U.S.UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington D.C. 20549
-------------------------
FORM 10-KSB
|X|10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 1997
|_|2008
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or
[ ] TRANSITION REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number:No. 0-21419
NAM CORPORATION
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(Name-----------------------------------
clickNsettle.com, Inc.
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(Exact name of small business issuerregistrant as specified in its charter)
Delaware 23-2753988
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(State or Other Jurisdiction (I.R.S.other jurisdiction of (IRS Employer
of Incorporationincorporation or Organization)organization) Identification No.)
1010 NORTHERN BOULEVARD, SUITE 336
GREAT NECK, NEW YORK 10021
--------------------------8899 Beverly Boulevard, Suite 619, Los Angeles, California 90048
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(Address of Principal Executive Offices)
(516) 829-4343
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(Issuer'sprincipal executive offices) (Zip Code)
(310) 274-2036
Registrant's Telephone Number, Including Area Code)including area code --------------------------
Securities registered under Sectionpursuant to section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Title of each class Name of each exchange on which registered
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- ---------------------------------- -----------------------------------------
Securities registered pursuant to section 12(g) of the Act:
Common Stock, .001 Par Value NASDAQ Small Cap Market
Warrants NASDAQ Small Cap Market
Units NASDAQ Small Cap Marketpar value $.001
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(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. [ ] Yes [X] No
CheckIndicate by check mark whether the issuerregistrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the pastpreceding 12 months (or for such shorter period that the
registrantRegistrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [X] Yes X[ ] No
--- ---
CheckIndicate by check mark if there is no disclosure of delinquent files in responsefilers pursuant to Item
405 of Regulation S-BS-K (Section 229.405 of this chapter) is not contained
in this Form,herein and no disclosure will not be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this form 10-KSBForm 10-K or any amendmentsamendment to this Form 10-KSB.|X|10-K [ ]
Indicate by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). [X] Yes [ ] No
State issuer's revenues for its most recent fiscal year. $3,377,062
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Thethe aggregate market value of the voting stockand non-voting common equity
held by non-affiliates percomputed by reference to the closing stockprice at which the common
equity was last sold, or the average bid and asked price of September 18, 1997 is $ 6,554,054.
Assuch common
equity, as of September 18, 1997, 3,334,978the last business day of the registrant's most recently
completed second fiscal quarter. $11,023,368
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The Registrant had 203,360,222 shares of common stock, par value $.001,
outstanding as of the issuer were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part I. -- None Part II. -- None
Part III. -- Proxy statement to be filed by October 28, 1997
Transitional Small Business Disclosure Format Yes____ No__X__September 19, 2008.
2
PART I
From time to time, including in this annual reportclickNsettle.com, Inc.
FORM 10-K
FISCAL YEAR ENDED June 30, 2008
TABLE OF CONTENTS
PART I
Item 1. Business 4
Item 2. Properties 5
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 6
Item 6. Selected Financial Data N/A
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Item 8. Financial Statements and Supplementary Data F-1 - F-18
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 8
Item 9A(T) Controls and Procedures 8
Item 9B Other Information N/A
PART III
Item 10 Directors, Executive Officers and Corporate Governance 9 - 13
Item 11 Executive Compensation 14
Item 12 Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters 14 - 15
Item 13 Certain Relationships and Related Transactions,
and Director Independence 16
Item 14 Principal Accounting Fees and Services 17
PART IV
Item 15 Exhibits , Financial Statement Schedules 18
Signatures 19
Certifications 20 - 23
3
FORWARD-LOOKING STATEMENTS
This Form 10-KSB, NAM
Corporation (the "Company") may publish forward-looking10-K contains "forward-looking statements, relating to
such matters" as anticipated financial performance, business prospects, future
operations, new products, research and development activities, and similar
matters. Thethat term is
defined under the Private Securities Litigation Reform Act of 1995, provides a safe
harbor foror the
PSLRA. Forward-looking statements include statements about our expectations,
beliefs or intentions regarding our product development efforts, business,
financial condition, results of operations, strategies or prospects. You can
identify forward-looking statements by the fact that these statements do not
relate strictly to historical or current matters. Rather, forward-looking
statements relate to anticipated or expected events, activities, trends or
results as of the date they are made. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects" and similar expressions
are intended to identify forward-looking statements. In orderBecause forward-looking
statements relate to comply with the terms of the
safe harbor, the Company notesmatters that a variety of factorshave not yet occurred, these statements are
inherently subject to risks and uncertainties that could cause the
Company'sour actual
results to differ materially from any future results expressed or implied by
the forward-looking statements.
Many factors could cause our actual activities or results to differ
materially from the activities and results anticipated in forward-looking
statements. Any or all of our forward-looking statements in this Form 10-K
may turn out to be wrong. They can be affected by inaccurate assumptions we
might make or by known or unknown risks and uncertainties. Consequently, no
forward-looking statement can be guaranteed. Actual future results or
other expectations expressedmay vary
materially. While we may elect to update these forward-looking statements at
some point in the Company'sfuture, we specifically disclaim any obligation to do so to
reflect actual results, changes in assumptions or changes in other factors
affecting forward-looking statements. The
risks and uncertaintiesWe intend that may affectall forward-looking
statements be subject to the operations, performance, development
and resultssafe-harbor provisions of the Company's business include, without limitation,PSLRA. These
forward-looking statements are only predictions and reflect our views as of
the following: changesdate they are made with respect to future events and financial
performance.
PART I
Item 1. BUSINESS
clickNsettle.com, Inc., or CKST, was incorporated in the markets and/or regions currently served by the Company
and in those markets and/or regions that the Company may expand into; changesState of
Delaware on January 12, 1994. CKST previously was involved in the insurance industry; the Company's inability to retain current or new hearing
officers; and changes in the public court system.
ITEM 1. DESCRIPTION OF BUSINESS
The Company
The Company providesbusiness
of providing alternative dispute resolution, ("ADR") services
principally to insurance companies, law firms, large self-insured corporations
and municipalities. Anor ADR, proceeding is designed to replace the public court
system as a forum for resolving civil disputes. The Company offers its clients
personalized attention and access to qualified hearing officers (generally
retired judges) to either mediate or arbitrate their disputes. The cases
currently handled by the Company are primarily disputes involving claims for
injury to persons or property allegedly arising out of acts of negligence and
are usually covered primarily by insurance. The Company believes it is one of
the leading providers of ADR services in New York State based upon the number of
cases processed since 1993. The Company has offices currently located in New
York, Massachusetts, Pennsylvania, South Carolina, Tennessee and Wisconsin,
through which it has the ability to provide ADR services on a nationwide basis
with a roster of over 900 qualified hearing officers.
The Company believes that the ADR business is a growing service
industry based upon the continuing inability of the public court system to
manage effectively its docket of civil cases. An ADR proceeding is intended to
streamline the traditional cumbersome public litigation process. As compared to
the public court system, an ADR proceeding generally offers litigants a faster
resolution, confidentiality, reduced expense, flexibility in procedures and
solutions, and control over the process. The ADR proceeding also has the
potential to preserve business relations among the parties because of its less
adversarial nature and potential for a prompt resolution.
The Company's objective is to become one of the leading providers of
ADR services on a national basis. The Company intends to achieve this goal by
employing the following strategies. Firstly, the Company intends to open offices
in regions where it does not presently have an office. During the second half of
the fiscal year ended June 30, 1997, the Company established an office in
Wisconsin with an additional location in Illinois to cover the midwest region of
the country. Secondly, management seeks and reviews opportunities to acquire
companies with a market niche in desirable locations. Thirdly, the Company is
pursuing exclusive agreements with the home offices of large corporations in
order to obtain contracts on a national basis. Finally, the
3
Company intends to increase awareness of its services beyond the insurance
market by creating and executing a large- scale advertising campaign.
The Company believes that the domestic ADR industry is, other than a
few national entities, generally fragmented into small ADR service providers.
The Company further believes that the trend in the ADR industry is towards
consolidation of providers who are capable of offering national and regional ADR
programs. The Company's planned expansion will enable it to exploit this trend.
In addition, the Company intends to increase its marketing of its ADR services
to litigants in other types of disputes, including complex commercial issues,
construction, employment and worker's compensation cases.
The Company was formed on January 12, 1994 under the laws of the State
of Delaware.services. On October
31, 1994, the CompanyCKST acquired all of the outstanding common stock of National Arbitration & Mediation, Inc. ("NA&M"), a New York
corporation,its
predecessor operating company, which was formed on February 6, 1992, whichand was
primarily owned by the Company'sits former Chief Executive Officer and President, and the Company's Executive Vice President. NA&MCKST's
predecessor began operations in March 1992 as a provider of ADR services.
Services Offered
Arbitration. The Company's arbitration procedure follows a format which
is essentially similar to a non-jury trial in the public court system. This
procedure is designed to grant the parties a forum in which to present their
cases, while at the same time sparing the litigants the time delays and someCKST's predecessor was merged into CKST as of the cumbersome procedures commonly associatedend of June 1999. In June
2000, CKST's name was changed from "NAM Corporation" to "clickNsettle.com,
Inc." CKST ceased all operations relating to its historical ADR business in
January 2005 when it sold that business to National Arbitration and
Mediation, Inc., a company owned by CKST's former Chief Executive Officer.
After the sale of the ADR business, CKST had no operating business. CKST was
a publicly traded shell company actively searching for a new operating
business to acquire or to enter into a merger transaction.
4
Merger with public court trials. TheCardo Medical, LLC
On August 29, 2008, subsequent to CKST's fiscal year for which this
Annual Report is filed, CKST merged its wholly owned subsidiary Cardo
Acquisition LLC with Cardo Medical, LLC ("Cardo") (the "Merger"). Cardo is
now a wholly-owned subsidiary of CKST and the former members of Cardo control
CKST. CKST adopted Cardo's business plan. For more information on the
Merger, see the Company's hearingsForm 8-K filed on September 9, 2008.
Information about Cardo Medical, LLC and its Subsidiaries
Cardo Medical, LLC is an early-stage orthopedic medical device company
specializing in designing, developing and marketing reconstructive joint
devices and spinal surgical devices. Reconstructive joint devices are generally governed byused
to replace knee, hip and other joints that have deteriorated through disease
or injury. Spinal surgical devices involve products to stabilize the spine
for fusion and reconstructive procedures. Within these areas, Cardo intends
to focus on the higher-growth sectors of the orthopedic industry, such as
advanced minimally invasive instrumentation and bone-conserving high-
performance implants. Cardo is focused on developing surgical devices that
will enable surgeons to bridge the gap between soft tissue-driven sports
medicine techniques and classical reconstructive surgical procedures. Cardo
commercializes its rulesreconstructive joint devices through its Cardo Orthopedics
division and its spine devices through its Cardo Spine division. In December
2006, Cardo initiated sales of procedure. The
parties, however, may depart from these rules and proceed in the fashion they
deem desirableAlign 360 unicompartmental knee device, a
partial knee resurfacing device for the resolutionmedial or lateral part of the case. The parties select a panel member
from the Company's list of hearing officers.
The hearings are non-public, thereby providing a level of
confidentiality not readily available in the public court system. Subject to the
parties' agreement, the proceedings may include discovery, examination of
non-party witnesses, the filing of post-hearing briefs and other matters that
may arise in the conduct of non-jury trials.
The arbitrations are usually oneknee.
Cardo has received approval under Section 510(k) of the following: (i)Federal Food, Drug
and Cosmetic Act ("Section 510(k)") for its uniquely instrumented patello-
femoral arthroplasty, a regular
arbitration, in whichresurfacing device for the hearing officer has authority to issue a ruling and/or
award a remedy without limitations; (ii) a "high/low" arbitration, where the
parties may choose to set the parametersback of the award by pre-selecting the highkneecap, as
well as for its total hip replacement system and low dollar limits that can be awarded by the hearing officer;its monopolar and (iii) the
so-called "baseball" arbitration, which typically involves the submission by
each partybipolar
hip systems. Cardo also has received Section 510(k) approvals for its spinal
lumbar fusion system and its cervical plate and screw systems. Cardo is
actively engaged in a number of their last best figureresearch and the reason why it should be accepted;
the hearing officer's binding recommendation is restricted to either one figure
or the other. These typesdevelopment projects for total
knee arthroplasty, spinal motion preservation, fusion devices and minimally
invasive approaches for treating an array of arbitration are not exclusive, and the hearing
officers may fashion remedies in accordance with whatever parameters are agreed
to by the parties.
Generally arbitration decisions are binding in nature and, unless
otherwise stipulated by the parties, are appealable in only limited
circumstances in the public court system. The Company does not currently offer
any type of appeal procedure. The Company's arbitration decisions are generally
enforceable in the public court system by following prescribed filing procedures
in the applicable local jurisdiction.
Mediation (Settlement Conferencing). The mediation method used by the
Company is settlement conferencing, in essence a non-binding process. The
principal advantage of settlement
4
conferencing is that it provides an opportunity for parties to reach an early,
amicable resolution without undue expense and time-consuming litigation. The
voluntary process of settlement conference mediation can be an effective tool
for a wide variety of disputes, including tort claims and commercial conflicts.
Settlement conferences are attended by each party to the dispute and/or
a representative of each party and a hearing officer selected by the parties
from a list available in the applicable region. Each party may choose to submit
a settlement conference memorandum setting forth a brief summary of facts,
indicating, for example, why each party has or does not have liability and, if
applicable, a statement of the party's damage. At the settlement conference,
each party is given an opportunity to describe the facts of the case and explain
its position. Thereafter, the hearing officer meets privately with each side on
an alternating basis to evaluate their respective cases, and receives proposed
concessions that each party might make, and potential settlement figures that
each party may offer, with a view toward guiding the parties to the settlement
of their dispute. Discussion concerning settlement figures and possible
concessions and potential settlement figures are typically not discussed between
a party and the hearing officer without the other party's express consent to
disclosing its position. In many instances, the settlement conference procedure
results in the resolution of all issues.
Other ADR Services. In addition to mediations and arbitrations, the
Company offers, among other services, advisory opinions and specialized dispute
resolution programs depending on the parties' particular needs. The Company also
offers Case Resolution Days which are events usually scheduled at an insurance
company client's office in which the Company arranges for parties to hold high
volume direct settlement meetings without the participation of a hearing
officer. In the event that the individual meetings do not resolve the dispute,
the Company provides a hearing officer to mediate the dispute if the parties
wish to pursue settlement.
On-Line Case Management Software Service. It is currently expected that
during fiscal 1998 the Company will offer to its clients the ability to be
"on-line" with the Company. This will enable clients to submit cases
electronically and to review the status of their cases from their offices. This
service will also allow them to integrate their arbitration calendar into their
offices' case-management system.spinal disorders.
