National Energy Services, Inc. - FORM 10-K

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EX-10.71 - EXHIBIT 10.71 - National Energy Services, Inc.	ex10_71.htm
EX-10.72 - EXHIBIT 10.72 - National Energy Services, Inc.	ex10_72.htm
EX-10.74 - EXHIBIT 10.74 - National Energy Services, Inc.	ex10_74.htm
EX-10.75 - EXHIBIT 10.75 - National Energy Services, Inc.	ex10_75.htm
EX-31.1 - EXHIBIT 31.1 - National Energy Services, Inc.	ex31_1.htm
EX-31.2 - EXHIBIT 31.2 - National Energy Services, Inc.	ex31_2.htm
EX-32.1 - EXHIBIT 32.1 - National Energy Services, Inc.	ex32_1.htm
EX-32.2 - EXHIBIT 31.1 - National Energy Services, Inc.	ex32_2.htm
EX-10.73 - EXHIBIT 10.73 - National Energy Services, Inc.	ex10_73.htm
EX-10.76 - EXHIBIT 10.76 - National Energy Services, Inc.	ex10_76.htm
EX-10.77 - EXHIBIT 10.77 - National Energy Services, Inc.	ex10_77.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended: DECEMBER 31, 2012

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

National Automation Services, Inc.

(Name of Small Business Issuer in its Charter)

Nevada	000-53755	26-1639141
(State or jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)

P.O. Box 400775 Las Vegas, NV 89140		877-871-6400
(Address number principal executive offices)		(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common, par value $0.001

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes £ No R

Check whether the Registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Exchange Act. Yes o No R

Check whether the Registrant (1) 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 o No R

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R No £

Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K £

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:

Large accelerated filer £	Accelerated filed £

Non-accelerated filer £	Smaller reporting company R

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No R

The market value of the voting stock held by non-affiliates as of June 30, 2012 is $237,192 based on 237,191,585 shares held by non-affiliates. Due to the fact that there is no trading market for the Registrant’s common stock, these shares have been arbitrarily valued at par value of one thousandth ($0.001) per share.

As of October 10, 2013, the Registrant had 532,560,872 shares of common stock outstanding.

Documents incorporated by reference: None

Table of Contents

PART I		3
ITEM 1:	BUSINESS	3
ITEM 1A:	RISK FACTORS	6
ITEM 1B:	UNRESOLVED STAFF COMMENTS	8
ITEM 2:	PROPERTIES	8
ITEM 3:	LEGAL PROCEEDINGS	8
ITEM 4:	MINE SAFETY DISCLOSURES	9
PART II		9
ITEM 5:	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	9
ITEM 6:	SELECTED FINANCIAL DATA	9
ITEM 7:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	9
ITEM 7A:	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	14
ITEM 8:	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	17
ITEM 9:	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	35
ITEM 9A:	CONTROLS AND PROCEDURES	35
ITEM 9B:	OTHER INFORMATION	37
PART III		37
ITEM 10:	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	37
ITEM 11:	EXECUTIVE COMPENSATION	38
ITEM 12:	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	39
ITEM 13:	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	40
ITEM 14:	PRINCIPAL ACCOUNTANT FEES AND SERVICES	41
ITEM 15:	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	42
SIGNATURES		47

PART I

FORWARD LOOKING STATEMENTS

Forward-looking statements include the information concerning National Automation Services’ possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, and the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “may,” “will,” or similar expressions. Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. We do not have any intention or obligation to update forward-looking statements after we distribute this report. You should understand that many important factors, in addition to those discussed elsewhere in this report, and could cause our results to differ materially from those expressed in the forward-looking statements. These factors include, without limitation, increases in materials, labor, demand for services, our ability to implement our growth strategy, our fixed obligations, and our dependence on the market demand for automation and control services.

ITEM 1: BUSINESS

Business Development, History and Organization

Organizational History

On December 28, 2007, we incorporated as a Nevada corporation under the name National Automation Services, Inc. On August 6, 2009, National Automation Services, Inc. filed a Form 10, which under SEC rule, reinstates our public reporting obligations under federal securities laws. The Form 10 had an effective registration date 60 days after submission on October 6, 2009 and was cleared of SEC’s limited comments as of March 8, 2010.

Overview

National Automation Services, Inc. (referred to herein as “NAS” or the “Company”) is a public holding company that serves the Industrial Automation market place. Our business plan takes action with expansion through carefully selected acquisitions. We anticipate expansion by acquisition into several geographic regions over the next 12 to 18 months.

Our telephone number for our executive offices is (877) 871-6400.

Our common stock is currently quoted on the OTC Markets under the symbol “NASV.QB”.

Plan of Operation

We intend to focus our efforts on implementing the following business strategy:

The Company has evaluated the scope of its business plan and has modified it to reduce corporate overhead functions leaving all operating activities at the subsidiary level. The benefits of this new direction will begin to be realized in the fourth quarter of 2013 and beyond.

Our goal is to acquire companies with track records of long term, stable, and profitable operations. Each subsidiary operates as its own entity with current management retained. This allows the Company’s management to focus on maintaining quality while increasing current levels of revenues and profitability. Each subsidiary provides their financials to NAS and the Company will make site visits to ensure companies are in compliance for reporting and monitoring purposes.

We feel this new and redirected focus will offer each subsidiary an opportunity for growth through synergies created by becoming a part of the Company.

We are presently evaluating other companies for acquisition in 2013 and beyond. The evaluation process is conducted by our acquisition board and the companies are evaluated on the following attributes:

Geographic area

Synergies with our current core businesses

Niche marketing

Areas of expertise

Price/earnings ratio

Benefit: Customer base, proprietary products, technology, and talent base.

Raise Additional Capital

We currently have a cash shortage, and our operating revenues are insufficient to fund our operations. Even though we settled our debt with Trafalgar in March of 2011, the effects of the agreement prevented us from seeking additional sources of financing throughout the fiscal year of 2012. Consequently, our audited financial statements contain, in Note 3, an explanatory paragraph to the effect that our ability to continue as a going concern is dependent on our ability to increase our revenue, eliminate our recurring net losses, eliminate our working capital deficit, and realize additional capital; and we can give no assurance that our plans and efforts to do so will be successful (see Item 8, Financial Statements and Supplementary Data). On September 4, 2013, the Company settled its obligation to Trafalgar Capital Group, SARL, in the amount of $200,000 in debt. The settlement will relieve all encumbrances of Trafalgar on the Company’s financials.

Therefore, we require additional funds to finance our business activities on an ongoing basis and to implement our acquisition strategy portraying our Company as one able to provide a target company with additional working capital to finance and grow its business. Accordingly, we intend to seek additional financing.

Any additional funding sought would likely result in a material and substantial dilution of the equity interests of our current shareholders, and also likely will increase our debt servicing obligations for the future (See also Item 1A, Risk Factors).

Improve Existing Operations

Our operating results have been unsatisfactory. We had a working capital deficit of $(3,538,986) at December 31, 2012. We also have experienced recurring losses. Although in each of the following periods our revenues have increased over the corresponding period in the prior year, our revenues for 2011 decreased due to our past encumbrance with Trafalgar and the inability to service our customers. For the fiscal year end December 31, 2012, we had an operating loss of $(266,255), and a net loss of $(510,063), primarily due to interest expenses for outstanding liabilities owed. For the year ended December 31, 2011, we had an operating loss of $(1,774,954), and a net income of $544,581, due primarily for our disposal of Trafalgar debt as noted in our settlement agreement dated March 25, 2011.

At October 10, 2013, our cash on hand, most of which was obtained from recent convertible note agreements and private placement offerings, was approximately $1,000.

We are working to improve the existing operations by removing the burdens and obstacles that we believe are impeding our operations. With Trafalgar litigation settled we intend to expand our operations purely through acquisition in 2013.

Affect Strategic Acquisitions

We intend to expand our operations in the continental United States by acquiring select small to medium sized privately-held automation companies that primarily perform work for industrial applications.

We use the following criteria to evaluate acquisition opportunities:

Established businesses with a proven track record: We seek established businesses with a proven operating track record strong financial performance, positive operating results, established or growing contract backlogs, and/or the potential for positive operating cash flow. We consider the experience and skill of management and whether other talented personnel exist within the company or the local market.

Opportunity for growth of our industrial business: We look for businesses with an established base of industrial end users, to provide us an opportunity to increase synergism of our portfolio as well as market diversification.

Opportunity to purchase and assimilate technologies and infrastructures to further aid our operational, technological and overhead objectives.

The criteria identified above are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, on the above factors as well as other considerations deemed relevant by our management. Accordingly, we may enter into a business combination that does not meet any or all of these criteria if we believe that it has the potential to create significant stockholder value.

We intend to affect our acquisitions by a stock purchase using the acquisitions cash flow to pay for the sale of our public stock. We currently have banks and access to cash for the funding of our acquisitions. The structure of the deal is an upfront cash payment with the owner carrying an interest bearing note payable for five years

Director Qualifications and Board of Directors Role

Our Company’s Board of Director qualifications, to date, have been members of the ownership of our Company. As owners of the Company their fundamental role has been to guide the Company’s success in its current operations, to oversee the management and executive levels of the Company, and to ensure that the Company complies with the rules and regulations of a public or traded company. Management has traditionally had a broad discretion to adjust the application and allocation of our cash and other resources as they are also a part of the management and Board of Directors.

In 2013 through 2014, we will begin transition to an independent Board of Directors. We will also expand our Advisory Board to the company Directors. The Advisory Board is convened to give advice and support to the company. It does not have any legal or formal responsibilities.

Our primary goal is to have our Corporate Governance rules and regulations implemented to start these strategies. The Board of Directors role in the next six to twelve months will move from its existing blend of management and direct dependence on ownership to one of independence set forth in our Governance charter as noted on our website and other disclosed documentation. These principals also adhere to the Company’s code of conduct (ethics) which is also noted on the Company’s website and exhibited on this annual filing.

Acquisitions Affected

Intuitive System Solutions, Inc.

Intuitive Systems Solutions, Inc., a wholly owned subsidiary and a Nevada corporation headquartered in Henderson, Nevada, was made dormant in January 2012.

Intecon, Inc.

Intecon Inc., a wholly owned subsidiary and an Arizona corporation headquartered in Tempe, Arizona, was made dormant in January 2012.

Our Business

Principal Services

General

By broadening our corporate focus to include new companies in product distribution, manufacturing and production, NAS will create a diverse spectrum of services.

As acquisitions are concluded, NAS will be defining this spectrum of its services. At present time, our core services have not changed from design, production, and installation of mechanical and electronic automation systems.

Our Market

The automation/control industry in the United States has been approximated to exceed over $500 billion in revenues per year. The automation industry is segmented, consisting of automation control and system divisions in companies that expand over various markets (Aerospace, Robotics, Transportation, Process, Security, Automotive, etc.). We estimate, based on various external sources, the total automation/control market consists of over 21,000 publically and privately held companies operating both domestically and internationally.

Our focus in 2013 and beyond will be to expand our market penetration in Automation and Controls while adding diversification into additional new markets as defined by the targeted acquisitions concluded.

Business Conditions

Environmental Matters

We are subject to environmental regulation by federal, state and local authorities in the United States. Although we believe we are in substantial compliance with all applicable environmental laws, rules and regulations (“laws”), the field of environmental regulation can change rapidly with the enactment or enhancement of laws and stepped up enforcement of these laws, either of which could require us to change our manufacturing methods. At present, we are not involved in any material environmental matters and are not aware of any material environmental matters threatened against us.

Proprietary Rights

We do not own or license any patents or trademarks, and we have no immediate plans to do so. We have not filed, and do not intend to file, any application with any government agency for protection or registration of these rights. We rely upon a combination of nondisclosure and other contractual arrangements to protect our proprietary rights.

Reports to Security Holders

You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all of the reports that we have filed electronically with the SEC at their internet site www.sec.gov.

ITEM 1A: RISK FACTORS

In any business venture, there are substantial risks specific to the particular enterprise which cannot be ascertained until a potential acquisition, reorganization or merger candidate has been specifically identified; however, at a minimum, our present and proposed business operations will be highly speculative, and will be subject to the same types of risks inherent in any new or unproven venture, and will include those types of risk factors outlined below, among others that cannot now be determined.

Risks Relating To Our Business

Continuation as a Going Concern

Our auditors' report on our audited December 31, 2011 and 2012 financial statements, and Note 3 to such financial statements, reflect a substantial doubt about our ability to continue as a going concern. We intend to expand our operations purely through acquisition in 2013 and beyond. We will be carefully managing our overhead to maximize the effects of profitable acquisitions. However, we can give no assurance that these plans and efforts will be successful.

