<PAGE>

================================================================================

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                           -------------------------

                                  FORM 10-KSB

|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934

                    For the fiscal year ended June 30, 1998

| |  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                        Commission File Number: 0-21419

                                NAM CORPORATION
                                --------------- 
          (Name of small business issuer as specified in its charter)


     Delaware                                           23-2753988
     --------                                           ----------
     (State or Other Jurisdiction                       (IRS Employer
     of Incorporation or Organization)                  Identification No.)


                      1010 NORTHERN BOULEVARD, SUITE 336
                          GREAT NECK, NEW YORK 10021
                          --------------------------
                   (Address of Principal Executive Offices)

                                (516) 829-4343
                                --------------
               (Issuer's Telephone Number, Including Area Code)

Securities registered under 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
-------------------                 -----------------------------------------   
Common Stock $.001 Par Value                  NASDAQ Small Cap Market
Warrants                                      NASDAQ Small Cap Market

Title of each class                 Name of each exchange on which registered
-------------------                 -----------------------------------------
Common Stock $.001 Par Value                  Boston Stock Exchange
Warrants                                      Boston Stock Exchange

<PAGE>

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes__X__  No____ 

Check if there is no disclosure of delinquent files in response to Item 405 of
Regulation S-B is not contained in this Form, and no disclosure will 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-KSB
or any amendments to this Form 10-KSB.| |

State issuer's revenues for its most recent fiscal year.  $3,847,975

The aggregate market value of the voting stock held by non-affiliates per the
closing stock price of September 8, 1998 is $2,772,869.

As of September 8, 1998, 3,334,978 shares of common stock 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, 1998

Transitional Small Business Disclosure Format   Yes____  No__X__

                                       2


<PAGE>

                                     PART I

         From time to time, including in this annual report on Form 10-KSB, NAM
Corporation (the "Company") may publish forward-looking statements relating to
such matters as anticipated financial performance, business prospects, future
operations, new products, research and development activities, and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. In order to comply with the terms of the
safe harbor, the Company notes that a variety of factors could cause the
Company's actual results to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, development
and results of the Company's business include, without limitation, the
following: changes in the markets and/or regions currently served by the Company
and in those markets and/or regions that the Company may expand into; changes in
the insurance industry; the Company's inability to retain current or new hearing
officers; and changes in the public court system.

ITEM 1. DESCRIPTION OF BUSINESS

The Company

         The Company provides alternative dispute resolution ("ADR") services
principally to insurance companies, law firms, self-insured corporations and
municipalities. An 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 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 operates from locations in New York,
Massachusetts, Pennsylvania, South Carolina, Tennessee and Illinois, 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 expenses, 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 its nature is
less adversarial and the 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 initiated an
advertising campaign during the third quarter of fiscal year 1998 intended to
increase awareness of its services with respect to litigants in most types of
civil disputes, including complex commercial issues, construction, employment,
matrimonial and worker's compensation cases. Total fiscal year 1998 advertising
and external public relations costs incurred with respect thereto approximated
$566,000. The Company currently anticipates spending at least a comparable
amount on advertising in fiscal year 1999. Secondly, in order to increase
business, the Company is currently pursuing exclusive relationships with
corporations and law firms in order to obtain contracts on a national and
regional basis. Thirdly, the Company is 

                                       3

<PAGE>

exploring strategic alliances with business entities that have the ability to 
promote NAM's ADR services to their customers. Finally, the Company may open 
offices in areas where it does not presently have an office. For example, the 
establishment of a sales office to develop business in Oregon is currently 
planned for fiscal year 1999.

         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. Management believes that its current expansion and marketing plans
will enable the Company to exploit this trend.

         The Company was formed on January 12, 1994 under the laws of the State
of Delaware. On October 31, 1994 the Company acquired all of the outstanding
common stock of National Arbitration & Mediation, Inc. ("NA&M"), a New York
corporation, formed on February 6, 1992, which was owned by the Company's Chief
Executive Officer and President, and the Company's Executive Vice President.
NA&M began operations in March 1992 as a provider of ADR services.

Services Offered

         Arbitration: The Company's arbitration procedure follows a format
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 some of
the cumbersome procedures commonly associated with public court trials. The
Company's hearings are generally governed by its rules of procedure. The
parties, however, may depart from these rules and proceed in the fashion they
deem desirable for the resolution 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 one of the following: (i) a regular
arbitration, in which 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 parameters of the award by pre-selecting the high
and low dollar limits that can be awarded by the hearing officer; and (iii) the
so-called "baseball" arbitration, which typically involves the submission by
each party of their last best figure and the reason why it should be accepted;
the hearing officer's binding recommendation is restricted to either one figure
or the other. These types 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

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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. Settlement figures and possible concessions 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: During fiscal year 1998, the
Company developed a service allowing its clients the ability to be "on-line"
with the Company. This enables clients to submit cases electronically and to
review the status of their cases from their offices. At the same time, clients
also have the ability to access the status of hearings, updated hearing officer
rosters and schedules, promotional materials and ADR news information. The
Company also maintains a website offering similar information and case
submission capability.

         Video Conferencing: The Company has the ability to offer video
conferencing capabilities. This service allows clients to participate in and
observe hearings without leaving their offices, resulting in the reduction of
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.


Marketing and Sales

         As of September 8, 1998, the Company employed 20 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.

                                       5

<PAGE>

         In the New York office, account executives are grouped into sales
teams, which are directly managed by team leaders who also have accounts. The
team leaders 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 Vice President of Marketing and the Executive Vice
President. 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 Vice
President of Marketing or the Executive Vice President. Account executives are
trained by a team leader, or the office's regional manager, over approximately a
two-week period. This training period may 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 clients of the Company are insurance carriers and law
firms. One insurance company customer represented approximately 12% and 14% of
total revenues for the years ended June 30, 1998 and 1997, 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% of revenues for
the years ended June 30, 1998 and 1997. The balance of the revenue base is
distributed among approximately 2,200 and 1,950 clients, respectively, in fiscal
years 1998 and 1997.

         The Company, when appropriate, seeks membership contracts with its
clients. Further, the Company is currently enhancing its efforts to obtain
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 submit their dispute for resolution 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 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 

                                       6

<PAGE>

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. This 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. Management believes the Company has
certain advantages that enable it to better serve its clients. These advantages
include: (1) exclusive agreements with qualified hearing officers, who are
generally former judges; (2) software which 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 that
allows clients to participate in 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 8, 1998, the Company employed 44 persons, including 2
part-time employees; of these, 4 were in executive positions, two of which
devote substantially all their attention to sales; 25 were sales managers and
sales account representatives and 15 were engaged in administrative and clerical
activities.


