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, 2002               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]

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. $137,147

The aggregate market value of the voting common stock held by non-affiliates of
the Registrant as of August 15, 2002: Not Determinable.

As of August 15, 2002 the Registrant had 5,231,280 shares of common stock
outstanding.


<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.


<PAGE>


         In addition to the transfer station, the Company had 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 determined not to pursue the acquisition of a landfill or
the development of trucking operations. Instead, it has been in discussions
regarding the acquisition of other businesses. None of these discussions has
resulted in any agreement as of the date of this Report and there are no
assurances that any discussions will culminate in any acquisition.

         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 consecutive years with automatic renewal annually
unless notice of termination is given by the operator. 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 in 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 initial term of
the Agreement will expire in December 2003. 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
1,500 yards of material per day, subject to local weather and construction
conditions. An advance from advance 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 paid from the revenues due the Company until it was paid in full in
October 2000.

         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 $7,650 per year in the aggregate) and any capital
improvements. There is currently a $375,000 mortgage note payable on the
facility which bears interest at the rate of 12% per annum. The mortgage note is
due February 1, 2004. See "Properties" herein and "Management's Discussion &
Analysis."

         The recycling center is presently receiving an average of 1,100 yards
of materials per day, approximately 400 yards less than was anticipated to be
reached by early in the first quarter of the fiscal year ended May 31, 2002.
This present amount of yardage constitutes approximately $11,500 per month in
revenues received by the Company. This amount varies due to local weather and
construction conditions.


                                        2
<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. The Company
intended, if the required financing could be obtained, to purchase a landfill
and acquire the necessary equipment to transport the materials to the Company's
landfill, thereby establishing additional sources of revenue. However, the
Company subsequently abandoned these plans and there are currently no plans to
purchase a landfill.

         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 Report, 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


                                        3
<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 was 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. The value of Mr. Greenfield's services
are recorded at their estimated fair value in the financial statements.

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 conducted 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 land 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


                                        4
<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.
The Company paid approximately $35,000 in settlement of this lawsuit and it was
dismissed on October 10, 2001.

                  b. Suit filed in September 1999 in the Circuit Court ,in and
for Miami-Dade County, Florida, Case No. 99-21685 CM05, Rock Power Corp. v.
Distribution Management Services, Inc., pursuant to a claim for payment in
connection with the replacement of a City of Miami water line for a cost of
approximately $97,000. In July 2002, payment in full was made by the Company and
the suit was dismissed.

                  c. 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. The
Company also issued 5,000 shares of restricted common stock to the Plaintiff in
December 2000. 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, 2002.


                                     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, 1999, 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


                                        5
<PAGE>


Company intended to apply for re-listing on the OTC:BB in the fall of 2001 but
did not do so. It is the Company's present intention to file for re-listing 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:

                                       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 Quarte                     .11                       .11


                                        6
<PAGE>


         Fiscal 2002                    High Bid                   Low Bid
         -----------                    --------                   -------

         First Quarter                     .11                       .11

         Second Quarter                    .11                       .11

         Third Quarter                     .11                       .11

         Fourth Quarter       no listed trades          no listed trades

         Fiscal 2003
         -----------

         June 1 - August 15   no listed trades          no listed trades

----------
         * Since October 18, 2000, the Company's common stock no longer trades
on the OTC:BB but continues to trade in the "pink sheets".

         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 July 31, 2002.


HOLDERS

         There were approximately 34 holders of record of the Company's common
stock as of July 31, 2002.


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.


                                        8
<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         RESULTS OF OPERATIONS
         ---------------------

         Twelve Months Ended May 31, 2002 compared to May 31, 2001.
         ----------------------------------------------------------

         During the fiscal year ended May 31, 2002, payments were made against
various obligations of the Company including settlement of two lawsuits. For the
year ended May 31, 2002 the Company received revenues from the operation of the
Center of approximately $137,100 compared with revenues of $120,800 for the
fiscal year ended May 31, 2001, representing an increase of approximately 15%.
This increase was primarily due to an increase in the materials brought to the
Center during the period but is less than management had anticipated. This
amount represents the Company's share of revenues pursuant to the Agreement
described in Item 1. of this Report and in Note 6 to the Company's audited
financial statements.

