National Companies Inc – ‘10KSB’ for 12/31/02

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report                                         25    110K 
 2: EX-21.1     Subsidiaries of the Registrant                         1      3K 
 3: EX-99.1     Miscellaneous Exhibit                                  1      5K 
 4: EX-99.2     Miscellaneous Exhibit                                  1      5K 

10KSB   —   Annual Report
Document Table of Contents

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 U.S. Securities and Exchange Commission
Washington, D.C. 20549
 Form 10-KSB

(Mark One)                                                                      

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

 For the fiscal year ended December 31, 2002

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

For the transition period from _______________ to ________________

 Commission file no. 000-28593

NATIONAL COMPANIES, INC.
--------------------------------------------
(Name of small business issuer in its charter)

Florida                                        65-0962627       
(State or other jurisdiction of                        (I.R.S. Employer         
incorporation or organization)                       Identification No.)        

4350 Oakes Road, Suite 512                                                
Davie, FL                                           33314 
--------------------                                   ----------     
(Address of principal executive offices)                     (Zip Code)         

Registrant's telephone number: (954) 584-2151                                   

Nationwide Companies, Inc.
----------------------------------------------------------------
(Former name and/or former address, if changes since last report)   

Securities registered under Section 12(b) of the Exchange Act:        

                                        Name of each exchange on
Title of each class                 which registered  

None                                     None     
-----------                          -------------------

Securities registered under Section 12(g) of the Exchange Act:          

 Common Stock, $.001 par value
(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  [X]        No[ ]                                                           

Check if there is no disclosure of delinquent filers in response to Item        
405 of Regulation S-B contained in this form, and no disclosure will be         
contained, to the best of registrant's knowledge, in definitive proxy or        
information statements incorporated by reference in Part III of this Form       
10-KSB or any amendment to this Form 10-KSB. [X]                                

The Registrant's revenue for the fiscal year ended December 31, 2002:           
$13,036,808.                                                                    

There were 3,575,538 shares of National Companies, Inc.'s common stock          
outstanding as of March 31, 2003. Of these, 1,075,538 shares are held by        
non-affiliates. Because of the absence of an established trading market for the 
voting stock, the registrant is unable to calculate the aggregate market value  
of the voting stock held by non-affiliates.                                     

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the definitive Information     
Statement to be filed with the Securities and Exchange Commission not later than
120 days after the end of the fiscal year covered by this report are            
incorporated by reference into Part III.                                        

Transitional Small Business Disclosure Format: Yes [ ] No [X]                   

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SUMMARY TABLE OF CONTENTS                                                       

PART I                                                                          
Item 1.  Description of Business.                                               
Item 2.  Description of Property.                                               
Item 3.  Legal Proceedings.                                                     
Item 4.  Submission of Matters to a Vote of Security Holders.                   
PART II                                                                         
Item 5.  Market for Common Equity and Related Stockholder Matters.              
Item 6.  Management's Discussion and Analysis or Plan of Operation.             
Item 7.  Financial Statements.                                                  
Item 8.  Changes in and Disagreements with Accountants on Accounting            
and Financial Disclosure.                                     
PART III                                                                        
Item 9.  Directors, Executive Officers, Promoters and Control Persons;          
Compliance with Section 16(a) of the Exchange Act.            
Item 10. Executive Compensation.                                                
Item 11. Security Ownership of Certain Beneficial Owners and Management.        
Item 12. Certain Relationships and Related Transactions.                        
Item 13. Exhibits and Reports on Form 8-K.                                      
Item 14. Controls and Procedures                                                
Signatures                                                                      

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PART I                                                                          

Forward Looking Statements                                                      

This Form 10-KSB includes "forward looking statements". All statements included 
or incorporated by reference in this Form 10-KSB that address activities, events
or developments that we expect or anticipate will or may occur in the future    
(including such things as the amount and nature of future capital expenditures, 
demand for our products and services, and the expansion and growth of our       
business and operations) are forward looking statements. These statements are   
based on certain assumptions and analyses we have made in light of our          
experience and our perception of historical trends, current conditions and      
expected future developments as well as other factors we believe are appropriate
in the circumstances. However, whether actual results or developments will      
conform with our expectations and predictions is subject to a number of risks   
and uncertainties, general economic, market and business conditions, the        
business opportunities (or lack thereof) that may be presented to and pursued by
us, changes in laws or regulation, and other factors, most of which are beyond  
our control. Consequently, all of the forward looking statements made in this   
Annual Report are qualified by these cautionary statements and there can be no  
assurance that the actual results or developments we anticipate will be realized
or, even if substantially realized, that they will have the expected consequence
to or effects on the Company or its business or operations. We assume no        
obligations to update any forward-looking statements.                           

ITEM 1.  Description of Business                                                

The name of our company is National Companies, Inc. formerly known as The       
Nationwide Companies, Inc.  We were incorporated under the laws of the          
State of Florida on November 18, 1999 and changed our name to National          
Companies Inc. on August 29, 2001. In this Annual Report, National              
Companies, Inc. is sometimes referred to as the "Company" or "National."        

We are a direct sales organization, whose principal business is selling benefit 
packages to customers through independent marketing directors ("IMDs"). We are  
founded on what we believe to be a universally accepted distribution concept,   
the utilization of group buying initiatives to distribute products at discounts 
to the end consumer. For those seeking an income opportunity, the Company's     
carefully structured pay plan allows its IMDs to reap the financial rewards of  
direct sales. We have developed strategic alliances that supply products and    
services to our customers located throughout the United States. We are one of   
only about 150 companies that maintain membership in the prestigious Direct     
Selling Association (DSA). Membership in the DSA is granted only to those       
companies that demonstrate the highest standards of business practices          
consistent with the association's high ideals.                                  

As of April 14, 2003 we had 18 full time employees.                             

