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 June 30, 1998

                                       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 June 30,
1998.


<PAGE>




                       NATIONAL DIVERSIFIED SERVICES, INC.


                                      INDEX

<TABLE>
<CAPTION>

<S>                                                                                                          <C>
                                                                                                             Page
                                                                                                             Number

PART I.  FINANCIAL INFORMATION

         Item 1.           Financial Statements

                           Consolidated Balance Sheets                                                            3
                             June 30, 1998 (Unaudited) and
                             December 31, 1997

                           Consolidated Statements of Operations                                                  4
                             Three Months and Six Months ended June 30,
                             1998 and June 30, 1997 (Unaudited)

                           Consolidated Statements of Cash Flows                                                  5
                             Six Months Ended June 30, 1998 and
                              June 30, 1997 (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>
<TABLE>
<CAPTION>

              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                                               JUNE 30,          DECEMBER 31,
                                                                                 1998                1997
                                                                             -----------         -----------
                                                                              (Unaudited)          (Audited)
<S>                                                                        <C>                  <C> 

CURRENT ASSETS:
   Cash and cash equivalents                                                 $   266,609         $   275,937
   Interest receivable                                                             1,514               1,775
   Other current assets                                                            1,656               1,656
                                                                             -----------         -----------

                  Total current assets                                           269,779             279,368
                                                                             -----------         -----------

                  TOTAL                                                      $   269,779         $   279,368
                                                                             ===========         ===========


                                   LIABILITIES

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                                     $     8,955         $     8,063
                                                                             -----------         -----------

                  Total current liabilities                                        8,955               8,063

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

                  Total liabilities                                               67,705              66,813
                                                                             -----------         -----------


                              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

Accumulated deficit                                                             (510,230)           (499,749)
                                                                             -----------         -----------
                                                                                 202,079             212,560
Less:  5,000 shares of treasury stock, at cost                                         5                   5
                                                                             -----------         -----------

                  Total stockholders' equity                                     202,074             212,555
                                                                             -----------         -----------

                  TOTAL                                                      $   269,779         $   279,368
                                                                             ===========         ===========

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

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>




                                                                  SIX                           THREE
                                                             MONTHS ENDED                   MONTHS ENDED
                                                               JUNE 30,                       JUNE 30,
                                                     -----------------------------  --------------------------
                                                          1998           1997           1998            1997
                                                     -------------   -------------  -------------  -----------
<S>                                                  <C>             <C>            <C>            <C>  


REVENUES - interest                                    $    7,521      $   7,254       $   4,361     $   3,621


GENERAL AND ADMINISTRATIVE
   EXPENSES                                                18,002          7,418           9,687         3,666
                                                       ----------      ---------       ---------     ---------


NET LOSS                                               $  (10,481)     $    (164)      $  (5,326)    $     (45)
                                                       ==========      =========       =========     =========


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


NUMBER OF SHARES USED TO
   COMPUTE LOSS 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>

                                                                                                 SIX
                                                                                            MONTHS ENDED
                                                                                              JUNE 30,
                                                                                    ----------------------------
                                                                                        1998            1997
                                                                                    -------------  -------------
<S>                                                                                 <C>             <C>   

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                          $    (10,481)  $       (164)
                                                                                     ------------   ------------
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
       Changes in assets and liabilities:
         Interest receivable                                                                  261          1,383
         Accounts payable and accrued expenses                                                892          1,957
                                                                                     ------------   ------------

                  Total adjustments                                                         1,153          3,340
                                                                                     ------------   ------------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                        (9,328)         3,176
                                                                                     ------------   ------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                    (9,328)         3,176

CASH AND CASH EQUIVALENTS - beginning                                                     275,937        272,574
                                                                                     ------------   ------------

CASH AND CASH EQUIVALENTS - ending                                                   $    266,609   $    275,750
                                                                                     ============   ============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for income taxes                                                        $        380   $        404
                                                                                     ============   ============

</TABLE>
                                       5
<PAGE>

              NATIONAL DIVERSIFIED SERVICES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 1998
                                   (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,  1997,  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
<PAGE>


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

Results of Operations

         During the six months ended June 30, 1998,  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
June 30, 1998,  the  Company's  working  capital  amounted to $260,824 with cash
assets of  $266,609.  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
         June 30, 1998.

                                                         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 9, 1998                        /s/Morry Rubin
                                          -----------------------------------
                                             Morry Rubin, President, Chief
                                             Executive, Financial and
                                                      Accounting Officer


                                                         9