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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007

or



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

For the transition period from  to

Commission File Number:
001-32837



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North
American Insurance Leaders, Inc.

(Exact name of registrant as specified in its charter)



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|                                                 |  |                                        
|------------------------------------------------ |  | ---------------------------------------
|Delaware                                         |  | 20-3284412                             
|(State or other jurisdiction of incorporation)   |  | (I.R.S. Employer Identification Number)
|                                                 | 
|885 Third Avenue, 31st Floor, New York, New York |  | 10022                                  
|(Address of principal executive offices)         |  | (Zip Code)                             

(212) 319-9407

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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 ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act:



|                         |  |                     |  |                       
|------------------------ |  | ------------------- |  | ----------------------
|Large accelerated filer ̈ |  | Accelerated filer x |  | Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes  x    No ̈

Number of shares of common stock outstanding as of November 8, 2007: 17,968,750.



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##### Table of Contents

Table of Contents



|           |  |                                                                                       |  |    
|---------- |  | ------------------------------------------------------------------------------------- |  | ---
|           |  | PART I. FINANCIAL INFORMATION                                                         |  |    
|           |  |                                                                                      
|Item 1.    |  | Financial Statements                                                                  |  | 1  
|           |  |                                                                                      
|           |  | Balance Sheets                                                                        |  | F-1
|           |  |                                                                                      
|           |  | Statements of Operations                                                              |  | F-2
|           |  |                                                                                      
|           |  | Statement of Stockholders Equity                                                     |  | F-3
|           |  |                                                                                      
|           |  | Statements of Cash Flows                                                              |  | F-4
|           |  |                                                                                      
|           |  | Notes to Financial Statements                                                         |  | F-5
|           |  |                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 2  
|           |  |                                                                                      
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 7  
|           |  |                                                                                      
|Item 4.    |  | Controls and Procedures                                                               |  | 7  
|           |  |                                                                                      
|           |  | PART II. OTHER INFORMATION                                                            |  |    
|           |  |                                                                                      
|Item 1A.   |  | Risk Factors                                                                          |  | 8  
|           |  |                                                                                      
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 8  
|           |  |                                                                                      
|Item 6.    |  | Exhibits                                                                              |  | 8  
|           | 
|SIGNATURES |  | 9                                                                                    



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Index to Financial Statements





|                                  |  |    
|--------------------------------- |  | ---
|Balance Sheets                    |  | F-1
|Statements of Operations          |  | F-2
|Statement of Stockholders Equity |  | F-3
|Statements of Cash Flows          |  | F-4
|Notes to Financial Statements     |  | F-5



1



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##### Table of Contents

PART I. FINANCIAL INFORMATION

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Balance Sheets



|                                                                                                                                                                 |  |                    |             |               |   |            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | ------------- | - | -----------
|                                                                                                                                                                 |  | September 30, 2007 |             | June 30, 2007
|                                                                                                                                                                 |  | (Unaudited)        |             |              
|ASSETS                                                                                                                                                           |  |                    |             |               |   |            
|                                                                                                                                                                 |  |                   
|Current assets:                                                                                                                                                  |  |                    |             |               |   |            
|Cash and cash equivalents                                                                                                                                        |  | $                  | 169,199     |               | $ | 430,776    
|Cash and cash equivalents in Trust Account                                                                                                                       |  |                    | 114,337,202 |               |   | 113,086,337
|Prepaid expenses                                                                                                                                                 |  |                    | 97,660      |               |   | 167,761    
|                                                                                                                                                                 |  |                    |             |               |   |            
|Total current assets                                                                                                                                             |  |                    | 114,604,061 |               |   | 113,684,874
|Deferred acquisition costs                                                                                                                                       |  |                    | 196,713     |               |   | 183,523    
|                                                                                                                                                                 |  |                    |             |               |   |            
|Total assets                                                                                                                                                     |  | $                  | 114,800,774 |               | $ | 113,868,397
|                                                                                                                                                                 |  |                    |             |               |   |            
|                                                                                                                                                                 |  |                   
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                             |  |                    |             |               |   |            
|                                                                                                                                                                 |  |                   
|Current liabilities:                                                                                                                                             |  |                    |             |               |   |            
|Accounts payable                                                                                                                                                 |  | $                  | 52,640      |               | $ | 64,430     
|Deferred underwriting fee                                                                                                                                        |  |                    | 2,875,000   |               |   | 2,875,000  
|Taxes payable                                                                                                                                                    |  |                    | 367,100     |               |   |           
|                                                                                                                                                                 |  |                    |             |               |   |            
|Total current liabilities                                                                                                                                        |  | $                  | 3,294,740   |               | $ | 2,939,430  
|                                                                                                                                                                 |  |                    |             |               |   |            
|Common stock, subject to possible conversion, 2,874,999 shares at conversion value                                                                               |  | $                  | 22,787,827  |               | $ | 22,621,524 
|                                                                                                                                                                 |  |                    |             |               |   |            
|COMMITMENTS                                                                                                                                                      |  |                    |             |               |   |            
|                                                                                                                                                                 |  |                   
|STOCKHOLDERS EQUITY                                                                                                                                             |  |                    |             |               |   |            
|                                                                                                                                                                 |  |                   
|Preferred stock0.0001 par value; 1,000,000 shares authorized; 0 issued and outstanding                                                                          |  |                    |            |               |   |           
|Common stock0.0001 par value; 100,000,000 shares authorized; 17,968,750 issued and outstanding (which includes 2,874,999 shares subject
to possible conversion) |  |                    | 1,797       |               |   | 1,797      
|Additional paid in capital                                                                                                                                       |  |                    | 85,051,158  |               |   | 85,217,461 
|Retained earnings accumulated during the development stage                                                                                                       |  |                    | 3,665,252   |               |   | 3,088,185  
|                                                                                                                                                                 |  |                    |             |               |   |            
|Total stockholders equity                                                                                                                                       |  |                    | 88,718,207  |               |   | 88,307,443 
|                                                                                                                                                                 |  |                    |             |               |   |            
|Total liabilities and stockholders equity                                                                                                                       |  | $                  | 114,800,774 |               | $ | 113,868,397
|                                                                                                                                                                 |  |                    |             |               |   |            

See notes to financial statements.



