiscal 2003 to seek
a new business focus beyond the environmental services industry. The Company
began to evaluate alternative business focuses and engage in negotiations with
potential buyers of the environmental services operating unit. The Company,
however, was unable to find a new business focus or sell the environmental
services operating unit.

In the forth quarter of fiscal 2003, the Company elected to inactivate the
environmental services operating unit, and authorized NAC to cease business
operations, in order to conserve financial and other resources until a new
business focus was identified. The Company ceased business operations in May
2003. The Company has yet to identify a new business focus and remains inactive.

         B.       Business of the Issuer

                  1.       Principal Services and Their Markets

                           a.    Asbestos Abatement Services

The Company, through NAC, has expertise in all types of asbestos abatement,
including, removal and disposal, enclosure (constructing structures around
asbestos-containing area) and encapsulation (spraying asbestos-containing
materials with an approved sealant). Asbestos abatement is principally performed
in commercial buildings, hospitals, government and institutional buildings,
universities and industrial facilities.

                                       3

<PAGE>

Asbestos is a fibrous mineral found in rock formations around the world that was
used extensively as a construction material and in construction-related products
as a fire retardant and insulating material prior to the early 1970s. Asbestos
also was used as a component in a variety of building materials (such as
plaster, drywall, mortar and building block) and in caulking, tile adhesives,
paint, roofing felts, floor tile and other surfacing materials.

In the early 1970s, it became widely recognized that inhalation or ingestion of
asbestos fibers caused a number of diseases, including asbestosis (a
debilitating pulmonary disease), lung cancer and mesothelioma (a cancer of the
abdominal and lung lining). The Environmental Protection Agency ("EPA") banned
the use of asbestos as a construction material in 1973, and the federal
government subsequently banned the use of asbestos in other building materials
as well. Most structures built before 1973, however, contained asbestos in some
form. The asbestos abatement industry grew rapidly in the 1980s due to
increasing awareness and concern over health hazards associated with asbestos,
legislative action mandating safety standards and requiring abatement in certain
circumstances, and economic pressures on building owners seeking to satisfy the
requirements of financial institutions, insurers and tenants. The market first
leveled off and then declined in the 1990s as building owners and facilities
managers developed containment and management programs and procedures that were
less costly than removal.

The Company provided its asbestos abatement services on a project contract
basis. Individual projects were competitively bid, although many requests for
bids from private owners were subject to changes in specifications, additions
and other factors with the result that the final terms were negotiated. The
majority of contracts undertaken were on a fixed price basis with monthly
billings based upon percentage of completion or a schedule of values, less
retainage. The lengths of the contracts were typically less than one year;
however, larger projects may require two or three years to complete.
Responsibility for each contract was assigned to a project manager who
coordinated the project until its completion. The Company provided its asbestos
abatement services using a qualified labor force in accordance with regulatory
requirements, contract specifications and operating procedures manual, which
described worker safety and protection procedures, air monitoring protocols and
abatement methods.

The Company's asbestos abatement operations generally have been concentrated in
the tri-state New York, New Jersey and Connecticut regions. The Company faced
formidable competition in this market, and its margins have declined in recent
years. The Company is licensed and/or certified in all jurisdictions where
required by its current work in order to conduct its operations. In addition,
certain management and staff members are licensed and/or certified by various
governmental agencies as asbestos abatement supervisors and workers. Disposal of
hazardous material is subcontracted to licensed haulers who transport the
material to a licensed landfill or other disposal facility. A "chain of custody"
for the material is set forth in a waste manifest on which each step in the
disposal process is accounted for.

Since the Company is able to perform asbestos abatement work throughout the
year, the business is not considered seasonal in nature. However, it is affected
by the timing of large contracts.

                                       4

<PAGE>


                           b.    Indoor Air Quality Services

The Company, primarily through NAC and in the past through IAP, provides indoor
air quality testing, monitoring and remediation services. Upon its organization,
IAP took over the indoor air quality services segment previously conducted by
NACE. In July 1999, operations were expanded by acquiring the name and certain
other assets from, and hiring personnel formerly employed by, a Long Island, New
York based indoor air quality contractor. The acquisition price of $637,860 was
paid through the issuance of 364,963 shares of common stock valued at $500,000
and cash. The purchase price was allocated $500,000 to goodwill, $50,000 to
covenants not to compete, and the balance to other assets.

On December 5, 2000, IAP acquired certain equipment and intangible assets in
connection with an asset purchase agreement entered into with two individuals.
The purchase price of $100,000 was paid through the issuance of 80,000 shares of
common stock valued at $100,000. The purchase price was allocated $88,450 to
equipment and $11,550 to intangible assets.

The Company provides an integrated approach to indoor air quality issues by
offering services such as facility investigation and diagnosis, remediation and
ultimately preventative monitoring/maintenance. Its services include testing,
monitoring and removal of indoor air contaminants (such as mold and mildew),
including sanitization of duct/HVAC systems and subsequent retrofitting and
replacement of HVAC equipment and parts. Indoor air quality is an important
concern in a wide variety of industries and facilities, including hospitals and
other health care facilities, pharmaceutical and medical device companies, food
manufacturing facilities, cruise ships, commercial and government office
buildings, laboratories, universities, schools and retail outlets. This concern
results from increased awareness of health, mechanical and fire hazards, related
litigation exposure, and compliance with federal and state indoor air quality
mandates. As a result of increased awareness of indoor air quality as a health
issue, terms such as "Sick Building Syndrome" and "Building Related Illness"
have come into common use.

The Company provides its indoor air quality services on a project contract
basis. Individual projects are competitively bid, although many requests for
bids from private owners are subject to changes in specifications, additions and
other factors with the result that the final terms are negotiated. The majority
of contracts undertaken are on a fixed price basis with monthly billings based
upon percentage of completion or a schedule of values, less retainage.
Responsibility for each contract is assigned to a project manager. The Company
provides its indoor air quality services using a qualified labor force in
accordance with federal and state indoor air quality mandates, contract
specifications, and source removal techniques to provide a level of cleaning in
compliance with the National Air Duct Cleaners Association ("NADCA") Standard
1992-01. The Company is a member of the NADCA. The Company's service area
includes primarily the New York/New Jersey/Connecticut Tri-State area.

                           c.    Other Environmental Services

The Company, through NACE, has in the past provided a variety of environmental
services, including, remediation, Phase I, II, and III environmental
assessments, underground storage tank removals, injection well closures, soil
and groundwater treatment systems, contaminated soil removal and emergency
response. The Company discontinued this line of services in fiscal 2003 and
reallocated resources in favor of indoor air quality services.

                                       5

<PAGE>

                           d.    Backlog

At April 30, 2003, we had no contracts representing substantial future revenues
as we wound down operations, which ceased in May 2003. At April 30, 2002, we had
contracts representing future revenues of approximately $2,381,070.

                  2.       Distribution Methods

We undertake work primarily pursuant to written "fixed price" contracts which
are obtained through competitive bidding, or on a negotiated, non-bid basis.
Work performed in excess of the original contract amount is usually done
pursuant to a formal change order or purchase order. The incidence of time and
material contracts, and unit price contracts are not significant.

In marketing our services, we rely principally on a Company-employed sales staff
and upon the efforts of our operating and executive management team who
regularly call upon existing and prospective customers. We also utilize a number
of independent sales representatives. As the breadth of the services that we
offer has expanded beyond asbestos abatement to include indoor air quality, we
strive to derive a competitive advantage from the working relationships that we
have developed over the years with industrial, commercial, engineering and other
professional concerns in our service area.

We supplement our direct sales effort through regular advertising in trade
publications, direct mailings to selected industrial and engineering firms
(e.g., in the indoor air quality area, to industries that are most affected by
indoor air quality issues), strategic telemarketing and regular participation in
industry conferences and trade shows.

                  3.       New Products or Services

In fiscal 2003, we sought to expand our indoor air quality business in light of
the increased public awareness of the series health and other risks related to
poor indoor air quality. In the first part of fiscal 2003, we focused on
expanding our indoor air quality services to businesses and organizations
primarily in the tri-state metropolitan New York City area through strategic
mergers and acquisitions and relationships with leaders in the indoor air
quality business. We engaged in confidential negotiations with certain merger or
acquisition targets, but were unable to complete any merger or acquisition due
primarily to a lack of adequate financing. We also attempted to expand our
indoor air quality business through promotions and marketing, but achieved
limited success. Due to our inability to expand our indoor air quality business,
we elected to cease operations and conserve resources while we seek a more
lucrative business focus.

                                       6

<PAGE>


                  4.       Competition

The environmental services industry is highly competitive and fragmented. We
face competition from local owner-operated service contractors and from national
and regionally based companies that perform a variety of industrial and
environmental services. Competition in this market is based primarily on hourly
rates, productivity, safety, innovative approaches and quality of service. A
substantial portion of work in our service areas is performed pursuant to
contracts obtained through competitive bidding. Among qualified bidders, price
usually is the determining factor.

                  5.       Sources of Supply

We purchase job related materials and equipment from several vendors. We are not
dependent on purchasing from any one vendor, as there are a number of sources of
supply.

                  6.       Major Customers

Our customers include owners of commercial real estate, managing agents and
general contractors, industrial facilities and hospitals and educational
institutions. In fiscal 2003 and 2002, approximately 94% of our operating
revenues were derived from commercial and industrial clients, and approximately
6% was derived from institutional customers such as educational institutions and
hospitals.

In fiscal 2003, two customers accounted for 57% of our revenues. PPC
Construction LLC, a commercial and residential property holder, accounted for
50% and Structure Tone, Inc., a large general contractor, accounted for 7%. In
the prior fiscal year, the same two customers accounted for approximately 41% of
our revenues. PPC Construction LLC accounted for 28% and Structure Tone, Inc.
accounted for 13%.

                  7.       Patents, Trademarks, Licenses, etc.

We do not consider intellectual property (apart from trade secrets concerning
customer and bidding information) to be significant to our operations.

                  8-9.     Governmental Approvals and Regulations

A core component of our business is advising and assisting customers in
complying with local, state and federal laws and regulations concerning the
environment. With respect to asbestos abatement services, numerous regulations
at the federal, state and local levels impact the industry, including the EPA's
Clean Air Act and Occupational Safety and Health Administration ("OSHA")
requirements.

EPA regulations provide national emissions standards for asbestos abatement.
These standards mandate detailed procedures for collection, waste disposal,
handling and shipment of asbestos. The EPA regulations require precise methods
for accomplishing various aspects of asbestos abatement and include
specifications on:

                                       7

<PAGE>


     o   temporary storage of asbestos;
     o   air test protocols;
     o   air cleaning devices;
     o   record maintenance;
     o   placement, content and size of signs and labels warning of the presence
         of asbestos and associated health risks; and
     o   reporting requirements to the EPA.

In addition, the EPA requires schools to inspect for asbestos and implement
response actions and submit asbestos management plans to states. These
regulations specify the use of accredited inspectors, air sampling methods and
waste disposal procedures. The EPA also has notification requirements before
removal operations can begin.

The health and safety of personnel involved in the removal of asbestos is
protected by OSHA regulations. These regulations provide worker protection
measures and standards for asbestos exposure in all work and include
specifications on:

     o   worker training;
     o   engineering controls;
     o   labeling respiratory protection;
     o   bagging of waste;
     o   permissible exposure limits;
     o   exposure assessment and monitoring;
     o   methods of compliance;
     o   hygiene facilities and practices;
     o   communication of hazards;
     o   record maintenance; and
     o   designation, duties and training of a "competent person" to ensure
         worker safety.

Many state authorities and local jurisdictions have implemented similar programs
governing removal, handling and disposal of asbestos.

While there are indoor air quality mandates at the state and federal levels, our
indoor air quality business is not subject to or dependent upon material
governmental regulation at the state or federal levels.

Certain services offered by us are required to be performed by licensed
individuals. As indicated above, we frequently subcontract with third parties
for services which require licensing or permits (e.g., transportation of
hazardous waste).

                                       8

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                  10.      Research and Development

We continuously pursue innovative and creative approaches and methods for
providing services to our customers. We do not, however, engage in any
significant research and development activities.

                  11.      Environmental Compliance

We routinely handle waste materials in the ordinary course of our business, some
of which may be considered to be hazardous wastes. We are subject to numerous
local, state and federal laws and regulations concerning the containment and
disposal of asbestos, pursuant to which we have been required to incur
compliance and clean-up costs. Compliance with environmental laws and
regulations due to currently unknown circumstances or developments could result
in substantial costs and have a material adverse effect on our results of
operations and financial condition. For a discussion of the Clean Air Act
proceeding commenced against us in January 2003, see Item 3-Legal Proceedings
below.

                  12.      Employees

As of August 7, 2003, we had one full-time administrative employee and one
part-time executive employee. Because we ceased business operations in May 2003,
we do not currently employ any sales, marketing, technical, production or other
administrative personnel, although we had in the past.

In the past, in addition to our "permanent" work force, we typically hired
temporary laborers to staff asbestos abatement and indoor air quality projects.
Laborers on indoor air quality projects were not represented by labor unions and
were not covered by a collective bargaining agreement. Temporary laborers on our
asbestos abatement projects were generally represented by a labor union and, in
New York and New Jersey, were covered by a collective bargaining agreement
between the Company and the Mason Tenders Union. NAC also employed union
laborers with other affiliations depending on project jurisdiction, on a
project-by-project basis. Our permanent work force is not unionized.

We believe we have good relations with our employees, and have never incurred a
significant work stoppage due to any strike or protest by our employees.




                                       9

<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTY

We sublease our executive and administrative offices and warehouse space from
PEC Realty Corp. PEC Realty Corp. is owned and controlled by Santo Petrocelli,
Sr., our Chairman, and members of Mr. Petrocelli's family, including his son,
Santo Petrocelli, Jr., who is a director of the Company. In the past, there was
no written sublease or term specified for this sublease. In fiscal 2003 and
prior to our decision to cease business operations, we occupied space of
approximately 5,850 square feet and paid a gross rent (i.e., our rental includes
utilities, taxes, common area maintenance and other typical tenant charges) of
$14.00 per square foot ($79,729 per year in fiscal 2003) which approximates PEC
Realty Corp.'s prime tenancy costs. In connection with the cessation of business
operations, we renegotiated the terms of this sublease to a month-to-month term
and substantially reduced our executive and administrative offices and
eliminated our warehouse space at no charge. Rents due under this new sublease
total approximately $1,000 per month. We believe that our occupancy costs under
this sublease arrangement are no higher than market, and that the terms are no
less favorable to us than we could have obtained through arms-length negotiation
with non-affiliated parties.

We lease approximately 8,500 square feet of warehouse space located in Rahway,
New Jersey. The lease, which runs for a three-year term ending July 31, 2005,
required two security deposits totaling $49,350. Rents due under the lease total
$3,116.66 per month. We are in the process of negotiating a release from this
lease, which, if successful, may result in termination charges not known at this
time.

We also lease a small amount of storage area in midtown Manhattan (approximately
170 square feet) at an annual rent of approximately $5,800. We expect to
terminate this lease, effective September 2003, at no or minimal charge.

We believe our offices and other facilities are adequate for our present needs.





                                       10

<PAGE>


ITEM 3.           LEGAL PROCEEDINGS

Except with respect to the actions set forth below, we are not involved in any
material legal proceedings.

         A.       Property Damage/Personal Claims

National Abatement Corporation ("NAC") and/or NAC Environmental Services, Inc.
("NACE"), our wholly-owned subsidiaries, are co-defendants with one or more
defendants in the following civil actions, all of which are pending in the
Supreme Court of the State of New York, Counties of New York, Kings and Queens,
and relate to property damage and/or personal injury claims which arose in the
ordinary course of NAC's and/or NACE's business operations:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------

                                                   Claimants            Amount Of Claim
Date Proceeding                                   Against NAC             Against NAC
   Began                Plaintiff                 and/or NACE            and/or NACE($)
----------------------------------------------------------------------------------------

<S>               <C>                         <C>                        <C>
12/12/95          Ralph LoRusso and Phillis   Ralph LoRusso and              4,250,000
                  LoRusso                     Phillis LoRusso
----------------------------------------------------------------------------------------
4/18/97           Manuel Zumba                Manuel Zumba                  10,000,000
----------------------------------------------------------------------------------------
1/18/01           20 Place Associates         20 Place Associates            2,000,000
----------------------------------------------------------------------------------------
11/20/01          Marcin Majewski             Marcin Majewski               20,000,000
----------------------------------------------------------------------------------------
11/29/01          Efraim Alfonesca            Efraim Alfonesca                 750,000
----------------------------------------------------------------------------------------
4/1/02            Charles Watson              Charles Watson                20,000,000
----------------------------------------------------------------------------------------
3/17/03           Boston Properties, Inc.     Boston Properties,             3,042,194
                  and Boston Properties       Inc. and Boston
                  Limited Partnership         Properties Limited
                                              Partnership
----------------------------------------------------------------------------------------
</TABLE>

At April 30, 2003, claims in excess of NAC's and/or NACE's insurance coverages
totaled approximately $11,800,000. Two cases totaling $6,900,000 in claims were
dismissed or settled within limits of coverage during fiscal 2003. One case
totaling $4,000,000 in claims settled within limits of coverage in fiscal 2001
but was reported in fiscal 2003. One case totaling $3,000,000 in claims was
commenced against NAC in fiscal 2003. NAC and/or NACE are being represented by
counsel engaged by their insurers and, in most or all cases, have filed
cross-claims and third party claims against other parties. However, any judgment
or settlement in excess of insurance coverages will require payment by NAC
and/or NACE. Based on prior experience, we believe that the amount of ultimate
liability of NAC and/or NACE with respect to these claims will not materially
effect the financial position, results of operations and cash flows of the
Company. However, there can be no assurance that any judgment or settlement of
these claims will not exceed NAC's and/or NACE's insurance coverages, which
could have a material impact on the financial position, results of operations
and cash flows of the Company.

