##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended November 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from     to
 Commission File No. 000-52919
 National American University Holdings, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    83-0479936(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)5301 S. Highway 16, Suite 200
    
    57701Rapid City, SD
    
    (Zip Code)(Address of principal executive offices)
 (605) 721-5220  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 INDEX
 Page ofForm 10-QPART I. FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTS
    
    
    3Unaudited Condensed Consolidated Balance Sheets as of
November 30, 2009 and May 31, 2009
    
    
    3Unaudited Condensed Consolidated Statements of Operations for
the six months ended and three months ended November 30,
2009 and November 30, 2008
    
    
    5Unaudited Condensed Consolidated Statements of Cash Flows for
the six months ended November 30, 2009 and November 30, 2008
    
    
    8Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    10ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    23ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    39ITEM 4T.
    
    CONTROLS AND PROCEDURES
    
    
    39PART II. OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    40ITEM 1A.
    
    RISK FACTORS
    
    
    40ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    40ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    41ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    41ITEM 5.
    
    OTHER INFORMATION
    
    
    42ITEM 6.
    
    EXHIBITS
    
    
    42EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  -2-




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
(formerly Dlorah, Inc.)
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 AS OF NOVEMBER 30, 2009 AND MAY 31, 2009
 (In thousands except per share data)
 November 30,
    
    
    May 31,2009
    
    
    2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    26,637
    
    
    $
    3,508Investments
    
    
    3,073
    
    
    
    4,417Student receivables  net of allowance of $403 and $115
at November 30, 2009 and May 31, 2009,
respectively
    
    
    3,860
    
    
    
    1,207Institutional receivables
    
    
    1,137
    
    
    
    173Student notes receivable  current portion  net of
allowance
    
    
    0
    
    
    
    30Bookstore inventory
    
    
    687
    
    
    
    604Deferred income taxes
    
    
    1,140
    
    
    
    1,090Prepaid and other current assets
    
    
    400
    
    
    
    410Total current assets
    
    
    36,934
    
    
    
    11,439PROPERTY AND EQUIPMENTLand
    
    
    718
    
    
    
    718Land improvements
    
    
    374
    
    
    
    374Buildings and building improvements
    
    
    16,487
    
    
    
    16,147Furniture, vehicles, and equipment
    
    
    15,441
    
    
    
    14,564Total gross property and equipment
    
    
    33,020
    
    
    
    31,803Less accumulated depreciation
    
    
    (20,578
    )
    
    
    (19,651
    )Total net property and equipment
    
    
    12,442
    
    
    
    12,152OTHER ASSETS:Condominium inventories
    
    
    3,636
    
    
    
    3,802Student notes receivable  net of current portion
and allowance
    
    
    131
    
    
    
    105Land held for future development
    
    
    312
    
    
    
    312Course development  net of accumulated amortization
of $981 and $804 at November 30, 2009 and May 31, 2009,
respectively
    
    
    746
    
    
    
    767Restricted Investment
    
    
    209
    
    
    
    0Other
    
    
    281
    
    
    
    2885,315
    
    
    
    5,274TOTAL
    
    $
    54,691
    
    
    $
    28,865
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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
(formerly Dlorah, Inc.)
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF NOVEMBER 30, 2009 AND MAY 31, 2009 
(In thousands except per share data)
 November 30,
    
    
    May 31,2009
    
    
    2009LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Long-term debt  current portion
    
    $
    2,322
    
    
    $
    2,147Lines of credit
    
    
    3,135
    
    
    
    3,305Accounts payable
    
    
    5,375
    
    
    
    3,564Dividends payable
    
    
    1,896
    
    
    
    0Student accounts payable
    
    
    253
    
    
    
    314Deferred income
    
    
    499
    
    
    
    367Income tax payable
    
    
    1,554
    
    
    
    551Accrued and other liabilities
    
    
    5,841
    
    
    
    4,900Total current liabilities
    
    
    20,875
    
    
    
    15,148LONG-TERM DEBT  Net of current portion
    
    
    4,077
    
    
    
    6,507DEFERRED INCOME TAXES
    
    
    1,081
    
    
    
    1,503OTHER LONG-TERM LIABILITIES
    
    
    857
    
    
    
    815COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Class A Common (100,000 authorized, issued and outstanding;
$0.0001 par)
    
    
    0
    
    
    
    0Common stock (50,000,000 authorized, 6,031,105 issued and
outstanding; $0.0001 par)
    
    
    1
    
    
    
    0Additional paid-in capital
    
    
    17,679
    
    
    
    385Retained earnings
    
    
    10,318
    
    
    
    7,251Accumulated other comprehensive income
    
    
    118
    
    
    
    10928,116
    
    
    
    7,745Less treasury stock at cost
    
    
    0
    
    
    
    (1,869
    )Total National American University Holdings, Inc.stockholders equity
    
    
    28,116
    
    
    
    5,876Non-controlling interest
    
    
    (315
    )
    
    
    (984
    )Total equity
    
    
    27,801
    
    
    
    4,892TOTAL
    
    $
    54,691
    
    
    $
    28,865
   -4-




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##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
(formerly Dlorah, Inc.)
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS AND THREE MONTHS ENDED NOVEMBER 30, 2009 AND
     NOVEMBER 30, 2008
(In thousands except per share data)
 Six Month Period Ended
    
    
    Three Month Period EndedNovember 30,
    
    
    November 30,2009
    
    
    2008
    
    
    2009
    
    
    2008REVENUE:Academic revenue
    
    $
    37,336
    
    
    $
    25,103
    
    
    $
    21,463
    
    
    $
    14,321Auxiliary revenue
    
    
    2,644
    
    
    
    1,918
    
    
    
    1,504
    
    
    
    1,032Rental income  apartments
    
    
    483
    
    
    
    478
    
    
    
    232
    
    
    
    240Condominium sales
    
    
    238
    
    
    
    211
    
    
    
    238
    
    
    
    0Total revenue
    
    
    40,701
    
    
    
    27,710
    
    
    
    23,437
    
    
    
    15,593OPERATING EXPENSES:Cost of educational services
    
    
    7,385
    
    
    
    5,980
    
    
    
    3,978
    
    
    
    3,252Selling, general and administrative
    
    
    23,563
    
    
    
    19,133
    
    
    
    12,384
    
    
    
    9,745Auxiliary expense
    
    
    1,036
    
    
    
    789
    
    
    
    610
    
    
    
    431Cost of condominium sales
    
    
    166
    
    
    
    176
    
    
    
    166
    
    
    
    0Total operating expenses
    
    
    32,150
    
    
    
    26,078
    
    
    
    17,138
    
    
    
    13,428INCOME FROM OPERATIONS
    
    
    8,551
    
    
    
    1,632
    
    
    
    6,299
    
    
    
    2,165OTHER INCOME (EXPENSE):Interest income
    
    
    119
    
    
    
    129
    
    
    
    33
    
    
    
    53Interest expense
    
    
    (315
    )
    
    
    (438
    )
    
    
    (158
    )
    
    
    (205
    )Gain on disposition of property and equipment
    
    
    0
    
    
    
    118
    
    
    
    0
    
    
    
    0Other income  net
    
    
    48
    
    
    
    45
    
    
    
    24
    
    
    
    19Total other expense
    
    
    (148
    )
    
    
    (146
    )
    
    
    (101
    )
    
    
    (133
    )INCOME BEFORE INCOME TAXES
    
    
    8,403
    
    
    
    1,486
    
    
    
    6,198
    
    
    
    2,032INCOME TAX EXPENSE
    
    
    (3,456
    )
    
    
    (530
    )
    
    
    (2,501
    )
    
    
    (758
    )NET INCOME
    
    
    4,947
    
    
    
    956
    
    
    
    3,697
    
    
    
    1,274NET (INCOME) LOSS ATTRIBUTABLE TO
NON-CONTROLLING INTEREST
    
    
    16
    
    
    
    (32
    )
    
    
    7
    
    
    
    28NET INCOME ATTRIBUTABLE TO NAU
HOLDINGS, INC.
    