National's Core Business                                                        

Direct selling, or network marketing, is a marketing strategy that is powered by
personal relationships, and offers IMDs lucrative financial incentives and time 
freedom. Highly consumable, quality products typically drive network marketing  
sales. Direct sales organizations traditionally have the ability to grow at     
rates faster than seen in many other industries. We believe that direct sales is
a powerful and persuasive way to introduce products, generating strong "word of 
mouth" validation by directly rewarding consumers for sharing their excitement  
about a company's products or services.                                         

We believe that our ability to aggregate services and products enables us to    
offer significant discounts through the power of group buying. We offer a wide  
variety of market- driven products and services through a network of customers  
-- "Team National". We have developed this distribution system based on the     
one-to-one marketing concept of direct selling, creating value for the Company  
and significant revenue for our IMDs.                                           

The Company's benefit packages include benefits such as automotive discounts,   
financing, leasing, mortgages, insurance, travel and vacation packages,         
telecommunications, and an array of consumer-oriented products and services     
including car care products, dietary and nutritional supplements, personal care 
products, jewelry and pet products.                                             

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We offer two benefit packages for purchases by consumers:                       

1) A Two-Year Premium Benefit Package for the whole family, including the       
package owner and spouse, their parents and all children (no age limit). A      
Premium package sells for $2,195.00. Financing is also available for this       
package @ $895 down and $75.95 per month for 20 months.                         

2) A Two-Year Standard Benefit Package for the owner and spouse, which has most 
of the same benefits as the Premium package, and sells for $795.00. Financing   
for this package includes $95 down and $39.95 per month for 20 months.          

As a direct sales and distribution organization, National does not engage in    
manufacturing activities nor is the Company an underwriter and/or originating   
lender for any of its products. Our customers purchase all goods and services   
directly from National's suppliers -- companies that either are affiliated with 
National or are independent vendors. In this manner we have a high level of     
control of the supply chain.                                                    

The National Marketing Plan                                                     

We intend to continue to grow and develop our market share with a marketing plan
focused on our core business, the sale of benefit packages. Our marketing       
strategy is a core element of our business plans. National understands that     
although the benefit programs and the discounted products and services offered  
are a key component of the Company's focus, without the proper marketing and    
direct sales, these benefits will go unsold. The points listed below are the    
constant focus of the National management team:                                 

*        Emphasis on training, recognition and motivation.    
*        Cultivate and attract both new and strong leaders.   
  *        Promote unique offerings of cost-effective products and
services.                                   
*        A pay plan that leads the industry.                  
  *        Availability and accessibility of executive management.

Independent Marketing Directors                                                 

As a direct sales Company, sales of National's benefit packages are dependent   
upon the efforts of Team National, the Company's IMDs and customers. Management 
expects the number of IMDs and customers to continue to grow as the Company     
expands and as distributor recruitment increases. IMD growth is an essential    
component in our continued success in the direct selling industry. National     
believes its distributor compensation plan is one of the most financially       
rewarding in the industry. IMD commissions and bonuses are calculated and paid  
weekly based on volume sales as outlined in the Company's pay plan. Commissions 
are the Company's most significant expense. Management believes distributor     
commissions as a percent of net sales will remain relatively constant going     
forward.                                                                        

National's Compensation Plan                                                    

We offer a "binary" compensation program. In our plan, an IMD is allowed to     
occupy one or more "business centers," (Pay Points) each limited to two downline
legs. Compensation is paid on group volume of the downline legs rather than a   
percentage of sales of multiple levels of distributors. Thus, payment is volume 
driven rather than level driven. Sales volume must be balanced in the two legs  
to be eligible for commissions, which are paid at designated points when target 
levels of group sales are achieved. Payment is on a weekly basis. National chose
a binary compensation structure because of several important advantages offered 
by this type of direct sales compensation program. National's compensation plan 
is designed to give generous rewards to all levels of participation. We believe 
that our plan is generous in that it appropriately rewards IMDs, while          
generating significant sales for the Company.                                   

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Training                                                                        

We have developed professional marketing and training tools to facilitate the   
success of every one of our independent marketing directors. Our training       
program has been developed over the past several years and serves as the basis  
for preparing our IMDs for understanding our system and marketing our services. 
To address the fact that people communicate in different ways, we have developed
two methods to allow IMDs to share information:                                 

* The traditional person-to-person method with printed materials, video and     
audiotapes, pre-recorded and live phone conversations. And, a feature we believe
is unique to National, Chairman Richard Loehr and the executive management are  
available to all IMDs and customers of National Companies to answer their       
questions.                                                                      

* For IMDs with computers, National has developed our Internet site,            
www.bign.com for online training and downloadable documents.                    

Bign.com                                                                        

National has designed and maintains a state-of-the-art Internet site, Bign.com. 
The site has grown quickly and is an important sales tool for the Company and   
our IMDs. An eCommerce site, Bign.com is a secure venue where IMDs can recruit  
prospects, advertise, and download training materials. At the site, customers   
can purchase products and services, price new and used vehicles, and engage in a
range of other activities. Via the internet, IMDs and customers may shop from   
the comfort of their own homes 24 hours a day, 7 days a week.                   

Trademarks, Patents and Proprietary Information                                 

Many of our products are sold under trade names that are exclusive to National. 
This helps us to protect the trade names and prevent them from being used by    
other direct sales companies. We feel this strategy provides flexibility in     
introducing new products and withdrawing products from the market, and minimizes
capital investment and product liability exposure. Some of our other products   
and services are protected under exclusive agreements with our business         
partners. The Company holds no patents.                                         

We regard our marketing plan as proprietary and we have implemented protective  
measures of both a legal and a practical nature to ensure that it retains that  
status. The Company derives such protection by contracts with distributors and  
by keeping its software program confidential. Access to the Company's           
proprietary marketing plan software is limited to those with a need to know.    

Management                                                                      

National has worked to assemble a capable and dedicated management team         
comprised of leaders in their respective industries. These skilled individuals  
are committed to executing the company's business plans. Refer to Part III, Item
9. of this Report.                                                              

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THE INDUSTRY                                                                    

National believes that it is positioned at the leading edge of several          
multibillion dollar industries -- automotive sales and services, healthcare     
products and services, nutritional supplements, personal care products,         
telecommunications, travel, insurance and financial services. The Company unites
these industries through a direct sales force to provide quality products and   
services without high advertising costs and overhead. The Company believes it   
has both the products and marketing expertise to aggressively capture a         
significant share of these growing industries.                                  