         The gross volume of materials delivered to the Center averaged
approximately 1,100 yards per day during fiscal 2002 compared to 950-1000 yards
in fiscal 2001. This amount is still approximately 27% 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 are expected to increase during the remainder of the current
fiscal year.

         LIQUIDITY AND CAPITAL RESOURCES
         -------------------------------

         As of May 31, 2002, the Company had cash on hand of approximately
$1,338. The monthly gross revenue received by the Company was approximately
$10,000 per month for the fiscal year ended May 31, 2001 and $11,500 for the
fiscal year ended May 31, 2002, or an increase of approximately 15%. 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 maturity
date of the mortgage note on the Center was extended from February 1, 2001 to
February 1, 2004.

         Management anticipates that cash flow from revenues, which are expected
to average approximately $12,000 to $15,000 per month during fiscal 2003, will
be sufficient to fund the Company's existing working capital requirements for
the next 12 months, including the funds required to pay the $4,100 per month
mortgage expense. All litigation which was pending in the fiscal years ended May
31, 2001 and 2002 has been settled and there is no pending litigation. The
Company's monthly cash operating expense averages approximately $6,000 which
amount is not expected to materially increase based upon current operations. In
the event that any of the outstanding loans (as described below) become due and
the Company is unable to secure alternative funding necessary to satisfy these
existing obligations, it may be unable to continue as a going concern.

         There are currently outstanding three loans from three related parties
in the principal sum of $150,000, $75,700 and $105,062, respectively. All of the
loans are due upon demand and bear interest at the applicable Federal rate.
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. See
"Certain Relationships and Related Transactions."


                                        9
<PAGE>


         From time to time, the Company may evaluate potential acquisitions
involving complementary businesses, services, products or technologies. Although
it has had preliminary discussions regarding potential requisition, it 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 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.


                                       10
<PAGE>

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 15, 2002, the directors and executive officers of the
Company, their ages, positions in the 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        78       President and Director     March 1999 to Present

Barbara Greenfield    64       Vice President and
                               Director                   March 1998 to Present

Maria Elena
  Lopez de Mendoza    61       Secretary and Director     March 1998 to Present

         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. The Company did not hold an annual meeting in the fiscal
year ended May 31, 2002.

         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


                                       11
<PAGE>


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. Since June 2000, Ms. Greenfield has been employed by
the City of Hollywood, Florida Fire Rescue Department. 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 was involved in the ownership
and management of Powergate Plaza, a shopping center located in Pompano Beach,
Florida until it was sold in November 2001. 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 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.

                                       12
<PAGE>


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
once there are sufficient revenues to do so as to which no assurances are given.
<TABLE>
<CAPTION>

                                        SUMMARY COMPENSATION TABLE
                                        --------------------------

                           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             2002     None    None     None         None         None     None     None
President/Director         2001     None    None     None         None         None     None     None
                           2000     None    None     None         None         None     None     None


Barbara Greenfield         2002     None    None     None         None         None     None     None
Vice President/Director    2001     None    None     None         None         None     None     None
                           2000     None    None     None         None         None     None     None

Maria Elena                2002     None    None     None         None         None     None     None
Lopez de Mendoza           2001     None    None     None         None         None     None     None
Secretary/Director         2000     None    None     None         100000       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 was filed in August
2002.

OPTION GRANTS IN FISCAL 2002
----------------------------

         None


AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTIONS/SAR VALUE TABLE
---------------------------------------------------------------------------

         None


                                       13
<PAGE>


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 15, 2002 the ownership of
common stock by persons who own beneficially more than 5% of the outstanding
shares of the Company's common stock:

<TABLE>
<CAPTION>

                   Name and Address                 Amount and Nature of
Title of Class   of Beneficial Owner                Beneficial Ownership             Percent of Class(1)
--------------   -------------------                --------------------             -------------------
<S>                <C>                                 <C>                                  <C>
Common             CEDE & CO.
                   P.O. Box 222
                   Bowling Green Station
                   New York, NY 10274                   1,649,000                           31.5%

Common             Empresas Flagler SA
                   Cable Beach Court
                   1 West Bay Street
                   Nassau, Bahamas                        380,000                            7.3%

Common             F.M.S. Distributors,
                   8700 N.W. 47th Drive
                   Coral Springs, FL 33067                500,000                            9.6%
</TABLE>

----------
(1) Percentages are calculated based upon 5,231,280 shares issued and
outstanding as of August 15, 2002.

