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 December 31, 1998
[ ] 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 February 10, 1999, 3,334,978 shares of common stock of the issuer were
outstanding.
Transitional small business disclosure format (check one): Yes No X
--- ---
<PAGE>
NAM CORPORATION
INDEX
PART I. FINANCIAL INFORMATION Page
----
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
Consolidated Balance Sheets at December 31,
1998 and June 30,1998 3
Consolidated Statements of Operations for
the three and six month periods ended
December 31, 1998 and 1997 4
Consolidated Statements of Changes in
Stockholders' Equity for the six month
periods ended December 31, 1998 and 1997 5
Consolidated Statements of Cash Flows
for the six month periods ended
December 31, 1998 and 1997 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 2. Changes in Securities
and Use of Proceeds 14
Item 6. Exhibits and Reports on Form 8-K 15
2
<PAGE>
NAM Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
December 31, June 30,
1998 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,104,576 $ 1,417,280
Marketable securities 392,797 1,950,880
Accounts receivable (net of allowance for doubtful accounts of $90,000) 434,838 385,300
Other receivables 29,353 17,945
Prepaid expenses 104,536 45,080
----------- -----------
Total current assets 3,066,100 3,816,485
FURNITURE AND EQUIPMENT - AT COST, less accumulated depreciation 254,889 248,679
OTHER ASSETS 48,831 44,392
------------ -----------
$ 3,369,820 $ 4,109,556
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 300,912 $ 315,323
Accrued liabilities 202,476 163,641
Accrued payroll and employee benefits 43,147 126,361
Deferred revenues 169,267 150,389
----------- -----------
Total current liabilities 715,802 755,714
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 4,795,933 4,778,179
Accumulated deficit (2,291,082) (1,368,681)
Accumulated other comprehensive income (loss) 145,832 (58,991)
----------- -----------
Total stockholders' equity 2,654,018 3,353,842
----------- -----------
$ 3,369,820 $ 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 December 31, Six months ended December 31,
1998 1997 1998 1997
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net revenues $1,114,307 $1,111,230 $2,112,256 $ 1,974,955
---------- ---------- ---------- -----------
Operating costs and expenses
Cost of services 295,614 280,639 565,788 505,108
Sales and marketing expenses 428,257 427,420 1,118,863 816,971
General and administrative expenses 558,024 488,359 1,100,676 969,757
---------- ---------- ---------- -----------
1,281,895 1,196,418 2,785,327 2,291,836
---------- ---------- ---------- -----------
Loss from operations (167,588) (85,188) (673,071) (316,881)
Other income (expenses)
Investment income (loss) 29,194 40,852 (259,432) 83,515
Other income 9,073 2,833 10,102 3,243
---------- ---------- ---------- -----------
38,267 43,685 (249,330) 86,758
---------- ---------- ---------- -----------
Loss before income taxes (129,321) (41,503) (922,401) (230,123)
Income taxes - - - -
---------- ---------- ---------- -----------
NET LOSS $ (129,321) $ (41,503) $ (922,401) $ (230,123)
========== ========= ========== ==========
Net loss per common share - basic and diluted $ (0.04) $ (0.01) $ (0.28) $ (0.07)
========== ========= ========== ==========
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
Six months ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Additional
Common stock paid-in Accumulated
Shares Amount capital deficit
--------------------------------------------------------
<S> <C> <C> <C> <C>
Balances at July 1, 1997 3,334,978 $ 3,335 $ 4,772,569 $ (739,547)
Compensation related to stock option plan 2,805
Net loss (230,123)
Change in unrealized gain on marketable securities
Earned portion of stock bonus plan
Comprehensive loss
--------------------------------------------------------
Balances at December 31, 1997 3,334,978 $ 3,335 $ 4,775,374 $ (969,670)
--------------------------------------------------------
Balances at July 1, 1998 3,334,978 $ 3,335 $ 4,778,179 $ (1,368,681)
Compensation related to stock option plan 17,754
Net loss (922,401)
Change in unrealized (loss) gain on marketable securities
Earned portion of stock bonus plan
Comprehensive loss
========================================================
Balances at December 31, 1998 3,334,978 $ 3,335 $ 4,795,933 $ (2,291,082)
========================================================
</TABLE>
<PAGE>
(RESTUBBED TABLE)
<TABLE>
<CAPTION>
Accumulated
other Total Compre-
comprehensive stockholders' hensive
income (loss) equity loss
