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

                                   FORM 10-KSB

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2001            Commission File No. 0-27539


          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                 For the transition period from______to_________

                     DISTRIBUTION MANAGEMENT SERVICES, INC.
       ------------------------------------------------------------------
                    (Exact name of registrant in its charter)


          Florida                                         65-0574760
------------------------------                        ------------------
State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)

11601 Biscayne Blvd., Suite 201
          Miami, FL                                          33181
----------------------------------------              -------------------
(Address of principal executive offices)                   (Zip Code)


Registrant's telephone number, including area code:  (305) 893-9273

Securities registered under Section 12(b) of the Exchange Act: None Securities
registered under Section 12(g) of the Exchange Act:

                      Common Stock, no par value per share
                    -----------------------------------------
                                (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 past 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 [   ]         NO [X]



<PAGE>

Check if 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 the registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

Issuer's revenues for its most recent fiscal year. $120,804

The aggregate market value of the voting Common stock held by non-affiliates of
the Registrant as of August 31, 2001: Not Determinable.


As of August 31, 2001 the Registrant had 5,231,280 shares of Common stock
outstanding.

















                                        2

<PAGE>

                                     PART 1

Item 1.  Description of Business

(a)      General Business Development
         ----------------------------
         History

         Distribution Management Services, Inc. ("Distribution" or the
"Company"), was incorporated in Florida on January 25, 1995. The Company was
formed specifically to operate a construction and demolition recycling center.
In furtherance of its business plan, the Company acquired a tract of land at
2000 N. Miami Avenue, Miami, Florida and caused same to be zoned for operation
as a recycling center. The recycling center was licensed with the Florida
Department of Environmental Regulation ("DERM") on July 6, 1995. The license is
renewable annually, through Miami-Dade County, Florida, upon payment of $2,100.

         The Company constructed the buildings and placed the improvements on
the land and obtained a temporary Certificate of Occupancy from the City of
Miami on December 4, 1998. It commenced operations on or about February 1, 1999.
The permanent Certificate of Occupancy was obtained from the City of Miami on
June 24, 1999 upon compliance with all state, county and city regulations. These
certificates are issued by the City of Miami to permit occupancy and use of the
facility. The permanent Certificate of Occupancy requires no renewals or
reissuance.

         On December 8, 1999, the Company filed a Form 10-SB registration
statement with Securities and Exchange Commission ("SEC") which became effective
in December 1999. Since such time, the Company has been subject to the reporting
requirements of the Securities Exchange Act of 1934.

(b)      Business of the Company
         -----------------------

         Principal Operations, Services and Markets
         ------------------------------------------

         The Company, through a third party operator, operates a transfer
station (also referred to herein as the recycling center) at the site which
provides contractors, truckers and demolition companies, under state
supervision, a conveniently located facility where recyclable materials from
demolition or new construction jobs can be segregated into usable or waste
categories. Once segregated, the materials are disposed of in accordance with
the requirements of DERM.

         Materials from the demolition or construction of buildings, such as
aluminum, glass, cardboard, paper, wood and like materials are segregated and
sold to junk dealers. The materials are then sold by such dealers to
manufacturers and are subsequently used in the manufacture of recycled goods of
a like kind. Materials which are not recyclable are delivered to landfills
operated by independent operators located in Miami-Dade County, Florida. These
landfills are operated under licenses from Miami-Dade County, Florida. There are
several of these other landfills scattered in locations throughout Miami-Dade
County.


                                        3

<PAGE>

         In addition to the transfer station, the Company has been exploring the
possibility of expanding its operations into other areas of environmental
concern including the acquisition of a landfill which would be operated in
conjunction with the Company's recycling center and trucking facilities which
would enable the Company to provide a full service operation to contractors and
developers. Management expects that once the recycling center begins to
regularly receive approximately 1,200 yards of material daily, which was
anticipated to occur in the 2000 fiscal year based upon current levels, it will
determine whether to develop the proposed trucking operations as to which no
assurances are given.

         Presently the Company derives its income solely from its Amended
Operation Agreement (the "Agreement") with the operator of the landfill. The
Agreement was entered into by the Company and the operator on December 22, 1998,
and is for a period of five years with four automatically renewable terms of one
year each. The operator also has an option to purchase the property and
recycling center (collectively, the "Center") during the initial five year term
of the Agreement at a purchase price of from 115% to 175% (determined by which
year of the Agreement the option is exercised) of $1,300,000 which was set by
the Company and the operator based, in part, upon the Company's investment in
the recycling center. The Agreement was assigned by the original operator,
Peerless Dade, Inc., to a new operator as permitted under the terms of the
Agreement on October 24, 2000. The new operator of the Center is Allied Waste
Industries, Inc. (the "Operator"). All other terms and conditions of the
Agreement remained the same except that the Company now receives 10% of the
gross amount collected by the Operator from "tipping fees"for the first 450
yards of materials received each day and 6% in excess of 450 yards per day. The
original agreement provided for 6% and 10%, respectively.

         The Operator charges construction or waste removal companies "tipping
fees" of $7.00 to $7.50 per yard for dumping of construction waste or demolition
materials at the transfer station which, on average, will receive from 850 to
1,150 yards of material per day, subject to local weather and construction
conditions. Notwithstanding the foregoing, pursuant to the terms of the
Agreement and commencing in June 1999, Peerless- Dade had retained 50% of the
Company's share of the gross amount collected until the advance from Peerless-
Dade on behalf of the Company in the sum of $75,000 to obtain the Use Permit for
the Center from the City of Miami was repaid. As of October 31, 2000, the
advance and all accrued, unpaid interest at the rate of 7% per annum which was
owed to the Operator, was paid in full.

         The Operator provides all machinery for the operation and assumes all
costs, expenses and maintenance of the operation of the recycling center. Under
the terms of the Agreement, the Company is responsible for the payment of
mortgages, real estate taxes, permits and licenses (which taxes, permits and
licenses cost approximately $2,500 per year in the aggregate) and any capital
improvements.

         The recycling center is presently receiving an average of 1,000 yards
of materials per day, approximately 200 yards less than was anticipated to be
reached by early in the first quarter of the fiscal year ended May 31, 2001.
This present amount of yardage constitutes approximately $12,100 per month in
revenues received by the Company. This amount varies due to local weather and
construction conditions.


                                        4

<PAGE>


         Distribution Methods
         --------------------

         Construction and demolition waste materials are delivered to the Center
by independent truckers who pay a fee of $7.00 to $7.50 per yard as "tipping
fees" to dispose of the materials. The materials are then segregated into
categories mandated by DERM and are then removed by truckers to junk dealers or
landfill operations. At the present time, the Company does not handle the
materials once they are removed from the Company's transfer station. If the
required financing can be obtained, the Company intends, as set forth above, to
purchase a landfill and acquire the necessary equipment to transport the
materials to the Company's landfill, thereby establishing additional sources of
revenue.