Hearing Officers

         As of September 8, 1998, the Company maintained relationships with over
900 hearing officers and has exclusive agreements with respect to ADR
proceedings with approximately 50 of them. These hearing officers accounted for
approximately 60% of the number of cases handled by the Company for the year
ended June 30, 1998. The balance of non-exclusive hearing officers makes 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.

                                       7

<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES

         The Company currently maintains 5 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 intends to lease an additional 1,530 square feet of
space adjacent to its existing offices when it becomes available during the 1999
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 1998, for its Easton,
Massachusetts office; (iii) 108 square feet of space, which lease is on a
monthly basis, for its Boston, Massachusetts office; and (iv) 601 square feet of
space, which lease expires March 1999, for its Hendersonville, Tennessee 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
$180,968 during the year ended June 30, 1998.


ITEM 3.  LEGAL PROCEEDINGS

         There is no material litigation currently pending against the Company.


ITEM 4.  SUBMISSION OF MATERIALS TO A VOTE OF SECURITY HOLDERS

         None.

                                       8


<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

A. The Company's Common Stock and Warrants are quoted on the NASDAQ Small Cap
Market under the trading symbols "NAMC" and "NAMCW," respectively, and have been
quoted since the Company commenced public trading on November 18, 1996. The
Company voluntarily delisted its units, which consisted of one share of Common
Stock and one redeemable Warrant, from trading on January 26, 1998 in order to
avoid confusion in the marketplace and to avoid additional and future
administrative costs. Prior to November 18, 1996, there was no public market for
the Company's Securities. The following table sets forth the range of high and
low closing sales prices (based on transaction data as reported by the NASDAQ
Small Cap Market) for each fiscal quarter during the periods indicated.
<TABLE>
<CAPTION>
                                                         Units           Common Stock        Warrants
                                                     High     Low         High     Low      High    Low
                                                     ---------------------------------------------------
<S>                                                 <C>      <C>         <C>      <C>      <C>     <C>
Fiscal Year 1998:
-----------------
First quarter (07/1/97-9/30/97)                      $4.72   $3.50       $3.88    $2.63    $1.38   $0.63
Second quarter (10/01/97-12/31/97)                    5.13    3.50        4.25     2.81     1.41    0.88
Third quarter  (01/01/98-03/31/98)                    4.50    3.75        4.00     2.00     1.25    0.44
Fourth quarter (04/01/98-06/30/98)                      NA      NA        2.38     1.50     0.50    0.22

Fiscal Year 1997:
-----------------
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    0.75
</TABLE>

         On September 8, 1998 the closing bid price for the Common Stock and
Warrants, as reported by the NASDAQ Small Cap Market, were $1.38 and $0.19,
respectively.

         As of September 8, 1998 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 does not contemplate
or anticipate paying any dividends upon its Common Stock in the foreseeable
future.

B. In November 1996, the Company raised additional capital through an initial
public offering of its securities. Net proceeds after offering expenses
approximated $4,700,000 of which $970,000 had been utilized through June 30,
1997. During the year ended June 30, 1998, the Company additionally expended
approximately $335,000 for working capital and general corporate purposes,
including its advertising campaign. The remaining funds were invested in cash
and cash equivalents, U.S. government securities, corporate preferred securities
and a diversified portfolio of marketable equity securities.

                                       9


<PAGE>

         The preceding information updates Form SR filed by the Company in 
February 1997 pursuant to former Rule 463. 

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
        RESULTS OF OPERATIONS

General

         The Company provides ADR services to insurance companies, law firms,
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 of ADR services.

         The Company opened for business in March 1992 in New York and currently
operates from locations in New York, Massachusetts, Pennsylvania, South
Carolina, Tennessee and the Midwest. The Midwest region 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 on a national basis. The Company intends to achieve this goal by
employing the following strategies. Firstly, the Company initiated an
advertising campaign during the third quarter of fiscal year 1998 intended to
increase awareness of its services with respect to litigants in most types of
civil disputes, including complex commercial issues, construction, employment,
matrimonial and worker's compensation cases. Total fiscal year 1998 advertising
and external public relations costs incurred with respect thereto approximated
$566,000. The Company currently anticipates spending at least a comparable
amount on advertising in fiscal year 1999. Secondly, in order to increase
business, the Company is currently pursuing exclusive relationships with
corporations and law firms in order to obtain contracts on a national and
regional basis. Thirdly, the Company is exploring strategic alliances with
business entities that have the ability to promote NAM's ADR services to their
customers. Finally, the Company may open offices in areas where it presently
does not have an office. For example, the establishment of a sales office to
develop business in Oregon is currently planned for fiscal year 1999.

Future Trends

         Management believes that the ADR industry is, and will continue to be,
undergoing a consolidation of ADR service providers so as to better serve
clients requiring national and regional multi-state ADR programs. The Company's
objective is to expand its national presence to exploit this trend. In addition,
ADR clients continue 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.

         The Company has and will continue to incur net losses in the short-term
future as a result of the extensive advertising campaign commenced during the
second half of fiscal year 1998. In connection therewith, the Company has placed
advertisements in a variety of print media, radio, outdoor and television. The
campaign is expected to continue throughout the 1999 fiscal year as well. The
Company believes that the campaign has increased awareness of the Company and
its services. However, there can be no assurance that this effort will result in
increased revenues.

         In addition, the Company has enhanced the status and capability of its
present offices. Significant costs have been and will continue to be incurred in
connection with establishing, maintaining 

                                       10

<PAGE>

and operating offices, including expenses such as leases, office equipment,
furnishings and salaries for management, sales and administrative personnel. The
Company believes its investment in these resources will ultimately be beneficial
in that a higher volume of business will be able to be processed in a more
efficient manner when and if the advertising campaign produces the desired
effect.

Year Ended June 30, 1998 Compared to Year Ended June 30, 1997

Results of Operations

         Revenues. Revenues increased 14% to $3,847,975 for the year ended June
30, 1998 from $3,377,062 for the year ended June 30, 1997. Management attributes
this increase in sales to a growing acceptance of the Company's services as
shown by the overall increase in the number of cases heard. Additionally, the
opening of the Midwest region in the third quarter of the 1997 fiscal year
contributed approximately $100,000 to the revenue growth in fiscal 1998.

