<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-21419
NAM CORPORATION
--------------------------------------------------------------
(Name of small business issuer as specified in its charter)
Delaware 23-2753988
--------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1010 Northern Boulevard
Great Neck, New York 11021
----------------------------------------------------------------
(Address of Principal Executive Offices)
(516) 829-4343
----------------------------------------------------------------
(Issuer's Telephone Number,
Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
As of May 12, 1999, 3,334,978 shares of common stock of the issuer were
outstanding.
Transitional small business disclosure format (check one): Yes No X
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<PAGE>
NAM CORPORATION
INDEX
PART I. FINANCIAL INFORMATION Page
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
Consolidated Balance Sheets at March 31,
1999 and June 30,1998 3
Consolidated Statements of Operations for
the three and nine month periods ended
March 31, 1999 and 1998 4
Consolidated Statements of Changes in
Stockholders' Equity and Comprehensive
Loss for the nine month periods ended
March 31, 1999 and 1998 5
Consolidated Statements of Cash Flows
for the nine month periods ended
March 31, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities
and Use of Proceeds 14
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
NAM Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 31, June 30,
1999 1998
----------- -----------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,792,818 $ 1,417,280
Marketable securities 524,271 1,950,880
Accounts receivable (net of allowance for doubtful accounts
of $100,000 and $90,000, respectively) 397,302 385,300
Other receivables 40,354 17,945
Prepaid expenses 95,152 45,080
----------- -----------
Total current assets 2,849,897 3,816,485
FURNITURE AND EQUIPMENT - AT COST, less accumulated depreciation 264,066 248,679
OTHER ASSETS 39,662 44,392
----------- -----------
$ 3,153,625 $ 4,109,556
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 235,958 $ 315,323
Accrued liabilities 185,461 163,641
Accrued payroll and employee benefits 65,750 126,361
Deferred revenues 246,190 150,389
----------- -----------
Total current liabilities 733,359 755,714
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value; 5,000,000 shares authorized;
none issued -- --
Common stock - $.001 par value; 15,000,000 shares authorized;
3,334,978 shares issued and outstanding 3,335 3,335
Additional paid-in capital 4,799,272 4,778,179
Accumulated deficit (2,449,853) (1,368,681)
Accumulated other comprehensive income (loss) 67,512 (58,991)
----------- -----------
Total stockholders' equity 2,420,266 3,353,842
----------- -----------
$ 3,153,625 $ 4,109,556
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
NAM Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31, Nine months ended March 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues $ 857,530 $ 847,722 $ 2,969,786 $ 2,822,677
----------- ----------- ----------- -----------
Operating costs and expenses
Cost of services 213,156 209,401 778,944 714,509
Sales and marketing expenses 412,980 568,641 1,531,843 1,385,612
General and administrative expenses 514,358 476,775 1,615,034 1,446,532
----------- ----------- ----------- -----------
1,140,494 1,254,817 3,925,821 3,546,653
----------- ----------- ----------- -----------
Loss from operations (282,964) (407,095) (956,035) (723,976)
Other income (expenses)
Investment income (loss) 123,115 217,309 (136,317) 300,824
Other income 1,078 1,003 11,180 4,246
----------- ----------- ----------- -----------
124,193 218,312 (125,137) 305,070
----------- ----------- ----------- -----------
Loss before income taxes (158,771) (188,783) (1,081,172) (418,906)
Income taxes -- -- -- --
----------- ----------- ----------- -----------
NET LOSS $ (158,771) $ (188,783) $(1,081,172) $ (418,906)
=========== =========== =========== ===========
Net loss per common share - basic and diluted $ (0.05) $ (0.06) $ (0.32) $ (0.13)
=========== =========== =========== ===========
Weighted average shares outstanding - basic and diluted 3,334,978 3,334,978 3,334,978 3,334,978
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
NAM Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY AND COMPREHENSIVE LOSS
Nine months ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Accumulated
Additional other Total Compre-