                                       11

<PAGE>

NAC maintains commercial general liability insurance for claims arising from its
business operations with coverage limits of $5 million per claim and in the
aggregate against loss arising from property damage and personal injury. The
policy is written on an "occurrence" basis which provides coverage for insured
risks that occur during the policy period, irrespective of when a claim is made.
Higher policy limits are available for individual projects. NAC also carries
pollution errors and omissions liability insurance ($1 million limit per claim
and in the aggregate), a $5 million commercial umbrella policy, and worker's
compensation insurance within statutory coverage limits. In addition, a
substantial number of NAC's customers require performance and payment bonds and
it maintains a bonding program to satisfy these requirements.

         B.       Clean Air Act Claims

On January 15, 2003, NAC and its employee were charged with violation of the
Clean Air Act in a one-count federal indictment filed in the United States
District Court for the Southern District of New York. The indictment, which
relates to work performed in January 1998, alleges that NAC and the employee
caused asbestos material to be stripped from a building without adequately
wetting it, failed to lower the asbestos material to the floor without dropping
or otherwise damaging it, and did not keep asbestos material that had been
removed wet until it was collected and contained. The prosecutor subsequently
filed a three-count prosecutor's information that superceded the indictment and
charged NAC with two additional violations of the Clean Air Act.

On July 1, 2003, NAC pled guilty to the three-count prosecutor's information in
accordance with the terms of a negotiated plea agreement. The plea agreement and
plea were intended to conclude the proceedings commenced against NAC by the
filing of the federal indictment in January 2003. In connection with the plea,
NAC received a fine totaling $76,200, which is payable on or before January 2,
2004. A five year probationary period was also imposed on NAC, and in addition,
NAC agreed, as a condition of probation, to not engage in any activity relating
to (i) inspection, sampling or analysis for the presence of asbestos, (ii)
removal, transportation or disposal of asbestos, or (iii) demolition or
renovation of buildings. This prohibition does not extend to any construction
work limited exclusively to the installation or addition of building components
to a structure, not involving the removal of any building components or
construction debris.




                                       12

<PAGE>


ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of our securities holders during the
fourth quarter of our fiscal year ended April 30, 2003.




                                       13

<PAGE>


                                     PART II


ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         A.       Market Information

Since April 1998, our common stock, par value $0.001 ("Common Stock"), has been
quoted on the Electronic Bulletin Board operated by the National Association of
Securities Dealers (OTCBB: NESK). For the period between January 2000 and March
2002, our Common Stock was quoted on an inter-dealer quotation system published
by the Pink Sheets LLC.

The following table sets forth the high and low closing bid prices per fiscal
quarter quoted for our Common Stock in the last two fiscal years (Pink Sheets
through 3/26/02; OTCBB from 3/27/02 to Present):

                                                         Closing Bid
         Year ended 4/30/2003                        High            Low
         --------------------                        ----            ----

         First Quarter (ended 7/31/02)               $0.75           $0.30
         Second Quarter (ended 10/31/02)             $0.25           $0.10
         Third Quarter (ended 1/31/03)               $0.12           $0.10
         Fourth Quarter (ended 4/30/03)              $0.12           $0.10


         Year ended 4/30/2002                        High            Low
         --------------------                        ----            ----

         First Quarter (ended 7/31/01)               $0.25           $0.11
         Second Quarter (ended 10/31/01)             $0.12           $0.10
         Third Quarter (ended 1/31/02)               $0.82           $0.10
         Fourth Quarter (ended 4/30/02)              $0.75           $0.55

The above quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions. Actual
trading in our shares has been very sporadic.

         B.       Holders

As of August 7, 2003, there were 34 record holders of our Common Stock.

         C.       Dividends

We have never declared or paid any cash dividends on our Common Stock. We
currently anticipate that future earnings will be retained to support our
business. Accordingly, we do not anticipate paying cash dividends on our Common
Stock in the foreseeable future.

                                       14

<PAGE>

         D.       Recent Sales of Unregistered Securities

In the past three fiscal years, we have issued the following securities in
transactions not registered under the Securities Act of 1933:

         o        In December 2000, we issued 80,000 shares of Common Stock as
                  payment for equipment and intangible assets. The transaction
                  was a negotiated asset purchase in which both the buyer and
                  seller were represented by counsel. We relied on Section 4(2)
                  of the Securities Act in issuing the shares without
                  registration under the Act.

         o        In January 2002, we issued five-year warrants to purchase a
                  total of 200,000 shares of Common Stock at an exercise price
                  of $0.50 per share to KSH Strategic Investment Fund I, LP and
                  Cleveland Overseas, Ltd. in connection with a January 2002
                  bridge loan financing of $500,000. These investors also
                  received secured promissory notes in the aggregate principal
                  amount of $500,000 which bore interest at 10% per annum. KSH
                  Investment Group, Inc., a registered broker-dealer and an
                  affiliate of KSH Strategic Investment Fund I, LP, received
                  $25,000 and was granted 75,000 shares of Common Stock (which
                  were issued in June 2002) as a fee for arranging the bridge
                  loan financing. We relied on Section 4(2) of the Securities
                  Act in issuing the warrants and shares of Common Stock without
                  registration under the Act. Under the terms of the bridge loan
                  financing, we have agreed to undertake to register the shares
                  of Common Stock issuable upon the exercise of the warrants
                  issued to the bridge investors and the shares of Common Stock
                  issued to KSH Investment Group, Inc.

         o        In June 2002, we issued 512,500 shares of our 10% Series A
                  Convertible Preferred Stock ("Preferred Stock") in connection
                  with the initial closing of a private placement of a minimum
                  of 500,000 and a maximum of 1,000,000 shares of our Preferred
                  Stock to accredited investors at $2.00 per share. Each share
                  of Preferred Stock is convertible into four shares of Common
                  Stock at a conversion price of $0.50 per share. KSH Investment
                  Group, Inc. served as placement agent and received, among
                  other things, a cash commission equal to 7.5% of the aggregate
                  purchase price of the shares sold, a non-accountable expense
                  allowance equal to 1.5% of the aggregate purchase price of the
                  shares sold, and warrants to purchase 402,500 shares of Common
                  Stock as commissions in connection with the June 2002 private
                  placement. We relied on Section 4(2) of the Securities Act and
                  Rule 506 of Regulation D promulgated thereunder in issuing the
                  shares of Preferred Stock and warrants without registration
                  under the Act. Under the terms of the private placement, we
                  have agreed to undertake to register the Common Stock issuable
                  upon the conversion of the Preferred Stock sold and the Common
                  Stock issuable upon the exercise of warrants issued to the
                  placement agent.

                                       15

<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

NESCO Industries, Inc. (hereinafter sometimes referred to as "we" or the
"Company") is a provider of asbestos abatement and indoor air quality testing,
monitoring and remediation services. In the fiscal year ended April 30, 2003,
the Company consolidated the operations of its various subsidiaries, through
which it provides services, into a single environmental services operating unit
organized under the banner of its wholly-owned subsidiary National Abatement
Corporation. Prior to consolidation, the Company provided asbestos abatement,
indoor air quality and a variety of other environmental services through its
wholly-owned subsidiaries, National Abatement Corporation ("NAC"), NAC/Indoor
Air Professionals, Inc. ("IAP") and NAC Environmental Services, Inc. ("NACE").
In May 2003, the Company ceased business operations and became inactive.

The Company's fiscal year ends on April 30 and, therefore, references to fiscal
2002 and fiscal 2003 refer to the fiscal years ended April 30, 2002 and April
30, 2003, respectively.

         A.       History

                  1.       In General

The Company was incorporated in Nevada in March 1993, and was inactive for a
number of years until it acquired NAC and NACE in March 1998. As a result of
this acquisition, which was the result of arms length negotiations between
previously non-affiliated parties, the former shareholders of NAC and NACE
acquired 5,000,000 shares of the Company's common stock, or 80% of the total
outstanding, immediately following the acquisition. The former shareholders of
NAC were the same as the former shareholders of NACE. For accounting purposes,
NAC was treated as the acquiring corporation. Thus, the historical financial
statements of NAC prior to this acquisition date are deemed to be the historical
financial statements of the Company.

NAC was incorporated in May 1988 to provide asbestos abatement services
primarily in the greater metropolitan New York City area, and today is a full
service asbestos and lead abatement contractor and indoor air quality service
provider.

NACE was incorporated in May 1993 and, in the past, provided environmental
services such as subsurface soils/groundwater remediation, Phase I and Phase II
environmental site assessments, underground storage tank management and
remediation.

In June 1999, the Company incorporated IAP to provide indoor air quality
testing, monitoring and remediation services, primarily in New York, New Jersey
and Connecticut. Prior to the organization of IAP, the Company provided limited
indoor air quality services through NACE.

                  2.       Developments in Fiscal 2003

In the first part of fiscal 2003, the Company began to implement strategies for
achieving its operational goals which included changes in the way the business
was managed and operated. The Company consolidated the operations and activities

                                       16

<PAGE>

of its various subsidiaries into a single operating unit, under the banner of
NAC, to cut costs and improve efficiency. As a result, the Company believes that
it now operates in one business segment.

In the first part of fiscal 2003, the Company focused on increasing revenues and
margins by expanding its indoor air quality services to businesses and
organizations primarily in the tri-state metropolitan New York City area through
strategic mergers, acquisitions or relationships with leaders in the indoor air
quality business. The Company engaged in confidential negotiations with certain
merger and acquisition targets, but was unable to complete any merger or
acquisition due primarily to inadequate financing. The Company also attempted to
expand its indoor air quality services through promotions and marketing, but
achieved limited success. The Company also phased out the business conducted by
NACE in order to focus on indoor air quality services. In October 2002, the
Company's then chief executive officer and then chief financial officer
resigned.

Due primarily to the inability of the Company to implement its growth strategy
for the indoor air quality services, the change in management in October 2002,
and the trend of lower revenues and margins from the environmental services
operating unit, the Company elected in the third quarter of fiscal 2003 to seek
a new business focus beyond the environmental services industry. The Company
began to evaluate alternative business focuses and engage in negotiations with
potential buyers of the environmental services operating unit. The Company,
however, was unable to find a new business focus or sell the environmental
services operating unit.

In the forth quarter of fiscal 2003, the Company elected to inactivate the
environmental services operating unit, and authorized NAC to cease business
operations, in order to conserve financial and other resources until a new
business focus was identified. The Company ceased business operations in May
2003. The Company has yet to identify a new business focus and remains inactive.

         B.       Critical Accounting Policies And Estimates

The Company considers certain accounting policies related to revenue
recognition, impairment of long-lived assets, allowance for doubtful accounts
and valuation of deferred tax assets, to be critical policies due to the
estimation processes involved in each.

                  1.       Revenue Recognition

The Company derives a significant portion of its revenue from fixed price
contracts, which require continuing estimations of costs to complete each job.
From time to time due to job conditions, job scheduling and productivity, the
cost to complete estimates are revised upward or downward which correspondingly
increases or decreases both estimated revenues and estimated gross profits, and
earned revenues and earned gross profits. The Company uses the percentage of
completion method to recognize revenue for each project. When an estimate
indicates a significant loss (i.e., estimated costs exceed estimated revenues),
the entire estimated loss is recognized in the Company's results of operations.
Any changes in estimated amounts, including contract losses, could be material
to the Company's results of operation in both current and future periods, as
jobs progress to completion.

                                       17

<PAGE>

                  2.       Allowance for Doubtful Accounts

The Company records an allowance for uncollectible amounts based on a review of
the collectibility of its accounts receivable. Management determines the
adequacy of this allowance by analyzing historical bad debts, continually
evaluating individual customer receivables and considering the customer's
financial condition and current economic conditions. If the financial condition
of the Company's customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances could be required. The
Company's accounts receivable balance as of April 30, 2003 was $990,901, net of
an allowance for doubtful accounts of $234,722.

                  3.       Impairment of Long-Lived Assets

The Company's long-lived assets included goodwill with a carrying value of
$416,954 as of October 31, 2002. In assessing the recoverability of the
Company's goodwill, the Company made assumptions regarding estimated future
operating results, cash flows and other factors to determine the fair value of
this asset. As a result of this evaluation, the Company recorded an impairment
of $416,954 for goodwill in the third quarter of fiscal 2003.

                  4.       Valuation of Deferred Tax Assets

The Company records the tax benefit of unused income tax losses and credits as
recoverable assets and evaluates the realizability of recorded deferred tax
assets by considering future cash flows and the applicability of tax laws, tax
jurisdictions and certain other assumptions. The Company has determined that a
one hundred percent (100.0%) valuation allowance is appropriate at the present
time, therefore, the carrying value of the Company's deferred tax asset is zero
in amount, and is evaluated on a quarterly basis.

         C.       Results of Operations

Revenues are reported on the percentage of completion method of accounting using
job costs incurred to date to determine percentages of construction completion.
As the level of work installed fluctuates, job costs and earned revenues
fluctuate accordingly.

                  1.       Fiscal years ended April 30, 2003 and 2002

The Company's revenues for the year ended April 30, 2003 declined by $4,239,728
to $4,589,693, or 48%, as compared with revenues of $8,829,421 in the prior
fiscal year. The significant decline was primarily due to the completion of
certain long-term projects in the third quarter of fiscal 2003 and a steady
decline in demand for the Company's environmental services due to the overall
slowdown in the economy and strong competition in the market. The decline in
demand for the Company's asbestos abatement services, however, was significantly
less than the decline in demand for its other services. As a result, revenues
from asbestos abatement comprised substantially all of the revenues generated by

                                       18

<PAGE>

the Company in fiscal 2003. The decline was also due in part to the
restructuring of the Company's sales force in the first part of fiscal 2003 in
an effort to expand the Company's customer base and offer a broader array of
services focusing on indoor air quality. The Company, however, was ultimately
unable to expand its indoor air quality business or establish a successful sales
force.

The Company's cost of earned revenues for the fiscal year ended April 30, 2003
declined by $2,783,729 to $4,389,116, or 39% as compared to $7,172,845 in the
prior fiscal year. The significant decline in cost of earned revenues is
attributable primarily to lower amounts of services provided by our
environmental services operating unit.

The Company's gross margin for the fiscal year ended April 30, 2003 was 4.4% of
revenues, as compared with 18.8% in the prior fiscal year. The significant
decline in the gross margin in fiscal 2003 is primarily due to asbestos
abatement services comprising a larger portion of total revenues and a lack of
revenues from indoor air quality services. Historically, indoor air quality
services have yielded higher gross margins that asbestos abatement services,
primarily due to the fact that the asbestos abatement market is finite and lacks
a recurring services component. Moreover, the indoor air quality gross margin in
fiscal 2003 was lower than the historical norm because in the second quarter of
fiscal 2003 the Company expensed certain unrecoverable costs for jobs that did
not take place. The decline in gross margin in fiscal 2003 is also attributable
in part to a historically low gross margin from asbestos abatement services. The
gross margin for asbestos abatement in fiscal 2003 was lower than the historical
average gross margin for asbestos abatement because certain indirect expenses
did not decrease in proportion with the decrease in total revenues from asbestos
abatement. The Company did not experience any significant losses on jobs in
fiscal 2003.

The Company's general and administrative expenses for the fiscal year ended
April 30, 2003 increased to $2,279,603, from $2,000,747 in the prior fiscal
year. The increase was primarily due to write-offs of goodwill and fixed assets
and the reserve against loan advances totaling $510,799, despite the decreases
from lower salaries, consulting fees and related employee expenses as a result
of the change in management in October 2002 and the consolidation of the
Company's various operating subsidiaries into a single operating unit, which in
turn employed fewer personnel.

Interest expense declined to $102,889 in fiscal 2003, as compared with $107,213
in the prior fiscal year. The decline was primarily due to full repayment of
interest-bearing debt during the second and third quarters of fiscal 2003.