         Cost of Services. Cost of services increased 14% to $969,345 for the
year ended June 30, 1998 from $853,048 for the year ended June 30, 1997. The
higher volume of business serviced resulted in greater hearing officer fees.
Cost of services as a percentage of revenue remained stable at 25% for both
fiscal years. The ratio of cost of services to revenues will fluctuate based on
the number of hours per case, as well as the ability (or inability) of an office
to take advantage of volume arrangements with hearing officers which usually
lower the cost per case.

         Sales and Marketing. Sales and marketing costs increased 48% to
$2,090,591 for the year ended June 30, 1998 from $1,412,348 for year ended June
30, 1997. This expense category includes 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. Sales and
marketing costs as a percentage of revenues increased to 54% for fiscal year
1998 from 42% for fiscal year 1997. Most of this increase relates to advertising
costs which rose by approximately $472,000 to $566,000 for the year ended June
30, 1998. The increase was largely due to the commencement of an advertising
campaign during the third quarter of the 1998 fiscal year whereby the Company
placed advertisements in a variety of media (newspapers, law journals, insurance
and business publications, outdoor, radio and television). The objective of the
campaign is to increase awareness of the Company and its services. There can be
no assurance that such expenditures will produce higher revenues. The remaining
increase (approximately $206,000) relates to salary and related items. Firstly,
higher sales commissions were incurred based on the higher volume of business.
Secondly, primarily during the second half of fiscal year 1997 and into fiscal
year 1998, personnel were hired 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 a higher volume of
cases. Finally, the Midwest region opened during the third quarter of fiscal
1997.

         General and Administrative. General and administrative costs increased
10% to $1,932,158 for the year ended June 30, 1998 from $1,761,994 for the year
ended June 30, 1997. Furthermore, general and administrative costs as a
percentage of revenues decreased slightly to 50% for fiscal year 1998 from 52%
for fiscal year 1997. This category includes salaries of executives, accounting,
data processing and administration/clerical and related payroll taxes and
employee benefits, as well as all other overhead costs. Salary-related costs
increased by approximately $189,000 as the Company expanded personnel,
particularly at its headquarters in New York, primarily during the second half
of fiscal year 1997 and into fiscal year 1998. All corporate activities,
including marketing, finance, data processing, billing and collections,
purchasing and scheduling of hearings, are centralized in New York. Management
believes that this structure provides a uniform and high-quality level of
service for clients, 

                                       11

<PAGE>

in addition to enhancing the control environment and producing a more
streamlined and efficient approach as the Company grows. Higher costs with
respect to fees relating to being a public company (approximately $18,000) were
more than offset by a decline in professional fees ($40,000).

         Other Income (Expenses). Other income (expenses) increased from
$12,771 for the year ended June 30, 1997 to $514,985 for the year ended June
30, 1998. In the current fiscal year, other income was composed primarily of
investment income and realized gains (losses) generated from investments.
During the second half of the 1998 fiscal year, the Company sold a portion of
its marketable securities and, as a result, net realized gains increased to
approximately $356,000 for the year ended June 30, 1998 from approximately
$16,000 for the year ended June 30, 1997. Also, in the prior year, 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 upon the consummation of the initial public
offering in the second quarter of fiscal year 1997. In addition, other
expenses in that period also included interest expense from a past private
placement financing. This debt was satisfied in full as of November 20, 1996
with proceeds from the Company's initial public offering.

         Income Taxes. Tax benefits resulting from net losses incurred for the
years ended June 30, 1998 and 1997 were not recognized as the Company recorded a
full valuation allowance against the net operating loss carryforwards during the
periods. As of June 30, 1998, the Company had net operating loss carryforwards
for Federal tax purposes of approximately $1,007,000.

         Net Loss. For the year ended June 30, 1998, the Company had a net loss
of $629,134 as compared to a net loss of $637,557 for the year ended June 30,
1997. The loss decreased slightly as expenditures for a comprehensive
advertising campaign and an investment in the Company's infrastructure to
support future growth were partially offset by higher revenues and realized
gains on marketable securities.


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.
The Company has focused its resources on re-staffing and rebuilding the
Pennsylvania office in an effort to reverse the downward 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

                                       12

<PAGE>

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, 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. There can be no assurance that
expenditures related to the advertising campaign will produce higher revenues in
the near future.

         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, upon the consummation of the initial public offering in
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 

                                       13

<PAGE>

public offering that was abandoned in October 1995 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 from the initial public offering.

         Income Taxes. The Company's tax expense for the years ended June 30,
1997 and 1996 was $0 and $3,525, respectively. Tax benefits resulting from net
losses incurred for the year ended June 30, 1997 were not recognized as the
Company recorded a full valuation allowance against the net operating loss
carryforwards. 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 charges incurred in
connection with the initial public offering.


Liquidity and Capital Resources

         At June 30, 1998, the Company had a working capital surplus of
$3,060,771 as compared to $3,853,430 at June 30, 1997. The decrease in working
capital occurred as cash was used to fund the Company's net loss. Net cash used
in operating activities was $688,132 for the year ended June 30, 1998 versus
$535,152 in the prior year. The change is partially attributable to expenditures
related to advertising costs.

         Net cash provided by investing activities was $1,929,926 for the year
ended June 30, 1998 versus cash used in investing activities of $3,725,439 for
the year ended June 30, 1997. Investing activity began in the third quarter of
the 1997 fiscal year after the net proceeds from the Company's initial public
offering were received. During fiscal 1998, various investments in government
securities matured and the Company sold a portion of its corporate bonds and
equity securities. Such proceeds were largely reinvested in government
securities and money market funds.

         Net cash provided by financing activities was $4,404,603 for the year
ended June 30, 1997 versus no activity in the current year. The prior period
reflects the receipt of the proceeds from the Company's initial public offering
which was consummated in November 1996. A portion of the proceeds was 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 March 31, 1997. On
November 20, 1996, the notes were repaid in full.

         The Company anticipates that cash flows, together with cash and
marketable securities on hand, will be sufficient to fund the Company's
operations, including its expansion plans and the advertising campaign which
will continue into the 1999 fiscal year.



The Year 2000

         The Year 2000 ("Y2K") issue is the result of computer programs using
a two-digit format, as opposed to four digits, to indicate the year. Such
computer systems will be unable to interpret dates 

                                       14

<PAGE>

beyond the year 1999, which could cause a system failure or other computer
errors, leading to disruptions in operations. The Company is taking actions to
make its systems, products and infrastructure year Y2K compliant. During fiscal
year 1998, the Company identified those systems that may be impacted by the Y2K
issue: (1) financial reporting system; (2) relational database system used to
manage the operations of the Company; and (3) third-party relationships.