F-1



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC

(a development stage company)

Statements of Operations

(Unaudited)



|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  
|---------------------------------------------------------------------------------- |  | -------------------------------------- | ---------- | - | -------------------------------------- | - | ---------- | ------------------------------------------------------------- |  | - | --------- | -
|                                                                                   |  | July 1, 2007 throughSeptember 30, 2007 |            |   | July 1, 2006 throughSeptember 30, 2006 |   |            | August 8, 2005 (Date of Inception) through September 30, 2007 | 
|Interest income                                                                    |  | $                                      | 1,374,277  |   |                                        | $ | 1,421,300  |                                                               |  | $ | 8,373,572 |  
|General and administrative expenses                                                |  |                                        | 259,817    |   |                                        |   | 220,124    |                                                               |  |   | 1,342,055 |  
|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  
|Net income before provision for taxes                                              |  | $                                      | 1,114,460  |   |                                        | $ | 1,201,176  |                                                               |  | $ | 7,031,517 |  
|Provision for taxes                                                                |  |                                        | 537,393    |   |                                        |   | 552,541    |                                                               |  |   | 3,366,265 |  
|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  
|Net income                                                                         |  | $                                      | 577,067    |   |                                        | $ | 648,635    |                                                               |  | $ | 3,665,252 |  
|Accretion of Trust Account relating to common stock subject to possible conversion |  |                                        | (166,303   | ) |                                        |   | (8,362     | )                                                             |  |   | (797,834  | )
|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  
|Net income attributable to common stockholders                                     |  | $                                      | 410,764    |   |                                        | $ | 640,273    |                                                               |  | $ | 2,867,418 |  
|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  
|Common shares outstanding subject to possible conversion                           |  |                                        | 2,874,999  |   |                                        |   | 2,874,999  |                                                               |  |   |           |  
|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  
|Basic and diluted net income per share subject to possible conversion              |  | $                                      | 0.06       |   |                                        | $ | 0.00       |                                                               |  |   |           |  
|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  
|Weighted average common shares outstanding                                         |  |                                        | 15,093,751 |   |                                        |   | 15,093,751 |                                                               |  |   |           |  
|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  
|Basic and diluted net income per share                                             |  | $                                      | 0.03       |   |                                        | $ | 0 .04      |                                                               |  |   |           |  
|                                                                                   |  |                                        |            |   |                                        |   |            |                                                               |  |   |           |  

See notes to financial statements.



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Statement of Stockholders Equity



|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                            |  |       |           |  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | ------ | ----- | -------------------------- | - | ----------- | ---------------------------------------------------------- |  | ----- | --------- |  | - | ----------- | -
|                                                                                                                                                                              |  | Common Stock Shares |  | Amount |       | Additional Paid-In Capital |   |             | Retained Earnings Accumulated
During the Development Stage |  | Total |          
|Balance at August 8, 2005 (date of inception)                                                                                                                                 |  |                    |  | $      |      |                            | $ |            |                                                            |  | $     |          |  | $ |            |  
|Issuance of common stock to initial stockholders                                                                                                                              |  | 3,593,750           |  |        | 359   |                            |   | 24,641      |                                                            |  |       |          |  |   | 25,000      |  
|Issuance of D&O rights in private placement                                                                                                                                   |  |                    |  |        |      |                            |   | 1,700,000   |                                                            |  |       |          |  |   | 1,700,000   |  
|Sale of 14,375,000 units (including the 1,875,000 units pursuant to the over-allotment option at a price of $8 per unit, net of
underwriters discount and offering expenses) |  | 14,375,000          |  |        | 1,438 |                            |   | 106,114,343 |                                                            |  |       |          |  |   | 106,115,781 |  
|Net proceeds subject to possible conversion of 2,874,999 shares                                                                                                               |  |                    |  |        |      |                            |   | (21,989,992 | )                                                          |  |       |          |  |   | (21,989,992 | )
|Net income for the period                                                                                                                                                     |  |                    |  |        |      |                            |   |            |                                                            |  |       | 662,858   |  |   | 662,858     |  
|Accretion of Trust Account relating to common stock subject to possible conversion                                                                                            |  |                    |  |        |      |                            |   | (174,454    | )                                                          |  |       |          |  |   | (174,454    | )
|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                            |  |       |           |  |   |             |  
|Balance at June 30, 2006                                                                                                                                                      |  | 17,968,750          |  | $      | 1,797 |                            | $ | 85,674,538  |                                                            |  | $     | 662,858   |  | $ | 86,339,193  |  
|Net income for the year                                                                                                                                                       |  |                    |  |        |      |                            |   |            |                                                            |  |       | 2,425,327 |  |   | 2,425,327   |  
|Accretion of Trust Account relating to common stock subject to possible conversion                                                                                            |  |                    |  |        |      |                            |   | (457,077    | )                                                          |  |       |          |  |   | (457,077    | )
|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                            |  |       |           |  |   |             |  
|Balance at June 30, 2007                                                                                                                                                      |  | 17,968,750          |  | $      | 1,797 |                            | $ | 85,217,461  |                                                            |  | $     | 3,088,185 |  | $ | 88,307,443  |  
|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                            |  |       |           |  |   |             |  
|Net income for the period (unaudited)                                                                                                                                         |  |                    |  |        |      |                            |   |            |                                                            |  |       | 577,067   |  |   | 577,067     |  
|Accretion of Trust Account relating to common stock subject to possible conversion (unaudited)                                                                                |  |                    |  |        |      |                            |   | (166,303    | )                                                          |  |       |          |  |   | (166,303    | )
|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                            |  |       |           |  |   |             |  
|Balance at September 30, 2007 (unaudited)                                                                                                                                     |  | 17,968,750          |  | $      | 1,797 |                            | $ | 85,051,158  |                                                            |  | $     | 3,665,252 |  | $ | 88,718,207  |  
|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                            |  |       |           |  |   |             |  

See notes to financial statements.



