<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 December 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 February 11, 2000, 3,432,233 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, 1999 and June 30, 1999 ............................. 3
Consolidated Statements of Operations
for the three and six month periods ended
December 31, 1999 and 1998 ...................................... 4
Consolidated Statements of Changes in
Stockholders' Equity and Comprehensive
Loss for the three and six month periods
ended Decemberf 31, 1999 and 1998 ............................... 5
Consolidated Statements of Cash Flows
for the six month periods ended
December 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 ....................................................... 8
PART II. OTHER INFORMATION
Item 2. Changes in Securities
and Use of Proceeds ..................................... 13
Item 6. Exhibits and Reports on Form 8-K ........................ 14
2
<PAGE>
NAM Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
----------- -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 866,020 $ 1,776,261
Marketable securities 638,318 436,283
Accounts receivable (net of allowance for doubtful
accounts of $110,000) 445,037 515,088
Other receivables 42,808 86,496
Prepaid expenses 66,908 79,918
----------- -----------
Total current assets 2,059,091 2,894,046
FURNITURE AND EQUIPMENT - AT COST, less accumulated depreciation 306,201 269,393
OTHER ASSETS 30,712 37,514
----------- -----------
$ 2,396,004 $ 3,200,953
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 253,207 $ 313,740
Accrued liabilities 202,404 249,551
Accrued payroll and employee benefits 45,536 166,620
Deferred revenues 230,379 238,224
----------- -----------
Total current liabilities 731,526 968,135
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;
3,416,233 and 3,370,739 shares issued and outstanding, respectively 3,416 3,371
Additional paid-in capital 4,828,875 4,797,637
Accumulated deficit (3,203,116) (2,663,446)
Accumulated other comprehensive income 35,303 95,256
----------- -----------
Total stockholders' equity 1,664,478 2,232,818
----------- -----------
$ 2,396,004 $ 3,200,953
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
NAM Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended December 31, Six months ended December 31,
1999 1998 1999 1998
---------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net revenues $1,069,044 $ 1,114,307 $ 1,975,752 $ 2,112,256
----------- ------------ ------------ -----------
Operating costs and expenses
Cost of services 272,865 295,614 494,408 565,788
Sales and marketing expenses 534,829 428,257 1,057,295 1,118,863
General and administrative expenses 583,481 558,024 1,219,421 1,100,676
---------- ------------ ------------ -----------
1,391,175 1,281,895 2,771,124 2,785,327
---------- ------------ ------------ -----------
Loss from operations (322,131) (167,588) (795,372) (673,071)
Other income (expenses)
Investment income (loss) 227,605 29,194 244,535 (259,432)
Other income 3,720 9,073 11,167 10,102
---------- ------------ ------------ -----------
231,325 38,267 255,702 (249,330)
---------- ------------ ------------ -----------
Loss before income taxes (90,806) (129,321) (539,670) (922,401)
Income taxes - - - -
---------- ------------ ------------ -----------
NET LOSS $ (90,806) $ (129,321) $ (539,670) $ (922,401)
========== ============ ============ ===========
Net loss per common share - basic and diluted $ (0.03) $ (0.04) $ (0.16) $ (0.28)
========== ============ ============ ===========
Weighted average shares outstanding - basic and diluted 3,415,506 3,334,978 3,413,186 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
Six months ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Common stock Additional
---------------------- paid-in Accumulated
Shares Amount capital deficit
-------------------------------------------------------------
<S> <C> <C> <C> <C>
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)
=============================================================
Balances at July 1, 1999 3,370,739 $3,371 $4,797,637 $(2,663,446)
Compensation related to stock option plan 10,444
Shares issued pursuant to restricted stock awards 36,744 36 (36)
Shares issued upon exercise of stock options 8,750 9 19,110
Gain on shareholder's stock 1,720
Net loss (539,670)
Change in unrealized gain (loss) on marketable securities
Comprehensive loss
-------------------------------------------------------------
Balances at December 31, 1999 3,416,233 $3,416 $4,828,875 $(3,203,116)
=============================================================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
[RESTUBED FOR TABLE ABOVE]
<TABLE>
<CAPTION>
Accumulated Unearned
other compensation- Total Compre-
comprehensive stock bonus stockholders' hensive
income (loss) plan equity loss
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Balances at July 1, 1998 $(58,888) $(103) $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
------------
Comprehensive loss $(717,629)
============
-----------------------------------------------
Balances at December 31, 1998 $145,884 $ (52) $2,654,018