         Competition
         -----------

         The issuance of permits for the operation of facilities similar to the
Company's Center are extremely limited. There are presently no similar
facilities available to contractors and waste removal companies in the City of
Miami. Management believes that no additional permits in proximity to the
Company's Center will be issued in the near future. Accordingly, management does
not anticipate that it will be subject to significant competition in the
foreseeable future although no assurances are given.

         Dependence on Major Customer
         ----------------------------

        The Company's income is presently solely dependent on the Operator who
is the exclusive operator for the Center pursuant to the Agreement. The
existence of the Agreement may have an adverse effect on the income received by
the Company since the volume of business is controlled by the Operator. The
Agreement provides, however, that the Operator is required to exercise
commercially reasonable efforts to maximize the business operations of the
Center. In the event that the Operator fails to fulfill its obligations under
the Agreement, the Company believes that it would be able to terminate the
Agreement and operate the facility or obtain other operators to do so on what
may be more favorable terms to the Company.

         Patents and Proprietary Rights
         ------------------------------

         The Company has no intellectual property.

         Governmental Approvals and Regulations
         --------------------------------------

         The Company's Center has been approved by and operates under licenses
issued by the State of Florida, City of Miami and Miami-Dade County, Florida,
all in accordance with the regulations imposed by DERM and enforced through the
City of Miami and Miami-Dade County, Florida. As of the date of this filing, all
licenses and permits are in good standing. The Solid Waste Operating Permit
issued, through DERM by Miami-Dade County, Florida, must be renewed annually.

         The Company and the Operator are subject, directly and indirectly, to
regulations and various laws of the State of Florida, City of Miami and
Miami-Dade County, Florida relating to the operation of the Company's

                                        5

<PAGE>

business. The Company and the Operator are in material compliance with all
applicable laws relating to the Company's business and operations, particularly
the requirements of DERM which required that the Company file a Contamination
Assessment Plan (the "Plan"). The Plan was filed with DERM on September 16,
1999. The Plan was prepared by LandScience, Inc. Environmental Consultants.
LandScience, Inc., whose office is located at 2124 NE 123rd Street, #206, North
Miami, Florida 33181, specializes in environmental concerns. All groundwater
samples from the Center were previously submitted to DERM.

         On September 1, 1999, Leo Greenfield, the President and a director of
the Company, was individually charged by the State of Florida with "littering"
in violation of Fla.Stat. 403.413(4) which is a third degree felony and carries
a maximum penalty of up to five years imprisonment and a possible $5,000 fine.
Such charge is based on a claim that 22 barrels of liquid material pumped from a
ground storage tank during construction of the facility were temporarily stored
by the contractor in a fenced-off alley adjoining the Company's property. At
such time, Leo Greenfield was not an officer or director of the Company. Three
months prior to the charges being made, the barrels and material were disposed
of in accordance with the requirements and approval of DERM and in accordance
with all environmental regulations. Mr. Greenfield denied any violation of such
statute or wrongdoing of any kind; however, in order to dispose of the charge,
Mr. Greenfield entered a plea of nolle contendre on March 21, 2000, without an
adjudication, and the Company paid the County's expenses related to this matter
of approximately $12,500.

         Research and Development Costs
         ------------------------------

         The Company is not involved with any research or development at this
time.

         Employees
         ---------

         As of the present time the Company has no paid employees. The
President, Vice President and the Secretary of the Company presently serve
without compensation and have provided the services required to establish the
Company's current business and operation.


Item 2.  Properties.

         The Company's executive offices are located at 11601 Biscayne Blvd.,
Suite 201, Miami, Florida 33181, and substantially all of its operating
activities are conducte from, that location which is the office of the
President. The Company pays no rent for these offices; however the President is
under no continuing obligation to provide the use of the Company's executive
offices free of charge. Management believes that as the Company expands its
operations it will enter into an appropriate lease agreement for such facilities
as may be necessary for conducting its operations. Any such lease agreement is
expected to be on such terms and conditions customary for similar facilities in
the Company's geographical area. The Company's operations are conducted from
facilities located on real property owned by the Company. The Company is not in
the business of investing in real estate or real estate mortgages.

         The Company is the owner in fee simple of a tract of lan comprising
approximately 32,000 square feet located at 2000 North Miami Avenue, Miami,
Florida, upon which it has constructed the Center. The Center is enclosed by an
8' high concrete wall, and consists of a 5,000 square foot open operations
building and a 900 square foot office facility. The remaining areas of the site
are appropriately paved and drained and are used as

                                        6

<PAGE>

receiving areas. The improvements were financed in part by a mortgage loan from
an unaffiliated third party in the aggregate amount of $375,000 which bears
interest at 12% per annum payable monthly. The maturity date of the mortgage was
February 1, 2001 but was extended by the lender to February 1, 2004.


Item 3.  Legal Proceedings

         The Company is a party to the following legal proceedings:

            a. Suit filed in May 1999 in the Circuit Court, in and for
Miami-Dade County, Florida, Case No. 99-13058 CA 10, Central Concrete v.
Distribution Management Services, Inc., seeking $26,484.93 pursuant to a claim
for payment in connection with construction materials provided to the Company. A
settlement agreement has been entered into for the Company to pay $35,000 by
September 30, 2001.

            b. Suit filed in March 1998 in the Circuit Court, in and for
Miami-Dade County, Florida, Case No. 98-6581 CA 02 (03). Ronald L. Book v.
Romolo Egidi, et al. Plaintiff claimed an ownership interest in the real
property on which the Center is located which collateralized a loan previously
made to the Company to purchase the property. The case was settled and the Court
dismissed the suit but retained jurisdiction to reinstate the claim in the event
the Agreement to Settle and Standstill Agreement entered into on July 7, 1999,
was not complied with. A payment was made by the Company to the plaintiff in the
amount of $135,000, with an additional payment of $50,000 in May 2001. A Quit
Claim Deed dated May 10, 2001 in favor of the Company was filed and recorded,
general releases executed and the matters entirely settled.


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

         No matter was submitted to the vote of security holders during the year
ended May 31, 2001.


                                     Part II

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

            The Company's common stock currently trades in the "pink sheets"
under the trading symbol "DMGS". The Company's common stock was listed for
trading on the over- the-counter bulletin board (OTC:BB) on August 17, 1998, but
became ineligible to continue trading on October 18, 2000 because its Form
10-KSB for the fiscal year ended May 31, 2000 was not timely filed with the
Securities and Exchange Commission. The Company intends to apply for listing on
the OTC:BB once it has filed all late reports under the Securities Exchange Act
of 1934.