Common stock paid-in Accumulated comprehensive stockholders' hensive
Shares Amount capital deficit income (loss) equity loss
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1997 3,334,978 $ 3,335 $4,772,569 $ (739,547) $ 79,019 $ 4,115,376
Compensation related to stock option plan 4,207 4,207
Net loss (418,906) (418,906) $ (418,906)
Change in unrealized gain on marketable
securities 64,613 64,613 64,613
Earned portion of stock bonus plan 77 77 77
-------------
Comprehensive loss $ (354,216)
=============
--------------------------------------------------------------------------
Balances at March 31, 1998 3,334,978 $ 3,335 $4,776,776 $(1,158,453) $ 143,709 $ 3,765,367
==========================================================================
Balances at July 1, 1998 3,334,978 $ 3,335 $4,778,179 $(1,368,681) $ (58,991) $ 3,353,842
Compensation related to stock option plan 21,093 21,093
Net loss (1,081,172) (1,081,172) $(1,081,172)
Change in unrealized (loss) gain on
marketable securities 126,426 126,426 126,426
Earned portion of stock bonus plan 77 77 77
-------------
Comprehensive loss $ (954,669)
=============
--------------------------------------------------------------------------
Balances at March 31, 1999 3,334,978 $ 3,335 $4,799,272 $(2,449,853) $ 67,512 $ 2,420,266
==========================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
NAM Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended March 31,
<TABLE>
<CAPTION>
1999 1998
----------- -----------
Cash flows from operating activities
<S> <C> <C>
Net loss $(1,081,172) $ (418,906)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation and amortization 75,706 52,437
Provision for bad debts 10,000 10,000
Losses (gains) on sales of marketable securities 199,687 (177,847)
Losses (gains) on sales of furniture and equipment 490 (572)
Earned portion of stock bonus plan 77 77
Compensation related to stock option plan 21,093 4,207
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable (22,002) 62,424
(Increase) decrease in other receivables (22,409) 11,006
(Increase) decrease in prepaid expenses (50,072) 16,591
(Increase) decrease in other assets (1,715) 7,474
(Decrease) in accounts payable and accrued liabilities (57,545) (33,408)
(Decrease) in accrued payroll and employee benefits (60,611) (102,725)
Increase in deferred revenues 95,801 12,344
----------- -----------
Net cash used in operating activities (892,672) (556,898)
----------- -----------
Cash flows from investing activities
Purchases of marketable securities (1,310,637) (1,675,732)
Proceeds from maturities of marketable securities 570,000 1,845,000
Proceeds from sales of marketable securities 2,094,097 1,804,309
Increase in receivable for securities sold -- (1,306,304)
(Decrease) in payable for securities purchased -- (15,263)
Purchases of furniture and equipment (86,050) (122,342)
Sales of furniture and equipment 800 4,780
----------- -----------
Net cash provided by investing activities 1,268,210 534,448
----------- -----------
Cash flows from financing activities
----------- -----------
Net cash provided by financing activities -- --
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 375,538 (22,450)
Cash and cash equivalents at beginning of period 1,417,280 175,486
----------- -----------
Cash and cash equivalents at end of period $ 1,792,818 $ 153,036
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
NAM CORPORATION and SUBSIDIARIES
Notes to Consolidated Financial Statements
Nine months ended March 31, 1999
(Unaudited)
1. The consolidated balance sheet as of March 31, 1999 and the related
consolidated statements of operations for the three and nine month periods ended
March 31, 1999 and 1998 have been prepared by NAM Corporation, including the
accounts of its wholly-owned subsidiaries. In the opinion of management, all
adjustments necessary to present fairly the financial position as of March 31,
1999 and for all periods presented, consisting of normal recurring adjustments,
have been made. Results of operations for the three and nine month periods ended
March 31, 1999 are not necessarily indicative of the operating results expected
for the full year.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended June 30,
1998 included in the Company's Annual Report on Form 10-KSB. The accounting
policies used in preparing these consolidated financial statements are the same
as those described in the June 30, 1998 consolidated financial statements.