===============================================
Balances at July 1, 1999 $ 95,256 $ - $2,232,818
Compensation related to stock option plan 10,444
Shares issued pursuant to restricted stock awards -
Shares issued upon exercise of stock options 19,119
Gain on shareholder's stock 1,720
Net loss (539,670) $(539,670)
Change in unrealized gain (loss) on marketable securities (59,953) (59,953) (59,953)
------------
Comprehensive loss $(599,623)
============
-----------------------------------------------
Balances at December 31, 1999 $ 35,303 $ - $1,664,478
===============================================
</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>
1999 1998
----------- ------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (539,670) $ (922,401)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation and amortization 59,020 49,350
(Gains) losses on sales of marketable securities (213,697) 303,130
Losses on sales/disposals of furniture and equipment 383 523
Earned portion of stock bonus plan - 52
Compensation related to stock option plan 10,444 17,754
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable 70,051 (49,538)
(Increase) in other receivables (11,738) (11,408)
Decrease (increase) in prepaid expenses 13,010 (59,456)
Decrease (increase) in other assets 2,911 (8,734)
(Decrease) increase in accounts payable and accrued liabilities (107,680) 24,424
(Decrease) in accrued payroll and employee benefits (121,084) (83,214)
(Decrease) increase in deferred revenues (7,845) 18,878
---------- -----------
Net cash used in operating activities (845,895) (720,640)
---------- -----------
Cash flows from investing activities
Purchases of marketable securities (718,056) (818,813)
Proceeds from sales of marketable securities 669,765 1,708,647
Proceeds from maturities of marketable securities - 570,000
Decrease in receivable for securities sold 55,426 -
Purchases of furniture and equipment (92,320) (51,898)
---------- -----------
Net cash (used in) provided by investing activities (85,185) 1,407,936
---------- -----------
Cash flows from financing activities
Issuance of common stock 19,119 -
Gain on shareholder's stock 1,720 -
---------- -----------
Net cash provided by financing activities 20,839 -
---------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (910,241) 687,296
Cash and cash equivalents at beginning of period 1,776,261 1,417,280
---------- -----------
Cash and cash equivalents at end of period $ 866,020 $ 2,104,576
========== ===========
</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, 1999
(Unaudited)
1. The consolidated balance sheet as of December 31, 1999 and the related
consolidated statements of operations for the six month periods ended December
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 December 31, 1999 and
for all periods presented, consisting of normal recurring adjustments, have been
made. Results of operations for the six month period ended December 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,
1999 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, 1999 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, which prior to
adoption was reported separately in stockholders equity, to be included in
accumulated other comprehensive income (loss).
The components of comprehensive income (loss) are as follows:
Three months ended December 31,
1998 1999
---- ----
Net loss ($129,321) ($90,806)
Change in unrealized gain
on marketable securities 162,486 32,120
-------- --------
Comprehensive income (loss) $ 33,165 ($58,686)
-------- --------
Six months ended December 31,
1998 1999
---- ----
Net loss ($922,401) ($539,670)
Change in unrealized gain (loss)
on marketable securities 204,772 (59,953)
-------- --------
Comprehensive income (loss) ($717,629) ($599,623)
--------- ---------
7
<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. Forward-looking
statements contained herein involve 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 legal and insurance industries; 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 its clickNsettle.com website and in-person
and video conferenced arbitration and mediation programs.
General
The Company provides alternative dispute resolution ("ADR") services
principally to insurance companies, law firms, corporations and municipalities,
on an in-person basis, via video conferencing and on the Internet through its
clickNsettle.com website. To date, the Company has focused the majority of its
marketing efforts on developing new relationships and expanding existing
relationships with these entities, which the Company believes are significant
consumers of ADR services. The Company believes that with its global roster of
qualified hearing officers, video conferencing capabilities, knowledge of
dispute resolution, reputation within the corporate and legal communities and
internet based dispute resolution programs it is uniquely positioned to provide
a comprehensive web-enabled solution to disputing parties worldwide.
The Company opened for business in March 1992 in New York and currently
operates from locations in New York, Pennsylvania, Massachusetts and Tennessee.
