**
U. S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549_______________**FORM 10-KSB

× ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) **OF THESECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) **OF THESECURITIES EXCHANGE ACT OF 1934**_______________**Commission File Number: 0-30494

BLACK DIAMOND INDUSTRIES, INC.(Exact name of registrant as specified in its charter)

**Florida**
**65-0956097****(State of incorporation)****(I.R.S. Employer    Identification No.)****150 East Palmetto Park Road, Suite 510, Boca Raton, Florida33432(Address of principal executive offices)

561-750-4450 (Registrant's telephone number)

Securities registered pursuant to Section 12(b)**of the Act: 
None

Securities registered pursuant to Section 12(g)**of theAct: 
Common Stock, par value $.0001 per share**
Indicate by check mark whether the registrant (1) has filedall reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has been subjectto such filing requirements for the past 90 days. Yes [ X ] No [ ]. 

Indicate by check mark if disclosure of delinquent filerspursuant to Item 405 of Regulation S-B is not contained herein, and will not becontained, to the best of registrant's knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-KSBor any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $0

There is no active trading market for the Registrant's CommonStock.

Indicate the number of shares outstanding of each of theregistrant's classes of common stock, as of the latest practicable date.
CLASSOUTSTANDING AS OF NOVEMBER 17,    2002Common Stock
13,911,525****
Transitional Small Business Disclosure Format (check one) Yes [ ] No [ X ].

 
** ****BLACK DIAMOND INDUSTRIES, INC. 

TABLE OF CONTENTS**
 
 
**Page****Cautionary Statement Regarding    Forward-Looking Statements and Future Prospects** 1
1**PART I**
            Item 1.        Description of Business             Item 2.        Description of Property             Item 3.        Legal Proceedings             Item 4.        Submission of Matters to a Vote of Security Holders 
**PART II**
            Item 5.        Market for Common Equity and Related Shareholder Matters             Item 6.        Management's Discussion and Analysis or Plan of Operation             Item 7.        Financial Statements             Item 8.        Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure 
**PART III**
            Item 9.          Directors, Executive Officers, Promoters and Control Persons; Compliance                                 with Section 16(a) of the Exchange Act            Item 10.       Executive Compensation             Item 11.        Security Ownership of Certain Beneficial Owners and Management             Item 12.       Certain Relationships and Related Transactions             Item 13.        Exhibits, Financial Statement Schedules, and Reports on Form 8-K 

            Signatures

 

 
** ****BLACK DIAMOND INDUSTRIES, INC.

Cautionary Statement Regarding Forward-Looking Statements andFuture Prospects**
            ThisAnnual Report on Form 10-KSB and other public statements by the Company includesforward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended. We have based these forward-looking statements on our currentexpectations and projections about future events. These forward-lookingstatements are subject to known and unknown risks, uncertainties and assumptionsthat may cause our actual results, levels of activity, performance orachievements to be materially different from any future results, levels ofactivity, performance or achievements expressed or implied by suchforward-looking statements. In some cases, you can identify forward-lookingstatements by the use of the words "expect", "estimate", "project", "intend","plan," "will," "should," "could," "would," "anticipate," "believe," or thenegative of such words and similar expressions. Factors that might cause ouractual results, levels of activity, performance or achievements to differ fromthose expressed or implied in the forward-looking statements include, amongothers, the risk factors described under the caption "Risk Factors" in Item 1 inthis Annual Report. Additional factors are described in the Company's otherpublic reports filed with the Securities and Exchange Commission. Readers arecautioned not to place undue reliance on these forward-looking statements, whichspeak only as of the date made. The Company undertakes no obligation to publiclyrelease the result of any revision of these forward-looking statements toreflect events or circumstances after the date they are made or to reflect theoccurrence of unanticipated events. 
** 

 

PART I

ITEM 1. BUSINESS

General**
            BlackDiamond Industries, Inc. (the "Company" or "Black Diamond") is a Floridacorporation which was incorporated on July 11, 1998. Prior to our acquisition ofDDS Holdings, Inc. ("DDS USA") on November 14, 2002, our activities were limitedto actions related to our organization. Our business plan was to acquire acontrolling equity interest in or assets of an operating company.

            OnNovember 14, 2002 we acquired DDS USA, a Nevada corporation, pursuant to asecurities exchange agreement dated October 27, 2002, by and between the Companyand each of the shareholders of DDS USA. Under the terms of the securitiesexchange agreement, the shareholders of DDS USA agreed to transfer all of theissued and outstanding shares of common stock of DDS USA to the Company inexchange for an aggregate of 12,535,500 shares of our common stock, or 68% ofthe issued and outstanding shares. Immediately prior to, and in connection withthe securities exchange transaction, Peter Goldstein, the then-sole director andofficer and majority shareholder of the Company, returned 13,564,350 shares ofcommon stock of the Company to treasury. DDS USA holds the North, South andCentral American rights to the sale and distribution of dry dissagregationtechnology, permitting the dry separation of agricultural products which can besorted according to various properties, and which may have applications acrossnumerous industries. Both the Company and DDS USA are development stagecompanies which have had no revenues to date.

           Certainformer principal shareholders of DDS USA, constituting a majority of ouroutstanding shares, have filed with us a consent to a resolution which has beenapproved by our Board of Directors that will effect a change in our jurisdictionof incorporation to Delaware and a change of our name to DDS Technologies (USA),Inc. It is expected that these changes will be effective on December 19, 2002.

            TheCompany's principal executive offices are located at 150 East Palmetto ParkRoad, Suite 510, Boca Raton, Florida 33432, and its telephone number is (561)750-4450. 
** 

Technology License**
            TheCompany and DDS USA intend to commercialize certain technology which has beenlicensed by DDS Technologies Ltd.(""DDST"), a United Kingdom company which was aprincipal stockholder of DDS USA. The license provides for the exclusive North,South, Central American and Caribbean (excluding Cuba) rights to the pendingpatent, # 02425336.1, which was filed with the European patent office on May 28,2002. The patent relates to the Longitudinal Micrometric Separator ForClassifying Solid Particulate Materials. The license agreement also covers otherrelated technologies of DDST. The terms of the agreement required DDS USA to paythe at the time of signing $500,000 and 3,500,000 shares of the common stock ofDDS USA, which was subsequently exchanged for 3,500,000 shares of our commonstock in the share exchange transaction with DDS USA. The license agreement alsocalls for DDS USA to pay a royalty to DDST as follows:

                 

         
a)    49% of the net profits derived from the sale of              products embodying the licensed technology b)      24% of the net profits derived from the licensing              and rental of products embodying the licensed          technology; c)9% of net profits derived by from the sale of              materials that are produced by machines embodying the licensed              technology and  subsequently sold for use in producing              pharmaceutical additive, cosmetics or other products; and d)             2%          of the net profits derived from any source related to the licensed          technology be donated to charity.
       

