NAM CORP, 424B1, 1996-11-13

NAM CORP
424B1, 1996-11-13
LEGAL SERVICES

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<PAGE>
PROSPECTUS

NAM CORPORATION
1,400,000 UNITS
EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE WARRANT

Of the 1,400,000 Units (the "Units") offered hereby, 1,250,000 Units
include common stock, par value $.001 per share (the "Common Stock"), which
is offered by NAM Corporation, a Delaware corporation (the "Company"), and
150,000 Units (the "Selling Stockholders Units") include Common Stock which
is offered by two executive officers of the Company (the "Selling
Stockholders") (collectively, the "Offering"). The Company has also granted
Joseph Stevens & Company, L. P. (the "Underwriter") an option to purchase up
to an additional 210,000 Units (the "Over-allotment Option"). Each Unit
consists of one share of Common Stock and one redeemable warrant (the
"Redeemable Warrants," collectively with the Units and the Common Stock
hereinafter sometimes referred to as the "Securities"). The shares of Common
Stock and Redeemable Warrants comprising the Units will be detachable and
separately transferable immediately upon issuance. The Redeemable Warrants
included in the Selling Stockholders Units will be issued by the Company. The
Company will not receive any of the proceeds from the sale of the Selling
Stockholders Units, although the Company will receive proceeds from the
exercise, if any, of the Redeemable Warrants included in the Selling
Stockholders Units. See "Use of Proceeds," "Selling Stockholders" and
"Description of Securities." This Prospectus also relates to the registration
by the Company, at its expense, for the account of certain security holders
(the "Selling Private Placement Stockholders") of 139,447 shares of Common
Stock (the "Private Placement Stockholder Shares"), which were issued in
connection with a prior private placement financing. None of the Private
Placement Shares are being underwritten in this Offering and the Company will
not receive any proceeds from their eventual sale. The Selling Private
Placement Stockholders have agreed not to sell their Private Placement Shares
without the prior written consent of the Underwriter for a period of 18
months from the date hereof. See "Offer by the Selling Private Placement
Stockholders and Plan of Distribution."

Each Redeemable Warrant entitles the holder to purchase one share of
Common Stock at a price of $6.00 per share, subject to adjustment, at any
time from issuance until November 13, 2001 and is redeemable by the Company,
with the prior written consent of the Underwriter, at a redemption price of
five cents ($.05) commencing November 13, 1997 on thirty (30) days' prior
written notice, provided that the average closing bid price of the Common
Stock equals or exceeds $9.00, subject to adjustment, for any twenty trading
days within a period of thirty consecutive trading days ending on the fifth
trading day immediately prior to the notice of redemption. See "Description
of Securities."

Prior to this Offering, there has been no public market for the Units, the
Common Stock or the Redeemable Warrants and there can be no assurance that
any such market will develop after the completion of this Offering or, if
developed, that it will be sustained. See "Underwriting" for a discussion of
the factors considered in determining the offering price per Unit. The Units,
the Common Stock and the Redeemable Warrants have been approved for quotation
on the Nasdaq SmallCap Market (the "Nasdaq SmallCap") under the symbols
"NAMCU," "NAMC," and "NAMCW," respectively, and for listing on the Boston
Stock Exchange (the "BSE") under the symbols "NAMU," "NAM," and "NAMW,"
respectively. The Company and the Underwriter may jointly determine, based
upon market conditions, to delist the Units upon the expiration of the 30 day
period commencing on the date of this Prospectus.
------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS"
AND "DILUTION," BEGINNING AT PAGE 8.
------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
===============================================================================
Proceeds to the
Underwriting Proceeds to the Selling
Price to public discounts (1) Company (2) Stockholders (3)
- -------------------------------------------------------------------------------
Per Unit ..... $4.00 $.40 $3.60 $3.60
- -------------------------------------------------------------------------------
Total (4) .... $5,600,000 $560,000 $4,500,000 $540,000
- -------------------------------------------------------------------------------
Footnotes on next page.

The Units are being offered by the Underwriter, subject to prior sale,
when, as and if delivered to and accepted by the Underwriter, and subject to
the approval of certain legal matters by its counsel and to certain other
conditions. The Underwriter reserves the right to withdraw, cancel or modify
the offering and to reject any order in whole or in part. It is expected that
delivery of the Units will be made against payment therefor at the offices of
Joseph Stevens & Company, L.P., New York, New York, on or about November 18,
1996.
JOSEPH STEVENS & COMPANY, L.P.
November 13, 1996

<PAGE>

(1) Does not include additional compensation payable to the Underwriter in
the form of a 3% non-accountable expense allowance, warrants to purchase
140,000 Units (the "Underwriter's Warrants"), and a financial consulting
fee. The Company has also agreed to indemnify the Underwriter against
certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). See "Underwriting."

(2) Before deducting expenses payable by the Company estimated to be
$513,000, including the non-accountable expense allowance payable to the
Underwriter.

(3) Before the Company pays on behalf of the Selling Stockholders the
underwriting discounts and the non-accountable expense allowance related
to the Selling Stockholders Units.

(4) The Company has granted the Underwriter the Over-allotment Option, on the
same terms as set forth above, solely for the purpose of covering
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts, and Proceeds to the Company will
be $6,440,000, $644,000 and $5,256,000, respectively. See "Underwriting."

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other periodic reports as
the Company deems appropriate or as may be required by law.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE UNITS,
COMMON STOCK AND/OR THE REDEEMABLE WARRANTS AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE BOSTON STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.

2
<PAGE>

TO NEW JERSEY RESIDENTS:

The Units, each Unit consisting of one Share of Common Stock and one
Redeemable Warrant of NAM Corporation, may only be offered and sold to
persons who come within any of the following categories, or who the Company
reasonably believes comes within any of the following categories, at the time
of the sale of the securities to that person:

(1) Any bank as defined in section 3(a)(2) of the Securities Act of 1933
(the "Act"), or any savings and loan association or other institution as
defined in section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section 15 of
the Securities Exchange Act of 1934; any insurance company as defined in
section 2(13) of the Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined
in section 2(a)(48) of that Act; Small Business Investment Company licensed
by the U.S. Small Business Administration under section 301(c) or (d) of the
Small Business Investment Act of 1958; any plan established and maintained by
a state, its political subdivisions, or any agency or instrumentality of a
state or its political subdivisions for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; employee benefit plan within
the meaning of the Employee Retirement Income Security Act of 1974 if the
investment decision is made by a plan fiduciary, as defined in section 3(21)
of such act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;

(2) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;

(3) Any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;

(4) Any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;

(5) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds $1,000,000;

(6) Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;

(7) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Section230.506(b)(2)(ii);
and

(8) Any entity in which all of the equity owners are accredited investors.

TO CALIFORNIA RESIDENTS ONLY:

The Units, each Unit consisting of one share of Common Stock and one
Redeemable Common Stock Purchase Warrant of the Company may only be offered
and sold to (i) persons with a net worth, individually or jointly with his or
her spouse, of at least $250,000 (exclusive of home, home furnishings and
automobiles) and an annual income of at least $65,000 or (ii) persons with a
net worth, individually or jointly with his or her spouse, of at least
$500,000 (exclusive of home, home furnishings and automobiles).

The Units offered hereby have been registered by a limited qualification
and cannot be offered for resale or resold in the State of California unless
registered for sale. Furthermore, the exemption afforded by Section 25104(h)
of the California Securities Law shall be withheld by the Commissioner of
Corporations and the Company is not permitted to apply for the exemption
afforded by 25101(b) until after 90 days from the date of the closing of the
offering.

3
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and
financial statements (including the notes thereto) appearing elsewhere in
this Prospectus. Each prospective investor is urged to read this Prospectus
in its entirety. Unless otherwise indicated, all information in this
Prospectus relating to share and per share data gives effect to (i) a one for
two reverse stock split which was effected on March 29, 1996 and (ii) a
.14436 of a share stock dividend distributed on April 1, 1996 to all holders
of Common Stock. Unless otherwise indicated, all information in this
Prospectus assumes no exercise of the (i) Redeemable Warrants; (ii)
Over-allotment Option; or (iii) Underwriter's Warrants.

THE COMPANY

NAM Corporation (the "Company") provides alternative dispute resolution
("ADR") services principally to insurance companies, law firms, large
self-insured corporations and municipalities. An ADR proceeding is designed
to replace the public court system as a forum for resolving civil disputes.
The Company offers its clients personalized attention and access to qualified
hearing officers (generally retired judges) to either mediate or arbitrate
their disputes. The cases currently handled by the Company are primarily
disputes involving claims for injury to persons or property allegedly arising
out of acts of negligence and are usually covered by insurance. The Company
believes it is one of the leading providers of ADR services in New York State
based upon the number of cases processed since 1993. The Company has offices
currently located in New York, Massachusetts, Pennsylvania, South Carolina
and Tennessee, through which it has the ability to provide ADR services on a
nationwide basis with a roster of over 600 qualified hearing officers.

The Company believes that the ADR business is a growing service industry
based upon the continuing inability of the public court system to manage
effectively its docket of civil cases. An ADR proceeding is intended to
streamline the traditional cumbersome public litigation process. As compared
to the public court system, an ADR proceeding generally offers litigants: a
faster resolution, confidentiality, reduced expense, flexibility in
procedures and solutions, and control over the process. The ADR proceeding
also has the potential to preserve business relations among the parties
because of its less adversarial nature and potential for a prompt resolution.

The Company provides services to more than 50 major insurance companies,
law firms, large self-insured corporations and municipalities, including
Liberty Mutual Insurance Group, Royal Insurance Group, The Travelers
Insurance Company, American International Group, Conrail and the City of
Philadelphia. To date, the Company has focused the majority of its marketing
efforts on developing relationships, and expanding existing relationships,
with insurance companies which the Company believes are some of the largest
consumers of ADR services. The Company derives its revenues from fees charged
to the parties in an ADR proceeding, which are charged on an hourly basis for
hearings, conferences and deliberations by hearing officers, and set amounts
for administrative services.

As compared to the majority of its competitors, the management of the
Company believes it has certain advantages which enable it to better serve
its clients. These advantages include (1) qualified hearing officers, who are
generally former judges, (2) software that provides detailed case management
reporting ability which enables clients to review the history of cases
submitted and the status of pending matters, (3) case reporting that can be
customized to meet a client's needs, (4) account executives dedicated to
specified clients, (5) the ability to monitor and control the scheduling of
matters, and (6) videoconferencing capability which allows clients to
participate or observe a proceeding without leaving their office. In
addition, during 1997 the Company expects to offer clients "on-line" case
submission and reporting which will further improve the Company's ability to
serve the needs of its clients.

4
<PAGE>

not presently have an office, which will enable the Company to serve more
fully its current clients and attract new clients. This proposed expansion
may include the acquisition of existing ADR companies. Presently, the Company
does not have any agreements to acquire any such companies. The Company
intends to open approximately four to six new offices in the United States
over the next two years. It is currently anticipated that the Company will
open new offices in: Illinois, Arizona, Washington D.C., Wisconsin, Florida
and Connecticut.

The Company believes that the domestic ADR industry is, other than a few
national entities, generally fragmented into small ADR service providers. The
Company further believes that the trend in the ADR industry is towards
consolidation of providers who are capable of offering national and regional
ADR programs. The Company's planned expansion will enable it to exploit this
trend. In addition, the Company intends to increase its marketing of its ADR
services to litigants in other types of disputes, including complex
commercial issues, construction, employment and worker's compensation cases.

The Company was formed on January 12, 1994 under the laws of the State of
Delaware. The Company's executive offices are currently located at 1010
Northern Boulevard, Suite 336, Great Neck, New York 11021.

THE OFFERING

Units to be Offered ........... Each Unit consisting of one share of Common
Stock and one Redeemable Warrant. The Common
Stock and Redeemable Warrants will be
detachable and separately transferable
immediately upon issuance.
Each Redeemable Warrant entitles the holder
to purchase one share of Common Stock for
$6.00 per share, subject to adjustment.
Commencing 12 months from the date of this
Prospectus, the Redeemable Warrants will be
subject to redemption, subject to the prior
written consent of the Underwriter, at a
price of $.05 per Redeemable Warrant on 30
days' written notice provided the average
closing bid price of the Common Stock equals
or exceeds 150% of the exercise price of the
Redeemable Warrant for any 20 trading days
within a period of 30 consecutive trading
days ending on the fifth trading day prior
to the date of the notice of redemption. See
"Description of Securities."

Units Offered by the Company .. 1,250,000 Units.

Units Offered by the Selling
Stockholders................. 150,000 Units. The Redeemable Warrants
included in such Units will be issued by the
Company. Although the Company will not
receive any of the proceeds from the sale of
such Units, it will receive the proceeds
from the exercise, if any, of the Redeemable
Warrants included therein. See "Selling
Stockholders."

Shares Offered by Selling
Private Placement
Stockholders ................ 139,447 shares of Common Stock. These
Private Placement Shares are not being
underwritten in this Offering and the
Company will not receive any proceeds from
their sale. For a period of 18 months from
the date of the Prospectus, the Selling
Private Placement Stockholders have agreed
not to sell such shares without the prior
written consent of the Underwriter. See
"Offer by the Selling Private Placement
Stockholders and Plan of Distribution."

5
<PAGE>

Common Stock Outstanding Before
this Offering(1) ............ 1,874,978 shares.

Common Stock to be
Outstanding After this
Offering(1) ................. 3,124,978 shares.

Redeemable Warrants to be
Outstanding After this
Offering .................... 1,400,000 Redeemable Warrants.

Nasdaq SmallCap Symbols........ Units: NAMCU
Common Stock: NAMC
Redeemable Warrants: NAMCW

BSE Symbols.................... Units: NAMU
Common Stock: NAM
Redeemable Warrants: NAMW

Use of Proceeds................ For repayment of notes and interest; opening
new offices, including acquisitions;
marketing and sales; capital expenditures;
and working capital and general corporate
purposes. See "Use of Proceeds."

Risk Factors and Dilution ..... The purchase of the Units offered hereby
involves a high degree of risk and immediate
and substantial dilution. Prospective
investors should review carefully and
consider the information set forth under
"Risk Factors" and "Dilution."

- ------
(1) Includes 61,903 shares of Common Stock that vested in July 1996 pursuant
to a certain employment agreement and excludes: (i) 750,000 shares of
Common Stock reserved for issuance upon exercise of options available for
future grant under the Company's 1996 Stock Option Plan (the "Stock
Option Plan") of which options to purchase 25,000 shares have been
conditionally granted; and (ii) 79,007 shares of Common Stock which have
been conditionally granted to certain employees and a hearing officer
pursuant to their contracts and which vest over time beginning in March
1997. See "Management--Stock Option Plan," "Description of Securities"
and "Underwriting."

6
<PAGE>

SUMMARY FINANCIAL INFORMATION

The summary financial information set forth below is derived from and
should be read in conjunction with the consolidated financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. In
October 1994, the Company acquired all the outstanding shares of National
Arbitration & Mediation, Inc., a New York corporation ("National"). The
financial information presented below includes the results of operations of
National as if the Company and National had been combined as of July 1, 1994.

<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
Statements of Operations Data
Revenue ...................................... $2,235,030 $3,147,886
Operating income ............................. 215,219 206,229
Other expenses, net .......................... 19,817 67,105(1)
Net income ................................... 185,023 135,599
Net income per common share .................. $ 0.11 $ 0.07
------------ ------------
Pro forma net income(2) ...................... 106,622 ---
Pro forma net income per common share(2) ..... $ 0.06 $ ---
------------ ------------
Weighted average common stock and common stock
equivalents outstanding ..................... 1,688,358 1,947,504
</TABLE>

<TABLE>
<CAPTION>
June 30, 1996
------------------------------------
Actual As Adjusted(3)
------------ --------------
<S> <C> <C>
Balance Sheets Data
Working capital (deficit) ..... $ (464,426) $3,481,574
Total assets .................. 938,993 4,318,993
Total liabilities ............. 1,010,739 511,739
Notes payable ................. 400,000 ---
Stockholders' equity (deficit) $ (71,746) $3,807,254
</TABLE>

- ------
(1) Includes offering costs of $61,127 from a public offering that was
abandoned in October 1995.

(2) From inception through October 1994 National elected to be taxed as an
S-corporation under the applicable provisions of the Internal Revenue
Code of 1986. Effective October 1994 National's S-corporation election
was voluntarily revoked, subjecting National to corporate income taxes
subsequent to that date. Pro forma net income and pro forma net income
per common share represent the Company's position as if National had been
a C-corporation for all relevant periods.

(3) As adjusted to give effect to the issuance of 1,250,000 Units offered by
the Company and the receipt and initial application of the net proceeds
therefrom. See "Use of Proceeds."