An income tax benefit of $121,968 was recorded for the fiscal year ended April
30, 2003, as compared with $31,977 in the prior fiscal year. The benefit in
fiscal 2003 was primarily due to a refund received by applying new five year
carry back procedures for use of net operating losses.

The Company recorded accrued dividends of $88,264 in the fiscal year ended April
30, 2003 payable to holders of the Preferred Stock. The Preferred Stock, which
was issued in June 2002, pays annual dividends of $0.20 per share in the form of
additional shares of Preferred Stock or in shares of Common Stock if a
sufficient number of shares of Preferred Stock is not available. In connection
with the Preferred Stock, a beneficial conversion preference of $512,500 was
recorded.

                                       19

<PAGE>

As a result of the foregoing, the Company incurred a net loss available to
common shareholders of $2,612,111, as compared with $352,838 in the prior fiscal
year.

In May 2003, the Company became inactive in order to conserve financial and
other resources until a new and more profitable business focus was identified.
The is no assurance that the Company will identify a new and more profitable
business focus, or that it will be able to successfully take advantage of one
that may present itself.

         D.       Liquidity and Capital Resources

The following table sets forth our working capital (deficiency) position at the
end of the fiscal years indicated:

                                                Year ended April 30,
                                             2003                 2002
                                             ----                 ----

        Current assets                   $  1,202,270         $  3,021,496
        Current liabilities                 2,604,356            2,796,708
                                           ----------           ----------

        Working capital (deficiency)     $ (1,402,086)        $    224,788

The Company's cash and cash equivalents at April 30, 2003 declined to $78,695,
or by 29%, as compared to $111,260 in the prior fiscal year. The decline is
primarily due to the payment of expenses while the Company wound down its
business operations.

Net cash used in operating activities in fiscal 2003 was $398,524, as compared
with $596,504 in the prior fiscal year. The net cash used during fiscal 2003 was
primarily due to the net loss for the period, and the costs incurred to
reposition the Company, which included the addition of new management and
consultants, exploration of strategic mergers/acquisitions and financing
alternatives, and the evaluation and development of a new corporate strategy. No
cash was used in or provided by investing activities during fiscal 2003, as
compared with $5,548 used in investing activities in the prior fiscal year. Net
cash provided by financing activities was $365,959 in fiscal 2003, as compared
with $645,143 in the prior fiscal year. The net cash provided in fiscal 2003 was
primarily derived from the June 2002 private placement of 512,500 shares of the
Company's Preferred Stock to accredited investors at $2.00 per share, and in
fiscal 2002 primarily from the bridge loan financing in the amount of $500,000.

On January 10, 2002, the Company secured bridge loan financing in the aggregate
sum of $500,000 from KSH Strategic Investment Fund I, LP and Cleveland Overseas,
Ltd. The Company received net proceeds of $475,000 from the bridge loan
financing. The bridge loan investors were issued secured promissory notes in the
aggregate principal amount of $500,000, which bore interest at a rate of 10% per
annum ("Bridge Notes"). These investors were also granted warrants to purchase a
total of 200,000 shares of Common Stock at an exercise price of $0.50 per share.

                                       20

<PAGE>

KSH Investment Group, Inc., a registered broker-dealer and an affiliate of KSH
Strategic Investment Fund I, LP, received $25,000 and was issued 75,000 shares
of Common Stock as a fee for arranging the financing. In June 2002, the Company
used a portion of the proceeds derived from the private placement of 512,500
shares of its Preferred Stock to repay the Bridge Note in the principal amount
of $400,000, and all accrued and payable interest on the Bridge Notes to date.
On October 10, 2002, the Company issued a secured convertible promissory note in
the principal amount of $100,000 ("Convertible Note") in full payment and
satisfaction of the remaining Bridge Note in the principal amount of $100,000.
The Convertible Note was secured by substantially all of the assets of the
Company, bore interest at a rate of 7% per annum and was convertible into shares
of Common Stock at a conversion price of $1.00 per share. The Company repaid the
Convertible Note in two installments of principal in the amount of $50,000, and
the accrued interest thereon, in December 2002 and March 2003.

In June 2002, the Company completed the initial closing of a private placement
of a minimum of 500,000 and a maximum of 1,000,000 shares of its 10% Series A
Convertible Preferred Stock ("Preferred Stock") to accredited investors at $2.00
per share. Five hundred twelve thousand five hundred shares of Preferred Stock
were issued, each of which is convertible into four shares of Common Stock at a
conversion price of $0.50 per share. As of the closing, it was determined that
the holders of the Preferred Stock received a common stock conversion preference
based on the excess of the Common Stock's then current market value of $0.75 per
share over the Preferred Stock's $0.50 per share conversion price. This
preference was assigned a value of $512,500 relative to the 2,050,000 underlying
shares of Common Stock into which the issued Preferred Stock may be converted.
The Company received net proceeds of $865,959 from the issuance of the 512,500
shares of Preferred Stock, a portion of which was used to retire $400,000 in
principal, and all accrued and payable interest to date, on the Bridge Notes.
KSH Investment Group, Inc. served as placement agent and received, among other
things, a cash commission equal to 7.5% of the aggregate purchase price of the
shares sold, a non-accountable expense allowance equal to 1.5% of the aggregate
purchase price of the shares sold, and warrants to purchase 402,500 shares of
Common Stock at an exercise price of $0.65 per share in connection with the
private placement. Warrants for 325,625 shares were issued in June 2002 and
warrants for the remaining 76,875 shares were issued in September 2002.
Dividends on the Preferred Stock at the rate of $0.20 per share per annum are
payable in kind, or in shares of Common Stock if a sufficient number of shares
of Preferred Stock is not available. Dividends shall accrue and be payable in
May of each year. As of April 30, 2003, the Company had accrued Preferred Stock
dividends of $88,264. The Preferred Stock is redeemable, at the option of the
Company, after the second anniversary of the closing. Consequently, the
Preferred Stock has been classified as equity.

Although the Company has successfully completed the initial closing of the
Preferred Stock offering, the Company believes it will not complete the second
half of the offering as the market for equity financing continues to diminish.
The Company has ceased efforts to complete the second half of the Preferred
Stock offering or obtain any other financing. As a result, the Company will
likely be required to issue to holders of the Preferred Stock, on a pro-rata
basis, shares of Preferred Stock in the aggregate amount of 5% of the total
amount sold, or 25,625 shares, because it did not file with the SEC a
registration statement within 60 days of the final closing of the Preferred
Stock offering as required under the registration rights agreements with
Preferred Stock holders as the initial closing will likely be deemed the final
closing.

                                       21

<PAGE>

At April 30, 2003, the Company had an accumulated deficit in stockholder's
equity of $4,193,199, negative working capital of $1,402,086 and incurred a net
loss available to common shareholders of $2,612,111 for the fiscal year then
ended. As a result of it becoming inactive, the Company recorded write-offs of
goodwill, inventory and fixed assets totaling $597,737. The recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent on the Company's ability to meet its financing requirements
on an as needed basis and identify and succeed in future operations. The Company
has not identified any new business focus, and if a new business focus were
identified, there is no assurance that the Company will be able to succeed in
such business.

In the past, the Company relied on shareholders loans for its capital needs, but
believes it can no longer rely on shareholder loans for its capital needs going
forward. In the past, the Company explored debt and equity markets in order to
satisfy its current and future capital requirements. Although the Company had
satisfied in part its capital needs through debt and equity markets in the past,
it was unable to secure sufficient financing to implement its merger/acquisition
growth strategy for its indoor air quality business in fiscal 2003. The Company
will no longer pursue its merger/acquisition growth strategy for its indoor air
quality business and is not currently exploring debt and equity markets for its
capital needs.

On April 1, 2002, the Company issued unsecured promissory notes ("Shareholder
Loans") totaling $1,032,501, in exchange for and in full satisfaction of all
outstanding balances due on the demand loans, management fees and consulting
fees payable to shareholders and affiliates of the Company. The Shareholder
Loans do not bear interest. Each Shareholder Loan requires repayment in
twenty-one (21) equal monthly payments. Repayment on a Shareholder Loan in the
principal amount of $10,263 was scheduled to begin in February 2003, however,
the lender agreed to defer the commencement date indefinitely. Repayment on the
Shareholder Loans in the aggregate principal amount of $1,022,238 was scheduled
to begin in May 2003. In May 2003, the Company made a $25,000 payment on account
of the $1,022,238 Shareholder Loans and the lenders agreed to defer the
commencement dates indefinitely. The lenders could, however, demand that
repayment begin on the Shareholder Loans at any time. Due to the repayment
demand option, the Shareholder Loans were reclassified to current.

NAC and/or NACE are co-defendants in lawsuits involving property damage and/or
personal injury claims arising in the ordinary course of business from job-site
accidents. Plaintiffs' claims in these lawsuits exceed NAC's and/or NACE's
applicable insurance coverages. At April 30, 2003, claims in excess of NAC's
and/or NACE's insurance coverages totaled approximately $11,800,000. Two cases
totaling $6,900,000 in claims were dismissed or settled within limits of
coverage during fiscal 2003. One case totaling $4,000,000 in claims settled
within limits of coverage in fiscal 2001 but was reported in fiscal 2003. One
case totaling $3,000,000 in claims was commenced against NAC in fiscal 2003. NAC
and/or NACE are being represented in these lawsuits by legal counsel engaged by
their insurers and, in most or all cases, have filed cross-claims and
third-party claims against other parties. Any judgment or settlement in excess
of insurance coverages, however, will require payment by NAC and/or NACE. The
Company believes, based on prior experience, that the amount of ultimate

                                       22

<PAGE>

liability of NAC and/or NACE with respect to these claims will not have a
material impact on the financial position, results of operations and cash flows
of the Company. There can be no assurance, however, that any judgment or
settlement of these claims will not exceed NAC's and/or NACE's insurance
coverages, which could have a material impact on the financial position, results
of operations and cash flows of the Company.

On January 15, 2003, NAC and its employee were charged with violation of the
Clean Air Act in a one-count federal indictment filed in the United States
District Court for the Southern District of New York. The indictment, which
relates to work performed in January 1998, alleges that NAC and the employee
caused asbestos material to be stripped from a building without adequately
wetting it, failed to lower the asbestos material to the floor without dropping
or otherwise damaging it, and did not keep asbestos material that had been
removed wet until it was collected and contained. The prosecutor subsequently
filed a three-count prosecutor's information that superceded the indictment and
charged NAC with two additional violations of the Clean Air Act.

On July 1, 2003, NAC pled guilty to the three-count prosecutor's information in
accordance with the terms of a negotiated plea agreement. The plea agreement and
plea were intended to conclude the proceedings commenced against NAC by the
filing of the federal indictment in January 2003. In connection with the plea,
NAC received a fine totaling $76,200, which is payable on or before January 2,
2004. A five year probationary period was also imposed on NAC, and in addition,
NAC agreed, as a condition of probation, to not engage in any activity relating
to (i) inspection, sampling or analysis for the presence of asbestos, (ii)
removal, transportation or disposal of asbestos, or (iii) demolition or
renovation of buildings. This prohibition does not extend to any construction
work limited exclusively to the installation or addition of building components
to a structure, not involving the removal of any building components or
construction debris. The fine imposed upon NAC has been accrued in the financial
statements as of April 30, 2003.

Except for the claims against NAC and/or NACE set forth above, the Company, or
its subsidiaries, was not involved in any other material legal proceedings in
fiscal 2003.

                                       23

<PAGE>


The following table provides a summary of the Company's loans payable and
commitments for operating leases at April 30, 2003:

<TABLE>
<CAPTION>
                                                                 Less than                           3 or More
                                              Total ($)          1 Year ($)         1-3 Years ($)    Years ($)
                                              ---------          ----------         -------------    ---------

<S>                                          <C>                 <C>                <C>              <C>
Notes Payable, Shareholders and
Affiliates (1)                                1,032,501           1,032,501                  --             --
Operating leases (2)                            888,345             216,110             404,170       $268,065
                                             ----------          ----------             -------        -------

         Total Contractual Obligations       $1,920,846          $1,248,611            $404,170       $268,065
                                             ==========          ==========            ========       ========
</TABLE>

-----------------------------------

     1.  Notes Payable, Shareholders and Affiliates:
         On April 1, 2002, the Company issued unsecured promissory notes
         ("Shareholder Loans") totaling $1,032,501, in exchange for and in full
         satisfaction of all outstanding balances due on the demand loans,
         management fees and consulting fees payable to shareholders and
         affiliates of the Company. The Shareholder Loans do not bear interest.
         Each Shareholder Loan requires repayment in twenty-one (21) equal
         monthly payments. Repayment on a Shareholder Loan in the principal
         amount of $10,263 was scheduled to begin in February 2003, however, the
         lender agreed to defer the commencement date indefinitely. Repayment on
         the Shareholder Loans in the aggregate principal amount of $1,022,238
         was scheduled to begin in May 2003. In May 2003, the Company made a
         $25,000 payment on account of the $1,022,238 Shareholder Loans and the
         lenders agreed to defer the commencement dates indefinitely. The
         lenders could, however, demand that repayment begin on the Shareholder
         Loans at any time. Due to the repayment demand option, the Shareholder
         Loans were reclassified to current.

     2.  Operating leases:
         In the past, the Company entered into operating leases for office space
         which expire through September 30, 2008.

         In fiscal 2003, the Company signed a lease for approximately 8,500
         square feet of warehouse space located in Rahway, New Jersey. The
         lease, which runs for a three-year term ending July 31, 2005, required
         two security deposits totaling $49,350. Rents due under the lease total
         $3,116.66 per month.

         In fiscal 2003, and in connection with the cessation of business
         operations, the Company renegotiated the terms of its sublease with PEC
         Realty Corp. to a month-to-month term and substantially reduced its
         executive and administrative offices and eliminated its warehouse space
         at no charge. Rents due under this new sublease arrangement total
         approximately $1,000 per month.

         E.       Off-Balance Sheet Arrangements

At April 30, 2003 and 2002, the Company did not have any relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. In addition, the Company does
not engage in trading activities involving non-exchange traded contracts. As
such, the Company is not exposed to any financing, liquidity, market, or credit
risk that could arise if the Company had engaged in such activities.

                                       24

<PAGE>

         F.       Basis of Presentation - Going Concern

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. However, as of April
30, 2003, the Company has an accumulated deficit in stockholders' equity of
$4,193,199 and has incurred a net loss available to common shareholders of
$2,612,111, as compared to an accumulated deficit in shareholders' equity of
$455,288 and a net loss available to common shareholders of $352,838 in the
prior fiscal year. These matters raise substantial doubt about the Company's
ability to continue as a going concern.

The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the Company be able
to continue in existence.

In May 2003, the Company ceased business operations and remains inactive while
it seeks a more profitable business focus.

Management believes that the Company has the ability to meet its financing
requirements for the next twelve months. However, the Company may require
additional financing during fiscal 2004, without which its ability to continue
as a going concern could be adversely affected. The Company is not currently
seeking any additional financing. However, if the Company requires additional
financing during fiscal 2004 and the markets for debt and equity financing
continue to diminish, the Company's ability to raise additional financing may be
adversely affected. There can be no assurance, however, that additional
financing will be available if and when the Company needs it, which is
dependent, in part, on the Company's ability to identify a new business focus
and develop and implement a plan to achieve the transition.

In order to provide additional time within which to identify a new business
focus, the Company ceased business operations in May 2003. As a result, the
Company has taken measures to conserve financial and other resources and has
scaled back substantially in personnel and related expenses, subleased its New
York City office and reduced its executive and administrative offices and
warehouse space. However, if the Company's planned cash flow projections for the
next twelve months are not met, the requisite level of financing is
unattainable, and the Company has not transitioned into a promising business
focus, the Company may not be able to continue as a going concern.

         G.       New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations."
SFAS No. 141 requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. Adoption of SFAS No. 141 did not have a material
impact on the Company's financial position, results of operations and cash
flows.

                                       25

<PAGE>

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which is effective for all fiscal years beginning after December 31,
2001. SFAS No. 142 requires, among other things, the discontinuance of goodwill
amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairment of goodwill. SFAS No. 142 also requires the Company to complete a
transitional goodwill impairment test six months from the date of adoption. The
transitional goodwill impairment test was conducted as of the end of the first
quarter of fiscal 2003 and indicated no impairment of goodwill at that time.
Ongoing, periodic testing is required under SFAS No. 142. As a result of this
periodic testing, continuing losses, inability to obtain adequate financing to
complete an indoor air quality merger/acquisition and sell the business, the
Company recorded an impairment charge of $416,594 for goodwill in fiscal 2003.
Goodwill amortization of $38,270 was expensed in fiscal 2002.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement addresses financial accounting
and reporting for the impairment of long-lived assets and assets to be disposed
of. This statement supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of"; however, it
retains the fundamental provisions of SFAS No. 121 for (a) recognition and
measurement of the impairment of long-lived assets to be held and used and (b)
measurement of long-lived assets to be disposed of by sale. SFAS No. 144 is
effective for the Company's first quarter of the year ending April 30, 2003. As
a result of the cease of business operations, the Company recorded a write-off
to their fixed assets of $45,875 during the fourth quarter of fiscal 2003.

The FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections," on April 30,
2002. SFAS No. 145 rescinds Statement No. 4, which required all gains and losses
from extinguishments of debt to be aggregated and, if material, classified as an
extraordinary item, net of related income tax effect. Upon adoption of SFAS No.
145, companies are required to apply the criteria in APB Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" in determining the classification of gains and losses
resulting from the extinguishments of debt. SFAS No. 145 is effective for fiscal
years beginning after May 15, 2002. The Company is in the process of evaluating
the impact of adopting this pronouncement on its financial position, results of
operations and cash flows.

On July 30, 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. SFAS No. 146 is to
be applied prospectively to exit or disposal activities initiated after December
31, 2002. The adoption of this requirement did not have a material impact on the
Company's financial position, results of operations and cash flows.

                                       26

<PAGE>

In November 2002, FASB Interpretation 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others" ("FIN 45"), was issued. FIN 45 requires a guarantor entity, at the
inception of a guarantee covered by the measurement provisions of the
interpretation, to record a liability for the fair value of the obligation
undertaken in issuing the guarantee. The Company previously did not record a
liability when guaranteeing obligations unless it became probable that the
Company would have to perform under the guarantee. FIN 45 applies prospectively
to guarantees the Company issues or modifies subsequent to December 31, 2002,
but has certain disclosure requirements effective for interim and annual periods
ending after December 15, 2002. The Company does not anticipate that FIN 45 will
have a material impact on its financial position, results of operations and cash
flows.

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure: an amendment of FASB Statement 123,"
to provide alternative transition methods for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in annual financial statements about the method of
accounting for stock-based employee compensation and the pro forma effect on
reported results of applying the fair value based method for entities that use
the intrinsic value method of accounting. The pro forma effect disclosures are
also required to be prominently disclosed in interim period financial
statements. This statement is effective for financial statements for fiscal
years ending after December 15, 2002 and is effective for financial reports
containing condensed financial statements for interim periods beginning after
December 15, 2002, with earlier application permitted. The Company has elected
to continue accounting for stock-based compensation using the intrinsic value
method. However, the Company has adopted the new disclosure requirements
specified under SFAS No. 148.

In January 2003, the FASB issued FASB Interpretation 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin 51, Consolidated Financial Statements, for
certain entities that do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties or in which equity investors do not have the characteristics of a
controlling financial interest ("variable interest entities"). Variable interest
entities within the scope of FIN 46 will be required to be consolidated by their
primary beneficiary. The primary beneficiary of a variable interest entity is
determined to be the party that absorbs a majority of the entity's expected
losses, receives a majority of its expected returns, or both. FIN 46 applies
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after June
15, 2003, to variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. The Company is currently
evaluating the impact, if any, of FIN 46 on its financial position, results of
operations and cash flows.

                                       27

<PAGE>

         H.       Quantitative and Qualitative Disclosures About Financial
                  Derivative and Other Market Risks

The Company employs no "hedging" strategies at the present time, and all of our
cash deposits are denominated in US dollars.










                                       28

<PAGE>


ITEM 7.           FINANCIAL STATEMENTS





                                 C O N T E N T S


                                                                     Page
                                                                     ----


Report of Independent Certified Public Accountants                    F-2


Financial Statements

      Consolidated Balance Sheet                                      F-3

      Consolidated Statements of Operations                           F-4

      Consolidated Statement of Stockholders' Equity (Deficit)        F-5

      Consolidated Statements of Cash Flows                           F-6

      Notes to Consolidated Financial Statements                    F-7 to F-25


















                                       29


                                      F-1

<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors
    NESCO Industries, Inc.


We have audited the accompanying consolidated balance sheet of NESCO Industries,
Inc. as of April 30, 2003, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for each of the two
years in the period ended April 30, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audit.

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 financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of NESCO Industries,
Inc. as of April 30, 2003, and the consolidated results of their operations and
their consolidated cash flows for each of the two years in the period ended
April 30, 2003 in conformity with accounting principles generally accepted in
the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
as of April 30, 2003, the Company has an accumulated deficit in stockholders' of
$4,193,199, negative working capital of $1,402,086, and has incurred net losses
available to common shareholders of $2,612,111 and $352,838 for the years ended
April 30, 2003 and 2002, respectively. These factors, among others, as discussed
in Note A to the financial statements, raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note A. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

As disclosed in Note F, the Company adopted SFAS No. 142, "Goodwill and Other
Intangible Assets," on May 1, 2002.


/s/ GRANT THORNTON LLP
Certified Public Accountants

New York, New York
July 31, 2003



                                      F-2

<PAGE>


                             NESCO Industries, Inc.
                           CONSOLIDATED BALANCE SHEET
                                 April 30, 2003


                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                                                                     <C>
CURRENT ASSETS
    Cash and cash equivalents                                                                               $ 78,695
    Accounts receivable, net of allowance                                                                    990,901
    Prepaid expenses                                                                                         112,674
    Inventory                                                                                                 20,000
                                                                                                         -----------
           Total current assets                                                                            1,202,270

FIXED ASSETS, NET                                                                                             35,002

OTHER ASSETS                                                                                                  51,259
                                                                                                         -----------
                                                                                                         $ 1,288,531
                                                                                                         ===========


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
    Accounts payable and accrued expenses                                                               $  1,498,269
    Loans payable-shareholders-current                                                                     1,032,501
    Billings in excess of costs and estimated earnings on
       uncompleted contracts                                                                                  73,586
                                                                                                        ------------
          Total current liabilities                                                                        2,604,356

DEFERRED SUBLEASE INCOME                                                                                     210,600
                                                                                                        ------------
                                                                                                           2,814,956
                                                                                                        ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
    10% convertible preferred stock, $0.001 par value;
           1,000,000 shares authorized; 512,500 shares issued and outstanding                              1,113,264
    Common stock, $0.001 par value; 25,000,000 shares authorized;
       6,769,963 issued and outstanding shares                                                                 6,770
    Capital in excess of par value                                                                         1,546,740
    Accumulated deficit                                                                                   (4,193,199)
                                                                                                        ------------
                                                                                                          (1,526,425)
                                                                                                        ------------
                                                                                                        $  1,288,531
                                                                                                        ============
</TABLE>

The accompanying notes are an integral part of this statement.

                                      F-3

<PAGE>


                             NESCO Industries, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                              Year ended April 30,



<TABLE>
<CAPTION>
                                                                                            2003                    2002
                                                                                        ------------             -----------

<S>                                                                                     <C>                       <C>
Earned revenues                                                                         $  4,589,693              $8,829,421
Cost of earned revenues                                                                    4,389,116               7,172,845
                                                                                        ------------             -----------

         Gross profit                                                                        200,577               1,656,576

General and administrative expenses                                                        2,279,603               2,000,747
                                                                                        ------------             -----------

         Operating loss                                                                   (2,079,026)               (344,171)

Other income (expense)
    Sublease income                                                                           46,800                  46,800
    Interest expense, net                                                                   (102,889)               (107,213)
    Miscellaneous income                                                                       1,800                  19,769
                                                                                        ------------             -----------

         Loss before income taxes                                                         (2,133,315)               (384,815)

Income tax benefit                                                                          (121,968)                (31,977)
                                                                                        ------------             -----------

         NET LOSS                                                                       $ (2,011,347)            $  (352,838)
                                                                                        ------------             -----------

Convertible preferred stock dividends                                                        (88,264)
Value related to beneficial conversion feature of
         Convertible preferred stock                                                        (512,500)
                                                                                        ------------             -----------

Net loss available to common shareholders                                               $ (2,612,111)            $  (352,838)
                                                                                        ============             ===========
Basic and diluted loss per share                                                              $(0.39)                 $(0.05)
                                                                                              ======                  ======
Weighted average common shares outstanding                                                 6,754,474               6,694,963
                                                                                           =========               =========
</TABLE>




The accompanying notes are an integral part of these statements

                                      F-4

<PAGE>


                             NESCO Industries, Inc.
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                       Years ended April 30, 2003 and 2002





<TABLE>
<CAPTION>
                                                              Preferred          Stock         Common stock              Capital in
                                                              ---------          -----         ------------               excess of
                                                                Shares          Amount       Shares       Amount          par value
                                                                ------          ------       ------       ------          ---------

<S>                                                           <C>            <C>             <C>          <C>           <C>
Balance at April 30, 2001                                                                    6,694,963      $6,695      $   983,105

Warrants issued in connection with bridge financing                                                                         136,000

Net loss for the year ended April 30, 2002
                                                                                             ---------       -----        ---------

Balance at April 30, 2002                                                                    6,694,963       6,695        1,119,105
                                                                                             ---------       -----        ---------

Convertible preferred stock issuance                            512,500      1,025,000                                     (159,041)

Convertible preferred stock dividends                                           88,264

Convertible preferred stock beneficial conversion feature                                                                   512,500

Common stock issued in connection with bridge financing                                         75,000          75           74,176

Net loss for the year ended April 30, 2003
                                                                -------      ----------      ---------      ------       ----------

Balance at April 30, 2003                                       512,500     $1,113,264       6,769,963      $6,770       $1,546,740
                                                                =======      ==========      =========      ======       ==========
</TABLE>



The accompanying notes are an integral part of this statement.


<PAGE>


<TABLE>
<CAPTION>

                                                                     Accumulated
                                                                       deficit                 Total
                                                                       -------                 -----

<S>                                                                   <C>                    <C>
Balance at April 30, 2001                                             $(1,228,250)           $(238,450)

Warrants issued in connection with bridge financing                                            136,000

Net loss for the year ended April 30, 2002                               (352,838)            (352,838)
                                                                       ----------             --------

Balance at April 30, 2002                                              (1,581,088)            (455,288)
                                                                       ----------             --------
Convertible preferred stock issuance
                                                                                               865,959
Convertible preferred stock dividends
                                                                          (88,264)
Convertible preferred stock beneficial conversion feature
                                                                         (512,500)
Common stock issued in connection with bridge financing
                                                                                                74,251
Net loss for the year ended April 30, 2003
                                                                       (2,011,347)          (2,011,347)
                                                                      -----------          -----------
Balance at April 30, 2003
                                                                      $(4,193,199)         $(1,526,425)
                                                                      ===========          ===========
</TABLE>


The accompanying notes are an integral part of this statement.



                                      F-5


<PAGE>


                             NESCO Industries, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              Year ended April 30,

<TABLE>
<CAPTION>
                                                                                            2003               2002
                                                                                         -----------         ---------

<S>                                                                                      <C>                 <C>
Cash flows from operating activities
   Net loss                                                                              $(2,011,347)        $(352,838)
   Adjustments to reconcile net loss to net cash provided by (used in)
     operating activities
       Write off of goodwill                                                                 416,954
       Write off of Inventory                                                                134,908
       Write off of fixed assets                                                              45,875
       Reserve against advances                                                               47,970
       Amortization of discount on bridge loan                                                52,726            83,274
       Common stock issued for bridge financing                                               74,252
       Amortization of deferred sublease income                                              (46,800)          (46,800)
       Depreciation and amortization                                                          54,400           156,923
       Bad debt expense                                                                      (93,527)           54,255
       Changes in operating assets and liabilities
         Accounts receivable                                                               1,530,083            16,188
         Prepaid expenses and taxes                                                           (7,587)          (83,660)
         Inventory                                                                                84           (28,663)
         Unbilled costs and estimated earnings in excess of
           billings on uncompleted contracts                                                 222,700            95,547
         Other assets                                                                        (51,898)           82,305
         Accounts payable and accrued expenses and interest payable                         (443,217)         (548,427)
         Billings in excess of costs and estimated earnings on
           uncompleted contracts                                                            (324,100)          (24,608)
                                                                                         -----------         ---------

         Net cash used in operating activities                                              (398,524)         (596,504)
                                                                                         -----------         ---------

Cash flows from investing activities
   Purchase of fixed assets                                                                                     (5,548)
                                                                                         -----------         ---------

Cash flows from financing activities
   Payment of equipment notes                                                                                   (1,577)
   (Repayment) Proceeds from bridge loan                                                    (500,000)          500,000
   Payment of financing costs                                                                                  (25,000)
   Net proceeds (payments) from shareholder loans                                                              171,720
   Net proceeds of convertible preferred stock offering                                      865,959
                                                                                         -----------         ---------

         Net cash provided by financing activities                                           365,959           645,143
                                                                                         -----------         ---------

         NET INCREASE (DECREASE) IN CASH AND CASH
             EQUIVALENTS                                                                     (32,565)           43,091

Cash and cash equivalents at beginning of year                                               111,260            68,169
                                                                                         -----------         ---------

Cash and cash equivalents at end of year                                                 $    78,695         $ 111,260
                                                                                         ===========         =========
</TABLE>


The accompanying notes are an integral part of these statements.

                                      F-6

<PAGE>


                             NESCO Industries, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             April 30, 2003 and 2002



NOTE A -  ORGANIZATION, BASIS OF PRESENTATION, OPERATIONS AND SIGNIFICANT
          ACCOUNTING POLICIES

Organization

     NESCO Industries, Inc. (hereinafter sometimes referred to as "we" or the
     "Company") is a provider of asbestos abatement and indoor air quality
     testing, monitoring and remediation services. In the fiscal year ended
     April 30, 2003, the Company consolidated the operations of its various
     subsidiaries, through which it provides services, into a single
     environmental services operating unit organized under the banner of its
     wholly-owned subsidiary National Abatement Corporation. Prior to
     consolidation, the Company provided asbestos abatement, indoor air quality
     and a variety of other environmental services through its wholly-owned
     subsidiaries, National Abatement Corporation ("NAC"), NAC/Indoor Air
     Professionals, Inc. ("IAP") and NAC Environmental Services, Inc. ("NACE").
     In May 2003, the Company ceased business operations and became inactive.

     The Company was incorporated in Nevada in March 1993, and was inactive for
     a number of years until it acquired NAC and NACE in March 1998. As a result
     of this acquisition, which was the result of arms length negotiations
     between previously non-affiliated parties, the former shareholders of NAC
     and NACE acquired 5,000,000 shares of the Company's common stock, or 80% of
     the total outstanding, immediately following the acquisition. The former
     shareholders of NAC were the same as the former shareholders of NACE. For
     accounting purposes, NAC was treated as the acquiring corporation. Thus,
     the historical financial statements of NAC prior to this acquisition date
     are deemed to be the historical financial statements of the Company.

     NAC was incorporated in May 1988 to provide asbestos abatement services
     primarily in the greater metropolitan New York City area, and today is a
     full service asbestos and lead abatement contractor and indoor air quality
     service provider.

     NACE was incorporated in May 1993 and, in the past, provided environmental
     services such as subsurface soils/groundwater remediation, Phase I and
     Phase II environmental site assessments, underground storage tank
     management and remediation.

     In June 1999, the Company incorporated IAP to provide indoor air quality
     testing, monitoring and remediation services, primarily in New York, New
     Jersey and Connecticut. Prior to the organization of IAP, the Company
     provided limited indoor air quality services through NACE.

     In the first part of fiscal 2003, the Company began to implement strategies
     for achieving its operational goals which included changes in the way the
     business was managed and operated. The Company consolidated the operations
     and activities of its various subsidiaries into a single operating unit,
     under the banner of NAC, to cut costs and improve efficiency. As a result,
     the Company believes that it now operates in one business segment.

     In the first part of fiscal 2003, the Company focused on increasing
     revenues and margins by expanding its indoor air quality services to
     businesses and organizations primarily in the tri-state metropolitan New
     York City area through strategic mergers, acquisitions or relationships
     with leaders in the indoor air quality business. The Company engaged in
     confidential negotiations with certain merger and acquisition targets, but
     was unable to complete any merger or acquisition due primarily to
     inadequate financing. The Company also attempted to expand its indoor air
     quality services through promotions and marketing, but achieved limited
     success. The Company also phased out the business conducted by NACE in
     order to focus on indoor air quality services. In October 2002, the
     Company's then chief executive officer and then chief financial officer
     resigned.


                                      F-7

<PAGE>


                             NESCO Industries, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             April 30, 2003 and 2002


NOTE A (continued)

     Due primarily to the inability of the Company to implement its growth
     strategy for the indoor air quality services, the change in management in
     October 2002, and the trend of lower revenues and margins from the
     environmental services operating unit, the Company elected in the third
     quarter of fiscal 2003 to seek a new business focus beyond the
     environmental services industry. The Company began to evaluate alternative
     business focuses and engage in negotiations with potential buyers of the
     environmental services operating unit. The Company, however, was unable to
     find a new business focus or sell the environmental services operating
     unit.