The Company's objective is to become the leading global provider of
web-enabled dispute resolution services; to offer one-stop shopping for anyone
involved in any type of dispute, anywhere in the world; and to provide this
service more quickly, economically and efficiently than previously possible. The
Company intends to achieve this goal by employing the following strategies: (1)
marketing its Internet settlement website, clickNsettle.com, which is designed
to attract a larger customer base on a global scale with lower incremental
costs; (2) expanding the functionality of clickNsettle.com to address
multi-party disputes, class-action litigation and other new markets, including
multi-jurisdictional claims which are becoming more commonplace as a result of
the global transition towards e-commerce.(3) focusing the advertising campaign
initiated during fiscal year 1998 towards building brand recognition of
clickNsettle.com. (4) accelerating efforts to secure exclusive relationships
with corporations and law firms in order to obtain contracts on a national and
regional basis by capitalizing on the Company's market position; (5) exploring
strategic alliances with business entities that have the ability to promote
clickNsettle.com and NAM's legacy ADR services to their customers; and (6)
becoming a primary provider of international dispute resolution services.
8
<PAGE>
In June 1999, the Company introduced clickNsettle.com, an Internet
website which offers a cost effective forum to resolve disputes globally using a
unique, fully interactive blind bid negotiating process. The service, with
patent pending, can be accessed 24 hours a day, 7 days a week and is being
targeted to the multi-billion dollar litigation market.
Although additional amounts will be expended in further expanding,
enhancing and marketing this service during most of fiscal year 2000, Management
believes that clickNsettle.com has the potential to be successful for the
following reasons: (1) designed to process a large volume of cases
electronically with a lower cost per case; (2) ability to broaden the Company's
client base as the program is beneficial to litigants with disputes that can be
resolved with a monetary settlement; (3) easy accessibility by potential users
via the Internet; (4) ability to reach potential users on a global basis; (5)
lead generator for traditional ADR business; (6) captures valuable case
information providing the user the ability to benchmark data on settlements by
injury and venue; and (7) reporting capabilities to summarize and provide
analysis of a client's entire ADR program including traditional arbitration and
mediation conferences and electronic settlements over the Internet.
Second Quarter Ended December 31, 1999 Compared to Second Quarter Ended December
31, 1998
Revenues. Revenues decreased 4% to $1,069,044 for the second quarter ended
December 31, 1999 from $1,114,307 for the comparable prior period. The decrease
in revenues is attributable to a decline in the number of in-person hearings
conducted at the Company's satellite offices as a result of the Company's shift
towards an internet based business with more efficient primary customer service
centers and national account arrangements rather than numerous smaller regional
locations. The decline was partially offset by revenues generated by
clickNsettle.com, the Company's Internet settlement website which was first
introduced in June 1999. During the second quarter of fiscal year 2000, the
Company introduced an enhanced version of clickNsettle.com which focused on its
unique, unlimited bid, real-time negotiating format. The Company believes that
continuous improvement of its internet negotiating model is critical to the
success of the clickNsettle.com website and will continue to invest resources in
this area.
Cost of Services. Cost of services decreased 8% to $272,865 for the
second quarter ended December 31, 1999 from $295,614 for the second quarter
ended December 31, 1998. The decrease in absolute dollars relates primarily to
the decrease in sales and to a charge in the second quarter of fiscal year 1999
for the granting and vesting of stock options with respect to a hearing officer.
As a result, the cost of services as a percentage of revenues decreased to 25.5%
for the second quarter of fiscal year 2000 from 26.5% for the second quarter 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.
9
<PAGE>
Sales and Marketing. Sales and marketing costs increased 25% to $534,829
for the second quarter ended December 31, 1999 from $428,257 for the second
quarter ended December 31, 1998. Sales and marketing costs as a percentage of
revenues increased to 50% in the second quarter of fiscal year 2000 from 38% in
the second quarter of fiscal year 1999. This increase largely relates to salary
and travel and promotional costs arising from the establishment of a separate
clickNsettle.com marketing group.
General and Administrative. General and administrative costs increased
5% to $583,481 for the second quarter ended December 31, 1999 from $558,024 for
the second quarter ended December 31, 1998. Most of the increase (approximately
$24,000) relates to salary and related items (including payroll taxes, benefits
and employee recruitment fees) due to increases in staff for data processing and
other administrative functions, including temporary help, to support and enhance
clickNsettle.com, as well as NAM's in-person traditional arbitration and
mediation services. Furthermore, general and administrative costs as a
percentage of revenues increased to 55% in the second quarter of fiscal year
2000 from 50% for the comparable prior period.