            The following table sets forth the highest and lowest bi prices for
the common stock for each calendar quarter and subsequent interim period since
the common stock commenced actual trading, as reported by the National Quotation
Bureau, and represent interdealer quotations, without retail markup, markdown or
commission and may not be reflective of actual transactions:


                                        7

<PAGE>
                                            High Bid           Low Bid
                                            --------           -------

         Fiscal 1999

         First Quarter                        5.375              2.00

         Second Quarter                        5.75            1.4375

         Third Quarter                         5.50              1.50

         Fourth Quarter                       2.375               .25


         Fiscal 2000

         First Quarter                        1.125               .50

         Second Quarter                        .875              .375

         Third Quarter                        1.125               .28

         Fourth Quarter                         .25               .08


         Fiscal 2001

         First Quarter                          .10               .09

         Second Quarter                         .12               .08

         Third Quarter                          .11               .11

         Fourth Quarter                         .11               .11

----------------------
            * Since October 18, 2000, the Company's common stock no longer
trades on the OTC:BB.

            There can be no assurance that an active public market for the
common stock will continue or be sustained. In addition, the shares of common
stock are subject to various governmental or regulatory body rules which affect
the liquidity of the shares.

            The Company presently is authorized to issue 15,000,000 shares of
common stock, of which 5,231,280 shares were outstanding on August 31, 2001.

                                        8

<PAGE>

Holders

         There were approximately 26 holders of record of the Company's common
stock as of August 31, 2001.

Dividends

         The Company has never paid cash dividends on its common stock and does
not intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.


Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations


         Results of Operations
         ---------------------

         Twelve Months Ended May 31, 2001 compared to May 31, 2000.
         ----------------------------------------------------------

         During the fiscal year ended May 31, 2001, payments were made against
various obligations of the Company, For the year ended May 31, 2001 the Company
received revenues from the operation of the Center of approximately $120,800.
This amount represents the Company's share of revenues pursuant to the Agreement
described in Note 6 to the Company's audited financial statements after
deductions made on a monthly basis commencing June 1, 1999 for the outstanding
$75,000 loan made by Peerless-Dade, the operator of the Center at time. This
loan and all unpaid, accrued interest at the rate of 7% per annum was paid in
full in October 2000.

         The gross volume of materials delivered to the Center averaged
approximately 1,000 yards per day during fiscal 2001 compared to 950-1000 yards
in fiscal 2000. This amount is still approximately 33% less than the anticipated
volume of 1,500 yards per day, however, the daily volume continues to increase.
The Operator regularly solicits business throughout Miami-Dade County and
Broward County, Florida through telephone and direct mail advertising Management
anticipates that as more contractors and waste disposal companies become
familiar with the convenient location of the facility and with the continual
increase of demolition and construction activity in downtown Miami and Miami
Beach, revenues will continue to improve during the fourth quarter and
thereafter.


         Liquidity and Capital Resources
         -------------------------------

         As of May 31, 2001, the Company had cash on hand of approximately
$6,335. There has been a steady monthly increase in the number of cubic yards
being delivered to the Center which, in turn, increases the monthly revenue
received by the Company pursuant to the Agreement. The monthly gross revenue
received by the Company from February 1999, when the Center commenced
operations, through May 31, 1999 increased from approximately $165 to
approximately $10,000 for the fiscal year ended May 31, 2001. Management
believes that these numbers represent a positive upward trend in the amount of
materials that are being delivered to the Center on a daily basis. The Company
obtained an extension on the current mortgage on the Center from February 1,
2001 to February 1, 2004.

                                        9

<PAGE>

         In October 2000, the advance of $75,000 from Peerless-Dade, the former
Center operator, together with all accrued, unpaid interest thereon was paid in
full. Management anticipates that after the payment of pending litigation
claims, cash flow from revenues, which are expected to average approximately
$10,000 to $12,000 per month during fiscal 2002, will be sufficient to fund the
Company's existing working capital requirements for the next 12 months,
including the funds required to pay the $4,750 per month mortgage expense. The
pending litigation is related to a materialmen's lien in connection with the
construction of the Center in the approximate amount of $30,000 and a lawsuit
claiming an ownership interest in the loan to purchase the Company's real
property. There are no future expenses expected in connection with this
litigation. The Company's monthly cash operating expense averages approximately
$6,000, which amount is not expected to materially increase based upon current
operations. If the Company is unable to secure alternative funding necessary to
satisfy its existing obligations, it may be unable to continue as a going
concern.

         There are currently outstanding two loans from related parties in the
principal sum of $49,000 and $150,000, respectively. Both loans are due upon
demand and bear interest at the applicable Federal rate. The Company and each of
the lenders have agreed to execute promissory notes for the principal amount of
each loan at the same annual interest rate with maturity dates of February 2002.
In the event that these notes are not repaid when due, management expects that
the maturity dates will be extended by the lenders although no assurances are
given. These related parties have no obligation to make any further loans to the
Company in the future notwithstanding that they have made loans in the past.

         From time to time, the Company may evaluate potential acquisitions
involving complementary businesses, services, products or technologies. The
Company has no present agreements or understanding with respect to any such
acquisition. The Company's future capital requirements will depend on many
factors, including acquisitions, if any, growth of the Company's customer base,
economic conditions and other factors including the results of future
operations. Any such acquisition would require additional funding, through the
sale of Company securities and/or other financing sources. There can be no
assurances that such financing will be available to the Company.

         The Company currently has no paid employees. If operations are expanded
through growth or acquisitions, the Company will hire personnel to meet these
needs and may enter into employment agreements with its president or others to
oversee its operations. The number of employees which may be hired will be
determined by the continuity or modification of the present Agreement. and/or
the expansion of the Company's present business or into other business ventures.
The number of employees actually hired will be based on the Company's ability to
support the increased cost through cash flow generated by such business.

         Impact of Inflation
         -------------------

         Although the Company has not attempted to calculate the effect of
inflation, management does not believe inflation has had or will have a material
effect on its results of operations.

Forward-Looking Statements
--------------------------

         In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995(the "Reform Act"), the Company is providing
cautionary statements identifying important factors that could cause the
Company's actual results to differ materially from those projected in
forward-looking statements made

                                       10

<PAGE>

herein. Any statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions of future events or performance are not
statements of historical facts and may be forward-looking. These forward-looking
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, including but not limited to, economic,
competitive, regulatory, growth strategies, available financing and other
factors discussed elsewhere in this report and in documents filed by the Company
with the SEC. Many of these factors are beyond the Company's control. Actual
results could differ materially from the forward-looking statements made. In
light of these risks and uncertainties, there can be no assurance that the
results anticipated in the forward-looking information contained in this report
will, in fact, occur. Any forward-looking statement speaks only as of the date
on which such statement is made, and the Company undertakes no obligation to
update any forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time and it
is not possible for management to predict all of such factors, nor can it assess
the impact of each such factor on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.


