<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

 [X]             QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                    For the quarter ended September 30, 1997

                                       OR

 [ ]          TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from ________ to ________

Commission File Number:  2-99080
---------------------------------

                       NATIONAL DIVERSIFIED SERVICES, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


          Delaware                                               11-2820379
----------------------------------                 -----------------------------
(State or other jurisdiction                            (I.R.S. Employer
of incorporation or organization)                      Identification No.)

c/o Lester Morse P.C.
111 Great Neck Road, Suite #420
Great Neck, New York                                               11021
----------------------------------------            ----------------------------
(Address of principal executive offices)                        (Zip  Code)

Registrant's telephone number,
including area code:                                            (516) 487-1419
-------------------------------------                ---------------------------


                                 Not Applicable
--------------------------------------------------------------------------------
         (Former name, former address and former fiscal year if changed
                               since last report)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                                Yes  x .   No ___.



6,548,870 Common Shares, $.001 par value were issued and outstanding at 
September 30, 1997.


<PAGE>

                       NATIONAL DIVERSIFIED SERVICES, INC.
                       -----------------------------------

                                      INDEX
                                      -----

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                             Number


PART I.  FINANCIAL INFORMATION
<S>                                                                                                          <C>    


         Item 1.           Financial Statements

                           Consolidated Balance Sheets                                                            3
                             September 30, 1997 (Unaudited) and
                             December 31, 1996

                           Consolidated Statements of Operations                                                  4
                             Three and Nine Months ended September 30,
                             1997 and September 30, 1996 (Unaudited)

                           Consolidated Statements of Cash Flows                                                  5
                             Nine Months Ended September 30, 1997 and
                              September 30, 1996 (Unaudited)

                           Notes to Financial Statements (Unaudited)                                              6

         Item 2.           Management's Discussion and Analysis of
                             Financial Condition and Results of
                             Operations                                                                           7

PART II.          OTHER INFORMATION                                                                               8


SIGNATURES                                                                                                        9
</TABLE>
<PAGE>
              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>


                                                                           SEPTEMBER 30,         DECEMBER 31,
                                                                               1997                  1996
                                                                           ------------          ------------
                                                                            (Unaudited)            (Audited)
<S>                                                                       <C>                   <C> 
CURRENT ASSETS:
   Cash and cash equivalents                                               $   277,832           $   276,977
   Interest receivable                                                           2,088                 1,947
                                                                           -----------           -----------

                  Total current assets                                         279,920               278,924
                                                                           -----------           -----------

                  TOTAL                                                    $   279,920           $   278,924
                                                                           ===========           ===========


                                   LIABILITIES

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                                   $     8,939           $     8,144
                                                                           -----------           -----------

                  Total current liabilities                                      8,939                 8,144

ACCRUED SALARIES - officer                                                      58,750                58,750
                                                                           -----------           -----------

                  Total liabilities                                             67,689                66,894
                                                                           -----------           -----------


                              STOCKHOLDERS' EQUITY

Common stock, $.001 par value; authorized 30,000,000
   shares, issued 6,553,870 shares                                               6,554                 6,554
Additional paid-in capital                                                     705,755               705,755
                                                                           -----------           -----------
                  Total                                                        712,309               712,309

Deficit                                                                       (500,073)             (500,274)
                                                                           -----------           -----------
                                                                               212,236               212,035
Less:  5,000 shares of treasury stock, at cost                                       5                     5
                                                                           -----------           -----------

                  Total stockholders' equity                                   212,231               212,030
                                                                           -----------           -----------

                  TOTAL                                                    $   279,920           $   278,924
                                                                           ===========           ===========
</TABLE>




                                       3
<PAGE>
              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                                 NINE                             THREE
                                                                             MONTHS ENDED                     MONTHS ENDED
                                                                             SEPTEMBER 30,                    SEPTEMBER 30,
                                                                     ---------------------------     ----------------------------
                                                                          1997           1996              1997           1996
                                                                     ------------   ------------     ------------    ------------
<S>                                                                  <C>            <C>              <C>             <C>
REVENUES - interest                                                  $     11,694   $     11,231     $       3,842   $      3,977


GENERAL AND
   ADMINISTRATIVE EXPENSES                                                 11,492         10,274             3,844          2,856
                                                                     ------------   ------------     -------------   ------------


NET INCOME (LOSS)                                                    $        202   $        957     $          (2)  $      1,121
                                                                     ============   ============     =============   ============