    
    4,963
    
    
    
    924
    
    
    
    3,704
    
    
    
    1,302OTHER COMPREHENSIVE INCOME Unrealized gains on investments
    
    
    9
    
    
    
    171
    
    
    
    22
    
    
    
    141COMPREHENSIVE INCOME ATTRIBUTABLE TO NAU HOLDINGS, INC.
    
    $
    4,972
    
    
    $
    1,095
    
    
    $
    3,726
    
    
    $
    1,443
 (continued)The accompanying notes are an integral part of these condensed consolidated financial statements.
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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
(formerly Dlorah, Inc.)
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS AND THREE MONTHS ENDED NOVEMBER 30, 2009 AND
     NOVEMBER 30, 2008
(In thousands except per share data)
 Six Month Period Ended
    
    
    Three Month Period EndedNovember 30,
    
    
    November 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Basic EPSClass ADistributed earnings
    
    $
    17.30
    
    
    $
    
    
    
    $
    17.30
    
    
    $
    Undistributed earnings
    
    $
    30.23
    
    
    $
    9.24
    
    
    $
    17.57
    
    
    $
    13.02Total
    
    $
    47.53
    
    
    $
    9.24
    
    
    $
    34.87
    
    
    $
    13.02CommonDistributed earnings
    
    $
    0.03
    
    
    $
    
    
    
    $
    0.03
    
    
    $
    Undistributed earnings
    
    $
    0.19
    
    
    $
    
    
    
    $
    0.11
    
    
    $
    Total
    
    $
    0.22
    
    
    $
    
    
    
    $
    0.14
    
    
    $
    Diluted EPSClass ADistributed earnings
    
    $
    17.30
    
    
    $
    
    
    
    $
    17.30
    
    
    $
    Undistributed earnings
    
    $
    30.16
    
    
    $
    9.24
    
    
    $
    17.49
    
    
    $
    13.02Total
    
    $
    47.46
    
    
    $
    9.24
    
    
    $
    34.79
    
    
    $
    13.02CommonDistributed earnings
    
    $
    0.03
    
    
    $
    
    
    
    $
    0.03
    
    
    $
    Undistributed earnings
    
    $
    0.19
    
    
    $
    
    
    
    $
    0.10
    
    
    $
    Total
    
    $
    0.22
    
    
    $
    
    
    
    $
    0.13
    
    
    $
    Weighted Average SharesBasic EPSClass A
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Common
    
    
    227,589
    
    
    
    n/ a
    
    
    
    457,680
    
    
    
    n/ aDiluted EPSClass A
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Common
    
    
    262,788
    
    
    
    n/ a
    
    
    
    528,465
    
    
    
    n/ a
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##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
(formerly Dlorah, Inc.)
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2009 AND NOVEMBER 30, 2008
(In thousands except per share data)
 Equity attributable to NAU Holdings, Inc.Accumulated
    
    
    
    
    
    
    EquityAdditional
    
    
    
    
    
    
    other
    
    
    
    
    
    
    attributable to
    
    
    TotalClass A
    
    
    Common
    
    
    paid-in
    
    
    Retained
    
    
    comprehensive
    
    
    Treasury
    
    
    non-controlling
    
    
    stockholderscommon
    
    
    stock
    
    
    capital
    
    
    Earnings
    
    
    income
    
    
    stock
    
    
    interest
    
    
    equityBalance  May 31, 2008
    
    
    0
    
    
    $
    0
    
    
    $
    385
    
    
    $
    4,187
    
    
    $
    28
    
    
    $
    (1,869
    )
    
    $
    (971
    )
    
    $
    1,760Comprehensive income:Net (Loss) income
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    924
    
    
    
    0
    
    
    
    0
    
    
    
    32
    
    
    
    956Unrealized gain on
investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    171
    
    
    
    0
    
    
    
    0
    
    
    
    171Balance  November 30,
2008
    
    $
    0
    
    
    $
    0
    
    
    $
    385
    
    
    $
    5,111
    
    
    $
    199
    
    
    $
    (1,869
    )
    
    $
    (939
    )
    
    $
    2,887Balance  May 31, 2009
    
    $
    0
    
    
    $
    0
    
    
    $
    385
    
    
    $
    7,251
    
    
    $
    109
    
    
    $
    (1,869
    )
    
    $
    (984
    )
    
    $
    4,892Recapitalization of
Dlorah, Inc.
    
    
    0
    
    
    
    1
    
    
    
    22,508
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    22,509Retirement of Treasury
Stock
    
    
    0
    
    
    
    0
    
    
    
    (1,869
    )
    
    
    0
    
    
    
    0
    
    
    
    1,869
    
    
    
    0
    
    
    
    0Merger costs associated
with reverse merger
    
    
    0
    
    
    
    0
    
    
    
    (3,345
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (3,345
    )Contributed capital from
non-controlling interest
holders
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    685
    
    
    
    685Dividends declared
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1,896
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1,896
    )Comprehensive income:Net income (loss)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    4,963
    
    
    
    0
    
    
    
    0
    
    
    
    (16
    )
    
    
    4,947Unrealized loss on
investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    9
    
    
    
    0
    
    
    
    0
    
    
    
    9Balance  November 30,
2009
    
    $
    0
    
    
    $
    1
    
    
    $
    17,679
    
    
    $
    10,318
    
    
    $
    118
    
    
    $
    0
    
    
    $
    (315
    )
    
    $
    27,801
  -7-




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##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
(formerly Dlorah, Inc. )
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED NOVEMBER 30, 2009 AND NOVEMBER 30, 2008
(In thousands except per share data)
 November 30,
    
    
    November 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    4,947
    
    
    $
    956Adjustments to reconcile net income to net cash flows
provided
by operating activities:Depreciation and amortization
    
    
    1,103
    
    
    
    1,070Gain on disposition of property and equipment
    
    
    0
    
    
    
    (118
    )Provision for uncollectable tuition
    
    
    1,057
    
    
    
    762Deferred income taxes
    
    
    (94
    )
    
    
    0Changes in assets and liabilities:Accounts and other receivables
    
    
    (4,674
    )
    
    
    (1,485
    )Student notes
    
    
    4
    
    
    
    17Bookstore inventory
    
    
    (83
    )
    
    
    (46
    )Prepaid and other current assets
    
    
    10
    
    
    
    (5
    )Condominium inventories
    
    
    166
    
    
    
    149Accounts payable
    
    
    1,476
    
    
    
    (943
    )Deferred income
    
    
    132
    
    
    
    256Other long-term liabilities
    
    
    42
    
    
    
    52Income tax receivable/payable
    
    
    1,003
    
    
    
    1,097Accrued and other liabilities
    
    
    (921
    )
    
    
    (156
    )Net cash flows provided by operating activities
    
    
    4,168
    
    
    
    1,606CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investments
    
    
    (175
    )
    
    
    (1,848
    )Proceeds from sale of investments
    
    
    1,319
    
    
    
    180Purchases of property and equipment
    
    
    (943
    )
    
    
    (321
    )Proceeds from sale of property and equipment
    
    
    0
    
    
    
    204Course development
    
    
    (155
    )
    
    
    (96
    )Construction of development property with line of credit
borrowings
    
    
    0
    
    
    