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Statements of Cash Flows

(Unaudited)



|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|------------------------------------------------------------------------------------------- |  | -------------------------------------- | ---------- | - | -------------------------------------- | - | --------- | ------------------------------------------------------------ |  | - | ------------ | -
|                                                                                            |  | July 1, 2007 through September 30,2007 |            |   | July 1, 2006 through September 30,2006 |   |           | August 8, 2005 (Date of Inception) through September 30,2007 | 
|Cash flows from operating activities:                                                       |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Net income                                                                                  |  | $                                      | 577,067    |   |                                        | $ | 648,635   |                                                              |  | $ | 3,665,252    |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Changes in:                                                                                 |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Interest income, net                                                                        |  |                                        | (1,250,865 | ) |                                        |   | (343,647  | )                                                            |  |   | (4,387,201   | )
|Prepaid expenses                                                                            |  |                                        | 70,101     |   |                                        |   | 52,856    |                                                              |  |   | (97,660      | )
|Other assets                                                                                |  |                                        |           |   |                                        |   | 2,677     |                                                              |  |   |             |  
|Accounts payable                                                                            |  |                                        | (11,790    | ) |                                        |   | 125,511   |                                                              |  |   | 52,640       |  
|Taxes payable                                                                               |  |                                        | 367,100    |   |                                        |   | (121,209  | )                                                            |  |   | 367,100      |  
|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Net cash provided by (used in) operating activities                                         |  |                                        | (248,387   | ) |                                        |   | 364,823   |                                                              |  |   | (399,869     | )
|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Cash flows from investing activities:                                                       |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Cash and cash equivalents deposited in Trust Account                                        |  | $                                      |           |   |                                        | $ |          |                                                              |  | $ | (109,950,000 | )
|Deferred acquisition costs                                                                  |  |                                        | (13,190    | ) |                                        |   |          |                                                              |  |   | (196,713     | )
|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Net cash used in investing activities                                                       |  |                                        | (13,190    | ) |                                        |   |          |                                                              |  |   | (110,146,713 | )
|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Cash flows from financing activities:                                                       |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Net proceeds from public offering                                                           |  | $                                      |           |   |                                        | $ |          |                                                              |  | $ | 108,990,781  |  
|Proceeds from notes payable to directors and officers                                       |  |                                        |           |   |                                        |   |          |                                                              |  |   | 150,000      |  
|Prepayment of notes payable to directors and officers                                       |  |                                        |           |   |                                        |   |          |                                                              |  |   | (150,000     | )
|Proceeds from issuance of D&O rights                                                        |  |                                        |           |   |                                        |   |          |                                                              |  |   | 1,700,000    |  
|Proceeds from issuance of common stock to initial stockholders                              |  |                                        |           |   |                                        |   |          |                                                              |  |   | 25,000       |  
|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Net cash provided by financing activities                                                   |  |                                        |           |   |                                        |   |          |                                                              |  |   | 110,715,781  |  
|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Net increase (decrease) in cash and cash equivalents                                        |  | $                                      | (261,577   | ) |                                        | $ | 364,823   |                                                              |  | $ | 169,199      |  
|Cash and cash equivalentsbeginning of period                                               |  | $                                      | 430,776    |   |                                        | $ | 281,677   |                                                              |  | $ |             |  
|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Cash and cash equivalentsend of period                                                     |  | $                                      | 169,199    |   |                                        | $ | 646,500   |                                                              |  | $ | 169,199      |  
|                                                                                            |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Supplemental disclosures of non-cash financing activities:                                  |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Deferred underwriting fee                                                                   |  | $                                      |           |   |                                        | $ | 2,875,000 |                                                              |  | $ | 2,875,000    |  
|Accretion of Trust Account relating to common stock subject to possible conversion          |  | $                                      | 166,303    |   |                                        | $ | 8,362     |                                                              |  | $ | 797,834      |  
|Fair value of underwriter purchase option included in offering costs                        |  | $                                      |           |   |                                        | $ | 1,477,500 |                                                              |  | $ | 1,477,500    |  
|Supplemental disclosure of cash flow information:                                           |  |                                        |            |   |                                        |   |           |                                                              |  |   |              |  
|Cash paid for taxes                                                                         |  | $                                      | 392,774    |   |                                        | $ | 673,750   |                                                              |  | $ | 3,221,646    |  

See notes to financial statements.



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes to Financial Statements (unaudited)

NOTE AORGANIZATION AND BUSINESS OPERATIONS

North American Insurance Leaders, Inc. (the Company) was
incorporated in Delaware on August 8, 2005. The Company was formed to effect a merger, capital stock exchange, asset acquisition, stock purchase and/or other similar transaction with one or more businesses in the insurance or insurance services
industry in North America (Business Combination). The Company has not generated revenue to date other than interest income. The Company is considered to be in the development stage and is subject to the risks associated with activities
of development stage companies. The Company has selected June 30th as its fiscal year end.

The registration statement for the
Companys initial public offering (the Public Offering) was declared effective on March 21, 2006. On that date, the Company consummated a private placement of 1,700,000 D&O rights (the Private Placement) for an
aggregate purchase price of $1,700,000. On March 27, 2006, the Company consummated the Public Offering (together with the over-allotment offering, the Offering) of 14,375,000 units (Units) for net proceeds of
approximately $106,000,000 (net of deferred underwriting fees).

The Companys management has broad discretion with respect to the
specific application of the net proceeds of the Offering, although the Company intends to apply substantially all of the net proceeds of the Offering toward consummating a Business Combination with one or more insurance-related businesses.
Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the Offering and the Private Placement, $109,950,000 (including $2,875,000 of underwriting fees which have been
deferred by the underwriters as described in Note C) was placed in a trust account (the Trust Account) and invested in money market instruments or accounts meeting conditions of the Investment Company Act of 1940 and/or securities
principally issued or guaranteed by the U.S. government until the earlier of (1) the consummation of the Companys first Business Combination or (2) the distribution of the Trust Account as described below. The balance in the Trust
Account including interest on September 30, 2007 was $114,337,202. In quarters commencing July 2006, up to half of the interest earned during the preceding quarter on the amounts held in the Trust Account (net of taxes payable) was released to
the Company to cover a portion of its working capital requirements up to an aggregate of $1,000,000. As of September 30, 2007, $1,000,000 had been transferred to working capital. This interest and the proceeds of the Offering that were not
deposited in the Trust Account were used to pay business, legal, and accounting due diligence costs incurred in connection with prospective Business Combinations and to pay continuing general and administrative expenses. The Company will seek
stockholder approval before it effects an



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements (unaudited)



initial Business Combination, even if the nature of the Business Combination would not ordinarily require stockholder approval under applicable state law.
The Company will proceed with such a Business Combination only if a majority of the shares of common stock voted by the public stockholders of the Company (the Public Stockholders) are voted in favor of the Business Combination and
Public Stockholders owning less than 20% of the shares sold in the Offering both vote against the Business Combination and exercise their conversion rights as described below.

