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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of Earliest Event Reported): March 29, 2000
(February 15, 2000)
NAM CORPORATION
(Exact Name of Registrant as Specified in Charter)
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<CAPTION>
<S> <C> <C>
Delaware 0-21419 23-2753988
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
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1010 Northern Boulevard
Great Neck, New York 11021
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 829-4343
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Item 5. Other Events.
On February 15, 2000, we issued 1,850 shares of Series A Exchangeable
Preferred Stock for an aggregate purchase price of $1,850,000. We also issued
warrants to purchase an aggregate of 46,250 shares of our common stock at an
exercise price of $10.52 per share, exercisable on or after August 15, 2000 and
expiring on the close of business on August 15, 2005. The offering of our Series
A Exchangeable Preferred Stock and warrants was made pursuant to Rule 506 of
Regulation D of the Securities Act of 1933, as amended (the "Securities Act").
On February 16, 2000, we entered into an Equity Line of Credit
Agreement with Moldbury Holdings Limited. Under this agreement, we have the
right, until February 15, 2003, to require that Moldbury Holdings Limited
purchase between $500,000 and $7,000,000 of our common stock. The maximum and
minimum amounts that we can require Moldbury Holdings Limited to purchase at any
given time is subject to a floating number based on our closing bid price and
our average trading volume in a thirty day period. The price per share in each
such purchase shall be the greater of (i) 89% of the average closing bid price
for the day of our notice to Moldbury Holdings Limited requesting its purchase,
the two days preceding our notice, and the two days following our notice and
(ii) the minimum price set by us for such purchase. Moldbury Holdings Limited is
not required to make any purchase if the shares being purchased are not
registered pursuant to a then-effective registration statement. This offering
was made pursuant to Rule 506 of Regulation D of the Securities Act.
On February 17, 2000, as part of the above described transaction, we
issued a warrant to Moldbury Holdings Limited to purchase up to 60,000 shares of
our common stock at an exercise price of $9.34 per share, seventy-five percent
(75%) of which vested and became exercisable on February 17, 2000 and the
remaining twenty-five percent (25%) which will vest and become exercisable after
Moldbury Holdings Limited has invested three million five hundred thousand
dollars ($3,500,000) to purchase shares of common stock under the terms and
conditions of the Equity Line of Credit Agreement. Such warrants expire on the
close of business on February 17, 2003. This issuance was made pursuant to Rule
506 of Regulation D of the Securities Act.
As part of such transactions, we paid $92,500 and issued 10,000 shares
of our common stock to Trinity Capital Advisors, Inc., which acted as placement
agent for the offerings.
Description of our Series A Exchangeable Preferred Stock
As of March 1, 2000, we had authorized 5,000,000 shares of Preferred
Stock, of which 2,100 have been designated Series A Exchangeable Preferred
Stock. The Series A Exchangeable Preferred Stock has the following terms:
o No voting rights, except that holders of 75% of the Series A
Exchangeable Preferred Stock must approve changes to the Certificate
of Designation for the Series A Exchangeable Preferred Stock and
issuances of our securities with rights senior to the Series A
Exchangeable Preferred Stock.
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o Dividends accrue at a rate of 4% annually, unless our 30 day average
trading price is equal to or greater than $9.00 at any time after
July 15, 2000, in which case dividends will cease to accrue and
accrued but unpaid dividends will be canceled. Dividends may be
paid, at our option, in cash or in registered common stock.
o In the event of our liquidation, the holders of the Series A
Exchangeable Preferred Stock shall receive, before any payments to
our common stock holders, $1,000 per share plus any accrued but
unpaid dividends.
o Holders of the Series A Exchangeable Preferred Stock may exchange
such shares into shares of our common stock at any time and must
exchange such shares upon our written request which cannot be made
until the earlier of February 14, 2002 or the date upon which the
average closing bid price of our common stock for five consecutive
trading days is at least $10.00 and our average daily trading volume
for the thirty consecutive trading days ending on the fifth day is
at least 40,000 shares and the common stock underlying the
outstanding Series A Exchangeable Preferred Stock is registered
pursuant to a then-effective registration statement.