7
<PAGE>

RISK FACTORS

The Units offered hereby are speculative and involve a high degree of
risk, including, but not necessarily limited to, the risk factors described
below. An investment should only be made by persons who can afford a loss of
their entire investment. Each prospective investor should carefully consider
the following risk factors and the other information included in this
Prospectus before making any investment decision.

No Assurance of Continued Profitability. Although the Company has been
profitable for the last three fiscal years, there can be no assurance that
the Company will be able to continue to operate on a profitable basis in the
future. In fact, the Company anticipates a substantial increase in its
expenses associated with the implementation of its expansion plans. These
increases may result in a short-term net loss as new offices are opened and
the Company supports such new offices until they fully develop, if ever.

Lack of Written Contracts with Clients; Dependence on Referrals. The
Company currently relies on its relationships with, and marketing efforts to,
insurance companies, law firms, large self-insured corporations and
municipalities to obtain cases. The Company does not have written agreements
with the majority of its clients, but the Company has recently instituted the
process of obtaining written agreements with its existing clients and with
new clients. There can be no assurance that in the future the Company will
continue to receive its current level of, or an adequate level of, referrals
of cases. If the Company does not maintain such levels, there could be a
material adverse effect on the Company's business.

Dependence Upon Qualified Hearing Officers. The market for the Company's
services depends on a perception by clients that the Company's hearing
officers are impartial, qualified and experienced. The Company's ability to
retain qualified hearing officers in the face of increasing competition is
uncertain. Approximately 97% of the Company's hearing officers are retained
on a case-by-case basis. Accordingly, at any time, these hearing officers can
refuse to continue to provide their services to the Company and are free to
render services independently or through competing ADR services. If qualified
hearing officers are unwilling or unable to continue to provide their
services through the Company for any reason, including possible agreements to
provide their services to the Company's competitors on an exclusive basis,
the Company's business and operations could be materially and adversely
effected.

Dependence on Insurance-Related Disputes. The majority of the Company's
ADR business involves claims for damages to persons and/or property arising
from alleged acts of negligence and are usually covered by insurance. In many
instances, these disputes are resolved in a matter of hours. Since the
Company's revenues are derived primarily from certain administrative and
hourly fees, a high volume of these cases is required in order for the
Company to generate sufficient revenues. There can be no assurance that the
Company will be able to expand its business outside of the insurance-related
dispute segment, or maintain its current level of cases.

Possible Improvements in the Public Court System, Including Use of ADR
Services. The ADR industry in general furnishes an alternative to public
dispute mechanisms, principally the public courts. The Company's marketing
efforts have been based on its belief that there exists a high degree of
dissatisfaction among litigants and their counsel with the public court
system. If the public courts, in the markets the Company is currently serving
or seeks to serve, reduce case backlogs and provide effective settlement
mechanisms at no, or substantially reduced, cost to litigants, the Company's
business opportunities in such markets may be significantly reduced. Several
public court systems, both on the federal and state level, including certain
federal and state courts located in New York State, have instituted court
coordinated ADR programs and similar programs are under consideration in a
number of states and may be adopted at any time. These federal and state
court programs have generally been instituted by the establishment of lists
of either volunteer or compensated hearing officers who are generally
practicing attorneys who would be available to litigants to choose as an
arbitrator or mediator to hear a dispute. These programs may require
litigants either to mediate or pursue a non-binding arbitration of the
dispute at least once prior to pursuing fully the judicial litigation
process. The programs may also offer the litigants an opportunity to mediate
or arbitrate a dispute voluntarily. The success of such ADR programs could
have a material adverse effect on the Company's business by diminishing the
demand for private ADR services.

Competition. The ADR business is highly competitive, both on a national
and regional level. Barriers to entry in the ADR business are relatively low,
and new competitors can begin doing business relatively quickly. There are
two types of competitors, not-for-profit and for-profit entities. The Company
believes the largest not-

8
<PAGE>

for-profit competitor is the American Arbitration Association ("AAA") which
has significant market share in complex commercial cases. The Company
believes that the largest for-profit ADR provider in the country is Judicial
Arbitration Mediation Services, Inc./Endispute ("JAMS"). At this time,
management believes that numerous other private ADR firms are competing with
the Company in the regions it currently serves and in other areas of the
United States where the Company may open new offices. Increased competition
could decrease the fees the Company is able to charge for its services and
limit the Company's ability to obtain qualified hearing officers. This could
have a material adverse effect on the Company's ability to be profitable in
the future. Certain competitors may have greater financial, and other,
capabilities than the Company. Accordingly, there is no assurance that the
Company can successfully compete in the present or future marketplace for ADR
services.

Significant Start Costs Associated with the Establishment of New
Offices. Significant start-up costs will be incurred in connection with
opening and operating new offices, including expenses such as leases, office
equipment, furnishings, and salaries for management, sales and clerical
personnel. In these new areas, organizations similar to and in competition
with the Company may have been doing business for some time, and therefore,
will have competitive advantages over the Company. These advantages include
contacts with potential consumers of the Company's services, such as law
firms and insurance companies, and with retired judges and lawyers who act as
hearing officers. In addition, the account representatives who establish the
new offices are very important to the success of such offices. While
management of the Company believes that in the future, the Company may be
competitive in some or all of the planned new markets, there is no assurance
that any of the Company's new offices will ever be profitable. For example,
the Company opened up an office in the Minneapolis, Minnesota area in August,
1994 and closed it in April, 1995 due to disappointing performance.

Dependence on Key Personnel. The success of the Company will be largely
dependent on the personal efforts of Roy Israel, the Chief Executive Officer,
President and Chairman of the Board of Directors of the Company. Although the
Company has entered into an employment agreement with Mr. Israel, which
expires in 1997, the loss of his services could have a material adverse
effect on the Company's business and prospects. The Company has obtained
"key-man" life insurance on the life of Mr. Israel, of which the Company is
sole beneficiary in the amount of $1 million. The success of the Company is
also dependent upon its ability to hire and retain qualified marketing and
other personnel in its existing and new offices. In the New York office,
account executives are directly managed by the supervisor of the various
sales teams. The supervisors report to the Executive Vice President. In the
regional offices, account executives are supervised directly by the regional
manager for the office who reports to the Director of Regional Offices. The
Director of Regional Offices reports to the Executive Vice President. Mr.
Israel is responsible for the overall performance of the sales staff.
Generally, account executives in the New York office are interviewed by the
Executive Vice President and the President/ CEO. With regard to the hiring in
other offices, potential account executives are usually interviewed by each
office's regional manager, then the Director of Regional Offices meets with
them, and finally, either the Executive Vice President or President/ CEO
interviews the candidate. Account executives are trained by a supervisor, the
Director of Regional Offices or the office's regional manager over
approximately a two week period. This training includes the development of
marketing skills and the introduction to customers of the Company. After this
initial period, the new account executive's performance is closely monitored.
There can be no assurance that the Company will be able to hire or retain
such necessary personnel. See "Management."

Broad Discretion in Application of Proceeds. Approximately $1,110,000 or
approximately 28% of the estimated net proceeds of this offering has been
allocated to working capital and general corporate purposes by management.
Accordingly, the Company's management will have broad discretion as to the
application of such proceeds.

Absence of Dividends. The Company has not paid any cash dividends on its
Common Stock, except with respect to certain distributions relating to when
National was an S-corporation, and does not expect to do so in the
foreseeable future. See "Certain Transactions" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

Possible Adverse Effects of Authorization of Preferred Stock. The
Company's Certificate of Incorporation provides that up to 5,000,000 shares
of Preferred Stock may be issued by the Company from time to time in one or
more series. The Board of Directors is authorized to determine the rights,
preferences, privileges and restrictions granted to and imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares of
any series of Preferred Stock and the designation of any such series, without
any vote or action by the Com-

9
<PAGE>

pany's stockholders. The Board of Directors may authorize and issue Preferred
Stock with voting or conversion rights that could adversely affect the voting
power or other rights of the holders of Common Stock. In addition, the
potential issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company, may discourage
bids for the Common Stock at a premium over the market price of the Common
Stock and may adversely affect the market price of the Common Stock. See
"Description of Securities--Preferred Stock."

Control by Current Stockholders. When this Offering is completed, current
shareholders will beneficially own 1,724,978 shares or 55% of the Common
Stock outstanding. Of that number, Mr. Israel will beneficially own 1,197,139
shares or 38% of the Common Stock. As a result, these stockholders acting in
concert will have the ability to elect or remove any or all of the Company's
directors and to control substantially all corporate activities involving the
Company, including tender offers, mergers, proxy contests or other purchases
of Common Stock that could give stockholders of the Company the opportunity
to realize a premium over the then prevailing market price for their shares
of Common Stock. See "Principal and Selling Stockholders." See
"Management--Directors, Director Nominee, Executive Officers and Significant
Employees" and "Certain Transactions."

Benefit of the Offering to Certain Affiliates and Insiders. Roy Israel and
Cynthia Sanders, the Company's Executive Vice President, are selling in the
aggregate 150,000 shares of Common Stock (of their 1,460,194 shares of Common
Stock beneficially owned) in this Offering which were purchased at prices
well below the initial public offering price per Unit. The Selling
Stockholders will realize substantial gains as a result of their sale of such
shares. In addition, the Company is providing the Redeemable Warrants that
are part of the Selling Stockholders' Units and the Company will derive no
benefit from the sale of such Redeemable Warrants. The Company is also paying
on behalf of the Selling Stockholders the underwriting discounts and
non-accountable expense related to the sale of the Selling Stockholders
Units. The registration statement, of which this Prospectus is a part, also
includes the registration of the Private Placement Shares. The Private
Placement Shares (139,447) were purchased at prices substantially less than
the initial public offering price per Unit in this Offering and the Selling
Private Placement Stockholders, at the time they sell, may realize
substantial gain. A portion of the proceeds of this Offering will be used to
satisfy a certain private placement financing, of which Mr. Israel, Ms.
Sanders and Mr. Charles Merola, the Chief Financial Officer of the Company,
shall receive $10,000 in the aggregate plus interest. See "Use of Proceeds"
and "Offer by the Selling Private Placement Stockholders and Plan of
Distribution."

Proceeds from the Sale of Securities by Selling Securityholders. The
Company will not receive any of the proceeds from the sale of the Selling
Stockholders Units or the Private Placement Shares. See "Use of Proceeds,"
and "Offer by the Selling Private Placement Stockholders and Plan of
Distribution."

Forward-Looking Information May Prove Inaccurate. This Prospectus contains
various forward-looking statements and information that are based on
management's beliefs, as well as assumptions based upon information currently
available to management. When using this document, the words "expect,"
"anticipate," "estimate," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions including those identified above. Should one or
more of these risks or circumstances materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected.

Immediate Substantial Dilution. The purchasers of the Units will incur an
immediate and substantial dilution in the net tangible book value of each
share of Common Stock from the initial public offering price of $2.81 or 70%
per Unit. Dilution represents the difference between the price of the Common
Stock sold hereby and the pro forma net tangible book value per share of the
Company after the Offering. Additional dilution to future net tangible book
value per share may occur upon exercise of the Redeemable Warrants, the
Underwriter's Warrants and certain options that may be issued or exercised
under the Plan. See "Dilution."

Arbitrary Offering Price of the Units and Exercise Price of the Redeemable
Warrants. The offering price of the Units and the exercise price of the
Redeemable Warrants are completely arbitrary and are not based upon the
Company's assets, book value, cash flow, potential earnings or any other
established criteria of value. The initial public offering price for the
Units and the exercise price of the Redeemable Warrants were determined by
negotiations between the Company and the Underwriter, and should not be
regarded as indicative of any future market price of the Units, Common Stock
or Redeemable Warrants. See "Underwriting."

10
<PAGE>

Redeemable Warrants; Future Financings. The holders of the Redeemable
Warrants and the Underwriter Warrants will have the opportunity to profit
from a rise in the price of the Common Stock. The existence of these warrants
may adversely affect the terms on which the Company can obtain additional
equity financing in the future and the holders can be expected to exercise
them when the Company would, in all likelihood, be able to obtain additional
capital by offering additional shares of its unissued Common Stock on terms
more favorable to the Company than the terms provided by these warrants.

Repayment of Debt. The Company will use $445,000 of the proceeds of the
Offering to repay the Private Placement Notes with interest. See "Use of
Proceeds."

Potential Adverse Effect of Redemption of the Redeemable Warrants. The
Redeemable Warrants are redeemable by the Company, with the prior written
consent of the Underwriter, at a price of $.05 per Redeemable Warrant
commencing 12 months from the date of this Prospectus, provided that (i) 30
days' prior written notice is given to the holders of the Redeemable
Warrants, and (ii) the closing bid price per share of the Common Stock as
reported on the Nasdaq SmallCap (or the last sale price, if quoted on a
national securities exchange) for any 20 trading days within a period of 30
consecutive trading days, ending on the fifth day prior to the date of the
notice of redemption, has been at least 150% of the exercise price per share,
subject to adjustment in certain events. The holders of the Redeemable
Warrants will automatically forfeit their rights to purchase the shares of
Common Stock issuable upon exercise of such Redeemable Warrants unless the
Redeemable Warrants are exercised before they are redeemed. Notice of
redemption of the Redeemable Warrants could force the holders to exercise the
Redeemable Warrants and pay the respective exercise prices at a time when it
may be disadvantageous for them to do so, to sell the Redeemable Warrants at
the market price when they might otherwise wish to hold the Redeemable
Warrants, or to accept the redemption price which is likely to be
substantially less than the market value of the Redeemable Warrants at the
time of redemption. See "Description of Securities-- Redeemable Warrants."

Current Prospectus and State Blue Sky Registration Required to Exercise
Redeemable Warrants. Holders will have the right to exercise the Redeemable
Warrants and purchase shares of Common Stock only if a current prospectus
relating to such shares is then in effect and only if the shares are
qualified for sale under the securities laws of the applicable state or
states, or there is an exemption from the applicable qualification
requirements. The Company has undertaken and intends to file and keep
effective and current a prospectus which will permit the purchase and sale of
the Common Stock underlying the Redeemable Warrants, but there can be no
assurance that the Company will be able to do so. Although the Company
intends to qualify for sale the shares of Common Stock underlying the
Redeemable Warrants in those states in which the securities are to be
offered, no assurance can be given that such qualification will occur.
Holders of the Redeemable Warrants may be deprived of any value if a
prospectus covering the shares issuable upon the exercise thereof is not kept
effective and current or if such underlying shares are not, or cannot be,
registered in the applicable states. Although the Company does not presently
intend to do so, the Company reserves the right to call the Redeemable
Warrants for redemption whether or not a current prospectus is in effect or
such underlying shares are not, or cannot be, registered in the applicable
states. See "Description of Securities--Redeemable Warrants."

Shares Eligible for Future Sales. Sales of shares of Common Stock by
existing shareholders, or by holders of options, under Rule 144 of the
Securities Act could have an adverse effect on the trading price of the
Units, the Common Stock or the Redeemable Warrants. The Company has agreed
with the Underwriter to cause holders of not less than 95% of the shares of
Common Stock outstanding prior to this offering to execute lock-up agreements
with the Underwriter that restrict the sale or disposition of shares of
Common Stock for 18 months from the date of this Prospectus without the prior
written consent of the Underwriter. In addition, for 24 months from the date
of this Prospectus, these shares will be sold only through the Underwriter.
The Underwriter may consent to a waiver of this lock-up period without prior
public notice. Subject to this lock-up restriction, of the 3,124,978 shares
of Common Stock that will be outstanding after this Offering, 139,447 shares
owned by the Selling Private Placement Stockholders are eligible for
immediate sale and 1,516,476 shares are eligible for immediate sale pursuant
to Rule 144. Beginning in June, 1998, 7,152 shares will be eligible for sale
pursuant to Rule 144 subject to the lock-up agreement described above. See
"Description of Securities" and "Shares Eligible for Future Sale."

11
<PAGE>

Lack of Experience of Underwriter. Although the Underwriter commenced
operations in May 1994, it does not have extensive experience as an
underwriter of public offerings of securities. The firm is relatively small
and no assurance can be given that it will be able to participate as a market
maker in the Securities, and no assurance can be given that any broker-dealer
will make a market in the Units, the Common Stock or the Redeemable Warrants.
See "Underwriting."

Underwriter's Potential Influence on the Market. It is anticipated that a
significant amount of the Units will be sold to customers of the Underwriter.
Although the Underwriter has advised the Company that it intends to make a
market in the Securities, it will have no legal obligation to do so. Such
market making activity may be discontinued at any time. Moreover, if the
Underwriter sells the securities issuable upon exercise of the Underwriter's
Warrants, it may be required under the Exchange Act to suspend temporarily
its market-making activities. The prices and the liquidity of the Units, the
Common Stock and the Redeemable Warrants may be significantly affected by the
degree, if any, of the Underwriter's participation in the market. No
assurance can be given that any market activities of the Underwriter, if
commenced, will be continued. See "Underwriting."