     In the forth quarter of fiscal 2003, the Company elected to inactivate the
     environmental services operating unit, and authorized NAC to cease business
     operations, in order to conserve financial and other resources until a new
     business focus was identified. The Company ceased business operations in
     May 2003. The Company has yet to identify a new business focus and remains
     inactive. As a result of ceasing business operations, the Company wrote-off
     goodwill, fixed assets and inventory totaling $597,737.

     The Company's fiscal year ends on April 30 and, therefore, references to
     fiscal 2002 and fiscal 2003 refer to the fiscal years ended April 30, 2002
     and April 30, 2003, respectively.

Basis of Presentation - Going Concern

     The accompanying financial statements have been prepared in conformity with
     accounting principles generally accepted in the United States of America,
     which contemplate continuation of the Company as a going concern. However,
     as of April 30, 2003, the Company has an accumulated deficit in
     stockholders' equity of $4,193,199 and has incurred net losses available to
     common shareholders of $2,612,111 and $352,838 for the years ended April
     30, 2003 and 2002, respectively. In addition, the Company is a party to
     various lawsuits, as more fully described in Note N, and has $1,032,501 in
     shareholder loans that could become immediately due and payable, as more
     fully described in Note H. These matters raise substantial doubt about the
     Company's ability to continue as a going concern.

     The financial statements do not include any adjustments relating to the
     recoverability and classification of recorded asset amounts or amounts and
     classification of liabilities that might be necessary should the Company be
     unable to continue in existence.

     In May 2003, the Company ceased business operations and remains inactive
     while it seeks a more profitable business focus.

     Management believes that the Company has the ability to meet its financing
     requirements for the next twelve months. However, the Company may require
     additional financing during fiscal 2004, without which its ability to
     continue as a going concern could be adversely affected. The Company is not
     currently seeking any additional financing. However, if the Company
     requires additional financing during fiscal 2004 and the markets for debt
     and equity financing continue to diminish, the Company's ability to raise
     additional financing may be adversely affected. There can be no assurance,
     however, that additional financing will be available if and when the
     Company needs it, which is dependent, in part, on the Company's ability to
     identify a new business focus and develop and implement a plan to achieve
     the transition.

     In order to provide additional time within which to identify a new business
     focus, the Company ceased business operations in May 2003. As a result, the
     Company has taken measures to conserve financial and other resources and
     has scaled back substantially in personnel and related expenses, subleased
     its New York City office and reduced its executive and administrative
     offices and warehouse space. However, if the Company's planned cash flow
     projections for the next twelve months are not met, the requisite level of
     financing is unattainable, and the Company has not transitioned into a
     promising business focus, the Company may not be able to continue as a
     going concern.

                                      F-8

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002


NOTE A (continued)

Principles of Consolidation

     The accompanying financial statements include the accounts of the Company
     and its wholly-owned subsidiaries on a consolidated basis. All significant
     intercompany accounts and transactions have been eliminated.

Use of Estimates

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect reported amounts
     of assets and liabilities, disclosure of contingent assets and liabilities
     at the date of the financial statements, and revenues and expenses during
     the reporting period. In these financial statements, assets, liabilities,
     and earnings from contracts involve extensive reliance on management's
     estimates. Actual results could differ from those estimates.

Revenue and Cost Recognition

     Earned revenues are recorded using the percentage-of-completion method.
     Under this method, earned revenues are determined by reference to the
     Company's engineering estimates, contract expenditures incurred, and work
     performed. The calculation of earned revenue and the effect on several
     asset and liability amounts is based on the common industry standard
     revenue determination formula of actual costs-to-date compared to total
     estimated job costs. Due to uncertainties inherent in the estimation
     process, and uncertainties relating to future performance as the contracts
     are completed, it is at least reasonably possible that estimated job costs,
     in total or on individual contracts, will be revised. When a loss is
     anticipated, the entire amount of the estimated loss is provided for in the
     period.

     The asset "unbilled costs and estimated earnings in excess of billings on
     uncompleted contracts" represents revenues recognized in excess of amounts
     billed. The liability "billings in excess of costs and estimated earnings
     on uncompleted contracts" represents billings in excess of revenues
     recognized.

Cash and Cash Equivalents

     The Company classifies highly liquid debt instruments, purchased with a
     maturity of three months or less, as cash equivalents.

Fixed Assets and Depreciation

     Depreciation is computed principally using accelerated methods over the
     estimated useful lives of the assets. Expenditures for maintenance,
     repairs, and minor renewals are charged to operations. Major renewals and
     betterments are capitalized.

Income Taxes

     Provisions for income taxes are based on taxes payable or refundable for
     the current year and deferred taxes on temporary differences between the
     tax bases of assets and liabilities and their reported amounts in the
     financial statements. Deferred tax assets and liabilities are included in
     the financial statements at enacted income tax rates expected to apply to
     taxable income in the years when such temporary differences and net
     operating losses are expected to be recovered as prescribed in Statement of
     Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
     Taxes." As changes in tax laws or rates are enacted, deferred tax assets
     and liabilities are adjusted through the provision for income taxes.

     An allowance for bad debts is provided for financial statement purposes and
     the direct write-off method is used for tax reporting. In accordance with
     income tax regulations, NAC, IAP and NACE are required to report income
     from construction contracts using the percentage-of-completion method.

                                      F-9

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE A (continued)

Segment Information

     Segment information is presented in accordance with SFAS No. 131,
     "Disclosures About Segments of an Enterprise and Related Information." This
     standard is based on a management approach, which requires segmentation
     based upon the Company's internal organization that is used by it for
     making operating decisions and assessing performance as the source of its
     reportable operating segments. SFAS No. 131 also requires disclosures about
     products and services, geographic areas and major customers.

Reclassifications

     Certain prior period amounts have been reclassified to conform to the
     current period presentation.

Stock Based Compensation

     The Company has one effective stock-based employee compensation plan and
     one plan that failed to become effective in fiscal 2003, which are
     described more fully in Note J. The Company applies APB Opinion 25,
     "Accounting for Stock Issued to Employees", and related Interpretations in
     accounting for its effective plan. The following table illustrates the
     effect on net income and earnings per share if the Company had applied the
     fair value recognition provisions of FASB Statement 123, "Accounting for
     Stock-Based Compensation", using the assumptions described in Note J, to
     its effective stock-based employee compensation plan.

<TABLE>
<CAPTION>
                                                                                      2003                      2002
                                                                                      ----                      ----

<S>                                                                               <C>                        <C>
     Net loss available to common shareholders, as reported                       $ (2,612,111)              $ (352,838)


     Deduct:  Total stock-based employee compensation expense
     determined under fair value based method for awards granted,
     modified, or settled, net of related tax effects                                   23,101                  299,500
                                                                                  ------------               ----------

     Proforma net loss available to common shareholders                           $ (2,635,212)              $ (652,338)
                                                                                  ============               ==========

     Basis and diluted loss per share, as reported                                     $ (0.39)                 $ (0.05)
                                                                                       =======                  =======

     Basis and diluted loss per share, proforma                                        $ (0.39)                 $ (0.10)
                                                                                       =======                  =======
</TABLE>







                                      F-10

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE A (continued)

Loss Per Share

     Basic loss per share excludes dilution and is calculated by dividing the
     loss available to common stockholders by the weighted average number of
     common shares outstanding for the period. Diluted loss per share reflects
     the potential dilution that could occur if securities or other contracts to
     issue common stock were exercised or converted into common stock and
     resulted in the issuance of common stock. As a result of the Company's net
     loss, diluted net loss per share was the same as basic net loss per share
     for the years ended April 30, 2003 and 2002, since the effect of any
     potentially dilutive securities would be antidilutive. Options and warrants
     which were excluded from the calculation of diluted loss per share totaled
     3,620,000 with a weighted average exercise price of $0.61 as of April 30,
     2003 and 3,170,000 with a weighted average exercise price of $0.63 as of
     April 30, 2002.

Recent Accounting Pronouncements

     In December 2002, the Financial Accounting Standards Board ("FASB") issued
     Statement No. 148, "Accounting for Stock-Based Compensation -- Transition
     and Disclosure: an amendment of FASB Statement 123," to provide alternative
     transition methods for a voluntary change to the fair value based method of
     accounting for stock-based employee compensation. In addition, SFAS No. 148
     amends the disclosure requirements of SFAS No. 123 to require prominent
     disclosures in annual financial statements about the method of accounting
     for stock-based employee compensation and the pro forma effect on reported
     results of applying the fair value based method for entities that use the
     intrinsic value method of accounting. The pro forma effect disclosures are
     also required to be prominently disclosed in interim period financial
     statements. This statement is effective for financial statements for fiscal
     years ending after December 15, 2002 and is effective for financial reports
     containing condensed financial statements for interim periods beginning
     after December 15, 2002, with earlier application permitted. The Company
     has elected to continue accounting for stock-based compensation using the
     intrinsic value method. However, the Company has adopted the new disclosure
     requirements specified under SFAS No. 148.

     In July 2001, the FASB issued Statement of Financial Accounting Standards
     ("SFAS") No. 141, "Business Combinations." SFAS No. 141 requires the
     purchase method of accounting for business combinations initiated after
     June 30, 2001 and eliminates the pooling-of-interests method. Adoption of
     SFAS No. 141 did not have a material impact on the Company's financial
     position, results of operations and cash flows.

                                      F-11

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE A (continued)

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
     Assets," which is effective for all fiscal years beginning after December
     31, 2001. SFAS No. 142 requires, among other things, the discontinuance of
     goodwill amortization. In addition, the standard includes provisions for
     the reclassification of certain existing recognized intangibles as
     goodwill, reassessment of the useful lives of existing recognized
     intangibles, reclassification of certain intangibles out of previously
     reported goodwill and the identification of reporting units for purposes of
     assessing potential future impairment of goodwill. SFAS No. 142 also
     requires the Company to complete a transitional goodwill impairment test
     six months from the date of adoption. The transitional goodwill impairment
     test was conducted as of the end of the first quarter of fiscal 2003 and
     indicated no impairment of goodwill at that time. Ongoing, periodic testing
     is required under SFAS No. 142. As a result of this periodic testing,
     continuing losses, inability to obtain adequate financing to complete an
     indoor air quality merger/acquisition and sell the business, the Company
     recorded an impairment charge of $416,594 for goodwill in fiscal 2003.
     Goodwill amortization of $38,270 was expensed in fiscal 2002 (see Note F).

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
     Impairment or Disposal of Long-Lived Assets." This statement addresses
     financial accounting and reporting for the impairment of long-lived assets
     and assets to be disposed of. This statement supersedes SFAS No. 121,
     "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to be Disposed of"; however, it retains the fundamental provisions
     of SFAS No. 121 for (a) recognition and measurement of the impairment of
     long-lived assets to be held and used and (b) measurement of long-lived
     assets to be disposed of by sale. SFAS No. 144 is effective for the
     Company's first quarter of the year ending April 30, 2003. As a result of
     the cease of business operations, the Company recorded a write-off to their
     fixed assets of $45,875 during the fourth quarter of fiscal 2003.

     The FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and
     64, Amendment of FASB Statement No. 13, and Technical Corrections," on
     April 30, 2002. SFAS No. 145 rescinds Statement No. 4, which required all
     gains and losses from extinguishments of debt to be aggregated and, if
     material, classified as an extraordinary item, net of related income tax
     effect. Upon adoption of SFAS No. 145, companies are required to apply the
     criteria in APB Opinion No. 30, "Reporting the Results of Operations -
     Reporting the Effects of Disposal of a Segment of a Business, and
     Extraordinary, Unusual and Infrequently Occurring Events and Transactions"
     in determining the classification of gains and losses resulting from the
     extinguishments of debt. SFAS No. 145 is effective for fiscal years
     beginning after May 15, 2002. The Company is in the process of evaluating
     the impact of adopting this pronouncement on its financial position,
     results of operations and cash flows.



                                      F-12

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE A (continued)

     On July 30, 2002, the FASB issued SFAS No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities." The standard requires
     companies to recognize costs associated with exit or disposal activities
     when they are incurred rather than at the date of a commitment to an exit
     or disposal plan. Examples of costs covered by the standard include lease
     termination costs and certain employee severance costs that are associated
     with a restructuring, discontinued operation, plant closing, or other exit
     or disposal activity. SFAS No. 146 is to be applied prospectively to exit
     or disposal activities initiated after December 31, 2002. The adoption of
     this requirement did not have a material impact on the Company's financial
     position, results of operations and cash flows.

     In November 2002, FASB Interpretation 45, "Guarantor's Accounting and
     Disclosure Requirements for Guarantees, Including Indirect Guarantees of
     Indebtedness of Others" ("FIN 45"), was issued. FIN 45 requires a guarantor
     entity, at the inception of a guarantee covered by the measurement
     provisions of the interpretation, to record a liability for the fair value
     of the obligation undertaken in issuing the guarantee. The Company
     previously did not record a liability when guaranteeing obligations unless
     it became probable that the Company would have to perform under the
     guarantee. FIN 45 applies prospectively to guarantees the Company issues or
     modifies subsequent to December 31, 2002, but has certain disclosure
     requirements effective for interim and annual periods ending after December
     15, 2002. The Company does not anticipate that FIN 45 will have a material
     impact on its financial position, results of operations and cash flows.

     In January 2003, the FASB issued FASB Interpretation 46 ("FIN 46"),
     "Consolidation of Variable Interest Entities." FIN 46 clarifies the
     application of Accounting Research Bulletin 51, Consolidated Financial
     Statements, for certain entities that do not have sufficient equity at risk
     for the entity to finance its activities without additional subordinated
     financial support from other parties or in which equity investors do not
     have the characteristics of a controlling financial interest ("variable
     interest entities"). Variable interest entities within the scope of FIN 46
     will be required to be consolidated by their primary beneficiary. The
     primary beneficiary of a variable interest entity is determined to be the
     party that absorbs a majority of the entity's expected losses, receives a
     majority of its expected returns, or both. FIN 46 applies immediately to
     variable interest entities created after January 31, 2003, and to variable
     interest entities in which an enterprise obtains an interest after that
     date. It applies in the first fiscal year or interim period beginning after
     June 15, 2003, to variable interest entities in which an enterprise holds a
     variable interest that it acquired before February 1, 2003. The Company is
     currently evaluating the impact, if any, of FIN 46 on its financial
     position, results of operations and cash flows.


NOTE B - ACCOUNTS RECEIVABLE

     The Company submits requisitions (invoices) to customers based on work
     performed. Pursuant to contract provisions, these requisitions may include
     amounts, referred to as retainage, which are retained until completion and
     acceptance of the contract. Included in accounts receivable are amounts
     retained by customers at April 30, 2003 of $7,294. The allowance for
     uncollectible accounts at April 30, 2003 was $234,722.

     The Company's principal accounts receivable are due from owners of
     commercial real estate and other contractors.


                                      F-13

<PAGE>


                             NESCO Industries, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             April 30, 2003 and 2002


NOTE C - BILLING IN EXCESS OF COST AND ESTIMATED EARNINGS
                   ON UNCOMPLETED CONTRACTS

     An analysis of job costs and billings, on a per job basis, reflects the
following:

<TABLE>
<CAPTION>
                                                                                          2003
                                                                                        --------

<S>                                                                                     <C>                  <C>
       Estimated earnings on uncompleted contracts                                      $379,448

       Less billings to date                                                             453,034
                                                                                        --------

                                                                                        $(73,586)
                                                                                        ========

     The aforementioned balances are included in the accompanying balance sheet
     for the year ended April 30, 2003 under the following captions:

      Unbilled costs and estimated earnings in excess
          of billings on uncompleted contracts                                          $    -0-
      Less billings in excess of costs and estimated
          earnings on uncompleted contracts                                               73,586
                                                                                        --------

                                                                                        $ 73,586
                                                                                        --------

NOTE D - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

                                                                                             Year ended April 30,
                                                                                        -------------------------------
                                                                                          2003                  2002
                                                                                        --------             ----------
      Cash paid during the periods for:
          Interest                                                                      $ 27,739             $        -
          Taxes                                                                            3,038                      -

      Non cash investing and financing items:
          Beneficial conversion feature of convertible preferred stock                  $512,500
          Issuance of Warrants:                                                                              $  136,000
          On January 10, 2002, the Company granted warrants to purchase
          200,000 shares of the Company's common stock at an exercise price
          of $0.50 per share.  The estimated value of these warrants, which
          totals $136,000, was recorded as a loan discount and is being
          amortized over the loan term of six months.
</TABLE>

                                      F-14

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE E - FIXED ASSETS

     As a result of the cease of business operations, the Company decided to
     write-off approximately $46,000 of its fixed assets during the year ended
     April 30, 2003. This amount is included in general and administrative
     expenses in the statement of operations.