We Need Additional Capital

In the past we have experienced recurring net losses, including net losses of $(510,063) for the fiscal year ended December 31, 2012, and we had an accumulated deficit of $(15,814,009) at December 31, 2012. We have a severe cash shortage, with approximately $1,000 of cash on hand at October 10, 2013.

Therefore, we require additional funds to finance our business activities on an ongoing basis and to implement our acquisition strategy portraying our company as one able to provide a target subsidiary not only with cost savings results but also with additional working capital to finance and grow the business.

Fluctuations in Operating Results by Acquisition

We expect quarterly and annual operating results to fluctuate, depending primarily on the following factors:

Our ability to obtain new business;

Our ability to generate significantly greater revenues than we have been able to generate to date, and to have revenues in such amount as to be able to satisfy our operational overhead, which now is not being met;

Our ability to reduce selling, general and administrative cash expenses, particularly payroll compensation, by issuing stock to alleviate cash constraints, especially considering that our planned expansion by acquisition of other companies will result in increases in operating expenses, including, without limitation, as a result of the employment contracts we seek to enter into with the former owners of these companies;

The cost of attracting and hiring qualified employees.

Risks of Expansion by Acquisition

Our business strategy depends in large part on our ability to identify and acquire suitable companies, to expand our current expertise into the markets of our acquired companies, and to capitalize on the expertise of these companies to obtain new business in our current markets. Delays or failures in acquiring new companies would materially and adversely affect our planned growth.

The success of this proposed strategy will depend on numerous factors, some of which are beyond our control, including the following:

securing any required approvals from our lender(s) and others;

our ability to effectively integrate an acquired company, including its information systems and personnel;

our ability to retain the services of the key employees of the acquired company;

availability of additional qualified operating personnel;

necessary or unavoidable increases in wages, or unanticipated operating costs;

the possibility of unforeseen events affecting the region particularly in which an acquired company operates;

adverse effects on existing business relationships resulting from the performance of an acquired company; and

diversion of management’s attention from operating our business.

The acquisition transactions may also result in the following:

issuance of additional stock that would further dilute our current stockholders’ percentage ownership;

incurring debt;

assumption of unknown or contingent liabilities; or

negative effects on reported operating results from acquisition-related charges and

amortization of acquired technology, goodwill and other intangibles.

Therefore, our business strategy may not have the desired result, and notwithstanding effecting numerous acquisitions we still may be unable to achieve profitability or, if profitability should be achieved, to sustain it.

Control by Management and Directorship

Our company is effectively controlled by Management, specifically Messrs. Robert W. Chance, and Jeremy Briggs (“Management”), who collectively own approximately 16% (as of October 10, 2013) of our outstanding common stock, and specifically Messrs. Sean Sego, and Tom Sego, who hold a position on our board of directors own 7% of the Company’s outstanding common stock for a total controlled ownership of 23%. While we intend to pursue our business strategy as set forth herein, Management has broad discretion to adjust the application and allocation of our cash and other resources, whether in order to address changed circumstances and opportunities or otherwise. As a result of such discretion, our success is substantially dependent upon their judgment. In addition, Management is able to elect our board of directors and to cause the directors to declare or refrain from declaring dividends, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights holders of our common stock, issue additional shares of capital stock and generally to direct our affairs and the use of all funds available to us. Any such preferred stock also could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Any issuance of common or preferred stock could substantially dilute the percentage ownership of the company held by our current stockholders.

Dependence on Management

Our success is dependent upon the active participation of our Management. We have entered into employment agreements (i) with Mr. Chance, for an initial two-year term which expired February 14, 2009, and continues annually thereafter, and (ii) with Mr. Briggs which expired on December 31, 2012, as of January 1, 2013, we placed Mr. Briggs on a consulting agreement and have accrued his services under professional fees, until such time as we are able to execute our acquisition strategy. In addition, we do not maintain any "key man" insurance on any of their lives. In the event we should lose the services of any of their people, our business would suffer materially. There can be no assurance that we would be able to employ qualified person(s) on acceptable terms to replace them.

Dependence on Third-Party Suppliers

Our manufacturing processes require that we buy a high volume of components from third party suppliers. Our reliance on these suppliers involves certain risks, including:

The cost of these items might increase, for reasons such as inflation and increases in the price of the precious metals, if any, or other internal parts used to make such items, which could cause our costs to complete a job to exceed the estimate we used to create our bid;

Poor quality could adversely affect the reliability and reputation of our product; and

A shortage of components could adversely affect our manufacturing efficiencies and delivery capabilities, which could prevent us from obtaining, or hinder our ability to obtain, new business, which could jeopardize our ability to comply with the requirements of our contracts.

Any of these uncertainties also could adversely affect our business reputation and otherwise impair our profitability and ability to compete.

Risks Related to Our Industry in General

Exposure to Product and Professional Liability Claims

In the ordinary course of our business, we may be subject to product and professional liability claims alleging that products we sold or services that we provided failed or had adverse effects. We maintain liability insurance at a level which we believe to be adequate. A successful claim in excess of the policy limits of the liability insurance could materially adversely affect our business. As a user of products manufactured by others, we believe we may have recourse against the manufacturer in the event of a product liability claim. There can be no assurance, however, that recourse against a manufacturer would be successful, or that any manufacturer will maintain adequate insurance or otherwise be able to pay such liability.

ITEM 1B: UNRESOLVED STAFF COMMENTS

None

ITEM 2: PROPERTIES

None

ITEM 3: LEGAL PROCEEDINGS

As of November 21, 2012, the Company has defaulted on its convertible note with Asher Enterprises which it entered into on May 9, 2012. Per the terms of the agreement, the Company was still in compliance with the maturity date of the note, however, due to the conversion pricing of the Company’s restricted common stock and the conversion feature within the terms of the agreement the Company prevented Asher from further conversions of the debt. Asher Enterprises triggered the default as the Company was not in compliance with its filing requirements per Securities and Exchange Commission 1934 Exchange Act. As such the Company, as of the date of the default, will accrue for the interest rate of 22% in relation to the terms set within the convertible note agreement, and repayment of 150% the amount of principal.

On September 4, 2013, the Company settled its obligation to Trafalgar Capital Group, SARL, in the amount of $200,000 in debt. The settlement will relieve all encumbrances of Trafalgar on the Company’s financials.

ITEM 4: MINE SAFETY DISCLOSURES

None

PART II

ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has been quoted on the OTC Markets under the symbol “NASV.QB” since October 12, 2007. The quarterly high and low close information on the OTC Markets of our common stock for each full quarterly period is as follows:

Fiscal Year Ending December 31, 2012:	High		Low
Fourth Quarter	$	0.0011	$	0.0004
Third Quarter		0.0018		0.0005
Second Quarter		0.009		0.001
First Quarter		0.006		0.0014

Fiscal Year Ending December 31, 2011:	High		Low
Fourth Quarter	$	0.07	$	0.01
Third Quarter		0.08		0.04
Second Quarter		0.10		0.07
First Quarter		0.10		0.05

These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Sales of Unregistered Securities

All transactions within the year involving our sales of our securities were disclosed under our reviewed financials Form 10-Q for fiscal year 2012 and our audited financial statement in this Form 10K for fiscal year 2012, for the Securities Act. Shares issued for cash consideration paid to us are valued at the purchase price per share; all other shares are valued as stated. All shares issued were issued as “restricted” shares of our common stock except as otherwise expressly stated.

Holders

As of October 10, 2013, we had 532,560,872 shares of common stock issued and outstanding and approximately 485 shareholders of record of our common stock.

ITEM 6: SELECTED FINANCIAL DATA

National Automation Services, Inc. under regulation S-K qualifies as a small reporting company and is not required to provide information required by this item.

ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Safe Harbor for Forward-Looking Statements

When used in this Annual Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, operating results, and financial position. Persons reviewing this Annual Report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual result may differ materially from those included within the forward-looking statements as a result of various factors. Such factors include, but are not limited to, general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations.

Executive Overview

Overview:

Central to an understanding of our financial condition and results of operations is our current cash shortage. At October 10, 2013, our cash on hand was approximately $1,000, and our operating revenues are insufficient to fund our operations. Consequently, our audited December 31, 2012 financial statements contain, in Note 3, an explanatory paragraph to the effect that our ability to continue as a going concern is dependent on our ability to expand our operations through acquisition in 2013 and beyond. We will be carefully managing our overhead to maximize the effects of profitable acquisitions. Our goal is to acquire companies with track records of long term, stable, and profitable operations. Each subsidiary will operate as its own entity with current management retained. This will allow the Company’s management to focus on maintaining or increasing current levels of revenues and profitability. The subsidiaries will use NAS for financial reporting purposes and other financial projections. However, we can give no assurance that these plans and efforts will be successful (See Item 8, Financial Statements and Supplementary Data).

Decision to “Go Public”

National Automation Services, Inc. (“NAS”), desire to become a publically traded Company was to provide to the industry in which we do business, an opportunity to enter into a market which has traditionally been (1) a privatized industry and (2) a segregated industry. By going public NAS has the potential to raise capital, more than would be readily available through bond financing (multiple restrictions) and the private financing markets. These private markets have higher rates and are a greater risk to the Company’s overall growth. In the “public arena”, financing can provide opportunities to “glue” together the privatized and segregated industry through acquisitions, joint partnerships, and other working relationships. Essentially, going public allowed NAS to “unlock” relatively illiquid value in our equity and more accessible debt financing (available to publicly traded companies), to turn it into a mechanism for purchasing power. Much of the money raised by going public allows NAS to pursue its business plan, financing business operations and ultimately achieving the growth by acquisition strategy and the overall improvement of the Company’s net worth.

Critical Accounting Policies

Use of Estimates

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our financial statements and which we discussed below in Item 8. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe our critical accounting policies are those described below.

Allowance for Doubtful Accounts

As required by the Receivables Topic of FASB ASC, the Company is required to use a predetermined method in calculating the current value for its bad debt on overall accounts receivable.

We estimate our accounts receivable risks to provide allowances for doubtful accounts accordingly. We believe that our credit risk for accounts receivable is limited because of the way in which we conduct business largely in the areas of contracts. Accounts receivable includes the accrual of work in process for project contracts and field service revenue. We recognize that there is a potential of not being paid in a 12 month period. Our evaluation includes the length of time receivables are past due, adverse situations that may affect a contract’s scope to be paid, and prevailing economic conditions. We assess each and every customer to conclude whether or not remaining balances outstanding need to be placed into allowance and then re-evaluated for write-off. We review all accounts to ensure that all efforts have been exhausted before noting that a customer will not pay for services rendered. The evaluation is inherently subjective and estimates may be revised as more information becomes available.

Potential Derivative Instruments

We periodically assess our financial and equity instruments to determine if they require derivative accounting. Instruments which may potentially require derivative accounting are conversion features of debt and common stock equivalents in excess of available authorized common shares.

Revenue Recognition

As required by the Revenue Recognition Topic of FASB ASC, the Company is required to use predetermined contract methods in determining the current value for revenue.

Project Contracts Project revenue is recognized on a progress-basis - the Company invoices the client when it has completed the specified portion of the agreement, thereby, ensuring the client is legally liable to the Company for payment of the invoice. On progress-basis contracts, revenue is not recognized until this criteria is met. The Company generally seeks progress-based agreements when a job project takes longer than 30 days to complete.

Service Contracts Service revenue is recognized on a completed project basis - the Company invoices the client when it has completed the services, thereby, ensuring the client is legally liable to the Company for payment of the invoice. On service contracts, revenue is not recognized until the services have been performed. The Company generally seeks service based agreements when project based contracts have been completed.

In all cases, revenue is recognized as earned by the Company. Though contracts may vary between a progress-basis and completed project basis, as the client becomes liable to the Company for services provided, as defined in the agreement, the client is then invoiced and revenue is accordingly recognized and recorded. The Company does not recognize or record any revenues for which it does not have a legal basis for invoicing or legally collecting.

Stock-Based Compensation

As required by the Stock-based Compensation Topic of FASB ASC, transactions in which the Company exchanges its equity instruments for goods or services is accounted for using authoritative guidance for stock based compensation. This guidance also addresses transactions in which the Company incurs liabilities in exchange for goods or services that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of those equity instruments.

If the Company issues stock for services which are performed over a period of time, the Company capitalizes the value paid in the equity section of the Company’s financial statements as it’s a non-cash equity transaction. The Company accretes the expense to stock based compensation expense on a monthly basis for services rendered within the period.

We use the fair value method for equity instruments granted to non-employees and will use the Black-Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

If shares are issued for services to be performed over a period by a vendor, we capitalize the value paid and amortize the expense in association with services actually rendered. Shares issued to employees are expensed upon issuance.