         The Company has initiated certain action plans with respect to the
areas identified. First, the Company recently upgraded the software utilized for
financial reporting to a version that is Y2K compliant. Secondly, the software
that manages the operations of the business is already capable of recognizing
four digits to designate the year. The Company intends to convert its usage of
the date fields from 2 digits to 4 digits during the first half of fiscal year
1999. It is anticipated that the programming effort required could be
accomplished with existing resources and that no material external costs will be
incurred. Finally, in the third-party area, the Company has contacted most of
its major vendors who have stated that they intend to be Y2K compliant by 2000.

         Management believes that, based on available information, the Company
will be able to manage the year 2000 transition without any material adverse
effects on its business operations, products or financial prospects.

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.

                                       15


<PAGE>

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                     Page
                                                                     ----

Report of Independent Certified Public Accountants                    F-2


Financial Statements

     Consolidated Balance Sheets                                      F-3

     Consolidated Statements of Operations                            F-4

     Consolidated Statement of Changes in Stockholders' Equity        F-5

     Consolidated Statements of Cash Flows                            F-6

     Notes to Consolidated Financial Statements                    F-7 - F-21





                                     F-1
<PAGE>


              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors and Stockholders
    NAM Corporation


We have audited the accompanying consolidated balance sheets of NAM
Corporation and Subsidiaries (the "Company") as of June 30, 1998 and 1997, and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide 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 Subsidiaries as of June 30, 1998 and 1997, and the consolidated results of
their operations and their consolidated cash flows for the years then ended in
conformity with generally accepted accounting principles.




GRANT THORNTON LLP


Melville, New York
August 28, 1998




                                     F-2
<PAGE>


                       NAM Corporation and Subsidiaries

                          CONSOLIDATED BALANCE SHEETS

                                   June 30,


<TABLE>
<CAPTION>
                                     ASSETS                                                 1998                1997
                                                                                        ------------         -----------

<S>                                                                                      <C>                 <C>        
CURRENT ASSETS
    Cash and cash equivalents                                                            $1,417,280          $   175,486
    Marketable securities                                                                 1,950,880            3,792,381
    Accounts receivable (net of allowance for doubtful
       accounts of $90,000 and $80,000, respectively)                                       385,300              408,260
    Other receivables                                                                        17,945               34,490
    Prepaid expenses                                                                         45,080               54,682
                                                                                         ----------          -----------
         Total current assets                                                             3,816,485            4,465,299

FURNITURE AND EQUIPMENT - AT COST,
    less accumulated depreciation                                                           248,679              201,113
ORGANIZATION COSTS (net of accumulated amortization
    of $30,478 and $21,885, respectively)                                                    12,484               21,077
OTHER ASSETS                                                                                 31,908               39,756
                                                                                         ----------          -----------
                                                                                         $4,109,556           $4,727,245
                                                                                         ==========           ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                                                    $   315,323          $   158,846
    Accrued liabilities                                                                     163,641              140,192
    Accrued payroll and employee benefits                                                   126,361              174,115
    Deferred revenues                                                                       150,389              138,716
                                                                                         ----------          -----------
         Total current liabilities                                                          755,714              611,869
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Preferred stock - $.001 par value; 5,000,000 shares
      authorized; none issued                                                                -                    -
    Common stock - $.001 par value; 15,000,000 shares
      authorized; 3,334,978 shares issued and outstanding                                     3,335                3,335
    Additional paid-in capital                                                            4,778,179            4,772,569
    Accumulated deficit                                                                  (1,368,681)            (739,547)
    Unrealized (loss) gain on marketable securities                                         (58,888)              79,224
    Unearned compensation - stock bonus plan                                                   (103)                (205)
                                                                                         ----------          -----------
         Total stockholders' equity                                                       3,353,842            4,115,376
                                                                                         ----------          -----------
                                                                                         $4,109,556           $4,727,245
                                                                                         ==========           ==========
</TABLE>


The accompanying notes are an integral part of these statements.




                                     F-3
<PAGE>


                       NAM Corporation and Subsidiaries

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                              Year ended June 30,





<TABLE>
<CAPTION>
                                                                                          1998                  1997
                                                                                       -----------            ----------

<S>                                                                                    <C>                    <C>       
Net revenues                                                                           $ 3,847,975            $3,377,062
                                                                                       -----------            ----------

Operating costs and expenses
    Cost of services                                                                       969,345               853,048
    Sales and marketing expenses                                                         2,090,591             1,412,348
    General and administrative expenses                                                  1,932,158             1,761,994
                                                                                       -----------            ----------
                                                                                         4,992,094             4,027,390
                                                                                       -----------            ----------

         Loss from operations                                                           (1,144,119)             (650,328)

Other income (expenses)
    Investment income                                                                      510,063               136,572
    Other income                                                                             4,922                 4,237
    Costs incurred for the benefit of selling
      shareholders                                                                           -                  (115,500)
    Interest expense                                                                         -                   (12,538)
                                                                                       -----------            ----------
                                                                                           514,985                12,771
                                                                                       -----------            ----------

         Loss before income taxes                                                         (629,134)             (637,557)

Income taxes                                                                                 -                      -
                                                                                       -----------            ----------

         NET LOSS                                                                      $  (629,134)          $  (637,557)
                                                                                       ===========           =========== 

Net loss per common share - basic and diluted                                               $(.19)                $(.23)
                                                                                            =====                 ===== 

Weighted average shares outstanding - basic and diluted                                  3,334,978             2,762,348
                                                                                       ===========           =========== 
</TABLE>








The accompanying notes are an integral part of these statements.