No Prior Public Trading Market; Possible Delisting from Nasdaq SmallCap;
Disclosure Relating to Low Priced Stocks. Prior to the Offering there has
been no public trading market for the Units, the Common Stock or the
Redeemable Warrants. Although the Units, the Common Stock and the Redeemable
Warrants have been approved for quotation on the Nasdaq SmallCap, there can
be no assurance that a trading market will develop or, if developed, that it
will be maintained. In addition, there can be no assurance that the Company
will in the future meet the maintenance criteria for continued quotation of
the securities on the Nasdaq SmallCap. The maintenance criteria for the
Nasdaq SmallCap include, among other things, $2,000,000 in total assets,
$1,000,000 in capital and surplus, a public float of 100,000 shares with a
market value equal to $200,000, two market makers and a minimum bid price of
$1.00 per share of common stock. If an issuer does not meet the $1.00 minimum
bid price standard, it may, however, remain on the Nasdaq SmallCap if the
market value of its public float is at least $1,000,000 and the issuer has at
least $2,000,000 in equity. If the Company were removed from the Nasdaq
SmallCap, trading, if any, in the Units, the Common Stock or the Redeemable
Warrants would thereafter have to be conducted in the over-the-counter market
in the so-called "pink sheets" or, if then available, the NASD's OTC
Electronic Bulletin Board. As a result, an investor would find it more
difficult to dispose of, and to obtain accurate quotations as to the value of
such securities.

In addition, if the Common Stock is delisted from trading on the Nasdaq
SmallCap and the trading price of the Common Stock is less than $5.00 per
share, trading in the Common Stock would also be subject to the requirements
of Rule 15g-9 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Under such rule, broker/dealers who recommend
such low-priced securities to persons other than established customers and
accredited investors must satisfy special sales practice requirements,
including a requirement that they make an individualized written suitability
determination for the purchaser and receive the purchaser's written consent
prior to the transaction. The Securities Enforcement Remedies and Penny Stock
Reform Act of 1990 also requires additional disclosure in connection with any
trades involving a stock defined as a penny stock (generally, according to
recent regulations adopted by the Securities and Exchange Commission (the
"Commission"), any equity security not traded on an exchange or quoted on
Nasdaq SmallCap that has a market price of less than $5.00 per share, subject
to certain exceptions), including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and
the risks associated therewith. Such requirements could severely limit the
market liquidity of the Units, the Common Stock and the Redeemable Warrants
and the ability of purchasers in this Offering to sell their Securities in
the secondary market. There can be no assurance that the Units, the Common
Stock and the Redeemable Warrants will not be delisted or treated as a penny
stock.

THE COMPANY

The Company was formed on January 12, 1994 under the laws of the State of
Delaware. On October 31, 1994, the Company acquired all of the outstanding
common stock of National, a New York corporation, formed on February 6, 1992,
which was owned by Roy Israel, the Company's Chief Executive Officer and
President, and Cynthia Sanders, the Company's Executive Vice President.
National began operations in March, 1992.

12
<PAGE>

The Company has three wholly-owned subsidiaries: National, National Video
Conferencing, Inc., a Delaware corporation ("NV"), formed in April 1995, and
Michael Marketing, Inc., a Delaware corporation ("MM"), formed on November
15, 1991. NV was formed to be a reseller of video conferencing equipment. MM
provides in-house advertising services to the Company and enables the Company
to obtain advertising at discounted rates.

The Company's executive offices are currently located at 1010 Northern
Boulevard, Suite 336, Great Neck, New York 11021 and its telephone number is
(516) 829-4343.

USE OF PROCEEDS

By the Company. The net proceeds to be received by the Company from the
sale of the Units offered hereby by the Company after deducting the
Underwriters' discount and all applicable expenses, are estimated to be
$4,005,000 ($4,735,800, if the Over-allotment Option is exercised in full).
The Company currently anticipates applying the proceeds approximately as
follows:

<TABLE>
<CAPTION>
Approximate
Approximate Percentage of
Application of Proceeds Dollar Amount Net Proceeds
------------------------------------------------- --------------- ---------------
<S> <C> <C>
Repayment of Notes and interest(1) .............. $ 445,000 11%
Opening new offices, including acquisitions(2) .. 1,650,000 41
Marketing and sales(3) .......................... 700,000 17
Capital expenditures(4) ......................... 100,000 3
Working capital and general corporate purposes(5) 1,110,000 28
--------------- ---------------
Total ...................................... $4,005,000 100%
</TABLE>

- ------
(1) The Company intends to use this amount to repay notes (the "Private
Placement Notes") with interest held by the Selling Private Placement
Stockholders and certain executive officers and founders of the Company.
From July through October 1994, the Company received gross proceeds of
$402,000 from the private placement of eighty (80) units at a price of
$5,025 per unit, each of which consisted of a $5,000 8% promissory note
originally due June 30, 1996 and 1,787 shares of Common Stock. These
proceeds were used to open new offices, repay a loan from National and
for working capital. The repayment of the Notes has been extended until
the earlier of the completion of this Offering or December 31, 1996.

(2) The Company intends to use this amount to open approximately four to six
new offices over the next two years, which may include the acquisition of
other ADR companies. This amount will be used to equip these new offices
and enable the Company to operate them for approximately one year. The
Company does not currently have any agreements, commitments or
arrangements with respect to any proposed acquisitions, and no assurance
can be given that any acquisition opportunities will be identified or
consummated in the future.

(3) The Company intends to use this amount to increase its marketing efforts
and to create an increased national presence through advertising in a
variety of media.

(4) The Company intends to use this amount to upgrade its existing computer
system.

(5) The Company intends to use $78,000 to pay on behalf of the Selling
Stockholders the underwriting discounts and non-accountable expense
related to the sale of the Selling Stockholders Units (assuming an
initial public offering price of $4.00 per Unit) and $48,000 as a
consulting fee to the Underwriter. See "Underwriting."

The above represents the Company's best estimate based upon its present
plans and certain assumptions regarding general economic conditions and the
Company's future revenues and expenditures. The Company, therefore, reserves
the right to reallocate the net proceeds of this Offering among the various
categories set forth above as it, in its sole discretion, deems necessary or
advisable.

Any additional net proceeds realized from the exercise of the
Over-allotment Option or the Redeemable Warrants underlying the Units will be
added to the Company's working capital.

The Company believes that the estimated net proceeds to be received by the
Company from this Offering, together with funds from operations, will be
sufficient to meet the Company's working capital requirements for

13
<PAGE>

a period of at least 12 months following the date of this Prospectus.
Thereafter, if the Company has insufficient funds for its needs, there can be
no assurance that additional funds can be obtained on acceptable terms, if at
all. If necessary funds are not available, the Company's business would be
materially and adversely affected.

Prior to expenditure, the net proceeds will be invested in short-term
interest bearing securities or money market funds.

By the Selling Stockholders. The proceeds from the sale of the shares of
Common Stock offered hereby by the Selling Stockholders will not be received
by the Company. The Company, however, will receive the proceeds from the
exercise, if any, of the Redeemable Warrants included in the Selling
Stockholders Units. The Selling Stockholders will pay all applicable stock
transfer taxes and transfer fees. The Company has agreed to bear the cost of
preparing the Registration Statement of which the Prospectus is a part, the
underwriting discounts and non-accountable expense allowance, and all filing
fees and legal and accounting expenses in connection with the registration of
the Selling Stockholders Units offered hereby under federal and state
securities laws.

By the Selling Private Placement Stockholders. The Private Placement
Shares are not being underwritten in this Offering and the Company will not
receive any proceeds from their sale. The Company has agreed to bear the cost
of preparing the Registration Statement of which the Prospectus is a part and
all filing fees and legal and accounting expenses in connection with the
registration of the Selling Stockholders Units offered hereby under federal
and state securities laws.

OFFER BY THE SELLING PRIVATE PLACEMENT STOCKHOLDERS
AND PLAN OF DISTRIBUTION

The registration statement, of which this Prospectus is a part, also
includes an offering of 139,447 shares of Common Stock, owned by the Selling
Private Placement Stockholders. The Private Placement Shares were sold by the
Company in July through October 1994 in connection with the sale of notes by
the Company in a private placement. The Private Placement Shares may be sold
in the open market, in privately negotiated transactions or otherwise,
directly by the Selling Private Placement Stockholders. The Company will not
receive any proceeds from the sale of such shares. Expenses of this Offering,
other than fees and expenses of counsel to the Selling Private Placement
Stockholders and selling commissions, will be paid by the Company. Sales of
such shares of Common Stock or the potential of such sales may have an
adverse effect on the market price of the Securities offered hereby. See
"Risk Factors--Shares Eligible for Future Sale."

Holders of all of the Private Placement Shares being registered in this
Offering have agreed not to, directly or indirectly, issue, offer to sell,
sell, grant an option for the sale of, assign, transfer, pledge, hypothecate
or otherwise encumber or dispose of any securities issued by the Company,
including Common Stock or securities convertible into or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
for a period of eighteen months from the effective date of the registration
statement, without the prior written consent of the Underwriter.

DIVIDEND POLICY

The Company has never paid any cash dividends, except with respect to
certain distributions relating to when National was an S-corporation, and
currently anticipates that it will continue to retain all available funds for
use in its business. See "Certain Transactions" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations." The Company's
future dividend policy will depend upon the Company's earnings, capital
requirements, financial condition and other relevant factors.

14
<PAGE>

DILUTION

The Company had a net tangible book value of $(215,651) or $(.12) per
share, as of June 30, 1996, based upon 1,874,978 shares of Common Stock
outstanding (as adjusted for 61,903 shares that vested in July 1996). Net
tangible book value per share is equal to the Company's total tangible assets
less its total liabilities, divided by the total number of shares of its
Common Stock outstanding. After giving effect to the sale of the 1,250,000
Units offered hereby (assuming no value is attributed to the Redeemable
Warrants included in the Units) and the application of the net proceeds
therefrom (after deducting estimated underwriting discounts and other
expenses of the offering), the net tangible book value of the Common Stock as
of June 30, 1996 would have been $3,730,349 or $1.19 per share. This would
represent an immediate increase in net tangible book value of $1.31 per share
to existing stockholders and an immediate dilution of $2.81 per share or 70%
to new investors. Dilution is determined by subtracting net tangible book
value per share after this Offering from the amount paid by new investors per
share of Common Stock. The following table illustrates this dilution on a per
share basis:
<TABLE>
<CAPTION>
<S> <C> <C>

Initial public offering price per share of Common Stock ............. $4.00
Net tangible book value per share prior to this Offering .......... $(.12)
Increase attributable to new investors ............................ $1.31
-----
Pro forma net tangible book value per share after this Offering ..... $1.19
-----
Dilution per share to new investors ................................. $2.81
=====
</TABLE>

If the Over-allotment Option is exercised in full, the increase in pro
forma net tangible book value per share as of June 30, 1996 attributable to
new investors would be $1.46, the pro forma net tangible book value per share
of Common Stock after the Offering would be $1.34 and the dilution per share
to new investors would be $2.66 or 67%.

The following table summarizes the number of shares of Common Stock
purchased, the percentage of total consideration paid, and the average price
per share paid by the existing stockholders and new investors in this
Offering. The calculation below is based on an initial public offering price
of $4.00 per Unit (before deducting the underwriting discounts and
commissions and other estimated expenses of the offering payable by the
Company).

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average Price
------------------------ --------------------- ---------------
Number % Number % Per Share
-------------- ------ ------------ ----- ---------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders 1,874,978 60 $ 1,875 0 $ .001
New Investors ........ 1,250,000(1) 40 5,000,000 100 4.00
-------------- ------ ------------ -----
Total ................ 3,124,978 100% $5,001,875 100%
</TABLE>

- ------
(1) Does not include the 150,000 shares of Common Stock included in the
Selling Stockholders Units.

15
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
June 30, 1996 and the capitalization on such date as adjusted to give effect
to the issuance and sale of the 1,250,000 Units offered hereby by the Company
and the anticipated application of the estimated net proceeds therefrom.

<TABLE>
<CAPTION>
June 30, 1996
-----------------------------
Actual As Adjusted(1)
----------- --------------
<S> <C> <C>
Short-term debt .......................................................... $ 400,000 $ 0
Preferred Stock, par value $.001 per share; 5,000,000 authorized, no
shares outstanding ...................................................... 0 0
Common Stock, par value $.001 per share; 15,000,000 shares authorized;
1,874,978 shares issued and outstanding actual; 3,124,978 shares
outstanding, as adjusted(2) ............................................. 1,875 3,125
Additional paid-in capital(2)(3) ......................................... 28,677 4,069,927
Accumulated deficit(3) ................................................... (101,990) (265,490)
Unearned Common Stock in retention stock plan ............................ (308) (308)
----------- --------------
Total stockholders' equity (deficit) ..................................... (71,746) 3,807,254
----------- --------------
Total capitalization ..................................................... $ (71,746) $3,807,254
=========== ==============
</TABLE>

- ------
(1) As adjusted to give effect to the issuance of 1,250,000 Units offered by
the Company and the receipt and initial application of the net proceeds
therefrom. See "Use of Proceeds."

(2) Gives effect to the issuance of 61,903 shares of Common Stock vested in
July 1996 pursuant to a contractual right of an employee.

(3) As adjusted to reflect $37,500 resulting from the contribution of 150,000
Redeemable Warrants underlying the Selling Stockholder Units, $78,000
resulting from the payment by the Company on behalf of the Selling
Stockholders of the underwriting discounts and non-accountable expense
allowance relating to the Selling Stockholders Units, and a $48,000
consulting fee payable to the Underwriter.

16
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below for the Company's
statements of operations for the years ended June 30, 1995 and 1996 and the
balance sheets as of June 30, 1995 and 1996 are derived from the Company's
consolidated financial statements audited by KPMG Peat Marwick LLP which
appear elsewhere in this Prospectus. The financial information presented
below includes the results of operations of National as if the Company and
National had been combined as of July 1, 1994. The information set forth
below should be read in conjunction with the Company's financial statements
and the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included herein.

<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
Statements of Operations Data
Revenues ..................................... $2,235,030 $3,147,886
Expenses:
Cost of services ........................... 458,661 727,613
Sales and marketing ........................ 976,230 1,472,152
General and administrative ................. 584,920 741,892
------------ ------------
Total operating expenses ................ 2,019,811 2,941,657
------------ ------------
Income from operations ....................... 215,219 206,229
Other expenses, net .......................... 19,817 67,105(1)
------------ ------------
Income before income taxes ................... 195,402 139,124
Provision for income taxes ................... 10,379 3,525
------------ ------------
Net income ................................... $ 185,023 $ 135,599
============ ============
Net income per common share .................. $ 0.11 $ 0.07
============ ============
Pro forma net income(2) ...................... 106,622 --
============ ============
Pro forma net income per common share(2) ..... $ 0.06 --
============ ============
Weighted average common stock and common stock
equivalents outstanding .................... 1,688,358 1,947,504
============ ============

</TABLE>

<TABLE>
<CAPTION>
June 30,
--------------------------------------
1995 1996
----------- -----------
<S> <C> <C>
Balance Sheets Data
Cash .................. $ 56,070 $ 31,474
Working capital deficit (377,290) (464,426)
Total assets .......... 745,688 938,993
Total liabilities ..... 820,861 1,010,739
Stockholders' deficit . $ (75,173) $ (71,746)
</TABLE>

- ------
(1) Includes offering costs of $61,127 from a public offering that was
abandoned in October 1995.

17
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company provides ADR services to insurance companies, law firms, large
self-insured corporations and municipalities. The Company's services are
marketed by an internal sales force within each office. The Company has
offices in New York, Massachusetts, Pennsylvania, South Carolina and
Tennessee, through which it has the ability to provide ADR services on a
nationwide basis with a roster of over 600 qualified hearing officers.

The Company derives its revenues from fees charged to the parties in a
proceeding. The fees are charged on an hourly basis for hearings, conferences
and deliberations by hearing officers, and set amounts for administrative
services. The Company recognizes revenue when the arbitration or mediation
occurs. Fees received prior to the arbitration or mediation are reflected as
deferred income. Fees billed for cases not yet heard and not yet collected
for the years ended June 30, 1995 and 1996 were $292,795 and $328,400,
respectively.

In October 1994, the Company issued a total of 657,112 shares of Common
Stock to Mr. Israel and Ms. Sanders in exchange for all of the outstanding
stock of National. Prior to October, 1994, National was an S-corporation and,
effective October 1994, the S-corporation status was terminated, when
National was acquired by and became a wholly-owned subsidiary of the Company.
Accordingly, a pro forma tax provision for federal and state income taxes, as
if the Company was a C-corporation, has been presented in the accompanying
consolidated statement of operations for the year ended June 30, 1995.