2. During the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".
SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of SFAS No. 130
had no impact on the Company's net loss or stockholders' equity. SFAS No. 130
requires unrealized gains or losses on marketable securities and unearned
compensation related to a stock bonus plan, which prior to adoption were
reported separately in stockholders' equity, to be included in accumulated other
comprehensive income (loss). Prior year financial statements have been
reclassified to conform to the requirements of SFAS No. 130.
The components of comprehensive loss are as follows:
Three months ended March 31,
1999 1998
--------- ---------
Net loss ($158,771) ($188,783)
Change in unrealized gain (loss)
on marketable securities (78,346) (34,130)
Unearned compensation - stock
option plan 26 26
--------- ---------
Comprehensive loss ($237,091) ($222,887)
--------- ---------
7
<PAGE>
Nine months ended March 31,
1999 1998
--------- ---------
Net loss ($1,081,172) ($ 418,906)
Change in unrealized gain (loss)
on marketable securities 126,426 64,613
Unearned compensation - stock
option plan 77 77
----------- -----------
Comprehensive loss ($ 954,669) ($ 354,216)
----------- -----------
The components of accumulated other comprehensive income (loss) are as follows:
March 31, June 30,
1999 1998
----------- -----------
Unrealized gain (loss) on
marketable equity securities $67,538 ($58,888)
Unearned compensation - stock
option plan (26) (103)
----------- -----------
Accumulated other comprehensive
income (loss) $67,512 ($58,991)
----------- -----------
3. During fiscal year 1999, the shareholders approved a proposal to increase the
number of shares of common stock authorized for issuance under the Amended and
Restated 1996 Incentive and Nonqualified Stock Option Plan from 750,000 shares
to 2,000,000 shares.
4. Certain prior period amounts were reclassified to conform with the current
period presentation.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 (the "Act"). The Company
desires to avail itself of certain "safe harbor" provisions of the Act and
therefore is including this special note to enable it to do so. The
forward-looking statements contained herein involve certain risks and
uncertainties. The Company's actual results and experience could differ
materially from those anticipated in these forward-looking statements as a
result of many factors, including changes in the markets and/or regions
currently served by the Company and in those markets and/or regions that the
Company may expand into; changes in the insurance industry; the Company's
inability to retain current or new hearing officers; changes in the public court
system; and the degree and timing of the market's acceptance of the Company's
electronic settlement and arbitration and mediation management programs.
General
The Company provides arbitration and mediation services to insurance
companies, law firms, self-insured corporations, municipalities and individuals.
To date, the Company has focused the majority of its marketing efforts on
developing relationships, and expanding existing relationships, with large
corporations and law firms which the Company believes are some of the largest
consumers of arbitration and mediation services.
The Company opened for business in March 1992 in New York and currently has
hearing officers and conference facilities available nationwide.
With the ability to provide arbitration and mediation services
nationwide, the Company's objective is to offer a viable, cost efficient and
timely alternative to the court system and become one of the leading providers
of arbitration and mediation services. The Company intends to achieve this goal
by employing the following strategies: (1) the Company initiated an advertising
campaign during the third quarter of fiscal year 1998 intended to increase
awareness of its services with respect to litigants in most types of civil
disputes, including complex commercial issues, construction, employment,
matrimonial and worker's compensation cases. Total advertising and external
public relations costs incurred with respect thereto approximated $291,000 for
the nine months ended March 31, 1999; (2) in order to increase business, the
Company is currently pursuing exclusive relationships with corporations and law
firms in order to obtain contracts on a regional and national basis; (3) the
Company is attempting to broaden its client base by attracting more complex
commercial cases; (4) the Company has developed the NAMSYS software that it
intends to market to high volume users of arbitration and mediation services;
(5) the Company has developed an internet settlement product that is intended to
complement its existing arbitration and mediation services; and (6) the Company
is exploring strategic alliances with business entities that have the ability to
promote NAM's services to their customers.
9
<PAGE>
Third Quarter Ended March 31, 1999 Compared to Third Quarter Ended
March 31, 1998
Revenues. Revenues increased slightly to $857,530 for the third quarter
ended March 31, 1999 from $847,722 for the comparable prior period. The number
of cases heard in the current period increased by approximately 4% from the
prior year. At the end of the second quarter, the Company realigned its sales
operations in order to enhance its ability to process a higher volume of cases
as well as to better market its services to potential customers. Management
believes the steps taken will enable the Company to regain its momentum in
servicing an increasing number of cases when comparing like-periods year to
year.