     The major classes of fixed assets and the range of their useful lives are
     as follows:

<TABLE>
<CAPTION>
                                                                                                            Estimated
                                                                                      April 30,            useful life
                                                                                        2002                 (years)
                                                                                       -------             -----------

<S>                                                                                     <C>                      <C>
      Vehicles                                                                          $ 8,001                  5
      Furniture and fixtures                                                             27,001                 10
                                                                                       --------


                                                                                       $ 35,002
                                                                                       ========
</TABLE>

NOTE F -GOODWILL AND OTHER INTANGIBLE ASSETS

     In contrast to accounting standards in effect during fiscal 2002, SFAS 142,
     which became effective for fiscal years beginning after December 15, 2001,
     provides that goodwill, as well as identifiable intangible assets with
     indefinite lives, should not be amortized. The following table reflects
     adjustments to net income available to common shareholders during fiscal
     2002 as if SFAS 142 had been applied:

<TABLE>
<CAPTION>
                                                                                           2003                     2002
                                                                                           ----                     ----

<S>                                                                                   <C>                       <C>
         Net loss available to common shareholders, as reported                       $ (2,612,111)             $ (352,838)
           Add back:  Goodwill amortization                                                      -                  38,270
                                                                                      ------------              ----------

         Net loss available to common shareholders, as adjusted                       $ (2,612,111)             $ (314,568)
                                                                                      ============              ==========

         Basis and diluted loss per share, as reported                                     $ (0.39)                $ (0.05)
                                                                                           =======                 =======

         Basis and diluted loss per share, proforma                                        $ (0.39)                $ (0.05)
                                                                                           =======                 =======
</TABLE>


     In assessing the recoverability of the Company's goodwill, the Company made
     assumptions regarding estimated future operating results, cash flows and
     other factors to determine the fair value of this asset. As a result of
     this evaluation, the Company recorded an impairment of $416,954 for
     goodwill in the third quarter of fiscal 2003.

                                      F-15

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002


NOTE F (continued)

     The change in the carrying value of goodwill at April 30, 2003 was as
follows:

<TABLE>
<CAPTION>
<S>                       <C>                                                          <C>                    <C>
        Balance as of May 1, 2002                                                                             $ 416,954
        Impairment losses                                                                                      (416,954)
                                                                                                              ---------

        Balance as of April 30, 2003                                                                          $       -
                                                                                                              =========



NOTE G - INCOME TAXES

     The (benefit) provision for income taxes consists of the following:

                                                                                          2002                   2002
                                                                                       ---------               --------
      Current
          Federal                                                                      $(125,645)              $(22,321)
          State and local                                                                  3,677                 (9,656)
                                                                                       ---------               --------

                                                                                        (121,968)               (31,977)
                                                                                       ---------               --------

     The tax effects of temporary differences and tax credits that give rise to
deferred tax assets at April 30, 2003 are as follows:

      Deferred tax assets
          Net operating loss                                                                                   $912,032
          Accounts receivable allowance                                                                          98,583
          Inventory and fixed assets                                                                             75,929
          Goodwill write off                                                                                    159,550
          Other                                                                                                  20,148
                                                                                                             ----------
                                                                                                              1,266,242

      Valuation allowance                                                                                    (1,266,242)
                                                                                                             ----------

      Net deferred tax asset (liability)                                                                     $        -
                                                                                                             ==========
</TABLE>


                                      F-16

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE G (continued)

     A reconciliation of the income tax expense shown in the statements of
     operations to the effective Federal tax rate is as follows:

                                                        2003              2002
                                                      --------          --------
      Federal statutory rate (recovery)                (34.0)%           (34.0)%
      State and local income taxes, net of                 -                 -
          Federal tax benefit                              -                 -
      Nondeductible items                                1.7               1.2
      Carryback claim                                   (5.7)             (3.6)
      Other                                              0.3              (4.7)
      Asset valuations                                   8.2                 -
                                                      --------          --------

      Rate before valuation allowance                  (29.5)            (41.1)

      Valuation allowance adjustment                    23.8              32.8

                                                        (5.7)%            (8.3)%

     The valuation allowance increased by approximately $760,822 for the year
     ended April 30, 2003.

     During the year ended April 30, 2003, the Company utilized approximately
     $213,000 in Federal net operating loss carryback claims. During the year
     ended April 30, 2002, the Company utilized approximately $55,000 in
     federal, state and city net operating loss carryback claims. The current
     benefit for income taxes in 2003 includes an adjustment for an overaccrual
     of state taxes in the prior years.

     As of April 30, 2003, the Company has a net operating loss carryforward of
     approximately $2,171,500, which expires in 2021-2022.

                                      F-17

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE H - LOANS PAYABLE

Shareholder Loans

     On April 1, 2002, the Company, or its subsidiaries, had unsecured loans
     payable to Chairman Santo Petrocelli, Sr., Petrocelli Industries Inc., a
     private company controlled by Mr. Petrocelli, and then Chief Financial
     Officer Lawrence S. Polan. These loans were due on demand, bore interest at
     various rates, and had an outstanding principal balance of $573,490, net of
     a repayment of $100,000 in March 2002 to Petrocelli Industries Inc.
     Interest payable on those loans totaled $212,295. For fiscal 2002, the
     Company had an interest expense of $74,613 on shareholder and affiliate
     loans.

     In fiscal 2002, certain shareholders and officers received management fees
     and consulting fees totaling $27,500. On April 1, 2002, the Company had
     outstanding management fees and consulting fees payable to Mr. Petrocelli
     and Petrocelli Industries Inc. in the aggregate amount of $246,716. No
     other management fees or consulting fees were payable to shareholders and
     affiliates. The aggregate amount owed to shareholders and affiliates on the
     principal and accrued interest on the demand loans, together with the
     management fees and consulting fees, was $1,032,501.

     On April 1, 2002, the Company issued unsecured promissory notes
     ("Shareholder Loans") in favor of Mr. Petrocelli, Mr. Polan and Petrocelli
     Industries Inc. in the aggregate amount of $1,032,501 in exchange for and
     in full satisfaction of all outstanding balances due on the demand loans
     and management fees and consulting fees. Each Shareholder Loan does not
     bear interest and requires repayment in twenty-one (21) equal monthly
     payments from the date repayment commences. Repayment on a Shareholder Loan
     in the principal amount of $10,263 was scheduled to begin in February 2003,
     however, the lender agreed to defer the commencement date indefinitely.
     Repayment on the Shareholder Loans in the aggregate principal amount of
     $1,022,238 was scheduled to begin in May 2003. In May 2003, the Company
     made a $25,000 payment on account of the $1,022,238 Shareholder Loans and
     the lenders agreed to defer the commencement dates indefinitely. The
     lenders could, however, demand that repayment begin on the Shareholder
     Loans at any time. Due to the repayment demand option, the Shareholder
     Loans were reclassified to current.




                                      F-18

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE H (continued)

Bridge Loans

     On January 10, 2002, the Company secured bridge loan financing in the
     aggregate sum of $500,000 from KSH Strategic Investment Fund I, LP and
     Cleveland Overseas, Ltd. The Company received net proceeds of $475,000 from
     the bridge loan financing. The bridge loan investors were issued secured
     promissory notes in the aggregate principal amount of $500,000, which bore
     interest at a rate of 10% per annum ("Bridge Notes"). These investors were
     also granted warrants to purchase a total of 200,000 shares of Common Stock
     at an exercise price of $0.50 per share. KSH Investment Group, Inc., a
     registered broker-dealer and an affiliate of KSH Strategic Investment Fund
     I, LP, received $25,000 and was issued 75,000 shares of Common Stock as a
     fee for arranging the financing. In June 2002, the Company used a portion
     of the proceeds derived from the private placement of 512,500 shares of its
     10% Series A Convertible Preferred Stock (as discussed in Note K) to repay
     the Bridge Note in the principal amount of $400,000, and all accrued and
     payable interest on the Bridge Notes to date. On October 10, 2002, the
     Company issued a secured convertible promissory note in the principal
     amount of $100,000 ("Convertible Note") in full payment and satisfaction of
     the remaining Bridge Note in the principal amount of $100,000. The
     Convertible Note was secured by substantially all of the assets of the
     Company, bore interest at a rate of 7% per annum and was convertible into
     shares of Common Stock at a conversion price of $1.00 per share. The
     Company repaid the Convertible Note in two installments of principal in the
     amount of $50,000, and the accrued interest thereon, in December 2002 and
     March 2003.


NOTE I - BUSINESS SEGMENT INFORMATION

     In the first part of fiscal 2003, the Company began to implement strategies
     for achieving its operational goals, which included changes in the way the
     business was managed and operated. The Company consolidated the operations
     and activities of its various subsidiaries into a single operating unit,
     under the banner of NAC, to cut costs and improve efficiency. As a result,
     the Company believes that it now operates in one business segment.


NOTE J - STOCK OPTIONS

     The Company's 1999 Stock Option Plan ("1999 Plan") provides that key
     employees are eligible to receive incentive stock options or nonqualified
     stock options and that directors and advisors shall be eligible to receive
     nonqualified options. Under the 1999 Plan, the Company may grant options to
     purchase up to a total of 1,000,000 shares of common stock. As of April 30,
     2003 and 2002, there were 780,000 and 730,000 options available for future
     grants, respectively. For options granted to greater than 10% shareholders,
     the exercise price of the options must be fixed at not less than 110% of
     the fair market value on the date of grant. The maximum term of these
     options may not exceed five years from the date of grant.

                                      F-19

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE J (continued)

     On March 13, 2002, the Board of Directors approved the Company's 2001 Stock
     Option Plan ("2001 Plan"). The 2001 Plan authorized the issuance of
     incentive stock options and nonqualified stock options to purchase up to a
     total of 7,000,000 shares of Common Stock to selected employees, officers,
     directors, agents, consultants and independent contractors of the Company.
     The 2001 Plan failed to become effective in March 2003 when the necessary
     shareholder approval was not obtained. No options were ever issued under
     the 2001 Plan.

     During the fiscal years ended April 30, 2003 and 2002, the Company issued
     to officers and employees 500,000 and 2,900,000 fully vested warrants
     exercisable at a price of $0.55 per share, respectively. The fair value per
     warrant was estimated at $0.07 and $0.16 for the fiscal years ended April
     30, 2003 and 2002, respectively.

     The fair value of each warrant or option grant is estimated on the date of
     grant using the Black-Scholes option pricing model with the following
     weighted-average assumptions for the years ended April 30, 2003 and 2002:
     no dividend yield, expected volatility of 112 and 300 percent,
     respectively, risk-free interest rate of 3.5 and 4.69 percent,
     respectively, and five-year expected lives.

     The following table summarizes the options and warrants granted to officers
     and employees under the 1999 Plan and outside the 1999 Plan for the period
     from April 30, 2001 through April 30, 2003:

<TABLE>
<CAPTION>
                                                                             Number of shares
                                                                 ---------------------------------------
                                                  Total                 Options                                   Exercise
                                                 number          ------------------------                         price per
                                                of shares        Qualified   Nonqualified       Warrants            share
                                               ----------        ---------   ------------       --------          ---------
<S>       <C>                                    <C>              <C>             <C>          <C>                <C>
      Options outstanding at April 30,
          2001                                   445,000          277,000         168,000                            1.50

      Cancelled - Options                        175,000           91,000          84,000                            1.50

      Granted - Warrants                       2,900,000                                        2,900,000            0.55
                                               ---------          -------         -------       ---------           -----

      Options and Warrants outstanding
          at April 30, 2002                    3,170,000          186,000          84,000       2,900,000           $0.63
                                               =========          =======         =======       =========           =====

      Cancelled - Options                         50,000           50,000                                            1.50

      Granted - Warrants                         500,000                                          500,000            0.55
                                               ---------          -------         -------       ---------           -----

      Options and Warrants outstanding
          at April 30, 2003                    3,620,000          136,000          84,000       3,400,000           $0.61
                                               =========          =======         =======       =========           =====
</TABLE>


                                      F-20

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE J (continued)

     The following table summarizes information about the stock options and
     warrants granted to officers and employees at April 30, 2003:

<TABLE>
<CAPTION>
                                                                                                     Options and
                                            Options and Warrants Outstanding                     Warrants Exercisable
                                            --------------------------------                     --------------------

                                        Number             Weighted-                          Number
                                      Outstanding           Average        Weighted-        Exercisable         Weighted-
                                          at               Remaining        Average             at               Average
              Range of                 April 30,          Contractual      Exercise          April 30,          Exercise
           Exercise Prices               2003                Life            Price             2003               Price
           ---------------            -----------         -----------      ---------        -----------         ---------
<S>                                   <C>                  <C>               <C>             <C>                  <C>

                 $0.55                3,400,000            3.99 years        $0.55           3,400,000            $0.55
                 $1.50                  220,000            1.13 years        $1.50             220,000            $1.50
                                      ---------                              -----           ---------            -----
                                      3,620,000                              $0.61           3,620,000            $0.61
                                      =========                              =====           =========            =====
</TABLE>


NOTE K - PREFERRED SHARES

     On March 11, 1998, the Company's Articles of Incorporation were amended to
     authorize 1,000,000 shares of preferred stock, par value $0.001 per share,
     to be issued with rights, preferences and designations as determined by the
     Board of Directors.

                                      F-21

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE K (continued)

     In June 2002, the Company completed the initial closing of a private
     placement of a minimum of 500,000 and a maximum of 1,000,000 shares of its
     10% Series A Convertible Preferred Stock ("Preferred Stock") to accredited
     investors at $2.00 per share. Five hundred twelve thousand five hundred
     shares of Preferred Stock were issued, each of which is convertible into
     four shares of Common Stock at a conversion price of $0.50 per share. As of
     the closing, it was determined that the holders of the Preferred Stock
     received a common stock conversion preference based on the excess of the
     Common Stock's then current market value of $0.75 per share over the
     Preferred Stock's $0.50 per share conversion price. This preference was
     assigned a value of $512,500 relative to the 2,050,000 underlying shares of
     Common Stock into which the issued Preferred Stock may be converted. The
     Company received net proceeds of $865,959 from the issuance of the 512,500
     shares of Preferred Stock, a portion of which was used to retire $400,000
     in principal, and all accrued and payable interest to date, on the Bridge
     Notes. KSH Investment Group, Inc. served as placement agent and received,
     among other things, a cash commission equal to 7.5% of the aggregate
     purchase price of the shares sold, a non-accountable expense allowance
     equal to 1.5% of the aggregate purchase price of the shares sold, and
     warrants to purchase 402,500 shares of Common Stock at an exercise price of
     $0.65 per share in connection with the private placement. Warrants for
     325,625 shares were issued in June 2002 and warrants for the remaining
     76,875 shares were issued in September 2002. Dividends on the Preferred
     Stock at the rate of $0.20 per share per annum are payable in kind, or in
     shares of Common Stock if a sufficient number of shares of Preferred Stock
     is not available. Dividends shall accrue and be payable in May of each
     year. As of April 30, 2003, the Company had accrued Preferred Stock
     dividends of $88,264. The Preferred Stock is redeemable, at the option of
     the Company, after the second anniversary of the closing. Consequently, the
     Preferred Stock has been classified as equity.

     Although the Company has successfully completed the initial closing of the
     Preferred Stock offering, the Company believes it will not complete the
     second half of the offering as the market for equity financing continues to
     diminish. The Company has ceased efforts to complete the second half of the
     Preferred Stock offering or obtain any other financing. As a result, the
     Company will likely be required to issue to holders of the Preferred Stock,
     on a pro-rata basis, shares of Preferred Stock in the aggregate amount of
     5% of the total amount sold, or 25,625 shares, because it did not file with
     the SEC a registration statement within 60 days of the final closing of the
     Preferred Stock offering as required under the registration rights
     agreements with Preferred Stock holders as the initial closing will likely
     be deemed the final closing.


NOTE L - RELATED PARTY TRANSACTIONS

     During the fiscal years ended April 30, 2003 and 2002, the Company was owed
     $28,732 from an affiliated company for services rendered and the Company
     owed the same affiliated company $79,597 for services rendered by the
     affiliate. In addition, rental payments to an affiliated company in fiscal
     2003 and 2002 totaled $79,729 and $81,900, respectively.

     During the fiscal years ended April 30, 2002, certain stockholders and
     officers of the Company rendered consulting and management services
     totaling $27,500 and subcontractor services totaling $4,096. Subcontractor
     services rendered to affiliates in fiscal 2002 totaled $5,954.

     At April 30, 2003 and 2002, the Company had notes due to shareholders
     totaling $1,032,501 (see Note H).