Results of Operations for the Fiscal Years Ended December 31, 2012 and 2011

Summary of Consolidated Results of Operations

	Year Ended December 31,
	2012			2011			%Change

Revenue	$	--		$	385,242			(100	) %
Cost of revenue		--			626,595			(100	) %
Total gross loss		--			(241,353	)		100	%

Operating expenses:
Selling, general and administrative expenses		131,252			817,676			(84	) %
Consulting fees		--			103,667			100	%
Professional fees and related expenses		186,276			612,258			(70	) %
Gain on extinguishment of accounts payable		(51,273	)		--			100	%

Operating loss		(266,255	)		(1,774,954	)		(83	) %

Loss on disposal of fixed asset		12,429			15,020			(17	) %
Allowance for stock receivable		--			17,343			100	%
Interest expense, net		320,655			534,191			(40	) %
Fair value of derivative liability		(113,026	)		113,026			200	%
Gain on debt extinguishment		--			(2,999,115	)		(100	) %
Loss on default on debt		23,750			--			100	%
Net income (loss)	$	(510,063	)	$	544,581			(194	) %

Operating loss; Net income (loss). For the year ended December 31, 2012, compared to the year ended December 31, 2011, we had a decrease in revenues of $(385,242), or (100)%, and a decrease in our cost of revenue $(626,595), or (100)% Our operating loss decreased by $1,508,699, or 83%, to $(266,255). Out net income decreased by $(1,054,644) or (194)% to $(510,063) due to the non-reoccurring gain on debt extinguishment for Trafalgar in 2011, offset by a decrease in interest expense due to the settlement of Trafalgar. We attributed our decrease in operating revenues due to the closing of our subsidiaries. We also attribute a gain on extinguishment of accounts payable to our write-off of accounts payable as of December 31, 2012, in the amount of $51,273.

Interest Expense, net. Interest expense, net decreased by $215,718, or 40%, to $320,655, due to the settlement of Trafalgar debt and note interest incurred for the year ending December 31, 2012.

Gain / loss on extinguishment of debt. This is a non-recurring, non-cash economic event, of our write-off of Trafalgar debt in the comparative period of December 31, 2011, which increased our net income to $544,581. In the current year ending December 31, 2012, we incurred an adjustment to our noted derivative in the amount of $113,026, write off of our remaining fixed assets $12,429, a loss on default of our debt $23,750, and additional gain on our extinguishment of accounts payable in the amount of $51,273.

Financial Condition

Summary of Consolidated Balance Sheets

	December 31,
	2012			2011			% Change
CASH	$	652		$	1,371			(52	)%
ACCOUNTS RECEIVABLE, NET		--			3,252			(100	)%
TOTAL CURRENT ASSETS, OTHER		--			22,000			(100	)%
OTHER ASSETS		--			12,723			(100	)%
TOTAL ASSETS	$	652		$	39,346			(98	)%

TOTAL CURRENT LIABILITIES, OTHER	$	3,539,638		$	3,178,562			12	%
LONG TERM LIABILITIES		--			120,135			(100	)%
TOTAL LIABILITIES		3,539,638			3,298,697			7	%

STOCKHOLDER’S DEFICIT		(3,538,986	)		(3,259,351	)		9	%
TOTAL LIABILITIES & STOCKHOLDER’S DEFICIT	$	652		$	39,346			(98	)%

Assets: At December 31, 2012, our consolidated total assets decreased by $(38,694), or (98)%, to $652, due to the write off of our remaining fixed assets, no additional accounts receivable, and limited cash funds.

Liabilities: At December 31, 2012, our consolidated total liabilities increased by $240,941, or 7%, to $3,539,638, due to our increase in our accrued liabilities attributable to our accrual of our payroll tax and outstanding payroll liability to our former employees, and including interest on our outstanding accounts payable and notes payable. As we have been unable to pay the payroll tax, we have accrued for both the penalties and interest to date. We are actively seeking additional funding to pay these obligations.

Stockholders’ Deficit: Our consolidated stockholders’ deficit increased by $279,635, or 8%, to $3,538,986 primarily due to the Company’s net loss.

Revenue by Service Type

		Year Ended December
		2012			2011
Project revenue (generally fixed price)	$	--	0%	$	323,500	84%
Service revenue (generally time and materials)		--	0%		61,742	16%
Total revenue	$	--	0%	$	385,242	100%

Project Contracts: Project revenue is recognized on a progress-basis - the Company invoices the client when it has completed the specified portion of the agreement, thereby, ensuring the client is legally liable to the Company for payment of the invoice. On progress-basis contracts, revenue is not recognized until this criteria is met. The Company generally seeks progress-based agreements when a job project takes longer than 30 days to complete.

Service Contracts: Service revenue is recognized on a completed project basis - the Company invoices the client when it has completed the services, thereby, ensuring the client is legally liable to the Company for payment of the invoice. On service contracts, revenue is not recognized until the services have been performed. The Company generally seeks service based agreements when project based contracts have been completed.

Commitment and Contingencies

On June 9, 2010, a writ of garnishment was filed against our subsidiary Intecon’s bank account for our outstanding balanced owed to one of our vendors, Summit Electric. Our outstanding balance owed to Summit Electric was $61,000. This writ was established to collect funds from us by garnishing money in our subsidiaries bank accounts. At the time of the court ordered garnishment the accounts held a balance of $1,200 and have been sent to Summit Electric under the writ. As of December 31, 2012, the Company had paid this vendor in full and noted a gain on extinguishment of an outstanding payable in the amount of $51,273.

As of November 21, 2012, the Company has defaulted on its convertible note with Asher Enterprises which it entered into on May 9, 2012. Per the terms of the agreement, Asher Enterprises triggered the default as the Company was not in compliance with its filing requirements per Securities and Exchange Commission 1934 Exchange Act. As such the Company, as of the date of the default, will accrue for the interest rate of 22% in relation to the terms set within the convertible note agreement, and repayment of 150% the amount of principal.

Off-Balance Sheet Arrangements

At December 31, 2012, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our condensed consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

Liquidity and Capital Resources/ Plan of Operation for the Next Twelve Months

The economic downturn has had a severe effect on us. For the year ended December 31, 2012, our accounts receivable were $0, a decrease of $3,252, or 100%, due to an entry of all of our subsidiaries into dormancy, compared to December 31, 2011. As of October 10, 2013 our cash on hand was approximately $1,000.

The Company has evaluated the scope of its business plan and has modified the plan to reduce corporate overhead functions leaving all operating activities at the subsidiary level. The benefits of this new direction will begin to be realized in late 2013.

Our goal is to acquire companies with track records of long term, stable, and profitable operations. Each subsidiary operates as its own entity with current management retained. This will allow the Company’s management to focus on maintaining or increasing current levels of revenues and profitability. Each subsidiary provides their financials to NAS and the Company will make site visits to ensure companies are in compliance for reporting and monitoring purposes.

We feel this new focus will offer each subsidiary an opportunity for growth through synergies created by becoming a part of NAS.

Summary of Consolidated Cash Flow for the year ended December 31, 2012 and 2011 (rounded)

Our total cash decreased approximately by $700, or 50%, to $700 for the year ended December 31, 2012, compared to $1,400 for the year ended December 31, 2011. Our consolidated cash flows for the years ended December 31, 2012 and 2011 were as follows:

	Year Ended December 31,
	2012			2011
Net cash (used) by operating activities	$	(135,000	)	$	(239,500	)
Net cash (used) by investing activities	$	--		$	--
Net cash provided by financing activities	$	134,300		$	229,500

Operating Activities: Our total cash used by operating activities decreased by $104,500, or 44%, to $(135,000) for the year ended December 31, 2012, compared to $(239,500) for the year ended December 31, 2011. The change is primarily due to accrual of liabilities in our operating activities and accretion of our beneficial conversion features on our convertible debt, and a decrease due to our gain in extinguishment of accounts payable, and our reversal of the derivative liability in the first quarter of 2012.

Investing Activities: We had no investing activities for the year ended December 31, 2012 and the year ended December 31, 2011, respectively.

Financing Activities: Our total cash provided by financing activities decreased by $95,200, or (41)%, to $134,300 for the year ended December 31, 2012, compared to $229,500 for the year ended December 31, 2011. The decrease is due in part to our limited funding through our sale of restricted stock and debt facilities.

Current Commitments for Expenditures

Our current cash commitments for expenditures are mainly operational and the Securities and Exchange Commission (“SEC”) compliance in nature. We seek to use current revenue to pay vendors for materials for contracts, for payroll, and related employment expenditures (i.e. benefits). The remaining cash is used for debt service and to remain current with any SEC filings that are required

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Limitations upon Broker-Dealers Effecting Transactions in "Penny Stocks"

Trading in our common stock is subject to material limitations as a consequence of regulations which limits the activities of broker-dealers effecting transactions in "penny stocks."

Pursuant to Rule 3a51-1 under the Exchange Act, our common stock is a "penny stock" because it (i) is not listed on any national securities exchange or The NASDAQ Stock Market™, (ii) has a market price of less than $5.00 per share, and (iii) its issuer (the Company) has net tangible assets less than $2,000,000 (if the issuer has been in business for at least three (3) years) or $5,000,000 (if the issuer has been in business for less than three (3) years).

Rule 15g-9 promulgated under the Exchange Act imposes limitations upon trading activities on "penny stocks", which makes selling our common stock more difficult compared to selling securities which are not "penny stocks." Rule 15a-9 restricts the solicitation of sales of "penny stocks" by broker-dealers unless the broker first (i) obtains from the purchaser information concerning his financial situation, investment experience and investment objectives, (ii) reasonably determines that the purchaser has sufficient knowledge and experience in financial matters that the person is capable of evaluating the risks of investing in "penny stocks", and (iii) delivers and receives back from the purchaser a manually signed written statement acknowledging the purchaser's investment experience and financial sophistication.

Rules 15g-2 through 15g-6 promulgated under the Exchange Act require broker-dealers who engage in transactions in "penny stocks" first to provide their customers with a series of disclosures and documents, including (i) a standardized risk disclosure document identifying the risks inherent in investing in "penny stocks", (ii) all compensation received by the broker-dealer in connection with the transaction, (iii) current quotation prices and other relevant market data, and (iv) monthly account statements reflecting the fair market value of the securities.

There can be no assurance that any broker-dealer which initiates quotations for the Common Stock will continue to do so, and the loss of any such broker-dealer likely would have a material adverse effect on the market price of our common stock.

Fluctuations in Stock Price

Our common stock has been quoted on the Pink Sheets since October 12, 2007. Since that date, our common shares have traded on the Pink Sheets between a low of $0.0004 per share and a high of $0.56 per share. The market price of our common stock may change significantly in response to various factors and events beyond our control, including but not limited to the following: (i) the risk factors described herein; (ii) a shortfall in operating revenue or net income from that expected by securities analysts and investors; (iii) changes in securities analysts’ estimates of our financial performance or the financial performance of our competitors or companies in our industry generally; (iv) general conditions in the economy as a whole; (v) general conditions in the securities markets; (vi) our announcements of significant contracts, milestones, acquisitions; (vii) our relationship with other companies; (viii) our investors’ view of the sectors and markets in which we operate; or (ix) additions or departures of key personnel. Some companies that have volatile market prices for their securities have been subject to security class action suits filed against them. If a suit were to be filed against us, regardless of the outcome, it could result in substantial costs and a diversion of our management’s attention and resources. This could have a material adverse effect on our business, results of operations and financial condition.

Limited Public Trading Market

Our common stock is currently quoted for trading on the Over the Counter (“OTC”) QB markets. Trading in stocks quoted on the OTC is often thin and characterized by wide fluctuations in trading prices. With the registration of our Form 10, we seek to increase our trading volume in our current market, however, there can be no assurance that a more active trading market will commence in our securities on the Pink Sheets. Further, in the event that an active trading market commences on the Pink Sheets, there can be no assurance as to the level of any market price of our shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained.

Companies quoted for trading on the Over-The-Counter Bulletin Board must be reporting issuers under Section 12 of the Exchange Act and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the Over-The-Counter Bulletin Board. If our common stock is quoted on the Over-The-Counter Bulletin Board, and we fail to remain current on our reporting requirements, we could be removed from the Over-The-Counter Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. In addition, we may be unable to regain our quotation privileges on the Over-The-Counter Bulletin Board, which may have an adverse material effect on our business.

Accordingly, there can be no assurance as to the liquidity of any present or future markets that may develop for our common stock, the ability of holders of our common stock to sell our common stock, or the prices at which holders may be able to sell our common stock.