-----------------------------------------------
<S> <C> <C> <C>
Balances at July 1, 1997 $ 79,019 $ 4,115,376
Compensation related to stock option plan 2,805
Net loss (230,123) $ (230,123)
Change in unrealized gain on marketable securities 98,743 98,743 98,743
Earned portion of stock bonus plan 51 51 51
-----------------
Comprehensive loss $ (131,329)
-----------------
------------------------------
Balances at December 31, 1997 $ 177,813 $ 3,986,852
------------------------------
Balances at July 1, 1998 $ (58,991) $ 3,353,842
Compensation related to stock option plan 17,754
Net loss (922,401) $ (922,401)
Change in unrealized (loss) gain on marketable securities 204,772 204,772 204,772
Earned portion of stock bonus plan 51 51 51
-----------------
Comprehensive loss $ (717,578)
-----------------
==============================
Balances at December 31, 1998 $ 145,832 $ 2,654,018
==============================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
NAM Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended December 31,
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (922,401) $ (230,123)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation and amortization 49,350 33,134
Losses on sales of marketable securities 303,130 1,039
Losses on sales of furniture and equipment 523 -
Earned portion of stock bonus plan 52 51
Compensation related to stock option plan 17,754 2,805
Changes in operating assets and liabilities
(Increase) in accounts receivable (49,538) (63,499)
(Increase) decrease in other receivables (11,408) 20,488
(Increase) in prepaid expenses (59,456) (18,490)
(Increase) decrease in other assets (8,734) 4,998
Increase (decrease) in accounts payable and accrued liabilities 24,424 (29,479)
(Decrease) in accrued payroll and employee benefits (83,214) (70,215)
Increase (decrease) in deferred revenues 18,878 (963)
----------- ----------
Net cash used in operating activities (720,640) (350,254)
----------- ----------
Cash flows from investing activities
Purchases of marketable securities (818,813) (1,393,118)
Proceeds from maturities of marketable securities 570,000 1,545,000
Proceeds from sales of marketable securities 1,708,647 479,724
Increase in payable for securities purchased - 38,662
Purchases of furniture and equipment (51,898) (93,149)
----------- ----------
Net cash provided by investing activities 1,407,936 577,119
----------- ----------
Cash flows from financing activities
----------- ----------
Net cash provided by financing activities - -
----------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 687,296 226,865
Cash and cash equivalents at beginning of period 1,417,280 175,486
=========== ==========
Cash and cash equivalents at end of period $ 2,104,576 $ 402,351
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
NAM CORPORATION and SUBSIDIARIES
Notes to Consolidated Financial Statements
Six months ended December 31, 1998
(Unaudited)
1. The consolidated balance sheet as of December 31, 1998 and the related
consolidated statements of operations for the six month periods ended December
31, 1998 and 1997 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 December 31, 1998 and
for all periods presented, consisting of normal recurring adjustments, have been
made. Results of operations for the six month period ended December 31, 1998 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 earnings 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 December 31,
1998 1997
---- ----
Net loss ($129,321) ($41,503)
Change in unrealized gain (loss)
on marketable securities 162,486 (14,188)
Unearned compensation - stock
option plan 25 26
--------- ---------
Comprehensive income (loss) $ 33,190 ($55,665)
--------- ---------
7
<PAGE>
Six months ended December 31,
1998 1997
---- ----
Net loss ($922,401) ($230,123)
Change in unrealized gain (loss)
on marketable securities 204,772 98,743
Unearned compensation - stock
option plan 51 51
--------- ----------
Comprehensive loss ($717,578) ($131,329)
---------- ----------
The components of accumulated other comprehensive income (loss) are as follows:
December 31, June 30,
1998 1998
------------ ----------
Unrealized gain (loss) on
marketable equity securities $145,883 ($58,888)
Unearned compensation - stock
option plan (51) (103)
------- --------
Accumulated other comprehensive
income (loss) $145,832 ($58,991)
-------- --------
3. The Company is subject to various forms of litigation in the normal course of
business. It is the opinion of management that the outcome of such litigation
will not have a material adverse effect on the Company's financial condition.