                                       14
<PAGE>


         (b)      SECURITY OWNERSHIP OF MANAGEMENT
                  --------------------------------

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

Common             Double D, Inc. (2)            1,200,000            22.9%
                   1721 Trafalgar Circle
                   Hollywood, FL 33069


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

All officers and directors                       1,300,000            24.8%
as a group (3 persons)

----------
1) All percentages are calculated based upon 5,231,280 shares issued and
outstanding as of August 15, 2002.

(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.

         (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
loan 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.

         In or about July 2002, Leo Greenfield, President and a director of the
Company, loaned the


                                       15
<PAGE>


Company $105,062 to pay for the settlement of litigation involving the Company.
The loan is due upon demand and bears interest at the applicable Federal rate.

         From approximately May 1998 through July 2002, Greenfield and DuVal,
P.A. loaned the Company an aggregate of approximately $75,700. The loan 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 and
payment of approximately $35,000 for the settlement of litigation.

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

                  None


         (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.

                  99.1     Certification of the Chief Executive Officer.

                  99.2     Certification of the Chief Financial Officer.


                                       16
<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: August 26, 2002                  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                                           August 26, 2002
----------------------------                                  ----------------
Leo Greenfield                                                     Date
President and Director


 /s/ Barbara Greenfield                                       August 26, 2002
----------------------------                                  ----------------
Barbara Greenfield                                                 Date
Vice President and
Director

 /s/ Maria Elena Lopez de Mendoza                              August 26, 2002
---------------------------------                             ----------------
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>

                        M.D. WhiteMARVIN 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, 2002, 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, 2002, 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 25, 2002

                                       F-2

<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                                  BALANCE SHEET
                                     AUDITED
                                  May 31, 2002
<TABLE>
<CAPTION>

                                     ASSETS
                                     ------
<S>                                                                    <C>
Current Assets:
               Cash                                                    $     1,338
               Accounts receivable                                          15,966
               Advance costs of acquisitions                                 4,850
               Prepaid interest                                             40,672
                                                                       -----------
                          Total current assets                              62,826

Property, Plant and Equipment
               Land                                                        125,000
               Plant                                                       848,274
               Less:  Accumulated Depreciation                             (65,921)
                                                                       -----------
                          Net Property, Plant and Equipment                907,353

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

               Total assets                                                974,769
                                                                       ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities:
               Accounts payable                                             13,765
               Accrued interest                                             81,643
               Notes payable - stockholder and related party               330,762
                                                                       -----------
                          Total current liabilities                        426,170

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

Stockholders' Equity:
               Common stock; 15,000,000 shares of $.001 par value
               authorized; 5,231,280 shares issued and outstanding           5,231
               Additional paid-in capital                                1,075,581
               Accumulated deficit                                        (923,613)
               Subscription receivable                                      (3,600)
                                                                       -----------
                          Total stockholders' equity                       153,599
                                                                       -----------
                          Total liabilities and stockholders' equity   $   974,769
                                                                       ===========
</TABLE>

                       See notes to financial statements.


                                       F-3
<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                            STATEMENTS OF OPERATIONS
                                     AUDITED

                                                     YEAR ENDED     YEAR ENDED
                                                    MAY 31, 2001    MAY 31, 2002
                                                    -----------     -----------
Revenue:
       Recycling fees                               $   120,804     $   137,147
       Interest                                               0               0
                                                    -----------     -----------
             Operating Income                           120,804         137,147


Costs and Expenses:
       Compensation                                      15,600          15,600
       General and administrative                       124,239         127,856
                                                    -----------     -----------
                                                        139,839         143,456
             Income (loss) from Operations              (19,035)         (6,309)

       Extraordinary Income                              24,950             578

Net Income (Loss)                                         5,915          (5,731)

Net Income (Loss) Per Common Share                        0.001          (0.001)

Weighted Average Number of
Common Shares Outstanding                             5,224,000       5,231,280


               See notes to financial statements.