            DDST has completed a test facility in Parma, Italy. This facility has beenconstructed to introduce prospective clients to the technology in operation. Theclients will be invited to process their raw materials, as per their ownspecifications and requirements, in order to obtain an accurate accounting oftheir potential benefits. 
**Description of the Disaggregation Dry System Technology**
            The nutritional value of a product is based on the ability of a human oranimal to assimilate the basic food value of the product. In vegetable products,the grip connection between the various components of the product oftenconditions the digestive value of the product. In fact, in the digestive system,a single alimentary substance can affect the digestive process in various ways.Therefore, to maximize the nutritional value the goal is to use every componentto more completely fuse and proportionately mix each component of the vegetablestructures (protein, starches, fibrous fractions, etc.). In order to accomplishthe optimal result; the basic molecular components need to be separated in acontrolled environment.

            The Disaggregation Dry System Technology is the result of years of research,which began in 1964 by a prestigious group of technical research analysts andscientists of the alimentary field. Engineer Umberto Manola, the founder DDSTand a director and principal shareholder of the Company, has developed a systemof "disaggregation" of structures, called "crushing to collision," through whichthe fragments of matter, both organic and inorganic, endure violentaccelerations and decelerations, which cause the disaggregation of thestructure. The particles are separated as a function of their specific weight.The technology and its end result is understood by the food industries, both forhuman and for animal consumption, to have a tremendous value both economicallyand nutritionally. Management believes that the results obtained utilizing theDDS technology are unattainable with any other currently available technology,since all available methods interact with the matter modifying (in some casesdrastically) the natural property of the product originally introduced. Althoughresearch on the technology began over 35 years ago, only in the last few yearshas it been developed by Engineer Manola to the point of potential commercialapplication. Engineer Manola has filed with the European Patent Office anapplication covering the central of the technology, which has been assigned toDDST, which in turn, has licensed the technology to DDS USA.
**Potential Applications and Marketing Plan**
            We intend to initially concentrate our marketing/sales efforts on four marketsegments in which we believe that we can achieve quick penetration. These fourmarkets are:

           Large Breweries. Our initial research indicates that the brewing industrywould very receptive to a technology which could provide cost savings in theform of more efficient use of raw materials.

           Flour Processors, The Bakery Industry, Cereal Processors And Pasta Companies.These industries would have a keen interest in a technology which could offer aproduct with uniform glutens and yeast reactions while using a less expensive grainproduct. This technology would be of great interest to an industry thattypically operates on small profit margins. 

           Citrus. DDST's demonstration facility in Parma, Italy has shown superiorresults in the extraction of citrus oils and other by products to existingmethods. We have had a number of discussions with Californian and Florida citrus producersthat have indicated an interest in duplicating the efforts being undertaken inSicily to convert the pumas that is a by-product of the oranges into saleableproduct. The potential profits which could be generated by the added recycling ofthe leftovers/by-products may be substantial. The process would resolve anenormous problem created by the leftovers of the citrus industry. 

           Animal Feed. Our technology could have application in the market for bothlivestock and domestic pets. Preliminary tests have indicated that the livestockand pet industries can achieve cost savings in excess of twenty percent of theirraw material cost. The technology allows the feed products, derived from avariety of raw materials, to be tailored to the specific nutritionalrequirements of each different type of animal. 

            Our technology has potential application in a number of other industrieswhich under consideration, including but not limited to the wine industry.  

            Our intended customers are relatively large food processors. While we havehad significant discussions with a number of these potential customers, sellingto these companies involves a relatively long sales cycle with significant duediligence and testing on the part of the customers. Even though the system is incommercial operation in Europe, as of the date of thisAnnual Report, we have no agreements for the sale or lease of our equipment andthere can be no assurance that we will achieve profitable operations.
**Revenue Model**
            Our business plan contemplates that we will lease machinery employing the Disaggregation Dry System Technology or enter into joint venture or strategicpartner arrangements in which we will retain an equity interest in the profitsfrom the sale of products processed with our machinery. We believe that thismethod of commercialization will yield quicker market acceptance and in thelong-term provide higher cash flow and profits to the Company. However, while weare in discussions with a number of potential customers, we do not have anylease or joint venture contracts to date and we may be required to alter ourrevenue model if we are unsuccessful in reaching such agreements. In addition,our preferred revenue model will require us to obtain substantial additionalfinancing. Since our expected customers are relatively large and creditworthy,and because we will not hold equipment in inventory prior to obtaining acontract, we believe we will be able to obtain such financing on terms that willprovide a reasonable return to us. Nevertheless, if we are unable to finance thepurchase of equipment we may need to revise our business model or reduce ourexpectations.
**Manufacturing**
            We do not anticipate manufacturing the equipment ourselves but rather intendto purchase the equipment from DDST. In the license agreement with DDST, it hasagreed to manufacture equipment on our behalf and to maintain the sale price tous during the term of the license. Based upon current conditions, we believethat within several months DDST will be able to supply us with six machines permonth. While we have certain rights to manufacture the equipment in the eventthat DDST is unable to meet our production requirements, in such event we mayhave difficulty meeting our manufacturing requirements and this could have anadverse effect on our financial results.
**Competition**
            As of the date of this Annual Report, we are unaware of any competitor whichis focused on similar methods of increasing yields in food processing. However,there are numerous methods of increasing raw material yields using dissimilarprocesses and we will need to show attractive cost-savings to our customers inorder to compete effectively. This is especially true given our new entry intothis industry. 
**Patents and Proprietary Protection**
            We rely on a combination of our licensed patent, licenses, trade secrets andknow-how to establish and protect our proprietary rights to our technologies andproducts. We have obtained an exclusive North, South, Central American andCaribbean (excluding Cuba) rights to the pending patent, # 02425336.1, which wasfiled with the European patent office on May 28, 2002. DDST is in the process offiling worldwide protection and has filed in Japan and the United States.  The patent relates to theLongitudinal Micrometric Separator For Classifying Solid Particulate Materials.The license agreement also covers other related technologies of DDST. Until suchpatent is issued we are particularly sensitive to the protection of tradesecrets. It is our policy to require our customers, executive and technicalemployees, consultants and other parties to execute confidentiality agreements.These agreements prohibit disclosure of confidential information to thirdparties except in specified circumstances. These agreements also generallyprovide that all confidential information relating to our business is theexclusive property of the Company.
**Personnel**
            As of December 5, 2002, the Company had 2 employees, each of whom is employedin an executive capacity. None of the Company's employees are represented by alabor union. Management believes its relations with its employees are good. Aswe begin to commercially market our products and services, we anticipate hiringa sales and marketing team as well as service technicians. We do not anticipateany difficulty in attracting qualified candidates
**Government Regulation**
            We are subject to various state and federal laws, regulations and guidelinesrelating to safe working conditions and sales practices. While our customers aregenerally subject to extensive regulation by the U.S. Food and DrugAdministration, which may affect their specifications for products supplied bythe Company, the Company's products and operations are not directly subject tosuch regulation.
**Risk Factors***            Development Stage Company*
            We are in the development stage and our proposed operations are subject toall of the risks inherent in the establishment of a new business enterpriseincluding the absence of an operating history. The likelihood of our successmust be considered in light of the problems, expenses, difficulties,complications, and delays frequently encountered in connection with theformation of a new business and the competitive environment in which we willoperate. The Company has had no operating revenues to date and there can be noassurance of future revenues. As a result of the start up nature of our businessand the fact that it will incur start-up expenses, we may be expected, at leastinitially, to sustain operating losses.
*            No Assurances of Revenue or Profitability