In no event will the pre-Public Offering stockholders of the Company (the Initial Stockholders) be considered Public Stockholders for
purposes of voting for or against a Business Combination. Public Stockholders who convert their stock into an allocable share of the Trust Account will still have the right to exercise the warrants that they receive as part of the Units. In the
event that Public Stockholders owning 20% or more of the stock sold in the Offering vote against the Business Combination and exercise their conversion rights described below, the Business Combination will not be consummated. Accordingly, Public
Stockholders holding 19.99% of the aggregate number of shares owned by all Public Stockholders may seek conversion of their shares in the event of such a Business Combination. Such Public Stockholders are entitled to receive their per share interest
in the Trust Account computed without regard to the shares held by the Initial Stockholders. In this respect, $22,787,827 (including accretion of $797,834) has been classified as common stock subject to possible conversion at September 30,
2007. Voting against the initial Business Combination alone will not result in an election to exercise a stockholders conversion rights. A stockholder must also affirmatively exercise such conversion rights at or prior to the time the Business
Combination is voted upon by the stockholders. All of the Companys Initial Stockholders, including all of the directors at the time of the Offering and officers of the Company, have agreed to vote all of the shares of common stock held by them
in accordance with the vote of the majority in interest of all other stockholders of the Company, other than the Initial Stockholders, with respect to any initial Business Combination.

In the event that the Company does not consummate a Business Combination within 18 months after the completion of the Offering, or 24 months after
the completion of the Offering if certain extension criteria have been satisfied, the proceeds then on deposit in the Trust Account net of taxes will be distributed to the Companys Public Stockholders, excluding Initial Stockholders, to the
extent of their initial stock holdings. In the event of the distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public
offering price per share in the Offering (assuming no value is attributed to the Warrants included in the Units offered in the Offering as discussed in Note C). As discussed in Note I, on August 10, 2007, the Company announced that it had
entered into a definitive securities purchase agreement (the SPA) to, among other things, purchase from Deep South Holding, L.P., a Texas limited partnership (Deep South) all of the outstanding ownership interests of that
entitys operating subsidiaries. As a result of having executed the SPA, the deadline for the Companys consummation of a Business Combination was extended from September 27, 2007 (within 18 months after the completion of the
Offering) to March 27, 2008 (within 24 months after the completion of the Offering). However, this extension relates only to the transaction with Deep South



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements (unaudited)



(the Deep South acquisition). If the Company does not consummate the Deep South acquisition by March 27, 2008, the Company will liquidate
and the distribution described above will be made, unless the period within which to consummate a business combination is extended by an amendment to the Companys amended and restated certificate of incorporation by the affirmative vote of at
least 80% of the Companys outstanding shares. If the Deep South acquisition is terminated prior to March 27, 2008, the Company will lose the extension to March 27, 2008. and the Company will liquidate and the distribution described
above will be made unless the period within which to consummate a business combination is extended by an amendment to the Companys amended and restated certificate of incorporation as described above.

On March 15, 2006, the Company effected a two-for-three reverse stock split. Following this reverse stock split, there were 3,125,000 shares of
common stock outstanding. Immediately after the reverse stock split, the Company issued a stock dividend of 468,750 shares of common stock in order to ensure that, after the Offering, regardless of whether the underwriters exercised their
over-allotment option in part or in full, the Companys Initial Stockholders would maintain control over 20% of the Companys outstanding shares of common stock after consummation of the Offering. Following this stock dividend and
immediately prior to the Offering, there were 3,593,750 shares of common stock outstanding. All references in the accompanying financial statements to the number of shares of common stock and net income per share have been retroactively restated to
reflect the reverse stock split and the stock dividend.

NOTE BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] Basis of Presentation:

The accompanying financial
statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, certain information
and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These financial
statements should be read in conjunction with the audited financial statements and related notes that were included in the Companys Form 10-K for the fiscal year ended June 30, 2007.

In the Companys opinion, all adjustments (consisting primarily of normal accruals) have been made that are necessary to present fairly the
financial position of the Company. Operating results for the interim period presented are not necessarily indicative of the results to be expected for a full year.

[2] Cash and Cash Equivalents:

The Company considers all highly liquid investments with original maturities of three months
(such as money market funds and Treasury bills) or less to be cash equivalents.



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NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements (unaudited)



[3] Treasury Bills held in Trust Account:

The Companys Treasury bills held in the Trust Account at September 30, 2007 are classified as held to maturity as the Company has the positive
intent and ability to hold the securities to maturity. The held-to-maturity securities are recorded as short term on the Balance Sheet based on their contractual maturity date and are stated at amortized cost.



|                           |  |             
|-------------------------- |  | ------------
|Net Carrying Amount        |  | $113,776,232
|Unrecognized Holding Gains |  | 85,907      
|                           |  |             
|Estimated Fair Value       |  | $113,862,139
|                           |  |             

[4] Net Income Per Common Share:

Basic net income per share is calculated by dividing net income attributable to common stockholders by their weighted average number of common shares
outstanding during the period. Calculation of the weighted average common shares outstanding during the period is comprised of 3,125,000 initial shares outstanding throughout the period from August 8, 2005 (date of inception) to
September 30, 2007 and an additional 11,968,751 shares outstanding after the effective date of the Offering in March 2006. Basic net income per share subject to possible conversion is calculated by dividing accretion of Trust Account relating
to common stock subject to possible conversion by 2,874,999 common shares subject to possible conversion. No effect has been given to potential issuances of common stock from warrants or the underwriter option in the diluted computation, as the
effect would be anti-dilutive.

[5] Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.

[6] Income Taxes:

Deferred
income taxes are provided for the differences between the bases of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be
realized. There were no deferred taxes as of September 30, 2007.

[7] Deferred Acquisition Costs:

Costs related to proposed acquisitions are capitalized and will be expensed in the event the acquisition does not take place.



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NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements (unaudited)



[8] Recently Issued Accounting Standards:

In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48 Accounting for Uncertainty in Income
Taxes, an Interpretation of FASB Statement No. 109 (FIN 48) which clarifies the accounting for uncertainty in income taxes recognized in a companys financial statements and prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax position taken or anticipated to be taken in an income tax return. FIN 48 also provides guidance in derecognition, classification, interest and penalties,
accounting in interim periods, disclosures and transaction. FIN 48 is effective for fiscal years beginning after December 15, 2006. Adoption of FIN 48 did not have a material impact on the Companys financial statements.

In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements (SFAS No. 157), which defines fair
value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements. The new guidance
is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those fiscal years. The adoption of SFAS No. 157 is not expected to have a material effect on the
Companys financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilitiesincluding an amendment of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 permits entities to elect to measure many financial instruments and certain
other items at fair value. Upon adoption of SFAS No. 159, an entity may elect the fair value option for eligible items that exist at the adoption date. Subsequent to the initial adoption, the election of the fair value option should only be
made at initial recognition of the asset or liability or upon a remeasurement event that gives rise to new-basis accounting. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be
carried at fair value nor does it eliminate disclosure requirements included in other accounting standards. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007 and may be adopted earlier but only if the adoption is
in the first quarter of the fiscal year. The Company is evaluating whether it will adopt SFAS No. 159.