FUTURE TRENDS

Management believes that the ADR industry is, and will be, undergoing a
consolidation of ADR service providers so as to better serve clients
requiring national and regional ADR programs. The Company seeks to use a
portion of the proceeds of this Offering to exploit this trend. In addition,
ADR clients are beginning to seek volume discounts on the charges applied by
the Company for services rendered. The Company believes that this trend may
have a positive impact on the Company overall because the discounts are
usually applied only when an ADR client makes a commitment to refer a minimum
number of cases to the Company.

As a result of the proposed expansion through the opening of new offices,
the Company may incur net losses in the short-term future as a result of the
investment of resources over the time it takes for these new offices to
mature and become profitable, if ever. Significant start-up costs will be
incurred in connection with opening and operating these new offices,
including expenses such as leases, office equipment, furnishings, and
salaries for management, sales and clerical personnel. In these new areas,
organizations similar to and in competition with the Company may have been
doing business for some time, and therefore will have competitive advantages
over the Company. These advantages include contacts with potential consumers
of the Company's services, such as law firms and insurance companies, and
with qualified retired judges and lawyers who act as hearing officers. In
addition, the account representatives who establish the new offices are very
important to the success of such offices. While management of the Company
believes that in the future, the Company may be competitive in some or all of
the planned new markets, there is no assurance that any of the Company's new
offices will ever be profitable. For example, the Company opened up an office
in the Minneapolis, Minnesota area in August, 1994 and closed it in April,
1995 due to its disappointing performance.

18
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth the results of operations for the years
ended June 30, 1995 and 1996, together with such data as a percentage of
revenues:

<TABLE>
<CAPTION>
Year Ended Year Ended
June 30 June 30
---------------------- ----------------------
1995 % 1996 %
------------ ------ ------------ ------
<S> <C> <C> <C> <C>
Revenues .................. $2,235,030 100% $3,147,886 100%
------------ ------ ------------ ------
Expenses:
Cost of services ........ 458,661 21 727,613 23
Sales and marketing. .... 976,230 44 1,472,152 47
General and administrative 584,920 26 741,892 24
------------ ------ ------------ ------
Income from operations .... 215,219 9 206,229 6
Other expenses, net ....... 19,817 1 67,105 2
------------ ------ ------------ ------
Income before income taxes . 195,402 8 139,124 4
Provision for income taxes . 10,379 0 3,525 0
------------ ------ ------------ ------
Net income ................ $ 185,023 8% $ 135,599 4%
============ ====== ============ ======

</TABLE>

Revenues. Total revenues increased from $2,235,030 during the year ended
June 30, 1995 to $3,147,886 during the year ended June 30, 1996, an increase
of $912,856 or 41%, due to expansion into new markets, increased business
with existing clients and the overall increased consumer acceptance of ADR
services.

Cost of Services. Cost of services increased from $458,661 during the
year ended June 30, 1995 to $727,613 during the year ended June 30, 1996, an
increase of $268,952 or 59%. This increase was attributable to the Company's
increased business from expansion into new offices which resulted in
additional hearing officers' fees.

Sales and Marketing. Sales and marketing increased from $976,230 during
the year ended June 30, 1995 to $1,472,152 during the year ended June 30,
1996, an increase of $495,922 or 51%. Much of this increase was related to
the Company's expansion into new offices, which included an increase in sales
commissions and salaries of new hires.

General and Administrative. General and administrative costs increased
from $584,920 during the year ended June 30, 1995, to $741,892 during the
year ended June 30, 1996, an increase of $156,972 or 27%. This increase was
related to increased overhead costs associated with the Company's opening of
new offices.

Other Expenses, net. Other expenses, net increased from $19,817 during the
year ended June 30, 1995 to $67,105 during the year ended June 30, 1996, an
increase of $47,288 or 239%. This increase was primarily due to a write-off
of previously deferred offering costs of $61,127 associated with a public
offering that was abandoned in October 1995 and additional interest expense
of $32,000 recorded on the Private Placement Financing.

Provision for Income Taxes. The Company did not have taxable income for
the year ended June 30, 1995 and the utilization of net operating loss
carryforwards eliminated the Company's liability for federal taxes during the
year ended June 30, 1996. As of June 30, 1996, the Company had net operating
loss carryforwards for federal tax purposes of approximately $223,683.

LIQUIDITY AND CAPITAL RESOURCES

The Company has experienced net income and positive cash flow from
operations each year since January, 1993. For the years ended June 30, 1995
and 1996, the Company has had net income of $185,023 and $135,599,
respectively, and was provided with cash from operations of $208,329 and
$263,390, respectively. As of June 30, 1995 and 1996, the Company had cash
and cash equivalents of $56,070 and $31,474, respectively. The Company had
working capital deficit of ($377,290) and ($464,426) as of June 30, 1995 and
1996, respectively. The Company's credit and collection procedures have been
enhanced to improve the collections of its receivables. Establishment of a
collection team coupled with more stringent credit policies, organized
collection calls and letters, and weekly receivable analyses have all
contributed to a more efficient collections process.

19
<PAGE>

The Company has funded its operations to date primarily through the cash
provided by its operating activities and the private placement financing
described below. Operating cash flow in fiscal 1995 consisted of net income
plus increases in accounts payable and accrued liabilities, offset by
increases in accounts receivable. Operating cash flow in fiscal 1996
consisted of net income plus increases in accounts payable and accrued
liabilities, offset by increases in accounts receivable.

The Company's investing activities used cash of $61,583 and $127,949 in
the years ended June 30, 1995 and 1996, respectively, primarily to purchase
equipment and furniture of $56,830 and $124,535, respectively. The Company
currently anticipates making approximately $100,000 of capital equipment
purchases during fiscal 1997, consisting primarily of computer equipment and
software upgrades for all offices.

During the year ended June 30, 1995, $123,507 was used by financing
activities, primarily from the proceeds of notes payable (described below),
amounting to $400,000, offset by distributions made to certain stockholders
(Mr. Israel and Ms. Sanders) of $459,744 to partially fund their tax
liabilities. During the year ended June 30, 1996, $160,037 was used in
financing activities due to distributions made to Mr. Israel and Ms. Sanders
and the costs associated with the Offering. As of June 30, 1996,
distributions still owed to these stockholders amount to $8,942. Management
has paid these distributions as of August 31, 1996.

In June 1994, the Company, in a private placement, issued promissory notes
in the aggregate amount of $400,000 in connection with a private placement
financing ("Private Placement Financing"). The notes bear interest at the
rate of 8% per annum, and were originally due June 30, 1996. These notes have
been extended until the earlier of December 31, 1996 or the closing of this
offering. As part of the Private Placement Financing, the Company also issued
a total of 143,023 shares of its restricted Common Stock for an aggregate
amount of $2,000. The repayment of these notes is intended to be provided by
a portion of the net proceeds of this Offering. In the event that the
Offering is not completed prior to December 31, 1996, the Company will seek a
further extension of the payment terms of the notes, attempt to refinance or
repay the notes from operating cash flow and funds made available by
management and its affiliates. See "Use of Proceeds."

In March 1996, the Company entered into an agreement providing for a line
of credit with Citibank, N.A., expiring March 13, 1997, in the amount of
$25,000. The line of credit bears interest at the rate of 16%. No amounts are
outstanding under this line of credit. The Company does not anticipate
seeking any additional loan financing at this time.

The Company believes that the net proceeds of this offering, together with
existing cash balances and cash generated from operations, will be sufficient
to meet the Company's liquidity needs for at least the 12 months following
the date of this Prospectus.

IMPACT OF NEW ACCOUNTING STANDARD

In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No.
123"). SFAS No. 123 established a fair value based method of accounting for
stock-based compensation arrangements with employees, rather then the
intrinsic value based method that is contained in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25").
SFAS No. 123 does not require an entity to adopt the new fair value based
method for purposes of preparing its basic financial statements. While the
SFAS No. 123 fair value based method is considered by the FASB to be
preferable to the APB No. 25 method, entities are allowed to continue to use
the APB No. 25 method for preparing their basic financial statements.
Entities not adopting the fair value based method under SFAS No. 123 are
required to present pro forma net income and earnings per share information,
in the notes to the financial statements, as if the fair value based method
had been adopted.

The accounting requirements of SFAS No. 123 are effective for transactions
entered into during fiscal years that begin after December 15, 1995, but may
also be adopted upon the issuance of SFAS No. 123. The Company currently does
not intend to adopt the provisions of this statement early.

20
<PAGE>

BUSINESS

GENERAL

The Company provides ADR services principally to insurance companies, law
firms, large self-insured corporations and municipalities. An ADR proceeding
is designed to replace the public court system as a forum for resolving civil
disputes. The Company offers its clients personalized attention and access to
qualified hearing officers (generally retired judges) to either mediate or
arbitrate their disputes. The cases currently handled by the Company are
primarily disputes involving claims for injury to persons or property
allegedly arising out of acts of negligence and are usually covered primarily
by insurance. The Company believes it is one of the leading providers of ADR
services in New York State based upon the number of cases processed since
1993. The Company has offices currently located in New York, Massachusetts,
Pennsylvania, South Carolina and Tennessee, through which it has the ability
to provide ADR services on a nationwide basis with a roster of over 600
qualified hearing officers.

The Company's objective is to become one of the leading providers of ADR
services on a national basis. The Company intends to achieve this goal
through the opening of new offices in states where it does not presently have
an office, which will enable the Company to serve more fully its clients and
attract new clients. This proposed expansion may include the acquisition of
existing ADR companies. Presently, the Company does not have any agreements
to acquire any such companies. The Company intends to open approximately four
to six new offices in the United States over the next two years. It is
currently anticipated that the Company will open new offices in: Illinois,
Arizona, Washington D.C., Wisconsin, Florida and Connecticut. This should
enable the Company to more fully serve its current clients and attract new
clients.

21
<PAGE>

SERVICES OFFERED

Arbitration. The Company's arbitration procedure follows a format which is
essentially similar to a non-jury trial in the public court system. This
procedure is designed to grant the parties a forum in which to present their
cases, while at the same time sparing the litigants the time delays and some
of the cumbersome procedures commonly associated with public court trials.
The Company's hearings are generally governed by its rules of procedure. The
parties, however, may depart from these rules and proceed in the fashion they
deem desirable for the resolution of the case. The parties select a panel
member from the Company's list of hearing officers. The hearings are
non-public, thereby providing a level of confidentiality not readily
available in the public court system. Subject to the parties' agreement, the
proceedings may include discovery, examination of non-party witnesses, the
filing of post-hearing briefs and other matters that may arise in the conduct
of non-jury trials.

The arbitrations are usually one of the following: (i) a regular
arbitration, in which the hearing officer has authority to issue a ruling
and/or award a remedy without limitations; (ii) a "high/low" arbitration,
where the parties may choose to set the parameters of the award by
pre-selecting the high and low dollar limits that can be awarded by the
hearing officer; and (iii) the so-called "baseball" arbitration, which
typically involves the submission by each party of their last best figure and
the reason why it should be accepted; the hearing officer's binding
recommendation is restricted to either one figure or the other. These types
of arbitration are not exclusive, and the hearing officers may fashion
remedies in accordance with whatever parameters are agreed to by the parties.

Generally arbitration decisions are binding in nature and, unless
otherwise stipulated by the parties, are appealable in only limited
circumstances in the public court system. The Company does not currently
offer any type of appeal procedure. The Company's arbitration decisions are
generally enforceable in the public court system by following prescribed
filing procedures in the applicable local jurisdiction.

Mediation (Settlement Conferencing). The mediation method used by the
Company is settlement conferencing, in essence a non-binding process. The
principal advantage of settlement conferencing is that it provides an
opportunity for parties to reach an early, amicable resolution without undue
expense and time-consuming litigation. The voluntary process of settlement
conference mediation can be an effective tool for a wide variety of disputes,
including tort claims and commercial conflicts.

Settlement conferences are attended by each party to the dispute and/or a
representative of each party and a panel member selected by the parties from
a list available in the applicable region. Each party may choose to submit a
settlement conference memorandum setting forth a brief summary of facts,
indicating, for example, why each party has or does not have liability and,
if applicable, a statement of the party's damage. At the settlement
conference, each party is given an opportunity to describe the facts of the
case and explain its position. Thereafter, the hearing officer meets
privately with each side on an alternating basis to evaluate their respective
cases, and receives proposed concessions that each party might make, and
potential settlement figures that each party may offer, with a view toward
guiding the parties to the settlement of their dispute. Discussion concerning
settlement figures and possible concessions and potential settlement figures
are typically not discussed between a party and the hearing officer without
the other party's express consent to disclosing its position. In many
instances, the settlement conference procedure results in the resolution of
all issues.

Other ADR Services. In addition to mediations and arbitrations, the
Company offers, among other services, advisory opinions and specialized
dispute resolution programs depending on the parties' particular needs. The
Company also offers Case Resolution Days which are events usually scheduled
at an insurance company client's office in which the Company arranges for
parties to hold high volume direct settlement meetings without the
participation of a hearing officer. In the event that the individual meetings
do not resolve the dispute, the Company provides a hearing officer to mediate
the dispute if the parties wish to pursue settlement.

On-Line Case Management Software Service. It is currently expected that in
1997 the Company will be able to offer its clients the ability to be
"on-line" with the Company to submit cases electronically and to review the
status of their cases from their offices quickly and efficiently. This
service will also allow them to integrate their arbitration calendar into
their offices' case-management system. As of September 1, 1996, the Company
maintains an (i) e-mail address, (ii) ISDN (integrated services digital
network) communication line, and (iii) 2 analog communication lines. By
providing customized software to clients, beginning in mid-1997 clients will
be

22
<PAGE>

able to prepare case submission files and send them, through a modem, either
individually or in batches to the Company's system. The submissions will be
entered on a daily basis by the Company. Clients will also be able to utilize
an in-house "Bulletin Board" type system to access updates in software,
rosters and schedules of hearing officers, status of hearings and promotional
materials. Beginning in mid-1997, clients will be able to use the Company's
e-mail address to submit cases. The Company will automatically check its
e-mail site to download submitted cases. In addition, the Company is
designing an Internet Website which will enable clients through the Internet
to review rosters and schedules of hearing officers and promotional material,
and to submit cases directly. It is expected that this Internet service will
be available in late 1997.

Video Conferencing. The Company has the ability to offer video
conferencing capabilities to its clients which allow them to participate and
observe hearings without leaving their offices and thereby reducing certain
costs to the client associated with the ADR process. This capability allows
the Company to provide services to a wider range of clients on a geographical
basis. In addition, the video conferencing equipment, which can currently be
purchased or leased directly from the Company, has applications beyond the
ADR area for clients.

MARKETING AND SALES

As of June 30, 1996, the Company employed 18 account representatives to
market its ADR services. Account representatives solicit prospective clients
through telemarketing efforts and in-person meetings. They also provide
presentations, educational seminars relating to ADR services and periodic
monitoring of a client's ADR activity. Account representatives are typically
compensated based upon a draw against commissions earned which are based on
total collected revenue from a representative's clients.

In the New York office, account executives are directly managed by the
supervisors of the various sales teams. The supervisors report to the
Executive Vice President. In the regional offices, account executives are
supervised directly by the regional manager for the office who reports to the
Director of Regional Officers. The Director of Regional Offices reports to
the Executive Vice President. Mr. Israel is responsible for the overall
performance of the sales staff. Generally, account executives in the New York
office are interviewed by the Executive Vice President and the President/CEO.
With regard to the hiring of account executives in other offices, they are
usually interviewed by each office's regional manager, then the Director of
Regional Offices meets with them, and finally, either the Executive Vice
President or President/CEO interviews the candidate.

Account executives are trained by a supervisor, the Director of Regional
Offices or the office's regional manager over approximately a two week
period. This training includes the development of marketing skills and the
introduction to customers of the Company. After this initial period, the new
account executive's performance is closely monitored.

The majority of clients of the Company are insurance carriers and law
firms. The Company, when appropriate, seeks membership contracts with its
clients. For an annual fee, an exclusivity arrangement or a commitment to
refer a minimum volume of cases, members will receive a discount on each case
referred to the Company. As of September 1, 1996, the Company had 39 written
membership contracts. Further, the Company is devoting its efforts to
obtaining volume commitments from existing and new clients.

The Company has also been engaged in marketing efforts to increase
prospective ADR clients' awareness, acceptance and use of the Company's
services. The Company advertises in regional and national publications of
interest to prospective clients, participates in seminars and makes
presentations before bar associations and insurance and business groups.