Shares Eligible for Future Sale

The sale of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock. In addition, any such sale or perception could make it more difficult for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate. With the effectiveness of our registration statement, we might elect to adopt a stock option plan and register the shares of common stock reserved for such a plan or register shares of stock for equity funding groups. The shares of common stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible for resale in the public market without restriction.

The sales of shares of our common stock which are not registered under the Securities Act, known as “restricted” shares, typically are affected under Rule 144. At April 16, 2012 we had outstanding an aggregate of 200,000,000 shares of restricted common stock. In accordance with the recent amendments to Rule 144, since we formerly were a “shell” company our shares of restricted common stock are eligible for sale under Rule 144 as of October 6, 2009 at which time we became subject to the reporting requirements of the Exchange Act, i.e., our registration statement became effective, and thereafter, have complied with our reporting requirements under the Exchange Act. On March 23, 2012, the Company filed a form DEF 14A which will increase on shareholder approval our authorized common stock from 200,000,000 to 1,000,000,000.

No Dividends

We have never paid any dividends on our common stock and we do not intend to pay any dividends in the foreseeable future. Furthermore, our financing agreements with Trafalgar prohibit us from declaring dividends while our indebtedness is outstanding.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements of

NATIONAL AUTOMATION SERVICES, INC.


	Page

Report of Independent Registered Public Accounting Firm	18

Consolidated Balance Sheets –December 31, 2012 and 2011, respectively	19

Consolidated Statements of Operations –December 31, 2012 and 2011, respectively	20

Statements of Stockholders’ Deficit	21

Consolidated Statements of Cash Flows –December 31, 2012 and 2011, respectively	22

Notes to the Consolidated Financial Statements	23-34

Report of Independent Registered Public Accounting Firm

To the Board of Directors of

National Automation Services, Inc.:

We have audited the accompanying balance sheets of National Automation Services, Inc. as of December 31, 2012 and 2011, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the two years ended December 31, 2012 and 2011. National Automation Services, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of National Automation Services, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the two years ended December 31, 2012 and 2011, in conformity with generally accepted accounting principles in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has limited operations and continued net losses. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Keeton CPA, LLC

Keeton CPA, LLC

Henderson, NV

October 10, 2013

NATIONAL AUTOMATION SERVICES, INC.,

CONSOLIDATED BALANCE SHEETS

	DEC 31, 2012			DEC 31, 2011

ASSETS
CURRENT ASSETS
Cash	$	652		$	1,371
Accounts receivable, net of allowance of doubtful accounts of $0 and $0		--			3,252
Prepaid fees		--			22,000
Total current assets		652			26,623
PROPERTY, PLANT & EQUIPMENT, net of accumulated depreciation of $0 and $24,403		--			12,723
TOTAL ASSETS	$	652		$	39,346

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payables	$	881,840		$	945,417
Accrued liabilities		1,991,847			1,624,157
Current portion of loans, capital leases and line of credit		259,517			232,407
Convertible debt, net of beneficial conversion feature of $5,989 and $12,092		234,261			193,408
Related party payable		172,173			183,173
Total current liabilities		3,539,638			3,178,562
Loans and capital leases		--			7,109
Derivative liability		--			113,026
Total liabilities		3,539,638			3,298,697
STOCKHOLDERS’ DEFICIT
Common stock $0.001 par value, 200,000,000 authorized, 336,424,883 issued and outstanding 2012 and 191,380,081 shares issued and outstanding 2011		336,425			191,380
Additional paid in capital		11,903,613			11,853,215
Stock payable		34,985			--
Accumulated deficit		(15,814,009	)		(15,303,946	)
Total stockholders’ deficit		(3,538,986	)		(3,259,351	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	652		$	39,346

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

NATIONAL AUTOMATION SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS



	YEAR ENDED DECEMBER 31, 2012			YEAR ENDED DECEMBER 31, 2011
REVENUE	$	--		$	385,242
COST OF REVENUE		--			626,595
GROSS LOSS		--			(241,353	)

OPERATING EXPENSES
Selling, general and administrative expenses		131,252			817,676
Consulting fees		--			103,667
Professional fees and related expenses		186,276			612,258
Gain on extinguishment of accounts payable		(51,273	)		--
TOTAL OPERATING EXPENSES		266,255			1,533,601

OPERATING LOSS		(266,255	)		(1,774,954	)

OTHER EXPENSE, non-operating
Loss on disposal of fixed asset		12,429			15,020
Allowance for stock receivable		--			17,343
Fair value of derivative liability		(113,026	)		113,026
Interest expense, net		320,655			534,191
Loss on default of debt		23,750			--
TOTAL OTHER EXPENSE, non-operating		243,808			679,580

OTHER INCOME – nonrecurring
Gain on debt extinguishment		--			(2,999,115	)

(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES		(510,063	)		544,581

PROVISION FOR INCOME TAXES		--			--

NET (LOSS) INCOME	$	(510,063	)	$	544,581

BASIC (LOSS) INCOME PER SHARE	$	(0.00	)	$	0.00

DILUTED (LOSS) INCOME PER SHARE	$	(0.00	)	$	0.00

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING BASIC		266,620,012			156,499,920

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING DILUTED		266,620,012			278,146,118

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

NATIONAL AUTOMATION SERVICES, INC.,

STATEMENT OF STOCKHOLDERS’ DEFICIT

	Common Stock
	Shares			Amount			Additional Paid-in Capital			Stock Payable/ Receivable			Stock Held in Reserve			Accumulated Deficit			Total
				0.001 par value
Balance at December 31, 2010		182,376,315		$	182,376		$	9,671,931		$	(49,843	)	$	(70,000	)	$	(15,848,527	)	$	(6,114,063	)

Stock for cash		10,000,000		$	10,000		$	115,000		$	7,500		$	--		$	--		$	132,500
Stock for services		14,946,666			14,947			464,703			25,000			--			--			504,650
Stock prepaid for services		2,000,000			2,000			20,000			--			--			--			22,000
Stock for accrued payroll		4,151,279			4,151			400,726			--			--			--			404,877
Stock for settlement		21,895,821			21,896			783,624			--			--			--			805,520
Stock for conversion of debt		22,816,988			22,817			181,683			--			--			--			204,500
Stock equity drawdown for TriPod		3,193,012			3,193			11,807			--			--			--			15,000
Convertible note (BCF)		--			--			203,741			--			--			--			203,741
Allowance for stock receivable		--			--			--			17,343			--			--			17,343
Return stock for equity draw down agreement (reserve)		(70,000,000	)		(70,000	)		--			--			70,000			--			--
Net income		--			--			--			--			--			544,581			544,581
Balance at December 31, 2011		191,380,081		$	191,380		$	11,853,215		$	--		$	--		$	(15,303,946	)	$	(3,259,351	)

Stock for conversion of debt		115,931,471		$	115,932		$	(20,532	)	$	--		$	--		$	--		$	95,400
Stock payable for cash, net of offering costs		29,113,331			29,113			8,697			5,000			--			--			42,810
Stock payable fair value equity instrument		--			--			(4,088	)		29,985			--			--			25,897
Convertible note (BCF)		--			--			66,321			--			--			--			66,321
Net loss		--			--			--			--			--			(510,063	)		(510,063	)
Balance at December 31, 2012		336,424,883		$	336,425		$	11,903,613		$	34,985		$	--		$	(15,814,009	)	$	(3,538,986	)

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

NATIONAL AUTOMATION SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	YEAR ENDED DEC 31, 2012			YEAR ENDED DEC 31, 2011
Operating Activities
Net (loss) income	$	(510,063	)	$	544,581
Cash used by operating activities
Allowance for doubtful accounts		--			79,255
Depreciation and amortization		5,294			19,189
Stock for services		--			504,650
Gain on extinguishment of debt		--			(2,999,115	)
Allowance for stock receivable		--			17,343
Accretion of convertible notes beneficial conversion feature		72,429			225,861
Loss on disposal of assets		12,429			15,020
Deferred financing fees		--			125,000
Fair value of derivative		(113,026	)		113,026
Expenses paid by related party		15,000			--
Fair value of equity instrument		25,897			--
Loss on default of note payable		23,750			--
Gain on extinguishment of accounts payable		(51,273	)		--
Changes in assets
Decrease in receivables		3,251			88,780
Decrease in inventories		--			340,519
Decrease in prepaid expenses		22,000			22,667
Decrease in other assets		--			5,535
Changes in liabilities
Increase in accounts payable and accrued liabilities		359,283			658,161
Cash used by operating activities		(135,029	)		(239,528	)

Investing Activities
		--			--
Cash provided (used) by investing activities		--			--

Financing activities
Proceeds from sale of stock		42,810			132,500
Proceeds from convertible notes		87,500			97,500
Proceeds from loans		15,000			--
Payments for related party loans and capital leases		(11,000	)		(505	)
Cash provided by financing activities		134,310			229,495

Decrease in cash		(719	)		(10,033	)
Cash at beginning of year		1,371			11,404

Cash at end of year	$	652		$	1,371

SUPPLEMENTAL CASH FLOW
Cash paid for interest	$	--		$	--
Cash paid for income taxes	$	--		$	--

SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING TRANSACTIONS
Disposal of fixed assets	$	29,697		$	130,852
Stock issued in settlement of debt	$	--		$	805,820
Debt and interest converted to stock	$	91,500		$	204,500
Accounts payable paid with stock	$	--		$	404,877
Issuance of stock for prepaid expenses	$	--		$	47,000
Beneficial conversion feature on convertible debt	$	(66,321	)	$	203,741
Assignment of related party debt	$	--		$	15,000
Accrued interest added to note	$	--		$	24,000
Convertible notes for expenses paid by related party	$	15,000		$	--

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

NATIONAL AUTOMATION SERVICES, INC.,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: Organization and basis of presentation

Basis of Financial Statement Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. These financial statements have been presented in accordance with the Securities and Exchange Commission (“SEC”) rules governing a smaller reporting company for both periods of December 31, 2012 and December 31, 2011.

Business Overview

National Automation Services, Inc. (referred to herein as “NAS” or the “Company”) is a public holding company that serves the Industrial Automation market place. Our offerings are needed by a wide variety of companies across varied market segments, from food processing, to nuclear power both private and public sectors.

Our business provides a full range of service from design, engineering, installation and maintenance of automation controlled systems and machinery. We help companies to produce product more efficiently, effectively and measurably through automation maximizing profitability and safety. The Company has strived to position itself as a leading system integrator and certified Underwriters Laboratories panel fabrication facility. The Company currently focuses on two distinct lines of business: (1) industrial automation and control and (2) automation manufacturing, which comprises the bulk of contracts that the Company currently maintains under its building contracts. The Company has subsidiaries which perform the services; one is located in Arizona named Intecon, Inc. and the other was located in Nevada named Intuitive System Solutions, Inc. Intuitive Systems Solutions, Inc., moved operations to Intecon, Inc. in Arizona as an overhead reduction measure as of third quarter 2010. During the fourth quarter 2011 we commenced plans to reorganize Intecon by reducing overall office space and employment to further mitigate overhead requirements. The Company has evaluated the scope of its business plan and has modified it to reduce corporate overhead functions leaving all operating activities at the subsidiary level. Due to recent economic condition the Company has put both subsidiaries into dormancy.

Reclassifications

Certain amounts in the financial statements of the prior years have been reclassified to conform to the current year presentation for comparative purposes. The Company reclassified the stock held in reserve to common stock. Common stock is presented as net of issued and outstanding and the reserve shares (as noted in our Asher agreements).

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations of Credit and Business Risk

Financial instruments that are potentially subject to a concentration of business risk consist of accounts receivable. The majority of accounts receivable and all contract work in progress are from clients in various industries and locations. Most contracts require milestone payments as the projects progress. We generally do not require collateral, but in most cases can place liens against the property, plant or equipment constructed or terminate the contract if a material default occurs.

Potential Derivative Instruments

We have determined that the conversion features of our debt instruments are not derivative instruments because they are conventional convertible debt.

Property & Equipment

Property and equipment are stated at historical cost less accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is generally five years for vehicles, two to three years for computer software/hardware and office equipment and three to seven years for furniture, fixtures and office equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives. Upon the sale or retirement of property or equipment, the cost and related accumulated depreciation or amortization is removed from the Company’s financial statements with the resulting gain or loss reflected in the Company’s results of operations. Repairs and maintenance costs are expensed as incurred.

Allowance for Doubtful Accounts

As required by the Receivables Topic of the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”), the Company is required to use a predetermined method in calculating the current value for its bad debt on overall accounts receivable.

Revenue Recognition

As required by the Revenue Recognition Topic of FASB ASC, the Company is required to use predetermined contract methods in determining the current value for revenue.