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 NAMSYS
software program.
General
The Company provides alternative dispute resolution ("ADR") 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 ADR services.
The Company opened for business in March 1992 in New York and currently has
offices in New York, Pennsylvania, Massachusetts, Tennessee, South Carolina and
Illinois.
With the ability to provide ADR 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 ADR 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 $293,000 for the six months ended December 31, 1998; (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 cases; (4) the Company has developed the NAMSYS software
that it intends to market to high volume users of ADR services; (5) the Company
is also developing an ADR internet 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 ADR services to their customers.
9
<PAGE>
Second Quarter Ended December 31, 1998 Compared to Second Quarter Ended December
31, 1997
Revenues. Revenues increased slightly to $1,114,307 for the second quarter
ended December 31, 1998 from $1,111,230 for the comparable prior period. The
number of cases heard in the current period decreased from the prior year.
However, an increase in the average dollars earned per case more than offset
this decline. 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 5% to $295,614 for the second
quarter ended December 31, 1998 from $280,639 for the second quarter ended
December 31, 1997. The increase of $14,975 relates primarily to a non-recurring
charge for the granting and vesting of stock options with respect to a hearing
officer. Without this charge, 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 increased slightly to
$428,257 for the second quarter ended December 31, 1998 from $427,420 for the
second quarter ended December 31, 1997. Sales and marketing costs as a
percentage of revenues remained stable at 38% for both periods.
General and Administrative. General and administrative costs increased
14% to $558,024 for the second quarter ended December 31, 1998 from $488,359 for
the second quarter ended December 31, 1997. A portion of the increase relates to
costs incurred in connection with an annual conference sponsored by the Company
for the benefit of the ADR industry. Secondly, after the second quarter of the
1998 fiscal year, additional staff were hired for data processing and other
support functions. Finally, higher printing costs were incurred in the second
quarter of fiscal year 1999 relating to the Company's brochures and other
marketing materials. General and administrative costs as a percentage of
revenues increased to 50% in the second quarter of fiscal year 1999 from 44% for
the comparable prior period.
Other Income. Other income declined 12% to $38,267 for the second quarter
ended December 31, 1998 from $43,685 for the second quarter ended December 31,
1997. 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 the average invested portfolio during the current period.
10
<PAGE>
Income Taxes. Tax benefits resulting from net losses incurred for the
three-month periods ended December 31, 1998 and 1997 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 December 31, 1998, the Company had
a net loss of ($129,321) as compared to a net loss of($41,503) for the three
months ended December 31, 1997. The loss increased primarily due to higher
general and administrative costs incurred to support the Company's anticipated
future growth.
Six Months Ended December 31, 1998 Compared to Six Months Ended December 31,
1997
Revenues. Revenues increased by 7% to $2,112,256 for the six months ended
December 31, 1998 from $1,974,955 for the comparable prior period. The number of
cases heard in the current six 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 12% to $565,788 for the six
months ended December 31, 1998 from $505,108 for the six months ended December
31, 1997. The increase relates primarily to a non-recurring charge for the
granting and vesting of stock options with respect 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 declined from 26% in the first six months
of fiscal year 1998 to 25% in the first six months of fiscal year 1999. 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 increased 37% to $1,118,863
for the six months ended December 31, 1998 from $816,971 for the six months
ended December 31, 1997. Sales and marketing costs as a percentage of revenues
increased to 53% for the first six months of fiscal year 1999 from 41% for the
first six months of fiscal year 1998. This increase largely relates to
advertising and public relations expenditures. Such costs increased by
approximately $260,000 during the six months ended December 31, 1998 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
made significant progress in achieving 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
periods. The remaining increase in sales and marketing primarily pertains to
salaries and related items (approximately $30,000). Firstly, higher sales
commissions were incurred based on the higher volume of business. Secondly,
marketing and public relations personnel were hired after the first quarter of
the 1998 fiscal year in connection with the advertising campaign.