NET INCOME PER SHARE, BASED ON THE
   WEIGHTED AVERAGE SHARES OUTSTANDING                               $       -   *  $       -   *    $        -   *  $       -   *
                                                                     ============   ============     =============   ============


NUMBER OF SHARES USED TO COMPUTE
   INCOME PER SHARE                                                     6,548,870      6,548,870         6,548,870      6,548,870
                                                                     ============   ============     =============   ============
</TABLE>

 
*Less than $.01 per share

                                      4
<PAGE>
              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>




                                                                                                  NINE
                                                                                             MONTHS ENDED
                                                                                              SEPTEMBER 30,
                                                                                    ----------------------------
                                                                                        1997            1996
                                                                                    -------------  -------------
<S>                                                                                 <C>             <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                        $        202   $        957
                                                                                     ------------   ------------
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization                                                                        -
       Changes in assets and liabilities:
         Interest receivable                                                                 (142)         1,199
         Accounts payable and accrued expenses                                                795          4,690
                                                                                     ------------   ------------

                  Total adjustments                                                           653          5,889
                                                                                     ------------   ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                     855          6,846
                                                                                     ------------   ------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                       855          6,846

CASH AND CASH EQUIVALENTS - beginning                                                     276,977        272,574
                                                                                     ------------   ------------

CASH AND CASH EQUIVALENTS - ending                                                   $    277,832   $    279,420
                                                                                     ============   ============


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid for income taxes                                                        $        388   $        404
                                                                                     ============   ============

   Cash paid for interest                                                            $       -      $       -
                                                                                     ============   ============
</TABLE>


                                       5
<PAGE>
              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1997
                                   (Unaudited)



NOTE 1 - BASIS OF PRESENTATION

     The  attached  summarized  financial   information  does  not  include  all
     disclosures  required  to  be  included  in a  complete  set  of  financial
     statements  prepared  in  conformity  with  generally  accepted  accounting
     principles.  Such disclosures were included with the consolidated financial
     statements  of the Company at  December  31,  1996,  included in its annual
     report on Form 10-K. Such statements should be read in conjunction with the
     data herein.


NOTE 2 - ADJUSTMENTS

     The financial  information reflects all normal recurring adjustments which,
     in the opinion of management,  are deemed necessary for a fair presentation
     of the results for the interim periods. The results for the interim periods
     are not necessarily indicative of the results to be expected for the year.


NOTE 3 - CASH EQUIVALENTS

     Cash  equivalents  consist of an investment in short-term  commercial paper
     with maturities of less than ninety days.


NOTE 4 - ACCRUED SALARIES - OFFICER

     Accrued salaries - officer  represents $58,750 for the period December 1986
to November 22, 1989.


                                       6

<PAGE>
          Management's Discussion and Analysis of Financial Condition
                           and Results of Operations

Results of Operations

         During the nine months ended  September  30,  1997,  the Company had no
revenues other than interest income since the Company  terminated its import and
sale business  operations in 1990.  The Company is presently  exploring  various
business  opportunities  that may be available to it. No assurances can be given
that the Company will be successful  in  completing a transaction  to acquire an
operating business.

Liquidity and Capital Resources

         Financing of the Company's activities has been provided from the public
sale of its securities for cash amounting to a net of approximately $600,000. At
September 30, 1997, the Company's working capital amounted to $270,981 with cash
assets of  $277,832.  Management  believes  that its cash assets are adequate to
meet the  Company's  short term and long term  liquidity  and cash  requirements
until such time, if ever, as the Company completes a transaction to establish an
operating business.



                                        7

<PAGE>

                       NATIONAL DIVERSIFIED SERVICES, INC.


                           PART II - OTHER INFORMATION



Item 1.           Legal Proceedings:                          None

Item 2.           Changes in Securities:                      None

Item 3.           Defaults Upon Senior Securities:            None

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

                  None

Item 5.           Other Information:                          None

Item 6.           Exhibits and Reports on Form 8-K:

                  (a)      Exhibits - 27 - Financial Data Schedule

                  (b)      No reports on Form 8-K were filed  during the quarter
                           ended September 30, 1997.

                                        8

<PAGE>

                       NATIONAL DIVERSIFIED SERVICES, INC.
                       -----------------------------------


                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.





                                             NATIONAL DIVERSIFIED SERVICES, INC.
                                             -----------------------------------
                                                         (Registrant)




Dated: November 19, 1997                     /s/George Rubin
                                             -----------------------------------
                                             George Rubin, President, Chief
                                             Executive, Financial and
                                             Accounting Officer


                                        9