Item 7.  Financial Statements

         The financial statements of the Company required by Regulation S-B are
attached to this Report. Reference is made to Item 13 below for an index to the
financial statements and financial statements schedules.


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

         On July 23, 2001, the Company filed a Form 8-K reporting a change in
its certifying accountant on July 8, 2001, which Form 8-K was subsequently
amended on August 3, 2001. The Company reported the dismissal of Rachlin Cohen &
Holtz LLP and the retention of Martin B. Seidman, CPA as its certified public
accountant for the purpose of conducting its audits and providing financial
reports for the Company.

              The decision to dismiss Rachlin Cohen & Holtz LLP was recommended
and approved by the Board of Directors. During the two most recent fiscal years
and through the date of dismissal, there were no disagreements over accounting
matters, financial disclosures or any other limitations on the scope or
procedure of the independent auditor in the course of performing professional
services and there was no adverse opinion or disclaimer of opinion, nor were its
reports modified as to audit scope or accounting principles.


                                    Part III

Item 9.  Directors, Executive Officers, Promoters and Control Persons

    (a)  Identification of Directors and Executive Officers
         --------------------------------------------------

         As of August 31, 2001, the directors and executive officers of the
Company, their ages, positions in the

                                       11

<PAGE>

Company, the dates of their initial election or appointment as director or
executive officer, and the expiration of the terms as directors are as follows:

                                                             Period Served
 Name                 Age    Position                         As Director*
------                ---    --------                         -----------
Leo Greenfield        77     President and Directo         March 1999 to Present

Barbara Greenfield    63     Vice President and Director   March 1998 to Present

Maria Elena
Lopez de Mendoza      60     Secretary and Director        March 1998 to Present

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

*  From inception until March 1999, Romolo Egidi was President and a director of
   the Company.

         The Company's directors are elected at the annual meeting of
stockholders and hold office until their successors are elected and qualified.
The Company's officers are appointed by the Board of Directors and serve at the
pleasure of the Board and subject to employment agreements, if any, approved and
ratified by the Board.

         Leo Greenfield has been President and a director of the Company since
March 1999. He is also the vice president of Double D, Inc., a privately held
Florida holding company with no operations or business, which is a major
shareholder of the Company. From May 1997 to March 1998, he acted as business
consultant for the Company in arranging the financing for and supervising
construction of the Company's facilities. In March 1998, he became the General
Manager of the Company. He still serves in that capacity although he has now
become President and Director of the Company. He holds an LLB Degree from the
University of Miami (1948) and a BSBA Degree from the University of Miami
(1950). In 1990 he was convicted of obstruction of justice and resigned from The
Florida Bar. On September 1, 1999 Mr. Greenfield was individually charged by the
State of Florida with "littering" in violation of Fla. Stat.403.413(4), a class
three felony with a maximum penalty of five years imprisonment and possibly up
to a $5,000 fine, based on a claim that 22 barrels of liquid material were
pumped from a ground storage tank during construction of the facility by the
contractor and during the time that Mr. Greenfield was not an officer or
director of the Company. They were temporarily stored in a fenced-off alley
adjoining the Company's property. These barrels and the material were disposed
of in accordance with the requirements and approval of DERM and all
environmental regulations three months prior to the charges being made and. Mr.
Greenfield denied any violation of such statute or wrongdoing of any kind;
however, in order to dispose of the charge, Mr. Greenfield entered a plea of
nolle contendre on March 21, 2000, without an adjudication, and the Company paid
the County's expenses of approximately $12,500.

         Barbara Greenfield has been Vice President and a director of the
Company since March 1998. She is president of Double D, Inc., a majority
shareholder of the Company. Ms. Greenfield has been employed as a controller and
consultant in designing computer programs. In 1998 she was employed by Panciera
Funeral Homes in Hollywood, Florida and designed a computer program for their
Pre-Need Division. She is presently involved in the ownership and management of
Powergate Plaza, a shopping center located in Pompano Beach, Florida. Ms.
Greenfield attended the University of Miami and graduated from the School of
Interior Design, a private design school. She is a licensed practitioner and has
been active in the field since 1969.

         Maria Elena Lopez de Mendoza has been Secretary and Director of the
Company since March 1998 and

                                       12

<PAGE>

has been providing administrative services to the Company since such time. She
had previously been employed by Mr. Greenfield, President of the Company, since
1973 in both the operation of his law office as well as various business
enterprises in which he had been engaged.

         (b) Directorships
             -------------

         None of the Company's executive officers or directors is a director of
any company with a class of equity securities registered pursuant to section 12
of the Exchange Act or subject to the requirements of Section 15(d) of the
exchange Act or any company registered as an investment company under the
Investment Company Act of 1940.

         (c) Identification of Certain Significant Employees
             ------------------------------------------------
             None


         (d) Family Relationships
             --------------------

         Leo Greenfield and Barbara Greenfield, President/Director and Vice
President/Director of the Company, respectively, have been married since 1959.
No other family relationship exists between the officers or any other person who
may be selected as a director or executive officer of the Company.


Item 10. Executive Compensation

         The Company did not compensate prior management in the years ended May
31, 1998, 1997 and 1996,since it did not engage in business during those years,
nor is it presently compensating its officers or directors. It does intend at a
future date to enter into employment contracts with its officers for
compensation on a reasonable basis as may be approved by the Board of Directors.