                                     F-4
<PAGE>



                       NAM Corporation and Subsidiaries

           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                      Years ended June 30, 1998 and 1997



<TABLE>
<CAPTION>
                                                                                                        Unearned                    
                                                                                     Unrealized       compensation-       Total     
                                  Common stock          Additional                  (loss) gain on        stock        stockholders'
                               -------------------       paid-in       Accumulated    marketable          bonus          equity     
                               Shares       Amount       capital         deficit      securities          plan          (deficit)   
                               ------       ------       -------         -------      ----------          ----          ---------   
<S>                            <C>            <C>       <C>            <C>            <C>                  <C>           <C>        
Balances at July 1, 1996     1,813,075      $1,813    $    28,739    $  (101,990)                        $(308)      $    (71,746)  
                                                                                                                                    
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                103   
                              ---------      ------      ----------  -----------     ----------          -----         ----------  
Balances at June 30, 1997     3,334,978       3,335       4,772,569     (739,547)        79,224           (205)         4,115,376  
                                                                                                                                 
Net loss                                                                (629,134)                                        (629,134)
Change in unrealized (loss)                                                                    
 gain on marketable securities                                                         (138,112)                         (138,112)  
Compensation related to stock                                                                   
 option plan                                                 5,610                                                          5,610
Earned portion of stock bonus                                                                                                       
 plan                                                                                                      102                102 
                             ---------      ------      ----------   -----------     -----------         -----         ----------
Balances at June 30, 1998    3,334,978      $3,335      $4,778,179   $(1,368,681)     $  (58,888)        $(103)        $3,353,842 
                             =========      ======      ==========   ===========     ===========         =====          ========= 
                                                                                               

</TABLE>



The accompanying notes are an integral part of this statement.


                                     F-5

<PAGE>


                       NAM Corporation and Subsidiaries

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                              Year ended June 30,

<TABLE>
<CAPTION>
                                                                                           1998                  1997
                                                                                        -----------          ------------ 

<S>                                                                                     <C>                  <C>          
Cash flows from operating activities
   Net loss                                                                             $  (629,134)         $   (637,557)
   Adjustments to reconcile net loss to net cash used in
     operating activities
       Depreciation and amortization                                                         75,488                58,653
       Provision for bad debts                                                               10,000                40,000
       (Gains) on sales of marketable securities                                           (356,390)               (7,123)
       Losses on sales of furniture and equipment                                               129                     -
       Earned portion of stock bonus plan                                                       102                   103
       Compensation related to stock option plan and
         contributed warrants                                                                 5,610                43,808
       Changes in operating assets and liabilities
         Decrease in accounts receivable                                                     12,960                 7,696
         Decrease (increase) in other receivables                                            16,545               (28,617)
         Decrease (increase) in prepaid expenses                                              9,602                (1,672)
         Decrease (increase) in other assets                                                  7,848                (5,252)
         Increase (decrease) in accounts payable and accrued liabilities                    195,189              (146,115)
         (Decrease) increase in accrued payroll and employee benefits                       (47,754)              128,588
         Increase in deferred revenues                                                       11,673                12,336
                                                                                        -----------          ------------ 
       Net cash used in operating activities                                               (688,132)             (535,152)
                                                                                        -----------          ------------ 
Cash flows from investing activities
   Purchases of marketable securities                                                    (2,313,195)           (4,086,959)
   Proceeds from maturities of marketable securities                                      2,075,000               325,000
   Proceeds from sales of marketable securities                                           2,311,367                62,373
   (Decrease) increase in payable for securities purchased                                  (15,263)               15,263
   Purchases of furniture and equipment                                                    (133,113)              (41,116)
   Sales of furniture and equipment                                                           5,130                 -
                                                                                        -----------          ------------ 
       Net cash provided by (used in) investing activities                                1,929,926            (3,725,439)
                                                                                        -----------          ------------ 
Cash flows from financing activities
   Issuance of common stock, net of issuance costs                                         -                    4,701,544
   Repayment of notes payable                                                              -                     (400,000)
   Distributions to shareholders                                                           -                       (8,942)
   Decrease in deferred offering costs                                                     -                      112,001
                                                                                        -----------          ------------ 
       Net cash provided by financing activities                                           -                    4,404,603
                                                                                        -----------          ------------ 
       NET INCREASE IN CASH AND CASH
          EQUIVALENTS                                                                     1,241,794               144,012
Cash and cash equivalents at beginning of year                                              175,486                31,474
                                                                                        -----------          ------------ 
Cash and cash equivalents at end of year                                                $ 1,417,280          $    175,486
                                                                                        ===========          ============
</TABLE>


The accompanying notes are an integral part of these statements.




                                     F-6
<PAGE>


                       NAM Corporation and Subsidiaries

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                            June 30, 1998 and 1997



NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

     NAM Corporation ("NAM") provides a broad range of Alternative Dispute
     Resolution ("ADR") services, including arbitration and mediation, in the
     United States. NAM incorporated on January 12, 1994 and began operations
     on February 15, 1994. On October 31, 1994, National Arbitration &
     Mediation, Inc. ("NA&M"), which was owned by NAM's Chief Executive
     Officer and Executive Vice President, was acquired by and became a
     wholly-owned subsidiary of NAM. The transaction was accounted for as a
     transfer of assets between companies under common control, with the
     assets and liabilities of NA&M combined with those of NAM at their
     historical carrying values. NA&M also provided a broad range of ADR
     services, including arbitrations and mediations. NA&M began operations in
     March 1992.

     On November 18, 1996, NAM completed an Initial Public Offering ("IPO") of
     its securities, which resulted in 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.


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 include the accounts of its wholly-owned
         subsidiaries, NA&M, National Video Conferencing, Inc., a Delaware
         corporation formed in April 1995, Michael Marketing, Inc., a Delaware
         corporation formed in November 1991 and NAMSYS Corporation, a
         Delaware corporation





                                     F-7
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 2 (continued)

         formed in January 1998 (collectively referred to herein as the
         "Company"). The Company operates in only one business segment, ADR.
         All significant intercompany transactions and balances were
         eliminated in consolidation.

     b.  Use of Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management 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. Actual results may differ from those
         estimates. Estimates are used when accounting for the allowance for
         uncollectible accounts receivable, depreciation, taxes and
         contingencies, among others.

     c.  Revenue Recognition

         The Company principally derives its revenues from fees charged for
         arbitration and mediation services. Each party 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 revenue.

     d.  Cash and Cash Equivalents

         Cash and cash equivalents consist of cash on hand, money market
         funds and short-term notes with a maturity at date of purchase of
         three months or less.

     e.  Marketable Securities

         Investments classified as marketable securities include fixed
         maturities (bonds and redeemable preferred stocks) 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-8
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 2 (continued)

         all fixed maturity and equity securities as available-for-sale in
         order to provide the Company flexibility to respond to various
         factors, including changes in market conditions and tax planning
         considerations.