EXPANSION PLANS

New Offices. The Company intends to continue to expand its client base and
increase case loads in its current markets and to expand into new markets.
Over the next two years, management of the Company anticipates that its
expansion will include the opening of approximately four to six new offices.
These new offices will be in states where the Company does not presently have
an office. This expansion may consist of new offices in the following
locations: Illinois, Arizona, Washington D.C., Wisconsin, Florida and
Connecticut. The expansion may also include the acquisition of other ADR
companies. Currently, the Company has not entered into any agreements to
acquire such companies. There can be no assurance that the Company's new
offices, if any, will be successful.

23
<PAGE>

Expansion Beyond Insurance-Related Disputes. While the Company currently
provides ADR services beyond insurance-related disputes, it intends to
increase its marketing efforts to capture a larger share of the market in
such other areas. These areas include, but are not limited to, complex
commercial disputes, construction, employment and worker's compensation
cases. There can be no assurance that the Company will be successful in these
marketing efforts or if successful, that such new areas will be profitable.

COMPETITION

The ADR business is highly competitive, both on a national and regional
level. Management believes that barriers to entry in the ADR business are
relatively low, and new competitors can begin doing business relatively
quickly. The basis of this belief is that the provision of ADR services only
requires the consent of all parties to a dispute to submit their dispute to
be resolved through a proposed ADR provider. There are two types of
competitors, not-for-profit and for-profit entities. The Company believes the
largest not-for profit competitor is AAA which has significant market share
in complex commercial cases. The insurance industry has also continued its
support for Arbitration Forums, a not-for-profit organization created to
service primarily the insurance subrogation market. The Company believes that
JAMS is the largest for-profit ADR provider in the country. Several public
court systems, including the federal and certain state courts in New York,
the Company's major market, have recently instituted court coordinated ADR
programs. To the extent that the public courts reduce case backlogs and
provide effective dispute resolution mechanisms, the Company's business
opportunities in such markets may be significantly reduced. The Company
believes that the domestic ADR industry is, other than a few national
entities, generally fragmented into small ADR service providers. The Company
also believes that the trend in the ADR industry is towards consolidation of
providers who are capable of offering quality national and regional ADR
programs. The Company's planned expansion intends to exploit this trend. In
addition, the Company intends to increase its marketing of its ADR services
to litigants in other types of disputes, including complex commercial issues,
construction, employment and worker's compensation cases.

In New York State, the Company's competitors include, among others,
Settlement Systems, Inc., Expedite NYC, JAMS, Resolute, Inc. and Island
Arbitration and Mediation.

Increased competition could decrease the fees the Company is able to
charge for its services, and limit the Company's ability to obtain
experienced hearing officers, and thus could have a materially adverse effect
on the Company's ability to be profitable in the future. In addition, the
Company competes with other ADR providers to retain the services of qualified
hearing officers. Certain competitors may have greater financial, and other,
capabilities than the Company. As compared to the majority of its
competitors, the Company believes that it competes based primarily upon
reputation, price, and the ability to manage scheduling of hearings
effectively. Accordingly, there is no assurance that the Company can
successfully compete in the present or future marketplace for ADR services.

GOVERNMENT REGULATION

ADR services that are offered by private companies, such as the Company,
are not subject to any form of local, state or federal regulation. ADR
services that are offered by the public courts are subject to the local rules
set forth by each jurisdiction and the dictates of the individual judge who
controls the dispute.

EMPLOYEES/HEARING OFFICERS

As of September 1, 1996, the Company employed 33 persons including 1
part-time employee; of these, 4 were in executive positions, 18 were engaged
in sales and marketing activities, and 11 were engaged in administrative and
clerical activities. Management of the Company believes that its relationship
with its employees is satisfactory.

As of June 30, 1996, the Company maintained relationships with over 600
hearing officers and has exclusive agreements with 25 of them. These 25
hearing officers accounted for approximately 51% of the number of cases
handled by the Company for the year ended June 30, 1996. The balance of
non-exclusive hearing officers are independent contractors who make their
services available to the Company on a case-by-case basis. With the exception
of the exclusive hearing officers, the remainder of the Company's roster of
hearing officers can pro-

24
<PAGE>

vide their services to competing ADR providers. Compensation to the hearing
officers is based on the number of proceedings conducted and the length of
time of such proceedings. All active hearing officers are requested to
execute confidentiality agreements regarding the Company and its clients.

LEGAL PROCEEDINGS

There is no material litigation currently pending against the Company.

PROPERTIES

The Company leases 4,800 square feet of space at 1010 Northern Boulevard,
Great Neck, New York which is used as its corporate headquarters and to
provide ADR services in the metropolitan New York area. The lease expires
October, 2000. The Company believes this space is adequate for its reasonably
anticipated future needs.

The Company also leases: (i) 2,168 square feet of space, which lease
expires February, 2000, for its Philadelphia, Pennsylvania office; (ii) 174
square feet of space, which lease expires December, 1996, for its Easton,
Massachusetts office; (iii) 1,630 square feet of space, which lease expires
January, 1998, for its Greenwood, South Carolina office; and (iv) 601 square
feet of space, which lease expires March, 1997, for its Hendersonville,
Tennessee office. The Company believes this space is adequate for its
reasonably anticipated future needs.

The annual aggregate base rental payment for all of the Company's offices
was $136,515 for the year ended June 30, 1996.

The Company currently maintains 5 leased facilities all of which are
located in office buildings. Previously, the Company had opened an office in
the Minneapolis, Minnesota area in August 1994 which was closed in April 1995
due to disappointing performance. As of September 1, 1996, the Company has
not opened any other offices and maintains the following offices:

<TABLE>
<CAPTION>
# of
Full-Time Expiration Annual
Address Employees Revenue(1) Date of Lease Rent(1)
---------------------- ----------- ------------ --------------- ---------
<S> <C> <C> <C> <C>
1010 Northern Blvd. 22 $2,402,533 10/31/00 $ 91,596
Ste. 335
Great Neck, NY 11021
One Penn Center 2 $ 288,935 2/29/00 $ 38,119
at Suburban Station
1617 JFK Boulevard
Philadelphia, PA 19103
50 Oliver Street 2 $ 127,080 1/15/97 $ 1,375
Ste. 115
North Eastern, MA
02356
West Main Bldg. 3 $ 315,588 3/31/97 $ 1,350
Ste. 32
315 West Main Street
Hendersonville, TN
37075
332 Main Street 3 $ 13,750 1/31/98 $ 4,075
Ste. 603
Greenwood, SC 29646

----------- ------------ ---------
Totals 32 $3,147,886 $136,515
============ =========
</TABLE>

- ------
(1) For the year ended June 30, 1996.

25
<PAGE>

MANAGEMENT

DIRECTORS, DIRECTOR NOMINEE, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

The directors, director nominee, executive officers and significant
employees of the Company, are as follows:

<TABLE>
<CAPTION>
Name and Address Age Position(s)
---------------------- ----- ------------------------------------------------------
<S> <C> <C>
Roy Israel ........... 36 Chief Executive Officer, President and Chairman of the Board
of Directors
Cynthia Sanders ...... 36 Executive Vice President and Director
Charles A. Merola .... 40 Vice President, Chief Financial Officer, Treasurer and
Director
Daniel Jansen ........ 33 Director of Regional Offices and Director
Stephen H. Acunto .... 47 Director
Michael I. Thaler .... 44 Director
Anthony J. Mercorella 69 Director Nominee

</TABLE>

ROY ISRAEL has been the Chairman of the Board of Directors, Chief
Executive Officer and President of the Company since February 1994.
Immediately prior to holding such positions, Mr. Israel was President and a
Director and founder of National since February 1992. From March 1989 to
October 1991, he was employed at the Renaissance Communications television
station WTXX-TV in Hartford, Connecticut in the capacity of General Sales
Manager, overseeing the local and national sales efforts, research, traffic
and marketing departments.

CYNTHIA SANDERS has been the Executive Vice President and a Director of
the Company since February 1994. Immediately prior to holding such positions,
Ms. Sanders was the Executive Vice President of National since May 1993. From
August 1992 until May 1993, she was an account executive with Katz
Communications and from January 1989 until August 1992, she was an account
executive with Telerep, Inc., an entertainment company.

CHARLES A. MEROLA has been Vice President, Chief Financial Officer and
Treasurer of the Company since February 1996 and a Director since July 1996.
Immediately prior to holding such positions, Mr. Merola was the Chief
Financial Officer of MBS/Multimode, Inc., a computer services company, since
March 1993. From April 1988 to February 1993, he was an assistant controller
with Weight Watchers International, Inc. Mr. Merola is a certified public
accountant.

DANIEL JANSEN has been Director of Regional Offices and a Director of the
Company since February 1994. Immediately prior to holding such positions he
was Senior Account Executive with National since September 1992. Prior to
joining National, Mr. Jansen was an account executive with Summit Office
Supply from October 1991 to August 1992, and an Account Executive with TNT
Skypak, Inc., a consulting firm, from September 1989 to October 1991.

STEPHEN H. ACUNTO has been a Director of the Company since May 1996. Since
1978, Mr. Acunto has been the president of Chase Communications, a company
involved in the insurance publishing and communications fields. Mr. Acunto
also serves as an officer of the Insurance Federation of New York; the
International Insurance Law Society, U.S. Chapter; the AIDA Reinsurance and
Insurance Arbitration Society; and the American Risk and Insurance Society.

MICHAEL I. THALER has been a Director of the Company since April 1994.
Since October 1993, he has been a partner in Bond Beebe, a professional
corporation of certified public accountants. From September 1988 through
October 1993, Mr. Thaler was a tax partner at Buchbinder Tunick & Co., a
certified public accounting firm.

ANTHONY J. MERCORELLA, Esq. will be appointed to the Board of Directors
effective upon the closing of this Offering. Judge Mercorella is a senior
partner of the law firm of Wilson, Elser, Moskowitz, Edelman & Dicker and has
been a partner with such firm since 1984, which he joined upon his retirement
as a Justice of the Supreme Court of the State of New York. Judge Mercorella
also serves as a hearing officer for the Company.

26
<PAGE>

Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed to serve until the meeting of the Board of Directors
following the next annual meeting of stockholders and until their successors
have been elected and have qualified. The Company has agreed to use its best
efforts to elect, if requested, a designee of the Underwriter to the Board of
Directors for a period of five years.

DIRECTOR COMPENSATION

Non-employee directors will receive a fee of $250 for each meeting of the
Board attended and $150 for each meeting of any committee of the Board
attended, and reimbursement of their actual expenses. In addition, pursuant
to the Plan, each non-employee director shall receive an annual grant of
options to purchase 1,000 shares of Common Stock on the last trading day in
June at the closing bid price of the Common Stock as reported on Nasdaq
SmallCap for such date in June. This grant of options will begin on June 30,
1997.

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the total
compensation paid or accrued by the Company for services rendered during the
six months ended June 30, 1994, the year ended June 30, 1995 and year ended
June 30, 1996 to Mr. Israel, the Company's CEO, President and Chairman of the
Board. No other executive officer received a salary and bonus in excess of
$100,000. Mr. Israel currently has no stock options or other equity based
compensation. See "Certain Transactions."

<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------------
Name and Principal Position Year Salary Bonus
--------------------------- ------ ------------- --------
<S> <C> <C> <C>
Roy Israel, CEO/President 1996 $113,250(1) $5,463
1995 $110,400(1) $9,420
1994 $ 23,077 -0-
</TABLE>

- ------
(1) Includes car allowance payments.

EMPLOYMENT AGREEMENTS

Mr. Israel has an employment agreement with the Company that expires June
30, 1997. Pursuant to the agreement, he currently receives an annual base
salary of $93,713, an annual five percent (5%) cost of living increase and a
bonus of four percent (4%) of the Company's quarterly pretax profit. In
addition, the agreement provides for a life insurance policy of $2 million,
with $1 million in favor of the Company and $1 million in favor of the estate
of Mr. Israel. If Mr. Israel is terminated without cause, he is entitled to
receive a lump sum payment consisting of his base salary for a six month
period and two bonus payments equal to the average bonus payment over the
four preceding quarters. If the Company breaches the agreement, Mr. Israel is
entitled to resign and to receive as a lump sum all monies payable under the
remaining term of the Agreement. The agreement also contains a one-year
non-compete if the agreement is terminated for any reason or expires.

Ms. Sanders has an employment agreement with the Company that expires June
15, 1998. The agreement provides for an annual base salary of $90,000 and an
annual five percent (5%) cost of living increase. The agreement also contains
a one year non-compete if the agreement is terminated for any reason or
expires.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company, pursuant to its By-laws, has agreed to indemnify its officers
and directors to the fullest extent allowed by law. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the

27
<PAGE>

Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.

STOCK OPTION PLAN

A total of 750,000 shares of Common Stock are reserved for issuance under
the Stock Option Plan, of which options to purchase 25,000 shares have been
conditionally granted to one employee and two hearing officers. The plan
provides for the award of options, which may either be incentive stock
options ("ISOs") within the meaning of Section 422A of the Internal Revenue
Code of 1986, as amended (the "Code") or non-qualified options ("NQOs") which
are not subject to special tax treatment under the Code. The Plan is
administered by the Board or a committee appointed by the Board (the
"Administrator"). Officers, directors, and employees of, and consultants to,
the Company or any parent or subsidiary corporation selected by the
Administrator are eligible to receive options under the plan. Subject to
certain restrictions, the Administrator is authorized to designate the number
of shares to be covered by each award, the terms of the award, the dates on
which and the rates at which options or other awards may be exercised, the
method of payment and other terms.

The exercise price for ISOs cannot be less than the fair market value of
the stock subject to the option on the grant date (110% of such fair market
value in the case of ISOs granted to a stockholder who owns more than 10% of
the Company's Common Stock). The exercise price of a NQO shall be fixed by
the Administrator at whatever price the Administrator may determine in good
faith. Unless the Administrator determines otherwise, options generally have
a 10-year term (or five years in the case of ISOs granted to a participant
owning more than 10% of the total voting power of the Company's capital
stock). Unless the Administrator provides otherwise, options terminate upon
the termination of a participant's employment, except that the participant
may exercise an option to the extent it was exercisable on the date of
termination for a period of time after termination.

Generally, awards must be exercised by cash payment to the Company of the
exercise price. However, the Administrator may allow a participant to pay all
or a portion of the exercise price by means of a promissory note, stock or
other lawful consideration. The Plan also allows the Administrator to provide
for withholding and employment taxes payable by a participant to the Company
upon exercise of the award. Additionally, the Company may make cash grants or
loans to participants relating to the participant's withholding and
employment tax obligations and the income tax liability incurred by a
participant upon exercise of an award.

In the event of any change in the outstanding shares of Common Stock by
reason of any reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash
dividend, property dividend or similar change in the corporate structure, the
aggregate number of shares of Common Stock underlying any outstanding options
may be equitably adjusted by the Administrator in its sole discretion.

The Administrator may, at any time, modify, amend or terminate the plan as
is necessary to maintain compliance with applicable statutes, rules or
regulations; provided, however, that the Administrator may condition the
effectiveness of any such amendment on the receipt of stockholder approval as
may be required by applicable statute, rule or regulation. In addition, this
Plan may be terminated by the Board of Directors as it shall determine in its
sole discretion, in the absence of stockholder approval; provided, however,
that any such termination will not adversely alter or impair any option
awarded under the Plan prior to such termination without the consent of the
holder thereof.

The Company has agreed that for a 24 month period commencing on the date
of this Prospectus that it will not, without the consent of the Underwriter,
adopt or propose to adopt any plan or arrangement permitting the grant, issue
or sale of any shares of its securities or issue, sell or offer for sale any
of its securities, or grant any options for its securities, except for (i) an
aggregate of 250,000 options, at an exercise price equal to or greater than
the fair market value on the date of grant, which may be granted to
management personnel on or after June 30, 1997, if the Company has at least
$2,000,000 in the pre-tax earnings for the year ended June 30, 1997, (ii) an
aggregate of 250,000 options, at an exercise price equal to or greater than
the fair market value on the date of grant, which may be granted to
management personnel on or after June 30, 1998, if the Company has at least

28
<PAGE>

$5,600,000 in pre-tax earnings for the year ended June 30, 1998 as reported
to the public in the Company's Form 10-K for the year ended June 30, 1998,
(iii) options to purchase up to an aggregate of 500,000 shares of Common
Stock which shall (x) have an exercise price per share no less than the
greater of (a) the initial public offering price of the Units set forth
herein and (b) the fair market value of the Common Stock on the date of grant
and (y) not be granted to any existing officers, directors, employees or
consultants of the Company (other than certain non-affiliated individuals) or
to any direct or indirect beneficial holder on the date hereof of more than
5% of the issued and outstanding shares of Common Stock. No option or other
right to acquire Common Stock granted, issued or sold during this period
shall permit (a) the payment with any form of consideration other than cash,
(b) payment of less than the full purchase or exercise price for such shares
of Common Stock or other securities of the Company on or before the date of
issuance, or (c) the existence of stock appreciation rights, phantom options
or similar arrangements. In addition, the exercise price of all options
granted under the Plan will be at least 85% of the fair market value of the
Common Stock on the date of grant.