    (412
    )Other
    
    
    7
    
    
    
    0Net cash flows provided by (used in) investing
activities
    
    
    53
    
    
    
    (2,293
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings on lines of credit
    
    
    0
    
    
    
    2,190Repayments of lines of credit
    
    
    (170
    )
    
    
    (2,405
    )Increase in outstanding checks in excess of book balance
    
    
    0
    
    
    
    53Borrowings of long-term debt
    
    
    44
    
    
    
    0Repayments of long-term debt
    
    
    (2,299
    )
    
    
    (1,474
    )Construction of development property with line of credit borrowings
    
    
    0
    
    
    
    412Contributed capital by non-controlling interest members
    
    
    685
    
    
    
    0Cash received in reverse merger
    
    
    22,092
    
    
    
    0Cash paid for merger costs
    
    
    (1,444
    )
    
    
    0Net cash flows provided by (used in) financing
activities
    
    
    18,908
    
    
    
    (1,224
    )
   -8-




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##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
(formerly Dlorah, Inc.)
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2009 AND NOVEMBER 30, 2008
(In thousands except per share data)
 November 30,
    
    
    November 30,2009
    
    
    2008NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    $
    23,129
    
    
    $
    (1,911
    )CASH AND CASH EQUIVALENTS  Beginning of year
    
    
    3,508
    
    
    
    2,108CASH AND CASH EQUIVALENTS  End of period
    
    $
    26,637
    
    
    $
    197SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest  net of $-0- and $38 capitalized
during the six months ended November 30, 2009 and
November 30, 2008,
respectively
    
    $
    316
    
    
    $
    447Cash paid (received) for income taxes
    
    $
    2,727
    
    
    $
    (567
    )Dividends declared at November 30, 2009 and November 30, 2008
    
    $
    1,896
    
    
    $
    
 (Concluded)The accompanying notes are an integral part of these condensed consolidated financial statements.
 -9-




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##### Table of Contents



NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED NOVEMBER 30, 2009 AND NOVEMBER 30, 2008
(Dollar amounts, except per share, in thousands)
 1.
    
    BASIS OF PRESENTATIONThe condensed financial statements are presented on a consolidated basis. The accompanying
financial statements include the accounts of National American University Holdings, Inc. (the
Company), its subsidiary, Dlorah, Inc. (Dlorah), and its divisions, National American
University (NAU), and Fairway Hills. The accompanying unaudited condensed consolidated
financial statements have been prepared on a basis substantially consistent with the Companys
audited financial statements. These financial statements are condensed and do not contain all
disclosures required in annual financial statements. Accordingly, these financial statements
should be read in conjunction with the Companys annual financial statements which were filed
with the Companys Current Report on Form 8-K on November 30, 2009. Furthermore, the results of
operations and cash flows for the six month periods ended November 30, 2008, and November 30,
2009, are not necessarily indicative of the results that may be expected for the full year.
These financial statements include consideration of subsequent events
through January 12, 2010.
All intercompany transactions and balances have been eliminated.In the opinion of management, the accompanying condensed consolidated financial statements
contain all adjustments necessary for a fair presentation as prescribed by accounting principles
generally accepted in the United States (GAAP). All adjustments were comprised of normal
recurring adjustments, except as noted in these Notes to the Condensed Consolidated Financial
StatementsEstimates The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts and disclosures reported in the
financial statements. On an ongoing basis, the Company evaluates the estimates and assumptions,
including those related to revenue recognition, bad debts, fixed assets, income taxes, benefit
plans, and certain accruals. Actual results could differ from those estimates.
 2.
    
    NATURE OF OPERATIONSThe Company was incorporated in the State of Delaware on April 10, 2007 as Camden Learning
Corporation (Camden). Camden was a special purpose acquisition company formed to serve as a
vehicle for the acquisition of an operating business. On November 23, 2009, pursuant to an
Agreement and Plan of Reorganization, Dlorah, became a wholly-owned subsidiary of the Company.
The stockholders of Dlorah, received approximately 77% of the equity of the Company. As more
fully described in Note 12, the transaction has been accounted for as a reverse merger
accompanied by a recapitalization of the Company. The Company is now publicly traded, and is
listed on the Over-the-Counter Bulletin Board.Dlorah is a South Dakota corporation operating NAU. NAU operates  15 campuses within the
states of South Dakota, Colorado, Kansas, Missouri, Minnesota, New Mexico, and Texas, including
its headquarters in Rapid City, South Dakota. A substantial portion of NAUs academic income is
dependent upon federal student financial aid programs, company tuition
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assistance, distance learning programs, and contracts to provide instruction and course
materials to other educational institutions. To maintain eligibility for financial aid programs,
NAU must comply with Department of Education requirements, which include, among other items, the
maintenance of certain financial ratios.The Company, through its Fairway Hills division, also operates luxury apartment units and
develops real estate in the Rapid City, South Dakota area.Approximately 92% and 91% of the Companys total revenues for the six months ended November 30,
2009 and November 30, 2008, respectively, were derived from NAUs academic income.
Approximately 92% of the Companys total revenue for the three
months ended November 30, 2009
and November 30, 2008 were derived from NAUs academic income.3.
    
    EARNINGS PER SHAREBasic earnings per share is computed by dividing net income available to common
stockholders by the weighted average number of shares of common stock outstanding during the
applicable period. Diluted earnings per share reflect the potential dilution that could occur
assuming vesting, conversion or exercise of all dilutive unexercised warrants and restricted
stock. As described in Note 6, the Company has two classes of common stock outstanding as of
November 30, 2009 with different dividend rates. Therefore, the Company utilized the two class
method to calculate and report earnings per share for each class of stock for 2009. During
2008, only one class of common stock was outstanding and there were no dilutive securities
outstanding.
 For the six months
    
    For the three monthsended November 30,
    
    ended November 30,2009
    
    2009Weighted average shares outstanding used to compute basic net income per share
    
    
    227,589
    
    
    
    457,680Incremental shares issuable upon the assumed exercise of warrants
    
    
    35,199
    
    
    
    70,785Shares used to compute diluted net income per share
    
    
    262,788
    
    
    
    528,465
 4.
    
    RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTSIn September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements
(codified in FASB ASC Topic 820, Fair Value Measurements and Disclosures). This standard
establishes a framework for measuring fair value. It does not require any new fair value
measurements, but does require expanded disclosures to provide information about the extent to
which fair value is used to measure assets and liabilities, the methods and assumptions used to
measure fair value, and the effect of fair value measures on earnings. The Company adopted this
standard as of June 1, 2008. It did not have a material impact on the consolidated financial
statement. In February 2008, the FASB issued FASB Staff Position (FSP) FAS No. 157-2, Effective
Date of FASB Statement No. 157(codified in FASB ASC Topic 820). This standard delayed the
effective date for all nonfinancial assets and nonfinancial liabilities to fiscal years
beginning after November 15, 2008. The implementation of this standard for financial assets and
financial liabilities did not have a material impact on the Companys consolidated financial
statement. The additional
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disclosures required by this standard are included in Note 11 fair
value measurements.In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities  Including an amendment of FASB Statement No. 115(codified
in FASB ASC Topic 825, Financial Instruments). This standard expands the use of fair value
accounting but does not affect existing standards that require assets or liabilities to be
carried at fair value. Under this standard, a company may elect to use fair value to measure
various assets and liabilities, including accounts receivable, available-for-sale and
held-to-maturity securities, equity method investments, accounts payable, guarantees, and issued
debt. The fair value election is irrevocable and generally made on an instrument-by-instrument
basis, even if a company has similar instruments that it elects not to measure based on fair
value. The Company adopted this standard as of June 1, 2008; however, has elected not to use the
fair value option. As a result, there is no impact on the consolidated financial statement.In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51(codified in FASB ASC Topic
810). This standard requires that a noncontrolling interest in a consolidated entity be reported
in equity, but separate from the parent companys equity, in the financial statements. This
standard was effective for fiscal years beginning on or after December 15, 2008. A
noncontrolling interest exists in the Partnership. The Company adopted this guidance for the
Companys fiscal year that began on June 1, 2009, which required the Company to record the
noncontrolling interest within equity.In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations
(codified in FASB ASC Topic 805, Business Combinations). This standard significantly changes the
accounting for business combinations in a number of areas, including the treatment of contingent
consideration, preacquisition contingencies, transaction costs, in-process research and
development and restructuring costs. In addition, under this standard changes in an acquired
entitys deferred tax assets and uncertain tax positions after the measurement period will
impact income tax expense. This standard is effective for fiscal years beginning after December
15, 2008. The Company has adopted this standard, and is applying the accounting treatment for
business combinations on a prospective basis.On December 11, 2008, the FASB issued FSP FAS No. 140-4 and FIN No. 46(R)-8, Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable
Interest Entities(both codified in FASB ASC Topic 860, Transfers and Servicing). This standard
requires additional disclosures by public entities with continuing involvement in transfers of
financial assets to special-purpose entities and with variable interests in VIEs, including
sponsors that have a variable interest in a VIE. This standard became effective for the first
interim or annual reporting period that ends after December 15, 2008. The implementation of this
standard did not have a material impact on the Companys consolidated financial statement.In June 2009, the FASB issued FASB Statement No. 165, Subsequent Events(codified in FASB ASC
Topic 855, Subsequent Events). This standard established general standards of accounting for and
disclosure of events that occur after the balance sheet date, but before the financial
statements are issued or available to be issued. This standard is effective for financial
periods ending after June 30, 2009. The Company has adopted this standard, but it
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did not have a material effect on the Companys consolidated balance sheet or required financial
statement disclosures.In June 2009, the FASB issued FASB Statement No. 167, Amendments to FASB Interpretation No.
46(R)(codified in FASB ASC Topic 810). This standard is intended to improve financial reporting
by enterprises involved with VIEs. This statement nullifies FSP FAS No. 140-4 and FIN No.
46(R)-8 (codified in FASB ASC Topic 860). This standard is effective as of the beginning of each
reporting entitys first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and annual reporting
periods thereafter. This will be effective for the Companys fiscal year beginning June 1, 2010.
The Company is still evaluating the impact of this statement on its consolidated financial
statement.In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments(both codified in FASB ASC Topic 320, Investments), which
provides additional guidance related to the disclosure of impairment losses on securities and
the accounting for impairment losses on debt securities. These standards do not amend existing
guidance related to other-than-temporary impairments of equity securities. These standards are
effective for fiscal years and interim periods ended after June 15, 2009, and was effective for
the Company in the first quarter of the fiscal year beginning June 1, 2009. The implementation
of this standard did not have a material effect on its consolidated balance sheet or required
financial statement disclosures.
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5.
    
    LONG-TERM DEBTAt November 30, 2009, long-term debt consisted of the following:Notes Payable
 Note payable to Great Western Bank; matures February 2014;
requires monthly payments of $42, including principal and interest;
accrues interest at 6.45%; secured by real estate and personally
guaranteed by a Company stockholder.
    
    $
    3,448Note payable to Wells Fargo Bank; matures June 1, 2011; requires
monthly payments of $30; accrues interest at 6%; secured by cash,
savings, and investment accounts held at Wells Fargo Bank.
    
    
    551Note payable to VFS Financing, Inc.; matures April 2014; requires an
initial monthly payment of $19 and monthly payments of $15
thereafter, including principal and interest; accrues interest at a fixed
 rate of 6.89% per annum; secured by airplane, paid in full
in December 2009 and classifed as current at November
30, 2009.
    
    
    686Note payable to Great Western Bank; matures March 26, 2012;
requires monthly payments of $19, including principal and interest;
accrues interest at a variable rate (a) (3.25% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    
    522Note payable to Great Western Bank; matures November 28, 2012;
requires monthly payments of $13, including principal and interest;
accrues interest at a variable rate (a) (4.00% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    
    426Note payable to Great Western Bank; matures August 17, 2011;
requires monthly payments of $15, including principal and interest;
accrues interest at a variable rate (a) (3.25% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    
    262
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Notes Payable
 Note payable to Great Western Bank; matures on May 18, 2011;
requires monthly payments of $13, including principal and interest;
accrues interest at a variable rate (a) (3.25% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    $
    193Note payable to Great Western Bank; matures on May 18, 2010;
requires monthly payments of $16, including principal and interest;
accrues interest at a variable rate (a) (3.25% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    
    81Note payable to Great Western Bank; matures on December 8, 2010;
requires monthly payments of $10, including principal and interest;
accrues interest at a variable rate (a) (4.00% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    
    118Note payable to Great Western Bank; matures on December 22, 2009;
requires monthly payments of $14, including principal and interest;
accrues interest at a variable rate (a) (3.25% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    
    17Note payable to Great Western Bank; matures on September 25, 2010;
requires monthly payments of $9, including principal and interest;
accrues interest at a variable rate (a) (3.25% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    
    83Note payable to Great Western Bank; matures on June 2, 2010;
requires monthly payments of $2, including principal and interest;
accrues interest at a variable rate (a) (3.25% at November 30, 2009);
secured by substantially all assets of the University and personally
guaranteed by a Company stockholder.
    
    
    12Total long-term debt
    
    
    6,399Less current portion
    
    
    2,322Long-term portion
    
    $
    4,077
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(a)
    
    Variable rates are based on prime rate plus an adjustment, which is specific to each note
payable agreement.
 Future maturities of long-term debt for the five years ending November 30 are as follows:
 2010
    
    $
    2,3222011
    
    
    1,0352012
    
    
    5052013
    
    
    3452014
    
    
    2,192Thereafter
    
    
    0$
    6,399
 The Company was in compliance with all debt covenants at November 30, 2009.
 6.
    
    STOCKHOLDERS EQUITYThe authorized capital stock for the Company is 51,100,000 shares,  consisting of (i) 50,000,000
shares of Common Stock, par value $0.0001, (ii) 100,000 shares of Class A Common Stock, par
value $0.0001, and (iii) 1,000,000 shares of Preferred Stock, par value $0.0001.Of the authorized shares, the following were issued and outstanding as of November 30, 2009:
(i) 6,031,105 shares of Common Stock and (ii) 100,000 shares of Class A Common Stock (which
are convertible into Common Stock at a rate of 157.3 shares of Common Stock for each share of
Class A Common Stock). No shares of Preferred Stock were outstanding as of November 30, 2009.The shares of Common Stock outstanding include the 250,000 shares of restricted Common Stock
issued to the former Dlorah stockholders, and the 575,000 shares of restricted Common Stock
issued to Camden Learning LLC, in connection with the reverse merger. The restriction lapses
when the Companys stock trades above $8.00 for 60 consecutive days. Should the restriction
not lapse by November 23, 2014, the restricted shares will be canceled.Also, in connection with the reverse merger, the former Dlorah stockholders were issued, in
the aggregate, warrants to purchase up to 2,800,000 shares of Common Stock at $5.50 per share
that will expire if not converted by November 23, 2011. These warrants contain a cashless
exercise feature. These warrants remain outstanding and have not been exercised as of November 30,
2009.At November 30, 2009, the Companys outstanding and issued
shares consisted of (i) 6,031,105 shares of Common Stock, which includes 825,000 restricted
shares (250,000 referred to above and 575,000 with the same restriction), (ii) 100,000 shares of
Class A Stock, (iii) -0- shares of Preferred Stock, and (iv) 2,800,000 Warrants. Future equity
transactions may include exercise of warrants or issuances of stock, which could result in
substantial dilution of existing stockholders.The holders of Class A Common Stock are entitled to a quarterly dividend equal to $0.11 per
quarter (for a total of $0.44 per year) per share of the Common Stock into which such Class A
Common Stock is convertible, paid when and if declared by the Board of Directors. If a dividend
is paid on the Class A Common Stock, there will also be a dividend paid to holders
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of Common Stock equal to one-fourth of the per share amount of any Class A Common Stock dividend
paid. A dividend totaling $1,896 was declared on November 30, 2009, and is scheduled to be paid
in January 2010.
 7.
    