o Until July 15, 2000 the exchange rate for each share of the Series A
Exchangeable Preferred Stock is equal to the stated value of $1,000
divided by the Set Price, which is $10.45.
o On July 15, 2000 and after, the exchange rate for each share of
Series A Exchangeable Preferred Stock is equal to $1,000 divided by
the lesser of (i) the Set Price or (ii) the Market Price, which is
the average of any three consecutive closing bid prices of our
common stock during the thirty trading day period ending on the day
immediately prior to the exchange.
o In the event that at the time of any exchange, the exchange rate per
share is less than $6.00, at our option, we can pay the exchange in
common stock, cash, or a combination of common stock and cash.
o Until February 14, 2001, the exchange rate will never be greater
than the Set Price or less than $2.375.
o After the earlier of an underwritten secondary offering of our
common stock or August 15, 2000, we can redeem the Series A
Exchangeable Preferred Stock, in whole or in part, at a price equal
to $1,400 per share, plus accrued, but unpaid dividends.
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Pursuant to the request of Nasdaq, the following is a pro forma balance
sheet and income statement dated as of and for the seven months ended January
31, 2000 which demonstrates the Company's compliance with the continued listing
requirements of the Nasdaq SmallCap Market.
The unaudited pro forma consolidated information gives effect to the
issuance of 1,850 shares of Series A Exchangeable Preferred Stock which occurred
on February 15, 2000 and to the consummation of the Equity Line of Credit
Agreement which occurred on February 16, 2000.
The unaudited pro forma consolidated balance sheet at January 31, 2000
assumes that the issuance of the Series A Exchangeable Preferred Stock and the
consummation of the Equity Line of Credit Agreement occurred on January 31,
2000. The unaudited pro forma consolidated statement of operations for the seven
months ended January 31, 2000 assumes that the issuance of the Series A
Exchangeable Preferred Stock and the consummation of the Equity Line of Credit
Agreement occurred on July 1, 1999.
The unaudited pro forma consolidated financial information is not
necessarily indicative of the actual results that would have been reported if
the transaction described above had occurred as of the dates referenced above
nor do they purport to be indicative of the results of future operations. In the
opinion of management, all adjustments necessary to present fairly such pro
forma consolidated financial information have been made. Our future consolidated
financial statements will reflect the transactions as of the consummation dates
of February 15 and 16, 2000, respectively.
The pro forma consolidated financial information should be read in
conjunction with our consolidated financial statements as of June 30, 1999 and
1998 and for the two years ended June 30, 1999 included in our Form 10-KSB and
our consolidated financial statements as of December 31, 1999 and for the six
months ended December 31, 1999 included in our Form 10-QSB previously filed.
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NAM Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET (UNAUDITED)
January 31, 2000
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Pro Forma
Historic Adjustments Pro Forma
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<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 776,600 $ 1,850,000 A $ 2,514,100
(112,500) C
Marketable securities 477,560 477,560
Accounts receivable (net of allowance for
doubtful accounts of $110,000) 424,166 424,166
Receivable for securities sold 196,075 196,075
Other receivables 48,094 48,094
Prepaid expenses 66,020 66,020
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Total current assets 1,988,515 3,726,015
FURNITURE AND EQUIPMENT - AT COST, less
accumulated depreciation 299,961 299,961
OTHER ASSETS 30,711 30,711
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$ 2,319,187 $ 4,056,687
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 241,217 $ 241,217
Accrued liabilities 213,011 213,011
Accrued payroll and employee benefits 61,470 61,470
Deferred revenues 246,680 246,680
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Total current liabilities 762,378 762,378
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value; 5,000,000
shares authorized; none issued - 1,850,000 A 1,527,000
(183,000) A
(140,000) A
Common stock - $.001 par value; 15,000,000
shares authorized; 3,416,233 shares issued
and outstanding 3,416 10 B 3,426
Additional paid-in capital 4,830,616 183,000 A 5,041,106
140,000 A
(10) B
(112,500) C
Accumulated deficit (3,301,506) (3,301,506)
Accumulated other comprehensive income 24,283 24,283
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Total stockholders' equity 1,556,809 3,294,309
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$ 2,319,187 $ 4,056,687
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</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
consolidated financial statements.