            We anticipate that our primary sources of revenue will come from leasingequipment employing Disaggregation Dry System Technology or from joint venturesemploying such technology. There can be no assurance that we will be able torealize contracts with the target companies to provide our technology orproducts. As of the date of this Annual Report, no contracts have been executed usthat will provide a reasonable assurance of revenues.
*            Dependence on DDST*
            We rely upon DDST to continue to develop the Disaggregation Dry SystemTechnology, to prosecute and protect our licensed patents, and to manufacturethe equipment that will be leased or sold by us. If DDST fails to perform underits agreements with us, there will be a material adverse effect on our financialcondition and results of operations.
*            Need for Additional Capital*
            The development of our business may require significant additional capital inthe future to, among other things, fund our operations, expand the range ofproducts and services we offer and finance future acquisitions and investments.We have historically relied upon private sales of our equity to fund ouroperations. There can be no assurance, however, that these sources of financing,or alternative sources will be available on terms favorable to us, or at all.Our ability to obtain additional financing will be subject to a number offactors, including market conditions, our operating performance and investorsentiment. These factors may make the timing, amount, terms and conditions oradditionalfinancings unattractive to us. If we are unable to raise additionalcapital, our growth could be impeded.
*            Dependence on Management, Need to Recruit Additional Personnel

            To date, we have depended upon the efforts of Mr. Ben Marcovich and Mr.Joseph Fasciglione, our chief executive officer and chief financial officer,respectively, and Mr. Lee Rosen, a consultant to the Company. The loss of any oftheir services would have a material adverse effect on the Company. We do nothave any employment or other agreements with our key personnel, nor do we haveany "key-man" insurance on them. In addition, if we are to be successful, wewill need to recruit additional management depth as well as sales and marketingand technical personnel. While we believe that we will be able to recruit suchpersonnel, we cannot provide any assurance to that effect.
*            Lack of Established Trading Market*
           As of the date of this Annual Report, there has not been apublic market for our common stock and there can be no assurance that one willdevelop. In addition, the stock market in recent periods has experienced andcontinues to experience significant price and volume fluctuations, which haveaffected the market price of the stock of many companies and which have oftenbeen unrelated or disproportionate to the operating performance of thesecompanies. These fluctuations, as well as a shortfall in sales or earningscompared to securities analysts' expectations, changes in analysts'recommendations or projections or general economic and market conditions, mayadversely affect the market price of our common stock.
**ITEM 2. DESCRIPTION OF PROPERTIES**
            The Company owns no real property and currently leases all of its officespace. The Company leases the office space that houses its executive offices inBoca Raton, Florida, totaling approximately 1950 square feet. The leaseexpires in January 2007. The Company uses this facility for its executive,marketing, administrative, finance and management personnel.
**ITEM 3. LEGAL PROCEEDINGS**
            There are currently no legal proceedings pending to which the Company is aparty or to which any of its properties is subject.
**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
            Pursuant to an Information Statement dated September 27, 2002, effective asof October 17, 2002, the Company amended its Articles of Incorporation toincrease its authorized capital stock from 1,000,000 shares of common stock to25,000,000 and to authorize 1,000,000 shares of "blank check" preferred stock.

            Pursuant to an Information Statement dated November 29, 2002, which isanticipated to be effective as of December 19, 2002, the Company will change itsjurisdiction of incorporation from Florida to Delaware and change its name toDDS Technologies (USA), Inc.
** 

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

General**
            Our shares of common stock have never been traded on any recognized stockexchange. On October 31, 2002 there were 49 shareholders of record.
**Dividends**
            TheCompany has not paid any cash dividends to shareholders. The declaration of anycash dividends will be at the discretion of the Board of Directors, and willdepend upon earnings, capital requirements and the financial position of theCompany, general economic conditions and other pertinent factors. The Companydoes not intend to pay any cash dividends in the foreseeable future. Managementintends to use earnings, if any, to develop and expand the Company's business. 

**Recent Sales of Unregistered Securities**
            In connection with the acquisition of DDS USA, on November 17, 2002, theCompany issued an aggregate of 12,535,500 shares of our common stock to theformer stockholders of DDS USA. Such shares were issued in reliance on theexemption from registration provided by Section 4(2) of the Securities Act of1933, as amended, and Regulation D thereunder. No brokerage commissions werepaid in connection with such transaction.
**ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND      RESULTS                OF OPERATIONS 

      Financial Results

            During thefiscal years ended October 31, 2001 and 2002, we conducted no businessoperations. As a result, we had no revenue and all of our expenses wereassociated with maintaining our corporate existence. 