ITEM 2.  Description of Property                                                

Our headquarters offices are located at 4350 Oakes Road, Suite 512, Davie,      
Florida, 33314, in a leased 10,000-sq. ft. facility in a newly constructed      
commercial complex. We can be reached at (954) 584-2151. Certain of our         
affiliated operating companies also operate from this leased location. We have  
an option to renew our lease in 2006.                                           

ITEM 3.  Legal Proceedings                                                      

The Company is currently not a party to any pending legal proceedings and no    
such action is planned by, or to the best of its knowledge, threatened against  
the Company.                                                                    

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

No matters were submitted to a vote of our security holders during the fourth   
quarter of 2002.                                                                

PART II                                                                         

ITEM 5.  Market For Common Equity and Other Shareholder Matters.                

The Company is not aware of any existing trading market for its common stock.   
The Company's common stock has never traded in a public market.                 

If and when the Company's common stock is traded in the over-the-counter market,
most likely the shares will be subject to the provisions of Section 15(g) and   
Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the Exchange     
Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth 
certain requirements for transactions in penny stocks and Rule 15g9(d)(1)       
incorporates the definition of penny stock as that used in Rule 3a51-1 of the   
Exchange Act.                                                                   

The Commission generally defines penny stock to be any equity security that has 
a market price less than $5.00 per share, subject to certain exceptions. Rule   
3a51-1 provides that any equity security is considered to be a penny stock      
unless that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on   
The NASDAQ Stock Market; issued by a registered investment company; excluded    
from the definition on the basis of price (at least $5.00 per share) or the     
issuer's net tangible assets; or exempted from the definition by the Commission.
If the Company's shares are deemed to be a penny stock, trading in the shares   
will be subject to additional sales practice requirements on broker-dealers who 
sell penny stocks to persons other than established customers and accredited    
investors, generally persons with assets in excess of $1,000,000 or annual      
income exceeding $200,000, or $300,000 together with their spouse.              

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For transactions covered by these rules, broker-dealers must make a special     
suitability determination for the purchase of such securities and must have     
received the purchaser's written consent to the transaction prior to the        
purchase. Additionally, for any transaction involving a penny stock, unless     
exempt, the rules require the delivery, prior to the first transaction, of a    
risk disclosure document relating to the penny stock market. A broker- dealer   
also must disclose the commissions payable to both the broker-dealer and the    
registered representative, and current quotations for the securities. Finally,  
the monthly statements must be sent disclosing recent price information for the 
penny stocks held in the account and information on the limited market in penny 
stocks. Consequently, these rules may restrict the ability of broker dealers to 
trade and/or maintain a market in the Company's common stock and may affect the 
ability of shareholders to sell their shares.                                   

As of March 31, 2003, we had 3,575,538 shares of common stock issued and        
outstanding. As of March 31, 2003, there were 119 holders of record of the      
outstanding shares of Common Stock. The company is not aware of any record      
holders holding stock for others.                                               

On March 28, 2002, the Company issued a total of 1,075,538 shares to 76         
employees and IMD's of the Company pursuant to an exemption from registration   
under Section 4(2) of the Securities Act of 1933.                               

For information regarding National's outstanding stock options, please refer to 
Note 3 of the Notes to Consolidated Financial Statements, contained in Item 7 of
this Report.                                                                    

Dividend Policy                                                                 

The Company has not declared or paid cash dividends or made distributions in the
past, and the Company does not anticipate that it will pay cash dividends or    
make distributions in the foreseeable future. The Company currently intends to  
retain and reinvest future earnings, if any, to finance its operations.         

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS            

Forward-Looking Statements                                                      

Generally, the inclusion of the words "believe," "expect," "intend," "estimate,"
"anticipate," "will," and similar expressions identify statements that          
constitute "forward-looking statements." All statements addressing operating    
performance, events, or developments that we expect or anticipate will occur in 
the future, including statements relating to sales growth, earnings or earnings 
per share growth, and market share, as well as statements expressing optimism or
pessimism about future operating results, are forward-looking statements.       

The forward-looking statements are and will be based upon our management's      
then-current views and assumptions regarding future events and operating        
performance, and are applicable only as of the dates of such statements. We     
undertake no obligation to update or revise any forward-looking statements,     
whether as a result of new information, future events, or otherwise.            

By their nature, all forward-looking statements involve risks and uncertainties.
Actual results, revenues, expenses, gross margins, cash flows, financial        
condition, liquidity and net income, as well as factors such as our competitive 
position, and the demand for the products and services offered through our      
programs, may differ materially from those contemplated by the forward-looking  
statements or those currently being experienced by the Company for a number of  
reasons, including but not                                                      

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limited to: the strength of the economy and other economic conditions in our    
markets, including recession, inflation, and deflation; our ability to maintain 
mutually beneficial relationships with our IMDs and customers; increased        
competition; the effects of litigation, our ability to generate sufficient cash 
flows to support capital expansion and general operating activities; changes in 
laws and regulations; the impact of unforeseen events, including war or         
terrorist activities; and consumer confidence.                                  

The foregoing list is not exhaustive. There can be no assurance that we have    
correctly identified and appropriately assessed all factors affecting our       
business or that the publicly available and other information with respect to   
these matters is complete and correct. Additional risks and uncertainties not   
presently known to us or that we currently believe to be immaterial also may    
adversely impact us. Should any risks and uncertainties develop into actual     
events, these developments could have material adverse effects on our business, 
financial condition, and results of operations. For these reasons, you are      
cautioned not to place undue reliance on our forward-looking statements.        

OVERVIEW                                                                        

The company was founded as a Florida corporation in 1999 as a direct sales      
organization. The Company sells benefit packages through independent marketing  
directors. Our marketing plan is based on the utilization of group buying       
initiatives to distribute products at discounts to the end consumer. We have    
developed strategic alliances for supplying products and services to the        
Company's customers located throughout the United States. We are one of only    
about 150 companies that maintain membership in the prestigious Direct Selling  
Association (DSA). Membership in the DSA is granted only to those companies that
demonstrate the highest standards of business practices consistent with the     
DSA's high ideals.                                                              

12-Month Plan of Operations                                                     

Over the next twelve (12) months we will focus on increasing the number of      
independent marketing directors and customers located throughout the United     
States. We will continue to grow and develop our market share with a marketing  
plan focused on our core business, the sale of benefit packages. Our marketing  
strategy is at the core of our success. We understand that although the benefit 
programs and the discounted products and services offered are a key component of
our focus, without the proper marketing and direct sales, these benefits will go
unsold. The constant focus of our management team will include (i) an emphasis  
on training, recognition and motivation, (ii) cultivating and attracting both   
new and strong leaders, (iii) promoting unique offerings of cost-effective      
products and services, as well as (iv) making executive management available and
accessible.                                                                     

We have adopted Internet technology enthusiastically and maintain an Internet   
site as a means of communication, training and ordering for our customers. The  
Company is committed to not losing sight of the fact that our products, services
and independent sales force are our hallmarks.                                  