11
<PAGE>
General and Administrative. General and administrative costs increased
14% to $1,100,676 for the six months ended December 31, 1998 from $969,757 for
the six months ended December 31, 1997. A portion of the increase relates to
costs incurred in connection with two seminars/conferences sponsored by the
Company for the benefit of the ADR industry. The remaining increase relates
primarily to salary and related items due to increases in staff after the first
quarter of the 1998 fiscal year for data processing and other support functions.
General and administrative costs as a percentage of revenues increased to 52% in
the first six months of fiscal year 1999 from 49% for the comparable prior
period.
Other Income (Expenses). Other income (expenses) changed from income of
$86,758 for the six months ended December 31, 1997 to an expense of ($249,330)
for the six months ended December 31, 1998. Other income (expense) is composed
primarily of investment income and realized gains (losses) generated from
investments. During the first half of the 1999 fiscal year, the Company sold a
substantial portion of its marketable securities. As a result, net realized
losses increased to approximately $303,000 in the first six months of fiscal
year 1999 from $1,000 in the comparable prior period. In addition, investment
income also declined as a result of the lower average invested portfolio during
the current period.
Income Taxes. Tax benefits resulting from net losses incurred for the
six-month periods ended December 31, 1998 and 1997 were not recognized as the
Company recorded a full valuation allowance against the net operating loss
carryforwards during the periods.
Net Loss. For the six months ended December 31, 1998, the Company had a
net loss of ($922,401) as compared to a net loss of ($230,123) for the six
months ended December 31, 1997. 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 general and administrative costs
incurred to support the Company's anticipated future growth.
12
<PAGE>
Liquidity and Capital Resources
At December 31, 1998, the Company had working capital surplus of $2,350,298
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 $720,640 for the six months ended December 31, 1998 versus $350,254 in the
prior comparable period.
Net cash provided by investing activities was $1,407,936 for the six months
ended December 31, 1998 versus $577,119 in the comparable prior period. During
the first half 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 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. The Company believes
it has meritorious defenses to such claims and intends to
defend the action vigorously.
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 six months
ended December 31, 1998, the Company additionally expended
approximately $1,100,700 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.
On December 17, 1998, the Company held its annual
meeting of shareholders. At the meeting, shareholders voted on
four proposals. The following represents the results of the
voting, both in person and by proxy:
Election of Directors:
Roy Israel 3,078,856 votes for;
0 votes against;
15,150 votes withheld.
Cynthia Sanders 3,074,856 votes for;
0 votes against;
19,150 votes withheld.
Daniel Jansen 3,075,756 votes for;
0 votes against;
18,250 votes withheld.
Anthony Mercorella 3,078,856 votes for;
0 votes against;
15,150 votes withheld.
Ronald Katz 3,079,256 votes for;
0 votes against;
14,750 votes withheld.
14
<PAGE>
For ratification of appointment of Grant Thornton LLP as the
Company's independent accountants for fiscal year 1999:
3,071,619 votes for;
13,787 votes against;
8,600 abstenations.
For approval of the amendment to the Amended and Restated 1996
Incentive and Nonqualified Stock Option Plan to increase the
number of shares of common stock authorized for issuance
thereunder from 750,000 shares to 2,000,000 shares:
1,718,140 votes for;
83,651 votes against;
42,785 abstenations;
1,249,430 not voted.
For approval of the amendment to the Amended and Restated 1996
Incentive and Nonqualified Stock Option Plan to increase the
number of options granted annually to each non-employee
director from options to purchase 1,000 shares to options to
purchase 2,500 shares:
2,975,370 votes for;
72,851 votes against;
42,785 abstenations.
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>
15
<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 December 31, 1997.
(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. None.
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: February 10, 1999 By: /s/ Roy Israel
----------------------------------
Roy Israel, President and CEO
Date: February 10, 1999 By: /s/ Patricia A. Giuliani-Rheaume
----------------------------------
Patricia A. Giuliani-Rheaume,
Vice President, Treasurer and CFO
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