Plan of Operations

            Effectiveas of November 14, 2002, we acquired all of the outstanding shares of DDS USA.DDS USA was organized in July 2002 and all of its expenses to date have beenattributable to its organization, the acquisition of the license from DDST, theshare exchange transaction with the Company, and the beginning commercialdiscussions with respect to our licensed technology.

            Theseexpenses have been paid with the proceeds of private placements of securities byDDS USA prior to the share exchange transaction with the Company. In theaggregate DDS USA raised $965,000 which used to pay the cash cost of the licensefrom DDST and the costs associated with the share exchange transaction with theCompany. As of the date of this Annual Report, the Company's approximate cashbalance was $350,000.

            TheCompany is in discussions with a number of significant food processors regardinga lease or a joint venture purchase of equipment employing our technology. Asall of these parties are large, creditworthy companies, we do not anticipate anydifficulty in financing purchases from DDST. Nevertheless, we will likely seekadditional financing to finance our operations pending the commencement ofsustainable cash flow. 
**ITEM 7. FINANCIAL STATEMENTS**
            See Financial Statements provided at pages F-1 through F-__ hereof.
**ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND                                 FINANCIAL DISCLOSURES        **
None. 
******PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;COMPLIANCE               WITH SECTION 16(A) OF THE EXCHANGE ACT**
            Certain information regarding the directors and executive officers of theCompany is set forth below.
Name
AgePosition   Ben Marcovitch
64President, Chief Executive    Officer and DirectorJoe Fasciglione
50Chief Financial Officer,    Treasurer and SecretaryDr. Jacques DeGroote
76DirectorUmberto Manola
71DirectorDr. Marc Mallis
51Director
            The following is a description of the business experience of each of ourdirectors and executive officers:
*            Ben Marcovitch*
            Ben Marcovitch, age 64, is Chairman and CEO of Gemini Capital Partners, aFinancial Services firm, established in the UK  From 1996 to 1998, Mr.Marcovitch acted as a private investor and financial advisor. From 1994 to 1996,Mr. Marcovitch acted as Chairman and CEO of Triumph Investments Co., a portfoliomanagement firm.  From 1986 to 1995, he acted as a Chairman and CEO of GNPProducts, Inc, a publicly trade Food Products Company which manufactured anddistributed food products throughout the United States.  Prior to GNP, from1970 to 1982, Mr. Marcovitch successively acted as Chairman and President ofBelgium Standards, CEO of Western, Allebee Oil & Gas Inc., CEO of Sogevox Inc.,and CEO Sanitary Refuse Co.

            From 1963 to 1983 Mr. Marcovitch acted as CEO and President of Budget FuelsInc., in Montreal Canada, which distributed refined petroleum products. Form 1959 to 1963, he acted as Vice President of HY Grade fuels, Montreal,Canada, and was responsible for coordinating the buying, marketing, service anddistribution of fuel in Montreal.  He is a member of the Canadian PetroleumClub, Montreal Chamber of Commerce, Bnai Brith Organizations and VariousBusiness Organizations.  
*            Joe Fasiglione*
            Joe Fasiglione , age 50, is the owner and president of Alliance FinancialServices, a financial consulting company providing services to small and mediumsized businesses.  From 1998 until 2000 Mr. Fasiglione was employed as abusiness analyst for AT&T Wireless Services where he provided financing analysisrelated to local cluster operations.   From 1995 to 1997, Mr.Fasiglione acted as Director of Business Operations for AT&T Wireless Servicesduring which time he held primary responsibility for budget preparations,forecasting and various financial analysis.  From 1993 until 1994, Mr.Fasiglione acted as Operations Manager also for AT&T Wireless Services. From 1990 to 1992, he held the position of CFO for Professional ReimbursementSolutions of Dallas, Texas, where he was responsible for all financial andadministrative functions for a large closely held operation employing 28 people. From 1983 until 1990, Mr. Fasiglione held at different times the positions ofRegional Business Manager & Controller, Assistant Controller and Manager ofBudgeting and Internal Reporting for Metromedia Paging of Dallas, Texas. From 1981 until 1983 he acted as Corporate Accounting Manager for HomequityRelocation Services, Inc. of Wilton, Connecticut.  Mr. Fasiglione acted asCorporate Budget manager for Frank B. Hall & Company, Inc., a majorinternational commercial insurance brokerage firm from 1979-1981 and as SeniorInternal Auditor for Levitt Homes, Inc. from 1976 until 1979.  Mr.Fasiglione also served as a Staff Auditor for Grant Thornton Accountants andManagement Consultants from 1975 to 1976 .  

        Mr. Fasiglione holds a BBA in Accounting from Iona College,New Rochelle, NewYork, and a CPA designation from the same institution.  Mr. Fasiglione is amember of the American Institute of Certified Public Accountants.
*        Dr. Jacques DeGroote*
            Jacques DeGroote, age 76, has acted as a private consultant offeringfinancial and economic advice and representation in negotiations from 1994 tothe present. Dr. De Groote currently assists a number of companies in variouscapacities. From 1973 to 1994 Dr. DeGroote served as Executive Director of theInternational Monetary Fund. Dr. DeGroote also served as Executive Director ofthe World Bank (IBRD), the International Finance Corporation (IFC) and theInternational Development Association (IDA) from 1975 to 1991.

            During his tenure as joint Executive Director for the World Bank andInternational Monetary Fund, Dr. DeGroote's constituency included Belgium,Austria, Luxemburg, Turkey, Belarus the Czech Republic, Hungary, Karskhstan, theSlovak Republic and Slovenia. As a member of the Executive Board of the IMF, Dr.DeGroote made special contributions to the preparation and negotiation ofstabilization programs for Turkey, Hungary and Czechoslovakia, which aided thetransition of these countries from command economies to capital driveneconomies. Dr. DeGroote was also instrumental in reforming the IMF's system ofcompensatory financing. As a member of the Executive Board of the World Bank hemade special contributions to the acceptance of non-project related lending,specialty oriented projects, and the involvement of the World Bank in thePrivate Sector. 