We have adopted an operational strategy to form strategic alliances with        
multiple business partners. As a direct sales and distribution organization, we 
do not engage in manufacturing activities nor are we an underwriter and/or      
originating lender for any of our products. Our customers purchase all goods and
services directly from our suppliers -- companies that either are affiliated    
with National or are independent vendors. In this manner we have a high level of
control of the supply chain. We believe these strategic alliances and affiliated
companies will further reduce our risk, capital investment, need for facilities 
and direct responsibility for employees and will provide the necessary resources
and business practices.                                                         

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To distinguish ourselves from the competition, we plan to identify, develop and 
launch additional services, product lines and strategic alliances. In this      
regard, we established a new corporation, National Wireless, Inc., to provide   
wireless service to our customers. We intend to offer services of all the major 
carriers. Our strategic partners include United Parcel Service (UPS), Wells     
Fargo, Mircle Ear, Lenscrafters, Southeastern Gems and Smart Choice for extended
service contracts.                                                              

Results of Operations  2001 and 2002                                            

REVENUE. To date, sale of benefit packages by our IMDs have accounted for       
substantially all of our revenues. Revenues for the fiscal year ended December  
31, 2002 were $13,036,808. This represents an increase of 20.1% as compared to  
revenues of $10,852,392 for the fiscal year ended 2001. Loss from operations for
the fiscal year 2002 was ($708,967) compared to income from operations of       
$126,626 for fiscal year 2001. Net loss for the fiscal year 2002 was ($285,452) 
or ($0.086) per share on a basic and diluted basis. By comparison, net income   
for the fiscal year 2001 was $174,388 or $0.07 per share on a basic and diluted 
basis. We had commissions from related parties of $541,935 in 2001, but no such 
commission revenue in 2002.                                                     

The Company's ability to achieve revenues in the future will depend in          
significant part upon its ability to maintain relationships with and provide    
support to, existing and new IMDs. There can be no assurance that the Company's 
revenues will increase in the future. Accordingly, the Company's ability to     
maintain or increase revenues will depend in part upon its ability to market its
benefit packages, making available services and products at reduced prices      
sufficient to continue to attract new customers.                                

DIRECT COSTS. Direct costs of services increased by $2,100,579 or 27.1%, from   
$7,761,020 in fiscal 2001 to $9,861,599 in fiscal 2002. As a percentage of      
revenues, direct costs increased from 71.5% in fiscal 2001 to 75.6% in fiscal   
2002.                                                                           

Selling, General and Administrative. Selling, general and administrative        
expenses increased by $919,432 or 31%, from $2,964,744 in fiscal 2001 to        
$3,884,176 in fiscal 2002. As a percentage of revenues, selling, general and    
administrative expenses were 27.3% in 2001 and 29.8% in 2002. Selling, general  
and administrative expenses increased as a percentage of revenues primarily     
because of increased administrative and professional consulting fees and the    
development and opening of National Wireless.                                   

Provision for Income Taxes. The provision for income taxes decreased from       
$99,000 in fiscal 2001 to $0 in fiscal 2002.                                    

LIQUIDITY AND CAPITAL RESOURCES; FINANCIAL CONDITION                            

We generally fund our working capital needs from operations. Working capital    
decreased from approximately $643,000 at December 31, 2001, to a deficit of     
approximately ($1,388,393) at December 31, 2002. Over the same time period, cash
decreased from approximately $448,000, to an overdraft of approximately         
($228,000) at December 31, 2002.                                                

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At December 31, 2002 the Company is in a negative cash and working capital      
position and has a net capital deficiency. Management believes that this working
capital deficiency can be funded from continuing operations. The Company's      
majority shareholder, president and Chairman of the Board has informed the      
Company that he has the ability and intent to advance the Company's cash needs, 
if necessary, for a short period of time. If the Company experiences a prolonged
need for working capital, the Company believes it will be able to raise needed  
working capital from private placements of debt or equity securities. There can 
be no assurance, however, that working capital needs will be funded from        
operations, or that private capital sources will be available on acceptable     
terms, or at all.                                                               

At December 31, 2002, the Company has a $500,000 merchant processing deposit,   
which is expected to be refunded in May 2003.                                   

To date, inflation has not had a material impact on our financial results.      
However, inflation could adversely affect our future financial results.         

Critical Accounting Policies                                                    

We have adopted various accounting policies that govern the application of      
accounting principles generally accepted in the United States in the preparation
of our financial statements. Our significant accounting policies are described  
in the footnotes to the consolidated financial statements at December 31, 2002, 
as included in this annual report on Form 10-KSB. We consider these accounting  
policies to be critical accounting policies. Certain accounting policies involve
significant judgments and assumptions by us, but do not have a material impact  
on the carrying value of our assets and liabilities and results of operations.  
The judgments and assumptions we use are based on historical experience and     
other factors that we believe to be reasonable under the circumstances. Because 
of the nature of the judgments and assumptions we make, actual results could    
differ from these judgments and from estimates which could have an impact on our
carrying values of assets and liabilities and our results of operations.        

Item 7.  FINANCIAL STATEMENTS                                                   

The financial information required in response to this Item is as follows:      

NATIONAL COMPANIES, INC.

 CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2001 and 2002

NATIONAL COMPANIES, INC.