Employees
As of June 30, 1997, the Company maintains an
e-mail address and offers analog and digital communications capabilities. By
providing customized software to clients, clients will be able to prepare case
submission files and send them, through a modem, either individually or in
batches to the Company's system. The submissions are expected to be entered on a
daily basis by the Company. Clients will also be able to utilize an in-house
"Bulletin Board" type system to access updates in software, rosters and
schedules of hearing officers, status of hearings and promotional materials. In
addition, the Company presently maintains an Internet Website. The Company plans
to enhance the Website to enable clients to review rosters and schedules of
hearing2008, we had no employees. Our officers and promotional material, and to submit cases directly. It is
expected that this Internet service will be available during fiscal 1998.
Video Conferencing. The Company hasdirectors
transact the ability to offer video
conferencing capabilities to its clients which allow them to participate and
observe hearings without leaving their offices and thereby reducing certain
costs to the client associated with the ADR process. This capability allows the
Company to provide services to a wider range of clients on a geographical basis.
In addition, the video conferencing equipment, which can be purchased or leased
directly from the Company, has applications beyond the ADR area for clients.
5
Marketing and Sales
As of September 18, 1997, the Company employed 18 account
representatives to market its ADR services. Account representatives solicit
prospective clients through telemarketing efforts and in-person meetings. They
also provide presentations, educational seminars relating to ADR services and
periodic monitoring of a client's ADR activity. Account representatives are
typically compensated based upon a draw against commissions earned which are
based on total collected revenue from a representative's clients.
In the New York office, account executives are grouped into sales
teams, which are directly managed by supervisors who are also account
executives. The supervisors in the New York office, as well as account
executives in the regional offices, are supervised directly by a regional
manager. Regional managers report to the Executive Vice President and the Chief
Executive Officer. Several of the employment agreements with regional managers
provide for additional compensation based on the profits of the manager's
operation.
With regard to the hiring and training of account executives, they are
usually interviewed by each office's regional manager and then by the Executive
Vice President or Chief Executive Officer. Account executives are trained by a
supervisor, or the office's regional manager, over approximately a two-week
period. This training period can vary depending on the overall abilities of each
candidate, the level or lack of prior experience and their aptitude to
assimilate the required marketing skills. The training includes the development
of sales techniques and the introduction to customers of the Company. After this
initial period, the new account executive's performance is closely monitored. In
addition, staff meetings are generally held twice a week to review progress
against goals and to enhance marketing skills.
The majority of clientsbusiness of the Company are insurance carriers and law
firms. One insurance company customer represented approximately 14% and 15% of
total revenues for the years ended June 30, 1997 and 1996, respectively.
However,without compensation therefor.
Item 2. PROPERTIES
Until August 29, 2008, the Company works with more than 70 individualmaintained, at no cost to the
Company, its executive offices in approximately 500 square feet of office
space located at 4400 Biscayne Boulevard, Suite 950, Miami, Florida 33137,
within the offices of another company with which Glenn Halpryn and Noah
Silver are affiliated. Following the insurance
company, which in total equal the aforementioned percentages of revenue. The
next largest insurance company customer represented less than 3% and 4% of
revenues for the years ended June 30, 1997 and 1996, respectively. The balance
of the revenue base is distributed among approximately 1,950 and 1,800 clients,
respectively, in fiscal 1997 and 1996.
The Company, when appropriate, seeks membership contracts with its
clients. For an annual fee, an exclusivity arrangement or a commitment to refer
a minimum volume of cases, members will receive a discount on each case referred
to the Company. As of September 18, 1997, the Company had in excess of 40
written contracts. Further,Merger, the Company is devotingmoving its
effortsexecutive offices to obtaining
volume commitments from existing and new clients.
Competition
The ADR business is highly competitive, both on a national and regional
level. Management believes that barriers to entry in the ADR business are
relatively low, and new competitors can begin doing business relatively quickly.
The basis of this belief is that the provision of ADR services only requires the
consent of all parties to a dispute to submit their dispute to be resolved
through a proposed ADR provider. There are two types of competitors,
not-for-profit and for-profit entities. The Company believes the largest
not-for-profit competitor is the American Arbitration Association which has
significant market share in complex commercial
6
cases. The insurance industry has also continued its support for Arbitration
Forums, a not-for-profit organization created to service primarily the insurance
subrogation market.
The Company believes that the domestic ADR industry is, other than a
few national entities, generally fragmented into small ADR service providers.
The Company believes that Judicial Arbitration Mediation Services,
Inc./Endispute ("JAMS") is the largest for-profit ADR provider in the country.
In New York State, the Company's competitors include, among others, Settlement
Systems, Inc., Expedite NYC, JAMS, Resolute, Inc. and Island Arbitration and
Mediation. In addition, several public court systems, including the federal and
certain state courts in New York, the Company's major market, have instituted
court coordinated programs. To the extent that the public courts reduce case
backlogs and provide effective dispute resolution mechanisms, the Company's
business opportunities in such markets may be significantly reduced.
Increased competition could decrease the fees the Company is able to
charge for its services, and limit the Company's ability to obtain experienced
hearing officers, and thus could have a materially adverse effect on the
Company's ability to be profitable in the future. In addition, the Company
competes with other ADR providers to retain the services of qualified hearing
officers.
As compared to the majority of its competitors, the Company believes
that it competes based primarily upon reputation, price, and the ability to
manage scheduling of hearings effectively. The management of the Company
believes it has certain advantages which enable it to better serve its clients.
These advantages include (1) exclusive agreements with qualified hearing
officers, who are generally former judges, (2) software that provides detailed
case management reporting that can be customized to meet a client's needs, (3)
account executives dedicated to specified clients, (4) the ability to monitor
and control the scheduling of matters, and (5) videoconferencing capability
which allows clients to participate or observe a proceeding without leaving
their office. There can be no assurance, however, that these perceived
advantages will enable the Company to compete successfully in the future.
Government Regulation
ADR services that are offered by private companies, such as the
Company, are not presently subject to any form of local, state or federal
regulation. ADR services that are offered by the public courts are subject to
the rules set forth by each jurisdiction and the dictates of the individual
judge assigned to preside over the dispute.
Employees
As of September 18, 1997, the Company employed 41 persons, including 2
part-time employees; of these, 3 were in executive positions, one of which
devotes substantially all her attention to sales; 1 performs the duties of a
hearing officer/regional manager; 23 were sales managers and sales account
representatives and 14 were engaged in administrative and clerical activities.
Hearing Officers
As of September 18, 1997, the Company maintained relationships with
over 900 hearing officers and has exclusive agreements with respect to ADR
proceedings with approximately 40 of
7
them. These hearing officers accounted for approximately 57% of the number of
cases handled by the Company for the year ended June 30, 1997. The balance of
non-exclusive hearing officers make their services available to the Company on a
case-by-case basis. With the exception of the exclusive hearing officers, the
remainder of the Company's roster of hearing officers can provide their services
to competing ADR providers. Compensation to the hearing officers is based on the
number of proceedings conducted and the length of time of such proceedings. All
active hearing officers are requested to execute confidentiality agreements
regarding the Company and its clients.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company currently maintains 6 leased facilities, all of which are
located in office buildings. The Company leases 4,800 square feet of space at
1010 Northern Boulevard, Great Neck, New York for its corporate headquarters and
for providing ADR services in the metropolitan New York area. The lease expires
October 2000. The Company is contemplating leasing additional space in the same
building if it becomes available during the 1998 fiscal year.
The Company also leases: (i) 2,168 square feet of space, which lease
expires February 2000, for its Philadelphia, Pennsylvania office; (ii) 174
square feet of space, which lease expires December 1997, for its Easton,
Massachusetts office; (iii) 1,630 square feet of space, which lease expires
January 1998, for its Greenwood, South Carolina office; (iv) 601 square feet of
space, which lease expires March 1998, for its Hendersonville, Tennessee office;
and (v) 1,262 square feet of space, which lease expires February 1998, for its
Milwaukee, Wisconsin office. The Company believes this space is adequate for its
reasonably anticipated future needs.
The aggregate rental expense for all of the Company's offices was
$190,356 during the year ended June 30, 1997.
ITEMLos Angeles, California.
Item 3. LEGAL PROCEEDINGS
ThereWe are not party to any legal proceedings, nor to the knowledge of our
management is no material litigation currently pendingany such proceeding threatened against the Company.
ITEMus.
5
Item 4. SUBMISSION OF MATERIALSMATTERS TO A VOTE OF SECURITY HOLDERS
None.
8
During the fourth quarter of the fiscal year ended June 30, 2008, the
Company did not submit any matters to a vote of its security holders.
However, during November 2006, the Board approved a resolution amending its
Certificate of Incorporation to effect a reverse stock split of one for
fifteen shares and thereby adjusting the par value from $.0001 to $.001.
This resolution was approved by the consent of holders of a majority of our
outstanding shares of common stock.
PART II
ITEMItem 5. MARKET FOR REGISTRANT'S COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS
A. The Company's Units, consisting of one share of Common Stock and one
redeemable Warrant, Common Stock and WarrantsAND ISSUER PURCHASES OF EQUITY SECURITIES
At the present time our shares are quotedtraded on the NASDAQ SmallCap
MarketOver-the-Counter
Bulletin Board under the trading symbols "NAMCU", "NAMC" and "NAMCW", respectively, and
have been quoted since the Company commenced public trading on November 18,
1996. Prior to that date, there was no public market for the Company's
Securities.symbol CKST.
The following table sets forth, for the periods indicated, the range of
high and low closing salesbid prices (based on transaction datafor our common stock through June 30, 2008
for the periods noted, as reported by the NASDAQ SmallCap
Market) for each fiscal quarter duringNational Quotations Bureau and the
periods indicated.Over-The-Counter Bulletin Board. Quotations reflect inter-dealer prices,
without retail mark-up, markdown or commission and may not represent actual
transactions.
Units Common Stock WarrantsClosing Bid
Period High Low
High Low High Low
-------------------------------------------------------- ---------------------------------- ------------- ------------
Second quarter (11/18/96-12/31/96) $6.50 $4.50 $4.50 $3.50 $1.75 $1.00
Third quarter (01/01/97-03/31/97) 5.97 4.25 5.00 3.50 1.50 1.00
Fourth quarter (04/01/97-06/30/97) 4.97 3.75 4.25 3.00 1.38 0.75Fiscal Year of CKST Ended June 30, 2008
4th Fiscal Quarter $2.00 $1.05
3rd Fiscal Quarter $2.30 $0.16
2nd Fiscal Quarter $0.60 $0.30
1st Fiscal Quarter $0.49 $0.07
Fiscal Year of CKST Ended June 30, 2007:
4th Fiscal Quarter $0.12 $0.07
3rd Fiscal Quarter $0.22 $0.06
2nd Fiscal Quarter $0.10 $0.07
1st Fiscal Quarter $0.09 $0.06
On September 18, 1997 the closing bid price for the Units, Common StockWe have not paid any cash dividends on our common or preferred stock and
Warrants, as reported by the NASDAQ SmallCap Market, were $4.125, $3.125 and
$1.00, respectively.
As of September 18, 1997 there were in excess of 300 holders of the
Company's securities.
The payment by the Company of dividends, if any, in the future rests
within the discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, capital requirements and financial
condition, as well as other relevant factors. The Company paid a cash dividend
to certain executives who were shareholders of NA&M, in connection with
undistributed earnings relating to when NA&M was an S-Corporation. The Company
also declared a 25% stock dividend on February 1, 1995. In connection with the
initial public offering in November 1996, the Company effected a one for two
reverse stock split on March 29, 1996 and a stock dividend of 14.436% per share.
The Company doesdo not contemplate or anticipate paying any cash dividends upon its
Common Stock in the foreseeable future.
B. In November 1996, the Company raised additionalEarnings, if any, will be retained to finance future growth. We may issue
shares of our common stock and preferred stock in private or public offerings
to obtain financing, capital through an initial
public offeringor to acquire other businesses that can improve
our performance and growth. Issuance and/or sales of its Securities. The public offering consistedsubstantial amounts of
1,400,000
Units, each Unit consistingcommon stock could adversely affect prevailing market prices in our common
stock.
As of one shareJune 30, 2008 there were approximately 150 holders of Common Stockrecord of
our common stock with 11,277,579 shares issued and one redeemable
Warrant. Of the total Units sold, 150,000 Units were offered by two executive
officers of the Company. In addition, there was an overallotment optionoutstanding.
6
We have no compensation plans under which our equity securities are
authorized for 210,000 Units which was exercised by the underwriter, resulting in a total of
1,610,000 Units being sold, of which 1,460,000 Units were sold by the Company.
Gross proceeds to the Company totaled $5,840,000. Offering expenses approximated
$1,138,456 and consisted of the following: (a) underwriting discounts,
non-accountable expense allowance and reimbursable expenses of $791,165 and (b)
legal, accounting, printing and other fees incurredissuance, but, in connection with the initial public offering of $347,291. The net proceeds of $4,701,544 were
utilized as follows: (a) $78,000 for the benefit of selling shareholders as the
Company agreedMerger, we expect to
pay the underwriting costs associated with shares sold by two
executive officers in connection with the initial public offering; (b) $48,000
as a consulting fee to the underwriter; (c) $444,537 to repay outstanding notes
payable plus interest from a past private placement offering, and (d)
approximately $400,000 relating to opening a new office in Wisconsin;
commencement ofadopt an advertising program and for
9
working capital and general corporate purposes. The remaining funds of
approximately $3,700,000 are invested in U.S. government securities, corporate
preferred securities and a diversified portfolio of marketable equity securities.
The above information updates Form SR filed by the Company in February
1997 pursuant to former Rule 463.incentive plan.
ITEM 6.7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The following discussion and analysis should be read in conjunction
with, and is qualified in its entirety by, the financial statements and the
notes thereto included with this Annual Report on Form 10-K, our Annual
Report on Form 10-KSB for the fiscal year ended June 30, 2007, and our
subsequent Quarterly Reports on Form 10-QSB filed for the fiscal quarters
ended September 30, 2007, December 31, 2007 and March 31, 2008.
Status as Shell Company
provides alternative dispute resolution ("ADR") servicesCKST ceased all operations relating to insurance companies, law firms, large self-insured corporations and
municipalities. To date, the Company has focused the majority of its marketing
efforts on developing relationships, and expanding existing relationships, with
insurance companies which the Company believes are some of the largest consumers
ofhistorical 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 the Midwest. The Midwest region, with headquarters in Wisconsin, commenced
operations in the third quarter of the 1997 fiscal year.
The Company's objective is to become one of the leading providers of
ADR services nationally. To accomplish this goal, the Company plans to open up
new offices in regions where it does not presently have offices, which may
include the acquisition of existing ADR companies. In addition, the Company
intends to increase its marketing of its ADR services to litigants in other
types of disputes, including complex commercial issues, construction, employment
and worker's compensation cases.