29
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth, as of September 30, 1996, the number and
percentage (before and after giving effect to the sale of the Units offered
hereby) of the shares of Common Stock beneficially owned by each director,
direct nominee and named executive officer of the Company, by each entity
which owns more than 5% of the outstanding Common Stock and by all officers
and directors, as a group. No Preferred Stock of the Company is issued or
outstanding.

<TABLE>
<CAPTION>
Number of Shares Percentage Owned Percentage to be
Beneficially Before Owned After
Name(1) Owned(2) Offering(3) Offering(4)
--------------------------- ------------------- ---------------- ---------------------
<S> <C> <C> <C>
Roy Israel(5) 1,333,639 71% 38%
Cynthia Sanders(6) 126,555 7% 4%
Charles A. Merola 1,192 * *
Daniel Jansen 0 0% 0%
Stephen H. Acunto 0 0% 0%
Michael J. Thaler 0 0% 0%
Anthony J. Mercorella 0 0% 0%
Dr. Eugene Stricker(7) 134,104 7% 4%
42 Barrett Road
Lawrence, NY 11559
Mark Schindler(8) 134,104 7% 4%
200 East 69th Street
Apt. 4M
New York, NY 10021
All officers, directors and 1,461,386 78% 42%
director nominee as a group
(7 persons)(5,6)
</TABLE>

- ------
* Less than one percent (1%).

(1) Unless otherwise indicated, all addresses are c/o NAM Corporation, 1010
Northern Boulevard, Great Neck, New York 11021.

(2) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act and unless otherwise indicated, represents shares
for which the beneficial owner has sole voting and investment power. The
percentage of class is calculated in accordance with Rule 13d-3.

(3) Based upon a total number of shares of Common Stock outstanding of
1,874,978.

(4) Based upon a total number of shares of Common Stock outstanding of
3,124,978.

(5) Includes 61,903 shares owned by his wife, Carla Israel, the Corporate
Secretary of the Company, and 114,436 shares owned by the Roy Israel
Irrevocable Trust. Mr. Israel disclaims beneficial ownership as to such
shares. As part of this Offering, Mr. Israel will sell 136,500 shares of
Common Stock resulting in beneficial ownership of 1,197,139 shares of
Common Stock after the Offering.

(6) As part of this Offering, Ms. Sanders will sell 13,500 shares of Common
Stock resulting in beneficial ownership of 113,055 shares of Common Stock
after the Offering.

(7) Includes 5,364 shares owned by Osprey Partners of which Dr. Stricker is a
general partner. Osprey Partners is a partnership formed solely to invest
in the Company.

(8) Includes 32,185 shares owned by the Mark Schindler Irrevocable Trust and
32,185 shares owned by Ms. Barbara Serota, his fiance. Mr. Schindler
disclaims beneficial ownership of such shares. Includes 5,364 shares
owned by Osprey Partners of which Mr. Schindler is a general partner.
Osprey Partners is a partnership formed solely to invest in the Company.

30
<PAGE>

SELLING PRIVATE PLACEMENT STOCKHOLDERS

The following table sets forth the number of Private Placement Shares and
percentage (before and after giving effect to the sale of the Units offered
hereby) of the shares of Common Stock owned of record by the Selling Private
Placement Stockholders.

Number of
Private Placement Percentage
Shares Owned Before Percentage to be
Name of Selling Presently Owned the Offering Owned After
Private Placement Stockholders and Being Registered (1) Offering (2)
------------------------------------- -------------------- -------------- ----------------
<S> <C> <C> <C>
Ackerman, Milton 3,576 * *
Adler, Frederic Lee 1,787 * *
Blech, Benjamin & Elaine 3,576 * *
Bolder, Solomon J. 1,787 * *
Brown, Arthur 10,728 * *
Cantor, Michael 14,304 1% *
Deutscher, Madeline 1,787 * *
Epstein, Joan & Howard 3,576 * *
Feinstein, Robert P. & Diane 5,364 * *
Felton, Susan 1,787 * *
First, Lee B. 3,576 * *
Gambino, Anthony & Castiglia, & Luisa 5,364 * *
Gelb, Harry 1,787 * *
Gentile, Jr. John A. & Geraldine 5,364 * *
Goodman, Mark A. & Leona M. 5,364 * *
Gordon, Gertrude J. 1,787 * *
Gross, Robert E. 1,787 * *
Harnick, Paul E. 5,364 * *
Hirschman, Sherry 3,576 * *
Israel, Milton 3,576 * *
Kaplan, Barry H. & Rosalind P. 1,787 * *
Katz, Stanley 1,787 * *
Kurk, Mitchell 1,787 * *
Loewenstein, David A. & Robin 1,787 * *
Lynch, James T. 1,787 * *
Maidenbaum, Shalom 1,787 * *
Novick, Shelly 1,787 * *
Oppenheim, Darrin 3,576 * *
Osprey Partners 5,364 * *
Quackenbush, John 5,364 * *
Romankin, L.T. 3,576 * *
Schneider, Aaron 3,576 * *
Schneider, Earl 1,787 * *
Schreiber, David 3,576 * *
Schwartzberg, Sheila M. 1,787 * *
Tartaglia, John 3,576 * *
Weinstein, Jeremy S. & Elaine 3,576 * *
Zinberg, Elaine 3,576 * *
Zisook, Seymour H. 1,787 * *
TOTAL 139,447 12% 4%
</TABLE>

- ------
* Less than one percent (1%). Assuming no purchase by any Selling Private
Placement Stockholder of Units, Common Stock or Redeemable Warrants offered
in the Offering.

(1) Based upon a total number of shares of Common Stock outstanding of
1,184,978.

(2) Based upon a total number of shares of Common Stock outstanding of
3,124,978.

31
<PAGE>

There are no material relationships between any of the Selling Private
Placement Stockholders and the Company or any of its predecessors or
affiliates, except that (i) Milton Israel is the father of Roy Israel, and
(ii) Mr. Schindler and Dr. Stricker are partners in Osprey Partners. The
Securities offered by the Selling Private Placement Stockholders are not
being underwritten by the Underwriters. The Selling Private Placement
Stockholders may sell the Private Placement Shares at any time on or after
the date hereof, provided prior consent is given by the Underwriter during 18
months commencing on the date of this Prospectus. In addition, the Selling
Private Placement Stockholders have agreed with the Company that, during the
period ending on the second anniversary of the date of this Prospectus, the
Selling Private Placement Stockholders will not sell such securities other
than through the Underwriter, and that the Selling Private Placement
Stockholders shall compensate the Underwriter in accordance with its
customary compensation practices. Subject to these restrictions, the Company
anticipates that sales of the Private Placement Shares may be effected from
time to time in transactions (which may include block transactions) in the
over-the-counter market, in negotiated transactions, or a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, or at negotiated prices. The Selling Private
Placement Stockholders may effect such transactions by selling the Private
Placement Shares directly to purchasers or through broker-dealers that may
act as agents or principals. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling Private
Placement Stockholders for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).

The Selling Private Placement Stockholders and any broker-dealers that act
in connection with the sale of the Private Placement Shares as principals may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commission received by them and any profit on the
resale of such securities as principals might be deemed to be underwriting
discounts and commissions under the Securities Act. The Selling Private
Placement Stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of such
securities against certain liabilities, including liabilities arising under
the Securities Act. The Company will not receive any proceeds from the sales
of the Private Placement Shares by the Selling Private Placement
Stockholders. Sales of the Private Placement Shares by the Selling Private
Placement Stockholders, or even the potential of such sales, would likely
have an adverse effect on the market price of the Units, the Redeemable
Warrants and Common Stock.

At the time a particular offer of Private Placement Shares is made, except
as herein contemplated, by or on behalf of a Selling Private Placement
Stockholder, to the extent required, a Prospectus will be distributed which
will set forth the number of Private Placement Shares being offered and the
terms of the offering, including the name or names of any underwriters,
dealers or agents, if any, the purchase price paid by any underwriter for
shares purchased from the Selling Private Placement Stockholder and any
discounts, commissions or concessions allowed or reallowed or paid to
dealers.

Under the Exchange Act, and the regulations thereunder, any person engaged
in a distribution of the securities of the Company offered by this Prospectus
may not simultaneously engage in market-making activities with respect to
such securities of the Company during the applicable "cooling-off" period
(two or nine days) prior to the commencement of such distribution. In
addition, and without limiting the foregoing, the Selling Private Placement
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules
10b-6 and 10b-7, in connection with transactions in such securities, which
provisions may limit the timing of purchases and sales of such securities by
the Selling Private Placement Stockholders.

CERTAIN TRANSACTIONS

Since the Company's inception there have not been any material
transactions between it and any of its officers and directors, except as set
forth herein and no additional transactions are currently contemplated.

On October 31, 1994, the Company acquired all of the outstanding stock of
National from Mr. Israel and Ms. Sanders in exchange for a total of 657,112
shares of Common Stock. In addition, as of August 31, 1996, $690,763 and
$51,388 were distributed by the Company to Mr. Israel and Ms. Sanders,
respectively, as retained earnings of National as an S-corporation. There
will be no further distributions.

32
<PAGE>

Pursuant to their contracts, four employees and one hearing officer were
conditionally granted a total of 148,060 shares of Common Stock, of which
Carla Israel received 61,903 shares which vested in July 1996, Daniel Jansen
received 17,165 shares which do not vest until July 1999 and an employee
received 7,152 shares which vested in June 1996. The remaining shares vest
only if the person is still providing services to the Company at a date
certain which differs for each person ranging from 1997 to 1999.

On July 15, 1996, the Company entered into a financial public relations
consulting agreement with Dr. Eugene Stricker and Mark Schindler, each of
whom are founders of the Company, current stockholders and former directors
of the Company. The agreement has a four year term and provides for annual
payments of $48,000 payable in equal monthly payments of $4,000. The
agreements shall commence on the consummation of this Offering.

On-going and future transactions between the Company and its officers,
directors, principal stockholders or other affiliates will be on terms no
less favorable to the Company than could be obtained from unaffiliated third
parties on an arm's-length basis, and will be approved by a majority of the
Company's independent and disinterested directors.

DESCRIPTION OF SECURITIES

UNITS

Upon consummation of this Offering, the Company will have outstanding
1,400,000 Units, each Unit consisting of one share of Common Stock, $.001 par
value, and one Redeemable Warrant. The Common Stock and Redeemable Warrants
may only be purchased as Units in the Offering, but are immediately
detachable and separately tradeable. The Company and the Underwriter may
jointly determine, based upon market conditions, to delist the Units upon the
expiration of the 30 day period commencing on the date of this Prospectus.

COMMON STOCK

The Company is authorized to issue 15,000,000 shares of Common Stock, par
value $.001 per share. As of the date of this Prospectus, 1,874,978 shares of
Common Stock are outstanding and are held of record by fifty (50) persons.
Holders of Common Stock are entitled to receive, subject to the prior rights
of holders of outstanding stock having prior rights as to dividends, such
dividends as are declared by the Board of Directors, to one vote for each
share at all meetings of stockholders, and, subject to the prior rights of
holders of outstanding stock having prior rights as to asset distributions,
to the remaining assets of the Company upon liquidation, dissolution or
winding up of the Company. The holders of Common Stock have no preemptive or
other subscription or conversion rights. There are no redemption or sinking
fund provisions applicable to the Common Stock. All shares of Common Stock
now outstanding are fully paid and nonassessable and all shares of Common
Stock which are the subject of this offering, when issued, will be fully paid
and nonassessable.

PREFERRED STOCK

The Company is authorized to issued up to 5,000,000 shares of Preferred
Stock, par value $.001 per share, without further stockholder approval
(except as may be required by applicable law or stock exchange regulations).
The Board of Directors is authorized to determine, without any further action
by the holders of the Common Stock, the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption, liquidation
preferences and sinking fund terms of any series of Preferred Stock, as well
as the number of shares constituting such series and the designation thereof.
Should the Board of Directors elect to exercise its authority, the rights and
privileges of holders of the Common Stock could be made subject to the rights
and privileges of any such series of Preferred Stock. No shares of Preferred
Stock are outstanding.

These provisions give the Board of Directors the power to approve the
issuance of a series of Preferred Stock of the Company that could, depending
on its terms, either impede or facilitate the completion of a merger, tender
offer or other takeover attempt. For example, the issuance of new shares
might impede a business transaction if the terms of those shares include
series voting rights which would enable a holder to block business
transactions or the issuance of new shares might facilitate a business
transaction if those shares have general voting rights sufficient to cause an
applicable percentage vote requirement to be satisfied.

33
<PAGE>

DIVIDENDS

The payment by the Company of dividends, if any, in the future rests
within the discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and its
financial condition, as well as other relevant factors. The Company paid a
cash dividend to certain executives, former shareholders of National, in
connection with certain distributions relating to when National was an
S-corporation. See "Certain Transactions" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The Company also
declared a 25% stock dividend on February 1, 1995. In connection with the
Offering, the Company effected a one for two reverse stock split on March 29,
1996 and a stock dividend of .14436 per share. By reason of its present
financial status and its contemplated financial requirements, the Company
does not contemplate or anticipate paying any dividends upon its Common Stock
in the foreseeable future.

REDEEMABLE WARRANTS

Each Redeemable Warrant entitles the registered holder thereof to purchase
one share of Common Stock at a price of $6.00 per share, subject to
adjustment, commencing immediately. The Redeemable Warrants expire on
November 13, 2001. The Redeemable Warrants will be subject to redemption,
subject to the prior written consent of the Underwriter, at a price of $.05
per Redeemable Warrant commencing November 13, 1997 on 30 days' written
notice provided the average closing bid price of the Common Stock as reported
by Nasdaq (or the last sale price if listed on a national securities
exchange), equals or exceeds 150% of the warrant exercise price per share for
any 20 trading days within a period of 30 consecutive trading days ending on
the fifth trading day prior to the date of the notice of redemption. The
holder of a Redeemable Warrant will lose his right to purchase if such right
is not exercised prior to redemption by the Company on the date for
redemption specified in the Company's notice of redemption or any later date
specified in a subsequent notice. Notice of redemption by the Company shall
be given by first class mail to the holders of the Redeemable Warrants at
their addresses set forth in the Company's records.

The exercise price of the Redeemable Warrants and the number and kind of
shares of Common Stock or other securities and property to be obtained upon
exercise of the Redeemable Warrants are subject to adjustment in certain
circumstances including a stock split of, or stock dividend on, or a
subdivision, combination or recapitalization of, the Common Stock.
Additionally, an adjustment would be made upon the sale of all or
substantially all of the assets of the Company so as to enable Redeemable
Warrant holders to purchase the kind and number of shares of stock or other
securities or property (including cash) receivable in such event by a holder
of the number of shares of Common Stock that might otherwise have been
purchased upon exercise of such Redeemable Warrant. No adjustment for
previously paid cash dividends, if any, will be made upon exercise of the
Redeemable Warrants.

The Redeemable Warrants do not confer upon the holder any voting or any
other rights of a stockholder of the Company. Upon notice to the Redeemable
Warrant holders, the Company has the right to reduce the exercise price or
extend the expiration date of the Redeemable Warrants.

The Redeemable Warrants may be exercised upon surrender of the Redeemable
Warrant certificate on or prior to the respective expiration date (or earlier
redemption date) of such Redeemable Warrants at the office of Continental
Stock Transfer & Trust Company (the "Redeemable Warrant Agent"), with the
form of "Election to Purchase" on the reverse side of the Redeemable Warrant
certificate completed and executed as indicated, accompanied by payment of
the full exercise price (by certified check payable to the order of the
Redeemable Warrant Agent) for the number of Redeemable Warrants being
exercised.

TRANSFER AGENT, WARRANT AGENT AND REGISTRAR

The Company's Transfer Agent, Warrant Agent and Registrar is Continental
Stock Transfer & Trust Company, 2 Broadway, New York, NY 10004.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this Offering, there has been no public market for the Units, the
Common Stock or the Redeemable Warrants. No prediction can be made of the
effect, if any, that future market sales of Common Stock or the

34
<PAGE>

availability of such shares for sale will have on the prevailing market price
of the Securities following this Offering. Nevertheless, sales of substantial
amounts of such shares in the open market following this offering could
adversely affect the prevailing market price of the Units, Common Stock or
Redeemable Warrants.