 Table of Contents

Independent Auditor's Report                                       9            

Consolidated Balance Sheet                                         10           

Consolidated Statements of Operations                              11           

Consolidated Statement of Shareholders' Deficit                    12           

Consolidated Statements of Cash Flows                              13           

Notes to Consolidated Financial Statements                         14 - 17      

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 ROBERT JARKOW
 CERTIFIED PUBLIC ACCOUNTANT

 3111 North Andrews Avenue
Fort Lauderdale, Florida 33309

(954) 630-9070

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors                                                       
National Companies, Inc.                                                        

I have audited the accompanying consolidated balance sheets of National         
Companies, Inc. as of December 31, 2002 and 2001 and the related statements of  
operations, shareholders' deficit, and cash flows for the years then ended.     
These financial statements are the responsibility of the Company's management.  
My responsibility is to express an opinion on these financial statements based  
on my audits.                                                                   

My audits were conducted 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 audits provide a reasonable 
basis for my opinion.                                                           

In my opinion, the consolidated financial statements referred to above present  
fairly, in all material respects, the consolidated financial position of        
National Companies, Inc. as of December 31, 2002 and 2001, and the results of   
its operations and cash flows for the years then ended, in conformity with      
accounting principles generally accepted in the United States of America.       

/s/ Robert Jarkow                                                               
-----------------                                                               

April 11, 2003                                                                  

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 NATIONAL COMPANIES, INC. and SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                                                               December 31,  December 31,
                                                                                                   2002         2001     
                                                                                               -----------   ----------- 
                                                    ASSETS                                                               
                                                                                                                         
Current Assets                                                                                                           

      Cash                                                                                              --   $   447,991 
      Inventory                                                                                $    43,937            -- 
      Prepaid commissions                                                                        7,213,056     4,734,208 
      Merchant processing deposit                                                                  500,000            -- 
      Advance to related company                                                                   500,000     2,143,409 
      Income tax refund receivable                                                                 109,000            -- 
      Other                                                                                         38,386            -- 
                                                                                               -----------   ----------- 
            Total current assets                                                                 8,404,379     7,325,608 

Prepaid commissions-long term                                                                    2,890,388     3,424,093 

Advance to related company-long term                                                             1,316,853            -- 

Equipment and leasehold improvements                                                                                     
    net of accumulated depreciation of $105,836 in 2002 and $44,388 in 2001                        221,199       209,526 

Data base and web site-net of accumulated amortization of $76,000 in 2002 and $57,000 in 2001       19,000        38,000 
                                                                                               -----------   ----------- 
                                                                                               $12,851,819   $10,997,227 
                                                                                               ===========   =========== 

                                         LIABILITIES & SHAREHOLDERS' DEFICIT                                             

Current Liabilities                                                                                                      

      Cash overdraft                                                                           $   227,690   $        -- 
      Accounts payable and accrued liabilities                                                     242,249       258,688 
      Income tax payable                                                                                --        99,000 
      Revenue received in advance                                                                9,322,833     6,325,097 
                                                                                               -----------   ----------- 
            Total current liabilities                                                            9,792,772     6,682,785 
                                                                                               -----------   ----------- 

Revenue received in advance-long term                                                            3,628,819     4,651,248 
                                                                                               -----------   ----------- 

Shareholders' Deficit                                                                                                    

      Common stock-par value $.001; 10,000,000 shares authorized,                                                        
           3,575,538 in 2002;  2,500,000 in 2001 issued and outstanding                             97,168        44,682 
      Deficit                                                                                     (666,940)     (381,488)
                                                                                               -----------   ----------- 
            Total shareholders' deficit                                                           (569,772)     (336,806)
                                                                                               -----------   ----------- 
                                                                                               $12,851,819   $10,997,227 
                                                                                               ===========   =========== 

The accompanying notes are an integral part of these financial statements.

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 NATIONAL COMPANIES, INC. and SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2002 and 2001

                                                                [Download Table]


                                                            2002          2001   
                                                        -----------   -----------

Revenue                                                                          
                                                                                 
      Sales                                             $12,862,938   $ 9,971,355

      Commissions-related party                                  --       541,935

      Other income                                          173,870       339,102
                                                        -----------   -----------

                                                         13,036,808    10,852,392

Direct costs                                              9,861,599     7,761,020
                                                        -----------   -----------

      Gross profit                                        3,175,209     3,091,372

Selling, general, and administrative expenses             3,884,176     2,964,744
                                                        -----------   -----------

      (Loss) income from operations                        (708,967)      126,628

      Interest income                                       339,515       146,760
                                                        -----------   -----------

(Loss) income before (credit) provision for income tax     (369,452)      273,388

      (Credit) provision for Income tax                     (84,000)       99,000
                                                        -----------   -----------

Net (loss) income                                       $  (285,452)  $   174,388
                                                        ===========   ===========

(Loss) Income per share-basic                           $    (0.086)  $     0.070
                                                        ===========   ===========

Weighted - average common shares outstanding              3,310,335     2,500,000
                                                        ===========   ===========

The accompanying notes are an integral part of these financial statements.

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 NATIONAL COMPANIES, INC. and SUBSIDIARIES

 CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT

Year Ended December 31, 2002

                                                        [Enlarge/Download Table]


                                                            Common Stock                
                                                       ---------------------            
                                                         Shares     Amount     Deficit  
                                                       ---------   ---------  --------- 

                                                                                        
Balance December 31, 2000                              2,500,000   $  44,682  $(555,876)

      Net income for the year ended December 31, 2001          --         --    174,388 

                                                       ---------   ---------  --------- 
Balance December 31, 2001                              2,500,000      44,682   (381,488)

      Common stock issued for services                 1,075,538      52,486         -- 

      Net (loss) for the year ended December 31, 2002         --          --   (285,452)

                                                       ---------   ---------  --------- 
Balance December 31, 2002                              3,575,538   $  97,168  $(666,940)
                                                       =========   =========  ========= 

The accompanying notes are an integral part of these financial statements.