Future Trends
Management believes that the ADR industry is, and will be, undergoing a
consolidation of ADR service providers so as to better serve clients requiring
national and regional ADR programs. The Company's objective is to expand its
national presence to exploit this trend. In addition, ADR clients are beginning
to seek volume discounts on the charges applied by the Company for services
rendered. The Company believes that this trend may have an overall positive
impact on the Company because the discounts are usually applied only when an ADR
client makes a commitment to refer a minimum number of cases to the Company.
As a result of the proposed expansion by opening new offices, as well
as enhancing the status of present offices, the Company may incur net losses in
the short-term futureJanuary 2005 as a result of the investmentsale of resources over the time
it takes for offices to mature and become profitable, if ever. Significant
start-up costs will be incurred in connection with opening and operating
offices, including expenses such as leases, office equipment, furnishings, and
salaries for management, sales and clerical personnel. In these new areas,
organizations similar to and in competition with the Company may have been doing
business for some time, and therefore will have competitive advantages over the
Company. These advantages include contacts with potential consumers of the
Company's services, such as law firms and insurance companies, and with
qualified retired judges and lawyers who act as hearing officers. In addition,
the account representatives who establish the new offices are very important to
the success of such offices. While management of the Company believes that in
the future, the Company may be competitive in some or all of the planned new
markets, there is no assurance that any of the Company's new offices will ever
10
be profitable. For example, the Company opened up an office in the Minneapolis,
Minnesota area in August 1994 and closed it in April 1995 due to its
disappointing performance. Additionally, the Company plans to initiate an
aggressive marketing campaign in the 1998 fiscal year. There is no assurance
that this effort will result in a higher revenue base.
Year ended June 30, 1997 Compared to Year ended June 30, 1996
Results of Operations
Revenues. Revenues increased 7% to $3,377,062 for the year ended June
30, 1997 from $3,147,886 for the year ended June 30, 1996. Management attributes
this growth in sales to a higher level of business with existing as well as new
clients in all offices other than Pennsylvania. Excluding Pennsylvania, revenues
grew by approximately 14% over the prior period for all other offices combined.
Management believes that the Pennsylvania office will continue to experience a
lower volume of cases heard during the 1998 fiscal year. The Company has focused
its resources in re-staffing and rebuilding this location in an effort to
reverse this trend.
Cost of Services. Cost of services, direct costs incurred for hearing
officers, increased 17% to $853,048 for the year ended June 30, 1997 from
$727,613 for the year ended June 30, 1996. The higher volume of business
serviced resulted in greater hearing officer fees. In addition, cost of services
as a percentage of revenues increased slightly to 25% in the 1997 fiscal year
from 23% in the prior period. 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 as such lowers the cost per case.
Sales and Marketing. Sales and marketing costs decreased 4% to
$1,412,348 for the year ended June 30, 1997 from $1,472,152 for the year ended
June 30, 1996. Furthermore, sales and marketing costs as a percentage of
revenues for the year ended June 30, 1997 decreased to 42% from 47% for the year
ended June 30, 1996. In fiscal year 1996 and prior, all employees were
considered to spend a majority of their time performing sales-related functions.
As a result, this expense category includes all salary and related payroll and
employee benefit costs as well as advertising and promotional expenses in fiscal
1996. In fiscal 1997, the Company expanded in size and was organizationally
restructured to provide for future growth. Sales and marketing costs include
amounts directly related to the production of sales; that is, salaries and
commissions for sales executives, sales managers and account executives and
applicable payroll taxes and employee benefits; advertising; promotions and
travel and entertainment. Salaries and related expenses for individuals who do
not spend a majority of their time involved in marketing the Company's services
are included in general and administrative expenses in fiscal 1997. If sales and
marketing costs had been classified in the same manner in fiscal 1996 as it was
in fiscal 1997, this category of expense would have increased by approximately
$380,000. Most of this increase (approximately $281,000) relates to salary and
related items. Firstly, higher sales commissions were incurred based on the
higher volume of business. Secondly, personnel were hired and upgraded to staff
and support the Company's expansion plans. In particular, sales management was
strengthened at the Company's headquarters in New York to better prepare the
Company for higher revenue levels. Finally, the Midwest region, with personnel
in Wisconsin and Illinois, opened during the third quarter of fiscal 1997.
Additionally, during the later half of fiscal 1997, the Company embarked on an
advertising campaign with the goal of creating an increased national presence
through a variety of media. As a result, advertising costs increased by
approximately $60,000. Marketing efforts at a higher spending level are planned
for the 1998 fiscal year. There can be no assurance that such expenditures will
produce higher revenues in the near future.
11
General and Administrative. General and administrative costs increased
138% to $1,761,994 for the year ended June 30, 1997 from $741,892 for the year
ended June 30, 1996. Furthermore, general and administrative costs as a
percentage of revenues for the year ended June 30, 1997 increased to 52% from
24% for the comparable prior period. As explained previously, in fiscal 1996,
general and administrative costs do not include any salary or salary related
expenses. However, in fiscal 1997, this category includes salaries of
executives, accounting, data processing and administration/clerical and related
payroll taxes and employee benefits, which were previously included in sales and
marketing, as well as all other overhead costs. If general and administrative
costs had been classified in the same manner in fiscal 1996 as it was in fiscal
1997, this category of expense would have increased by approximately $609,000.
Of this increase, salary-related costs increased by approximately $219,000 as
the Company upgraded and expanded personnel, particularly at its headquarters in
New York. All corporate activities, including marketing, finance, data
processing, billing and collections, purchasing, scheduling of hearings, etc.,
are centralized in New York. Management believes that this structure enhances
the control environment as well as produces a more streamlined and efficient
approach as the Company grows. In addition, a portion of the increase relates to
higher rent expense (which increased by approximately $54,000). To support
business opportunities throughout the country, larger office space was obtained
in four locations and a new office was opened in Wisconsin. Higher costs with
respect to professional fees, insurance, employee recruitment, stock market
fees, depreciation, office supplies and stationery were due to the expansion of
the Company and its status as a publicly traded entity. Such costs increased by
approximately $298,000 in total.
Other Income (Expense). Other income (expense) changed from a net
expense of ($67,105) for the year ended June 30, 1996 to income of $12,771 for
the year ended June 30, 1997. In fiscal 1997, other income was composed
primarily of (i) investment income, generated from available proceeds received
from the initial public offering, less (ii) interest expense from a past private
placement financing and (iii) costs incurred for the benefit of selling
shareholders. In connection with the initial public offering, the Company
contributed warrants underlying units sold by two executive officers and also
agreed to pay the underwriting costs associated with shares sold by them. With
respect thereto, the Company expensed $115,500, of which $37,500 related to the
contributed warrants, uponTherefore, before the
consummation of the initialMerger, CKST was a shell company that had no operations
or revenues and had assets consisting only of cash, cash equivalents and
nominal other assets. Our expenses consisted of the amounts required to
maintain our status as a reporting public offering incompany, the second quarter of fiscal 1997. Other expenses in the prior fiscal year
included a write-off of previously deferred offering costs of $61,127 associated with
a public offering that was abandonedthe sale of stock in October 1995September 2007 and interest expense
of $32,000 relating to a past private placement financing. This debt was
satisfied in full on November 20, 1996 with proceeds fromMarch 2008, and the initial public
offering.
Provision for Income Taxes. The Company's tax expense for the year
ended June 30, 1997 and 1996 was $0 and $3,525, respectively. There was no tax
provision during the 1997 fiscal year due to losses incurred during the period.
As of June 30, 1997, the Company had net operating loss carryforwards for
Federal tax purposes of approximately $440,000.
Net Income (Loss). For the year ended June 30, 1997, the Company had a
net loss of ($637,557) as compared to net income of $135,599 for the year ended
June 30, 1996. As discussed above, this change was primarily due to higher
general and administrative expenditures incurred as an investment in the
Company's infrastructure in anticipation of future growth. In addition, the
current period was adversely affected by non-recurring chargescosts incurred in
connection with the initial public offering.
12
Year endedMerger. Professional fees constituted our primary
expense. Our expenses were greater than our interest income.
At June 30, 1996 as Compared to Year ended June 30, 1995
Revenues. Revenues increased 41% to $3,147,8862008, we had cash and cash equivalents of $2,651,572,
liabilities of $14,676, and an accumulated deficit of $10,358,647. CKST's
net loss for the fiscal year ended June 30, 1996 from $2,235,030 for the year ended June 30, 1995 due to expansion into
new markets, increased business with existing clients and overall increased
consumer acceptance of ADR services.
Cost of Services. Cost of services increased 59% to $727,613 for the
year ended June 30, 1996 from $458,661 for the year ended June 30, 1995. This
increase2008 was attributable to the Company's$261,107. Expenses in
fiscal 2008 were higher level of business from the
expansion into new offices which resulted in additional hearing officers' fees.
In addition, cost of services as a percentage of revenues increased slightly to
23%than in the 1996 fiscalprevious year from 21%principally because of the
stock sales and the resulting changes of control in the prior comparable period.
SalesSeptember 2007 and Marketing. Sales and marketing costs increased 51% to
$1,472,152 for the year ended June 30, 1996 from $976,230 for the year ended
June 30, 1995. Much of this increase was related to the Company's expansion into
new offices, which included an increase in sales commissions and salaries of new
hires. Sales and marketing costs as a percentage of revenues was 47% and 44%,
respectively, during the years ended June 30, 1996 and 1995.
General and Administrative. General and administrative costs increased
27% to $741,892 for the year ended June 30, 1996 from $584,920 for the year
ended June 30, 1995. Such costs increased due to higher overhead associated with
the Company's opening of new offices. Furthermore, general and administrative
costs as a percentage of revenues for the year ended June 30, 1996 decreased to
24% from 26% for the prior comparable period.
Other Expenses, net. Other expenses, net, increased by 239% to $67,105
for the year ended June 30, 1996 from $19,817 for the year ended June 30, 1995.
This increase was primarily due to a write-off of previously deferred offering
costs of $61,127 associated with a public offering that was abandoned in October
1995 and interest expense of $32,000 relating to a private placement financing.
Provision for Income Taxes. The Company's tax expense for the year
ended June 30, 1996 and 1995 was $3,525 and $10,379, respectively.
Net Income. Net income for the year ended June 30, 1996 decreased 27%
to $135,599 from $185,023 for the year ended June 30, 1995. The 1996 fiscal year
was adversely affected by a write-off of charges incurred in connection with an
abandoned initial public offering attempt in October 1995.
Liquidity and Capital Resources
At June 30, 1997, the CompanyMarch
2008.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Contractual Obligations
We had a working capital surplus of
$3,853,430 as compared to a working capital deficit of $464,426no contractual obligations at June 30, 1996. This change in working capital was primarily due to2008.
7
Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ClickNsettle.com, Inc.
For the Company's
completion of its initial public offering on November 18, 1996.
Net cash used in operating activities was $535,152 for the year endedYears Ended June 30, 1997 versus cash provided by operating activities of $263,390 in2008 and 2007
F-1
ClickNsettle.com, Inc.
For the prior year. The decline is attributable to the decrease in net income (loss)
from income of $135,599 for the year endedYears Ended June 30, 1996 to a loss of ($637,557)
for the year ended June 30, 1997.
Net cash used in investing activities was $3,725,439 for the year ended
June 30, 1997 versus $127,949 for the year ended June 30, 1996. Additional
investing activity occurred during the 1997 fiscal year when the net proceeds
from the initial public offering were received. Such amount was invested in
132008 and 2007
Contents
Report of Independent Registered Public Accounting Firm F-3-F-4
Balance Sheets as of June 30, 2008 and 2007 F-5
Statements of Operations for the years
ended June 30, 2008 and 2007 F-6
Statements of Changes in Stockholders' Equity for the
years ended June 30, 2008 and 2007 F-7-F-8
Statements of Cash Flows for the years ended
June 30, 2008 and 2007 F-9
Notes to Financial Statements F-10-F-18
F-2
U.S. government securities, corporate preferred securities, and a diversified
portfolio of marketable equity securities.
Net cash provided by financing activities was $4,404,603 for the year
ended June 30, 1997 versus cash used in financing activities of $160,037 for the
year ended June 30, 1996. The change primarily pertains to proceeds from the
initial public offering. A portion of the proceeds were utilized to repay
promissory notes in the aggregate amount of $400,000. The notes bore interest at
a rate of 8% per annum, and were originally due June 30, 1996. Subsequently, the
due dates of the notes were extended to December 31, 1996. On November 20, 1996,
the notes were repaid in full.
The Company believes that existing cash balances and cash
generated from operations, based on the Company's current business plan, will be
sufficient to meet the Company's liquidity needs through at least fiscal 1998.
During fiscal year 1998, the Company expects to utilize these funds to increase
its marketing efforts and to create an increased national presence through
advertising in a variety of media. The Company also intends to upgrade and
enhance its computer capabilities to better serve its clients. Funds may also be
used to open new offices and/or to acquire ADR companies.
ITEM 7. FINANCIAL STATEMENTS
Information in response to this item is set forth in the Financial
Statements, beginning on Page F-1 of this filing.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES.
The Company filed Form 8-K on March 11, 1997 with respect to a
change in accountants.
14
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
ReportsReport of Independent CertifiedRegistered Public Accountants F-2 - F-3
Financial Statements
Consolidated Balance Sheets F-4
Consolidated Statements of Operations F-5
Consolidated Statements of Changes in Stockholders'
Equity F-6
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-8 - F-22
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTSAccounting Firm
Board of Directors
and Stockholders
NAM CorporationclickNsettle.com, Inc.
Miami, Florida
We have audited the accompanying consolidated balance sheet of NAM Corporation
and Subsidiaries (the "Company")clickNsettle.com, Inc.
as of June 30, 1997,2008 and the related consolidated statementsstatement of operations, changes in
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management.management of clickNsettle.com, Inc.
Our responsibility is to express an opinion on these financial statements based
on our audit. The financial statements of clickNsettle.com, Inc. as of June
30, 2007, and for the year then ended was audited by other auditors who have
ceased operations. Those auditors expressed an unqualified opinion with an
explanatory paragraph (going concern) on those financial statements in their
report dated September 18, 2007.
We conducted our audit in accordance with generally accepted auditing standards.the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required at this time to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express
no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of NAM Corporation
and SubsidiariesclickNsettle.com, Inc. as of
June 30, 1997,2008 and the consolidated results of theirits operations and their consolidatedits cash flows for the year
then ended in conformity with United States generally accepted accounting
principles.
GRANT THORNTONPender Newkirk & Company LLP
Melville, New York
August 25, 1997
F-2Certified Public Accountants
Tampa, Florida
September 26, 2008
F-3
Report of Independent Auditors' Report
----------------------------
TheRegistered Public Accounting Firm*
Board of Directors
and Stockholders
NAM Corporation:clickNsettle.com, Inc.
We have audited the accompanying consolidated balance sheet of NAM CorporationclickNsettle.com, Inc.
(the "Company") as of June 30, 19962007 and the related consolidated statements of operations,
changes in stockholders' equity, and cash flows for each of the yearyears in the
two-year period then ended. These
consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated
financial statements based on our audit.audits.