                                      F-22

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002

NOTE M - EMPLOYEE BENEFIT PLANS

     The Company has established a profit sharing and a 401(k) plan covering
     substantially all full-time, non-union employees who have completed one
     year of continuous service and who meet certain other eligibility
     requirements. Contributions to the plan are discretionary and are allocated
     in proportion to compensation. For the years ended April 30, 2003 and 2002,
     the Company contributed $24,217 and $26,987, respectively, to the profit
     sharing plan.

NOTE N - COMMITMENTS AND CONTINGENCIES

Litigation

     NAC and/or NACE are co-defendants in lawsuits involving property damage
     and/or personal injury claims arising in the ordinary course of business
     from job-site accidents. Plaintiffs' claims in these lawsuits exceed NAC's
     and/or NACE's applicable insurance coverages. At April 30, 2003, claims in
     excess of NAC's and/or NACE's insurance coverages totaled approximately
     $11,800,000. Two cases totaling $6,900,000 in claims were dismissed or
     settled within limits of coverage during fiscal 2003. One case totaling
     $4,000,000 in claims settled within limits of coverage in fiscal 2001 but
     was reported in fiscal 2003. One case totaling $3,000,000 in claims was
     commenced against NAC in fiscal 2003. NAC and/or NACE are being represented
     in these lawsuits by legal counsel engaged by their insurers and, in most
     or all cases, have filed cross-claims and third-party claims against other
     parties. Any judgment or settlement in excess of insurance coverages,
     however, will require payment by NAC and/or NACE. The Company believes,
     based on prior experience, that the amount of ultimate liability of NAC
     and/or NACE with respect to these claims will not have a material impact on
     the financial position, results of operations and cash flows of the
     Company. There can be no assurance, however, that any judgment or
     settlement of these claims will not exceed NAC's and/or NACE's insurance
     coverages, which could have a material impact on the financial position,
     results of operations and cash flows of the Company.

     On January 15, 2003, NAC and its employee were charged with violation of
     the Clean Air Act in a one-count federal indictment filed in the United
     States District Court for the Southern District of New York. The
     indictment, which relates to work performed in January 1998, alleges that
     NAC and the employee caused asbestos material to be stripped from a
     building without adequately wetting it, failed to lower the asbestos
     material to the floor without dropping or otherwise damaging it, and did
     not keep asbestos material that had been removed wet until it was collected
     and contained. The prosecutor subsequently filed a three-count prosecutor's
     information that superceded the indictment and charged NAC with two
     additional violations of the Clean Air Act.

     On July 1, 2003, NAC pled guilty to the three-count prosecutor's
     information in accordance with the terms of a negotiated plea agreement.
     The plea agreement and plea were intended to conclude the proceedings
     commenced against NAC by the filing of the federal indictment in January
     2003. In connection with the plea, NAC received a fine totaling $76,200,
     which is payable on or before January 2, 2004. A five year probationary
     period was also imposed on NAC, and in addition, NAC agreed, as a condition
     of probation, to not engage in any activity relating to (i) inspection,
     sampling or analysis for the presence of asbestos, (ii) removal,
     transportation or disposal of asbestos, or (iii) demolition or renovation
     of buildings. This prohibition does not extend to any construction work
     limited exclusively to the installation or addition of building components
     to a structure, not involving the removal of any building components or
     construction debris. The fine imposed upon NAC has been accrued in the
     financial statements as of April 30, 2003.

     From time to time, the Company is subject to other legal proceedings and
     claims in the ordinary course of business. The Company currently is not
     aware of any such legal proceedings or claims that the Company believes
     will have, individually or in the aggregate, a material adverse effect on
     the Company's business, financial condition or operating results.


                                      F-23

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002

NOTE N (continued)

Leases

     On October 1, 1998, the Company entered into a ten-year lease through
     September 30, 2008 for rental of office facilities. The lease provides for
     escalations for scheduled rent increases and for the Company's
     proportionate share of increases in real estate taxes and maintenance
     costs. On March 4, 2000, the Company entered into a sublease agreement for
     the October 1998 lease with a company in which a major shareholder of the
     Company is a stockholder. The sublease expires on September 30, 2008.

     On July 15, 2002, the Company entered into a three-year lease through July
     15, 2005 for rental of warehouse facilities in Rahway, New Jersey.

     The Company is negotiating, or will attempt to negotiate, releases from
     certain of the above leases, which may result in termination charges not
     known at this time.

     Aggregate future minimum rental payments and sublease payments under the
     operating leases set forth above as of April 30, 2003 are as follows:

                                        Rent            Sublease
                                       payment           income            Net
                                     -----------       -----------      --------
     Year ending April 30,
         2004                        $   216,110       $   178,710      $ 37,400
         2005                            216,110           178,710        37,400
         2006                            188,060           178,710         9,350
         2007                            178,710           178,710             -
         Thereafter                       89,355            89,355             -
                                     -----------       -----------      --------

                                     $   888,345       $   804,195      $ 84,150
                                     ===========       ===========      ========

     In June 2000, the Company received a payment for future rent of $397,800
     from the subtenant under the sublease with respect to the October 1998
     lease. This payment was recorded as deferred sublease income and will be
     recognized as revenue on a straight-line basis over the lease term.

     Starting in April 2000 and continuing through the present, the Company
     subleases its executive and administrative offices and warehouse from an
     affiliated company. Rents due under this sublease totaled $6,825 per month
     in fiscal 2002. Prior to the cessation of business operations in fiscal
     2003, there was no specified term or written agreement for this lease. In
     connection with the cessation of business operations in fiscal 2003,
     however, the Company renegotiated the terms of this sublease to a
     month-to-month term and substantially reduced its executive and
     administrative offices and eliminated its warehouse space at no charge.
     Rents due under this new sublease total approximately $1,000 per month.

     Rent expense for the years ended April 30, 2003 and 2002 was $79,729 and
     $81,900, respectively.

NOTE O - RISK AND UNCERTAINTIES

     The Company is subject to laws and regulations relating to the protection
     of the environment. While it is not possible to quantify with certainty the
     potential impact of actions regarding environmental matters, particularly
     any future remediation and other compliance efforts, in the opinion of
     management, compliance with the present environmental protection laws did
     not have a material adverse effect on the financial condition, competitive
     position or capital expenditures of the Company. However, the Company's
     efforts to comply with increasingly stringent environmental regulations may
     have an adverse effect on the Company's future earnings.

                                      F-24

<PAGE>


                             NESCO Industries, Inc.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             April 30, 2003 and 2002



NOTE P - CONCENTRATION OF CREDIT RISK

     The Company grants unsecured trade credit to customers, substantially all
     of whom are located in the New York tri-state area. The Company's customers
     include owners of commercial real estate, managing agents and general
     contractors, industrial facilities and hospitals and educational
     institutions. During fiscal 2003 and 2002, approximately 94% of the
     Company's operating revenues were derived from commercial and industrial
     clients, and approximately 6% was derived from institutional customers such
     as educational institutions and hospitals.

     In fiscal 2003, two customers accounted for 57% of our revenues. PPC
     Construction LLC, a commercial and residential property holder, accounted
     for 50% and Structure Tone, Inc., a large general contractor, accounted for
     7%. In the prior fiscal year, the same two customers accounted for
     approximately 41% of the Company's revenues. PPC Construction LLC accounted
     for 28% and Structure Tone, Inc. accounted for 13%. Accounts receivable for
     these two customers accounted for 17.9% and 9.1%, respectively, of accounts
     receivable as of April 30, 2003.

NOTE Q - FAIR VALUES OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
     of financial instruments:

Cash and Cash Equivalents

     The carrying amounts reported in the balance sheet for cash and cash
     equivalents approximate their fair values, principally because of the
     short-term maturity of these items.

Accounts Receivable and Accounts Payable

     The carrying amounts of accounts receivable and accounts payable in the
     balance sheet approximate fair values, principally because of the
     short-term maturity of these items.

Short-Term Debt

     The carrying amounts of the notes payable approximate fair value based upon
     their effective interest rates compared to current market rates.

NOTE R - FOURTH QUARTER ADJUSTMENTS

     During the fourth quarter of the year ended April 30, 2003, the Company
     recorded significant adjustments to its accounts, which resulted in
     increasing the net loss by approximately $89,284. The adjustments for the
     year ended April 30, 2003 were principally attributable to the write-off of
     fixed assets of approximately $45,875; the write-off of inventory of
     approximately $134,908; an over accrual of estimated workman's compensation
     insurance which were reversed out in the fourth quarter of approximately
     $139,469 and reserve against loan advances for approximately $47,970.

                                      F-25

<PAGE>


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.













                                       30

<PAGE>


                                    PART III


ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     A.  Directors and Executive Officers

As of August 7, 2003, the Company's directors and executive officers were as
follows:

Name                        Age     Position with the Company
----                        ---     -------------------------

Santo Petrocelli, Sr.       68      Chairman of the Board and Director

Michael J. Caputo(1)        50      President, Principal Executive and
                                    Financial Officer

Santo Petrocelli, Jr.       37      Director

------------------------

     1.  In fiscal 2003, Michael J. Caputo served as Chief Operating Officer
         until October 25, 2002, when he was elected interim President,
         Principal Executive and Financial Officer. On April 29, 2003, Mr.
         Caputo resigned as interim President, Principal Executive and Financial
         Officer. On June 25, 2003, the Company engaged Mr. Caputo to serve, on
         a limited basis, as interim President, Principal Executive and
         Financial Officer. Mr. Caputo's engagement is scheduled to terminate
         upon the earlier to occur of September 15, 2003, or the completion of
         the objectives for which he was primarily engaged.

Santo Petrocelli, Sr. has served as Chairman of the Board of Directors and a
director of the Company and its predecessors since 1988. Mr. Petrocelli had
served as President and Chief Executive Officer of the Company and its
predecessors from 1988 to 2002. Mr. Petrocelli is a director and/or officer of
Petrocelli Industries, Inc., PEC Realty Corp. and Petrocelli Electric Co., Inc.,
all of which are companies controlled by Mr. Petrocelli and members of his
family.

Michael J. Caputo has served in various capacities with the Company and its
predecessors since 1988, including: interim President, Principal Executive and
Financial Officer (October 2002 - April 2003; June 2003 - present); Chief
Operating Officer (1988 - October 2002); Director (1988 - July 2002). Mr. Caputo
devotes less than a majority of his working time (approximately 30%) to the
Company's business in accordance with his limited engagement.

Santo Petrocelli, Jr. has served as a director of the Company since March 1998.
Mr. Petrocelli is also President of Petrocelli Communications Company, a
division of Petrocelli Electric Co., Inc., a position he has held since May
1998. From May 1992 to May 1998, Mr. Petrocelli was Executive Vice President of
Petrocelli Communications Company.

Santo Petrocelli, Sr. is the father of Santo Petrocelli, Jr. There are no other
family relationships among the Company's officers and directors.

                                       31

<PAGE>

All directors currently serve for one-year terms and until their successors have
been elected and qualified. Unless expressly agreed otherwise, officers are
elected annually and serve at the discretion of the Board of Directors.

     B.  Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's
directors and executive officers, and any persons who own more than ten percent
of the Company's Common Stock, file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Such persons are
required by SEC regulations to furnish the Company with copies of all such
reports that they file.

To the knowledge of the Company, based on a review of the Section 16 reports,
Jeffrey L. Powell, a former officer and director, and Joel Schoenfeld, a former
director, failed to file required reports on Form 3 to report their elections to
the Company in fiscal 2003. To the knowledge of the Company, based on a review
of the Section 16 reports, no other person has failed to file reports required
under Section 16(a) of the Exchange Act during fiscal 2003.



                                       32

<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

     A.  Summary Compensation Table

The following table sets forth, for the Company's last three fiscal years, all
compensation awarded to, earned by or paid to all persons serving as the
Company's chief executive officer ("CEO") or interim CEO in fiscal 2003 and the
most highly compensated executives officer of the Company other than the CEO or
interim CEO whose salary and bonus payments exceeded $100,000 in fiscal 2003.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                Summary Compensation Table
-------------------------------------------------------------------------------------------------------------------------------
                                                                                        Long Term Compensation
-------------------------------------------------------------------------------------------------------------------------------
                                        Annual Compensation                       Awards                     Payouts
-------------------------------------------------------------------------------------------------------------------------------
   Name and         Year       Salary ($)    Bonus ($)       Other       Restricted    Securities       LTIP       All Other
  Principal                                                  Annual        Stock       Underlying   Payouts ($)  Compensation($)
   Position                                               Compensation     Award(s)     Options/
                                                              ($)            ($)         SARS(#)
-------------------------------------------------------------------------------------------------------------------------------
<S>                 <C>             <C>          <C>        <C>              <C>           <C>           <C>           <C>

Santo               2003            4,500       -0-            *            -0-           -0-           -0-           -0-
Petrocelli,    ----------------------------------------------------------------------------------------------------------------
Sr., Chairman       2002            3,300       -0-            *            -0-           -0-           -0-           -0-
of the Board,   ----------------------------------------------------------------------------------------------------------------
and former          2001           87,000       -0-            *            -0-           -0-           -0-           -0-
President and
CEO (1)
-------------------------------------------------------------------------------------------------------------------------------
Jeffrey L.          2003           57,000       -0-            *            -0-           -0-           -0-           -0-
Powell, former ----------------------------------------------------------------------------------------------------------------
President,          2002              -0-       -0-         108,500         -0-           -0-           -0-           -0-
CEO and        ----------------------------------------------------------------------------------------------------------------
Director (2)         --                --        --            --            --            --            --            --
-------------------------------------------------------------------------------------------------------------------------------
Michael J.          2003          135,000       -0-            *            -0-           -0-           -0-           -0-
Caputo,        ----------------------------------------------------------------------------------------------------------------
President,          2002          135,000       -0-            *            -0-           -0-           -0-           -0-
Principal      ----------------------------------------------------------------------------------------------------------------
Executive and       2001          132,500       -0-            *            -0-           -0-           -0-           -0-
Financial
Officer (3)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

--------------------------------------

     *   Less than $50,000

     1.  Succeeded by Jeffrey L. Powell as President and CEO, effective July 10,
         2002. Mr. Petrocelli is compensated through Petrocelli Industries, Inc.
         Payments to this company may be referred to as "management fees" and
         "consulting fees" in this Annual Report on Form 10-KSB for the fiscal
         years ended April 30, 2003 and other reports filed by the Company with
         the SEC. Mr. Petrocelli also received compensation directly from the
         Company in the fiscal year ended April 30, 2001. In March 2002, the
         Company issued to Mr. Petrocelli a warrant exercisable for 1,000,000
         shares of Common Stock at an exercise price of $0.55 per share.

     2.  Succeeded by Michael J. Caputo as President and Principal Executive
         Officer (interim), effective October 25, 2002. Mr. Powell served as
         President, CEO and Director of the Company from July 10, 2002 to
         October 25, 2002. In fiscal 2002 and prior to his election as
         President, CEO and Director in fiscal 2003, Mr. Powell served as a
         consultant to the Company. Mr. Powell received a total of $108,500 in
         compensation for his consulting services in fiscal 2002.

     3.  In fiscal 2003, Mr. Caputo served as Chief Operating Officer until
         October 25, 2002, and as interim President, Principal Executive and
         Financial Officer from October 25, 2002 to April 29, 2003. On June 25,
         2003, the Company engaged Mr. Caputo, on a limited basis, to serve as
         interim President, Principal Executive and Financial Officer. Mr.

                                       33

<PAGE>

         Caputo's engagement is scheduled to terminate upon the earlier to occur
         of September 15, 2003, or the completion of the objectives for which he
         was primarily engaged. In December 2002, the Company issued to Mr.
         Caputo a warrant exercisable for 500,000 shares of Common Stock at an
         exercise price of $0.55 per share.

Except as set forth above, no other options or warrants have been issued to the
Company's officers and directors named in the above summary compensation table
during the last three fiscal years.

         B.       Options/SAR Grants in Last Fiscal Year

Not Applicable.

         C.       Aggregated Option/SAR Exercises and Fiscal Year-End
                  Option/SAR Value

None of the executive officers identified in Item 10(A) above exercised any
options or SARs in the last fiscal year, and none of such officers held any SARs
at year end. Information relating to the number and value of options held at
year end by such officers is set forth in the following table:

                 Aggregated Option/SAR Exercises in Fiscal 2003
                    and Fiscal 2003 Year-End Option/SAR Value
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
         (a)                      (b)                  (c)                          (d)                           (e)

        Name                 Shares Acquired       Value Realized           Number of Securities         Value of Unexercised
                              on Exercise              ($)                 Underlying Unexercised         In-the-Money Options/
                                                                          Options/SAR at 4/30/03            SARs at 4/30/03
                                                                          Exercisable/ Unexercisable   Exercisable/Unexercisable
                                                                                    (#) (1)                      ($) (2)
---------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>                   <C>                     <C>                             <C>

Santo Petrocelli, Sr.             -0-                   -0-                      150,000/-0-                      -0-/-0-
---------------------------------------------------------------------------------------------------------------------------------
Michael J. Caputo (3)             -0-                   -0-                       50,000/-0-                      -0-/-0-
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>



     1.  Shares of Common Stock.

     2.  Based on the high "bid" price of shares quoted on April 30, 2003.

     3.  The options identified herein, exercisable for 50,000 shares of Common
         Stock at an exercise price of $1.50, expired on July 29, 2003.