         Investment income, consisting of interest 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
         discounts 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 generally 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.  Income Taxes

         The Company follows the asset and liability method of accounting for
         income taxes by applying statutory tax rates in effect at the balance
         sheet date to differences among the book and tax bases of assets and
         liabilities. The resulting deferred tax liabilities or assets are
         adjusted to reflect changes in tax laws or rates by means of charges
         or credits to income tax expense. A valuation allowance is recognized
         to the extent a portion or all of a deferred tax asset may not be
         realizable.

     i.  Advertising Costs

         The cost of advertising is expensed when the advertising takes place.
         During the second half of fiscal 1998, the Company commenced an
         advertising campaign intended to increase awareness of its services
         with respect to litigants in most types of civil disputes, including
         complex





                                     F-9
<PAGE>



                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 2 (continued)

         commercial issues, construction, employment, matrimonial and worker's
         compensation cases. The Company incurred $566,084 and $93,696 for
         advertising and external public relations costs in fiscal 1998 and
         1997, respectively.

     j.  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
         ended June 30, 1997.

     k.  Earnings (Loss) Per Common Share

         In fiscal 1998, the Company adopted Statement of Financial Accounting
         Standards No. 128 ("SFAS No. 128"), "Earnings Per Share," which
         requires public companies to present basic earnings per share and, if
         applicable, diluted earnings per share. In accordance with SFAS No.
         128, all comparative periods have been restated, if applicable. Basic
         earnings per share are based on the weighted average number of common
         shares outstanding without consideration of potential common stock.
         Diluted earnings per share are based on the weighted average number
         of common and potential common shares outstanding. The calculation
         takes into account the shares that may be issued upon exercise of
         stock options, reduced by the shares that may be repurchased with the
         funds received from the exercise, based on the average price during
         the period. Diluted earnings per share is the same as basic earnings
         per share as potential common shares would be antidilutive as the
         Company incurred net losses for the years ended June 30, 1998 and
         1997.






                                     F-10
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 2 (continued)

     l.  Accounting Pronouncement Not Yet Adopted

         In June 1997, the FASB issued Statement of Financial Accounting
         Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"),
         which is effective for the Company's 1999 fiscal year. SFAS No. 130
         establishes standards to report and display comprehensive income and
         its components in a full set of general-purpose financial statements.
         Earnings (loss) per share will only be reported for net income (loss)
         but not for comprehensive income. Adoption of SFAS No. 130 relates to
         disclosure within the financial statements and is not expected to
         have a material impact on the Company's financial statements.


NOTE 3 - MARKETABLE SECURITIES

     Marketable securities are carried at fair value. A summary of investments
     in marketable securities and a reconciliation of amortized cost to the
     fair value follow:

<TABLE>
<CAPTION>
                                                                              Gross             Gross
                                                          Amortized        unrealized        unrealized             Fair
                                                            cost              gains            losses               value
                                                         ----------        ----------        ----------          ----------

<S>                                                     <C>                 <C>           <C>                   <C>        
        June 30, 1998
            Fixed maturities
              U.S. Treasury securities and
                obligations of U.S. government
                corporations and agencies                $  669,889          $    209        $     (75)          $  670,023
              Corporate preferred securities                250,000             5,620            -                  255,620
                                                         ----------           -------        ---------           ----------

                                                            919,889             5,829              (75)             925,643

            Equity securities                             1,089,879            38,083         (102,725)           1,025,237
                                                         ----------           -------        ---------           ----------

               Total marketable securities               $2,009,768           $43,912        $(102,800)          $1,950,880
                                                         ==========           =======        =========           ==========
</TABLE>






                                     F-11
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 3 (continued)

<TABLE>
<CAPTION>
                                                                              Gross             Gross
                                                          Amortized        unrealized        unrealized             Fair
                                                            cost              gains            losses               value
                                                         ----------        ----------        ----------          ----------


<S>                                                      <C>               <C>               <C>                 <C>       
        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
                                                         ==========           =======         ========           ==========
</TABLE>

     The amortized cost and fair value of investments in fixed maturities
     classified as securities available-for-sale at June 30, 1998 are shown
     below by contractual maturity. Actual maturities may differ from
     contractual maturities because borrowers have the right to call
     obligations without call penalties.

                                                  Amortized     Fair
                                                    cost        value
                                                  --------    --------

        Due in one year or less                   $569,470    $569,679
        Due after one through five years           100,419     100,344
        Due after ten years                        250,000     255,620
                                                  --------    --------

                                                  $919,889    $925,643
                                                  ========    ========

     Proceeds on sales of securities were $2,311,367 and $62,373 for the years
     ended June 30, 1998 and 1997, respectively. During fiscal 1998 and 1997,
     gross gains of $386,155 and $7,123, respectively, and gross losses of
     $29,765 and $0, respectively, were realized on these sales. Net
     unrealized (losses) gains on marketable securities were $(58,888) and
     $79,224 at June 30, 1998 and 1997, respectively. During fiscal 1998 and
     1997, no income taxes (benefits) were provided on the unrealized gains
     (losses) due to the Company's net operating loss.







                                     F-12
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 4 - FURNITURE AND EQUIPMENT

     Furniture and equipment consist of the following:

                                                           June 30,
                                                -----------------------------
                                                   1998                1997
                                                ---------           ---------

        Furniture                               $ 169,717           $ 159,447
        Equipment                                 307,311             191,093
                                                ---------           ---------
                                                  477,028             350,540
        Less accumulated depreciation            (228,349)           (149,427)
                                                ---------           ---------
                                                               
                                                $ 248,679           $ 201,113
                                                =========           =========
                                                           
     Depreciation expense for the years ended June 30, 1998 and 1997 was
     $80,288 and $56,510, respectively.


NOTE 5 - INCOME TAXES

     Temporary differences which give rise to deferred taxes are summarized as
     follows:

<TABLE>
<CAPTION>
                                                                                         1998                  1997
                                                                                       ---------            ---------

<S>                                                                                    <C>                  <C>      
        Deferred tax assets
            Net operating loss and other carryforwards                                 $ 406,000            $ 139,000
            Provision for bad debts                                                       36,000               32,000
            Deferred compensation                                                         21,000               26,000
            Deferred rent and other                                                       10,000                6,000
                                                                                       ---------            ---------
                                                                                         473,000              203,000
        Deferred tax liabilities
            Depreciation                                                                   6,000               17,000
                                                                                       ---------            ---------
        Net deferred tax asset before valuation allowance                                467,000              186,000
        Valuation allowance                                                             (467,000)            (186,000)
                                                                                       ---------            ---------

               Net deferred tax asset                                                  $      -             $      -
                                                                                       =========            =========
</TABLE>






                                     F-13
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 5 (continued)

     The Company has recorded a full valuation allowance to reflect the
     estimated amount of deferred tax assets which may not be realized.