We conducted our auditaudits in accordance with generally accepted auditing standards.the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the auditaudits to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
An audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements.
An audit also includesstatements, assessing the accounting
principles used and significant estimateestimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit providesaudits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NAM CorporationclickNsettle.com,
Inc. as of June 30, 19962007 and the results of itstheir operations and itstheir cash
flows for each of the yearyears in the two-year period then ended in conformity
with accounting principles generally accepted accounting principles.
KPMG Peat Marwick LLP
Jericho,in the United States of
America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As described in Note 2 to the
financial statements, the Company has no operating business. Currently, the
Company is actively searching for a new operating business to acquire or to
enter into a merger transaction. There can be no assurances that an
operating entity will be acquired or that a merger transaction will be
consummated. As a result, there is substantial doubt about the Company's
ability to continue as a going concern. The accompanying financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/ BP AUDIT GROUP, PLLC
Farmingdale, New York
September 18, 1996
F-32007
*This report is a copy of the previously issued report and the predecessor
auditor has not reissued the report.
F-4
CLICKNSETTLE.COM, INC.
BALANCE SHEETS
NAM Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
June 30
2008 2007
------------ ------------
ASSETS 1997 1996
------------ -----------
CURRENT ASSETSAssets
Current Assets
Cash and cash equivalents $ 175,4862,651,572 $ 31,474
Marketable securities 3,792,381 -
Accounts receivable (net of allowance for doubtful
accounts of $80,00082,097
Prepaids 9,567 5,013
------------ ------------
Total Current Assets 2,661,139 87,110
------------ ------------
Total Assets $ 2,661,139 $ 87,110
============ ============
Liabilities and $40,000, respectively) 408,260 455,956
Other receivables 34,490 5,873
Prepaid expenses 54,682 53,010
---------- ---------
Total current assets 4,465,299 546,313
FURNITURE AND EQUIPMENT - AT COST,
less accumulated depreciation 201,113 216,507
ORGANIZATION COSTS (net of accumulated amortization
of $21,885 and $13,293, respectively) 21,077 29,669
DEFERRED OFFERING COSTS - 112,001
OTHER ASSETS 39,756 34,503
---------- ---------
$4,727,245 $ 938,993
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIESStockholders' Equity
Current liabilities:
Accounts payable $ 158,84614,676 $ 239,261
Accrued liabilities 140,192 199,571
Accrued payroll and employee benefits 174,115 45,527
Deferred revenues 138,716 126,380
Notes payable - private placement - 400,000
---------- ---------25,829
----------- ------------
Total current liabilities 611,869 1,010,739
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)14,676 25,829
------------ ------------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock -stock; $.001 par value;
5,000,00050,000,000 shares authorized; none
issued - -and outstanding
Common stock -stock; $.001 par value;
15,000,000750,000,000 shares authorized;
3,334,978 and 1,813,07511,277,579 shares issued and
outstanding in 19972008; 1,018,170
shares issued and 1996, respectively 3,335 1,813
Paid-in992,920 shares
outstanding in 2007 11,277 1,018
Additional paid in capital 4,772,569 28,73912,993,833 10,241,721
Accumulated deficit (739,547) (101,990)
Unrealized gain on marketable securities 79,224(10,358,647) (10,097,540)
Less: treasury stock
(25,250 shares) at cost - Unearned compensation (205) (308)
---------- ---------(83,918)
------------ ------------
Total stockholders' equity (deficit) 4,115,376 (71,746)
---------- ---------
$4,727,2452,646,463 61,281
------------ ------------
Total Liabilities and Stockholders' equity $ 938,993
========== =========2,661,139 $ 87,110
============ ============
TheSee accompanying notes are an integral part of theseto financial statements.
F-4F-5
NAM Corporation and Subsidiaries
CONSOLIDATEDCLICKNSETTLE.COM, INC.
STATEMENTS OF OPERATIONS
Year ended
Years Ended June 30
1997 19962008 2007
------------ ----------------------
Net revenues $3,377,062 $3,147,886
---------- ----------
Operating costs and expenses
Cost of services 853,048 727,613
Sales and marketing expenses 1,412,348 1,472,152Expenses
Professional fees $ 218,911 $ -
General and administrative expenses 1,761,994 741,892
---------- ----------
4,027,390 2,941,657
---------- ----------
(Loss)87,616 79,802
------------ ------------
Total Operating Expenses 306,527 79,802
Loss from Operations (306,527) (79,802)
------------ ------------
Other Income
Interest income from operations (650,328) 206,22945,420 4,358
------------ ------------
Total Other income (expenses)
Other income 140,809 26,022
Costs incurred for the benefit of selling
shareholders (115,500)Income 45,420 4,358
------------ ------------
Net loss $ (261,107) $ (75,444)
============ ============
Net loss per share - Offering costs on transaction not consummated - (61,127)
Interest expense (12,538) (32,000)
---------- ----------
12,771 (67,105)
---------- ----------
(Loss) income before provision for income
taxes (637,557) 139,124
Provision for income taxes - 3,525
---------- ----------
NET (LOSS) INCOME $ (637,557)(0.04) $ 135,599
========== ==========
Net (loss) income per common share $(.23) $.07
==== ===(0.08)
Basic and Diluted ============ ============
Weighted average common stocknumber of
shares outstanding during
the year-basic and common
stock equivalents 2,762,348 1,947,504
========== ==========diluted 6,065,160 992,921
============ ============
F-5
TheSee accompanying notes are an integral part of theseto financial statements.
F-6
NAM Corporation and Subsidiaries
CONSOLIDATEDCLICKNSETTLE.COM, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended June 30, 1997 and 1996
Unearned
Unrealized compensation- Total
Common stock Additional gain on stock stockholders
------------------- paid-in Retained marketable bonus equity
Shares (1) Amount capital deficit securities plan (deficit)
---------- ------ ------- -------- ----------- ---------- ----------For the Years Ended June 30, 2008 and 2007
Balances at July 1, 1995 1,805,923 $ 3,156 $ 27,396 $(104,648) $(1,077) $ (75,173)
Net income 135,599 135,599
Distributions to shareholders (132,941) (132,941)
Earned portion of stock bonus plan 769 769
Reverse 1-for-2 stock split (1,578) 1,578Common Stock
$0.001 Par Value Additional
------------------ Paid in Accumulated Treasury Subscription
Shares issued pursuant to stock dividend 228 (228)
Shares issued pursuant to restricted stock award 7,152 7 (7)
--------- ------ ----------Amount Capital Deficit Stock Receivable Total
--------- -------- ----------- Balances at------------- ---------- --------- ----------
Balance, June 30, 1996 1,813,075 1,813 28,739 (101,990) (308) (71,746)2006 1,018,155 $ 1,018 $10,221,921 $(10,022,096) $ (83,918) $ - $ 116,925
Increase in shares issued
due to reconciliation with
transfer agent 15 - - - - - -
Contributed services-
Related party - - 19,800 - - - 19,800
--------- -------- ----------- ------------- ---------- --------- ----------
Net loss (637,557) (637,557)
Shares issued pursuant to initial public offering 1,460,000 1,460 4,700,084 4,701,544
Shares issued pursuant to restricted stock award 61,903 62 (62)
Unrealized gain on marketable securities $79,224 79,224
Compensation related to stock option plan
and contributed warrants 43,808 43,808
Earned portion of stock bonus plan 103 1032007 - - - (75,444) - - (75,444)
--------- -------------- ----------- ------------- ---------- --------- -----------------
Balance, June 30, 2007 1,018,170 1,018 10,241,721 (10,097,540) (83,918) - 61,281
Issuance of common stock for
cash ($0.349/share) 4,492,105 4,492 1,562,508 - - (25,500) 1,541,500
Issuance of common stock as a
finder's fee ($0.001 per share) 30,000 30 (30) - - - -
Cash paid as finder's fee - - (55,000) - - - (55,000)
Collection of prior period
subscription - - - - - 25,500 25,500
Issuance of common stock for
cash ($0.23/share), net of
offering costs 5,762,448 5,762 1,328,527 - - - 1,334,289
Cancellation of treasury stock (25,250) (25) (83,893) - 83,918 - -
F-7
Increase in shares issued
due to reconciliation with
transfer agent 106 - - - - - -
Net loss 2008 - - - (261,107) - - (261,107)
------------ -------- ----------- Balances at------------- ---------- --------- -----------
Balance, June 30, 1997 3,334,978 $3,335 $4,772,569 $(739,547) $79,2242008 11,277,579 $ (205) $4,115,376
========= ===== ========= ========= ======= ======== ==========11,277 $12,993,833 $(10,358,647) $ - $ - $2,646,463
(1) Share amounts have been restated to reflect the 1-for-2 stock split and
14.436% stock dividend in March 1996.
TheSee accompanying notes are an integral part of theseto financial statements.
F-6F-8
NAM Corporation and Subsidiaries
CONSOLIDATEDCLICKNSETTLE.COM, INC.
STATEMENTS OF CASH FLOWS
Year ended
Years Ended June 30
1997 1996
----------- ----------2008 2007
------------ ------------
Cash flows from operatingFlows From Operating activities
Net (loss) incomeLoss $ (637,557) $ 135,599(261,107) (75,444)
Adjustments to reconcile net (loss) incomeloss
to net cash (used in)
provided by operating activities
Depreciation and amortization 58,653 49,744
Provision for bad debts 40,000 15,622
(Gains) on sales of marketable securities (7,123) --
Earned portion of stock bonus plan 103 769
Compensationused in operations
Contributed services-former related to stock option plan and
contributed warrants 43,808 --party - 19,800
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable 7,696 (110,428)liabilities:
(Increase) decrease in other receivables (28,617) 11,630
(Increase) inin:
prepaid expenses (1,672) (44,162)
(Increase) decrease in other assets (5,252) 23,680
(Decrease) increase in accountsasset (4,554) 7,265
Increase (decrease) in:
Accounts payable and accrued liabilities (146,115) 171,588
Increase in accrued payroll and employee benefits 128,588 9,979
Increase (decrease) in deferred revenues 12,336 (631)(11,153) 1,256
------------ ---------------------
Net cash (used in) provided by operatingCash Used In Operating Activities (276,814) (47,123)
------------ ------------
Cash Flows From Financing activities (535,152) 263,390
------------ ---------
Cash flows from investing activities
Purchases of marketable securities (4,086,959) --
Proceeds from maturities of marketable securities 325,000 --
Proceeds from sales of marketable securities 62,373 --
Increase in payable for securities purchased 15,263 --
Purchases of furniture and equipment (41,116) (124,535)
Increase in organization costs -- (3,414)
------------ ---------
Net cash used in investing activities (3,725,439) (127,949)
------------ ---------
Cash flows from financing activities
Issuancesale of common stock net of issuance costs 4,701,544 --
Repayment of notes payable (400,000) --
Distributions to shareholders (8,942) (123,999)
Decrease (increase)2,905,100 -
Cash paid as direct offering cost (3,811) -
Cash paid as finder's fee (55,000) -
------------ ------------
Net Cash Provided by Financing Activities 2,846,289 -
------------ ------------
Net Increase (Decrease) in deferred offering costs 112,001 (36,038)Cash
and Cash Equivalents 2,569,475 (47,123)
------------ ---------
Net cash provided by (used in) financing activities 4,404,603 (160,037)
------------ ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 144,012 (24,596)
Cash and cash equivalents at beginningequivalents-beginning of year 31,474 56,070$ 82,097 $ 129,220
------------ ---------------------
Cash and cash equivalents at endequivalents-end of year $ 175,4862,651,572 $ 31,47482,097
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest $ - $ -
============ ==========
Supplemental disclosures============
Cash paid for taxes $ - $ -
============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Stock paid as finder's fee (30,000 shares)
(See Note 3) $ 300 $ -
============ ============
Cancellation of cash flow information:
Noncash financing activities
Dividend distribution declared but unpaidtreasury stock $ --83,918 $ 8,942
============= ==========-
============ ============
TheSee accompanying notes are an integral part of theseto financial statements.
F-7F-9
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSClickNsettle.com, Inc.
Notes to Financial Statements
June 30, 19972008 and 1996
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
NAM Corporation2007
1. Nature of Operations and Summary of Significant Accounting Policies
(A) Nature of Operations and Liquidity
clickNsettle.com, Inc. ("NAM"CKST") providespreviously provided a broad range of
Alternative Dispute Resolution ("ADR") services, including arbitrationprimarily arbitrations and
mediation,mediations, principally in the United States. NAMCKST incorporated on January
12, 1994 and began operations on February 15, 1994. On October 31, 1994, National Arbitration & Mediation,
Inc. ("NA&M"),the
predecessor operating company, which was owned by NAM'sCKST's former Chief Executive Officer
and
Executive Vice President,primarily owned, was acquired by and became a wholly-ownedwholly owned subsidiary of
NAM.CKST. The transaction was accounted for as a transfer of assets between
companies under common control, with the assets and liabilities of NA&Mthe
predecessor operating company combined with those of NAMCKST at their historical
carrying values. NA&MThe predecessor operating company also provided a broad
range of ADR services, including arbitrations and mediations. NA&MThe
predecessor operating company began operations in March 1992.
On November 18, 1996, NAM completed an Initial Public Offering ("IPO") of
its securities, which resulted inPrior to January 1, 2006, the sale of 1,400,000 units, each unit
consisting of one share of common stock and one redeemable warrant. Of this
total, 150,000 shares of common stock were not newly issued; rather, they
were sold by two executive officers of NAM. On December 3, 1996, an
additional 210,000 units were sold upon the exercise of an overallotment
option by the underwriter. Units were sold at a price of $4.00 per unit.
Effective March 29, 1996, NAM authorized a 1-for-2 reverse stock split and
a 14.436% stock dividend. All share amounts included in the accompanying
consolidated financial statements have been restated to reflect these
transactions.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting and reporting policies applied on a
consistent basis which conform with generally accepted accounting
principles follow:
a. Basis of Presentation
The accompanying consolidated financial statements of
NAM Corporation
and Subsidiaries includeclickNsettle.com, Inc. included the accounts of its wholly-ownedwholly owned
subsidiaries,
NA&M, National Video Conferencing, Inc., a Delaware corporation formed
in April 1995 and Michael Marketing Inc., a Delaware corporation
F-8
NAM CorporationLLC and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 2 (continued)
formed in November 1991clickNsettle.com LLC (collectively
referred to herein as the "Company"). As of January 1, 2006, the Company
transferred ownership of its wholly owned subsidiary, Michael Marketing LLC,
to National Arbitration and Mediation, Inc. ("NAMI"). Such subsidiary was
inactive and had no operations or net assets. Previously, the Company
dissolved its other wholly owned subsidiary, clickNsettle.com LLC, as it was
also inactive and had no operations or net assets. On January 13, 2005, CKST
sold its ADR services. As such, the Company no longer owns any subsidiaries
or has any operations.