    INCOME TAXESThe effective tax rate for the six months ended November 30, 2009 and November 30, 2008,
was 41.1% and 35.7%, respectively. The effective tax rate for the three months ended November
30, 2009 and November 30, 2008, was 40.4% and 37.3%.
 8.
    
    COMMITMENTS AND CONTINGENCIESFrom time to time, the Company is a party to various claims, proceedings, or lawsuits
relating to the conduct of its business. Although the outcome of litigation cannot be predicted
with certainty and some lawsuits, claims, or proceedings may be disposed of unfavorably to the
Company, management believes, based on facts presently known, that the outcome of such legal
proceedings and claims will not have a material adverse effect on the Companys unaudited
condensed consolidated financial position, cash flows, or future results of operations.The Company is subject to extensive regulation by federal and state governmental agencies and
accrediting bodies. On an ongoing basis, the Company evaluates the results of internal
compliance monitoring activities and those of applicable regulatory agencies and, when
appropriate, records liabilities to provide for the estimated costs of any necessary
remediation. There are no current outstanding actions, but the Company cannot predict the
outcome of future program reviews and any unfavorable outcomes could have a material adverse
effect on the results of unaudited condensed consolidated statements of operations, cash flows,
and financial position.
 9.
    
    RELATED-PARTY TRANSACTIONSThe Company is required under 34 CFR668.23(d) to disclose all related-party transactions
(as defined within the regulation) regardless of materiality to the financial statements. As
described in Note 5, certain notes payable are personally guaranteed by a stockholder of the
Company and notes payable are due to stockholders and related parties at November 30, 2009 and
May 31, 2009, of $0 and $1,147, respectively.
 10.
    
    CONDOMINIUM PROJECTDuring 2008, the Company broke ground on a new building that will house 24 condominiums to
be sold to the general public (Vista Park). The Vista Park project was funded by a construction
line of credit and was completed in 2009. In July 2008, the Company sold one unit within the
Vista Park condominium project for approximately $250. In addition, two units were sold for $230
and $225 in December 2008 and April 2009, respectively. The Company sold one unit in September
2009 for approximately $238. Subsequent to November 30, 2009, a unit was sold for approximately
$231.
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11.
    
    FAIR VALUE MEASUREMENTSThe Company adopted a new accounting standard that defines fair value, establishes a
framework for measuring fair value, and expands disclosure requirements about fair value
measurements. Fair value is defined as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between market participants on the measurement
date. Following is a description of each category in the fair value hierarchy and the financial
assets and liabilities of the Company that are included in each category at November 30, 2009
and May 31, 2009:Level 1 Quoted prices in active markets for identical assets or liabilities. The types of
assets and liabilities included in Level 1 are highly liquid and actively traded instruments
with quoted market prices.Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the full term of
the assets or liabilities. The type of assets and liabilities included in Level 2 are typically
either comparable to actively traded securities or contracts or priced with models using
observable inputs.Level 3 Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. The type of assets and liabilities
included in Level 3 are those with inputs requiring significant management judgment or
estimation. The Company does not have any Level 3 assets or liabilities.In accordance with the fair value hierarchy, the following table shows the fair value as of
November 30, 2009 and May 31, 2009, of those financial assets that are measured at fair value on
a recurring basis, according to the valuation techniques the Company used to determine their
fair market value.
 QuotedPrices in
    
    
    OtherActive
    
    
    Observable
    
    
    UnobservaMarkets
    
    
    Inputs
    
    
    ble Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Fair ValueNovember 30, 2009Investments (cds, US treasury bills,
money market accounts)
    
    $
    2,828
    
    
    $
    245
    
    
    $
    
    
    
    $
    3,073Restricted Investments (checking account)
    
    
    209
    
    
    
    
    
    
    
    
    
    
    
    209Total assets at fair value
    
    $
    3,037
    
    
    $
    245
    
    
    $
    
    
    
    $
    3,282May 31, 2009Investments (cds, US treasury bills,
money market accounts)
    
    $
    4,299
    
    
    $
    231
    
    
    $
    
    
    
    $
    4,530Total assets at fair value
    
    $
    4,299
    
    
    $
    231
    
    
    $
    
    
    
    $
    4,530
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12.
    
    COMPLETED MERGERIn August 2009, Camden entered into an Agreement and Plan of Reorganization, under which
Camden agreed to purchase all of the ownership interests in Dlorah for cash and stock.In connection with the approval of the transaction, Camdens stockholders adopted an amendment
to Camdens amended and restated articles of incorporation (i) to change Camdens corporate name
to National American University Holdings, Inc., (ii) to create a new class of common stock to
be designated as Class A Common Stock, par value $0.0001 per share (the Class A Stock), (iii)
to increase the authorized capital stock of Camden from 21,000,000 shares consisting of
20,000,000 shares of common stock, par value $0.0001 per share (the Common Stock), and
1,000,000 shares of preferred stock, par value $0.0001 per share (the Preferred Stock), to
51,100,000 shares, consisting of 50,000,000 shares of Common Stock, 100,000 shares of Class A
Stock, and 1,000,000 shares of Preferred Stock, and (iv) to remove the provisions related to
Camdens status as a blank check company, including, among other things, the classification of
the board of directors, and to make Camdens corporate existence perpetual. Furthermore,
Camdens stockholders adopted the 2009 Stock Option and Compensation Plan (the Incentive Plan)
pursuant to which Camden reserved 1,300,000 shares of Common Stock for issuance pursuant to the
Incentive Plan.The acquisition closed on November 23, 2009, and on that date, Dlorah became a wholly owned
subsidiary of the Company. The stockholders of Dlorah received shares and warrants representing
approximately 77% of the issued capital shares of the Company. The acquisition was accounted
for as a reverse merger accompanied by a recapitalization of the Company. Under this accounting
method, Dlorah is considered the acquirer for accounting purposes because it obtained effective
control of the Company as a result of the acquisition. This determination was primarily based
on the following facts: Dlorahs retention of a significant voting interest in the Company;
Dlorahs appointment of a majority of the members of the Companys initial board of directors;
Dlorahs operations comprising the ongoing operations of the Company; and Dlorahs senior
management serving as the senior management of the Company. Under this method of accounting,
the recognition and measurement provisions of the accounting guidance for business combinations
do not apply and therefore, the Company did not recognize goodwill or other intangible assets.
Instead, the acquisition has been treated as the equivalent of Dlorah issuing stock for the net
monetary assets of the Company, primarily cash, which are stated at their carrying value.
Because of the reverse merger, the historical results represent those of Dlorah.At the time of the merger, all the issued and outstanding equity interests of Dlorah were
automatically converted into the right to receive the aggregate of (i) 100,000 shares of Class A
Stock, automatically convertible after two years (or earlier if elected by the stockholders)
into 15,730,000 shares of the Common Stock at a ratio of 157.3 shares of Common Stock for every
1 share of Class A Stock, (ii) 2,800,000 newly issued common stock purchase warrants
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(the
Warrants at a purchase price of $5.50 per share, and (iii) 250,000 shares of Restricted Common
Stock that are not freely tradable until such time as the Common Stock trades at or above $8.00
per share for any sixty consecutive trading day period, provided that such shares shall be
forfeited on the fifth anniversary of the date of issuance if such restriction has not been
satisfied by then.Additionally, the Company has entered into an employment agreement with its Chairman of
the Board of Directors through December 2011. The agreement requires, among other things, an
annual incentive payment of 10% of the Companys annual income as defined in the agreement,
which is paid out annually. Effective November 23, 2009, this changed to 7% of the Companys
annual income. As of November 30, 2009, the Company has recorded a liability of $1,562, which is
included in accrued and other liabilities in the accompanying consolidated balance sheet.
Furthermore, the agreement provides for a deferred compensation payment payable upon retirement
or death equal to one years salary. The liability totals $158 at November 30, 2009, and is
included in other long-term liabilities in the accompanying consolidated balance sheet.
 13.
    