Cost of Services. Cost of services increased slightly to $213,156 for the
third quarter ended March 31, 1999 from $209,401 for the third quarter ended
March 31, 1998. The higher volume of business serviced resulted in greater
hearing officer fees. In addition, the cost of services as a percentage of
revenues remained stable at 25% in both periods. The ratio of cost of services
to revenues will fluctuate based on the number of hours per case, as well as the
ability (or inability) of an office to take advantage of volume arrangements
with hearing officers which usually lower the cost per case.
Sales and Marketing. Sales and marketing costs decreased by 27% to $412,980
for the third quarter ended March 31, 1999 from $568,641 for the third quarter
ended March 31, 1998. Sales and marketing costs as a percentage of revenues
decreased to 48% in the third quarter of fiscal year 1999 from 67% in the third
quarter of fiscal year 1998. The decrease largely relates to advertising and
external public relations expenditures. Such costs decreased by approximately
$190,000 during the third quarter of fiscal year 1999 from the comparable prior
year period. The decrease was largely due to the commencement of an advertising
campaign during the third quarter of fiscal year 1998 whereby the Company placed
advertisements in a variety of media. The campaign was aimed at quickly making
NAM a brand name. As the Company believes it has achieved its intended progress
towards this goal, Management intends to continue advertising to maintain the
Company's name recognition but at a reduced level. As a result, advertising
expense declined in the third quarter of fiscal year 1999, as planned, and is
currently expected to decline substantially in the fourth quarter from the level
of expenditures incurred in the fiscal year 1998 comparable prior period.
Offsetting this decline was an increase in sales salaries and related costs of
approximately $18,800. Such increase was primarily due to a higher number of
account executives who are promoting NAM's services. Additionally, travel
expenses increased by approximately $15,800 as the sales force began marketing
the Company's electronic products, as well as its traditional services, to
corporate headquarters of national firms throughout the country.
10
<PAGE>
General and Administrative. General and administrative costs increased
8% to $514,358 for the third quarter ended March 31, 1999 from $476,775 for the
third quarter ended March 31, 1998. Most of the increase relates to additional
staff hired for data processing and other support functions. General and
administrative costs as a percentage of revenues increased to 60% in the third
quarter of fiscal year 1999 from 56% for the comparable prior period.
Other Income. Other income declined 43% to $124,193 for the third quarter
ended March 31, 1999 from $218,312 for the third quarter ended March 31, 1998.
Other income is composed primarily of investment income and realized gains
(losses) generated from investments. The decrease in other income is mainly due
to the decrease in realized gains from approximately $179,000 in the third
quarter of fiscal year 1998 to approximately $103,000 in the third quarter of
fiscal year 1999.
Income Taxes. Tax benefits resulting from net losses incurred for the
three-month periods ended March 31, 1999 and 1998 were not recognized as the
Company recorded a full valuation allowance against the net operating loss
carryforwards during the periods.
Net Loss. For the three months ended March 31, 1999, the Company had a
net loss of ($158,771) or ($0.05) loss per share as compared to a net loss of
($188,783) or ($0.06) loss per share for the three months ended March 31, 1998.
The loss decreased primarily due to lower sales and marketing expenses, mostly
attributable to the decline in advertising costs. This decrease was offset by a
decline in realized gains on investments.
Nine Months Ended March 31, 1999 Compared to Nine Months Ended March 31, 1998
Revenues. Revenues increased by 5% to $2,969,786 for the nine months ended
March 31, 1999 from $2,822,677 for the comparable prior period. The number of
cases heard in the current nine month period increased slightly from the prior
year. Furthermore, there was an increase in the average dollars earned per case.
At the end of the second quarter of fiscal year 1999, the Company realigned its
sales operations in order to enhance its ability to process a higher volume of
cases as well as to better market its services to potential customers.
Management believes the steps taken will enable the Company to regain its
momentum in servicing an increasing number of cases when comparing like-periods
year to year.