Other Income. Other income increased 504% from $38,267 in the second
quarter of fiscal year 1999 to $231,325 in the second quarter of fiscal year
2000. Other income is composed primarily of investment income and realized gains
(losses) generated from investments. During the second quarter of the 2000
fiscal year, the Company sold a portion of its marketable securities. As a
result, net realized gains approximated $214,000 in the second quarter of fiscal
year 2000 as compared to gains of approximately $7,000 in the prior fiscal
period.
Income Taxes. Tax benefits resulting from net losses incurred for the
periods ended December 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 December 31, 1999, the Company had
a net loss of ($90,806) or ($.03) loss per share as compared to a net loss of
($129,321) or ($.04) loss per share for the three months ended December 31,
1998. The loss decreased primarily due to higher realized gains offset by higher
sales and and marketing costs incurred to promote NAM's electronic internet
settlement service.
Six Months Ended December 31, 1999 Compared to Six Months Ended December 31,
1998
Revenues. Revenues decreased 6% to $1,975,762 for the six months ended
December 31, 1999 from $2,112,256 for the comparable prior period. The decrease
in revenues is attributable to an overall decline in the number of in-person
hearings conducted during the period. Management believes this is primarily the
result of many of the Company's marketing and other resources being devoted to
the introduction and promotion of clickNsettle.com in the first quarter and the
subsequent shift towards an internet based business with more efficient primary
customer service centers and national account arrangements rather than numerous
regional locations. During the second quarter of fiscal year 2000, the Company
introduced an enhanced version of clickNsettle.com which focused on its unique,
unlimited bid, real-time negotiating format. The Company believes that
continuous improvement of its internet negotiating model is critical to the
success of the clickNsettle.com website and will continue to invest resources in
this area.
10
<PAGE>
Cost of Services. Cost of services decreased 13% to $494,408 for the
six months ended December 31, 1999 from $565,788, for the six months ended
December 31, 1998. The decrease in absolute dollars relates primarily to the
decrease in sales and a charge in the six months of fiscal year 1999 for the
granting and vesting of stock options with respect to a hearing officer as well
as payments to hearing officers in connection with the commencement of exclusive
arrangements with the Company. As a result, the cost of services as a percentage
of revenues decreased to 25% for the first six months of fiscal year 2000 from
27% for 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 decreased 5.5% to
$1,057,295 for the six months ended December 31, 1999 from $1,118,863 for the
six months ended December 31, 1998. Sales and marketing costs as a percentage of
revenues remained stable at 53% for both periods. The decrease largely relates
to advertising and external public relations costs which declined by
approximately $151,000 from the first six months of fiscal year 1999 to the
first six months of fiscal year 2000. This decline was offset by higher salary
and travel and promotional costs arising from the establishment of a separate
clickNsettle.com marketing group.
General and Administrative. General and administrative costs increased
11% to $1,219,421 for the six months ended December 31, 1999 from $1,100,676 for
the six months ended December 31, 1998. Most of the increase (approximately
$91,000) relates to salary and related items (including payroll taxes, benefits
and employee recruitment fees) due to increases in staff for data processing and
other administrative functions, including temporary help, to support and develop
clickNsettle.com, as well as NAM's in-person traditional arbitration and
mediation services. The remaining increase was largely related to higher
corporate legal fees (partially attributable to patent and trademark filings
related to clickNsettle.com). Furthermore, general and administrative costs as a
percentage of revenues increased to 62% in the first six months of fiscal year
2000 from 52% for the comparable prior period.
Other Income. Other income (expenses) changed from an expense of ($249,330)
for the first six months of fiscal year 1999 to income of $255,702 for the first
six months of fiscal year 2000. Other income is composed primarily of investment
income and realized gains (losses) generated from investments. During the first
six months of the 2000 fiscal year, the Company sold a portion of its marketable
securities. As a result, net realized gains approximated $213,000 for the first
six months of fiscal year 2000 as compared to losses of approximately $303,000
in the prior fiscal period.
11
<PAGE>
Income Taxes. Tax benefits resulting from net losses incurred for the
six month periods ended December 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 six months ended December 31, 1999, the Company had a
net loss of ($539,670) or ($.16) loss per share as compared to a net loss of
($922,401) or ($.28) loss per share for the six months ended December 31, 1998.