Income Taxes

As required by the Income Tax Topic of FASB ASC, income taxes are provided for using the liability method of accounting in accordance with the new codification standards. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realizing of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, we continually assess the carrying value of our net deferred tax assets.

Stock Based Compensation

Stock based compensation is accounted for using the Equity-Based Payments to Non-Employee Topic of the FASB ASC, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. We determine the value of stock issued at the date of grant. We also determine at the date of grant the value of stock at fair market value or the value of services rendered (based on contract or otherwise) whichever is more readily determinable.

Earnings (loss) per share basic and diluted

Earnings per share is calculated in accordance with the Earnings per Share Topic of the FASB ASC. The weighted-average number of common shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings per share is computed using the weighted average number of shares plus dilutive potential common shares outstanding.

Potentially dilutive common shares consist of employee stock options, warrants, and other convertible securities, and are excluded from the diluted earnings per share computation in periods where the Company has incurred net loss. During the year ended December 31, 2012, the Company incurred a net loss, resulting in no potentially dilutive common shares, where during the year ended December 31, 2011 the Company incurred a net income, resulting in potentially dilutive common shares.

Fair Value Accounting

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions (For additional information see Note 10: Fair value).

The three levels of the fair value hierarchy are described below:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

NOTE 2: Recently adopted and recently issued accounting guidance

Adopted

In May 2011, the FASB (“Financial Accounting Standards Board”) issued an accounting standard update that amends the accounting standard on fair value measurements. The accounting standard update provides for a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. generally accepted accounting principles and International Financial Reporting Standards. The accounting standard update changes certain fair value measurement principles, clarifies the application of existing fair value measurement, and expands the fair value measurement disclosure requirements, particularly for Level 3 fair value measurements. The amendments in this accounting standard update are to be applied prospectively and are effective for interim and annual periods beginning after December 15, 2011. The adoption of this accounting standard update will become effective for the reporting period beginning January 1, 2012. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows

In June 2011, the FASB issued an accounting standard update which requires the presentation of components of other comprehensive income with the components of net income in either (1) a continuous statement of comprehensive income that contains two sections, net income and other comprehensive income, or (2) two separate but consecutive statements. This accounting standard update eliminates the option to present components of other comprehensive income as part of the statement of shareholders’ equity, and is effective for interim and annual periods beginning after December 15, 2011. In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05,” to defer the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. All other provisions of this update, which are to be applied retrospectively, are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this accounting standard update will become effective for the reporting period beginning January 1, 2012. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.

In September 2011, the FASB issued an accounting standard update that amends the accounting guidance on goodwill impairment testing. The amendments in this accounting standard update are intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amendments in this accounting standard update are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this accounting standard update will become effective for the reporting period beginning January 1, 2012. The adoption of this guidance did not have a material impact on the Company’s financial position, result of operations or cash flows.

In December 2011, the FASB issued Accounting Standard Update 2011-10, “Derecognition of in Substance Real Estate—a Scope Clarification” to clarify that when a parent (reporting entity) ceases to have a controlling financial interest (as described in ASC subtopic 810-10, Consolidation) in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in subtopic 360-20, Property, Plant and Equipment, to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. Under this new guidance, even if the reporting entity ceases to have a controlling financial interest under subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. This amendment is applicable to us prospectively for deconsolidation events occurring after June 15, 2012. The adoption of this accounting standard update will become effective for the reporting period beginning July 1, 2012. The adoption of this guidance will not have a material impact on the Company’s financial position, results of operations, or cash flows.

Issued

In December 2011, the FASB issued Accounting Standards Update 2011-11, "Disclosures about Offsetting Assets and Liabilities." This update requires entities to disclose both gross information and net information about instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The scope of this update includes derivatives, sale and repurchase agreements and reverse sale and repurchase agreements and securities borrowing and lending arrangements. The Company is required to adopt this update retrospectively for periods beginning after January 1, 2013. The adoption of this accounting standard update will become effective for the reporting period beginning January 1, 2013. Management does not anticipate that adoption will have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.

NOTE 3: Going concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company had no operating revenues for the year ended December 31, 2012. We had recurring net losses of $(510,063) for the year ended December 31, 2012, compared to the net income of $544,581 for the year ended December 31, 2011, and a working capital deficiency of $(3,538,986) at December 31, 2012.

Based on the above facts, management determined that there is substantial doubt about the Company’s ability to continue as a going concern.

We intend to expand our operations through acquisition beginning in late 2013. We will be carefully managing our overhead to maximize the effects of profitable acquisitions. Our business plan is to acquire companies with track records of long term, stable, and profitable operations. Each subsidiary will operate as its own entity with current management retained. This will allow the Company’s management to focus on maintaining or increasing current levels of revenues and profitability. The subsidiaries will use the Company for financial reporting purposes and other financial projections. However, we can give no assurance that our business plan will be successful.

NOTE 4: Property and equipment, net

Property and equipment consists of the following:

	Year Ended December 31,
	2012		2011
Vehicles	$	--	$	--
Computer and office equipment		--		30,829
Furniture and fixtures		--		6,297
UL Machinery and equipment		--		--
Total property and equipment		--		37,126
Less: accumulated depreciation		--		(24,403	)
Property and equipment, net	$	--	$	12,723

We were unable to make consistent payments to a rental facility which stored our fixed assets. As a result as of December 31, 2012, the storage facility auctioned off our assets to recover expenses, the Company wrote off the remaining fixed assets, recognized a loss on disposal of assets in the amount of $12,429, depreciation expense for the year ended December 31, 2012 and 2011 was $5,294 and $19,189 respectively.

NOTE 5: Loans, Capital lease

The following tables represent the outstanding balance of loans for the Company as of December 31, 2012, and 2011.

	Year Ended December 31,
	2012			2011
South Bay Capital loan at an interest rate 12%	$	10,926		$	10,926
Trafalgar promissory note		200,000			200,000
Capital lease, line of credit		33,591			28,590
Krochak note		15,000			--
Loans and capital lease sub total		259,517			239,516
Less: current portion loans and capital leases		(259,517	)		(232,407	)
Total	$	--		$	7,109

On July 25, 2008, the Company entered into a loan agreement with South Bay Capital in the amount of $75,926. Per the terms of the verbal agreement no interest was to be accumulated. On December 19, 2008 the Company repaid South Bay in the amount of $65,000. On September 15, 2009, the Company secured the remaining balance of the loan with a written promissory note. The note bears an interest rate of 12% for the remaining balance of $10,926, and was applied retrospectively to the note as of January 1, 2009. As of December 31, 2012, $10,926 of the debt still remains outstanding with total interest of $44,309; the note is due on demand.

On January 15, 2009, the Company entered into a capital lease for office equipment. The lease is over a 60 month period, with present lease payments exceeding 90% of fair market value of the property. The capital lease is a five (5) year lease at $481 per month (see Note 9: Commitments). As of December 31, 2012, the lease is in default as we have not made any payments on the lease since 2011. As indicated in Note 4 all of our fixed assets have been disposed of in 2012. We still owe the outstanding lease even though the fixed assets were disposed.

On April 1, 2009, the Company entered into a revolving line of credit with Dell Financial in the amount of $25,000. The Company’s current outstanding balance on the line of credit as of December 31, 2012 was $12,508.

On March 25, 2011, the Company entered into a promissory note agreement which was a part of the Trafalgar Capital settlement agreement on the same date (see Note 9: Commitments). The note bears an interest of 12% for 6 months. As of December 31, 2012; we owed $200,000 plus accrued interest in the amount of $24,932.

On January 4, 2012, the Company entered into a promissory note agreement. The note bears an interest of 7% annum, payable on demand. As of December 31, 2012, we owed $15,000 plus accrued interest in the amount of $1,043.

As of December 31, 2012, the Company noted several vendor payables outstanding. As such we recognized cumulative interest accrued on their outstanding balances in the amount of $101,917.

NOTE 6: Related party transactions

On December 31, 2010, the Company entered into a promissory note with a former officer of the Company, for $13,000. The terms of the loan were to repay of the loan in the amount of $13,000 with a 10% annual interest to start as of December 31, 2010. As of December 31, 2012; we owed $2,000 plus accrued interest in the amount of $2,050.

On December 31, 2010, the Company entered into a promissory note with a former officer of the Company, for $9,760. The terms of the loan were to repay of the loan in the amount of $9,760 with a 10% annual interest to start as of December 31, 2010. As of December 31, 2012; we owed $9,760 plus accrued interest in the amount of $1,952.

On December 31, 2010, the Company entered into a promissory note with a former employee of the Company, for $9,500. The terms of the loan were to repay of the loan in the amount of $9,500 with a 10% annual interest to start as of December 31, 2010. As of December 31, 2012; we owed $9,500 plus accrued interest in the amount of $1,900.

On April 1, 2009 we modified the verbal loan agreement entered into on June 30, 2008 with a former director of the Company, which had a balance of $50,000 as of December 31, 2008, by making it a formal promissory note, capitalizing accrued interest into the principal ($36,000) and including an annual interest rate of 10%. On August 15, 2011, we repaid a portion of the note obligation in the amount of $15,000 which reduced our principle obligation from $86,000 to $71,000. As of December 31, 2012; we owed $71,000 plus accrued interest in the amount of $30,061. As of December 31, 2012, the note holder has called the note.

On November 5, 2008, the Company entered into agreement promissory note with a former director of the Board, for $77,000. The terms of the loan were to repay of the loan in the amount of $72,000 with the addition of a $5,000 fee for interest or incur a $250 a day late fee if paid after December 5, 2008. On April 1, 2009 the loan agreement was modified to remove the $250 a day late fees and add an annual interest rate of 10%. As of December 31, 2012, we owed $79,913 plus accrued interest in the amount of $58,824.

NOTE 7: Convertible notes

As of December 31, 2012, the following convertible notes payable are outstanding.

Description	Note Value		BCF Value		Amortized BCF value		Interest accrued
Convertible note issued on April 15, 2011, at a 20% interest rate for six months, convertible to shares of stock at $0.02 per share	$	124,000	$	124,000	$	124,000	$	84,835
Convertible note issued on April 29, 2011, at a 6% interest rate for one year, convertible to shares of stock at a variable rate upon date of conversion		5,000		10,000		10,000		1,221
Convertible note issued on March 14, 2012, at a 10% interest rate for six months, convertible to shares of stock at a fixed rate of $0.004 per share		40,000		10,000		10,000		1,567
Convertible note issued on May 9, 2012, at a 8% interest rate for nine months, convertible to shares of stock at a variable rate upon date of conversion		71,250		41,321		35,333		3,791
Total	$	240,250	$	185,321	$	179,332	$	91,414

As of December 31, 2012, the Company has converted $10,000 of the $15,000 balance of the convertible noted dated April 29, 2011. We have issued stock in the amount of 16,666,666 for the value of $10,000, and as of December 31, 2012, the remaining amount of the note is $5,000 plus accrued interest.

On May 9, 2012, the Company entered into an additional note with Asher Enterprises in the amount of $47,500. Per the Note agreement, the Company is required to hold 5 “times” the amount of shares it would take to convert the note in reserve. When those shares are added to the Common Stock Equivalent (“CSE”), there are insufficient common shares authorized to issue stock to Asher in an excess amount of 197,875,575. However, calculation of the CSE without the reserved shares does not exceed the authorized common stock. The 5 “times” of reserved shares are not included in the CSE; per the debt agreement would only convert 1 “time” the amount of shares. The remaining 4 “times” would not be converted and are in reserve for debt compliance reasons. Therefore, the Company has assessed that the current note from Asher does not trigger a derivative. On November 21, 2012, the Company has defaulted on its convertible note with Asher Enterprises which it entered into on May 9, 2012. Per the terms of the agreement, Asher Enterprises triggered the default as the Company was not in compliance with its filing requirements per Securities and Exchange Commission 1934 Exchange Act. As such the Company, as of the date of the default, will accrue for the interest rate of 22% in relation to the terms set within the convertible note agreement, and repayment of 150% the amount of principal of $71,250.

On January 4, 2012, the Company entered into a convertible note agreement in the amount of $15,000, with an interest rate of 8% for a nine month period. The funds from the note were sent directly to the Company’s counsel to initiate the submission of our DEF 14A in order to increase our authorized shares of common stock (see Note 11: Stockholder’s deficit). The note has been fully converted as of December 31, 2012.

On June 2, 2011, the Company entered into a convertible note agreement in the amount of $32,500, with an interest rate of 8% for a nine month period. As of December 31, 2012 the Company has fully converted this note.

On April 21, 2011, the Company entered into a convertible note agreement in the amount of $50,000, with an interest rate of 8% for a nine month period. As of December 31, 2012 the Company has fully converted this note.