Subsequent to year end the Company effected a reverse acquisition with
an operating company utilizing its common stock and cash on hand. The
Company operates in only one business segment, ADR. All
significant intercompany transactions and balances were eliminated in
consolidation.
b.closing occurred on August 29, 2008. (See Note 3(G))
(B) Use of Estimates
The preparation ofIn preparing financial statements, in conformity with generally
accepted accounting principles requires management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of
the financial statements, and the revenues and expenses during the reporting period.periods
presented. Actual results may differ from thosethese estimates. Estimates are used when accounting for theSignificant
estimates in 2008 and 2007 include a 100% valuation allowance for uncollectible
accounts receivable, depreciation,deferred
taxes and contingencies, among
others.
c. Revenue Recognition
The Company principally derives its revenues from fees charged for
arbitration and mediation services. Each partydue to a proceeding is
charged an administrative fee, a portion of which is nonrefundable when
each party agrees to utilize the Company's services. The Company
recognizes revenue when the arbitration or mediation occurs. Fees
received prior to the arbitration or mediation are reflected as
deferred income.
d.continuing and expected future losses.
(C) Cash and Cash Equivalents
Cash andThe Company minimizes its credit risk associated with cash equivalents consistby
periodically evaluating the credit quality of its primary financial
institution. The balance at times may exceed federally insured limits. At
June 30, 2008, the balance exceeded the federally insured limit by
$2,451,572.
F-10
For purposes of the statements of cash on hand, money market funds
and short-term notesflows, the Company considers all
highly liquid instruments with a maturity at date of purchase of three months or less.
e. Marketable Securities
Investments classified as marketable securities include fixed
maturities (bondsless and redeemablemoney
market accounts to be cash equivalents.
(D) Earnings per Share
Basic earnings (loss) per share is computed by dividing the net income
(loss) less preferred stocks)dividends for the period by the weighted average number
of shares outstanding. Diluted earnings (loss) per share is computed by
dividing net income (loss) less preferred dividends by the weighted average
number of shares outstanding including the effect of share equivalents. On
March 13, 2008, the Company declared a one for ten reverse stock split. All
share and equity
securities (common and nonredeemable preferred stocks) which are
reported at their fair values. Unrealized gains or losses on these
securities are reported as a separate component of stockholders'
equity, net of related tax effects. The Company categorizes
F-9
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)per share amounts have been retroactively restated.
At June 30, 19972008 and 1996
NOTE 2 (continued)
all fixed maturity and equity securities as available-for-sale in order
to provide2007, the Company flexibility to respond to various factors,
including changes in market conditions and tax planning considerations.
Investment income,had outstanding common stock
equivalents consisting of interest20,999 and dividends, is recognized
when earned. Realized gains and losses on sales, maturities or
liquidation of investments are determined on a specific identification
basis. The amortization of premiums and accretion of discounts21,399 stock options, respectively,
which could potentially dilute earnings (loss) per share. All common stock
equivalents existing at these dates were antidilutive due to the reported net
loss; as such, there was no separate computation for fixed maturity securities are computed on a straight-line basis. Fair
values of investments are based on quoted market prices or on dealer
quotes.
f. Furniture and Equipment
Furniture and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed using the straight-line method
to allocate the cost of those assets over their expected useful lives
which range from five to seven years.
g. Organizational Costs
Organizational costs arose from NAM's organization in 1994.
Organizational costs are amortized over five years.
h.diluted earnings per
share.
(E) Income Taxes
The Company follows the asset and liability method of accountingaccounts for income taxes by applying statutoryunder the liability method in
accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Under this method, deferred income tax rates in effect atassets
and liabilities are determined based on differences between the balance
sheet date to differences among the bookfinancial
reporting and tax bases of assets and liabilities.liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
We adopted the provisions of FASB Interpretation No. 48; "Accounting for
Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109"
("FIN 48"). FIN 48 contains a two-step approach to recognizing and measuring
uncertain tax positions. The resulting deferredfirst step is to evaluate the tax liabilitiesposition for
recognition by determining if the weight of available evidence indicates it
is more likely than not that the position will be sustained on audit,
including resolution of related appeals or assets are
adjustedlitigation processes, if any. The
second step is to reflect changes inmeasure the tax laws or rates by meansbenefit as the largest amount that is more
than 50% likely of charges or
credits to incomebeing realized upon ultimate settlement. We consider many
factors when evaluating and estimating our tax expense. A valuation allowance is recognized to
the extent a portion or all of a deferredpositions and tax assetbenefits,
which may not be
realizable.
i. Offering Costs
Costs incurred in connection with the IPO in November 1996, consisting
of professional fees directly associated with the offering, were
charged to additional paid-in capital during the year endedrequire periodic adjustments. At June 30, 1997. A prior attempt at an initial public offering was abandoned in
October 1995, at which time expenditures amounting to $61,127 were
expensed to fiscal 1996 operations.
F-10
NAM Corporation2008 and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 2 (continued)
j. Net (Loss) Income Per Share
For the year ended June 30, 1996, net income per share was computed
based on the weighted average number of shares of common stock and
common stock equivalents outstanding during such fiscal year, which
were retroactively adjusted to give recognition to the change in the
capital structure as a result of contingently issuable shares, stock
dividends and the reverse stock split. Net loss per share2007,
respectively, we did not record any liabilities for the year
ended June 30, 1997 is based on the weighted average number of shares
of common stock outstanding during the period. Common stock equivalents
were excluded in fiscal 1997 as the effect of their conversion is
antidilutive.
k. Accounting Pronouncements Not Yet Adopted
In February 1997, the Financial Accounting Standards Board ("FASB")
issueduncertain tax position.
(F) Segment Information
The Company follows Statement of Financial Accounting Standards No. 128, "Earnings
per Share,131,
"Disclosures about Segments of an Enterprise and Related Information." At
June 30, 2008 and 2007, respectively, the Company only operated in one
segment; therefore, segment information has not been presented.
F-11
(G) Recent accounting pronouncements
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements", which clarifies the principle that fair value should be based
on the assumptions that market participants would use when pricing an asset
or liability. It also defines fair value and establishes a hierarchy that
prioritizes the information used to develop assumptions. SFAS No. 157 is
effective for financial statements issued for both
interimfiscal years beginning after
November 15, 2007. The Company does not expect SFAS No. 157 to have a
material impact on its financial position, results of operations or cash
flows.
In February 2007, the FASB issued SFAS 159, "The Fair Value Option for
Financial Assets and annual periods endingFinancial Liabilities", which permits entities to choose
to measure many financial instruments and certain other items at fair value.
The unrealized gains and losses on items for which the fair value option has
been elected should be reported in earnings. The decision to elect the fair
value option is determined on an instrument-by-instrument basis, should be
applied to an entire instrument and is irrevocable. Assets and liabilities
measured at fair values pursuant to the fair value option should be reported
separately in the balance sheet from those instruments measured using other
measurement attributes. SFAS No. 159 is effective as of the beginning of the
Company's 2009 fiscal year. The adoption of SFAS No. 159 is not expected to
have a material effect on the Company's financial position, results of
operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements, an amendment of Accounting
Research Bulletin No 51" ("SFAS 160"). SFAS 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, changes in a parent's ownership of a noncontrolling
interest, calculation and disclosure of the consolidated net income
attributable to the parent and the noncontrolling interest, changes in a
parent's ownership interest while the parent retains its controlling
financial interest and fair value measurement of any retained noncontrolling
equity investment. SFAS 160 is effective for financial statements issued for
fiscal years beginning after December 15, 1997.2008, and interim periods within
those fiscal years. Early adoption is prohibited. The adoption of SFAS No.
160 is not expected to have a material effect on the Company's financial
position, results of operations or cash flows.
In December 2007, the FASB issued SFAS 141R, "Business Combinations"
("SFAS 141R"), which replaces FASB SFAS 141, "Business Combinations". This
Statement retains the fundamental requirements in SFAS 141 that the
acquisition method of accounting be used for all business combinations and
for an acquirer to be identified for each business combination. SFAS 141R
defines the acquirer as the entity that obtains control of one or more
businesses in the business combination and establishes the acquisition date
as the date that the acquirer achieves control. SFAS 141R will require an
entity to record separately from the business combination the direct costs,
where previously these costs were included in the total allocated cost of the
acquisition. SFAS 141R will require an entity to recognize the assets
acquired, liabilities assumed, and any non-controlling interest in the
acquired at the acquisition date, at their fair values as of that date. This
F-12
compares to the cost allocation method previously required by SFAS No. 141.
SFAS 141R will require an entity to recognize as an asset or liability at
fair value for certain contingencies, either contractual or non-contractual,
if certain criteria are met. Finally, SFAS 141R will require an entity to
recognize contingent consideration at the date of acquisition, based on the
fair value at that date. This Statement will be effective for business
combinations completed on or after the first annual reporting period
beginning on or after December 15, 2008. Early adoption of the newthis standard is
not permitted. The newpermitted and the standards are to be applied prospectively only. Upon
adoption of this standard, eliminates primarythere would be no impact to the Company's results
of operations and fully diluted earnings per share and requires
presentation of basic and diluted earnings per share together with
disclosure of how the per share amounts were computed.financial condition for acquisitions previously completed.
The adoption of SFAS No. 141R is not expected to have a material effect on
the Company's financial position, results of operations or cash flows.
In January 2008, the SEC released SAB No. 110, which amends SAB No. 107
which provided a simplified approach for estimating the expected term of a
"plain vanilla" option, which is required for application of the Black-
Scholes option pricing model (and other models) for valuing share options.
At the time, the Staff acknowledged that, for companies choosing not to rely
on their own historical option exercise data (i.e., because such data did not
provide a reasonable basis for estimating the term), information about
exercise patterns with respect to plain vanilla options granted by other
companies might not be available in the near term; accordingly, in SAB No.
107, the Staff permitted use of a simplified approach for estimating the term
of plain vanilla options granted on or before December 31, 2007. The
information concerning exercise behavior that the Staff contemplated would be
available by such date has not materialized for many companies. Thus, in SAB
No. 110, the Staff continues to allow use of the simplified rule for
estimating the expected term of plain vanilla options until such time as the
relevant data becomes widely available. The Company does not expect its
adoption of SAB No. 110 to have a material impact on its financial position,
results of operations or cash flows.
In March 2008, the FASB issued SFAS No. 161 "Disclosures about
Derivative Instruments and Hedging Activities-An Amendment of FASB Statement
No. 133" ("SFAS 161"). SFAS 161 establishes the disclosure requirements for
derivative instruments and for hedging activities with the intent to provide
financial statement users with an enhanced understanding of the entity's use
of derivative instruments, the accounting of derivative instruments and
related hedged items under Statement 133 and its related interpretations, and
the effects of these instruments on the entity's financial position,
financial performance, and cash flows. This statement is effective for
financial statements issued for fiscal years beginning after November 15,
2008. The Company does not expect its adoption of SFAS 161 to have a
material impact on its financial position, results of operations or cash
flows.
In April 2008, the FASB issued FASB Staff Position ("FSP") SFAS No. 142-
3, "Determination of the Useful Life of Intangible Assets". This FSP amends
the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible
asset under FASB Statement No. 142, "Goodwill and Other Intangible Assets"
("SFAS 142"). The intent of this new standardFSP is to improve the consistency between
the useful life of a recognized intangible asset under SFAS 142 and the
F-13
period of expected cash flows used to measure the fair value of the asset
under SFAS 141R, and other GAAP. This FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Early adoption is prohibited.
The Company is currently evaluating the impact of SFAS FSP 142-3, but does
not expect the adoption of this pronouncement to have a material impact on
its financial position, results of operations or cash flows.
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally
Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the
sources of accounting principles and the framework for selecting principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles in the United States. This statement is effective 60 days
following the SEC's approval of the Public Company Accounting Oversight
Board's amendments to AU section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles. The Company is
currently evaluating the impact of SFAS 162, but does not expect the adoption
of this pronouncement to have a material impact on its financial position,
results of operations or cash flows.
Other accounting standards that have been issued or proposed by the FASB
or other standards-setting bodies do not require adoption until a future date
and are not expected to have a material impact on the calculation and disclosure of earnings per sharefinancial statements
upon adoption.
(H) Reclassifications
Certain amounts in the year 2007 financial statements.
In June 1997,statements have been
reclassified to conform to the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130").
This statement is effective for years beginning after December 15,
1997. SFAS No. 130 establishes standards to report and display
comprehensive income and its components in a full set of
general-purpose financial statements. Management does not expect SFAS
No. 130 to have ayear 2008 presentation. These
reclassifications had no material impacteffect on the Company's financial statements.
F-11
NAM Corporationposition, results
of operations or cash flows.
2. Income Taxes
SFAS 109 requires the recognition of deferred tax assets and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997liabilities
for both the expected impact of differences between the financial statements
and 1996
NOTE 3 - MARKETABLE SECURITIES
Marketable securities are carried at estimated fair value. A summarythe tax basis of investments in marketable securitiesassets and a reconciliation of amortized cost
to the estimated fair value follow:
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---------- ---------- ----------- ----------
June 30, 1997
Fixed maturities
U.S. Treasury securities $2,088,713 $ 97 $ (1,225) $2,087,585
Corporate preferred securities 550,000 500 - 550,500
---------- ---------- --------- ----------
2,638,713 597 (1,225) 2,638,085
Equity securities 1,074,444 89,657 (9,805) 1,154,296
---------- ---------- --------- ----------
Total marketable securities $3,713,157 $90,254 $(11,030) $3,792,381
========== ======= ======== ==========
The amortized costliabilities, and estimated fair value of investments in fixed
maturities classified as securities available-for-sale at June 30, 1997 are
shown below by contractual maturity. Actual maturities may differ from
contractual maturities because borrowers have the right to call obligations
without call penalties.
Estimated
Amortized fair
cost value
---------- ----------
Due in one year or less $2,088,713 $2,087,585
Due after ten years 550,000 550,500
---------- ----------
$2,638,713 $2,638,085
========== ==========
F-12
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 3 (continued)
Proceeds on sales of securities were $62,373. Gains of $7,123 and losses of
$0 were realized on these sales. Net unrealized gains, net of tax effects,
on marketable securities were $79,224 at June 30, 1997. During fiscal 1997,
no income taxes were provided on the unrealized gains due to the Company's
net operating loss.
Investment income, consisting primarily of interest, dividends and gains
(losses) on sales of securities less investment expenses, was $136,572 and
$0 for the years ended June 30, 1997expected future tax
benefit to be derived from tax losses and 1996, respectively. Such amounts
are included in other income intax credit carryforwards. SFAS 109
additionally requires the accompanying consolidated financial
statements.
