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<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 March 31, 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 March 31, 1997.
---------------------------------
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                       NATIONAL DIVERSIFIED SERVICES, INC.
                       -----------------------------------

                                      INDEX
                                      -----




                                                                            
                                                                          
                                                                        Page
                                                                      Number
PART I.  FINANCIAL INFORMATION                                        ------  

         Item 1.           Financial Statements

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

                           Consolidated Statements of Operations       
                             Three Months ended March 31,
                             1997 and March 31, 1996 (Unaudited)           4

                           Consolidated Statements of Cash Flows   
                             Three Months Ended March 31, 1997 and
                              March 31, 1996 (Unaudited)                   5

                           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 



                                                         2

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              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>
                                                                              MARCH 31,          DECEMBER 31,
                                                                                 1997                1996
                                                                             ------------       ------------
                                                                              (Unaudited)         (Audited)
<S>                                                                          <C>                 <C>
CURRENT ASSETS:                                                              
   Cash and cash equivalents                                                 $   275,478         $   276,977
   Interest receivable                                                             3,702               1,947
                                                                             -----------         -----------

                  Total current assets                                           279,180             278,924
                                                                             -----------         -----------

                  TOTAL                                                      $   279,180         $   278,924
                                                                             ===========         ===========

                                   LIABILITIES

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                                     $     7,036         $     8,144
                                                                             -----------         -----------

                  Total current liabilities                                        7,036               8,144

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

                  Total liabilities                                               65,786              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                                                                         (498,910)           (500,274)
                                                                             -----------         -----------
                                                                                 213,399             212,035
Less:  5,000 shares of treasury stock, at cost                                         5                   5
                                                                             -----------         -----------

                  Total stockholders' equity                                     213,394             212,030
                                                                             -----------         -----------

                  TOTAL                                                      $   279,180         $   278,924
                                                                             ===========         ===========
</TABLE>

                                                         3

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              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                                THREE
                                                                                            MONTHS ENDED
                                                                                              MARCH 31,
                                                                                     ---------------------------
                                                                                        1997            1996
                                                                                     ------------   ------------
<S>                                                                                  <C>            <C>
REVENUES - interest                                                                  $      4,153   $      3,633


GENERAL AND ADMINISTRATIVE EXPENSES                                                         2,789          3,752
                                                                                     ------------   ------------


NET INCOME (LOSS)                                                                    $      1,364   $       (119)
                                                                                     ============   ============


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


NUMBER OF SHARES USED TO COMPUTE INCOME
   (LOSS) PER SHARE                                                                     6,548,870      6,548,870
                                                                                     ============   ============


</TABLE>

*Less than $.01 per share

                                                         4

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              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                                THREE
                                                                                            MONTHS ENDED
                                                                                              MARCH 31,
                                                                                     ---------------------------
                                                                                        1997            1996
                                                                                     ------------  -------------
<S>                                                                                  <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                                 $      1,364   $       (119)
                                                                                     ------------   ------------
   Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
       Changes in assets and liabilities:
         Accounts payable and accrued expenses                                             (1,108)        (1,036)
         Interest receivable                                                               (1,755)         1,429
                                                                                     ------------   ------------

                  Total adjustments                                                        (2,863)           393
                                                                                     ------------   ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                  (1,499)           274
                                                                                     ------------   ------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                    (1,499)           274

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

CASH AND CASH EQUIVALENTS - ending                                                   $    275,478   $    272,848
                                                                                     ============   ============


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

   Cash paid for interest                                                            $       -      $       -
                                                                                     ============   ============



</TABLE>
                                                         5

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              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 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  are comprised 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

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        Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

Results of Operations

         During the three  months  ended  March 31,  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
March 31, 1997,  the Company's  working  capital  amounted to $272,144 with cash
assets of  $275,478.  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

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                       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 March 31, 1997.

                                                         8

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                       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: May 14, 1997                         /s/George Rubin
                                            ----------------------------------
                                            George Rubin, President, Chief
                                                Executive, Financial and
                                                Accounting Officer


                                                         9

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