For the year ended December 31, 2011, due to the insufficient authorized but unissued shares of common stock to meet the required amount of shares for convertible instruments, the Company accounted for the excess in common stock equivalents as a derivative liability in accordance with FASB ASC 815 Derivatives and Hedging. Accordingly, the derivative was marked to market through earnings at the end of each reporting period. As a result, as of December 31, 2011, the Company recorded an expense of $113,026. As of December 31, 2012, the Company reversed the derivative due to the increase in common stock shares there by relieving the need of derivative liability expense.

NOTE 8: Fair Value

In accordance with authoritative guidance, the table below sets forth the Company's financial assets and liabilities measured at fair value by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	Fair value at December 31, 2012
	Total		Level 1		Level 2		Level 3
Assets:
Total	$	--	$	--	$	--	$	--

Liabilities, and stockholder’s deficit
Fair value of equity instrument	$	29,985	$	29,985
Convertible debt, net of beneficial conversion feature		5,989		5,989
Total	$	35,974	$	35,974	$	--	$	--

	Fair value at December 31, 2011
	Total		Level 1		Level 2		Level 3
Assets:
Total	$	--	$	--	$	--	$	--

Liabilities, and stockholders’ deficit
Derivative liability	$	113,026	$	113,026
Convertible debt, net of beneficial conversion feature		12,092		12,092
Total	$	125,118	$	125,118	$	--	$	--

For the year ended December 31, 2012, we noted additional expenses in the amount of $29,985 due to default terms in one of our investing agreements. It was noted that should our stock price fall below $0.04 per share the Company was to issue additional shares in order to compensate for the value of “twice” the amount of investment. This represents the total value of the stock and has to be revalued quarterly to reflect current changes in market price until such time as the Company issues out the stock compensation.

NOTE 9: Commitments

Operating leases

On September 1, 2008, the Company leased office space for sales in Tuscon, Arizona on a month-to-month basis in the amount of $500 per month under operating lease agreements with original lease periods of up to five (5) years. On June 1, 2011, the Company moved office space under the existing agreement and reduced its rental fees to $305 per month on a month-to-month basis. As of December 31, 2012, the Company cancelled the month to month lease obligation in Tuscon.

Legal

On May 9, 2012, the Company entered into an additional note with Asher Enterprises in the amount of $47,500. Per the Note agreement, the Company is required to hold 5 “times” the amount of shares it would take to convert the note in reserve. When those shares are added to the Common Stock Equivalent (“CSE”), there are insufficient common shares authorized to issue stock to Asher in an excess amount of 197,875,575. However, calculation of the CSE without the reserved shares does not exceed the authorized common stock. The 5 “times” of reserved shares are not included in the CSE, per the debt agreement would only convert 1 “time” the amount of shares. The remaining 4 “times” would not be converted and are in reserve for debt compliance reasons. Therefore, the Company has assessed that the current note from Asher does not trigger a derivative. On November 21, 2012, the Company has defaulted on its convertible note with Asher Enterprises which it entered into on May 9, 2012. Per the terms of the agreement, Asher Enterprises triggered the default as the Company was not in compliance with its filing requirements per Securities and Exchange Commission 1934 Exchange Act. As such the Company, as of the date of the default, will accrue for the interest rate of 22% in relation to the terms set within the convertible note agreement, and repayment of 150% the amount of principal of $71,250.

NOTE 10: Income taxes

At December 31, 2012 and 2011, the Company had federal and state net operating loss carry-forwards of approximately $6,914,000 and $6,390,000, respectively, which begin to expire in 2027. The components of net deferred tax assets, including a valuation allowance, are as follows at December 31 (rounded):

	Year Ended December 31,
	2012			2011
Deferred tax asset:
Net operating loss carry forward	$	2,419,800		$	2,236,500
Stock based compensation		--			176,600

		2,419,800			2,413,100

Total deferred tax assets		2,419,800			2,413,100
Less: valuation allowance		(2,419,800	)		(2,413,100	)
Net Deferred Tax Assets	$	--		$	--

The valuation allowance for deferred tax assets as of December 31, 2012 and 2011 was $2,419,800 and $2,413,100, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible.

Reconciliation between the statutory rate and the effective tax rate for the years ended December 31, is as follows:

	Year Ended December 31,
	2012		2011

Federal statutory tax rate		35%		35%
State taxes, net of federal benefit		7%		7%
Valuation allowance		(42)%		(42)%
Effective tax rate		0%		0%

The Company had no gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The Company has accrued for interest and penalties in the amount of approximately $153,100 and $103,300 for December 31, 2012 and 2011, respectively. This interest and penalties are in relation to payroll tax remittances that, due to cash constraints, were unable to be made for payroll paid prior to 2011, and past payroll tax IRS audit findings for our subsidiaries.

This interest and penalties are in relation to payroll tax remittances that, due to cash constraints, were unable to be made for our payroll accrued for 2012, and 2011 respectively, and past payroll tax IRS audit findings for our subsidiaries.

The Company files income tax returns in the United States federal jurisdiction and certain state jurisdictions. With a few exceptions, the Company is no longer subject to U.S. federal or state income tax examination by tax authorities on tax returns filed before December 31, 2005. The Company will file its U.S. federal return for the year ended December 31, 2012, 2011, 2010 and 2009. The federal (including payroll tax returns) and state filing payments have not been made for 2012, 2011 and 2010 respectively. The U.S. federal returns are considered open tax years for years 2006 - 2012. There are currently no corporate tax filings under examination by IRS tax authorities.

NOTE 11: Stockholders’ deficit

Increased in authorized

On March 23, 2012, the Company filed a form DEF 14A whereby, the authorized common stock of the Company was increased to 1,000,000,000 shares with a par value of $0.001 per share. As of April 27, 2012, per our 8-K, form DEF 14A was approved by majority shareholder vote.

Preferred Stock

Our wholly owned subsidiary, ISS, has 125,000 shares of preferred stock authorized with a par value of $1.00; these shares have no voting rights and no dividend preferences.

Common Stock

On January 5, 2012, the Company issued the sum of 7,758,621 shares valued at $4,500 or $0.00058 of its common stock from reserve as a part of the convertible note agreement on April 18, 2011.

On April 30, 2012, the Company issued the sum of 4,347,826 shares valued at $10,000 or $0.0023 of its common stock from reserve as a part of the convertible note agreement on April 18, 2011.

On May 7, 2012, the Company issued the sum of 4,347,826 shares valued at $10,000 or $0.0023 of its common stock from reserve as a part of the convertible note agreement on April 18, 2011.

On May 9, 2012, the Company issued the sum of 5,000,000 shares valued at $11,500 or $0.0023 of its common stock from reserve as a part of the convertible note agreement on April 18, 2011.

On May 17, 2012, the Company issued the sum of 8,571,429 shares valued at $12,000 or $0.0014 of its common stock from reserve as a part of the convertible note agreement on June 2, 2011.

On May 23, 2012, the Company issued the sum of 9,230,769 shares valued at $12,000 or $0.0013 of its common stock from reserve as a part of the convertible note agreement on June 2, 2011.

On May 31, 2012, the Company issued to three investors the sum of 23,888,887 shares valued at $43,000 or an average of $0.0016 of its restricted common stock for cash received.

On May 31, 2012, the Company issued to one investor the sum of 5,224,444 shares valued at $20,014 or $0.004 of its restricted common stock as finder’s fee and recorded as a reduction of equity.

On June 5, 2012, the Company issued the sum of 8,333,333 shares valued at $5,000 or $0.0006 of its common stock as a part of the convertible note agreement on April 29, 2011.

On June 7, 2012, the Company issued the sum of 9,800,000 shares valued at $9,800 or $0.001 of its common stock from reserve as a part of the convertible note agreement on June 2, 2011.

On July 26, 2012, the Company issued the sum of 10,000,000 shares valued at $5,000 or $0.0005 of its common stock from reserve as a part of the convertible note agreement on January 8, 2012.

On August 21, 2012, the Company issued the sum of 8,333,333 shares valued at $5,000 or $0.0006 of its common stock as a part of the convertible note agreement on April 29, 2011.

On August 30, 2012, the Company issued the sum of 14,166,667 shares valued at $3,400 or $0.00024 of its common stock from reserve as a part of the convertible note agreement on January 8, 2012.

On August 31, 2012, the Company issued the sum of 14,166,667 shares valued at $3,400 or $0.00024 of its common stock from reserve as a part of the convertible note agreement on January 8, 2012.

On September 11, 2012, the Company issued the sum of 11,875,000 shares valued at $3,800 including interest in the amount of $600 or $0.00032 of its common stock from reserve as a part of the convertible note agreement on January 8, 2012.

As of December 31, 2012, the Company recorded a stock payable valued at $29,985. (See Note 8: Fair Value for additional information).

Warrants

As of December 31, 2010, the Company granted 150,000 warrants to twenty individuals for 1:1 ratio of common stock at $0.05 per share in connection with the sale of common stock under the Company’s private offering. Since these warrants were issued in connection with a cash sale of common stock and were not compensatory in any way, the value of the warrants have been accounted for as part of the proceeds received from the sale of the common stock. Nineteen warrants vested over a period of six months and expired in November 2010; one warrant vested over a period of two years and expired in February 2012.

Warrants	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2011		150,000
Exercised, granted, forfeited or expired		(150,000)	$	0.05		1.0
Outstanding at December 31, 2012		--	$	--		--	$	--
Exercisable at December 31, 2012		--	$	--		--	$	--

NOTE 12: Subsequent events

On April 16, 2013, the Company entered into a promissory note agreement in the amount of $5,000. The Company was to repay this amount back in 30 days. The Company defaulted on this 30 day return of the promissory note and as such we had to issue a stock payable in the amount of 1,000,000 shares of stock. On July 23, 2013, the Company issued out the 1,000,000 shares of restricted common stock at a value of $1,100 or $0.0011 per share to compensate for the interest and delay of repayment.

On July 1, 2013, we amended our promissory note agreement in the amount of $15,000 dated January 4, 2012 to a convertible note which included accrued interest of $1,625. On July 9, 2013, the Company converted the noted and issued stock in the amount of 3,325,000 or $0.005 per share in consideration for the amount of $16,625.

On July 9, 2013, the Company issued 10,000,000 shares of restricted common stock in consideration for the convertible note dated March 14, 2012 in the amount of $40,000. The shares were converted at a price per share of $0.004 per share.

On July 9, 2013, the Company issued 10,092,748 shares of restricted common stock in consideration for service agreement dated July 9, 2013. The services were valued at the closing value of stock on July 9, 2013, in the amount of $11,102 or $0.0011 per share.

On July 22, 2013, the Company issued 6,924,476 shares of restricted common stock in consideration for stock payable noted on December 31, 2012. The stock was valued at $5,540 or $0.0012 per share.

On July 22, 2013, the Company issued 102,000,000 shares of restricted common stock in consideration for services rendered by the Board of Directors of the Company. The services were valued at $81,600 or $0.0008 per share.

On July 22, 2013, the Company issued 9,000,000 shares of restricted common stock in consideration for stock payables valued at $0.005 or $45,000.

On July 25, 2013, the Company issued 2,000,000 shares of restricted common stock in consideration for cash valued at $0.005 or $10,000.

On August 15, 2013, the Company issued 12,000,000 shares of restricted common stock in consideration for services rendered by the Board of Directors of the Company. The services were valued at $20,400 or $0.0017 per share.

On August 15, 2013, the Company issued 6,407,252 shares of restricted common stock in consideration for service agreement dated July 9, 2013. The services were valued at the closing value of stock on August 15, 2013, in the amount of $10,892 or $0.0017 per share.

On August 15, 2013, the Company issued 3,441,720 shares of restricted common stock in consideration for services rendered by former employees of the Company. Based upon Board meeting minutes dated October 9, 2010, the Company issues stock in lieu of cash at a value of $0.10 per share or $349,172.

On August 15, 2013, the Company issued 100,000 shares of restricted common stock in consideration for services rendered by a former employee of the Company. The Company issued stock in inconsideration of employee agreement dated May 5, 2011, in the amount of $0.05 per share or $5,000.

On August 15, 2013, the Company issued 5,000,000 shares of restricted common stock in consideration for consulting services rendered for the Company. The stock is valued at $0.0017 per share or $8,500.

On August 15, 2013, the Company issued 10,000 shares of restricted common stock in consideration for legal services rendered for the Company. The stock is valued at $0.03 per share or $300.

On August 15, 2013, the Company issued 20,334,792 shares of restricted common stock in consideration for stock payable noted on December 31, 2012. The stock was valued at $16,268 or $0.0012 per share

On August 22, 2013, the Company granted 7,496,036 shares of restricted common stock in final consideration for the convertible note dated April 29, 2011. The original amount of the note was $15,000. The final conversion was valued at $0.00084 per share or $6,298 including principle and interest.