    SEGMENT REPORTINGOperating segments are defined as business areas or lines of an enterprise about which
financial information is available and evaluated on a regular basis by the chief operating
decision makers, or decision-making groups, in deciding how to allocate capital and other
resources to such lines of business.The Company operates two operating and reportable segments: National American University (NAU)
and other. These operating segments are divisions of the Company for which separate financial
information is available and evaluated regularly by executive management in deciding how to
allocate resources and in assessing performance.General administrative costs of the Company are allocated to specific divisions of the Company.The majority of the Companys revenue is derived from the NAU division, which provides
undergraduate and graduate education programs. NAU derives its revenue primarily from student
tuition. The other division operates multiple apartment and condominium complexes and derives
its revenues primarily from condominium sales and rental income (in thousands).
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Six Months Ended November 30, 2009
    
    
    Six Months Ended November 30, 2008Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    37,336
    
    
    $
    0
    
    
    $
    37,336
    
    
    $
    25,103
    
    
    $
    0
    
    
    $
    25,103Auxiliary revenue
    
    
    2,644
    
    
    
    0
    
    
    
    2,644
    
    
    
    1,918
    
    
    
    0
    
    
    
    1,918Rental income  apartments
    
    
    0
    
    
    
    483
    
    
    
    483
    
    
    
    0
    
    
    
    478
    
    
    
    478Condominium sales
    
    
    0
    
    
    
    238
    
    
    
    238
    
    
    
    0
    
    
    
    211
    
    
    
    211Total revenue
    
    
    39,980
    
    
    
    721
    
    
    
    40,701
    
    
    
    27,021
    
    
    
    689
    
    
    
    27,710Operating expenses:Educational services and facilities
    
    
    7,385
    
    
    
    0
    
    
    
    7,385
    
    
    
    5,980
    
    
    
    0
    
    
    
    5,980Selling, general and administrative
    
    
    22,213
    
    
    
    1,350
    
    
    
    23,563
    
    
    
    18,213
    
    
    
    920
    
    
    
    19,133Auxiliary expense
    
    
    1,036
    
    
    
    0
    
    
    
    1,036
    
    
    
    789
    
    
    
    0
    
    
    
    789Cost of condominium sales
    
    
    0
    
    
    
    166
    
    
    
    166
    
    
    
    0
    
    
    
    176
    
    
    
    176Total operating expenses
    
    
    30,634
    
    
    
    1,516
    
    
    
    32,150
    
    
    
    24,982
    
    
    
    1,096
    
    
    
    26,078Income (loss) from operations
    
    
    9,346
    
    
    
    (795
    )
    
    
    8,551
    
    
    
    2,039
    
    
    
    (407
    )
    
    
    1,632Other income (expense):Interest income
    
    
    119
    
    
    
    0
    
    
    
    119
    
    
    
    129
    
    
    
    0
    
    
    
    129Interest expense
    
    
    (56
    )
    
    
    (259
    )
    
    
    (315
    )
    
    
    (222
    )
    
    
    (216
    )
    
    
    (438
    )Gain on disposal of property and
equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    113
    
    
    
    118Other income  net
    
    
    0
    
    
    
    48
    
    
    
    48
    
    
    
    0
    
    
    
    45
    
    
    
    45Total other expense
    
    
    63
    
    
    
    (211
    )
    
    
    (148
    )
    
    
    (88
    )
    
    
    (58
    )
    
    
    (146
    )Income (loss) before taxes
    
    $
    9,409
    
    
    $
    (1,006
    )
    
    $
    8,403
    
    
    $
    1,951
    
    
    $
    (465
    )
    
    $
    1,486Total assets
    
    $
    43,956
    
    
    $
    10,735
    
    
    $
    54,691Expenditures for long-lived assets
    
    $
    (918
    )
    
    $
    (25
    )
    
    $
    (943
    )
    
    $
    (305
    )
    
    $
    (16
    )
    
    $
    (321
    )Depreciation and amortization
    
    $
    858
    
    
    $
    245
    
    
    $
    1,103
    
    
    $
    897
    
    
    $
    173
    
    
    $
    1,070
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Three Months Ended November 30, 2009
    
    
    Three Months Ended November 30, 2008Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    21,463
    
    
    $
    0
    
    
    $
    21,463
    
    
    $
    14,321
    
    
    $
    0
    
    
    $
    14,321Auxiliary revenue
    
    
    1,504
    
    
    
    0
    
    
    
    1,504
    
    
    
    1,032
    
    
    
    0
    
    
    
    1,032Rental income  apartments
    
    
    0
    
    
    
    232
    
    
    
    232
    
    
    
    0
    
    
    
    240
    
    
    
    240Condominium sales
    
    
    0
    
    
    
    238
    
    
    
    238
    
    
    
    0
    
    
    
    0
    
    
    
    0Total revenue
    
    
    22,967
    
    
    
    470
    
    
    
    23,437
    
    
    
    15,353
    
    
    
    240
    
    
    
    15,593Operating expenses:Educational services and facilities
    
    
    3,978
    
    
    
    0
    
    
    
    3,978
    
    
    
    3,252
    
    
    
    0
    
    
    
    3,252Selling, general and administrative
    
    
    11,417
    
    
    
    967
    
    
    
    12,384
    
    
    
    9,215
    
    
    
    530
    
    
    
    9,745Auxiliary expense
    
    
    610
    
    
    
    0
    
    
    
    610
    
    
    
    431
    
    
    
    0
    
    
    
    431Cost of condominium sales
    
    
    0
    
    
    
    166
    
    
    
    166
    
    
    
    0
    
    
    
    0Total operating expenses
    
    
    16,005
    
    
    
    1,133
    
    
    
    17,138
    
    
    
    12,898
    
    
    
    530
    
    
    
    13,428Income (loss) from operations
    
    
    6,962
    
    
    
    (663
    )
    
    
    6,299
    
    
    
    2,455
    
    
    
    (290
    )
    
    
    2,165Other income (expense):Interest income
    
    
    33
    
    
    
    0
    
    
    
    33
    
    
    
    53
    
    
    
    0
    
    
    
    53Interest expense
    
    
    (23
    )
    
    
    (135
    )
    
    
    (158
    )
    
    
    (98
    )
    
    
    (107
    )
    
    
    (205
    )Other income  net
    
    
    0
    
    
    