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 CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2002 and 2001

                                                        [Enlarge/Download Table]

                                                                                      2002         2001     
                                                                                  -----------   ----------- 
                                                                                                            
Cash flows from operating activities                                                                        
         Net (loss) income                                                        $  (285,452)  $  (174,388)
         Adjustments to reconcile net (loss) income to net cash                                             
           (used) provided by operating activities                                                          
                 Issuance of common stock for services                                 52,486            -- 
                 Depreciation and amortization                                         80,448        53,388 
                 (Increase) in inventory                                              (43,937)           -- 
                 (Increase) in prepaid commissions                                 (1,945,143)   (3,394,306)
                 (Increase) in income tax refund                                     (109,000)           -- 
                 (Increase) in other assets                                           (38,386)           -- 
                 Increase (decrease) in accounts payable and accrued liabilities      (16,439)       26,207 
                 Increase (decrease) in income tax payable                            (99,000)       99,000 
                 Increase in revenue received in advance                            1,975,307     5,067,890 
                                                                                  -----------   ----------- 
                      Total adjustments                                              (143,664)    1,852,179 
                                                                                  -----------   ----------- 

                      Net cash (used) provided by operating activities               (429,116)    2,026,567 
                                                                                  -----------   ----------- 

Cash flows from investing activities                                                                        
         Purchase of equipment                                                        (73,121)     (238,914)
         (Increase) in merchant processing deposit                                   (500,000)           -- 
         (Increase) decrease in advance to related company                            326,556    (1,677,775)
         Increase in cash overdraft                                                   227,690            -- 
                                                                                  -----------   ----------- 
                      Net cash (used) by investing activities                         (18,875)   (1,916,689)
                                                                                  -----------   ----------- 

Cash flows from financing activities                                                                        
         (Decrease) in due to shareholder                                                  --       (50,000)
                                                                                  -----------   ----------- 
                      Net cash (used) by financing activities                              --       (50,000)
                                                                                  -----------   ----------- 

Net (decrease) increase in cash                                                      (447,991)       59,878 

Cash - beginning                                                                      447,991       388,113 
                                                                                  -----------   ----------- 

Cash - ending                                                                     $         0   $   447,991 
                                                                                  ===========   =========== 

Supplemental disclosures of cash flow information                                                           
         Taxes paid                                                               $    99,000   $        -- 
                                                                                  ===========   =========== 

The accompanying notes are an integral part of these financial statements.

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NATIONAL COMPANIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 and 2001

Note 1. Summary of Significant Accounting Policies                              

Nature of Operations                                                            

         The Company is a direct sales organization which sells benefit packages
which allows the Company's customers to purchase products and services through  
affiliated companies and third party vendors.                                   

         The Company created a wholly owned subsidiary which began operations in
July 2002. The subsidiary is in the business of selling wireless telephones and 
accessories to the customers of National Companies, Inc. At December 31, 2002,  
the consolidation with the parent included the following: Cash $7,977; Inventory
$43,939; Equipment (net of depreciation of $8,333) $41,667; Sales $45,814; Cost 
of Sales $40,079; Selling, General and Administrative Expenses $185,734. In     
April 2003 the Company is relocating the office to its Florida office in order  
to eliminate general and administrative expenses of approximately $150,000.     

Principles of Consolidation                                                     

The consolidated financial statements include amounts of the  
subsidiaries. All intercompany accounts and transactions have been eliminated in
the consolidation.                                                              

Use of Estimates                                                                

   Use of estimates and assumptions by management is required in the
preparation of financial statements in conformity with generally accepted       
accounting principles. Actual results could differ from those estimates and     
assumptions.                                                                    

Revenue Recognition                                                             

   Benefit Package sales, and associated Direct Costs (consisting of
commissions), are deferred and recognized over the term of the membership period
(two years) on the straight line basis (because the customers buying patterns   
are random and cannot be predicted).                                            

  Other Income consists of (1) business packages, which assist the
independent marketing director to present the Company to prospective new        
customers and (2) access by the independent marketing directors to the Company's
data base. Income is recognized when payment is received.                       

Cash Concentration                                                              

   The Company maintains its cash in bank deposit accounts which may
exceed the $100,000 federally insured limits.                                   

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 NATIONAL COMPANIES, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 and 2001

Note 1. Summary of Significant Accounting Policies (continued)                  

Data Base and Web Site                                                          

        The data base and web site was recorded at $95,000, which was the cost
to the contributing shareholder. Amortization is computed using the             
straight-line method over the five year estimated useful life. Maintenance of   
the web site is expensed as occurred.                                           

Equipment and Leasehold Improvements                                            

     Equipment in 2000 is recorded at $15,000, which was the cost to the
contributing shareholder. Depreciation is computed using the straight-line      
method over the three year estimated useful lives of the assets. Additions for  
2001 are as follows: (1) equipment of $146,170 is depreciated using the         
straight-line method over the three and five year estimated useful lives; (2)   
leasehold improvement of $49,183 is being depreciated using the straight-line   
method over the five year life of the lease; (3) a Corvette purchase of $42,921 
(for a promotional prize) is recorded at estimated residual value and was       
purchased by the recipient in 2003. Additions for 2002 are as follows: (1)      
equipment of $50,000 is depreciated using the straight-line method over the five
year estimated useful lives, and (2) leasehold improvements of $23,121 are      
depreciated using the straight-line method over the remaining years of the      
lease.                                                                          

(Loss) Earnings Per Share                                                       

       (Loss) earnings per share is calculated by dividing net income by the
average number of shares outstanding during the period.                         

      At December 31, 2002 and 2001 there are no shares that would cause a
dilution of (loss) earnings per share.                                          

Note 2. Benefit Package Contracts                                               

     In March 2001, the Company began a time payment program for Benefit
Package sales. The contracts are payable over 20 months bearing interest at     
approximately 18 percent. The amount of contracts entered into during 2002 were 
$4,445,115 and 2001 were $5,652,270, with the balance to be collected at        
December 31, 2002 of $4,725,767 and December 31, 2001 of $3,579,984. The        
receivables, and corresponding commissions payable, are not recorded, in        
compliance with the Securities and Exchange Commissions Staff Accounting        
Bulletin No. 101, until received.                                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 and 2001

Note 3. Commitments                                                             

      Long-Term Operating Lease-The Company has a commitment under a lease
for office space, expiring on August 31, 2006. The following summarizes the     
future minimum lease payments under the non-cancelable operating lease          
obligation: for 2003 is $67,854; 2004 is $70,924; 2005 is $73,770 and 2006 is   
$50,484.                                                                        

       Rent expense for 2002 and 2001 was approximately $74,880 and $59,924,
respectively.                                                                   

    The Company has issued options to purchase approximately 7,600,000
shares of its common stock at $5 per share to Independent Marketing Directors.  
The options may be exercised for a 90 day period after the Company is approved  
for quotation on the Over The Counter Bulletin Board (OTCBB) or other trading   
exchange. The Company has not applied for quotation on the OTCBB or any other   
exchange, nor does it have any current plans to do so.                          