                                        Summary Compensation Table
                                        --------------------------
<TABLE>
<CAPTION>

                                Annual Compensation                            Long Term Compensation
                                -------------------                            ----------------------

                                                                             Awards          Payouts
                                                                             ------     -----------------
                                                     Annual      Restricted   Under-             Other
Name and                                             Compen-     Stock        lying     LTIP     Comp-
Principal Position         Year    Salary   Bonus    sation      Awards       Option    Payouts  ensation
------------------         ----    ------   -----    ------      ------       ------    -------  --------
<S>                        <C>      <C>     <C>       <C>         <C>          <C>      <C>      <C>
Leo Greenfield             2001     None    None     None         None         None     None     None
President/Director         2000     None    None     None         None         None     None     None
                           1999     None    None     None         None         None     None     None

Barbara Greenfield         2001     None    None     None         None         None     None     None
Vice President/Director    2000     None    None     None         None         None     None     None
                           1999     None    None     None         None         None     None     None
</TABLE>


                                                               13

<PAGE>


<TABLE>
<CAPTION>

                                Annual Compensation                            Long Term Compensation
                                -------------------                            ----------------------

                                                                             Awards          Payouts
                                                                             ------     -----------------
                                                     Annual      Restricted   Under-             Other
Name and                                             Compen-     Stock        lying     LTIP     Comp-
Principal Position         Year    Salary   Bonus    sation      Awards       Option    Payouts  ensation
------------------         ----    ------   -----    ------      ------       ------    -------  --------
<S>                        <C>      <C>     <C>       <C>         <C>          <C>      <C>      <C>
Maria Elena                2001     None    None     None         None         None     None      None
Lopez de Mendoza           2000     None    None     None        100000        None     None      None
Secretary/Director         1999     None    None     None         None         None     None      None
</TABLE>


Compliance With Section 16(a) of the Exchange Act
-------------------------------------------------

         All reports required by Section 16(a) of the Exchange Act were not
filed on a timely basis by all directors, officers and beneficial owners of more
than ten percent (10%) of any class of equity securities of the Company
registered pursuant to Section 12 of the Act. The Form 4 reporting the issuance
of 100,000 shares to Ms. Lopez de Mendoza in April 2000 has not been filed.

         Option Grants in 2001

         None

         Aggregated Option/SAR Exercises and Fiscal Year End Options/SAR Value
         ---------------------------------------------------------------------
         Table
         -----

         None


         Long Term Incentive Plan ("LTIP") Awards Table
         ----------------------------------------------

         None


         Compensation of Directors
         --------------------------

         None


         Employment Contracts and Termination of Employment and Change in
         ----------------------------------------------------------------
         Control Arrangements
         --------------------

         None

                  Report on Repricing of Options/SARS

                  None


Item 11.  Security Ownership of Certain Beneficial Owners and Management

         (a) Security Ownership of Certain Beneficial Owners

         The following table sets forth as of August 31, 2001 the ownership of
common stock by persons who own beneficially more than 5% of the outstanding
shares of the Company's common stock:

                 Name and Address      Amount and Nature of
Title of Class   of Beneficial Owner   Beneficial Ownership  Percent of Class(1)
--------------   -------------------   --------------------  -----------------
Common           CEDE & CO.
                 P.O. Box 222
                 Bowling Green Station
                 New York, NY 10274        1,457,000              27.4%

Common           Empresas Flagler SA
                 Cable Beach Court
                 1 West Bay Street
                 Nassau, Bahamas             380,000               7.1%

Common           F.M.S. Distributors,
                 8700 N.W. 47th Drive
                 Coral Springs, FL 33067     500,000               9.4%
-------------------
(1) Percentages are calculated based upon 5,321,280 shares issued and
outstanding as of August 31, 2001.

         (b) Security Ownership of Management

                 Name and Address      Amount and Nature of
Title of Class   of Beneficial Owner   Beneficial Ownership  Percent of Class(1)
--------------   -------------------   --------------------  -----------------

Common           Double D, Inc. (2)         1,200,000             22.6%
                 1721 Trafalgar Circle
                 Hollywood, FL 33069

Common           Maria Elena Lopez            100,000              1.9%
                 de Mendoza (3)

All officers and directors                  1,300,000             22.5%
as a group (3 persons)

--------------------
(1) All percentages are calculated based upon 5,321,280 shares issued and
outstanding as of August 31, 2001.

(2) Double D, Inc. is a Florida corporation. 100% of the common stock of Double
D, Inc. is owned by Barbara Greenfield, vice president and a director of the
Company, and the wife of Leo Greenfield, President of the Company. For the
purposes of Rule 13(d), Mr. Greenfield claims beneficial ownership of these
shares with his wife.

                                       14

<PAGE>

(3) Issued in April 2000 for administrative services rendered to the Company.

         (c) Changes in Control

         There is no arrangement which may result in a change of control.

Item 12. Certain Relationships and Related Transactions

         During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's Common Stock, except as
disclosed in the following paragraphs:

                  On or about December 31, 1997, Double D, Inc., a company owned
by Leo Greenfield, President and a director of the Company, and Barbara
Greenfield, Vice President and a director of the Company, loaned the Company
$150,000. The note is payable upon demand and bears interest at the applicable
Federal rate. The proceeds of this loan provided additional funding for the
construction of the facility.

                  From approximately May 1998 through December 1998, Greenfield
and DuVal, P.A. loaned the Company an aggregate of approximately $49,000. This
sum is due upon demand and bears interest at the applicable Federal rate. The
proceeds of this loan provided additional funding for the construction of the
facility.


Item 13. Exhibits, Financial Statements and Reports on Form 8-K.

     (a) Documents filed as part of this Report:
         ---------------------------------------

         See Index to Financial Statements attached, which are included as an
         integral part of this Report.


     (b) Reports on Form 8-K
         -------------------

         A report on Form 8-K was filed with the Commission on July 23, 2001 and
         amended on August 3, 2001.


     (c) Exhibits
         --------

      2      Articles of Incorporation, as amended, filed as an exhibit and
             incorporated by reference to the Company's Form 10-SB filed on
             December 8, 1999.

      3      Bylaws filed as an exhibit and incorporated by reference to the
             Company's Form 10-SB filed on December 8, 1999.

      10.1   Amended Operation Agreement dated December 23, 1998 filed as an
             exhibit and incorporated by reference to the Company's Form 10-SB
             filed on December 8, 1999.

      10.2   Assumption Agreement dated October 24, 2000 filed as an exhibit to
             the Company's Form 10- KSB for the fiscal year ended May 31, 2000
             filed  on September 5, 2001.


                                       15

<PAGE>


                                   SIGNATURES
                                   ----------

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

                                        Distribution Management Services, Inc.


Date: September 24, 2001                By:  /s/ Leo Greenfield
                                             -----------------------------------
                                        Leo Greenfield, President
                                        and Principal Financial Officer


         In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.



 /s/ Leo Greenfield                                    September 24, 2001
------------------------------------                   ------------------
Leo Greenfield                                                Date
President and Director


 /s/ Barbara Greenfield                                September 24, 2001
------------------------------------                   ------------------
Barbara Greenfield                                            Date
Vice President and
Director

 /s/ Maria Elena Lopez de Mendoza                      September 24, 2001
------------------------------------                   ------------------
Maria Elena Lopez de Mendoza                                  Date
Secretary and Director






                                       17

<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.