         D.       Long-Term Incentive Plans

Not Applicable.

         E.       Compensation of Directors

During the fiscal year ended April 30, 2003, no director of the Company received
any compensation for services provided in such capacity. Directors of the
Company are reimbursed for any expenses incurred by them in connection with
their activities on behalf of the Company.

                                       34

<PAGE>

         F.       Employment Contracts and Termination of Employment and Change
                  in Control Arrangements

At April 30, 2003, the Company had no employment contracts or compensatory plans
or arrangements.

On June 25, 2003, the Company engaged Michael J. Caputo, pursuant to a written
letter agreement, to serve as interim President, Principal Executive and
Financial Officer. Mr. Caputo was engaged primarily to wind down the operations
and business affairs of NAC and prepare and file with the SEC this Annual Report
on Form 10-KSB for the fiscal year April 30, 2003. Mr. Caputo's engagement is
scheduled to terminate upon the earlier to occur of September 15, 2003, or the
completion of the objectives for which he was primarily engaged. The Company and
Mr. Caputo have not yet determined the compensation to him for this engagement.

         G.       Report on Repricing of Options/SARS

Not Applicable.



                                       35

<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

     A.  Beneficial Ownership

The following table sets forth information as of August 7, 2003, with respect to
the beneficial ownership of the Company's Common Stock by officers and
directors, individually and as a group, and all holders of more than 5% of the
Common Stock. Unless otherwise indicated, all shares are beneficially owned and
sole investment and voting power is held by the beneficial owners indicated. On
August 7, 2003, there were 6,769,963 shares of Common Stock outstanding.

The Company has 1,000,000 shares of its 10% Series A Convertible Preferred Stock
("Preferred Stock") outstanding, of which 512,500 shares were issued to
investors in connection with the July 2002 private placement. No officers and
directors own any shares of the Preferred Stock.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
               Name and Address of                       Amount and Nature of
               Beneficial Owner                          Beneficial Owner (1)             Percent of Class
               --------------------                      ---------------------            ----------------
------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                           <C>
Santo Petrocelli, Sr.                                           4,616,667                     58.3%
c/o NESCO Industries, Inc.
22-09 Queens Plaza North
Long Island City, NY 11101 (2)
------------------------------------------------------------------------------------------------------------
Michael J. Caputo                                                 600,000                      8.3%
c/o NESCO Industries, Inc.
22-09 Queens Plaza North
Long Island City, NY 11101 (3)
------------------------------------------------------------------------------------------------------------
Santo Petrocelli, Jr.                                                   0                        0%
c/o NESCO Industries, Inc.
22-09 Queens Plaza North
Long Island City, NY 11101 (4)
------------------------------------------------------------------------------------------------------------
All directors and executive officers as a group                 5,216,667                       62%
(3 persons) (5)
------------------------------------------------------------------------------------------------------------
Jeffrey L. Powell                                                       0                        0%
One Walnut Street
Acton, MA 01720 (6)
------------------------------------------------------------------------------------------------------------
Lawrence S. Polan                                               1,466,666                     19.1%
c/o NESCO Industries, Inc.
22-09 Queens Plaza North
Long Island City, NY 11101 (7)
------------------------------------------------------------------------------------------------------------
IAP Inc.                                                          364,963                      5.4%
45 Research Way
East Setauket, NY 11733
------------------------------------------------------------------------------------------------------------
Ronald W. Kuzon (8)                                             1,000,000                     12.9%
------------------------------------------------------------------------------------------------------------
</TABLE>

---------------------------------

     1.  As used herein, the term beneficial ownership with respect to a
         security is defined by Rule 13d-3 under the Securities Exchange Act of
         1934 as consisting of sole or shared voting power (including the power
         to vote or direct the vote) and/or sole or shared investment power
         (including the power to dispose or direct the disposition of) with
         respect to the security through any contract, arrangement,
         understanding, relationship or otherwise, including a right to acquire
         such power(s) during the next 60 days. Unless otherwise noted,
         beneficial ownership consists of sole ownership, voting and investment
         rights.

                                       36

<PAGE>

     2.  Mr. Petrocelli is the Chairman and a director of the Company. The above
         number of shares beneficially owned includes 150,000 shares reserved
         for issuance upon the exercise of an option granted under the Company's
         1999 Incentive Stock Option Plan, 1,000,000 shares issuable upon
         exercise of a warrant issued in March 2002, 2,900,000 shares owned of
         record by Petrocelli Industries Inc. and 566,667 shares owned by SMFS
         Corp. Mr. Petrocelli is the President and Chief Executive Officer of
         Petrocelli Industries, Inc., and beneficially owns 25% of its
         outstanding capital stock. The other 75% is owned by members of Mr.
         Petrocelli's family. Mr. Petrocelli is the President of SMFS Corp.

     3.  Mr. Caputo is the interim President, Principal Executive and Financial
         Officer of the Company. The above number of shares beneficially owned
         includes 500,000 shares issuable upon exercise of a warrant issued in
         December 2002.

     4.  Mr. Petrocelli is a director of the Company. The above number of shares
         beneficially owned does not include shares owned by Petrocelli
         Industries, Inc., in which Mr. Petrocelli has an economic interest by
         reason of his equity ownership of Petrocelli Industries, Inc.

     5.  Note that the sum of the beneficial ownership percentages of individual
         directors and executive officers is not equal to the beneficial
         ownership percentage of all directors and executive officers as a
         group.

     6.  Mr. Powell is a former President, Chief Executive Officer and Director
         of the Company.

     7.  Mr. Polan is a former Vice President, Chief Financial Officer,
         Secretary and Treasurer of the Company. The above number of shares
         beneficially owned includes 900,000 shares issuable upon the exercise
         of a warrant issued in March 2002 and 566,666 shares owned of record by
         LPS Consultants, Inc., a company owned and controlled by Mr. Polan and
         his wife. Mr. Polan passed away in May 2003. For the purpose of this
         presentation, the Company assumed that Mr. Polan's estate succeeded to
         his rights and interests set forth herein.

     8.  Mr. Kuzon is a former employee of the Company. The 1,000,000 shares
         identified above are issuable upon the exercisable of a warrant issued
         in March 2002.

                                       37

<PAGE>


         B.       Securities Authorized for Issuance under Equity Compensation
                  Plans

The following table sets forth information as of August 7, 2003 with respect to
compensation plans and individual compensation arrangements under which the
Company's Common Stock is authorized for issuance.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                              Number of securities
                                                                                              remaining available
                                                                                              for future issuance
                                       Number of securities to   Weighted-average exercise     under equity plans
                                       be issued upon exercise      price of outstanding     (excluding securities
                                       of outstanding options,     options, warrants, and     reflected in column
                                         warrants, and rights    rights compensation plans            (a))
            Plan Category                        (a)                        (b)                       (c)
-------------------------------------------------------------------------------------------------------------------
<C>                                    <C>                       <C>                          <C>

1999 Incentive Stock Option Plan(1)
(previously approved by security              150,000(2)                   $1.50                   850,000
holders)

-------------------------------------------------------------------------------------------------------------------
Securities to be issued upon the
exercise of outstanding options,            3,400,000(3)                   $0.55                        --
warrants and rights granted to
officers, directors and employees
not pursuant to a plan

-------------------------------------------------------------------------------------------------------------------
                Total:                      3,550,000                      $0.59                   850,000
-------------------------------------------------------------------------------------------------------------------
</TABLE>


     1.  The Company's 1999 Incentive Stock Option Plan ("1999 Plan"), which has
         been approved by the Company's Board of Directors and shareholders,
         expires on June 14, 2009.

         On March 13, 2002, the Board of Directors approved the Company's 2001
         Stock Option Plan ("2001 Plan"). The 2001 Plan authorized the issuance
         of incentive stock options and nonqualified stock options to purchase
         up to a total of 7,000,000 shares of Common Stock to selected
         employees, officers, directors, agents, consultants and independent
         contractors of the Company. The 2001 Plan failed to become effective in
         March 2003 when the necessary shareholder approval was not obtained. No
         options were ever issued under the 2001 Plan.

     2   Includes options granted to Chairman Santo Petrocelli Sr. in June 1999
         exercisable for up to 150,000 shares of Common Stock at an exercise
         price of $1.50.

     3.  Includes warrants granted to officers, directors and employees of the
         Company exercisable for up to 3,400,000 shares of Common Stock at an
         exercise price of $0.55.

                                       38

<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In fiscal 2003 and 2002, the Company paid PEC Realty Corp., a company controlled
by Chairman Santo Petrocelli, Sr., rents totaling $79,729 and $81,900,
respectively. In fiscal 2003 and 2002, the Company was owed $28,732 from an
affiliate for services rendered and the Company owed the same affiliate $79,597
for services rendered by the affiliate.

In fiscal 2002, the Company satisfied all loans and management and consulting
fees previously owed to shareholders and affiliates by issuance of term notes as
discussed below. On April 1, 2002, the Company, or its subsidiaries, had
unsecured loans payable to Mr. Petrocelli, Petrocelli Industries Inc., a private
company controlled by Mr. Petrocelli, and then Chief Financial Officer Lawrence
S. Polan. These loans were due on demand, bore interest at various rates, and
had an outstanding principal balance of $573,490, net of a repayment of $100,000
in March 2002 to Petrocelli Industries Inc. Interest payable on those loans
totaled $212,295. For fiscal 2002, the Company had an interest expense of
$74,613 on shareholder and affiliate loans.

In fiscal 2002, certain shareholders and officers received management fees and
consulting fees totaling $27,500. On April 1, 2002, the Company had outstanding
management fees and consulting fees payable to Mr. Petrocelli and Petrocelli
Industries Inc. in the aggregate amount of $246,716. No other management fees or
consulting fees were payable to shareholders and affiliates. The aggregate
amount owed to shareholders and affiliates on the principal and accrued interest
on the demand loans, together with the management fees and consulting fees, was
$1,032,501.

On April 1, 2002, the Company issued unsecured promissory notes ("Shareholder
Loans") in favor of Mr. Petrocelli, Mr. Polan and Petrocelli Industries Inc. in
the aggregate amount of $1,032,501 in exchange for and in full satisfaction of
all outstanding balances due on the demand loans and management fees and
consulting fees. Each Shareholder Loan does not bear interest and requires
repayment in twenty-one (21) equal monthly payments from the date repayment
commences. Repayment on a Shareholder Loan in the principal amount of $10,263
was scheduled to begin in February 2003, however, the lender agreed to defer the
commencement date indefinitely. Repayment on the Shareholder Loans in the
aggregate principal amount of $1,022,238 was scheduled to begin in May 2003. In
May 2003, the Company made a $25,000 payment on account of the $1,022,238
Shareholder Loans and the lenders agreed to defer the commencement dates
indefinitely. The lenders could, however, demand that repayment begin on the
Shareholder Loans at any time. Due to the repayment demand option, the
Shareholder Loans were reclassified to current in fiscal 2003.

In fiscal 2002, certain stockholders and officers of the Company rendered
subcontractor services to the Company totaling $4,096, and the Company rendered
subcontractor services to affiliates totaling $5,954.

Except as set forth above, there were no transactions between the Company and
any of its current directors, executive officers, affiliates or holders of 5% or
more of its voting securities during either of the last two fiscal years.

                                       39

<PAGE>


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     A.  Exhibits

Exhibit No.       Description
-----------       -----------

3.1(a)            Articles of Incorporation as amended

3.2(a)            Bylaws as amended

3.3(b)            Certificate of Designation of 10% Series A Convertible
                  Preferred Stock

4.1(a)            Common Stock Certificate

4.2(a)            1999 Incentive Stock Option Plan

4.3(c)            Form of Registration Rights Agreement related to the June 2002
                  private placement of the Company's 10% Series A Convertible
                  Preferred Stock

10.1(d)           Promissory Note issued to Santo Petrocelli, Sr. dated April 1,
                  2002

10.2(d)           Promissory Note issued to Lawrence S. Polan dated April 1,
                  2002

10.3(d)           Promissory Note issued to Petrocelli Industries Inc. dated
                  April 1, 2002

21(a)             Subsidiaries

31                Certification of Principal Executive and Financial Officer
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32                Certification of Principal Executive and Financial Officer
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

---------------------------

     (a) Filed as Exhibits with the Company's Registration Statement on Form
         10-SB filed with the SEC on November 30, 1999, and incorporated by
         reference herein.

     (b) Filed as an Exhibit with the Company's Annual Report on Form 10-KSB
         filed with the SEC on August 13, 2002, and incorporated by reference
         herein.

     (c) Filed as an Exhibit with the Company's Quarterly Report on Form 10-QSB
         filed with the SEC on September 23, 2002, and incorporated by reference
         herein.

     (d) Filed as an Exhibit with the Company's Current Report on Form 8-K filed
         with the SEC on April 18, 2002, and incorporated by reference herein.

         B.       Reports on Form 8-K

Current Reports on Form 8-K filed during the fiscal year ended April 30, 2003
and the subsequent interim period ended August 7, 2003 are as follows:

                                       40

<PAGE>

         o    Report on Form 8-K, filed with the SEC on July 16, 2002 announcing
              the election of Jeffrey L. Powell as President, CEO and Director
              under Item 5 - Other Events.

         o    Report on Form 8-K, filed with the SEC on July 23, 2002 announcing
              the initial closing of the minimum offering of 500,000 shares of
              the Company's 10% Series A Convertible Preferred Stock and the
              election of Joel Schoenfeld as director to fill the vacancy
              created by the resignation of Michael J. Caputo under Item 5 -
              Other Events.

         o    Report on Form 8-K, filed with the SEC on August 19, 2002
              announcing the submission of the certifications required under 18
              U.S.C. Section 1350 and related matters under Item 7 - Financial
              Statements and Exhibits and Item 9 - Regulation FD Disclosure.

         o    Report on Form 8-K, filed with the SEC on August 22, 2002,
              announcing the election of Paul Bailey as Vice President,
              Secretary and Chief Financial Officer to fill the vacancies
              created by the resignation of Lawrence S. Polan under Item 5 -
              Other Events.

         o    Report on Form 8-K, filed with the SEC on November 6, 2002,
              announcing the election of Michael J. Caputo as interim President,
              Principal Executive and Financial Officer and the resignations of
              Jeffrey L. Powell, Paul Bailey and Joel Schoenfeld under Item 5 -
              Other Events.

         o    Report on Form 8-K, filed with the SEC on January 21, 2003,
              announcing the commencement of proceedings against National
              Abatement Corp. for violation of Clean Air Act under Item 5 -
              Other Events.

         o    Report on Form 8-K, filed with the SEC on April 16, 2003,
              announcing the intention of National Abatement Corp. to cease
              business operations under Item 5 - Other Events.

         o    Report on Form 8-K, filed with the SEC on April 29, 2003,
              announcing the resignation of Michael J. Caputo as interim
              President, Principal Executive and Financial Officer under Item 5
              - Other Events.

         o    Report on Form 8-K, filed with the SEC on June 26, 2003,
              announcing the engagement of Michael J. Caputo as interim
              President, Principal Executive and Financial Officer on a limited
              basis under Item 5 - Other Events.

         o    Report on Form 8-K, filed with the SEC on July 17, 2003,
              announcing the settlement of the conclusion of the proceedings
              against National Abatement Corp. with respect to violations under
              the Clean Air Act under Item 5 - Other Events.

                                       41

<PAGE>


ITEM 14. CONTROLS AND PROCEDURES

The principal executive officer and principal financial officer of the Company,
who are the same person (the "Certifying Officer"), with the assistance of
advisors, evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in sections
240.13a-14(c) and 240.15d-14(c) under the Exchange Act) within 90 days prior to
the filing date of this annual report. Based upon that evaluation, the
Certifying Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting management to material information
relative to the Company which is required to be disclosed in its periodic
filings with the SEC.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.







                                       42

<PAGE>


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                             NESCO INDUSTRIES, INC.

                                             /s Michael J. Caputo
                                             ---------------------------
                                             Name:  Michael J. Caputo
                                             Title: President
                                             Date:  September 2, 2003

In accordance with the Exchange, 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
---------                          -----                        ----

/s/ Santo Petrocelli, Sr.          Chairman and Director        August 18, 2003
-------------------------
Santo Petrocelli, Sr.

/s/ Santo Petrocelli, Jr.          Director                     August 18, 2003
-------------------------
Santo Petrocelli, Jr.











                                       43