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NAM Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Seven
Months ended January 31, 2000
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<CAPTION>
Pro Forma
Historic adjustments Pro Forma
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<S> <C> <C> <C>
Net revenues $ 2,254,413 $ 2,254,413
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Operating costs and expenses
Cost of services 566,225 566,225
Sales and marketing expenses 1,217,835 1,217,835
General and administrative expenses 1,413,633 1,413,633
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3,197,693 3,197,693
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Loss from operations (943,280) (943,280)
Other income
Investment income 293,161 293,161
Other income 12,060 12,060
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305,221 305,221
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Loss before income taxes (638,059) (638,059)
Income taxes - -
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NET LOSS (638,059) (638,059)
Preferred Stock Dividend - (183,000)(d) (183,000)
Net loss attributable to common stockholders $ (638,059) $ (821,059)
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Net loss per common share - basic and diluted $ (0.19) $ (0.24)
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Weighted average shares outstanding - basic
and diluted 3,413,625 3,413,625
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</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
consolidated financial statements.
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NAM Corporation and Subsidiaries
Notes to Unaudited Pro Forma Consolidated Balance Sheet and Unaudited Pro Forma
Consolidated Statement of Operations
January 31, 2000
The unaudited pro forma consolidated balance sheet at January 31, 2000 assumes
that the issuance of the Series A Exchangeable Preferred Stock and the
consummation of the Equity Line of Credit Agreement occurred on January 31,
2000. The unaudited pro forma consolidated statement of operations for the seven
months ended January 31, 2000 assumes that the issuance of the Series A
Exchangeable Preferred Stock and the consummation of the Equity Line of Credit
Agreement occurred on July 1, 1999.
(A) To record the issuance of 1,850 shares of Series A Exchangeable Preferred
Stock with a stated value of $1,000 per share or $1,850,000 in total.
Gross Proceeds from issuance of preferred stock $1,850,000
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Allocation of Gross Proceeds
Fair value of preferred stock 1,527,000
Fair value of warrants 183,000
Fair value of beneficial conversion feature 140,000
(B) To record the issuance of 10,000 shares of common stock in connection with
the equity financing agreements.
(C) To record financing costs of $112,500 with respect to the issuance of the
preferred stock and equity line of credit agreement.
(D) To record the accretion of the beneficial conversion feature and the
4% preferred stock dividend.
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Item 7. Exhibits.
EXHIBIT LIST
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Exhibit Number Description
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4.1 Certificate of Designation of Series A Exchangeable Preferred Stock, filed with
the State of Delaware Office of the Secretary of State on February 15, 2000 (1)
4.2 Exchangeable Preferred Stock and Warrants Purchase Agreement, dated as of
February 15, 2000 (1)
4.3 Preferred Stock Registration Rights Agreement, dated as of February 15, 2000 (1)
Form of Stock Purchase Warrant (1)
4.5
Private Equity Line of Credit Agreement between Moldbury Holdings Limited and
4.6 the Company, dated as of February 16, 2000 (1)
Private Equity Line of Credit Registration Rights Agreement, dated as of
4.7 February 16, 2000 (1)
Stock Purchase Warrant for Moldbury Holdings Limited (1)
4.8
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(1) Incorporated herein in its entirety by reference to the Company's
Registration Statement on Form SB-2, Registration No. 333-33420, as filed
with the Securities and Exchange Commission on March 28, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
NAM CORPORATION
By: /s/ Roy Israel
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Name: Roy Israel
Title: Chief Executive Officer and President
By: /s/ Patricia Giuliani-Rheaume
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Name: Patricia Giuliani-Rheaume
Title: Chief Financial Officer and Vice President
Date: March 29, 2000
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