Cost of Services. Cost of services increased 9% to $778,944 for the nine
months ended March 31, 1999 from $714,509 for the nine months ended March 31,
1998. The increase relates primarily to a compensation charge relating to stock
options granted to a hearing officer as well as one-time payments to hearing
officers in connection with the commencement of exclusive arrangements with the
Company. Without these charges, the cost of services as a percentage of revenues
remained stable at 25% for the first nine months of fiscal years 1999 and 1998,
respectively. The ratio of cost of services to revenues will fluctuate based on
the number of hours per case, as well as the ability (or inability) of an office
to take advantage of volume arrangements with hearing officers which usually
lower the cost per case.
11
<PAGE>
Sales and Marketing. Sales and marketing costs increased 11% to $1,531,843
for the nine months ended March 31, 1999 from $1,385,612 for the nine months
ended March 31, 1998. Sales and marketing costs as a percentage of revenues
increased to 52% for the first nine months of fiscal year 1999 from 49% for the
first nine months of fiscal year 1998. This increase largely relates to
advertising and external public relations expenditures. Such costs increased by
approximately $70,000 during the nine months ended March 31, 1999 from the
comparable prior year period. The increase was largely due to the commencement
of an advertising campaign during the third quarter of the 1998 fiscal year
whereby the Company placed advertisements in a variety of media. The campaign
was aimed at quickly making NAM a brand name. As the Company believes it has
achieved its intended progress towards this goal, Management intends to continue
advertising to maintain the Company's name recognition but at a reduced level.
As a result, advertising expense for the remainder of the 1999 fiscal year is
expected to decline substantially from the expenditures in the comparable prior
period. The remaining increase in sales and marketing primarily pertains to
salaries and related items (approximately $65,000) as the sales force was
increased to pursue additional business opportunities. Additionally, travel
expenses increased by approximately $11,300 as a result of sales visits to
corporate headquarters of targeted clients throughout the country.
General and Administrative. General and administrative costs increased
12% to $1,615,034 for the nine months ended March 31, 1999 from $1,446,532 for
the nine months ended March 31, 1998. A portion of the increase (approximately
$36,000) relates to costs incurred in connection with seminars/conferences
sponsored by the Company for the benefit of the arbitration and mediation
industry. The remaining increase of approximately $125,000 relates primarily to
salary and related items due to increases in staff for data processing and other
support functions. General and administrative costs as a percentage of revenues
increased to 54% in the first nine months of fiscal year 1999 from 51% for the
comparable prior period.
Other Income (Expenses). Other income (expenses) changed from income of
$305,070 for the nine months ended March 31, 1998 to an expense of ($125,137)
for the nine months ended March 31, 1999. Other income (expense) is composed
primarily of investment income and realized gains (losses) generated from
investments. During the first nine months of the 1999 fiscal year, the Company
sold a substantial portion of its marketable securities. As a result, net
realized losses approximated $200,000 in the first nine months of fiscal year
1999 as compared to $178,000 of realized gains in the comparable prior period.
In addition, investment income also declined as the Company reduced its
investment portfolio and conservatively decreased its equity portfolio in favor
of a larger concentration in money market funds.
12
<PAGE>
Income Taxes. Tax benefits resulting from net losses incurred for the
nine-month periods ended March 31, 1999 and 1998 were not recognized as the
Company recorded a full valuation allowance against the net operating loss
carryforwards during the periods.
Net Loss. For the nine months ended March 31, 1999, the Company had a
net loss of ($1,081,172) or ($0.32) loss per share as compared to a net loss of
($418,906) or ($0.13) loss per share for the nine months ended March 31, 1998.
The loss increased primarily due to greater expenditures for the advertising
campaign and losses realized from the sale of marketable securities, as well as
higher costs incurred to support the Company's anticipated future growth.
Liquidity and Capital Resources
At March 31, 1999, the Company had working capital surplus of $2,116,538
compared to $3,060,771 at June 30, 1998. The decrease in working capital
occurred as a result of (1) the loss from operations and (2) realized losses
from the sales of marketable securities. Net cash used in operating activities
was $892,672 for the nine months ended March 31, 1999 versus $556,898 in the
prior comparable period.