On September 9, 2013, the Company issued 2,500,000 of restricted common stock in consideration for services provided to the Board of Directors of the Company. The shares were valued at $0.0038 or $9,500.

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE

None

ITEM 9A: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of December 31, 2012, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission's rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2012, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in Item 9A(b).

Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, our principal executive and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and any disposition of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, Management identified the following two material weaknesses that have caused management to conclude that, as of December 31, 2012, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, Management identified the following four material weaknesses that have caused management to conclude that, as of December 31, 2012, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level.

We do not have sufficient control over our written agreements, and effective communication of such agreements with executive management. Management evaluated the impact of our failure to have sufficient control over our written agreements and communication and has concluded that the control deficiency that resulted represented a material weakness.

We have had non-timely filing issues in regards to our recent Securities and Exchange Commission (SEC) filings. Non timely filing is a disclosure control which we have had little success in correcting over the past three months ending December 31, 2012. Management evaluated the impact of our failure to have timely filing requirements of our financial statements on our assessment of our disclosure controls and procedures and has concluded that the control deficiency represents a material weakness.

We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act for the period ending December 31, 2012. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

Remediation of Material Weaknesses

To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness once resources become available.

We intend to ratify in board resolutions that all written agreements will be maintained by the financial officer of the Company. This individual will ensure that all documents will be properly accounted for and that all compensation or remediation of agreements will be brought to the attention of the Board of Directors on an annual basis or as needed by the Board.

We also intend to remedy our material weakness with regard to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes effective internal controls once resources become available.

We also intend to remedy our non-timely filing requirements by hiring additional employees in order to ensure that disclosure control is reviewed and monitored on a timely basis for the submission of our required flings to the SEC.

Change in internal control over financial reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fourth quarter ended December 31, 2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM9B:

OTHER INFORMATION

None

PART III

ITEM 10:

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Identification of Officers and Directors

Our directors and executive officers, and their respective ages, positions and offices, are as follows:

Name	Age	Position
Robert W. Chance	56	Director, President and Chief Executive Officer of NAS

Sean Sego	44	Director, Secretary of Board of Directors

Jeremy W. Briggs	37	Vice President, Principal Financial Officer NAS

Tom Sego	47	Independent Director of the Board of Directors

Robert W. Chance has served as a director and our President and Chief Executive Officer since October 2, 2007, when we completed our reverse merger with ISS; and he served as our acting Principal Financial Officer from September 2008 through December 2008 (Jeremy Briggs filled that position on January 1, 2009). From July 2005 to June 2007, Mr. Chance was Chief Operations Officer of Nytrox Systems, which engaged in the business of manufacturing ozone generating equipment; and from October 2004 until October 2, 2007 he served as Vice President of ISS. Prior to that time, he held management positions in Siemens and Johnson Controls, and worked for representatives of Honeywell and Fisher Controls International, over the course of his 30 year career in the automation and controls industry.

Sean Sego joined the board of directors for NAS on April 19, 2012 and replaces Manuel Ruiz as secretary. A graduate from Indiana State University, Mr. Sego brings many years of experience in the Financial Services Industry including Ameriprise Financial Services, Waddell and Reed and now over the past six years, serving as Senior Partner at Intrinsic Value Capital Management.

Jeremy Briggs has served as our Principal Financial Officer since January 1, 2009. He also has served as our Vice President and Chief Accounting Officer since January 2009 (he has worked for us since July 2008, originally as Senior Accountant, and from October through December 2008 as Controller) and he is responsible for directing our overall accounting policies and functions.

Tom Sego is currently CEO of SouthInk, a fast growing international wine distributor. Previous to his current position he also worked at Apple for 9 years. Most notably he served as head of World Wide Sales and Sales Support, reporting directly to Tim Cook, the now current CEO and successor of Steve Jobs. He managed 6 different divisions while at Apple and was responsible for expanding an experimental program from 300 stores to 2600 stores in 24 months, accounting for a large amount of Apple's growth during that period. Before Apple, Tom worked at Alta Vista in business analysis and product management. Tom also performed merger and acquisition work in business development at Emerson Electric after getting his MBA from Harvard Business School. Before business school Tom held various engineering positions at Eli Lilly and Caterpillar.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Family Relationships

Currently our Board of Directors has two (2) independent directors which are related.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership of our common stock on Forms 3, 4 and 5 with the SEC. Based on our review of the copies of such forms that we have received and written representations from certain reporting persons we believe that all our executive officers, directors and greater than ten percent beneficial owners complied with applicable SEC filing requirements.

Code of Ethics and Corporate Governance

We have adopted a Code of Conduct (ethics) and Corporate Governance that applies to our executive officers, including the principal executive officer, principal financial officer and principal accounting officer; our management team and all employees. A copy of our Code of Conduct (ethics) and Corporate Governance is posted on our Internet site at http://www.nasautomation.com. In the event that we amend or grant any waiver from, a provision of the Code of Conduct (ethics) and Corporate Governance that applies to the principal executive officer, principal financial officer or principal accounting officer and that requires disclosure under applicable SEC rules, we intend to disclose such amendment or waiver and the reasons therefore on our Internet site.

ITEM 11: EXECUTIVE COMPENSATION

The following table sets forth all compensation earned during the fiscal years ended December 31, 2012, 2011 and 2010, by (i) our Chief Executive Officer (principal executive officer), (ii) our Principal Financial Officer, (iii) our Vice President, and (iv) up to two additional individuals for whom disclosure would have been provided but for the fact that the individuals were not serving as an executive officer at the end of our last completed fiscal year, whose total compensation exceeded $60,000 during such fiscal year ends. We refer to all of these officers collectively as our “named executive officers”.

Name & Principal Position	Year	Salary ($) (2)	Bonus ($)	Stock Awards ($) (1)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	All Other Compensation ($)	Total ($)

Robert W. Chance,	2012	48,000	0	0	0	0	0	48,000
	2011	78,000	0	0	0	0	0	78,000
PEO Chief Executive Officer	2010	76,000	0	0	0	0	0	76,000
Jeremy W. Briggs,	2012	58,300	0	0	0	0	0	58,300
	2011	75,000	0	58,000	0	0	0	133,000
Principal Financial Officer	2010	61,600	0	61,600	0	0	0	122,600

(1)

In 2011 we issued to these individual 1,750,000 shares of our common stock based upon their employment agreements, (see Item 13 Certain Relationships and Related Transactions, and Director Independence – Compensation).

(2)

In 2009 we imposed a temporary 20% salary reduction on our employees and a temporary 50% salary reduction on our senior management the dollar value represents base salary (cash and non-cash) earned. As of January 1, 2012, we placed Mr. Briggs on a consulting agreement and have accrued his services under professional fees, until such time as we are able to execute our acquisition strategy. For the Fiscal year end 2011 and 2012, the Company has accrued salaries for the PEO Chief Executive Officer. These salaries accrued have not been paid to the Chief Executive Officer nor will they be paid to him. As of October 10, 2013, Mr. Chance has forgiven all past accrued salaries.

Employment Contracts

Employment Agreements with Named Executive Officers

Robert Chance. Effective October 12, 2007, our ISS subsidiary entered into an employment agreement, as amended, with Robert Chance under which he agreed to devote his full working time to the discharge of his duties, such duties to be those which ISS may from time to time assign to him. Pursuant to the agreement, we agreed to pay Mr. Chance a salary at the rate of $104,000 per year and to provide him with such supplemental benefits as we may from time to time provide to our full-time employees in similar positions as Mr. Chance (see employment agreement as exhibited).

Jeremy Briggs. On July 28, 2008, we entered into an employment agreement with Jeremy Briggs, as amended January 1, 2009, under which he agreed to devote his full working time as a Vice President and our Chief Accounting Officer. Pursuant to the agreement, we agreed to pay Mr. Briggs a salary at the rate of $85,000 per year, to issue to him 250,000 shares of common stock which we valued at $32,500, and to provide him with such supplemental benefits as we may from time to time prove to our full-time employees in similar positions as Mr. Briggs. On January 17, 2011, we amended our employment agreement with Jeremy Briggs increasing his current salary of $85,000 to $100,000 and awarding him 750,000 shares of common stock as a retention bonus (see employment agreement as exhibited). As of January 1, 2012, we placed Mr. Briggs on a consulting agreement and have accrued his services under professional fees, until such time as we are able to execute our acquisition strategy.

Termination of Employment or Change in Control Arrangements

Except as disclosed in this Form 10-K, there are no compensatory plans or arrangements with any named executive officer (including payments to be received from our parent company or any of our subsidiaries), which result or will result from the resignation, retirement or any other termination of employment of such named executive officer or from a change of control of our parent company or any of our subsidiaries or any change in such named executive officer’s responsibilities following a change in control.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Beneficial Owners

None

Ownership of Management

The following table sets forth certain information as of October 10, 2013 as to each class of our equity securities beneficially owned by (i) each of our directors and named executive officers and (ii) our directors and executive officers as a group. Except as otherwise indicated, we have been advised that each of the persons listed below has sole voting and investment power over their listed shares.

Title of Class	Name of Beneficial Owner (1)	Amount and Nature Of Beneficial Ownership (2)	Percent of Class (2)
Common Stock	Robert W. Chance(3)	42,324,872	8%
Common Stock	Jeremy Briggs(4)	39,513,654	8%
Common Stock	Sean Sego	38,000,000	7%
Common Stock	Tom Sego	2,500,000	>1%
Common Stock	All Executive Officers and
	Directors as a Group (4 persons)

(1)	Each person named is an executive officer or a director. Except as otherwise indicated, the address of each beneficial owner is c/o National Automation Services, Inc., P.O. Box 400775 Las Vegas, NV 89140.
(2)	Applicable percentage ownership is based on 532,560,872 shares of our common stock outstanding as of October 10, 2013, as provided by our Transfer Agent, which systematically makes the calculations to three decimal points, and we rounded up or down. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.
(3)	Each individual formerly was a principal shareholder of ISS, and in connection with our October 2, 2007 reverse merger he executed a lockup agreement in which he agreed not to sell any of the 7,333,333 shares he received in that transaction for two years, other than in a private sales transaction approved in advance by Ronald Williams (the President of T-Beck Capital, Inc., who died in March 2009) or Joseph Pardo, each of whom we deemed to have been a “promoter” following such reverse merger. See Item 13 below, “Certain Relationships and Related Transactions, and Director Independence – Promoters and Control Persons.”
(4)	Includes 26,154 shares held by immediate family members.

Securities Authorized for Issuance under Equity Compensation Plans

We have no equity compensation plans.

Changes in Control

There are no arrangements, including any pledge by any person of our securities, known to us the operation of which may at a subsequent date result in a change in control of our company.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The following information summarizes transactions we have either engaged in during the last three years, or propose to engage in, involving our executive officers, directors, more than 5% stockholders, promoters or founders, or immediate family members of these persons, or promoter or founder, or immediate family of such persons, which equals either $120,000 or an aggregate one percent of the average of our total assets at the year end of our last two fiscal years, whichever is less:

Transaction with related persons

Described below are certain transactions and currently proposed transactions, from January 1, 2009, the beginning of our last two fiscal years, between us and our named executive officers, our directors and the beneficial owners of 5% or more of our common stock (being the lesser of $120,000 or 1% of the average of our total assets as of year-end for the last three completed fiscal years), other than compensation arrangements that are otherwise described under “Executive Compensation.”

Borrowings:

Compensation, Etc.

We also have issued to our named executive officers common stock as compensation in addition to the amounts of salary set forth in their respective employment agreements, as follows:

To Robert Chance: On July 23, 2013, we issued 34,000,000 shares for Board services.

To Sean Sego: On July 23, 2013, we issued 34,000,000 shares for Board services

To Jeremy Briggs: On July 23, 2013, we issued 34,000,000 shares for Board services

To Sean Sego: On August 1, 2013, we issued 4,000,000 shares for Board services

To Robert Chance: On August 1, 2013, we issued 4,000,000 shares for Board services

To Jeremy Briggs: On July 23, 2013, we issued 4,000,000 shares for Board services

To Jeremy Briggs: On March 28, 2011, we issued 750,000 shares for employment retention.

To David Marlow: On March 28, 2011, we issued 1,000,000 shares for employment retention

In March 2011, we issued common stock to our named executive officers in lieu of salary as part of our temporary salary reduction program implemented to save cash, valuing the shares at $0.10 each, as follows:

Jeremy Briggs: 137,500 shares

Promoters and certain control persons

We have no knowledge of any person who would be deemed a “promoter” of our company during the past five years within the meaning of Rule 405 under the Securities Act, except as noted in our registration statement Form 10/a filed on March 3, 2010.