                                TABLE OF CONTENTS
                                -----------------


                                                                   PAGE
                                                                   ----
INDEPENDENT AUDITOR'S REPORT                                        F-2


FINANCIAL STATEMENTS

              BALANCE SHEET                                         F-3

              STATEMENTS OF OPERATIONS                              F-4

              STATEMENTS OF CASH FLOWS                              F-5

              STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY           F-6

              NOTES TO FINANCIAL STATEMENTS                         F-7










                                      F-1

<PAGE>


                             Marvin B. Seidman, CPA
                           Certified Public Accountant
                              8501 S.W. 29th Street
                              Miami, Florida 33155
                                 (305) 221-8271

                          INDEPENDENT AUDITOR'S REPORT


The Board of Directors
Distribution Management Services, Inc.
Miami, Florida

I have audited the accompanying balance sheet of Distribution Management
Services, Inc. as of May 31, 2001, and the related statements of operations and
statement of change in stockholders' equity, and cash flows for the two years
then ended. These financial statements are the responsibility of the management
of Distribution Management Services, Inc. My responsibility is to express an
opinion on these financial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that I 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. I believe that my audit provides a reasonable basis for
my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Distribution Management Services,
Inc. as of May 31, 2001, and the results of its operations and cash flows for
the two years then ended 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 discussed in Note 2 to the
financial statements, the Company has suffered recurring net losses and is
dependent upon the continued sale of its securities or obtaining debt financing
for funds to meet its cash requirements. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
with regard to these matters are described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.






Marvin B. Seidman, CPA
Certified Public Accountant

July 9, 2001

                                      F-2

<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                                  BALANCE SHEET

                                  May 31, 2001

<TABLE>
<CAPTION>
<S>                                    <C>                                    <C>

                                       ASSETS
Current Assets:
               Cash                                                          $     6,335
               Accounts receivable                                                11,036
               Prepaid interest                                                   36,484
                                                                             -----------
                           Total current assets                              $    53,855

Property, Plant and Equipment
               Land                                                              125,000
               Plant                                                             827,197
               Less:  Accumulated Depreciation                                   (45,000)
                                                                             -----------
                           Net Property, Plant and Equipment                     907,197

Other Assets
               Deposits                                                            4,590
                                                                             -----------
               Total other assets                                                  4,590

               Total assets                                                      965,642
                                                                             ===========


               LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
               Accounts payable                                                   86,730
               Accrued interest                                                   67,960
               Notes payable - stockholder and related party                     276,567
                                                                             -----------
                           Total current liabilities                             431,257

Long-Term Liabilities:
               Mortgage payable                                                  375,000
               Convertible Debenture                                              20,000
                                                                             -----------
                           Total long-term liabilities                           395,000

Stockholders' Deficiency:
               Common stock; 15,000,000 shares of $.001 par value
               authorized; 5,281,280 shares issued and outstanding ..              5,281
               Additional paid-in capital                                      1,055,587
               Accumulated deficit                                              (917,883)
               Subscription receivable                                            (3,600)
                                                                             -----------
                           Total stockholders' equity                            139,385
                                                                             -----------
                           Total liabilities and stockholders' equity            965,642
                                                                             ===========
</TABLE>
                        See notes to financial statements

                                       F-3
<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                            STATEMENTS OF OPERATIONS




                                                   Year Ended        Year Ended
                                                  May 31, 2000      May 31, 2001
                                                 -------------      ------------
Revenue:
       Recycling fees                            $     89,913       $   120,804
       Interest                                           555                --
                                                 ------------       -----------
             Operating Income                          90,468           120,804


Costs and Expenses:
       Compensation                                    17,600            15,600
       General and administrative                     155,903           124,239
                                                 ------------       -----------
                                                      173,503           139,839
             Income (loss) from Operations            (83,035)          (19,035)

       Extraordinary Income                                --            24,950

Net Income (Loss)                                     (83,035)            5,915

Net Income (Loss) Per Common Share                      (0.02)             0.00

Weighted Average Number of
Common Shares Outstanding                           5,072,000         5,254,000






                       See notes to financial statements.

                                       F-4


<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                              Year Ending         Year Ending
                                                                              May 31, 2000        May 31, 2001
                                                                              ------------        ------------
<S>                                                                             <C>               <C>
Cash Flows from Operating Activities:
     Net Income (Loss)                                                          $ (83,035)        $   5,915
     Adjustments to reconcile net loss to net cash
         provided by (used in) operating activities:
            Litigation settlement                                                       0                 0
            Expenses paid by issuance of common stock                               3,526                 0
            Credit for estimated fair value of services
                 performed by officer                                              15,600            15,600
            Credit for estimated fair value of office space                         4,344             4,344
            Depreciation                                                           20,000            20,000
            Changes in operating assets and liabilities:
                 Increase in accounts receivable                                   (3,711)           (7,325)
                 Decrease (increase) in prepaid interest                           (8,000)          (10,698)
                 Increase in deposits                                                   0                 0
                 Increase in accrued interest payable                              12,863            10,075
                 Increase (decrease) in accounts payable                           13,843           (23,558)
                 Customer Deposits                                                  5,000            (5,000)
                                                                                ---------         ---------
                     Net cash provided by (used in) operating activities          (19,570)            9,353

Cash Flows from Investing Activities:
     Construction of recycling facility                                           (35,047)           (7,303)
                                                                                ---------         ---------
         Net cash used in investing activities                                    (35,047)           (7,303)

Cash Flows from Financing Activities:
     Payments of obligation related to litigation settlement                     (135,000)         (275,000)
     Proceeds from issuance of common stock                                             0           235,000
     Proceeds from restricted cash                                                 10,000                 0
     Proceeds from exercise of warrants                                                 0                 0
     Proceeds from mortgage payable                                                     0                 0
     Proceeds from advance payable                                                      0                 0
     Repayment of advance payable                                                 (42,481)          (32,519)
     Proceeds from stockholder and related party loans                                  0            75,175
     Repayment of stockholder and related party loans                              (4,142)                0
     Proceeds from convertible debenture                                           20,000                 0
                                                                                ---------         ---------
         Net cash (used in) provided by financing activities                     (151,623)            2,656

Net (Decrease) Increase in Cash                                                  (206,240)            4,706

Cash, Beginning                                                                   207,869             1,629
                                                                                ---------         ---------

Cash, Ending                                                                    $   1,629         $   6,335
                                                                                =========         =========
</TABLE>

                       See notes to financial statements.

                                       F-5

<PAGE>

            DISTRIBUTION MANAGEMENT SERVICES, INC.

               STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                      Stock       Additional
                                                                                   Subscription    Paid-In    Accumulated
                                                           Shares        Amount     Receivable     Capital      Deficit      Total
                                                         ----------    ---------    ---------    ----------   ----------  ---------
<S>                                                       <C>          <C>          <C>          <C>          <C>         <C>
Balance, May 31, 1999                                     5,050,000    $   5,050    $  (3,600)   $  777,404   $ (840,763) $ (61,909)
Year Ended May 31, 2000:
Stock issued                                                176,280          176                      3,350                   3,526
Credit for estimated fair value of services performed
   by officer                                                                                        15,600                  15,600
Credit for estimated fair value of office space used                                                  4,344                   4,344
Net (Loss)                                                                                                       (83,035)   (83,035)

                                                         ----------    ---------    ---------    ----------   ----------  ---------
Balance, May 31, 2000                                     5,226,280    $   5,226    $  (3,600)   $  800,698   $ (923,798) $(121,474)
                                                         ==========    =========    =========    ==========   ==========  =========


Year Ended May 31, 2001:
Stock issued (12-15-00)                                      55,00            55                    234,945                 235,000
Credit for estimated fair value of services performed
   by officer                                                                                        15,600                  15,600
Credit for estimated fair value of office space used                                                  4,344                   4,344
Net Income                                                                                                         5,915      5,915
                                                         ----------    ---------    ---------    ----------   ----------  ---------
Balance, May 31, 2001                                     5,281,280    $   5,281    $  (3,600)   $1,055,587   $ (917,883) $ 139,385
                                                         ==========    =========    =========    ==========   ==========  =========
</TABLE>


                       See notes to financial statements.

                                       F-6

<PAGE>


                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                                  MAY 31, 2001


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - Development Stage Enterprise

         Distribution Management Services, Inc. (the Company) was incorporated
         in the State of Florida on January 25, 1995. The Company was organized
         for the purpose of operating a transfer station for recycling of
         construction and demolition materials in Miami, Florida. From
         incorporation, the Company was principally engaged in organizational
         activities, construction of its recycling facility, and raising capital
         until approximately May 1999. Accordingly, the Company was considered
         to be in the development stage. The company ceased being a development
         stage company during the year beginning June 1, 1999. The plant
         operations were substantial based on its design. That year the purpose
         of the operating plant was achieved.

Property, Plant, and Equipment

         Property, plant and equipment are recorded at cost, including interest
         incurred during the period of construction. Depreciation has been
         calculated using the straight-line method of depreciation over the
         estimated useful lives of the assets. The estimated useful life of the
         recycling facility is 40 years.

Revenue Recognition

         The limited revenues generated by the Company consist solely of
         recycling fees in connection with the Operation Agreement described in
         Note 5. The Company recognizes revenue when the recycling services are
         performed.

Use of Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the amounts reported in the financial
         statements and accompanying notes. Actual results could differ from
         those estimates.

Net Loss Per Common Share

         The net loss per common share in the accompanying statements of
         operations has been computed based upon the provisions of Statement of
         Financial Accounting Standards No. 128, Earnings Per Share. The basic
         and diluted net earnings per common share in the accompanying
         statements of operations is based upon the net loss divided by the
         weighted average number of shares outstanding during each period.
         Diluted per share data is the same as basic per share data since the
         inclusion of all potentially dilutive common shares that would be
         issuable upon the exercise of options and warrants would be
         anti-dilutive.

Income Taxes

         The Company accounts for income taxes using Statement of Financial
         Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes",
         which requires recognition of deferred tax liabilities and assets for
         expected future tax consequences of events that have been included in
         the financial statements or tax returns. Under this method, deferred
         tax liabilities and assets are determined based on the difference
         between the financial statement and tax bases of assets and liabilities
         using enacted tax rates in effect for the year in which the differences
         are expected to reverse.

Recent Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
         133, "Accounting for Derivative Instruments and Hedging Activities".
         SFAS No. 133 requires companies to recognize all derivative contracts
         as either assets or liabilities in the balance sheet and to measure
         them at fair value.

                                      F-7
<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)

                                  MAY 31, 2001


Recent Accounting Pronouncements (Continued)

         If certain conditions are met, a derivative may be specifically
         designated as a hedge, the objective of which is to match the timing of
         the gain or loss recognition on the hedging derivative with the
         recognition of (i) the changes in the fair value of the hedged asset or
         the liability that are attributable to the hedged risk or (ii) the
         earnings effect of the hedged forecasted transaction. For a derivative
         not designated as a hedging instrument, the gain or loss is recognized
         in income in the period of change. On June 30, 1999, the FASB issued
         SFAS No. 137, "Accounting for Derivative Instruments and Hedging
         Activities-Deferral of Effective Date of FASB Statement No. 133". SFAS
         No. 133 as amended by SFAS No. 137 is effective for all fiscal quarters
         of fiscal years beginning after June 15, 2000. In June 2000, the FASB
         issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
         Certain Hedging Activities". SFAS No. 133 as amended by SFAS No. 137
         and 138 is effective for all fiscal quarters of fiscal years beginning
         after June 15, 2000.

         Historically, we have not entered into derivative contracts to hedge
         existing risks or for speculative purposes. Accordingly, we do not
         expect adoption of the new standard to have a material effect on our
         consolidated financial statements.

         In December 1999, the Securities and Exchange Commission issued Staff
         Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
         Statements." SAB 101 provides guidance for revenue recognition under
         certain circumstances, and is effective during the first quarter of
         fiscal year 2001. SAB 101 is not expected to have a material effect on
         our consolidated results of operations, financial position, and cash
         flows.

NOTE 2. GOING CONCERN

         The accompanying financial statements have been prepared in conformity
         with generally accepted accounting principles which assume that the
         Company will continue on a going concern basis, including, the
         realization of assets and liquidation of liabilities in the ordinary
         course of business. There are significant uncertainties with regard to
         the Company's ability to generate sufficient cash flows from operations
         or other sources to meet and fund its commitments with regard to
         existing liabilities and recurring expenses. These factors raise
         substantial doubt about the Company's ability to continue as a going
         concern. The accompanying financial statements do not include any
         adjustments that might result from the outcome of these uncertainties.

NOTE 3. RESTRICTED CASH

         On May 31, 1999 the Company had restricted cash of $10,000 invested in
         a certificate of deposit earning interest at 4.22%, which matured on
         April 23, 2000. At maturity this became unrestricted.

NOTE 4. MORTGAGE PAYABLE

         Mortgage payable to an individual; collateralized by the property,
         plant, and equipment. Interest at 12% is payable monthly. Principal is
         due March 31, 2004 in the amount of $375,000.

NOTE 5. STOCKHOLDER AND RELATED PARTY TRANSACTIONS

         There are significant funds that have been advanced by or through Mr.
         Leo Greenfield evidenced by the amounts carried on the Balance Sheet as
         a current liability. This liability could adversely affect cash flow in
         the future.