Management does not believe
that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

NOTE COFFERING

In the Offering, the Company sold 14,375,000 Units. The underwriters were
paid fees equal to 4.5% of the gross proceeds of the Offering, or $5,175,000, and have agreed to defer an additional $2,875,000 (the Deferred Fees) of their underwriting fees until the consummation of a Business Combination. Each Unit
consists of one share of the Companys common stock, par value $0.0001 per share, and one warrant exercisable to purchase one share of common stock (Warrant). Upon consummation of a Business



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements (unaudited)



Combination, the Company will pay such Deferred Fees out of the proceeds of the Offering held in the Trust Account. The underwriters will not be entitled to
any interest accrued on the Deferred Fees. The underwriters have agreed to forfeit any rights to, or claims against, such proceeds if the Company does not successfully complete a Business Combination. Each Warrant will entitle the holder to purchase
from the Company one share of common stock at an exercise price of $6.00 commencing on the later of (a) March 21, 2007 or (b) the completion of a Business Combination, and will expire on March 21, 2010, or earlier upon redemption. The
Warrants will be redeemable at a price of $0.01 per Warrant upon 30 days notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $11.50 per share for any 20 trading days
within a 30-trading day period ending on the third business day prior to the date on which notice of redemption is given. The D&O warrants referenced in Note DCommitments have identical rights to those of the Warrants but will not be
transferable or salable by the Companys directors and officers and the spouse of one of the Companys officers, as designee, until the later of March 21, 2007 or the consummation of a Business Combination. On February 13, 2007,
the Company entered into a Warrant Clarification Agreement (the Warrant Clarification Agreement) to clarify the terms of the Warrant Agreement, dated as of March 27, 2006 (the Warrant Agreement), by and between the
Company and Mellon Investor Services LLC, as Warrant Agent. The Warrant Clarification Agreement clarified, consistent with the terms of the Warrant Agreement and the disclosure contained in the Companys Prospectus, dated March 22, 2006,
that if the Company is unable to deliver securities pursuant to the exercise of a Warrant because a registration statement under the Securities Act of 1933, as amended, with respect to the common stock is not effective, then the Company will have no
obligation to pay cash or other consideration to the holders of Warrants or otherwise net-cash settle the Warrant.

The Company
sold to CRT Capital Group LLC, for $100, an option to purchase up to a total of 750,000 units, consisting of one share of common stock and one warrant, at $8.80 per unit, commencing on the later of the consummation of the Business Combination and
one year after the date of the final prospectus for the Offering and expiring four years after the date of the final prospectus. The warrants underlying the units have terms that are identical to those issued in the Offering, with the exception of
the exercise price, which is set at $7.50 per warrant. The purchase option also contains a cashless exercise feature that allows the holder or holders of the purchase option to receive units on a net exercise basis. In addition, the purchase option
provides for registration rights that permit the holder or holders of the purchase option to demand that a registration statement be filed with respect to all or any part of the securities underlying the purchase option within five years of the
completion of the Offering. Further, the holder or holders of the purchase option are entitled to piggy-back registration rights in the event the Company undertakes a subsequent registered offering within seven years of the completion of the
Offering. Warrants issued and outstanding as a result of the exercise of the purchase option will be subject to the Companys right of redemption.

The sale of the option was accounted for as a cost attributable to the Offering. Accordingly, there was no net impact on the Companys financial position or results of operations, except for the recording of the
$100 proceeds from the sale. The underwriters,



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements (unaudited)



on behalf of the Company, used a volatility of 15.86% to calculate the value of the underwriter option. This volatility measurement was based on the average
four-year volatility of the S&P 600 Small-Cap Insurance Index. The S&P 600 Small-Cap Insurance Index is a sub-set of the S&P 600 Small-Cap Index and included fourteen companies with a range of market capitalizations from $230 million to
$1.5 billion operating in the insurance sector. The Company believes this index provides an objective and reasonable estimate for the price volatility of other small-cap companies operating in the insurance sector. The Company has reviewed the
estimates and believes, based upon a Black-Scholes model, that the fair value of the option on the date of sale was approximately $1,477,500, using an expected life of four years, volatility of 15.86%, and a risk-free rate of 4.71%.

NOTE DCOMMITMENTS

The Company presently
occupies office space provided by an affiliate of several of its directors. Pursuant to an office administration agreement, the affiliate has furnished the Company with office facilities, equipment and clerical services at the facilities for $10,000
per month commencing on January 1, 2006. Amounts of $30,000, $30,000 and $210,000 for such services have been included in general and administrative expenses for the three-month period ended September 30, 2007, the three-month period ended
September 30, 2006 and the period from August 8, 2005 (date of inception) through September 30, 2007, respectively. The office administration agreement may be terminated by either party without penalty upon 30 days written
notice to the other party.

The Companys directors at the time of the Offering and officers and the spouse of one of the
Companys officers, as designee, purchased from the Company on the closing date of the Offering an aggregate of 1,700,000 rights (D&O rights) in a Private Placement, at a purchase price of $1.00 per right, convertible into
warrants (D&O warrants). The $1.7 million proceeds from the issuance and sale of the D&O rights were placed in the Trust Account and are part of the liquidating distribution to the Companys Public Stockholders in the event
of liquidation prior to the Companys Business Combination or in the event that less than 20% of the Companys Public Stockholders elect to convert their shares of common stock in connection with a Business Combination.

The D&O rights automatically converted into 2,383,957 D&O warrants on the 120th day following the effective date of the Offering, July 19,
2006. The conversion ratio of D&O rights into D&O warrants was calculated by dividing $1.00 by the conversion price of $0.7131. The conversion price was equal to the weighted average of all sale prices of the warrants as reported on the AMEX
during the 20 trading days prior to the conversion date.

The D&O warrants have terms and provisions that are identical to those of the
warrants sold as part of the units in the Offering but will not be transferable or salable by the Companys directors and officers and the spouse of one of the Companys officers, as



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements (unaudited)



designee, until the later of March 21, 2007 or the consummation of the initial Business Combination. In the event of liquidation prior to the
Companys Business Combination, the D&O warrants will expire worthless.