           From April 1971 to November 1973 Dr. DeGroote headed the Research Departmentof the National Bank of Belgium, with the rank of Deputy Director. From May 1969to November 1973 he acted as Financial Counselor of the Belgium Delegation tothe OECD in Paris. He headed several working groups, examining the firstproposal for a multilateral agency guaranteeing private investments. From March1966 to May 1969 Dr. DeGroote acted as Economic Advisor to the Republic of Zaireand Advisor to the Governor of the National Bank of Zaire. He was responsiblefor Zaire's economic rehabilitation, and for negotiations with the IMF, theWorld Bank and the U.S. government. The 1967 program resulted in the only periodof growth of the Zairian economy since Independence (1968-1971), and is cited bythe IMF and World Bank as one of the most successful stabilization efforts everundertaken under their aegis. During this period Dr. DeGroote was also in chargeof Zaire's negotiations for nationalizing and reactivating Gecamines (the formerUnion Miniere).

            From July 1965 to March 1966 Dr. DeGroote acted as Financial Counselor of theBelgium Delegation to the OECD in Paris. From May 1963 to July 1965 he acted asAdvisor to the Foreign Department of the National Bank of Belgium, representedBelgium in the Ossala group which was formed to study the creation of a newreserve instrument and submitted the first proposals favoring a collective unitto be created by the IMF, which led to the SDR. From April 1960 to May 1963 hewas Assistant to the Belgium Executive Director of the International MonetaryFund and World Bank in Washington. From January 1957 to April 1960, Dr. DeGrooteserved as Attachè at the National Bank of Belgium, where his responsibilitiesincluded negotiation of the payment agreements with the countries of EasternEurope. During the first few months of 1960, he served as secretary of thecommittee preparing the Belgian-Zairian Economic Round Table.  Dr. DeGrooteis a shareholder in DDST which holds a significant interest inDDS and, as a result, he will hold ownership in the Company following theExchange Transaction.

           Dr. DeGroote's academic history includes, from July 1955 to January 1957,acting as Assistant at the University of Cambridge (United Kingdom) andAssistant at the University of Louvain. From 1963 to 1992 Dr. DeGroote held theposition of Professeur Ordinaire in the Economics Department of the Universityof Namur (Belgium) where he taught courses on money and credit, monetarymechanisms and institutions, and current problems of international finance. From1963 to 1973, Dr. DeGroote held the position of Professeur Extraordinaire at theUniversity of Louvain. From 1957 to 1960 and from 1963 to 1965 he also acted asa Lecturer at the Catholic University of Lille where he taught courses onstructural economics and the history of economic thought.

            Dr. DeGroote holds a D. Juris from University of Louvain, Belgium, an M.A.Economics from Cambridge University, United Kingdom a Licencie en SciencesEconomiques from Louvain University, Belgium and a Licencie en SciencesPolitiques et Administratives from Louvain University, Belgium.

            Dr. DeGroote is highly decorated and holds the Grand Officer of the Order ofLeopold I (Belgium), Grand Officer of the Order of Orange-Nassau, (Luxembourg),Commander of the Order of Merit of Austria, Commander of the Order ofLuxembourg, Red Star of the Hungarian People with Gold Palm, Officer of theOrder of Zaire, 

            Dr. DeGroote also contributes his time as Director of the Belgian-AmericanEducational Foundation, founded in 1921, to sponsor exchanges between U.S. andBelgian universities, and from 1980 to 1989, as a member of the jury of the KingBaudevin Foundation's biannual prize for important contributions to the struggleagainst poverty or underdevelopment.
*            Umberto Manola*
            Umberto Manola, age 71, is a researcher in biological techniques for thetreatment of cereals. He concentrates on systems for the dehumidification andextraction of basic molecular elements (organic active principles) which allowfor zero environmental impact. Currently he collaborates with several well-knownresearch institutes in analyzing nutritional applications in differentgeographical areas.

           Mr. Manola holds patents in the methodology of air separation, methodology ofmolecular division and the methodology of micronization in double tandem. Mr. Manola is the inventor and patent holder of the technology under license byDDST.  Mr. Manola is a shareholder in DDST. Under the license agreement,DDST is entitled to nominate one director to the Board. Mr. Manola is DDST'snominee.

            Mr. Manola holds a Diploma of Abteilun engineer from St. Wales, and a Degreein milling technology, from Turin, Italy (Laurea in tecnica molitoria a Torino)
*            Dr. Marc Mallis, M.D.*
            Dr. Mallis is a principal with Retina Vitreous Associates of Florida Agia,Mallis and Pautler P.A. Inc., from 1980 to the present, where he is engaged inthe practice of medicine with a specialty in ophthalmology. 

            Dr. Mallis graduated from New York Medical College and attended theOphthalmology Course of Stanford University School of Medicine. Dr. Mallisinterned at Geisinger Medical Center, Department of Ophthalmology in Danville,Pennsylvania, performed his residency at New York Medical College, Department ofOphthalmology, Valhalla New York, and received a Vitreo-Retinal fellowship atOhio State University, Columbus, Ohio.

            Consultant

            Mr. Lee Rosenis a consultant of the Company. 

           Mr. Rosenis 49 years old.  During the previous five years, Mr. Rosen was aconsultant in private practice and a private investor.

Section 16(a) Compliance

            Section 16(a) of the Exchange Act requires the Company's officers anddirectors, and persons who own more than ten percent of a registered class ofthe Company's equity securities, to file reports of ownership and changes inownership with the Securities and Exchange Commission. Officers, directors andgreater than ten-percent shareholders are required to furnish the Company withcopies of Section 16(a) forms they file. On April 30, 2002, we filed a Form 3[for who] which was required to be filed by April 23, 1999.

 
**ITEM 10. EXECUTIVE COMPENSATION**
           During the fiscal year ended October 31, 2002, the Company's sole officer anddirector did not receive any compensation for his services rendered to theCompany, and did not accrue any compensation pursuant to any agreement with theCompany. No retirement, pension, profit sharing, stock option or insuranceprograms or other similar programs have been adopted by the Company for thebenefit of its employees. 