                                       F-8

<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)

                                  MAY 31, 2001


NOTE 6. COMMITMENTS AND CONTINGENCIES

Litigation Settlement

         A suit was filed against the Company by two former stockholders
         alleging that a principal stockholder of the Company forged their names
         on certain agreements, contracts and stock certificates. One former
         stockholder entered into a settlement agreement with the Company, which
         provided for the payment of $185,000 and the issuance of 5,000 shares
         of common stock valued at $10,000. On July 7, 1999, the Company paid
         $135,000 of this obligation with the remaining $50,000 of this
         obligation and the issuance of 5,000 shares of common stock due
         December 31, 1999. The Company has reached an agreement in principle
         with the second former stockholder to settle this claim. As settlement,
         the Company will issue shares of common stock valued at approximately
         $215,000. This settlement was subsequently completed by the parties and
         the case dismissed permanently.

         The total of $410,00 related to the settlement of this litigation has
         been charged to operations in the year ended May 31, 1999. Recognition
         of this litigation settlement had the impact of increasing net loss and
         loss per common share by $410,000 and $.09, respectively, for the year
         ended May 31, 1999.

Construction Liens

         As of May 31, 2000, there remains litigation open though settled in
         principle by the parties and the agreed liabilities recorded. It may be
         possible that these amounts may change but management is confident that
         amounts recorded in the accounts payable section will be sufficient to
         meet these obligations.

Operation Agreement

         During December 1998, the Company entered into an Operation Agreement
         (as amended) with a management company to operate a recycling facility.
         The agreement called for an advance to the Company by the management
         company in the amount of $75,000. The management company will be
         reimbursed by retaining fifty percent of the gross amounts collected
         until the advance is fully repaid. Interest will accrue on the unpaid
         balance at a rate of 7% per month. Use of the advanced funds was
         exclusively for the purpose of obtaining the use permit from the City
         of Miami and the completion of any necessary work for the commencement
         of the facility's operations. As of May 31, 2000, $32,519 remains
         outstanding.

         The agreement also stated that the management company will operate the
         facility on a day to day basis, including providing equipment necessary
         for operations, performing hiring and firing of its employees and
         paying all necessary operating expenses relating to the operations of
         the facility.

         The Company will receive revenues in an amount equal to 6% of amounts
         collected for receipt of 0 - 450 cubic yards of construction and
         demolition debris received each day, less any applicable local, state
         or federal sales taxes due thereon. For each cubic yard in excess of
         450 yards per day, the Company will receive an amount equal to 10% of
         the gross amounts collected.

         The agreement also includes an option to purchase the facility. The
         option is exercisable during the first five years of the Company's
         operation. Based on the timing of the exercise of the option, the
         purchase price ranges from $1,495,000 to $2,275,000.

         The term of the agreement is for five years commencing December 22,
         1998 and automatically renews for four sequential terms of one year
         each.

                                       F-9

<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)

                                  MAY 31, 2001


Environmental Regulation and Compliance

         The Company is subject directly and indirectly to regulations and
         various laws of both the State of Florida and Miami-Dade County as well
         as Federal regulations and statutes. The Company believes it is in
         compliance with all applicable laws and has obtained an annual solid
         waste operating permit, which company keeps current.

NOTE 7. RELATED PARTY TRANSACTIONS

         The Company uses the office facilities of a related party as its
         administrative offices. There is currently no lease agreement with this
         related party. The Company records an imputed rent, which is charged to
         operations.

         The Company's president has agreed not to receive any compensation. The
         value of his services is recorded as estimated fair value of his
         services in the Statement of Change in Stockholders' Equity (Deficit).

NOTE 8. STOCK ISSUANCE

         The Company on April 13, 2000, issued 3 blocks of restricted stock. One
         block of 100,000 shares was issued for compensation to the Corporate
         Secretary during the year ending May 31, 2000. One block of stock was
         issued to the mortgagee of the property the Company owns as
         consideration for extending the maturity date of the mortgage. The
         third block was issued as settlement of a commission due on a cancelled
         contract.

         Management has ascertained that there was no trading of the stock
         during April 2000. There was no active bid and several market makers
         had an ask price with no takers up to $.70. It is believed that an
         experienced investor under no compulsion to buy this type of highly
         speculative stock and considering the financial situation of the
         Company with a concern that a year or more in the future there would be
         a market for this stock would possibly pay $.02 a share. Therefore,
         management and the Board of Directors estimate that $.02 a share would
         be a fair value for these blocks of stock issued under the
         circumstances considering the financial condition of the Company. There
         is a realistic expectation that a reasonable person might have
         considered that the Company would cease to be a going concern and the
         stock become worthless.

         This is recorded in the Statement of Change in Stockholders' Equity
         (Deficit).

NOTE 9. INCOME TAXES

         No credit for income taxes has been reflected in the accompanying
         financial statements for 1999 and 2000 because of the significant
         uncertainty that exists regarding the realization of such income tax
         credits (see below).

         As of May 31, 2000, the Company estimates that it has net operating
         loss carry forwards of approximately $920,000, which expire in various
         years through 2015; however, the utilization of the benefits of such
         carry forwards may be limited, as more fully discussed below.
         Sufficient uncertainty exists regarding the realization of these
         operating loss carry forwards and, accordingly, deferred tax assets of
         approximately $373,000 as of May 31, 2000 were subject to and presented
         net of a 100% valuation allowance, therefore, zero.

         The Company is delinquent in the filing of various federal, state and
         local income and other tax returns. The ultimate determination of the
         Company's taxable income, including the amount and expiration dates of
         net operating loss carry forwards, is subject to, among other things,
         certain restrictions as a result of the late filing of the various tax
         returns. The Company may also be subject to possible review and
         examination of such tax returns by the appropriate taxing authorities.
         Additional income taxes, including penalties for non-compliance and
         interest, if any, which may be assessed, will be charged to operations
         when determined.

                                      F-10

<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)

                                  MAY 31, 2001

NOTE 9. INCOME TAXES (Continued)

         In accordance with certain provisions of the Tax Reform Act of 1986, a
         change in ownership of greater than 50% of a corporation within a three
         year period will place an annual limitation on the corporation's
         ability to utilize its existing tax benefit carry forwards. Under such
         circumstances, the potential benefits from utilization of the tax loss
         carry forwards as of that date may be substantially limited or reduced
         on an annual basis. To the extent that net operating loss carry
         forwards, when realized, relate to stock option deductions, the
         resulting benefits will be credited to stockholders' equity.



                                      F-11