Note 4. Related Party Transactions                                              

 Affiliated companies-The majority of the Company's products and
services are supplied by companies that are owned by the Company's majority     
shareholder, president and Chairman of the Board of the Company. These          
affiliated companies sell only to the Company's customers. No revenue is        
realized by the Company for product or service sold by theses affiliates, except
that one affiliate paid a commission, based on product sales, to the Company in 
2001. This commission was discontinued for 2002; if not discontinued it would   
have been approximately $616,000. The revenue received by the Company from this 
affiliate is reflected in the Statement of Operations as Commissions.           

 At December 31, 2002, The Company had advanced to an affiliate,
interest free, $1,816,853. The Company anticipates to receive approximately     
$500,000 in 2003 toward repayment of this obligation. The balance is anticipated
to be repaid before the end of 2004.                                            

         An affiliate of the Company is owned by the majority shareholder of the
Company who is also the president and Chairman of the Board of the Company and  
is also the president and Chairman of the Board of the affiliate. The affiliate 
sold health insurance of two health care providers to customers of the Company. 
The State of Florida Department of Insurance has initiated proceedings against  
one health care provider, asserting that it was operating without a state       
license and was not a valid ERISA plan exempt from state regulation. The State  
of Texas Department of Insurance has initiated a receivership proceeding against
the other health care provider, asserting that it was operating without a state 
license and was not a valid ERISA plan exempt from state regulation. The        
Company's understanding, that as of April 11, 2003, neither plan is operating or
paying claims. The amount of unpaid claims that the Company is aware of as of   
April 11, 2003 is approximately $652,000.                                       

     Management is unable to assess the effect, if any, this matter will
have on the Company. Accordingly, no provision has been made in these financial 
statements in this matter.                                                      

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 and 2001

Note 5.  Income Tax                                                             

     At December 31, 2002 and 2001, there are no items that give rise to
deferred income taxes.                                                          

At December 31, 2001 the effective tax rate is 36%.           

         The loss of 2002 was carried back to recover income taxes paid in 2001.

Note 6.  Liquidity                                                              

    At December 31, 2002 the Company is in a negative cash and working
capital position and has a net capital deficiency. Management believes that this
working capital deficiency can be funded from continuing operations. The        
Company's majority shareholder, president and Chairman of the Board has informed
the Company that he has the ability and intent to fund the Company's cash needs,
if necessary, for a short period of time. If the Company experiences a prolonged
need for working capital, the Company believes it will be able to raise needed  
working capital from private placements of debt or equity securities. However,  
there can be no assurance that working capital needs will be funded from        
operations, or that private capital sources will be available on acceptable     
terms, or at all.                                                               

      At December 31, 2002, the Company has a $500,000 merchant processing
deposit, which is expected to be refunded in May 2003.                          

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ITEM 8.  Changes in and Disagreements with Accountants on Accounting and        
Financial Matters.                                                              

We have had no changes in or disagreements with our independent certified public
accountant on accounting and financial disclosure.                              

PART III                                                                        

ITEM 9.  Directors, Executive Officers, Promoters and Control Persons;          
Compliance with Section 16(a) of the Exchange Act.                              

The information for this Item is incorporated by reference to our Information   
Statement to be filed with the Securities and Exchange Commission not later than
120 days after the end of the fiscal year covered by this report ("Information  
Statement").                                                                    

ITEM 10. Executive Compensation                                                 

The information for this Item is incorporated by reference to our Information   
Statement.                                                                      

ITEM 11. Securities Ownership Of Certain Beneficial Owners And Management       

The information for this Item is incorporated by reference to our Information   
Statement.                                                                      

Item 12. Certain Relationships and Related Transactions                         

The information for this Item is incorporated by reference to our Information   
Statement.                                                                      

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Item 13. Exhibits and Reports on Form 8-K                                       

(a) The following documents are filed as part of this report:                   

(1) Consolidated Financial Statements.                                      

  An index to consolidated financial statements for the year ended
December 31, 2002 appears on page 8.                          

(2)  Exhibits.                                                              

The exhibits required to be filed herewith by Item 601 of Regulation S-B, as    
described in the following index of exhibits, are incorporated herein by        
reference, as follows:                                                          

Exhibit No.    Description                                                      
-----------    ----------------------------------------------------             
3(i).1             Articles of Incorporation of National Companies, Inc.,       
a Florida corporation (1)                 

3(i).2             Articles of Amendment to Articles of Incorporation of        
         National Companies, Inc., a Florida corporation (4)

3(ii)              Bylaws of National Companies, Inc., a Florida corporation (1)

10.1               Office lease for Corporate offices located in                
Davie, Florida (2)                        

10.2               General Contract for services between National               
       Companies, Inc. and National Automotive, Inc. (3)

10.3               General Contract for services between National               
        Companies, Inc. and National Health Plans Plus (3)

10.4               General Contract for services between National               
           Companies, Inc. and Team Nationals Products, Inc. (3)

21.1               Registrant's Subsidiaries (5)                                

99.1               Certification  Pursuant to 18 U.S.C.  Section 1350,          
as Adopted Pursuant to Section 906 of the 
Sarbanes-Oxley Act of 2002. (5)           

99.2               Certification  Pursuant to 18 U.S.C.  Section 1350,          
as Adopted Pursuant to Section 906 of the 
Sarbanes-Oxley Act of 2002. (5)           

(1)  Incorporated herein by reference to our Registration Statement on Form     
10-SB originally filed with the SEC on December 21, 1999.             

(2)  Incorporated herein by reference to the Company's Form 10-KSB Amendment 1  
originally filed with the SEC on May 17, 2001.                        

(3)  Previously filed with Amendment No. 2 to Form SB-2 on October 22, 2001 (SEC
File No. 333-63220).                                                  

(4)  Previously filed with Amendment No. 3 to Form SB-2 on November 8, 2001.    