Employment Agreements

            The Company currently has no employment agreements. [Describe currentcompensation arrangements]

Stock Option Plans

            The Company currently has no stock option plan. 
**ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT

 **
The following table sets forth certain information regarding the beneficialownership of our common stock as of November 17, 2002 by the following persons:

each person who is known to be the beneficial owner of more than five    percent (5%) of our issued and outstanding shares of common stock;

each of our directors and executive officers; and

all of our directors and executive officers as a group.
**NUMBER OF SHARES     NAME AND ADDRESS BENEFICIALLY OWNED    PERCENTAGE OWNED    Ben Marcovitch    (President)        17332 Saint James Court    Boca Raton, FL 33496          800,000     5.75%        Joseph Fasciglione     (Secretary & Treasurer)        14199 Aster AvenueWellington, FL 33414        100,000  0.72%        Umberto Manola     (Director)        DDS Technologies Ltd.21 S. George RoadLondon, UK    3,500,000     25.6%        Dr. Jacques DeGroote      (Director)        150 E. Palmetto Park RoadSuite 510    Boca Raton, FL 33432        Nil     Nil        Dr. Marc Mallis     (Director)        2975 Rolling Woods DrivePalm Harbor, FL 34683     700,000  5.03%        DDS Technologies Ltd.(1)     21 S. George RoadLondon, UK        3,500,000  25.16%        Mallis Limited Partnership(2)     2975 Rolling Woods DrivePalm Harbor, FL 34683        700,000        5.03%        All directors and officers as a group (5 Persons)     5,100,000     36.7% 
       (1) DDS Technologies Ltd. holds the patent for a dry dissagregationtechnology which is licensed by Black Diamond. Umberto Manola and Dr. JacquesDeGroote, who are both Directors of Black Diamond Industries, hold 60% and 2% ofthe outstanding shares of common stock of DDS Technologies Ltd. respectively.

(2) Dr. Marc Mallis, MD is the General Partner of The Mallis LimitedPartnership and is a Director of Black Diamond Industries. Shares held by TheMallis Limited Partnership are owned beneficially by Dr. Mallis.
**ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
            Peter Goldstein, who during the last completed fiscal year was the soledirector and officer of the Company, extended a non-interest bearing loan to theCompany in the amount of $1667.00, which loan was repaid by the Company inconnection with the completion of the transaction with DDS USA. 

           Mr. Goldstein is party to a consulting agreement by and between himself andthe Company, which became effective upon closing of the transaction with DDSUSA.  Under the terms of the Consulting Agreement, Mr. Goldstein isentitled to receive payment in the amount of $58,333 in exchange for providingassistance and information to the Company for such period as is required by theCompany to properly consummate the change in ownership transition.  Mr.Goldstein is, in addition, party to a lockup agreement by and between himselfand the Company pursuant to which he has agreed to limit his sale of CommonStock during a 24 month period commencing upon the consummation of thetransaction.
****
       **Item 13. Exhibits and Reports On Form 8-K
        (a)       Exhibits                                  See Exhibit Index
**        (b)     Reports on Form 8-K

Signatures**
In Accordance with Section 13 or 15(d) of the Exchange Act, The Registrantcaused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 

BLACK DIAMOND INDUSTRIES, INC.
Signature          TitleDate/s/ Ben MarcovitchPresident &    DirectorDecember 6, 2002Ben Marcovitch          /s/ Dr. Marc Mallis December 6, 2002Dr. Marc Mallis                 Director    Dr. Jacques    DeGrooteDirectorDecember 6, 2002Dr. Jacques    DeGroote                   ****
 

 

CERTIFICATION PURSUANT TO SECTION 302 of the SARBANES-OXLEYACT OF 2002
**--------------------------------------**
        I, Ben Marcovitch , President of Black Diamond Industries, Inc., herebycertify that:

        1. I have reviewed this annual report on Form 10-KSB of Black DiamondIndustries, Inc.;

        2. Based on my knowledge, this annual report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this annualreport;

        3. Based on my knowledge, the financial statements, and other financialinformation included in this annual report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this annual report;

        4. I am responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and I have:

        (a) designed such disclosure controls and procedures to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries,is made known to me by others within those entities, particularly during theperiod in which this annual report is being prepared;

        (b) evaluated the effectiveness of the registrant's disclosure controls andprocedures as of a date within 90 days prior to the filing date of this annualreport (the "Evaluation Date"); and

        (c) presented in this annual report my conclusions about the effectiveness ofthe disclosure controls and procedures based on my evaluation as of theEvaluation Date;

        5. I have disclosed, based on my most recent evaluation, to the registrant'sauditors and to the audit committee of registrant's board of directors (orpersons performing the equivalent function):

        (a) all significant deficiencies in the design or operation of internalcontrols which could adversely affect the registrant's ability to record,process, summarize and report financial data and have identified for theregistrant's auditors any material weaknesses in internal controls; and

        (b) any fraud, whether or not material, that involves management or otheremployees who have a significant role in the registrant's internal controls; and

        6. I have indicated in this annual report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of my most recentevaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

Date: December 6, 2002

 

/s/ Ben MarcovitchBy: Ben Marcovitch President

 

CERTIFICATION PURSUANT TO SECTION 302 of the SARBANES-OXLEYACT OF 2002
**--------------------------------------**
        I, Joseph Fasciglione, Secretary and Treasurer of Black Diamond Industries,Inc., hereby certify that:

        1. I have reviewed this annual report on Form 10-KSB of Black DiamondIndustries, Inc.;

        2. Based on my knowledge, this annual report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this annualreport;

        3. Based on my knowledge, the financial statements, and other financialinformation included in this annual report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this annual report;

       4. I am responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and I have:

        (a) designed such disclosure controls and procedures to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries,is made known to me by others within those entities, particularly during theperiod in which this annual report is being prepared;

        (b) evaluated the effectiveness of the registrant's disclosure controls andprocedures as of a date within 90 days prior to the filing date of this annualreport (the "Evaluation Date"); and

        (c) presented in this annual report my conclusions about the effectiveness ofthe disclosure controls and procedures based on my evaluation as of theEvaluation Date;

        5. I have disclosed, based on my most recent evaluation, to the registrant'sauditors and to the audit committee of registrant's board of directors (orpersons performing the equivalent function):