NOTE 4 - FURNITURE AND EQUIPMENT
Furniture and equipment consistestablishment of the following:
June 30,
---------------------------------
1997 1996
--------- --------
Furniture $ 159,447 $140,543
Equipment 191,093 168,881
--------- --------
350,540 309,424
Less accumulated depreciation (149,427) (92,917)
--------- --------
$ 201,113 $216,507
========= ========
Depreciation expense for the years ended June 30, 1997 and 1996 was $56,510
and $42,846, respectively.
F-13
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 5 - NOTES PAYABLE - PRIVATE PLACEMENT
In the second half of 1994, the Company offered units, consisting of a
total of $400,000 in 8% promissory notes and 143,023 shares of restricted
common stock, for total proceeds of $402,000 in a private placement. The
promissory notes, recorded at par value, were payable on June 30, 1996 and
required annual payments of accrued interest. This financing was offered in
minimum units of $5,025 denominations and multiples thereof, with each
person and/or firm participating therein purchasing a $5,000, 8% promissory
note and 1,787 restricted shares of NAM's common stock with a par value of
$0.001 per share.
The maturity of these notes was extended and repaid along with interest due
of $44,537 with proceeds from the November 1996 IPO.
NOTE 6 - INCOME TAXES
The provision for income taxes for the year ended June 30, 1996 consists
solely of state and local taxes.
Temporary differences which give rise to deferred taxes at June 30, 1997
are summarized as follows:
Deferred tax assets
Net operating loss and other carryforwards $ 139,000
Provision for bad debts 32,000
Deferred compensation 26,000
Deferred rent 6,000
---------
203,000
Deferred tax liabilities
Depreciation 17,000
---------
Net deferred tax asset before valuation allowance 186,000
Valuation allowance (186,000)
---------
Net deferred tax asset $ -
=========
At June 30, 1996, the Company had temporary differences relating to bad
debts and depreciation which offset and resulted in no deferred taxes.
F-14
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 6 (continued)
The Company has recorded a full valuation allowance to reflect
the estimated amountlikelihood of realization of deferred tax assets which may not be realized.assets.
The Company's effective income tax rate differs from the statutory Federal
income tax rate as a result of the following:
1997 1996
--------- -------
Provision (benefit) at statutory rate $(216,769) $ 36,675
State and local taxes, net of Federal benefit -- 2,327
Nondeductible expenses 30,589 --
Other -- 1,013
Increase (decrease) in the valuation allowance 186,180 (36,490)
--------- --------
$ -- $ 3,525
========= ========
The provision for Federal income taxesCompany has been determined on the basis of
a consolidated tax return. At June 30, 1997, the Company had a net operating loss carryforward for Federaltax purposes
totaling $9,290,624 at June 30, 2008, expiring from 2012 through the year
2028. Additionally, the Company had a net capital loss carryforward for
federal income tax reporting purposes amounting toat June 30, 2008 of approximately
$440,000, expiring$37,400 which expires in 2012.2009. No Federalincome taxes were paid in the years ended
June 30, 19972008 and 1996.
NOTE 7 - STOCKHOLDERS' EQUITY
a. Initial Public Offering
In November 1996,2007. Internal Revenue Code Section 382 places a
limitation on the Company raised additional capital through an IPO.
The offering consistedamount of 1,400,000 units, each unit consisting of one
share of common stock and one redeemable warrant. Of the total units
sold, 150,000 units were offeredtaxable income that can be offset by
two executive officers of the
Company. Each redeemable warrant entitles the holder to purchase one
share of common stockcarryforwards after a change in control (generally greater than a 50% change
in ownership). Net deferred tax assets, are as follows at $6.00 per unit, subject to adjustment, at any
time from issuance until November 13, 2001. Such warrants are
redeemable by the Company, with the prior written consent of the
underwriter, at a redemption price of $.05 commencing November 13, 1997
provided that the average closing bid price of the common stock equals
or exceeds $9.00, subject to adjustment,
F-15
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) June 30, 19972008 and
1996
NOTE 7 (continued)
for a specified period of time. In addition, there2007:
F-14
Gross deferred tax assets: 2008 2007
Capital loss carryover 14,600
Contribution carryover 300
Net operating loss carryforwards $ 3,623,300 $ 3,525,800
------------ ------------
Total deferred tax assets 3,638,200 3,525,800
Less: valuation allowance (3,638,200) (3,525,800)
------------ ------------
Net deferred tax asset recorded $ - $ -
The valuation allowance at June 30, 2007 was an overallotment
option for 210,000 units which was exercised by the underwriter,
resulting$3,525,800. The net change
in a total of 1,610,000 units being sold, of which 1,460,000
units were sold by the Company. Gross proceeds to the Company totaled
$5,840,000 and offering expenses aggregated $1,138,456, resulting in
net proceeds of $4,701,544.
In connection with the IPO, the Company contributed warrants underlying
units sold by two executive officers and agreed to pay the underwriting
costs associated with shares sold by them. With respect thereto, the
Company expensed $115,500valuation allowance during the year ended June 30, 1997,2008, was an increase
of $112,400. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or
all of the deferred income tax assets will not be realized. The ultimate
realization of deferred income tax assets is dependent upon any Section 382
limitations and the generation of future taxable income during the periods in
which $37,500 relatedthose temporary differences become deductible. Management considers
the scheduled reversal of deferred income tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment. Based
on consideration of these items, management has determined that enough
uncertainty exists relative to the contributed warrants.
b.realization of the deferred income tax
asset balances to warrant the application of a full valuation allowance as of
June 30, 2008.
The actual tax benefit differs from the expected tax benefit for the
period ended June 30, 2008 and 2007 (computed by applying the U.S. Federal
Corporate tax rate of 34% to income before taxes and 7.58% for State income
taxes, a blended rate of 39.00%) as follows:
2008 2007
Expected tax expense (benefit)-Federal $ (82,100) $ (25,651)
Expected tax expense (benefit)-State (19,800) ( 3,338)
Nondeductible expenses and other-net (10,500) 40,589
------------ ------------
Change in valuation allowance (112,400) (11,600)
============ ============
Actual tax expense (benefit) $ - $ -
3. Stockholders' Equity
(A) Stock Award Plan
In June 1994,Issued for Cash
On September 26, 2007, the Company adopted an Executive Stock Bonus Plan. Under
the plan,sold 4,492,105 shares of restricted
common stock for $1,567,000 ($0.349/share). The sale resulted in control
being obtained by a third party investor group.
F-15
On December 19, 2007, the Company granted shares to three employees pursuant to
their employment agreements. Allentered into a stock purchase
agreement with a new group of investors for the sale of 51% of the Company's
outstanding common stock. The transaction closed on March 18, 2008, whereby
the Company sold 5,762,448 shares vest after providing two
to five years of servicecommon stock for $1,334,289, net of
offering costs ($0.23/share). This transaction resulted in a further change
of control.
(B) Stock Issued as Finder's Fee
On September 26, 2007, the Company issued 30,000 shares of restricted
common stock, having a fair value of $300, as a finder's fee relating to the
Company's change in control. The payment had a net effect on equity of $0,
as additional paid in capital was debited and common stock was credited for
the same balance at par value.
(C) Cash Paid as Finder's Fee
On September 26, 2007, the Company from the grant date. The
estimated market value per share at date of grant was $0.01. These
amounts were recorded as unearned compensation and are shownpaid $55,000 to an individual as a
separate componentfinder's fee.
(D) Stock Options
A summary of stockholders' equity. The Company recognized
compensation expense of $103 and $769 duringstock option activity for the years ended June 30, 19972008 and
1996, respectively, representing2007 is as follows:
Weighted
Average
Number of Exercise
Options Price
Stock Options
Balance at June 30, 2006 44,897 $14.20
Granted - -
Exercised - -
Cancelled/Forfeited (23,498) 24.40
----------- -----------
Balance at June 30, 2007 21,399 $ 3.02
Granted - -
Exercised - -
Cancelled/Forfeited (400) 11.25
----------- -----------
Balance at June 30, 2008 20,999 $ 2.86
=========== ===========
Options exercisable at June 30, 2008 20,999 $ 2.86
=========== ===========
Weighted average fair value of options
granted during 2008 $ -
===========
F-16
Outstanding Exercisable
------------------------------------- ---------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted-
at Remaining Average at average
Range of June 30 Contractual Exercise June 30 Exercise
Exercise Price 2008 Life Price 2008 Price
- ----------------------------------------------------------------------------
$ 0.50-$ 1.08 15,000 5.50 yrs. $ 0.79 15,000 $ 0.79
$ 1.55-$ 2.00 3,999 3.62 yrs. $ 1.83 3,999 $ 1.83
$ 7.82-$11.25 500 0.99 yrs. $ 7.82 500 $ 7.82
$24.69 1,500 1.99 yrs. $24.69 1,500 $24.69
----------- ---------- ----------- --------- ---------
$ 0.50-$24.69 20,999 4.13 yrs. $ 2.86 20,999 $ 2.86
=========== ========== =========== ========= =========
(E) Authorized Capital
On March 13, 2008, the amortizationCompany increased its authorized share capital to
50,000,000 shares of unearned
compensation overpreferred stock and 750,000,000 shares of common stock.
(F) Cancellation of Treasury Stock
On March 14, 2008, the vesting period. DuringCompany cancelled its outstanding treasury stock.
(G) Reverse Acquisition and Recapitalization
On August 29, 2008, clickNsettle.com, Inc. completed an acquisition of
Cardo Medical, LLC, a privately held California limited liability company,
and its subsidiaries pursuant to a Merger Agreement and Plan of
Reorganization, dated as of June 18, 2008, as amended, by and among CKST,
Cardo and Cardo Acquisition, LLC, a California limited liability company and
wholly-owned subsidiary of CKST. Cardo merged with and into Cardo
Acquisition, LLC, with Cardo continuing as the surviving entity in the merger
and a wholly-owned subsidiary of CKST (referred to as the "Merger"). Cardo
stockholders were issued common shares of CKST, resulting in a change of
control for CKST. The original CKST stockholders will retain a non-
controlling interest.
Each Cardo unit issued and outstanding was converted into and exchanged
for the right to receive 667,204.70995 shares of common stock of CKST. As a
result of the Merger, CKST's stockholders and optionholders own approximately
5.5% of the combined company on a fully diluted basis (or 11,298,979 shares
of common stock outstanding and underlying options), the former members of
Cardo own approximately 93.3% of the combined company on a fully diluted
basis (or 192,082,643 shares of common stock), and optionholders of Cardo
own approximately 1.2% of the combined company on a fully diluted basis (or
2,398,400 shares of common stock underlying those options).
F-17
In connection with the consummation of the Merger and with the approval
of its stockholders on September 16, 2008, CKST will amend its Certificate of
Incorporation to change its name from "clickNsettle.com, Inc." to "Cardo
Medical, Inc."
The Company intends to account for this transaction as a reverse
acquisition and recapitalization of Cardo. At closing, CKST did not have any
material operations and majority-voting control was transferred to Cardo.
The transaction will require a recapitalization of Cardo. Since Cardo
acquired a controlling voting interest, it is deemed the accounting acquiror,
while CKST is deemed the legal acquiror. The historical financial statements
of the Company will be those of Cardo, and of the consolidated entities from
the date of Merger and subsequent. Since the transaction will be considered
a reverse acquisition and recapitalization, the guidance in SFAS No. 141 will
not apply for purposes of presenting pro-forma financial information.
On August 29, 2008, the Company changed its fiscal year end to December
31.
F-18
Part III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Our financial statements for the year ended June 30, 1997, 60,193 shares2007 were
previously audited by BP Audit Group, PLLC ("BP"). On October 2, 2007, BP
resigned as the Independent Registered Certified Public Accounting Firm for
the Company. Their report on such financial statements has not been reissued
due to their discontinuation of their public accounting and auditing
operations. Their previously issued upon vesting. Asreport is included herein.
The reports of BP on the Company's financial statements for the years
ended June 30, 2007 and 2006 expressed substantial doubt about our ability to
continue as a going concern because we had no operating business. The
reports of BP did not otherwise contain an adverse opinion or disclaimer of
opinion, nor were such reports modified as to uncertainty, audit scope or
accounting principles.
During the years ended June 30, 2007 and 2006, and through October 2,
2007, there were no disagreements with BP, whether or not resolved, on any
matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which, if not resolved to the satisfaction of
BP, would have caused BP to make reference thereto in their reports on the
financial statements for such years.
During the years ended June 30, 2007 and 2006, and through October 2,
2007, there were no reportable events (as defined in Item 304(a)(1)(v) of
Regulation S-K).
On October 3, 2007, we engaged Pender Newkirk & Company LLP as the
Company's principal accountant to audit our financial statements.
Item 9A(T). CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Disclosure controls and procedures mean the methods designed to ensure
that information that the Company is required to disclose in the reports that
it files with the Securities and Exchange Commission is recorded, processed,
summarized and reported within the time periods required. Our controls and
procedures are designed to ensure that all information required to be
disclosed is accumulated and communicated to our management to allow timely
decisions regarding disclosure. Our controls and procedures are also
designed to provide reasonable assurance of the reliability of our financial
reporting and accurate recording of our financial transactions.
Our Management is responsible for establishing and maintaining adequate
internal control over financial reporting. Under the supervision and with
the participation of our Management, including our principal executive
officer and principal financial officer, we conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as of June 30, 2008. Based on this evaluation and
8
using the COSO framework, our principal executive officer and principal
financial officer concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this report. No material
weaknesses in our internal control over financial reporting were identified.
Our management assessed the risks associated with the reliability of our
financial reporting by identifying the risks that could result in a
misstatement in our financial statements. Our management's daily involvement
with the business provides the necessary knowledge to identify reporting
risks. Based on such knowledge, our management believes that it has controls
in place that address our financial reporting risks and that such controls
operate effectively.
A control system, however well designed and operated, can provide only
reasonable, not absolute, assurance that the control system's objectives will
be met. There are inherent limitations in all control systems, and no
evaluation of controls can provide absolute assurance that all control gaps
or instances of fraud have been detected. These inherent limitations include
the realities that the judgments in decision-making can be faulty, and that
simple errors or mistakes can occur.
This Annual Report on Form 10-K does not include an attestation report
of the Company's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation
by the Company's registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to
provide only management's report in this annual report.
There were no significant changes in our internal controls over
financial reporting during the most recent fiscal year.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The following table sets forth information, as of June 30, 2008,
concerning the Company's executive officers and directors, including their
ages:
Name Age Position
Glenn L. Halpryn 48 Chairman of the Board, Chief
Executive Officer, President
Noah M. Silver 50 Vice President, Secretary
Treasurer and Director
Alan Jay Weisberg 62 Chief Financial and Accounting
Officer and Director
Curtis Lockshin 48 Director
9
Business Experience of Directors and Executive Officers During the Past Five
Years
Glenn L. Halpryn. Mr. Halpryn has served as the Company's Chairman of
the Board, Chief Executive Officer and President since October 2007. Mr.