     The Company's effective income tax rate differs from the statutory
     Federal income tax rate as a result of the following:

<TABLE>
<CAPTION>
                                                                                          1998                    1997
                                                                                       ---------               --------- 

<S>                                                                                    <C>                     <C>       
        Benefit at statutory rate                                                      $(213,906)              $(216,769)
        State and local benefit, net of Federal tax                                      (42,096)                      -
        Nontaxable (income)/nondeductible expenses - net                                 (24,668)                 30,589
        Increase in the valuation allowance                                              280,670                 186,180
                                                                                       ---------               --------- 

                                                                                       $      -                $      -
                                                                                       =========               ========= 
</TABLE>

     The provision for Federal income taxes has been determined on the basis
     of a consolidated tax return. At June 30, 1998, the Company had a net
     operating loss carryforward for Federal income tax reporting purposes
     amounting to approximately $1,007,000, expiring through 2018. No Federal
     taxes were paid in the years ended June 30, 1998 and 1997.


NOTE 6 - STOCKHOLDERS' EQUITY

     a.  Initial Public Offering

         In November 1996, the Company completed an IPO. The IPO consisted 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 offered by two executive officers of the Company. Each
         redeemable warrant entitles the holder to purchase one share of
         common stock at $6.00 per share, 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, for a specified period of time. In
         addition, there was an overallotment option for 210,000 units which
         was exercised by the





                                     F-14
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 6 (continued)

         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 and offering expenses aggregated
         $1,138,456, resulting in net proceeds of $4,701,544.

         In connection with the IPO, the Company sold to the underwriter, for
         nominal consideration, warrants to purchase from the Company 140,000
         units (the "underwriter's warrants"). The underwriter's warrants are
         initially exercisable at $5.80. The shares of common stock and
         redeemable warrants issuable upon exercise of the underwriter's
         warrants are identical to those offered to the public. The
         underwriter's warrants contain provisions providing for adjustment of
         the number of warrants and exercise price under certain
         circumstances. The underwriter's warrants grant to the holders
         thereof certain rights of registration of the securities issuable
         upon exercise of the underwriter's warrants.

         Further, 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 $115,500 during the year ended June 30,
         1997, of which $37,500 related to the contributed warrants.

     b.  Stock Award Plan

         In June 1994, the Company adopted an Executive Stock Bonus Plan.
         Under the plan, the Company granted shares to three employees
         pursuant to their employment agreements. All of the shares vest after
         providing two to five years of service to the Company from the grant
         date. Unearned compensation based on the estimated market value per
         share at date of grant of $0.01 was recorded and shown as a separate
         component of stockholders' equity. The Company recognized
         compensation expense of $102 and $103 during the years ended June 30,
         1998 and 1997, respectively, representing the amortization of
         unearned compensation over the vesting period. During the year ended
         June 30, 1997, 61,903 shares were issued upon vesting. As of June 30,
         1998, 36,744 awards are outstanding, all of which will vest in June
         1999 provided such employees are employed by the Company at that
         time.

         In addition, in September 1994, the Company granted the manager of a
         regional office restricted common stock for the purchase price of
         $0.17 per share, pursuant 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.





                                     F-15
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 6 (continued)

         In December 1994, the Company entered into an agreement with 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
         lieu of the shares during the year ended June 30, 1997.

     c.  Stock Option Plan

         In May 1996, the Company adopted an Incentive and Nonqualified Stock
         Option Plan (the "Plan") for employees, officers, directors,
         consultants and advisors of the Company, pursuant to which the
         Company may grant options to purchase up to 750,000 shares of the
         Company's common stock. The Plan is administered by the board 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 conditions of the Plan. Unless the
         board of 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 not officers of the
         Company receive annually, on the last trading day of June, stock
         options for 1,000 shares at an exercise price equal to the fair
         market value 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
         officer of the Company has a contractual right under his agreement to
         receive options to purchase 10,000 shares of common stock provided
         services are being rendered to the Company through November 18, 1998
         (the obligation and vesting date). Price per share will be the closing
         bid price on the obligation date.

         On May 11, 1998, the Company's Board of Directors approved the
         repricing of outstanding stock options previously granted to
         employees. The repricing provided for the exercise price of 230,500
         options to be reduced from a range of $3.00 to $4.38 per share to a
         range of $1.63 to $2.25 per share, to reflect current fair value. The
         repricing did not affect the term or vesting period of the options.





                                     F-16
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 6 (continued)

         The Company's stock option awards granted to employees, directors and
         consultants as of and for the years ended June 30, 1998 and 1997 are
         summarized as follows:

<TABLE>
<CAPTION>
                                                                     1998                               1997
                                                          ----------------------------       ---------------------------
                                                                           Weighted -                         Weighted -
                                                                             average                            average
                                                                            exercise                           exercise
                                                           Shares             price          Shares              price
                                                           ------          ---------         ------           ----------

<S>                                                        <C>              <C>              <C>                  <C>  
            Outstanding at beginning of year               155,500          $ 3.18              -
            Awards granted                                 451,500          $ 2.22           155,500              $3.18
            Awards exercised                                 -                                  -
            Awards canceled                               (233,500)         $(3.20)             -
                                                          --------                           -------

            Outstanding at end of year                     373,500          $ 2.01           155,500              $3.18
                                                          ========                           =======

            Options exercisable at year-end                 37,000          $ 2.49            16,000              $3.00

            Weighted-average fair value
                 of options granted during
                 the year                                                   $  .99                                $1.66
</TABLE>

         The following information applies to options outstanding and
         exercisable at June 30, 1998:

<TABLE>
<CAPTION>
                                                            Outstanding                               Exercisable
                                           -------------------------------------------     -----------------------------
                                                            Weighted-
                                                             average         Weighted-                         Weighted-
                                                            remaining         average                           average
                                             Number          life in         exercise         Number           exercise
            Range of exercise prices       outstanding        years            price        exercisable          price
            ------------------------       -----------      ---------        ---------      -----------        ---------

<S>                                          <C>              <C>             <C>               <C>             <C>  
            $1.63 to $1.94                   240,300          7.65            $1.72             9,002           $1.78
            $2.09 to $2.25                    96,200          7.60            $2.17             9,998           $2.20
            $3.00 to $4.00                    37,000          7.89            $3.41            18,000           $3.00
                                            --------                                           ------

                                             373,500                                           37,000
                                             =======                                           ======
</TABLE>

         Stock option awards are granted at prices equal to or above the
         closing bid price on the date of grant. As of June 30, 1998, 376,500
         shares were available for granting of options under the Plan.