Holders of the D&O warrants are permitted to transfer
D&O warrants in certain limited circumstances, such as by will in the event of their death. However, the transferees receiving such D&O warrants will be subject to the same sale restrictions imposed on the Companys directors and
officers and the spouse of one of the Companys officers, as designee, who initially purchased the D&O rights from the Company.

NOTE EPREFERRED STOCK

The Company is authorized to issue 1,000,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from time to time by the board of directors.

NOTE FCOMMON STOCK

At September 30, 2007, 18,258,957 shares of common stock were reserved for issuance upon exercise of redeemable warrants and
underwriters unit purchase option.

NOTE GTAXES

Provision for Taxes

Delaware franchise taxes are included in State taxes in the table below. Provision for taxes are as
follows:



|                                                                          |  |         |           |       |   |         |  |   |          
|------------------------------------------------------------------------- |  | ------- | --------- | ----- | - | ------- |  | - | ---------
|                                                                          |  | Federal |           | State |   | Total  
|Period from July 1, 2007 through September 30, 2007                       |  | $       | 370,579   |       | $ | 166,814 |  | $ | 537,393  
|Period from July 1, 2006 through September 30, 2006                       |  | $       | 408,400   |       | $ | 144,141 |  | $ | 552,541  
|Period from August 8, 2005 (date of inception) through September 30, 2007 |  | $       | 2,593,192 |       | $ | 773,073 |  | $ | 3,366,265



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements (unaudited)



NOTE IRECENT DEVELOPMENTS

On August 10, 2007, the Company announced that it had entered into the SPA with Deep South Holding, L.P., a Texas limited partnership (Seller or Deep South), NAIL Acquisition Corp. I, a
Delaware corporation and the Companys wholly-owned, newly-formed subsidiary (Buyer), and David J. Disiere (the Stockholder). Pursuant to the SPA, (1) Buyer will purchase from Seller all of the outstanding ownership
interests of the operating subsidiaries of Seller (the Deep South Companies), as well as certain assets of Seller relating to the business of the Deep South Companies, such as contracts, leases, intellectual property and fixed assets,
and (2) Buyer will assume from Seller certain liabilities associated with such assets of Seller that are purchased. Following the closing of the transaction (the Deep South acquisition), Buyer will own 100% of the outstanding
ownership interests of the Deep South Companies.

The Deep South Companies provide insurance-related services on behalf of certain
insurance companies, including managing general agent and claims administration services with respect to commercial auto and general liability property and casualty insurance products. The Deep South Companies are: Deep South Surplus, Inc., a
Louisiana corporation; Deep South Surplus of Georgia, Inc., a Georgia corporation; Deep South Surplus of Arkansas, Inc., an Arkansas corporation; Deep South Surplus of Tennessee, Inc., a Tennessee corporation; Deep South Surplus of Colorado, Inc., a
Colorado corporation; Deep South Surplus of Ohio, Inc., an Ohio corporation; Deep South Surplus of New Mexico, Inc., a New Mexico corporation; Deep South Surplus of Florida, Inc., a Florida corporation; Deep South Surplus of Oklahoma, Inc., an
Oklahoma corporation; Deep South Surplus of California, Inc., a Texas corporation; Southern National Risk Management, Inc., a Louisiana corporation; Deep South Surplus of Texas, L.P., a Texas limited partnership; and Deep South Surplus of Texas
Management, LLC, a Texas limited liability company.

Under the terms of the SPA, the Company will acquire the Deep South Companies for an
initial payment of an estimated $110 million. The initial consideration will be equal to 5.94x the proforma earnings before interest, taxes, depreciation and amortization (EBITDA) of the business of the Deep South Companies for the
twelve-month period ended December 31, 2007. The initial payment will be comprised of approximately 83% cash and 17% shares of the Companys common stock. The Seller will have the opportunity to receive up to an additional approximately
$65 million in cash and stock through an earn-out arrangement based on the future financial performance of the Deep South Companies over the two years following closing. The SPA has been approved and adopted by the Companys Board of Directors,
but is subject to customary closing conditions, including, among others, the approval of the Companys stockholders. The Company and Buyer have entered into an employment agreement with the Stockholder that will become effective as of the
closing; and will at closing also enter into employment agreements with certain key executives of the Deep South Companies. In addition, at closing, the parties will enter into various other agreements, including an escrow agreement with respect to
certain payments that may apply post-closing in the event of an adjustment to the earnings or working capital of the Deep South Companies, an assignment and assumption agreement with respect to the assets to be acquired by Buyer from Seller and a
registration rights agreement and lock-up agreement with respect to certain shares of the Companys common stock issued to Seller in the transaction and issued to the Stockholder pursuant to his employment agreement with the Company.

The Company expects to pay transaction fees and expenses for the Deep South acquisition of approximately $3 million. Such fees include
legal and investment banking fees contingent upon the closing of the transaction. As of September 30, 2007, the Company has $196,713 in deferred acquisition costs relating to the Deep South transaction.

The Company expects that the Deep South acquisition will be consummated in the first quarter of 2008 and that the combined company will operate under the
name Deep South Group, Inc., will be headquartered in Dallas, Texas and will trade on the American Stock Exchange. However, as discussed in Note A, if the Company does not complete the Deep South acquisition by March 27, 2008, the Company may
be forced to liquidate.



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##### Table of Contents

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Unless
the context otherwise requires, references in this report to the Company, we, us, and our refer to North American Insurance Leaders, Inc.

The following discussion should be read in conjunction with our financial statements and related notes thereto included elsewhere in this report.

Forward-Looking Statements

This
report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve
substantial risks and uncertainties. We have based these forward-looking statements on our current expectations, estimates and projections about our industry, our beliefs, our assumptions and future events. These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may, should, could, would, expect,
plan, anticipate, believe, estimate, continue, or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not
limited to, those described in this report and our other Securities and Exchange Commission (SEC) filings, including the risks discussed in the section entitled Item 1A. Risk Factors in our Annual Report on Form 10-K for the
fiscal year ended June 30, 2007 (the Form 10-K), and the following:



| |  |  | our blank check structure, limited operating history and the extremely limited basis upon which to evaluate our ability to achieve our business objective;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | liquidation if no business combination occurs;
| | - |  | ----------------------------------------------



| |  |  | allocation of our managements time to other businesses;
| | - |  | --------------------------------------------------------



| |  |  | decreases in interest rates;
| | - |  | ----------------------------



| |  |  | potential conflicts of interest involving our directors and officers;
| | - |  | ---------------------------------------------------------------------



| |  |  | our ability to hire and retain key personnel;
| | - |  | ---------------------------------------------



| |  |  | pervasive and increasing federal and state regulation of the insurance industry, including the possibility that regulation will delay or prevent a business
combination; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a target business being potentially subject to unforeseeable and/or catastrophic natural and man-made events.
| | - |  | -------------------------------------------------------------------------------------------------------------