Net cash provided by investing activities was $1,268,210 for the nine
months ended March 31, 1999 versus $534,448 in the comparable prior period.
During the first nine months of fiscal year 1999, various investments in
government securities matured and the Company sold a large portion of its
corporate bonds and equity securities. Such proceeds were largely reinvested in
money market funds.
The Company anticipates that cash flows, together with cash and
marketable securities on hand, will be sufficient to fund the Company's
operations for the next year.
The Year 2000
The Company continues to evaluate the impact of the Year 2000 issue on its
business and currently does not expect to incur significant costs associated
with Year 2000 compliance or that Year 2000 issues will have a material impact
on the Company's business, results of operations or financial condition. The
Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Company's financial
reporting system is currently Year 2000 compliant. The relational database
system used to manage the operations of the Company is already capable of
recognizing four digits to designate the year. The Company has also converted
its usage of the date fields from two digits to four digits with respect to its
major operating system. The final components of the system are anticipated to be
Year 2000 compliant before the end of the fiscal year. The Company has also
contacted most of its major vendors to ensure that they have appropriate plans
to address Year 2000 issues.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
An action entitled National Arbitration Forum, Inc.
v. NAM Corporation, pending in Federal District Court of
Minnesota, was commenced on February 4, 1999 against the
Company seeking (i) to cancel the Company's registered
trademark National Arbitration & Mediation, (ii) an order
declaring plaintiff's use of its trademark does not infringe
upon the Company's mark, and (iii) unspecified damages. This
action arose out of the Company's efforts to enforce its
trademark rights against the plaintiff. On April 23, 1999, the
matter was settled, without further litigation activities, to
the parties' mutual satisfaction.
Item 2. Changes in Securities and Use of Proceeds.
In November 1996, the Company raised additional
capital through an initial public offering of its securities.
Net proceeds after offering expenses approximated $4,700,000
of which $1,315,000 had been utilized through June 30, 1998 as
disclosed in the Company's Form 10-KSB. During the nine months
ended March 31, 1999, the Company additionally expended
approximately $1,277,800 for working capital and general
corporate purposes, including its advertising campaign.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of matters to a Vote of Security Holders.
None.
Item 5. Other information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------ -----------------------
<S> <C>
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws of the Company, as amended (4)
10.1 1996 Stock Option Plan, amended and restated (4)
10.2 Employment Agreement between Company and Roy Israel(3)
10.2.1 Amendment to Employment Agreement between Company and Roy Israel (4)
10.3 Employment Agreement between Company and Cynthia Sanders (4)
10.4 Employment Agreement between Company and Daniel Jansen (1)
10.5 Employment Agreement between Company and Patricia Giuliani-Rheaume (2)
10.7 Lease Agreement for Great Neck, New York facility (1)
27 Financial Data Schedule **
</TABLE>
14
<PAGE>
(1) Incorporated herein in its entirety by reference to the Company's
Registration Statement on Form SB-2, Registration No. 333-9493, as
filed with the Securities and Exchange Commission on August 2,
1996.
(2) Incorporated herein in its entirety by reference to the Company's
1997 Annual Report on Form 10-KSB.
(3) Incorporated herein in its entirety by reference to the Company's
Quarterly Report on Form 10-QSB for the quarter ended March 31,
1998.
(4) Incorporated herein in its entirety by reference to the Company's
1998 Annual Report on Form 10-KSB.
** Filed herewith.
(b) Reports on Form 8-K. Form 8-K was filed on March 26, 1999 to
announce the Company's extension of its March 1998 purchase plan
to acquire up to 600,000 shares of its common stock during a
one-year period.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NAM CORPORATION
Date: May 13, 1999 By: /s/ Roy Israel
--------------------------------
Roy Israel, President and CEO
Date: May 13, 1999 By: /s/ Patricia A. Giuliani-Rheaume
--------------------------------
Patricia A. Giuliani-Rheaume,
Vice President, Treasurer and CFO
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1999
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