                                     F-17
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 6 (continued)

         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 to members
         of the board of directors, as such options were granted to board
         members in their capacity as directors. Compensation expense of
         $5,610 and $6,308 was recognized in fiscal 1998 and 1997,
         respectively, for options granted to consultants.

         If 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 members of the board of directors consistent with
         the methodology prescribed by SFAS No. 123, the Company's net loss
         and net loss per share for the years ended June 30, 1998 and 1997
         would be reduced to the pro forma amounts indicated below:

                                                     1998            1997
                                                  ---------       ---------

            Net loss
                As reported                       $(629,134)      $(637,557)
                Pro forma                          (762,728)       (679,965)

            Net loss per common share - basic
                As reported                           $(.19)          $(.23)
                Pro forma                              (.23)           (.25)


         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 for 1998 and 1997, respectively:
         dividend yields of zero for both years; risk-free interest rates
         ranging from 5.52% to 5.94% in 1998 and 6.04% to 6.71% in 1997;
         expected terms ranging from 2 to 6 years in 1998 and 3 to 6 years in
         1997; and expected stock price volatility of 64.15% in 1998 and
         60.17% in 1997.






                                     F-18
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997




NOTE 7 - TRANSACTIONS WITH RELATED PARTIES

     Certain members of the board of directors perform services for the
     benefit of the Company. Such services included those of public relations,
     legal and other professional, and hearings. The related expenditures for
     these services for the years ended June 30, 1998 and 1997 were $75,425
     and $166,932, respectively, of which $66,776 was charged to additional
     paid-in capital in fiscal 1997 as it was incurred in connection with the
     November 1996 IPO.


NOTE 8 - COMMITMENTS AND CONTINGENCIES

     a.  Leases

         As of June 30, 1998, the Company has lease agreements for equipment
         and office space. Rent expense amounted to $205,308 and $204,762 for
         the years ended June 30, 1998 and 1997, respectively. The minimum
         lease payments under noncancelable leases as of June 30, 1998 are as
         follows:

                             1999                      $177,000
                             2000                       163,000
                             2001                        47,000
                             2002                         1,000
                                                       --------

                                                       $388,000

     b.  Employment/Consulting Agreements

         In October 1997, the Company entered into an employment agreement
         with its Chief Executive Officer retroactive to July 1, 1997 as the
         prior agreement expired on June 30, 1997. The new agreement expires
         June 30, 2002 and provides for an annual base salary of $225,000, an
         annual cost of living increase of the greater of 6% per annum or the
         increase in the Urban Consumer Price Index and an annual bonus at the
         discretion of the Company's Board of Directors. If this agreement is
         terminated as a result of a change in duties of the executive or due
         to a change in control, the officer will be entitled to a lump-sum
         severance payment equal to three times his then current base salary.





                                     F-19
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 8 (continued)

         The Company has also entered into employment agreements with three
         officers expiring through July 20, 2001. Such contracts are
         cancelable at any time without further liability to the Company with
         the exception of one contract which provides for six months of
         severance pay. Minimum salary commitments under these contracts
         follow:

                             1999                      $336,000
                             2000                       303,000
                             2001                       233,000
                             2002                         6,000
                                                       --------

                                                       $878,000
                                                       ========

         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, 1998 and 1997 was $48,000
         and $28,000, respectively.


NOTE 9 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

     At June 30, 1998 and 1997, 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.







                                     F-20
<PAGE>


                       NAM Corporation and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 1998 and 1997



NOTE 10 - 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 two financial institutions.

     The Company primarily sells its services to insurance companies and law
     firms. One insurance company customer represented approximately 12% and
     14% of total revenues for the years ended June 30, 1998 and 1997,
     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 Company monitors exposure to credit losses
     and maintains allowances for anticipated losses considered necessary
     under the circumstances.






                                     F-21





<PAGE>

                                    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, 1998, 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, as amended**
10.1      1996 Stock Option Plan, amended and restated**
10.2      Employment Agreement between Company and Roy Israel (3)
10.2.1    Amendment to Employment Agreement between Company and Roy Israel **
10.3      Employment Agreement between Company and Cynthia Sanders**
10.4      Employment Agreement between Company and Daniel Jansen (1)
10.5      Employment Agreement between Company and Patricia Giuliani-Rheaume (2)
10.6      Employment Agreement between Company and Rina Bloch**
10.7      Lease Agreement for Great Neck, New York facility (1)
21.1      List of Subsidiaries**
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 with the Securities and Exchange Commission on August 2, 1996.

(2)       Incorporated herein in its entirety by reference to the Company's 1997
          Annual Report on Form 10-KSB.

(3)       Incorporated herein in its entirety by reference to the Company's
          Quarterly Report on Form 10-QSB for the quarter ended September 30,
          1997.

**        Filed herewith.

Reports on Form 8-K: None during the fourth quarter.

                                       16
                                                                                
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant 
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                NAM CORPORATION

Date:   September 23, 1998      By: /s/ Roy Israel
                                    --------------------------------------------
                                    Roy Israel, Chairman of the
                                    Board, CEO and President

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Date: September 23, 1998        By: /s/ Roy Israel
                                    --------------------------------------------
                                    Roy Israel, Chairman of the
                                    Board, CEO and President
                           
Date: September 23, 1998        By: /s/ Patricia Giuliani-Rheaume
                                    --------------------------------------------
                                    Patricia Giuliani-Rheaume, Vice President,
                                    Chief Financial Officer and Treasurer
                           
                           
Date: September 23, 1998        By: /s/ Cynthia Sanders
                                    --------------------------------------------
                                    Cynthia Sanders, Executive Vice President
                                    and Director
                           
                           
Date: September 23, 1998        By: /s/ Daniel P. Jansen
                                    --------------------------------------------
                                    Daniel P. Jansen, National Accounts
                                    Manager and Director
                           
                           
Date: September 23, 1998        By: /s/ Michael I. Thaler
                                    --------------------------------------------
                                    Michael I. Thaler, Director
                           
                           
Date: September 23, 1998        By: /s/ Stephen H. Acunto
                                    --------------------------------------------
                                    Stephen H. Acunto, Director
                           
                           
Date: September 23, 1998        By: /s/ Anthony J. Mercorella
                                    --------------------------------------------
                                    Anthony J. Mercorella, Director
                           
                           
Date: September 23, 1998        By: /s/ Ronald Katz
                                    --------------------------------------------
                                    Ronald Katz, Director
                           
                                       17