                                       F-4
<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                            STATEMENTS OF CASH FLOWS
                                     AUDITED
<TABLE>
<CAPTION>

                                                                  YEAR ENDING        YEAR ENDING
                                                                  MAY 31, 2001       MAY 31, 2002
                                                                   ---------           ---------
<S>                                                                <C>                 <C>
Cash Flows from Operating Activities:
    Net Income (Loss)                                              $   5,915           $  (5,731)
    Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
         Expenses paid by issuance of common stock                         0                   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              20,921
         Changes in operating assets and liabilities:
           Increase in accounts receivable                            (7,325)             (4,930)
           Decrease (increase) in prepaid interest                   (10,698)             (4,188)
           Increase in deposits                                            0                   0
           Increase in accrued interest payable                       10,075              13,684
           Increase (decrease) in accounts payable                   (23,558)            (72,965)
           Customer Deposits                                          (5,000)                  0
                                                                   ---------           ---------
             Net cash provided by (used in) operating activities       9,353             (33,265)

Cash Flows from Investing Activities:
    Advance costs of acquisitions                                          0              (4,850)
    Construction of recycling facility                                (7,303)            (21,077)
                                                                   ---------           ---------
      Net cash used in investing activities                           (7,303)            (25,927)

Cash Flows from Financing Activities:
    Payments of obligation related to litigation settlement         (275,000)                  0
    Proceeds from issuance of common stock                           235,000                   0
    Proceeds from restricted cash                                          0                   0
    Proceeds from exercise of warrants                                     0                   0
    Proceeds from mortgage payable                                         0                   0
    Proceeds from advance payable                                          0                   0
    Repayment of advance payable                                     (32,519)                  0
    Proceeds from stockholder and related party loans                 75,175              54,195
    Repayment of stockholder and related party loans                       0                   0
    Proceeds from convertible debenture                                    0                   0
                                                                   ---------           ---------
      Net cash (used in) provided by financing activities              2,656              54,195

Net (Decrease) Increase in Cash                                        4,706              (4,997)

Cash, Beginning                                                        1,629               6,335
                                                                   ---------           ---------

Cash, Ending                                                       $   6,335           $   1,338
                                                                   =========           =========
</TABLE>


                       See notes to financial statements.


                                       F-5

<PAGE>


                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                   STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
                                     AUDITED
<TABLE>
<CAPTION>
                                                                          Stock        Additional
                                                                       Subscription     Paid-In     Accumulated
                                              Shares        Amount      Receivable      Capital       Deficit          Total
                                            ----------    ----------    ----------     ----------    ----------     ----------
<S>                                          <C>          <C>           <C>            <C>           <C>            <C>
                                            ----------------------------------------------------------------------------------
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)                          5,000             5            --        234,995            --        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                        5,231,280    $    5,231    $   (3,600)    $1,055,637    $ (917,883)    $  139,385
                                            ==================================================================================



Year Ended May 31, 2002:
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)                                          --            --            --             --        (5,731)        (5,731)
                                            ----------------------------------------------------------------------------------
Balance, May 31, 2002                        5,231,280    $    5,231    $   (3,600)    $1,075,581    $ (923,614)    $  153,598
                                            ==================================================================================
</TABLE>


             See notes to financial statements.

                                      F-6
<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                                  MAY 31, 2002

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, 2002

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 (including related party loans, see note 7) 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 February 1, 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, 2002

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, 2002, 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. Payment scheduled for July 2002.

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, 2001, there is no
         outstanding balance.

         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, 2002

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.

         There are substantial loans by these related parties which can affect
         liquidity and based on management policy are to be repaid when Company
         is profitable enough. This is considered a temporary advance by related
         parties instead of a contribution to capital; therefore, interest is
         being accrued.

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.

NOTE 9.  INCOME TAXES

         No credit for income taxes has been reflected in the accompanying
         financial statements for 2001 and 2002 because of the significant
         uncertainty that exists regarding the realization of such income tax
         credits (see below).

         As of May 31, 2002, the Company estimates that it has net operating
         loss carry forwards of approximately $665,392 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 $265,000 as of May 31, 2002 were subject to and presented
         net of a 100% valuation allowance, therefore, zero.

         The Company was 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

                                      F-10
<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                  MAY 31, 2002

NOTE 9.  INCOME TAXES (CONTINUED)

         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. The Company
         is not delinquent in its tax return filings; but, based on prior
         delinquencies is still open to audit by state and federal authorities.

         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.



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