The loss decreased primarily due to higher realized gains on the sale of
marketable securities offset by higher sales and marketing costs incurred to
promote clickNsettle.com.
Liquidity and Capital Resources
At December 31, 1999, the Company had working capital surplus of $1,327,565
compared to $1,925,911 at June 30, 1999. Net cash used in operating activities
was $845,895 for the six months ended December 31, 1999 versus $720,640 in the
prior comparable period. The decrease in working capital and the increase in net
cash used in operating activities occurred primarily as a result of the loss
from operations.
Net cash used in investing activities was $85,185 for the six months
ended December 31, 1999 versus net cash provided by investing activities of
$1,407,936 in the comparable prior period. The change in cash from investing
activities was principally due to the higher level of net purchases of
marketable securities during the current period as compared to the net sales and
maturities of marketable securities in the prior period. Additionally, the
establishment of a separate marketing group for clickNsettle.com resulted in
higher purchases of computer equipment.
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. However, the Company is currently evaluating
various equity financing arrangements to provide additional funds to further
promote, market and enhance clickNsettle.com, its electronic case resolution
website, and for general working capital.
Year 2000
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 has completed its evaluation of the impact of the year 2000 issue on its
business and currently does not expect to incur significant costs in the current
fiscal year 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 Company's financial reporting system is currently Year
2000 compliant. The relational database system used to manage operations of the
Company is capable of recognizing four digits to designate the year. The Company
has converted its usage of the date fields from two digits to four digits with
respect to its major operating system. The Company upgraded its network
operating systems and all servers including its main system, email, website and
file transfer protocol (FTP) servers to be year 2000 compliant. The Company
contacted most of its major vendors that provide non-operating systems (i.e.,
those which supply payroll and benefit information, in particular) to ensure
that they have properly addressed Year 2000 issues.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
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 $2,688,000 had been utilized through June 30, 1999 as
disclosed in the Company's Form 10-KSB. During the six months
ended December 31, 1999, the Company additionally expended
approximately $626,000 for working capital and general
corporate purposes, including the development and marketing of
clickNsettle.com.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of matters to a Vote of Security Holders.
On December 17, 1999, the Company held its annual
meeting of shareholders. At the meeting, the shareholders
voted on two proposals. The following represents the results
of the voting, both in person and by proxy:
Election of Directors:
Roy Israel 3,031,387 votes
for; 0 votes
against; 102,925
votes withheld.
Cynthia Sanders 3,031,737 votes
for; 0 votes
against; 102,575
votes withheld.
Daniel Jansen 3,029,761 votes
for; 0 votes
against; 104,551
votes withheld.
Anthony Mercorella 3,029,761 votes
for; 0 votes
against; 104,551
votes withheld.
Ronald Katz 3,031,737 votes
for; 0 votes
against; 102,575
votes withheld.
Jeffrey Lederer 3,031,207 votes
for; 0 votes
against; 103,105
votes withheld.
13
<PAGE>
For ratification of appointment of Grant Thornton LLP as the
Company's independent accountants for fiscal year 2000:
3,118,787 votes for;
9,730 votes against;
5,795 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> <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)
10.6 Employment Agreement between Company and Robert Mack**
10.7 Lease Agreement for Great Neck, New York facility (1)
10.7.1 Amendment to Lease Agreement for Great Neck, New York faciity (5)
27 Financial Data Schedule **
</TABLE>
- -----------------------------
(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.
(5) Incorporated herein in its entirely by reference to
the Company's 1999 Annual Report on Form 10-KSB.
14
<PAGE>
** 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 11, 2000 By: /s/ Roy Israel
--------------------------------
Roy Israel, President and CEO
Date: February 11, 2000 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> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1999
<CASH> 866
<SECURITIES> 638
<RECEIVABLES> 555
<ALLOWANCES> 110
<INVENTORY> 0
<CURRENT-ASSETS> 2,059
<PP&E> 681
<DEPRECIATION> 375
<TOTAL-ASSETS> 2,396
<CURRENT-LIABILITIES> 731
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 4,829
<TOTAL-LIABILITY-AND-EQUITY> 1,665
<SALES> 1,976
<TOTAL-REVENUES> 1,976
<CGS> 494
<TOTAL-COSTS> 2,771
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (540)
<INCOME-TAX> 0
<INCOME-CONTINUING> (540)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (540)
<EPS-BASIC> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