Upon completion of this Offering, the Company will have 3,124,978 shares
of Common Stock outstanding. All of the 1,400,000 shares of Common Stock sold
in this offering will be freely tradeable without restriction or further
registration under the Securities Act unless held by "affiliates" of the
Company as that term is defined in Rule 144 under the Securities Act. In
addition, 139,447 shares of Common Stock held by the Selling Private
Placement Stockholders are being registered on this Offering, but cannot be
sold without the consent of the Underwriter as described below. The remaining
1,585,531 shares may be deemed "restricted securities," and may not be sold
except in compliance with Rule 144 under the Securities Act. Rule 144, in
essence, provides that a person holding restricted securities for a period of
two years may publicly sell in brokerage transactions at an amount equal to
one percent of the Company's outstanding Common Stock every three months or,
if greater, a percentage of the shares publicly traded during a designated
period. Of such 1,585,531 shares, 1,516,476 shares will be eligible for sale
immediately under Rule 144; 7,152 shares will be eligible for sale under Rule
144 beginning in June, 1998; and 61,903 shares will be eligible for sale
under Rule 144 beginning in July, 1998.

Each of the Company's officers and directors and holders of not less than
95% of the shares of the Common Stock have agreed that for a period of 18
months from the date of this Prospectus they will not sell any of the
Company's securities without the prior written consent of the Underwriter.
They have further agreed that any sales of the Company's securities owned by
them will be executed through the Underwriter for a 24 month period from the
date hereof.

UNDERWRITING

Joseph Stevens & Company, L.P. (the "Underwriter") has entered into an
Underwriting Agreement with the Company and the Selling Stockholders pursuant
to which, and subject to the terms and conditions thereof, it has agreed to
purchase from the Company and the Selling Stockholders, and the Company and
the Selling Stockholders have agreed to sell to the Underwriter on a firm
commitment basis all of the Units offered by the Company and the Selling
Stockholders, hereby.

The Underwriter has advised the Company that the Underwriter initially
proposes to offer the Units to the public at the public offering price set
forth on the cover page of this Prospectus and that the Underwriter may allow
to certain dealers who are members of the National Association of Securities
Dealers, Inc. (the "NASD") concessions not in excess of $.15 per Unit, of
which amount a sum not in excess of $.05 per Unit may in turn be reallowed by
such dealers to other dealers. After the commencement of this Offering, the
public offering price, the concessions and the reallowances may be changed.
The Underwriter has informed the Company that it does not expect sales to
discretionary accounts by the Underwriter to exceed five percent of the
securities offered by the Company hereby.

The Company has granted to the Underwriter an option, exercisable within
45 days of the date of this Prospectus to purchase from the Company at the
offering price less underwriting discounts and the non-accountable expense
allowance, up to an aggregate of 210,000 additional Units for the sole
purpose of covering over- allotments, if any. To the extent such option is
exercised in whole or in part, the Underwriter will have a firm commitment,
subject to certain conditions, to purchase such number of additional Units.

The Company has agreed to pay to the Underwriter a non-accountable expense
allowance equal to three percent (3%) of the gross proceeds derived from the
sale of the Units underwritten, $25,000 of which has been paid to date. The
Company has further agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act and to contribute
to payments that the Underwriter may be required to make.

Upon the exercise of any Redeemable Warrants more than one year after the
date of this Prospectus, which exercise was solicited by the Underwriter, and
to the extent not inconsistent with the guidelines of the NASD and the Rules
and Regulations of the Commission, the Company has agreed to pay the
Underwriter a commission which shall not exceed five percent (5%) of the
aggregate exercise price of such Redeemable Warrants in connection with bona
fide services provided by the Underwriter relating to any warrant
solicitation. In addition, the individual must designate the firm entitled to
payment of such warrant solicitation fee. No compensation,

35
<PAGE>

however, will be paid to the Underwriter in connection with the exercise of
the Redeemable Warrants if (a) the market price of the Common Stock is lower
than the exercise price, (b) the Redeemable Warrants were held in a
discretionary account, or (c) the Redeemable Warrants are exercised in an
unsolicited transaction. Unless granted an exemption by the Commission from
its Rule 10b-6 under the Exchange Act, the Underwriter will be prohibited
from engaging in any market-making activities with regard to the Company's
securities for the period from nine business days (or other such applicable
periods as Rule 10b-6 may provide) prior to any solicitation of the exercise
of the Redeemable Warrants until the later of the termination of such
solicitation activity or the termination (by waiver or otherwise) of any
right the Underwriter may have to receive a fee. As a result, the Underwriter
may be unable to continue to provide a market for the Company's Securities
during certain periods while the Redeemable Warrants are exercisable. If the
Underwriter has engaged in any of the activities prohibited by Rule 10b-6
during the periods described above, the Underwriter undertakes to waive
unconditionally its right to receive a commission on the exercise of such
Redeemable Warrants.

Each director and officer of the Company, as well as holders of not less
than 95% of the Common Stock, have agreed not to, directly or indirectly,
offer, sell, transfer, pledge, assign, hypothecate or otherwise encumber any
shares of Common Stock or convertible securities, or otherwise dispose of any
interest therein, for a period of 18 months from the date of this Prospectus
without the prior written consent of the Underwriter. An appropriate legend
shall be marked on the face of certificates representing all such securities.

In connection with this Offering, the Company has agreed to sell to the
Underwriter, for nominal consideration, warrants to purchase from the Company
140,000 Units (the "Underwriter's Warrants"). The Underwriter's Warrants are
initially exercisable at $5.80. The shares of Common Stock and Redeemable
Warrants issuable upon exercise of the Underwriter's Warrants are identical
to those offered to the public. The Underwriter's Warrants contain provisions
providing for adjustment of the number of warrants and exercise price under
certain circumstances. The Underwriter's Warrants grant to the holders
thereof certain rights of registration of the securities issuable upon
exercise of the Underwriter's Warrants.

The Company has also agreed to retain the Underwriter as the Company's
financial consultant for a period of 24 months from the date hereof and to
pay the Underwriter $2,000 per month, all payable in advance on the closing
date as set forth in the Underwriting Agreement.

The Company has agreed that, for a period of five years from the date of
the Prospectus, the Underwriter shall have the right to nominate one member
of the Company's Board of Directors and the Company shall use its best
efforts to have such nominee appointed or elected to the Company's Board of
Directors.

Prior to this Offering there has been no public market for the Units, the
Common Stock or the Redeemable Warrants. Accordingly, the initial public
offering price of the Units and the terms of the Redeemable Warrants were
determined in negotiation between the Company and the Underwriter. Other
factors considered in determining such price and terms, in addition to
prevailing market conditions, included the history of and the prospects for
the industry in which the Company competes, an assessment of the Company's
management, the prospects of the Company, its capital structure and such
other factors that were deemed relevant.

The Underwriter commenced operations in March 1994. Therefore, it does not
have extensive experience as an underwriter of public offerings of
securities. The firm is relatively small and no assurance can be given that
the firm will be able to participate as a market maker in the Units, the
Common Stock or the Redeemable Warrants and no assurance can be given that
another broker-dealer will make a market in the Units, the Common Stock or
the Redeemable Warrants. The Underwriter has acted as managing underwriter of
seven public offerings.

The Company and the Underwriter may jointly determine, based upon market
conditions, to delist the Units upon the expiration of the 30 day period
commencing on the date of this Prospectus.

The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to a
copy of each such agreement which are filed as exhibits to the Registration
Statement. See "Additional Information."

36
<PAGE>

LEGAL MATTERS

The validity of the Securities offered hereby will be passed upon for the
Company by Camhy Karlinsky & Stein LLP, New York, New York. Orrick,
Herrington & Sutcliffe LLP, New York, New York has acted as counsel for the
Underwriter in connection with this Offering.

EXPERTS

The consolidated financial statements as of June 30, 1995 and 1996 and for
the years then ended, included in this Prospectus and in the Registration
Statement have been included herein in reliance upon the report of KPMG Peat
Marwick LLP independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

As of the date of this Prospectus, the Company will become subject to the
reporting requirements of the Exchange Act and in accordance therewith will
file reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information can be inspected and
copied at the Commission's principal offices at 450 Fifth Street, N.W.,
Washington, D.C. 20549; at its New York Regional Office, 7 World Trade
Center, New York, New York 10048; and at its Chicago Regional Office, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and copies of
such material can be obtained from the Commission's Public Reference Section
at prescribed rates.

The Company has filed with the Commission a Registration Statement (the
"Registration Statement") under the Securities Act with respect to the Units
offered by this Prospectus. This Prospectus, filed as part of such
Registration Statement, does not contain all of the information set forth in,
or annexed as exhibits to, the Registration Statement, certain portions of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and this
offering, reference is made to the Registration Statement including the
exhibits filed therewith. The Registration Statement may be inspected and
copies may be obtained from the Public Reference Section at the Commission's
principal office, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549, and the New York Regional Office, 7 World Trade Center, New York, New
York 10048, upon payment of the fees prescribed by the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete and where the contact or other document
has been filed as an exhibit to the Registration Statement, each such
statement is qualified in all respects by such reference to the applicable
document filed with the Commission.

37
<PAGE>

INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report ................................. F-2

Consolidated Balance Sheets .................................. F-3

Consolidated Statements of Income ............................ F-4

Consolidated Statements of Changes in Stockholders' Equity ... F-5

Consolidated Statements of Cash Flows. ....................... F-6

Notes to Consolidated Financial Statements ................... F-7

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
NAM Corporation:

We have audited the accompanying consolidated balance sheets of NAM
Corporation as of June 30, 1996 and 1995 and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of NAM
Corporation as of June 30, 1996 and 1995 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

KPMG Peat Marwick LLP
Jericho, New York
September 18, 1996

F-2
<PAGE>

NAM CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1996

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
ASSETS:
Current Assets:
Cash $ 56,070 $ 31,474
Accounts Receivable (net of allowance for doubtful
accounts of $24,378 and $40,000 respectively) 361,150 455,956
Other Receivables 17,503 5,873
Prepaid Expenses 8,848 53,010
----------- -----------
Total Current Assets 443,571 546,313
----------- -----------
Furniture and Equipment, net 134,818 216,507
Organizational Costs (net of accumulated
amortization
of $6,395 and $13,293 respectively) 33,153 29,669
Deferred Offering Costs 75,963 112,001
Other Assets 58,183 34,503
----------- -----------
Total Noncurrent Assets 302,117 392,680
----------- -----------
Total Assets $ 745,688 $ 938,993
=========== ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current Liabilities:
Accounts Payable $ 138,304 $ 239,261
Accrued Liabilities and Dividends Payable 119,998 199,571
Accrued Payroll and Employee Benefits 35,548 45,527
Deferred Revenues 127,011 126,380
Notes Payable -- Private Placement 400,000 400,000
----------- -----------
Total Current Liabilities 820,861 1,010,739
----------- -----------
Stockholders' Deficit:
Preferred Stock ($.001 par value, 5,000,000 shares
authorized; none issued) -- --
Common Stock ($.001 par value, 15,000,000 shares
authorized; 1,805,919 and 1,813,075 shares
issued, respectively) 3,156 1,813
Paid-in Capital 27,396 28,739
Accumulated Deficit (104,648) (101,990)
Unearned Compensation -- Stock Bonus Plan (1,077) (308)
----------- -----------
Total Stockholders' Deficit (75,173) (71,746)
----------- -----------
Total Liabilities and Stockholders' Deficit $ 745,688 $ 938,993
=========== ===========

</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

NAM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED JUNE 30, 1995 AND 1996

<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
HISTORICAL:
Revenues ................................................. $2,235,030 $3,147,886
------------ ------------
Operating Costs and Expenses:
Cost of Services ....................................... 458,661 727,613
Sales and Marketing Expenses ........................... 976,230 1,472,152
General and Administrative Expenses .................... 584,920 741,892
------------ ------------
Total Operating Costs and Expensees .................... 2,019,811 2,941,657
------------ ------------
Income from Operations ................................... 215,219 206,229
------------ ------------
Other Income (Expenses):
Other Income ........................................... 5,712 26,022
Offering Costs on Transaction not consummated .......... -- (61,127)
Interest Expense ....................................... (25,529) (32,000)
------------ ------------
Other Expenses, net .................................... (19,817) (67,105)
------------ ------------
Income before Income Taxes ............................... 195,402 139,124
Provision for Income Taxes ............................... 10,379 3,525
------------ ------------
Net Income ............................................... $ 185,023 $ 135,599
============ ============
Net Income per Common Share .............................. $ 0.11 $ 0.07
============ ============
Weighted Average Common Stock and Common Stock Equivalents 1,688,358 1,947,504
============ ============
PRO FORMA (Unaudited):
Historical Income before Income Taxes .................. $ 195,402
Pro Forma Provision for Income Taxes ................... 88,780
------------
Pro Forma Net Income ................................... $ 106,622
============
Pro Forma Net Income per Common Share .................. $ 0.06
============
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

NAM CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1995 AND 1996

Total
Additional Retained Unearned Stockholders'
Common Stock Paid-in (Deficit) Compensation- (Deficit)
Shares(1) Amount Capital Earnings Stock Bonus Plan Equity
----------- --------- ------------ ----------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1994 ................. 1,005,931 $ 1,606 16,039 170,073 (814) 186,904
Net Income ............................... -- -- -- 185,023 -- 185,023
Distributions to Shareholders ............ -- -- -- (459,744) -- (459,744)
Cash Proceeds from Issuance of Stock in NAM
Corporation's Private Placement ......... 143,023 200 1,800 -- -- 2,000
Payment for Restricted Stock Award ....... -- -- 10,200 -- -- 10,200
Issuance of Common Stock of NAM in Exchange
for NA&M, net ........................... 656,969 719 (719) -- -- --
Shares Issued Pursuant to Stock Dividend . -- 631 (631) -- -- --
Common Stock Awarded Under Retention Stock
Plan .................................... -- -- 707 -- (707) --
Earned Portion of Stock Bonus Plan ....... -- -- -- -- 444 444
----------- --------- ------------ ----------- ---------------- ------------
Balance at June 30, 1995 ................. 1,805,923 3,156 27,396 (104,648) (1,077) (75,173)
----------- --------- ------------ ----------- ---------------- -------------
Net Income ............................... -- -- -- 135,599 -- 135,599
Distributions to Shareholders ............ -- -- -- (132,941) -- (132,941)
Earned Portion of Stock Bonus Plan ....... -- -- -- -- 769 769
Reverse Stock Split 1:2 .................. -- (1,578) 1,578 -- -- --
Shares Issued Pursuant to Stock Dividend . -- 228 (228) -- -- --
Shares Issued Pursuant to Restricted Stock
Award ................................... 7,152 7 (7) -- -- --
----------- --------- ------------ ----------- ---------------- ------------
Balance at June 30, 1996 ................. 1,813,075 $ 1,813 28,739 (101,990) (308) (71,746)
----------- --------- ------------ ----------- ---------------- ------------
</TABLE>

- ------
(1) Share amounts have been restated to reflect the 25% stock dividend in
February 1995 and the 1 for 2 stock split and 14.436% stock dividend in
March 1996.

See accompanying notes to consolidated financial statements.

F-5
<PAGE>

NAM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 1995 AND 1996

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income ..................................................................... $ 185,023 $ 135,599
----------- -----------
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization ............................................. 30,282 49,744
Provision for Bad Debts ................................................... 16,778 15,622
Gains on Sale of Securities Available for Sale ............................ (1,711) --
Earned Portion of Stock Bonus Plan ........................................ 444 769
Increase in Accounts Receivable ........................................... (194,351) (110,428)
Decrease in Other Receivables ............................................. 11,802 11,630
Increase in Prepaid Expenses .............................................. (8,848) (44,162)
(Increase) Decrease in Other Assets ....................................... (47,490) 23,680
Increase in Accounts Payable and Accrued Liabilities ...................... 173,342 171,588
Increase in Accrued Payroll and Employee Benefits ......................... 26,712 9,979
Increase (Decrease) in Deferred Revenues .................................. 16,346 (631)
----------- -----------
Net Cash Provided by Operating Activities ................................. 208,329 263,390
----------- -----------
Cash Flows from Investing Activities:
Purchases of Securities Available for Sale ................................ (129,937) --
Proceeds from Sales of Securities Available for Sale ...................... 141,666 --
Purchases of Furniture and Equipment ...................................... (56,830) (124,535)
Increase in Organization Costs ............................................ (16,482) (3,414)
Net Cash Used In Investment Activities .................................... (61,583) (127,949)
----------- -----------
Cash Flows from Financing Activities:
Distributions Made to Shareholders ........................................ (459,744) (123,999)
Increase in Deferred Offering Costs ....................................... (75,963) (36,038)
Proceeds from Notes Payable ............................................... 400,000 --
Proceeds from Restricted Stock Award ...................................... 10,200 --
Proceeds from Issuance of Common Stock .................................... 2,000 --
----------- -----------
Net Cash Used In Financing Activities ..................................... (123,507) (160,037)
----------- -----------
Net Increase (Decrease) in Cash ................................................ 23,239 (24,596)
Cash at Beginning of Period .................................................... 32,831 56,070
----------- -----------
Cash at End of Period .......................................................... $ 56,070 $ 31,474
=========== ===========
Supplemental Disclosures
-----------------------
Non-Cash Financing Activities:
Dividend Distribution Declared but Unpaid ..................................... -- $ 8,942
=========== ===========

</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>

NAM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 1995 AND 1996

F-7
<PAGE>

NAM CORPORATION
Notes to Consolidated Financial Statements

(1) NATURE OF BUSINESS

NAM Corporation (NAM) provides a broad range of Alternative Dispute
Resolution (ADR) services, including arbitration and mediation. NAM
incorporated on January 12, 1994 and began operations on February 15, 1994.
On October 31, 1994, National Arbitration & Mediation, Inc. (NA&M), which was
owned by NAM's Chief Executive Officer and President, Roy Israel, and
Executive Vice President, Cynthia Sanders, was acquired by and became a
wholly-owned subsidiary of NAM (collectively referred to herein as the
Company), in an exchange of 143 shares of NA&M for 657,112 shares in NAM.
NA&M also provided a broad range of ADR services, including arbitrations and
mediations. NA&M began operations in March 1992.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following are the significant accounting and reporting policies applied
by the Company which conform with generally accepted accounting principles.