Overview

We are a blank check company
that was organized under the laws of the State of Delaware on August 8, 2005. We were formed to effect a merger, capital stock exchange, asset acquisition, stock purchase and/or other similar transaction with one or more businesses in the
insurance or insurance services industry in North America, which we refer to as a business combination. We have not generated revenue to date other than interest income. We are considered to be in the development stage and are subject to
the risks associated with activities of development stage companies. Since our initial public offering in March 2006, we have been actively engaged in sourcing a suitable business combination candidate. We have met with target companies, service
professionals and other intermediaries to discuss our company, the background of our management and our combination preferences. As discussed below, on August 10, 2007, we announced that we had entered into a definitive agreement to, among
other things, purchase from Deep South Holding, L.P. all of the outstanding ownership interests of that entitys operating subsidiaries. However, as of the date of filing of this report, we have not consummated any business combination. We have
selected June 30 as our fiscal year end. Our securities trade on the American Stock Exchange.

Recent Developments

On August 10, 2007, we announced that we had entered into a definitive Securities Purchase Agreement (the SPA) with Deep South Holding,
L.P., a Texas limited



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##### Table of Contents

partnership (Seller or Deep South), NAIL Acquisition Corp. I, a Delaware corporation and our wholly-owned subsidiary
(Buyer), and David J. Disiere (the Stockholder). Pursuant to the SPA, (1) Buyer will purchase from Seller all of the outstanding ownership interests of the operating subsidiaries of Seller (the Deep South
Companies), as well as certain assets of Seller relating to the business of the Deep South Companies, such as contracts, leases, intellectual property and fixed assets, and (2) Buyer will assume from Seller certain liabilities associated
with such assets of Seller that are purchased. Following the closing of the transaction (the Deep South acquisition), Buyer will own 100% of the outstanding ownership interests of the Deep South Companies.

The Deep South Companies provide insurance-related services on behalf of certain insurance companies, including managing general agent and claims
administration services with respect to commercial auto and general liability property and casualty insurance products. The Deep South Companies are: Deep South Surplus, Inc., a Louisiana corporation; Deep South Surplus of Georgia, Inc., a Georgia
corporation; Deep South Surplus of Arkansas, Inc., an Arkansas corporation; Deep South Surplus of Tennessee, Inc., a Tennessee corporation; Deep South Surplus of Colorado, Inc., a Colorado corporation; Deep South Surplus of Ohio, Inc., an Ohio
corporation; Deep South Surplus of New Mexico, Inc., a New Mexico corporation; Deep South Surplus of Florida, Inc., a Florida corporation; Deep South Surplus of Oklahoma, Inc., an Oklahoma corporation; Deep South Surplus of California, Inc., a Texas
corporation; Southern National Risk Management, Inc., a Louisiana corporation; Deep South Surplus of Texas, L.P., a Texas limited partnership; and Deep South Surplus of Texas Management, LLC, a Texas limited liability company.

Under the terms of the SPA, we will acquire the Deep South Companies for an initial payment of an estimated $110 million. The initial consideration will
be equal to 5.94x the proforma EBITDA, Earnings Before Interest, Taxes, Depreciation and Amortization, of the business of the Deep South Companies for the twelve-month period ended December 31, 2007. The initial payment will be comprised of
approximately 83% cash and 17% shares of our common stock. The Seller will have the opportunity to receive up to an additional approximately $65 million in cash and stock through an earn-out arrangement based on the future financial performance of
the Deep South Companies over the two years following closing.

The SPA has been approved and adopted by our Board of Directors, but is
subject to customary closing conditions, including, among others, the approval of our stockholders. We and Buyer have entered into an employment agreement with the Stockholder that will become effective as of the closing; and will at closing also
enter into employment agreements with certain key executives of the Deep South Companies. In addition, at closing, the parties will enter into various other agreements, including an escrow agreement with respect to certain payments that may apply
post-closing in the event of an adjustment to the earnings or working capital of the Deep South Companies, an assignment and assumption agreement with respect to the assets to be acquired by Buyer from Seller and a registration rights agreement and
lock-up agreement with respect to certain shares of our common stock issued to Seller in the transaction and issued to the Stockholder pursuant to his employment agreement with us.



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##### Table of Contents

We expect that the Deep South acquisition will be consummated in the first quarter of 2008 and that the
combined company will operate under the name Deep South Group, Inc., will be headquartered in Dallas, Texas and will trade on the American Stock Exchange. However, as discussed herein, if we do not complete the Deep South acquisition by
March 27, 2008, we may be forced to liquidate.

For a more complete discussion of the proposed Deep South acquisition and the business
of the Deep South Companies, including certain risks that are applicable to us with respect to the proposed Deep South acquisition, see our preliminary proxy materials that are available, free of charge, at the SEC Internet site at
http:/www.sec.gov.

Managements Discussion and Analysis of Financial Condition and Results of Operations

On March 27, 2006, we consummated our initial public offering of 14,375,000 units including the over-allotment option and received gross proceeds of
$115,000,000. The underwriters were paid fees of 4.5% of the gross proceeds, or $5,175,000, and have agreed to defer an additional $2,875,000 of their underwriting fees until the consummation of a business combination. Upon the closing of the
offering, $109,950,000 was placed in the trust account, including $2,875,000 of deferred underwriting fees and $1,700,000 from the March 2006 private placement of rights to our directors at that time and officers and the spouse of one of our
officers, as designee (D&O rights). The balance in the trust account including interest on September 30, 2007 was $114,337,202.

We intend to use substantially all of the net proceeds of our initial public offering to effect the Deep South acquisition, including structuring, negotiating and consummating such business combination. To the extent
that our capital stock is used in whole or in part as consideration to effect a business combination, we intend to use the proceeds held in the trust account as well as any other net proceeds not expended to finance and grow the operations of the
business or businesses we acquire, make further acquisitions, pay dividends to our shareholders and/or repurchase shares and/or warrants.

Net income for the three-month period ended September 30, 2007 was $577,067 and consisted of interest income of $1,374,277 earned predominantly on the trust account, offset by a $537,393 provision for taxes and $259,817 of general and
administrative expenses (primarily attributable to $77,500 of due diligence expenses related to potential acquisitions that are no longer active, $63,414 of legal and accounting expenses, $49,831 of insurance expense, $30,000 of fees for a monthly
administrative services agreement and $19,577 of travel expenses). Net income attributable to common stockholders was $410,764 after allowing for the $166,303 accretion of the trust account relating to common stock subject to possible conversion.