Director Independence

As of October 10, 2013, we currently have two (2), individuals serving on our board which we deem independent directors of the Company set forth in NASDAQ Rule 5605(a)(2).

ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed by the Company's auditors for the professional services rendered in connection with the audit of its annual financial statements and reviews of the financial statements included in the Company's Forms 10-Q’s for fiscal year 2012 and 10-K’s for fiscal 2012 and 2011 were approximately $33,000 and $55,000, respectively.

Other Fees

For 2012 and 2011, we incurred no other fees to Lynda R. Keeton, CPA, LLC, Certified Public Accountants, for products and services other than the services reported above.

ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

Financial Statements Filed

INDEX TO FINANCIAL STATEMENTS		Page
Report of Independent Registered Public Auditing Firm		18

Consolidated Balance Sheets –December 31, 2012 and 2011, respectively		19

Consolidated Statements of Operations –December 31, 2012 and 2011, respectively		20

Statements of Stockholders’ Deficit		21

Consolidated Statements of Cash Flows –December 31, 2012 and 2011, respectively		22

Notes to the Consolidated Financial Statements		23-34

(b)

Exhibits

Exhibit No.		Description of Exhibit

2.1		Stock Purchase Agreement dated October 2, 2007 by and among National Automation Services, Inc., Intuitive System Solutions, Inc., the stockholders of Intuitive System Solutions, Inc., TBeck Capital Inc. and 3 JP Inc. (1)

2.2		Stock Purchase Agreement dated December 26, 2007 by and among National Automation Services, Inc., Intecon, Inc. and the stockholders of Intecon, Inc. (1)

2.3		Stock Purchase Agreement dated June 30, 2009 by and among National Automation Services, Inc., Control Engineering, Inc., and the stockholders of Control Engineering, Inc. (1)

3.1		Articles of Incorporation, as amended.(1)

3.2		Bylaws.(1)

10.1		Securities Purchase Agreement dated March 26, 2008 by and between National Automation Services, Inc. and Trafalgar Capital Specialized Investment Fund, Luxembourg.(1)

10.2		Security Agreement dated March 26, 2008 by and between National Automation Services and Trafalgar Capital Specialized Investment Fund, Luxembourg.(1)

10.3		Secured Redeemable Debenture issued March 26, 2008 by National Automation Services, Inc. to Trafalgar Capital Specialized Investment Fund, Luxembourg.(1)

10.4		Securities Purchase Agreement dated July 21, 2008 by and between National Automation Services, Inc. and Trafalgar Capital Specialized Investment Fund, Luxembourg.(1)

10.5		Security Agreement dated July 21, 2008 by and between National Automation Services, Inc. and Trafalgar Capital Specialized Investment Fund, Luxembourg.(1)

10.6		Personal Guaranty dated July 21, 2008 by and between Robert Chance and Trafalgar Capital Specialized Investment Fund, Luxembourg.(1)

10.7		Secured Redeemable Debenture issued July 21, 2008 by National Automation Services, Inc. to Trafalgar Capital Specialized Investment Fund, Luxembourg.(1)

10.8		Credit Agreement dated December 18, 2008 by and among National Automation Services, Inc., Intecon, Inc., Intuitive System Solutions, Inc., Robert Chance and Trafalgar Capital Specialized Investment Fund, FIS.(1)

10.9		Security Agreement dated December 18, 2008 by and between National Automation Services, Inc., Intecon, Inc., Intuitive System Solutions, Inc. and Trafalgar Capital Specialized Investment Fund, FIS.(1)

10.10		Revolving Note issued December 18, 2008 by National Automation Services, Inc., Intecon, Inc. and Intuitive System Solutions, Inc. to Trafalgar Capital Specialized Investment Fund, FIS.(1)

10.11		Guaranty dated December 18, 2008 by and between National Automation Services, Inc., Intecon, Inc., Intuitive System Solutions, Inc. and Trafalgar Capital Specialized Investment Fund, FIS.(1)

10.12		Personal Guaranty dated December 18, 2008 by and between Robert Chance and Trafalgar Capital Specialized Investment Fund, FIS.(1)

10.13		Employment Agreement of Robert Chance.(1)

10.14		Employment Agreement of Manuel Ruiz.(1)

10.15		Employment Agreement of Jody Hanley.(1)

10.16		Employment Agreement of Brandon Spiker.(1)

10.17		Employment Agreement of David Marlow.(1)

10.18		Operating Lease Agreement dated January 1, 2008 with Jody Hanley.(1)

10.19		Nevada lease agreements.(1)

10.20		Arizona lease agreements (1)

10.21		Promissory note dated April 1, 2009 by and between National Automation Services, Inc. and Jody Hanley.(1)

10.22		Promissory note dated April 1, 2009 by and between National Automation Services, Inc. and Robert O’Connor.(1)

10.23		Lock Up Letter Agreement between T-Beck Capital, Inc. and Robert Chance, Jody Hanley and Manuel Ruiz, dated August 9, 2007.(3)

10.24		Summary of February 2008 Oral Loan Agreement with Robert Chance.(2)

10.25		Summary of July 25, 2008 Oral Loan Agreement with South Bay Capital, Inc. (2)

10.26		Termination Agreement with Control Engineering, Inc., dated September 18, 2009.(2)

10.27		Investment Banking Agreement with T-Beck Capital, dated October 2, 2007.(2)

10.28		Consulting Agreement with Draco Financial LLC, dated April 18, 2008.(2)

10.29		Consulting Agreement with Viard Consulting Services, dated July 16, 2008.(2)

10.30		Consulting Agreement with Gianpiero Balestrieri, dated July 16, 2008.(2)

10.31		Employment Agreement with Jeremy Briggs, dated July 28, 2008.(4)

10.32		Addendum, dated January 1, 2009, to Jeremy Briggs Employment Agreement.(4)

10.33		Amendment, dated March 1, 2010, to Addendum, dated January 1, 2009, to Jeremy Briggs Employment Agreement.(5)

10.34		Consulting agreement dated May 29, 2009 by and between National Automation Services, Inc. and Keros Capital (7)

10.35		Promissory note dated September 11, 2009 by and between National Automation Services, Inc. and Brandon Spiker (7)

10.36		Consulting agreement dated October 16, 2009 by and between National Automation Services, Inc. and Selective Consulting (7)

10.37		Convertible note dated November 9, 2009 by and between National Automation Services, Inc. and Joan Dougherty (7)

10.38		Convertible note dated November 10, 2009 by and between National Automation Services, Inc. and Eugene Ingles III (7)

10.39		Convertible note dated December 15, 2009 by and between National Automation Services, Inc. and Mark Ingles (7)

10.40		Convertible note dated December 22, 2009 by and between National Automation Services, Inc. and Eugene Ingles IV (7)

10.41		Consulting agreement dated January 27, 2010 by and between National Automation Services, Inc. and Quality Stocks (7)

10.42		Consulting agreement dated February 1, 2010 by and between National Automation Services, Inc. and Harbour Capital (7)

10.43		Securities Purchase Agreement dated April 7, 2010 with Ascendiant Capital Group, LLC (6)

10.44		Registration Rights Agreement dated April 7, 2010 with Ascendiant Capital Group, LLC (6)

10.45		Convertible note dated September 1, 2010 by and between National Automation Services, Inc. and Steven Seeley (9)

10.46		Convertible note dated September 21, 2010 by and between National Automation Services, Inc. and Michael Hayak (9)

10.47a		Convertible note dated October 15, 2010 by and between National Automation Services, Inc. and George Donovan (9)

10.47b		Convertible note dated October 15, 2010 by and between National Automation Services, Inc. and George Donovan (9)

10.48		Promissory note dated December 31, 2010 by and between National Automation Services, Inc. and David Marlow (9)

10.49		Promissory note dated December 31, 2010 by and between National Automation Services, Inc. and James Jesse (9)

10.50		Promissory note dated December 31, 2010 by and between National Automation Services, Inc. and Brandon Spiker (9)

10.51		Consulting agreement dated September 21, 2010 by and between National Automation Services, Inc. and Quality Stocks (9)

10.52		Consulting agreement dated April 10, 2010 by and between National Automation Services, Inc. and Lord & Benoit (9)

10.53		Consulting agreement dated September 24, 2010 by and between National Automation Services, Inc. and Tribe Communication (Robert Sullivan) (9)

10.54		Promissory note dated March 21, 2011 by and between National Automation Services, Inc. and Trafalgar Capital (disclosed as exhibit I in the settlement agreement filed in 8K on March 29, 2011) (9)

10.55		Consulting agreement dated March 3, 2011 by and between National Automation Services, Inc. and Lighthouse Capital (9)

10.56		Addendum, dated January 17, 2011, to Jeremy Briggs Employment Agreement(9)

10.57		Addendum, dated January 17, 2011, to Brandon Spiker Employment Agreement(9)

10.58		Addendum, dated December 30, 2010, to David Marlow Employment Agreement(9)

10.59		Settlement agreement dated March 25, 2011 by and between National Automation Services, Inc. and Trafalgar Capital in conjunction with litigation between both parties (8)

10.60		Finder’s Fee agreement dated March 15, 2011 by and between National Automation Services, Inc. and Newport Coast Securities (9)

10.61		Amended convertible note dated May 23, 2011 by and between National Automation Services, Inc. and George Donovan. (10)

10.62		Amended convertible note dated May 23, 2011 by and between National Automation Services, Inc. and George Donovan. (10)

10.63		Convertible note dated April 18, 2011 by and between National Automation Services, Inc. and Asher Enterprises. (10)

10.64		Convertible note dated June 2, 2011 by and between National Automation Services, Inc. and Asher Enterprises. (10)

10.65		Service agreement dated November 28, 2011 by and between National Automation Services, Inc. and Newport Coast Securities. (10)

10.66		Service agreement dated April 14, 2011 by and between National Automation Services, Inc. and Versant Funding LLC. (10)

10.67		Securities and collateral agreement dated April 29, 2011 by and between National Automation Services, Inc. and TriPod Group LLC. (10)

10.68		Service agreement dated June 30, 2011 by and between National Automation Services, Inc. and Tribe Communications, Inc. (Robert Sullivan)(10)

10.69		Service agreement dated September 1, 2011 by and between National Automation Services, Inc. and National Financial Communications Corporation. (10)

10.70		Service agreement dated April 26, 2011 by and between National Automation Services, Inc. and Mass Media 77. (10)

10.71		Convertible note dated May 8, 2012 by and between National Automation Services, Inc. and Asher Enterprises. (*)

10.72		Service agreement dated June 26, 2012 by and between National Automation Services, Inc. and Mass Media 77. (*)

10.73		Convertible note dated March 14, 2012 by and between National Automation Services, Inc. and Ronald Krochak. (*)

10.74		Promissory note dated January 4, 2012 by and between National Automation Services, Inc. and Ronald Krochak (*)

10.75		Service agreement dated March 23, 2012 by and between National Automation Services, Inc. and Newport Coast Securities. (*)

10.76		Service agreement dated May 8, 2012 by and between National Automation Services, Inc. and Newport Coast Securities. (*)

10.77		Convertible note dated January 6, 2012 by and between National Automation Services, Inc. and Asher Enterprises. (*)

14.1		Code of Ethics (NAS Company code of conduct) (9)

21.1		Subsidiaries (9)

31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*)

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*)

99.1		Disclosure Policy(1)

_______________________

Filed herewith (*)

Filed with registration statement Form 10 on August 7, 2009 (1)

Filed with amended registration statement Form 10/A on September 9, 2009 (2)

Filed with amended registration statement Form 10/A on October 29, 2009 (3)

Filed with amended registration statement Form 10/A on February 1, 2010 (4)

Filed with amended registration statement Form 10/A on March 3, 2010 (5)

Filed as exhibits 10.1 and 10.2, respectively on Form 8K on April 8, 2010 (6)

Filed with amended registration statement Form 10 on March 8, 2010 (7)

Filed as exhibits 10.1on Form 8K on March 29, 2011 (8)

Filed as exhibits on audited form 10-K on April 14, 2011(9)

Filed as exhibits on audited form 10-K on April 14, 2012(10)

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

		NATIONAL AUTOMATION SERVICES INC.
		(Registrant)

Date: October 10, 2013

	By:	/s/ Robert W. Chance
		Name: Robert W. Chance
		Title: President and Chief Executive Officer
		(Principal Executive Officer)


	By:	/s/ Jeremy W. Briggs
		Name: Jeremy W. Briggs
		Title: Principal Financial Officer

National Energy Services, Inc. - FORM 10-K - October 10, 2013

Attached files

National Energy Services, Inc. Reports