    24
    
    
    
    24
    
    
    
    (4
    )
    
    
    23
    
    
    
    19Total other expense
    
    
    10
    
    
    
    (111
    )
    
    
    (101
    )
    
    
    (49
    )
    
    
    (84
    )
    
    
    (133
    )Income (loss) before taxes
    
    $
    6,972
    
    
    $
    (774
    )
    
    $
    6,198
    
    
    $
    2,406
    
    
    $
    (374
    )
    
    $
    2,032Total assets
    
    $
    43,956
    
    
    $
    10,735
    
    
    $
    54,691Expenditures for long-lived assets
    
    $
    (542
    )
    
    $
    (24
    )
    
    $
    (566
    )
    
    $
    (224
    )
    
    $
    (2
    )
    
    $
    (226
    )Depreciation and amortization
    
    $
    434
    
    
    $
    122
    
    
    $
    556
    
    
    $
    421
    
    
    $
    86
    
    
    $
    507
 14. SUBSEQUENT EVENTS
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Certain of the statements included in this Managements Discussion and Analysis of Financial
Condition and Results of Operations as well as elsewhere in this quarterly report on Form 10-Q are
forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995
(Reform Act). These statements are based on the Companys current expectations and are subject
to a number of assumptions, risks and uncertainties. In accordance with the Safe Harbor provisions
of the Reform Act, the Company has identified important factors that could cause the actual results
to differ materially from those expressed in or implied by such statements. The assumptions,
uncertainties and risks include the pace of growth of student enrollment, our continued compliance
with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional
accreditation standards and state regulatory requirements, competitive factors, risks associated
with the opening of new campuses and hybrid learning centers, risks associated with the offering of
new educational programs and adapting to other changes, risks associated with the acquisition of
existing educational institutions, risks relating to the timing of regulatory approvals, our
ability to continue to implement our growth strategy, risks associated with the ability of our
students to finance their education in a timely manner, and general economic and market conditions.
Further information about these and other relevant risks and uncertainties may be found in the
Companys Form 8-K filed on November 30, 2009 and its other filing with the Securities and Exchange
Commission. The Company undertakes no obligation to update or revise forward looking statement,
except as may be required by law.
 Results of Operations  National American University Holdings, Inc.
  3 Months Ended
    
    6 Months Ended
    
    3 Months Ended
    
    6 Months EndedNovember 30,
    
    November 30,
    
    November 30,
    
    November 30,In percentages
    
    In percentages
    
    In percentages
    
    In percentages2009
    
    2009
    
    2008
    
    2008Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expensesCost of Educational
Services
    
    
    17.0
    
    
    
    18.1
    
    
    
    20.9
    
    
    
    21.6Selling, General,
and Administrative
    
    
    52.8
    
    
    
    57.9
    
    
    
    62.5
    
    
    
    69.0Auxiliary Expense
    
    
    2.6
    
    
    
    2.5
    
    
    
    2.8
    
    
    
    2.8Cost of
Condominium Sales
    
    
    0.7
    
    
    
    0.4
    
    
    
    0.0
    
    
    
    0.6Total operating expenses
    
    
    73.1
    
    
    
    79.0
    
    
    
    86.1
    
    
    
    94.1Operating income (loss)
    
    
    26.9
    
    
    
    21.0
    
    
    
    13.9
    
    
    
    5.9Interest expense
    
    
    (0.7
    )
    
    
    (0.8
    )
    
    
    (1.3
    )
    
    
    (1.6
    )
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3 Months Ended
    
    6 Months Ended
    
    3 Months Ended
    
    6 Months EndedNovember 30,
    
    November 30,
    
    November 30,
    
    November 30,In percentages
    
    In percentages
    
    In percentages
    
    In percentages2009
    
    2009
    
    2008
    
    2008Gain on disposition of
property and equipment
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.4Interest income
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.5Other Income  Net
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2Income (loss) before income
taxes and noncontrolling
interest
    
    
    26.4
    
    
    
    20.6
    
    
    
    13.0
    
    
    
    5.4Income tax (expense)
benefit
    
    
    (10.7
    )
    
    
    (8.5
    )
    
    
    (4.9
    )
    
    
    (1.9
    )Net (Income) Loss
attributable to
non-controlling interest
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.2
    
    
    
    (0.1
    )Net income (loss)
attributable to NAU
Holdings, Inc.
    
    
    15.8
    
    
    
    12.2
    
    
    
    8.3
    
    
    
    3.3
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Three Months Ended November 30, 2009 Compared to Three Months Ended November 30, 2008
 Enrollment Growth.
 Total revenue .
   Cost of educational services
 -25-




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Selling, general, and administrative expenses .
  Auxiliary
 Interest expense .
 Interest income .
 Income tax expense .
 Net income attributable to the Company .
 -26-




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Six Months Ended November 30, 2009 Compared to Six Months Ended November 30, 2008
 Total revenue .
   Cost of educational services
 Selling, general, and administrative expenses .
 -27-




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Auxiliary
 Interest expense .
 Interest income .
 Income tax expense .
 Net income attributable to the Company .
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Results of Operations  National American University (NAU) Segment
  3 Months Ended
    
    6 Months Ended
    
    3 Months Ended
    
    6 Months EndedNovember 30,
    
    November 30,
    
    November 30,
    
    November 30,In percentages
    
    In percentages
    
    In percentages
    
    In percentages2009
    
    2009
    
    2008
    
    2008Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expensesCost of Educational
Services
    
    
    17.3
    
    
    
    18.5
    
    
    
    21.2
    
    
    
    22.1Selling, General,
and Administrative
    
    
    49.7
    
    
    
    55.6
    
    
    
    60.0
    
    
    
    67.4Auxiliary Expense
    
    
    2.7
    
    
    
    2.6
    
    
    
    2.8
    
    
    
    2.9Total operating expenses
    
    
    69.7
    
    
    
    76.6
    
    
    
    84.0
    
    
    
    92.5Operating income (loss)
    
    
    30.3
    
    
    
    23.4
    
    
    
    16.0
    
    
    
    7.5Interest expense
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.6
    )
    
    
    (0.8
    )Gain on disposition of
prop and equip
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Interest income
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.5Income (loss) before income
taxes and noncontrolling
interest
    
    
    30.4
    
    
    
    23.5
    
    
    
    15.7
    
    
    
    7.2
 Three Months Ended November 30, 2009 Compared to Three Months Ended November 30, 2008
 Total revenue .
 -29-




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Cost of educational services
 Selling, general, and administrative expenses .
  Auxiliary
 -30-




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Interest expense .
 Interest income .
 Income before non-controlling interest and taxes .
   Six Months Ended November 30, 2009 Compared to Six Months Ended November 30, 2008
 Total revenue .
  -31-




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Cost of educational services
 Selling, general, and administrative expenses .
  Auxiliary
 Interest expense .
 Interest income .
 -32-




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Income before non-controlling interest and taxes .
   Results of Operations  Other
  3 Months Ended
    
    
    6 Months Ended
    
    
    3 Months Ended
    
    
    6 Months EndedNovember 30,
    
    
    November 30,
    
    
    November 30,
    
    
    November 30,In percentages
    
    
    In percentages
    
    
    In percentages
    
    
    In percentages2009
    
    
    2009
    
    
    2008
    
    
    2008Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expensesCost of Educational Services
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Selling, General, and
Administrative
    
    
    205.7
    
    
    
    187.2
    
    
    
    220.8
    
    
    
    133.5Auxiliary Expense
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Cost of Condo Sales
    
    
    35.3
    
    
    
    23.0
    
    
    
    0.0
    
    
    