        (a) all significant deficiencies in the design or operation of internalcontrols which could adversely affect the registrant's ability to record,process, summarize and report financial data and have identified for theregistrant's auditors any material weaknesses in internal controls; and

        (b) any fraud, whether or not material, that involves management or otheremployees who have a significant role in the registrant's internal controls; and

        6. I have indicated in this annual report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of my most recentevaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

Date: December 6, 2002

 

/s/ Joseph FasciglioneBy: Joseph Fasciglione Secretary and Treasurer

 
**INDEX TO EXHIBITS**    Exhibit No.       Description of Exhibits3.1      Articles of Incorporation of the Registrant filed with the    Florida Secretary of State on June 11, 1998 (incorporated herein by    reference to the Registrant's Form 10-SB filed with the Securities and    Exchange Commission on December 13, 1999).3.2      Articles of Amendment to Articles of Incorporation of the    Registrant filed with the Florida Secretary of State on August 13, 1999    (incorporated herein by reference to the Registrant's Form 10-SB filed with    the Securities and Exchange Commission on December 13, 1999).3.3      Amended and restated bylaws of Registrant (incorporated herein by    reference to the Registrant's Form 10-SB filed with the Securities and    Exchange Commission on December 13, 1999).4.1      Registration Rights Agreement by and among Black Diamond    Industries, Inc. and each of the shareholders of DDS Holdings, Inc. dated    November 14, 2002 (incorporated herein by reference to the Registrant's Form    8-K filed with the Securities and Exchange Commission on December 2, 2002).10.1      Securities Exchange Agreement by and among Black Diamond    Industries, Inc., and each of the shareholders of DDS Holdings, Inc., dated    October 27, 2002 (incorporated herein by reference to the registrant's Form    8-K filed with the Securities and Exchange Commission on December 2, 2002).10.2      Consulting Agreement by and between Black Diamond Industries,    Inc. and Peter Goldstein, dated, November 14, 2002 (incorporated herein by    reference to the registrant's Form 8-K filed with the Securities and    Exchange Commission on December 2, 2002).    10.3      Lock -up Agreement by and between DDS Holdings, Inc. and Peter    Goldstein, dated October 27, 2002 (incorporated herein by reference to the    registrant's Form 8-K filed with the Securities and Exchange Commission on    December 2, 2002).10.4      Indemnification Agreement by and between the Registrant and DDS    Technologies, Inc. dated October 29, 2002.    10.5      License Agreement by and between DDS Holdings, Inc. and DDS    Technologies Ltd, dated August 29, 2002.10.6      Letter Agreement by and between DDS Holdings, Inc. and DDS    Technologies amending the terms of the License Agreement dated December 5,    2002.21.1      Subsidiaries of Registrant.99.1      Certification pursuant to Section 302 of Sarbanes-Oxley Act 2002.
 

 

**ROBERT JARKOW**CERTIFIED PUBLIC ACCOUNTANT

3111 North Andrews AvenueFort Lauderdale, Florida 33309(954) 630-9070

INDEPENDENT AUDITOR'S REPORT

 

To the Board of DirectorsDDS Holdings, Inc.

            I have audited the accompanying balance sheet of DDS Holdings, Inc. andSubsidiary (a development stage company) as of November 14, 2002 and the relatedstatements of operations, shareholders' equity, and cash flows for the yearended October 31, 2002, and the period ending November 14, 2002. These financialstatements are the responsibility of the Company's management. My responsibilityis to express an opinion on these financial statements based on my audits.

            I conducted my audits in accordance with auditing standards generallyaccepted in the United States of America. Those standards require that I planand perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overallfinancial statement presentation. I believe that my audit provides a reasonablebasis for my opinion.

            In my opinion, the financial statements referred to above present fairly, inall material respects, the financial position of DDS Holdings, Inc. andSubsidiary (a development stage company) as of November 14, 2002, and theresults of its operations and cash flows for year ended October 31, 2002, andthe period ending November 14, 2002, in conformity with accounting principlesgenerally accepted in the United States of America.

 

November 20, 2002

 

**DDS HOLDINGS, INC.**(A DEVELOPMENT STAGE COMPANY)

Table of Contents

 

 
Independent Auditor's Report
1Balance Sheet
2Statement of Operations
3Statement of Shareholders'    Equity
4Statement of Cash Flows
5Notes to Financial Statements
6-8
The accompanying notes are an integral part of these financialstatements.

 

DDS HOLDINGS, INC. and SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)BALANCE SHEET

November 14,2002

ASSETS

 
Current Asset       Cash$
256,564          Total current asset$
256,564   License 
4,000,000 $
4,256,564
 

SHAREHOLDERS' EQUITY

 
Preferred stock-$.0001 par    value; 10,000,000 Shares Authorized;    no shares issued and outstanding$
-0-Common Stock-$.001 par value;    25,000,000 Shares authorized;    13,911,525 shares issued and outstanding 
4,324,563Deficit accumulated during the    development stage 
-67,999Total shareholders' equity 
4,256,564 $
$4,256,564
The accompanying notes are an integral part of these financialstatements.

 

DDS HOLDINGS, INC. and SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)STATEMENTS OF OPERATIONS

Year Ended October 31, 2002Period Ended November 14, 2002Inception (June 11, 1998) to November 14, 2002

 
  
    November 14,    2002

 
October 31,    2002
 
(Deficit)    accumulated during    the development stage
       Revenues$
-0-$
-0-$    -0-General and administrative    expenses 
2,507 
62,975     67,999               Net (loss)$-2,507$-62,975$67,999       
Net (loss) per share-basic and    diluted$
    -0.0002$    -0.0189$    -0.0053       Weighted average number of    shares outstanding during the period- diluted and undiluted 
    12,866,848 
3,328,136 
12,866,848
The accompanying notes are an integral part of these financialstatements.