(5)  Filed herewith.                                                            

(b) Reports on Form 8-K.                                                        

No Reports on Form 8-K were filed by the Registrant during the last quarter of  
the period covered by this report                                               

Item 14.  Controls and Procedures                                               

Within the 90 days prior to the date of this Annual Report, the Company         
conducted an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and       
Principal Financial Officer (its principal executive officer and principal      
financial officer, respectively), of the effectiveness of the design and        
operation of the Company's disclosure controls and procedures pursuant to       
Exchange Act Rules 13a-14. Based upon that evaluation, the Company's Chief      
Executive Officer and Principal Financial Officer concluded that the Company's  
disclosure controls and procedures are effective in timely alerting them to     
material information relating to the Company (including its consolidated        
subsidiaries) required to be included in the Company's periodic SEC filings.    
There have been no significant changes in the Company's internal controls or in 
other factors, which could significantly affect internal controls, subsequent to
the date the Company carried out its evaluation.                                

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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.                                                      

                              THE NATIONAL COMPANIES, INC.
              (Registrant)

Date:    April 15, 2003                   By: /s/ Richard L. Loehr              
                                    ----------------------------------
                                    Richard L. Loehr, Chairman & CEO

Date:    April 15, 2003                   By: /s/ Carol Boozer                  
                                    ----------------------------------
                                    Carol Boozer, Vice President and
                           Principal Financial and
                                Principal Accounting Officer

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

Date                   Signature          Title                                 

April 15, 2003          By: /s/ Richard L. Loehr                                
--------------------------        
       Richard L. Loehr, Chairman of the Board

April 15, 2003          By: /s/ Angela Loehr Chrysler                           
------------------------------    
Angela Loehr Chrysler, Director 

April 15, 2003          By: /s/ Richard Chrysler                                
--------------------------        
Richard Chrysler, Director      

April 15, 2003          By: /s/ Robert Fason                                    
-----------------------           
Robert Fason, Director          

April 15, 2003          By: /s/ Les Whitaker                                    
------------------------          
Les Whitaker, Director          

April 15, 2003          By: /s/ Fred Swindle                                    
       -----------------------
Fred Swindle, Director          

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CERTIFICATIONS

I, Richard L. Loehr certify that:                                               

1.   I have reviewed this Annual Report on Form 10-KSB of National Companies,   
Inc.                                                                  

2.   Based on my knowledge, the Annual Report does not contain any untrue       
    statement of a material fact or omit to state a material fact necessary to
  make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
this Annual Report;                                                   

3.   Based on my knowledge, the financial statements, and other financial       
   information included in the Annual Report, fairly present in all material
   respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this Annual Report;

4.   The registrant's other certifying officers and I are responsible for       
     establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: 

a)   designed such disclosure controls and procedures to ensure that  
  material information relating to the registrant, including its
    consolidated subsidiaries, if any, is made known to us by others
       within those entities, particularly during the period in which this
Annual Report is being prepared;                            

  b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
this Annual Report (the "Evaluation Date"); and             

     c)   presented in this Annual Report our conclusions about effectiveness of
        the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;                                        

5.   The registrant's other certifying officers and I have disclosed, based on  
our most recent evaluation, to the registrant's auditors and the audit
 committee of registrant's board of directors (or persons performing the
equivalent functions):                                                

  a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to
 record, process, summarize and report financial data and have
     identified for the registrant's auditors any material weakness in
internal controls; and                                      

    b)   any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
controls; and                                               

6.   The registrant's other certifying officers and I have indicated in the     
   Annual Report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls 
subsequent to the date of our most recent evaluation, including any   
 corrective actions with regard to significant deficiencies and material
weaknesses.                                                           

Dated:     April 15, 2003                                                       

                                   /s/    Richard L. Loehr
                                      --------------------------
                            Richard L. Loehr
                                  Chairman and President

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I, Carol Boozer, certify that:                                                  

1.   I have reviewed this Annual Report on Form 10-KSB of National Companies,   
Inc.                                                                  

2.   Based on my knowledge, the Annual Report does not contain any untrue       
    statement of a material fact or omit to state a material fact necessary to
  make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
this Annual Report;                                                   

3.   Based on my knowledge, the financial statements, and other financial       
   information included in the Annual Report, fairly present in all material
   respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this Annual Report;

4.   The registrant's other certifying officers and I are responsible for       
     establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: 

a)   designed such disclosure controls and procedures to ensure that  
  material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
        entities, particularly during the period in which this Annual Report
is being prepared;                                          

  b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
this Annual Report (the "Evaluation Date"); and             

     c)   presented in this Annual Report our conclusions about effectiveness of
        the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;                                        

5.   The registrant's other certifying officers and I have disclosed, based on  
our most recent evaluation, to the registrant's auditors and the audit
 committee of registrant's board of directors (or persons performing the
equivalent functions):                                                

  a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to
 record, process, summarize and report financial data and have
     identified for the registrant's auditors any material weakness in
internal controls; and                                      

    b)   any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
controls; and                                               

6.   The registrant's other certifying officers and I have indicated in the     
   Annual Report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls 
subsequent to the date of our most recent evaluation, including any   
 corrective actions with regard to significant deficiencies and material
weaknesses.                                                           

Dated:     April 15, 2003                                                       

 /s/    Carol Boozer
                            ----------------------------------------------
Carol Boozer      
                            Vice President and Principal Financial Officer

22

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EXHIBIT SCHEDULE

Exhibit         Description                                                     

21.1            Registrant's Subsidiaries                                       

99.1            Certification Pursuant to 18 U.S.C. Section 1350, as            
Adopted Pursuant to Section 906 of the          
Sarbanes-Oxley Act of 2002.                     

99.2            Certification Pursuant to 18 U.S.C. Section 1350, as            
Adopted Pursuant to Section 906 of the          
Sarbanes-Oxley Act of 2002.                     

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		8/31/06		18
Filed on:		4/15/03		22		24
		4/14/03		3
		4/11/03		11		18
		3/31/03		1		7			10QSB,  NT 10-Q
For Period End:		12/31/02		1		21			5,  NT 10-K
		3/28/02		7
		12/31/01		9		19			10KSB,  NT 10-K
		11/8/01		21					SB-2/A
		10/22/01		21					SB-2/A
		8/29/01		3
		5/17/01		21					10KSB/A
		12/21/99		21					10SB12G
		11/18/99		3
									List all Filings