Halpryn has been Chairman of the Board and Chief Executive Officer of
Quikbyte Software, Inc. since July 2008, and Chairman of the Board and Chief
Executive Officer of Getting Ready Corporation, a shell company traded on the
OTC Bulletin Board, since December 2006. He also served as Chairman of the
Board and Chief Executive Officer of Orthodontix, Inc., a public company,
from April 2001 until Orthodontix merged with Protalix BioTherapeutics, Inc.
in December 2006. Mr. Halpryn is also Chief Executive Officer and a director
of Transworld Investment Corporation, serving in those capacities since June
2001. Since 2000, Mr. Halpryn has been an investor and the managing member
of investor groups that were joint venture partners in 26 land acquisition
and development projects with one of the largest home builders in the
country. From 1984 to June 2001, Mr. Halpryn served as Vice
President/Treasurer of Transworld Investment. From October 19, 1999, Mr.
Halpryn also served as Vice President of Ivenco, Inc. until Ivenco's merger
into Transworld Investment in June 2001. In addition, since 1984, Mr.
Halpryn has been engaged in real estate investment and development
activities. From April 1988 through June 1998, Mr. Halpryn was Vice Chairman
of Central Bank, a Florida state-chartered bank. Since June 1987, Mr.
Halpryn has been the President of and beneficial holder of stock of United
Security Corporation, a broker-dealer registered with the National
Association of Securities Dealers. From June 1992 through May 1994, Mr.
Halpryn served as the Vice President, Secretary-Treasurer of Frost Hanna
Halpryn Capital Group, Inc., a "blank check" company whose business
combination with Sterling Healthcare Group, Inc. was effected in May 1994.
From June 1995 through October 1996, Mr. Halpryn served as a member of the
Board of Directors of Sterling Healthcare Group, Inc. Since October 2002,
Mr. Halpryn has been a director of Ivax Diagnostics, Inc., a publicly held
corporation, and is a member of its audit committee and chairman of its
compensation committee.
Noah M. Silver. Mr. Silver has served as the Company's Vice President,
Secretary, Treasurer and a director since October 2007. He has served as
Vice President, Secretary, Treasurer and a director of Getting Ready
Corporation since December 2006, and as Vice President, Secretary, Treasurer
and a director of Quikbyte Software, Inc. since July 2008. Mr. Silver was a
director of Orthodontix, Inc. from 2001 until December 2006. Mr. Silver has
been the Chief Financial Officer of Transworld Investment Corporation since
June 2001, a firm in which Mr. Halpryn is the Chief Executive Officer and a
director. From March 2000, Mr. Silver served as the Chief Financial Officer
of Ivenco, serving in such capacity until Ivenco's merger into Transworld
Investment in June 2001. From January 1997 36,744 awardsthrough February 1999, Mr. Silver
was the President of Dryclean USA, Florida Division, and Dryclean USA
Franchise Company. From April 1995 through December 1996, Mr. Silver was the
Florida Division Controller and Vice President of Dryclean USA, the parent
company of Dryclean USA, Florida Division. Mr. Silver is a Certified Public
Accountant and a Certified Management Accountant and has earned a Master of
Accounting Degree.
10
Alan Jay Weisberg. Mr. Weisberg has served as the Company's Chief
Financial and Accounting Officer and a director since October 2007. He has
served as the Chief Financial Officer and a director of Quikbyte Software,
Inc. since July 2008 and as the Chief Financial Officer and a director of
Getting Ready Corporation since December 2006. Mr. Weisberg was the Acting
Chief Financial Officer of Orthodontix, Inc. from 1999 until December 2006
and the Treasurer and a director of Orthodontix, Inc. from 2001 until
December 2006. Since July 1986, Mr. Weisberg has been a stockholder in the
accounting firm of Weisberg Brause & Co., Boca Raton, Florida. Mr. Weisberg
has been the principal financial officer of United Security Corporation since
June 1987.
Curtis Lockshin. Dr. Lockshin has served as a director of the Company
since October 2007. He has served as a director of Quikbyte Software, Inc.
since July 2008 and as a director of Getting Ready Corporation since December
2006. Since 2003, Dr. Lockshin has been an independent pharmaceutical and
life sciences consultant, focused on small companies that seek to leverage
their technology assets inside healthcare, biotechnology and security
sectors. At Sepracor Inc., from 1998 to 2002, as a Scientist, Associate
Director, and Director of Discovery Biology & Informatics, Dr. Lockshin was
instrumental in establishing the New Leads program, which delivered novel
chemical entities into the preclinical pipeline. In 2002 and 2003, while
Director of Discovery Biology at Beyond Genomics, Inc., Dr. Lockshin co-
developed strategies for utilizing proprietary technology platforms in
clinical trial optimization and prediction of off-target drug activities.
Since 2004, Dr. Lockshin has served on the Board of Directors of the Ruth K.
Broad Biomedical Research Foundation, a Duke University support corporation,
which supports basic research related to Alzheimer's disease and
neurodegeneration via intramural, extramural and international grants. Dr.
Lockshin was a director of Orthodontix, Inc. from July until December 2006.
Dr. Lockshin is a co-inventor on several U.S. patents and applications
covering pharmaceuticals, biomaterials and optics for remote biochemical
sensing. He holds a Bachelor's degree in Life Sciences and a Ph.D. in
Biological Chemistry, both from the Massachusetts Institute of Technology.
Relationship among Directors and Executive Officers
No family relationships exist among any of the individuals serving as
the Company's directors or executive officers.
Meetings of the Board of Directors
During the Company's fiscal year ended on June 30, 2008, there were four
meetings of the Company's Board of Directors. All directors attended 75% or
more of all the meetings of the Board of Directors in the fiscal year ended
June 30, 2008.
The Company currently does not have a formal policy regarding attendance
by its directors at annual shareholders meetings, although we encourage their
attendance and anticipate most of the Company's directors will attend these
meetings.
11
Director Compensation
The following table sets forth a summary of compensation awarded to,
earned by or paid to each director for the fiscal year ended June 30, 2008.
Directors of the Company received $600 for attendance at each Board meeting
after September 26, 2007, and outside directors received $250 for attendance
at meetings prior to September 26, 2007. The Company's Board of Directors
intends to review this compensation policy for the directors and may adopt a
policy of paying independent, non-employee directors an annual retainer
and/or a fee for attendance at Board and committee meetings. We anticipate
reimbursing each director for reasonable travel expenses related to that
director's attendance at Board of Directors and committee meetings.
Fees Earned or All Other
Name Paid in Cash Compensation Total
- ----------------------- -------------- ------------ ---------
Glenn L. Halpryn(1) $2,400 $ - $2,400
Noah M. Silver(1) 2,400 - 2,400
Alan Jay Weisberg(1) 2,400 - 2,400
Curtis Lockshin(1) 2,400 - 2,400
Roy Israel(2) - - -
Willem F. Specht(2) - - -
Corey J. Gottlieb(2) - - -
Randy Gerstenblatt(2) 250 - 250
Kenneth W. Good(2)(3) 250 - 250
- ---------------------
(1) Messrs. Halpryn, Silver, Weisberg and Lockshin resigned as directors and
officers on September 19, 2008 in connection with the Merger.
(2) Messrs. Israel, Specht, Gottlieb, Gerstenblatt and Good resigned as
directors in connection with a change in control of the Company on September
26, 2007.
(3) These payments were made to Mr. Good's employer, ISO Investment Holdings,
Inc.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than 10% stockholders
are outstanding,required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) reports they file. Based solely on
a review of the copies of those reports furnished to the Company and written
representations from its executive officers and directors, we believe that
the Company's officers, directors and greater than 10% beneficial owners
complied with all applicable Section 16(a) filing requirements in the fiscal
12
year ended June 30, 2008, except for one Form 3 filed by Steven Jerry
Glauser. Mr. Glauser should have filed a Form 3 by November 9, 2008 in
connection with his becoming a 10% or more stockholder of the Company. Mr.
Glauser instead filed his Form 3 on January 14, 2008.
Involvement in Legal Proceedings
The Company is not aware of any proceeding adverse to the interests of
the Company to which any officer, director or beneficial owner of 5% or more
of its voting securities is a party. Further, the Company is not aware of
any material proceeding adverse to the interests of the Company to which any
officer, director or beneficial owner of 5% or more of the Company's voting
securities is a party.
The Company is not aware of any material interest of any officer or
director of the Company that is adverse to the Company.
During the past five years, no officer or director of the Company
elected or appointed after the first change of control on September 26, 2007,
has:
(1) Petitioned for bankruptcy or had a bankruptcy petition
filed by or against any business of which such person was
a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
(2) Been convicted in a criminal proceeding or is currently
subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) Been subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or
banking activities; or
(4) Been found by a court of competent jurisdiction (in a
civil action), the SEC or the Commodity Futures Trading
Commission to have violated a federal or state securities
or commodities law, and the judgment has not been
reversed, suspended or vacated.
Director Independence
Corporate Governance and Independent Directors
Our Common Stock is currently traded on the National Association of
Securities Dealers, Inc.'s, OTC Bulletin Board, or "OTCBB". Accordingly, we
are not required to have an audit, compensation or nominating committee.
13
However, we operate within a comprehensive plan of corporate governance for
the purpose of defining responsibilities, setting high standards of
professional and personal conduct and assuring compliance with such
responsibilities and standards. We regularly monitor developments in the
area of corporate governance to ensure that we are in compliance with the
standards and regulations required by the national securities exchanges.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that includes
provisions ranging from restrictions on gifts to conflicts of interest. All
employees and directors are bound by this Code of Business Conduct and
Ethics. Violations of the Code of Business Conduct and Ethics may be
reported to the Board of Directors.
The Code of Business Conduct and Ethics includes provisions applicable
to all of whichour employees, including senior financial officers and members of
our Board of Directors.
Personal Loans to Executive Officers and Directors
We prohibit extensions of credit in the form of a personal loan to or
for our directors and executive officers.
Communications with the Board of Directors
Anyone who has a concern about the Company's conduct, including
accounting, internal accounting controls or audit matters, may communicate
directly with the Board of Directors or its non-management directors. These
communications may be confidential or anonymous, and may be mailed, e-mailed,
submitted in writing or reported by phone. All of these concerns will vest in June 1999
provided such employees are employedbe
forwarded to the appropriate directors for their review, and will be
simultaneously reviewed and addressed by the Company atCompany's Chief Financial
Officer in the same way that time.
In addition, in September 1994, the Company granted the manager of a
regional office restricted common stockaddresses other concerns.
ITEM 11. EXECUTIVE COMPENSATION
No officers or directors received any compensation for the purchase price of $0.17
per share, pursuantservices to his employment agreement. Of the total shares
granted, 7,152 vested and were issued in June 1996, while the remaining
35,761 shares will vest in June 1999 if the manager is still employed
by the Company.
In December 1994, the
Company, entered into an agreement withother than directors' fees, during the past three fiscal years.
Alan Jay Weisberg, CPA, the Company's Chief Financial and Accounting Officer
and a hearing
officer whereby the hearing officer had a contractual right to receive
6,500 shares of restricted common stock or a payment in cash, not to
exceed $26,000, on March 1, 1997. The agreement was reflected as
deferred compensation and amortized over the related term. The hearing
officer elected to receive a cash settlement in lieumember of the sharesCompany's Board of Directors, is a shareholder of
Weisberg Brause, an accounting firm to which the Company paid $12,700 for
accounting services during the year ended June 30, 1997.
F-16
NAM Corporation2008.
Employment Agreements and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 7 (continued)
c. Stock Option Plan
In May 1996,Change in Control Arrangements
All employment agreements with the Company adopted an Incentive and Nonqualified Stock
Option Plan (the "Plan") for employees, officers, directors,
consultants and advisors ofwere terminated in January
2005 when the Company pursuant to which the Company
may grant options to purchase up to 750,000 sharessold its operating assets.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table contains information regarding record ownership of
the Company's common stock. The Plan is administered by the boardCommon Stock as of directors, which
has the authority to designate the number of shares to be covered by
each award and the vesting schedule of such award, among other terms.
The option period during which an option may be exercised shall not
exceed ten years from the date of grant and will be subject to such
other terms and conditionsJune 30, 2008 held by:
14
persons who own beneficially more than 5% of the Plan. Unlessoutstanding
voting securities of the boardCompany;
the directors of the Company;
the current executive officers during 2008 of the Company; and
all directors provides otherwise, option awards terminate when a participant's
employment or services end, except that a participant may exercise an
option to the extent that it was exercisable on the date of termination
for a period of time thereafter. The Plan will terminate automatically
on April 1, 2006.
Commencing June 30, 1997, directors who are notand officers of the Company receive annually, on the last trading dayas a group.
Percentage of
Name and Title of Number of Outstanding Outstanding Shares
Beneficial Owner Shares Beneficially Owned (1) of Common Stock
Glenn L. Halpryn, Chairman 531,948 4.7%
Chief Executive Officer and
President
4400 Biscayne Boulevard
Suite 950
Miami, Florida 33137
Noah M. Silver, Vice 167,961 1.5%
President, Secretary,
Treasurer and Director
4400 Biscayne Boulevard
Suite 950
Miami, Florida 33137
Alan Jay Weisberg, Chief 50,241 *
Financial and Accounting
Officer and Director
2500 North Military Trail
Suite 206
Boca Raton, Florida 33431
Curtis Lockshin, Director 9,096 *
4400 Biscayne Boulevard
Suite 950
Miami, Florida 33137
All executive officers and 759,246 6.7%
present directors as a group
5% Stockholders:
Frost Gamma Investments Trust 4,611,457 40.9%
4400 Biscayne Boulevard
Suite 950
Miami, Florida 33137
Dr. Phillip Frost 4,611,457(1) 40.9%
4400 Biscayne Boulevard
Suite 1500
Miami, Florida 33137
15
Dr. Jane Hsiao 1,037,241 9.2%
4400 Biscayne Boulevard
Suite 1500
Miami, Florida 33137
Steven Jerry Glauser 673,587(2) 6.0%
1400 16th Street
Suite 510
Denver, Colorado 80202
* less than 1%
- -------------------------
(1) Includes 4,611,457 shares of Common Stock held by Frost Gamma Investments
Trust. Dr. Phillip Frost is the trustee and Frost Gamma Limited Partnership
is the sole and exclusive beneficiary of Frost Gamma Investments Trust. Dr.
Frost is one of two limited partners of Frost Gamma Limited Partnership. The
general partner of Frost Gamma Limited Partnership is Frost Gamma, Inc. and
the sole shareholder of Frost Gamma, Inc. is Frost-Nevada Corporation. Dr.
Frost is also the sole shareholder of Frost-Nevada Corporation.
(2) Includes 673,587 shares of common stock held by the Steven Jerry Glauser
Revocable Trust. Mr. Glauser is the trustee and beneficiary of the Steven
Jerry Glauser Revocable Trust
The Company is not aware of June, stock options for
1,000 shares at an exercise price equal to the fair market valueany arrangements, including any pledge by
any person of the
stock on the date of grant. Such options vest immediately upon grant.