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Net income for the three-month period ended September 30, 2006 was $648,635 and consisted of
interest income of $1,421,300 earned predominantly on the trust account, offset by a $552,541 provision for taxes and $220,124 of general and administrative expenses (primarily attributable to $125,000 of legal and accounting fees, $49,830 of
insurance expense and $30,000 in fees for a monthly administrative services agreement). Net income attributable to common stockholders was $640,273 after allowing for the $8,362 accretion of the trust account relating to common stock subject to
possible conversion.

Net income for the period since inception on August 8, 2005 through September 30, 2007 was $3,665,252 and
consisted of interest income of $8,373,572 earned predominantly on the trust account, offset by a $3,366,265 provision for taxes and $1,342,055 of general and administrative expenses (primarily attributable to $303,858 of insurance expense, $294,207
of due diligence expenses related to potential acquisitions that are no longer active, $279,896 of legal and accounting expenses, $210,000 in fees for a monthly administrative services agreement and $130,074 of travel expenses). Net income
attributable to common stockholders was $2,867,418 after allowing for the $797,834 accretion of the trust account relating to common stock subject to possible conversion.

During each quarter commencing July 2006, up to half of the interest earned on the trust account (net of taxes payable) during the preceding quarter was released to us to cover a portion of our working capital
requirements. The aggregate amount released to us may not exceed $1,000,000. This interest and the net proceeds of the offering that are not deposited in the trust account were used to pay business, legal, and accounting due diligence costs incurred
in connection with prospective business combinations and to pay continuing general and administrative expenses. During the twelve-month period ended June 30, 2007, $1,000,000 of the net interest income that was earned on the trust account
during the period had been released.

We believe that we will consummate the Deep South acquisition discussed above and that we have
sufficient available funds outside of the trust account to operate through the consummation of the Deep South acquisition. Upon consummation of the Deep South acquisition, cash held in the trust account will be released and, after payments to
stockholders if any, exercising their conversion rights, payment of the deferred underwriting fee and payments of amounts due under the SPA and other fees and expenses relating to the Deep South acquisition, will be available for operations and
conduct of the business.

Notwithstanding the above, there can be no assurance that the Deep South acquisition will be consummated. While
our deadline for consummation of the Deep South acquisition has been extended to March 27, 2008, if the Deep South acquisition is terminated or we do not otherwise consummate the Deep South acquisition by March 27, 2008, we will be forced
to liquidate our assets unless the period within which to consummate a business combination is extended by an amendment to our amended and



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restated certificate of incorporation by the affirmative vote of at least 80% of our outstanding shares. These conditions raise a substantial doubt about our
ability to continue as a going concern.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates.
We have determined that we have no critical accounting policies.

Off-Balance Sheet Arrangements

As of September 30, 2007, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

To date, our efforts have been
limited to organizational activities and activities relating to our initial public offering and the identification of a target business. We have neither engaged in any operations nor generated any revenues. As the proceeds from our initial public
offering held in trust have been invested in short term investments, our only market risk exposure relates to fluctuations in interest.

As
of September 30, 2007, $114,337,202 of the net proceeds of our initial public offering (including interest) was held in trust for the purposes of consummating a business combination. The proceeds held in trust are currently invested in United
States Treasury bills. JPMorgan Chase Bank acts as trustee. As of September 30, 2007, the effective annualized interest rate payable on our investment was 3.9%.

We have not engaged in any hedging activities since our inception on August 8, 2005. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in our periodic filings with the SEC under the Exchange Act, including this report, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and
procedures



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designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to our management on a timely basis to
allow decisions regarding required disclosure. Management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined
under Rules 13a-15(e) and 15(d)-15(e) of the Exchange Act) as of September 30, 2007. Based upon that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this report. During the most recently completed fiscal quarter, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A. Risk Factors.

See Item 1A. Risk Factors in the Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On March 27, 2006, we
consummated our initial public offering of 14,375,000 units including the over-allotment option and received gross proceeds of $115,000,000. The securities sold in our initial public offering were registered under the Securities Act of 1933, as
amended, on a registration statement on Form S-1 (No. 333-127871). The SEC declared the registration statement effective on March 21, 2006. The underwriters were paid fees of 4.5% of the gross proceeds, or $5,175,000, and have agreed to defer
an additional $2,875,000 of their underwriting fees until the consummation of a business combination. Upon the closing of the initial public offering, $109,950,000 was placed in the trust account, including $2,875,000 of deferred underwriting fees
and $1,700,000 from the March 2006 private placement of D&O rights. The balance in the trust account including interest on September 30, 2007 was $114,337,202. For a description of the use of proceeds generated in our initial public
offering, see Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations in Part I of this report.

Item 6. Exhibits.

Listed below are the exhibits that are furnished herewith as part of this report
(according to the number assigned to them in Item 601 of Regulation S-K):



|            |  |                                                                                                                                                                                                                                                                    
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                                                                                                                                            
|2.1         |  | Securities Purchase Agreement, dated August 10, 2007, by and among Deep South Holding, L.P., David J. Disiere, us and NAIL Acquisition Corp I (incorporated by reference to Exhibit 2.1 to our
Current Report on Form 8-K filed August 14, 2007, File No. 001-32837
|            | 
|31.1        |  | Certificate pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 of the Principal Executive Officer                                                                                                                                                
|            | 
|31.2        |  | Certificate pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 of the Principal Financial Officer                                                                                                                                                
|            | 
|32.1        |  | Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Executive Officer                                                                                                           
|            | 
|32.2        |  | Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer                                                                                                           



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly authorized.



|                 |  |  |  |                                                                           
|---------------- |  |  |  | --------------------------------------------------------------------------
|                 |  |  |  | NORTH AMERICAN INSURANCE LEADERS, INC.                                    
|                 |  | 
|November 9, 2007 |  |  |  | /s/ William R. de Jonge                                                   
|Date             |  |  |  | Name: William R. de Jonge                                                 
|                 |  |  |  | Title: President (duly authorized officer and
principal executive officer)
|                 |  | 
|November 9, 2007 |  |  |  | /s/ Paula S. Butler                                                       
|Date             |  |  |  | Name: Paula S. Butler                                                     
|                 |  |  |  | Title: Executive Vice President (principal financial
officer)             



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