(a) Basis of Presentation

The accompanying consolidated financial statements of the Company include the
accounts of its wholly-owned subsidiaries, NA&M, National Video Conferencing,
Inc., a Delaware corporation formed in April 1995, and Michael Marketing,
Inc., a Delaware corporation formed in November 1991. The Company operates in
only one business segment, ADR. All significant intercompany transactions and
balances were eliminated in consolidation.

As more fully described in note 1, NA&M was acquired by and became a
wholly-owned subsidiary of NAM on October 31, 1994. The transaction was
accounted for as a transfer of assets between companies under common control,
with the assets and liabilities of NA&M combined with those of NAM at their
historical carrying values. NAM's financial statements include the accounts
and results of operations of NA&M as though they had been combined as of the
beginning of the earliest period presented. All significant inter-company
accounts and transactions between NAM and NA&M have been eliminated.

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 may differ from those estimates.

When necessary, certain reclassifications of prior year amounts were made to
conform to the current year presentation.

All share amounts have been restated to reflect the 25% stock dividend in
February 1995 and the 1 for 2 reverse stock split and 14.436% stock dividend
in March 1996.

(b) Statement of Cash Flows

For purposes of the consolidated statements of cash flows, the Company
considers all short-term instruments with a maturity at date of purchase of
three months or less to be cash equivalents.

The Company principally derives it revenues from fees charged for arbitration
and mediation services. Each party to a proceeding is charged an
administrative fee, a portion of which is non-refundable, when each party
agrees to utilize the Company's services. The Company recognizes revenue when
the arbitration or mediation occurs. Fees received prior to the arbitration
or mediation are reflected as deferred income. Fees billed for cases not yet
heard and not yet collected at June 30, 1995 and 1996 were $292,795 and
$328,400, respectively.

(d) Deferred Offering Costs

Deferred offering costs as of June 30, 1995, included certain expenses
associated with an initial public offering which was abandoned in October
1995. At that time, the Company changed its underwriter and counsel and the

F-8
<PAGE>

NAM CORPORATION
Notes to Consolidated Financial Statements - (Continued)

(2) Summary of Significant Accounting Policies - (Continued)

related deferred offering costs of $61,127 were charged to other expenses.
Deferred offering costs as of June 30, 1996, consist primarily of new legal,
accounting and investment banking fees incurred in connection with the
proposed initial public offering (the "IPO") which is anticipated to be
completed by December 31, 1996. These costs will be reflected as a reduction
from the proceeds of the IPO. In the event there is no such offering, these
costs will be charged to operations.

(e) Furniture & Equipment

Furniture and equipment are stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of the assets
ranging from five to seven years.

(f) Organizational Costs

Organizational costs arose from NAM's organization in 1994. Organizational
costs are currently being amortized over five years.

(g) Income Taxes

NA&M elected by unanimous consent of its shareholders to be taxed under the
provisions of Subchapter S of the Internal Revenue Code. Under those
provisions, NA&M did not pay Federal corporate income taxes on its taxable
income and was not allowed a net operating loss carryover or carryback as a
deduction. Instead, the stockholders were liable for individual Federal
income taxes on their respective shares of the NA&M's taxable income and
included their respective shares of the NA&M's net income in their individual
income tax returns.

NA&M also elected to be taxed as a New York State Subchapter S Corporation.
The shareholders were liable for individual state income taxes on their
respective shares of the NA&M's taxable income and included their respective
shares of the NA&M's net income in their individual income tax returns.

Additionally, NA&M was subject to a New York State corporate tax on its
allocated entire net income. The tax rate is the difference between the
regular corporation tax, including a temporary surcharge, and the maximum
individual tax rate. NA&M's New York State corporate level tax was $9,142 and
$2,234 for the years ended June 30, 1995 and 1996, respectively, which is
included in the accompanying consolidated statements of operations.

NA&M's Subchapter S Corporation status was terminated effective October 31,
1994 when NA&M was acquired by and became a wholly-owned subsidiary of NAM, a
C Corporation. Accordingly, a pro forma tax provision for Federal and state
income taxes as if the Company was a C Corporation has been presented in the
accompanying consolidated statements of operations for the year ended June
30, 1995.

In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109 (SFAS 109) "Accounting for Income
Taxes". SFAS 109 requires a change from the deferred method of accounting for
income taxes of APB Opinion 11 to the asset and liability method of
accounting for income taxes. Under the asset and liability method of SFAS
109, deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which those temporary differences
are expected to be recovered or settled. Under Statement 109, the effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. The Company has
applied SFAS 109 beginning January 1, 1993.

Recognition of tax benefits from net operating loss carryforwards related to
NAM are uncertain, and accordingly no deferred tax benefits have been
recorded for the related operating losses. NAM has approximately $360,195 and
$223,683 in net operating loss carryforwards as of June 30, 1995 and 1996,
respectively. The deferred tax assets relating to these carryforwards, for
which the Company maintains a 100% valuation allowance, are $122,466 at June
30, 1995 and $76,052 at June 30, 1996, and are being recognized as realized.

F-9
<PAGE>

NAM CORPORATION
Notes to Consolidated Financial Statements - (Continued)

(2) Summary of Significant Accounting Policies - (Continued)

The Company's pro forma effective income tax rate for the year ended June 30,
1995 and effective tax rate for the year ended June 30, 1996 differs from the
Federal statutory rate, as a result of the following items:

<TABLE>
<CAPTION>
Pro forma
1995 1996
----------- ----------
(Unaudited)
<S> <C> <C>
Provision at Federal statutory rate ......................................... $72,574 $ 36,675
Increase in taxes resulting from State income taxes, net of Federal income
tax benefit ................................................................ 16,206 2,327
Other ....................................................................... -- 1,013
----------- ----------
88,780 40,015
Decrease in the valuation allowance for the deferred tax asset .............. -- (36,490)
----------- ----------
$88,780 $ 3,525
=========== ==========

</TABLE>

(h) Earnings Per Share

Earnings per share is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during the periods
presented, which were retroactively adjusted to give recognition to the
change in the capital structure as a result of contingently issuable shares,
stock dividends and the reverse stock split.

(3) SECURITIES AVAILABLE FOR SALE

The Company adopted Statement of Financial Accounting Standards No. 115 (SFAS
115) "Accounting for Certain Investments in Debt and Equity Securities"
effective January 1, 1993. SFAS 115 addresses the accounting and reporting
for investments in equity securities that have readily determinable fair
values and all investments in debt securities.

In accordance with the SFAS 115, the Company reflected securities available
for sale at fair value, with unrealized gains and losses reflected as a
separate component of stockholders equity. The portfolio consisted
principally of investments in mutual funds. The Company had no securities
available for sale as of June 30, 1995 and 1996, as all securities were sold
during the year ended June 30, 1995. Net gains of $1,711 were realized during
the year ended June 30, 1995.

(4) FURNITURE AND EQUIPMENT

Furniture and equipment consist of the following:

<TABLE>
<CAPTION>
06/30/95 06/30/96
----------- ----------
<S> <C> <C>
Furniture .................... $ 78,900 $140,543
Equipment .................... 105,989 168,881
----------- ----------
184,889 309,424
Less accumulated depreciation (50,071) (92,917)
----------- ----------
$134,818 $216,507
=========== ==========

</TABLE>

Depreciation expense for the years ended June 30, 1995 and 1996 is $26,056,
and $42,846, respectively.

(5) NOTES PAYABLE -- PRIVATE PLACEMENT

The Company offered in the second half of 1994, in a private placement, Units
consisting of a total of $400,000 in 8% promissory notes, and 143,023 shares
of restricted common stock for total proceeds of $402,000. The

F-10
<PAGE>

NAM CORPORATION

Notes to Consolidated Financial Statements - (Continued)

(5) Notes Payable -- Private Placement - (Continued)

promissory notes were recorded at par value, were payable on June 30, 1996
and required annual payments of accrued interest. This financing was offered
in minimum Units of $5,025 denominations and multiples thereof with each
person and/or firm participating therein purchasing a $5,000 8% promissory
note and 1,787 restricted shares of NAM's common stock with a par value of
$0.001 per share.

The Company has sought an extension of these notes until the earlier of
December 31, 1996 or the closing of the proposed IPO and received an
extension from all noteholders except one. The two non-consenting Units
totaling $10,050 were purchased by Company's management who also executed the
extension agreement. The repayment of the notes is intended to be provided by
the proceeds of an IPO of the Company's common stock. In the event the IPO is
not successful, the Company will seek a further extension of the payment
terms, attempt to refinance the notes or repay the notes from operating cash
flow and funds available by management and its affiliates.

(6) EMPLOYMENT AGREEMENTS

The Company's Chief Executive Officer and President entered into a three year
employment contract with the Company commencing June 1994, whereby he shall
receive a base annual salary of $85,000 during each of the three years
thereof. Additionally, the employment agreement provides for a 5 percent
annual cost of living increase (based upon prior years salary) and a bonus of
4 percent of Company's pretax profits.

The Company's Executive Vice President entered into a two-year employment
contract with the Company commencing June 1996, whereby she shall receive a
base salary of $90,000 during each of the two years. Additionally, the
employment agreement provides for a 5 percent annual cost of living increase
(based on prior years salary).

(7) DIVIDENDS

The Company authorized a 25% stock dividend (631,250 shares issued), effected
in a form of a stock split, to all stockholders of record on February 1,
1995. Effective March 29, 1996, the Company authorized a 1 for 2 reverse
stock split, net of 14.436% stock dividend.

The Company intends to pay the balance of its Subchapter S distributions to
its shareholders prior to the initial public offering of its common stock,
accordingly the balance of this distribution of $8,942 has been reflected as
dividends payable in the accompanying consolidated financial statements as of
June 30, 1996.

(8) STOCK PLAN

The Company adopted an Executive Stock Bonus Plan in June of 1994. Under the
plan, the Company has granted 58,202 shares to three employees pursuant to
their employment agreements, which included 21,458 shares to Carla Israel,
17,165 shares to Daniel Jansen and 19,579 shares to Robyn Aberbach. All of
the shares vest after providing two to five years of service to the Company
from the grant date. An additional 40,445 shares were granted to Carla Israel
in February 1995, which vest on July 1, 1996. The estimate market value per
share at date of grant was $.01. These amounts were recorded as unearned
compensation and are shown as a separate component of stockholders' deficit.
No shares have been vested as of June 30, 1996. The Company recognized
compensation expense of $444 and $769 during the years ended June 30, 1995
and 1996, respectively, representing the amortization of unearned
compensation over the vesting period.

In addition, on September 12, 1994, the Company granted Leonard Pudt,
Regional Manager, pursuant to his employment agreement, 42,913 shares of
restricted common stock of the Company for the purchase price of $0.17 a
share. Mr. Pudt vested in the first 7,152 shares of common stock, which were
issued to him on June 1, 1996 and will vest in the rest on June 1, 1999.

On December 7, 1994, the Company entered into an agreement with Leon Katz, a
hearing officer to the Company, whereby Mr. Katz has a contractual right to
receive 6,500 shares of restricted common stock or $26,000

F-11
<PAGE>

NAM CORPORATION

Notes to Consolidated Financial Statements - (Continued)

(8) Stock Plan - (Continued)

on March 1, 1997. The $26,000 is reflected as deferred compensation and is
currently being amortized over the term of the agreement. The Company
recognized compensation expense of $6,741 and $11,556 during the years ended
June 30, 1995 and 1996, respectively.

(9) COMMITMENTS AND CONTINGENCIES

The Company has lease agreements for office space in New York, Pennsylvania,
Massachusetts, Tennessee and South Carolina. Rent expense for the office
space amounted to $82,143, and $136,515 for the years ended June 30, 1995 and
1996, respectively. The minimum lease payments under the non-cancelable
office leases for the respective fiscal years are as follows:

1997 .............................. $175,040
1998 .............................. 170,287
1999 .............................. 169,646
2000 .............................. 162,273
Thereafter ........................ 34,578
----------
Total ............................ $711,824
==========

Rental expense for equipment amounted to $8,417 and $12,003 for the years
ended June 30, 1995 and 1996, respectively. The minimum lease payments under
the non-cancelable machinery leases for the respective fiscal years are as
follows:

1997 ................. $ 8,469
1998 ................. 5,537
--------
$14,006
========

On July 15, 1996, the Company has entered into a financial public relations
consulting agreement with Dr. Eugene Stricker and Mark Schindler, each of
whom are founders of the Company, current stockholders and former directors
of the Company. The agreement has a four year term and provides for annual
payments of $48,000 payable in equal monthly payments of $4,000. The
agreements shall commence on the consummation of the IPO.

(10) 1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN

Effective May 26, 1996, the Company adopted a 1996 Incentive and Nonqualified
Stock Option Plan for employees, officers, directors, consultants and
advisors of the Company pursuant to which the Company may grant options to
purchase up to 750,000 shares of the Company's common stock subsequent to the
completion of the IPO. The Company has not issued any options under this
plan, however, an employee of the Company and two hearing officers have been
granted a contractual right under their agreements to receive a total of
options to purchase 25,000 shares of common stock, respectively, if they are
still providing services to the Company on a certain anniversary date
subsequent to the IPO.

(11) SUBSEQUENT EVENTS

Subsequent to June 30, 1996, the Company intends to complete the IPO. The
offering is expected to consist of 1,250,000 Units, each Unit consisting of
one share of common stock and one redeemable warrant exercisable at 150% of
the initial public offering price for shares of common stock. The redeemable
warrant redemption price and period will be based on the price of the
Company's common stock one year after the offering. Additionally, the Company
intends to issue to the underwriter additional warrants which enable the
underwriter to acquire 140,000 Units for 120% of the initial public offering
price per share of common stock.

F-12
<PAGE>
=============================================================================

No underwriter, dealer, salesperson or any other person has been
authorized to give any information or to make any representations other than
those contained in this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company or the Underwriter. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities offered hereby by
anyone in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to any person to whom it is unlawful to make such an
offer or solicitation. Neither the delivery of this Prospectus nor any offer
or sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof or that the information contained in this Prospectus is correct as of
any date subsequent to the date hereof.
------

TABLE OF CONTENTS

Page
----
Prospectus Summary ................................................ 4
Risk Factors ...................................................... 8
The Company ....................................................... 12
Use of Proceeds ................................................... 13
Offer by the Selling Private Placement
Stockholders and Plan of Distribution ............................ 14
Dividend Policy ................................................... 14
Dilution .......................................................... 15
Capitalization .................................................... 16
Selected Consolidated Financial Data .............................. 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ....................................................... 18
Business .......................................................... 21
Management ........................................................ 26
Principal and Selling Stockholders ................................ 30
Selling Private Placement Stockholders ............................ 31
Certain Transactions .............................................. 32
Description of Securities ......................................... 33
Shares Eligible for Future Sale ................................... 34
Underwriting ...................................................... 35
Legal Matters ..................................................... 37
Experts ........................................................... 37
Additional Information ............................................ 37
Index to Financial Statements ..................................... F-1

Until December 8, 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligation of dealers to
deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.

==============================================================================
<PAGE>

==============================================================================

NAM CORPORATION

1,400,000 UNITS

EACH UNIT CONSISTING OF

ONE SHARE OF COMMON STOCK AND

ONE REDEEMABLE WARRANT

------
PROSPECTUS
------

JOSEPH STEVENS & COMPANY, L.P.

NOVEMBER 13, 1996

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