In addition to the stock options granted under the Plan, a hearing
officersecurities of the Company, hasthe operation of which may at a
contractual right under his agreement to
receive options to purchase 10,000 sharessubsequent date result in a change in control of common stock provided
services are being renderedthe Company.
ITEM 13. CERTAIN RELATIONS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
We did not engage in any transactions with persons related to the
Company through November 18, 1998
(the obligation and vesting date). Price per share will bethat involved an amount in excess of $120,000 during the closing
bid price on the obligation date.
The Company's stock option awards granted to employees, directors and
consultants as of and for thefiscal year
ended June 30, 1997 are summarized
as follows:
Outstanding at beginning of year -
Awards granted 155,500
Awards exercised -
Awards canceled -
-------
Outstanding at end of year 155,500
=======
F-17
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 7 (continued)
Stock option awards are granted at prices equal to2008.
Director Independence
Of the closing bid
price on the date of grant. Options granted during the year ended June
30, 1997 ranged in price from $3.00 to $4.38 per share with a
weighted-average exercise price of $3.18 per share. As of June 30,
1997, 16,000 options were vested, all with an exercise price of $3.00
per share. The remaining options vest over a five-year period based on
the terms of the specific grant. The exercise period for awards granted
during 1997 is either 6, 8 or 10 years from the grant date. The
weighted-average remaining contractual life of such awards as of June
30, 1997 was 7.34 years. The weighted-average fair value of options
granted during the year was $1.66 per option.
As of June 30, 1997, 594,500 shares were available for granting of
options under the Plan.
Effective in fiscal 1997, the Company adopted Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
("SFAS No. 123"). SFAS No. 123 allows for a choice of the method of
accounting used for stock-based compensation. Entities may elect the
"intrinsic value" method based on APB Opinion No. 25, "Accounting for
Stock Issued to Employees,"("APB No. 25") or the new "fair value"
method contained in SFAS No. 123. The Company has elected to continue
to account for stock-based compensation under the guidelines of APB No.
25. Accordingly, no compensation expense was recognized concerning
options granted to key employees and tofour current members of the boardCompany's Board of directors, as such options were granted to board members in their
capacity as directors. Compensation expenseDirectors, only
Curtis Lockshin is independent of $6,308 was recognized in
fiscal 1997 for options granted to consultants.
Ifmanagement.
The Company's Board of Directors determined the Company had elected to recognize compensation expense based upon
the fair value at the grant date for options granted to key employees
and to membersindependence of the
board of directors consistent with the
methodology prescribed by SFAS No. 123, the Company's net loss and net
loss per share would be as follows:
1997
----------
Net loss
As reported $(637,557)
Pro forma (679,965)
Net loss per common share
As reported $(.23)
Pro forma (.25)
F-18
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 7 (continued)
Pro forma disclosure of net income and net income per share for fiscal
1996 is not applicable, as all options were grantedBoard members in fiscal 1997 in
connection with the IPO.
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense
related to awards made before 1996. The fair value of each option grant
is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted-average assumptions:
risk-free interest rates ranging from 6.04% to 6.71%; no anticipated
dividends; expected terms ranging from 3 to 6 years; and expected stock
price volatility of 60.17%.
d. Dividends
NA&M was taxed under the provisions of Subchapter S of the Internal
Revenue Code. NA&M's Subchapter S Corporation status was terminated
when NA&M was acquired by and became a wholly-owned subsidiary of NAM,
a C Corporation. The Company paid the balance of its undistributed
Subchapter S earnings to its shareholders prior to the November 1996
IPO. At June 30, 1996, the balance of the distribution aggregating
$8,942 is reflected as dividends payable and was included in accrued
liabilities.
NOTE 8 - TRANSACTIONS WITH RELATED PARTIES
Certain members of the board of directors also perform services for the
benefit of the Company. Such services include those of public relations,
legal and other professional, and hearings. The related expenditures for
these services for the year ended June 30, 1997 were $166,932, of which
$66,776 was charged to additional paid-in capital as it was incurred in
connection with the November 1996 IPO.
F-19
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 9 - COMMITMENTS AND CONTINGENCIES
a. Leases
The Company has lease agreements for office space in New York,
Pennsylvania, Massachusetts, Tennessee, South Carolina and Wisconsin.
Rent expense for the office space amounted to $190,356 and $136,515 for
the years ended June 30, 1997 and 1996, respectively. The minimum lease
payments under these noncancelable office leases as of June 30, 1997
are as follows:
1998 $174,000
1999 143,000
2000 117,000
2001 39,000
--------
$473,000
========
Rental expense for equipment amounted to $14,406 and $12,003 for the
years ended June 30, 1997 and 1996, respectively. The minimum lease
payments under these noncancelable equipment leases as of June 30, 1997
are as follows:
1998 $ 7,700
1999 2,200
2000 700
-------
$10,600
=======
b. Employment/Consulting Agreements
The Company expects to enter into an employment agreement with their
Chief Executive Officer retroactive to July 1, 1997.
F-20
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 9 (continued)
The Company has also entered into employment agreements with two
officers expiring through December 31, 1999. Such agreements contain
renewal options after the initial term.
The Company has also entered into employment agreements with certain of
its regional office managers. Certain of these agreements provide for
additional compensation based on the profits of the manager's
operation.
In July 1996, the Company entered into a financial public relations
consulting agreement with two individuals who are founders of the
Company, current stockholders and former directors. The agreement has a
four-year term and provides for annual payments of $48,000 payable in
equal monthly payments of $4,000 through November 2000. The related
expense for the year ended June 30, 1997 was $28,000.
NOTE 10 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
At June 30, 1997 and 1996, the Company's financial instruments included
cash and cash equivalents, marketable securities, receivables, accounts
payable and notes payable. The fair values of cash and cash equivalents,
receivables, accounts payable and notes payable approximated carrying
values because of the short-term nature of these instruments. The estimated
fair values of marketable securities were determined based on broker quotes
or quoted market prices.
NOTE 11 - CREDIT CONCENTRATIONS
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents, marketable securities and accounts receivable.
The Company maintains its cash which consists primarily of demand deposits
and an insured money market fund with one financial institution. Such
balances generally do not exceed the Federally insured limits.
Additionally, the Company maintains its cash equivalents and all other
investments with one financial institution. However, a majority of the
funds consist of short-term government securities with the remainder
invested in investment grade corporate redeemable preferred securities and
a diversified portfolio of marketable equity securities. Other than
F-21
NAM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1997 and 1996
NOTE 11 (continued)
investments issued or guaranteed by the U.S. government, the Company's only
investment in a single entity in excess of 10% of stockholders' equity at
June 30, 1997 was redeemable preferred securities issued by Allstate with a
fair value of $500,000.
The Company primarily sells its services to insurance companies and law
firms. One insurance company customer represented approximately 14% and 15%
of total revenues for the years ended June 30, 1997 and 1996, respectively.
However, the Company works with more than 70 individual offices of the
insurance company, which in total equal the aforementioned percentages of
revenue. The next largest insurance company customer represented less than
3% and 4% of revenues for the years ended June 30, 1997 and 1996,
respectively. The balance of the revenue base is distributed among
approximately 1,950 and 1,800 clients, respectively, in fiscal 1997 and
1996. As a result, management does not believe trade receivables represent
a significant concentration of credit risk due to the diversity of
customers. The Company monitors exposure to credit losses and maintains
allowances for anticipated losses considered necessary under the
circumstances.
F-22
PART III
ITEM 9. (Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act); ITEM 10. (Executive
Compensation); ITEM 11 (Security Ownership of Certain Beneficial Owners and
Management); and ITEM 12 (Certain Relationships and Related Transactions) will
be incorporated in the Company's Proxy Statement to be filed within 120 days of
June 30, 1997, and are incorporated herein by reference.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit
Number Description of Document
- ------ -----------------------
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws of the Company (1)
10.1 1996 Stock Option Plan, amended and restated**
10.2 Employment Agreement between Company and Roy Israel, as amended(1)
10.3 Employment Agreement between Company and Cynthia Sanders(1)
10.4 Employment Agreement between Company and Daniel Jansen (1)
10.5 Employment Agreement between Company and Patricia Giuliani-Rheaume**
10.6 Lease Agreement for Great Neck, New York facility (1)
11.1 Computation of Net (Loss) Income per Common Share **
21.1 List of Subsidiaries (1)
27 Financial Data Schedule **
- -----------------
(1) Incorporated herein in its entirety by reference to the Company's
Registration Statement on Form SB-2, Registration No. 333-9493, as
filed withlisting standards adopted by the American
Stock Exchange, the independence standards set forth in the Sarbanes-Oxley
Act and the rules and regulations promulgated by the Securities and Exchange
Commission on August 2, 1996.
** Filed herewith.
Reports on Form 8-K: None duringunder applicable law.
16
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
During 2008, we were billed by our accountants, Pender Newkirk &
Company, approximately $23,000 for audit and review fees associated with our
10-K and 10-QSB filings. During 2007, we were billed by our accountants, BP
Audit Group, approximately $21,700.
Tax Fees
During 2008, we were not billed by our accountants, Pender Newkirk &
Company, for tax work. During 2007, we were billed approximately $6,500 by
BP Audit Group for tax work.
All Other Fees
During 2008, the fourth quarter.
15Company incurred no additional fees from our
accountants, Pender Newkirk & Company.
Board of Directors Pre-Approval Process, Policies and Procedures
Our principal auditors have performed their audit procedures in
accordance with pre-approved policies and procedures established by our Board
of Directors. Our principal auditors have informed our Board of Directors of
the scope and nature of each service provided. With respect to the provision
of services other than audit, review, or attest services, our principal
accountants brought such services to the attention of our Board of Directors
prior to commencing such services.
17
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit No. Document
- ----------- -----------------------------------------------------------------
2.1(1) Merger Agreement and Plan of Reorganization, dated as of June 18,
2008, by and among clickNsettle.com, Inc., Cardo Medical, LLC and
Cardo Acquisition, LLC
2.2(2) First Amendment to Merger Agreement and Plan of Reorganization,
dated as of August 29, 2008, by and among clickNsettle.com, Inc.,
Cardo Medical, LLC and Cardo Acquisition, LLC
3.1(3) Amended and Restated Certificate of Incorporation
3.2(4) Amended and Restated Bylaws
10.6(5) Stock Purchase Agreement, dated as of December 19, 2007, by and
among clickNsettle.com, Inc., Frost Gamma Investments Trust, Dr.
Jane Hsiao, Steven D. Rubin and Subbarao Uppaluri
10.7(4) First Amendment to Stock Purchase Agreement, dated as of January
31, 2008, by and among clickNsettle.com, Inc., Frost Gamma
Investments Trust, Dr. Jane Hsiao, Steven D. Rubin and Subbarao
Uppaluri
21.1(2) Subsidiaries of clickNsettle.com, Inc.
31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer
32 Certification Pursuant to Rule 13a-14(b) and Section 906 of the
Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section
1350, Title 18, United Sates Code)
- ---------------------
(1) Previously filed as an exhibit to the Current Report on Form 8-K filed by
us on June 23, 2008.
(2) Previously filed as an exhibit to the Current Report on Form 8-K filed by
us on September 9, 2008.
(3) Previously filed as an exhibit to the Current Report on Form 8-K filed by
us on March 18, 2008.
(4) Previously filed as an exhibit to the Current Report on Form 8-K filed by
us on February 1, 2008.
(5) Previously filed as an exhibit to the Current Report on Form 8-K filed by
us on December 21, 2007.
18
SIGNATURES
In accordance withPursuant to the requirements of Section 13 or 15(d) 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: September 26, 1997 By: /s/ Roy Israel
--------------
Roy Israel, Chairman of the Board and CEO
In accordance withCLICKNSETTLE.COM
Dated: September 19, 2008 By: /s/Glenn L. Halpryn
------------------------------------
Chief Executive Officer
Dated: September 19, 2008 By: /s/Alan Jay Weisberg
------------------------------------
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrantRegistrant and in the capacities and on the dates indicated.
Date: September 26, 1997 By: /s/ Roy Israel
---------------
Roy Israel, Chairman of the Board and CEO
Date: September 26, 1997 By: /s/ Patricia Giuliani-Rheaume
-----------------------------
Patricia Giuliani-Rheaume, Vice President,
Chief Financial Officer and Treasurer
Date: September 26, 1997 By: /s/ Cynthia Sanders
-------------------
Cynthia Sanders, Executive Vice President
and Director
Date: September 26, 1997 By: /s/ Daniel P. Jansen
--------------------
Daniel P. Jansen, National Accounts
Manager and Director
Date: September 26, 1997 By: /s/ Michael I. Thaler
---------------------
Michael I. Thaler, Director
Date: September 26, 1997 By: /s/ Stephen H. Acunto
---------------------
Stephen H. Acunto,/s/ Glenn L. Halpryn Director,
16Chief September 19, 2008
- --------------------- Executive Officer
Glenn L. Halpryn
/s/ Noah M. Silver Vice President, Secretary, September 19, 2008
- --------------------- Treasurer, Director
Noah M. Silver
/s/ Alan Jay Weisberg Chief Financial Officer, September 19, 2008
- --------------------- Director
Alan Jay Weisberg
/s/ Curtis Lockshin Director September 19, 2008
- ---------------------
Curtis Lockshin
19
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Glenn L. Halpryn, certify that:
1. I have reviewed this annual report on Form 10-K of ClickNsettle.com,
Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the small
business issuer as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the small business issuer and have:
a) Designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and registrant's board of directors
(or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
20
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Dated: September 19, 2008 /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer and President
21
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Alan Jay Weisberg, certify that:
1. I have reviewed this annual report on Form 10-K of ClickNsettle.com,
Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the small
business issuer as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the small business issuer and have:
a) Designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and registrant's board of directors
(or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
22
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Dated: September 19, 2008 /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Chief Financial Officer
23
Exhibit 32
CERTIFICATION PURSUANT TO RULE 13a-14(b) AND SECTION 906 OF THE SARBANES-
OXLEY ACT OF 2002 (SUBSECTIONS (a) AND (b) OF SECTION 1350, TITLE 18, UNITED
STATES CODE)
In connection with the Annual Report on Form 10-K of ClickNsettle.com
for the fiscal year ended June 30, 2008, as filed with the Securities and
Exchange Commission (the "Report"), we, Glenn L. Halpryn, Chief Executive
Officer of ClickNsettle.com, and Alan Jay Weisberg, Chief Financial Officer
of ClickNsettle.com, hereby certify pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
ClickNsettle.com.
Dated: September 19, 2008 /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
Dated: September 19, 2008 /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to ClickNsettle.com and will be retained by ClickNsettle.com and
furnished to the Securities and Exchange Commission or its staff upon
request.