 

DDS HOLDINGS, INC. and SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)STATEMENT OF SHAREHOLDERS' EQUITY

Inception (June 11, 1998) to November 14, 2002
  
 

 

 

Common Stock  Shares Amount 
      (Deficit)      accumulated during the development stageBalance October 31, 2002 
9,445,629$
1,845$
-2,517     Stock sold for cash, net of    costs 
765,896 
682,718       Stock issued for license 
3,500,000 
3,500,000       Net (loss) for the year ended    October 31, 2002     
-62,975Balance October 31, 2002 
13,711,525 
4,184,563 
-65,492     Stock sold for cash 
200,000 
200,000       Acquisition of public shell   
-60,000       Net (loss) for period ended    November 14, 2002     
-2,507Balance November 14,2002 
13,911,525
$
4,324,563$
-67,999
The accompanying notes are an integral part of these financialstatements.

 

DDS HOLDINGS, INC. and SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)STATEMENTS OF CASH FLOWS

Year Ended October 31, 2002Period Ended November 14, 2002Inception (June 11, 1998) to November 14, 2002

 
  
November 14,    2002
 
October 31,    2002
 
Cash Flows    during the    development stage
       Cash flows from operating    activities           Net (loss) 
-$2,507 
-$62,975 
-$67,999            Net cash (used) by operating    activities 
-2,507 
-62,975 
-67,999Cash flows from investing    activities           Cash paid for license   
-500,000 
-500,000           Net cash (used) by investing    activities   
-500,000 
-500,000Cash flows from financing    activities           Sale of common stock for cash 
200,000 
681,896 
884,563     Acquisition of public shell 
-40,000 
-20,000 
-60,000          Net cash provided by financing    activities 
160,000 
661,896 
824,563Net increase in cash 
157,493 
98,921 
256,564Cash-beginning 
99,071 
150 
-0-Cash-ending 
$256,564 
$99,071 
$256,564Noncash investing activities            Common stock issued for license   
$3,500,000 
$3,500,000
DDS HOLDINGS, INC. and SUBSIDIARY( A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTSNOVEMBER 14, 2002

Note 1. Public Entity

            On November 14, 2002, an inactive public shell corporation, Black DiamondIndustries, Inc. (formed June 11, 1998), with no assets or liabilities, wasacquired by a privately held company (formed July 17, 2002) which had no revenueand is in the development stage.            The owners of the private company received 90% of the public entity inexchange for 100% of their stock in the private company and the privately ownedcompany became a subsidiary of the public entity. The public company changed itsname to DDS Holdings, Inc.            The transaction was accounted for as a reverse acquisition, which is acapital transaction and not a business combination. Accordingly, the recordedassets, liabilities, and operations of the private company were carried forwardat historical amounts and the equity has been restated to give effect to thetransaction from inception. 

Note 2. Summary of Significant Accounting Policies

Nature of Operations            On August 29, 2002, the Company acquired a license to market a technologyknow as "Longitudinal Micrometric Separator For Classifying Solid ParticulateMaterials". See Note 3.            The license is for technology that has recently been developed. Managementhas not yet determined the useful life of the license.            Operations to date have consisted of acquisition of the license and thedevelopment of a marketing plan.

Use of Estimates            Use of estimates and assumptions by management is required in the preparationof financial statements in conformity with generally accepted accountingprinciples. Actual results could differ from those estimates and assumptions.

Cash Concentration            The Company maintains its cash in bank deposit accounts which may exceed the$100,000 federally insured limits. 

Loss Per Share            Loss per share is calculated by dividing net loss by the average number ofshares outstanding during the period.            At November 14, 2002 there are no shares that would cause a dilution of lossper share.

 

DDS HOLDINGS, INC. and SUBSIDIARY( A DEVELOPMENT STAGE COMPANY)NOTES TO FINANCIAL STATEMENTSNOVEMBER 14, 2002

 

Note 3. License

            On August 29, 2002, the Company (the licensee) entered into an agreement withDDS Technology, Ltd (the licensor, a United Kingdom company) which is the ownerof a European patent application dated May 28, 2002. The agreement grants to theCompany use of the technology in the geographic area of North, Central, andSouth America, (excluding Cuba) and the right of first refusal for other areasor should either entity decide to sell their company.             The technology is used to convert discarded waste materials and residuals ofthe production of pharmaceutical, cosmetic, and food production, using grain orother products, to produce a stabilizing effect on the product.             The agreement will expire on May 28, 2022. The Company paid $500,000 cashplus 3,500,000 shares of its common stock- valued at $1 per share- which was thefair market value of common stock sold under Regulation D of the Securities andExchange Act (see Note 6.).            The agreement also allows the licensor to one member on the board ofdirectors.            The Company will pay: (1) 24% of the net profits derived from the licensingand rental of the technology, or (2) 49% of the net profits derived from thesale of materials that are produced by machines utilizing the technology, and(3) 2% of the net profits of the technology to a charity designated by thelicensor. Net profit is determined using generally accepted accountingprinciples of the United States of America.            This agreement can be terminated by either party upon the other@s default ifnot corrected within 60 days. The laws of the United Kingdom will govern until the Company becomes publiclytraded, after which the laws of the State of Florida will govern.

Note 4. Operating Facilities

            On October 25, 2002, the Company entered into a five year lease for officespace expiring on October 25, 2007 (with options expiring through 2013).Occupancy is anticipated be in January 2003. A security deposit of $5,000 dueupon occupancy. Minimum lease commitments are as follows: 2003 is $32,060; 2004is $33,031; 2005 is $34,003; 2006 is $34,974; 2007 is $35,946.

 

DDS HOLDINGS, INC. and SUBSIDIARY( A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTSNOVEMBER 14, 2002

 

Note 5. Income Tax

            At November 14, 2002, the Company had net operating loss carryforwards, ofapproximately $68,000, available to offset taxable income through 2017. Thedeferred tax benefit of the net operating loss carryforwards, of approximately$10,000, has been fully reserved for due to the uncertainty of its recognition.

            At November 14, 2002, there are no items that give rise to deferred incometaxes. 

Note 6.Common Stock

            In July 2002, the Company began a private placement offering of 2,500,000shares of its common stock at $1 per share. As of November 14, 2002, 965,896shares have been sold. The costs of the offering were offset to the amount ofcapital raised. The stock was sold pursuant to Rule 506 of Regulation D underthe United States Securities Act of 1933.

Note 7. Private Company 

            At November 14, 2002, the private company@s financial highlights are asfollows:
Cash $256,564License 4,000,000Common Stock 4,381,896Deficit (65,332)
 

 

 

 ******************