    25.5Total operating expenses
    
    
    241.1
    
    
    
    210.3
    
    
    
    220.8
    
    
    
    159.1Operating income (loss)
    
    
    (-141.1
    )
    
    
    (110.3
    )
    
    
    (120.8
    )
    
    
    (59.1
    )Interest expense
    
    
    (28.7
    )
    
    
    (35.9
    )
    
    
    (44.6
    )
    
    
    (31.3
    )Gain on disposition of
prop and equip
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    16.4Interest income
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Other Income
    
    
    5.1
    
    
    
    6.7
    
    
    
    9.6
    
    
    
    6.5Income (loss) before income
taxes and non-controlling
interest
    
    
    (164.7
    )
    
    
    (139.5
    )
    
    
    (155.8
    )
    
    
    (67.5
    )
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Three Months Ended November 30, 2009 Compared to Three Months Ended November 30, 2008
 Total revenue .
  Selling, general, and administrative expenses .
 Interest expense .
 Income before non-controlling interest and taxes .
 Six Months Ended November 30, 2009 Compared to Six Months Ended November 30, 2008
 Total revenue .
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Selling, general, and administrative expenses .
 Interest expense .
 Income before non-controlling interest and taxes .
 Liquidity and Capital Resources
 Liquidity .
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Operating Activities .
 Investing Activities .
 Financing Activities .
 Off-Balance Sheet Arrangements
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COMMITMENTS AND CONTINGENCIES
 From time to time, the Company is a party to various claims, proceedings, or lawsuits
relating to the conduct of its business. Although the outcome of litigation cannot be predicted
with certainty and some lawsuits, claims, or proceedings may be disposed of unfavorably to the
Company, management believes, based on facts presently known, that the outcome of such legal
proceedings and claims will not have a material adverse effect on the Companys unaudited
condensed consolidated financial position, cash flows, or future results of operations.
 The Company is subject to extensive regulation by federal and state governmental agencies and
accrediting bodies. On an ongoing basis, the Company evaluates the results of internal
compliance monitoring activities and those of applicable regulatory agencies and, when
appropriate, records liabilities to provide for the estimated costs of any necessary
remediation. There are no current outstanding actions, but the Company cannot predict the
outcome of future program reviews and any unfavorable outcomes could have a material adverse
effect on the results of unaudited condensed consolidated statements of operations, cash flows,
and financial position.
 ACCOUNTING POLICIES AND ESTIMATES
 The condensed financial statements are presented on a consolidated basis. The accompanying
financial statements include the accounts of the Company, its ssubsidiary, Dlorah, and its
divisions, NAU and Fairway Hills. The accompanying unaudited consolidated financial statements
have been prepared on a basis substantially consistent with the Companys audited financial
statements. The financial statements are condensed and do not contain all disclosures required
in annual financial statements. Accordingly, financial statements should be read in conjunction
with the Companys annual financial statements which were filed with the Companys Current
Report on Form 8-K on November 30, 2009. Furthermore, the results of operations and cash flows
for the six month periods ended November 30, 2008, and November 30, 2009, are not necessarily
indicative of the results that may be expected for the full year. All intercompany transactions
and balances have been eliminated.
 Estimates The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts and disclosures reported in the
financial statements. On an ongoing basis, the Company evaluates the estimates and assumptions,
including those related to revenue recognition, bad debts, fixed assets, income taxes, benefit
plans, and certain accruals. Actual results could differ from those estimates.
 RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS
 In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements
(codified in FASB ASC Topic 820, Fair Value Measurements and Disclosures). This standard
establishes a framework for measuring fair value. It does not require any new fair value
measurements, but does require expanded disclosures to provide information about the extent to
which fair value is used to measure assets and liabilities, the methods and assumptions used to
measure fair value, and the effect of fair value measures on earnings. The Company adopted this
standard as of June 1, 2008. It did not have a material impact on the consolidated financial
statement. In February 2008, the FASB issued FASB Staff Position (FSP) FAS No. 157-2, Effective
Date of FASB Statement No. 157(codified in FASB ASC Topic 820). This standard delayed the
effective date for all nonfinancial assets and
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nonfinancial liabilities to fiscal years beginning after November 15, 2008. The implementation
of this standard for financial assets and financial liabilities did not have a material impact
on the Companys consolidated financial statement. The additional disclosures required by this
standard are included in Note 11 fair value measurements.
 In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities  Including an amendment of FASB Statement No. 115(codified in
FASB ASC Topic 825, Financial Instruments). This standard expands the use of fair value
accounting but does not affect existing standards that require assets or liabilities to be
carried at fair value. Under this standard, a company may elect to use fair value to measure
various assets and liabilities, including accounts receivable, available-for-sale and
held-to-maturity securities, equity method investments, accounts payable, guarantees, and issued
debt. The fair value election is irrevocable and generally made on an instrument-by-instrument
basis, even if a company has similar instruments that it elects not to measure based on fair
value. The Company adopted this standard as of June 1, 2008; however, has elected not to use the
fair value option. As a result, there is no impact on the consolidated financial statement.
 In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51(codified in FASB ASC Topic 810).
This standard requires that a noncontrolling interest in a consolidated entity be reported in
equity, but separate from the parent companys equity, in the financial statements. This
standard was effective for fiscal years beginning on or after December 15, 2008. A
noncontrolling interest exists in the Partnership. The Company adopted this guidance for our
year that began on June 1, 2009, which required the Company to record the noncontrolling
interest within equity.
 In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations
(codified in FASB ASC Topic 805, Business Combinations). This standard significantly changes the
accounting for business combinations in a number of areas, including the treatment of contingent
consideration, preacquisition contingencies, transaction costs, in-process research and
development and restructuring costs. In addition, under this standard changes in an acquired
entitys deferred tax assets and uncertain tax positions after the measurement period will
impact income tax expense. This standard is effective for fiscal years beginning after
December 15, 2008. The Company has adopted this standard, and is applying the accounting
treatment for business combinations on a prospective basis.
 On December 11, 2008, the FASB issued FSP FAS No. 140-4 and FIN No. 46(R)-8, Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable
Interest Entities(both codified in FASB ASC Topic 860, Transfers and Servicing). This standard
requires additional disclosures by public entities with continuing involvement in transfers of
financial assets to special-purpose entities and with variable interests in VIEs, including
sponsors that have a variable interest in a VIE. This standard became effective for the first
interim or annual reporting period that ends after December 15, 2008. The implementation of this
standard did not have a material impact on the Companys consolidated financial statement.
 In June 2009, the FASB issued FASB Statement No. 165, Subsequent Events(codified in FASB ASC
Topic 855, Subsequent Events). This standard established general standards of
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accounting for and disclosure of events that occur after the balance sheet date, but before the
financial statements are issued or available to be issued. This standard is effective for
financial periods ending after June 30, 2009. The Company has adopted this standard, but it did
not have a material effect on the Companys consolidated balance sheet or required financial
statement disclosures.
 In June 2009, the FASB issued FASB Statement No. 167, Amendments to FASB Interpretation
No. 46(R)(codified in FASB ASC Topic 810). This standard is intended to improve financial
reporting by enterprises involved with VIEs. This statement nullifies FSP FAS No. 140-4 and FIN
No. 46(R)-8 (codified in FASB ASC Topic 860). This standard is effective as of the beginning of
each reporting entitys first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and annual reporting
periods thereafter. This will be effective for the Companys fiscal year beginning June 1, 2010.
The Company is still evaluating the impact of this statement on its consolidated financial
statement.
 In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments(both codified in FASB ASC Topic 320, Investments), which
provides additional guidance related to the disclosure of impairment losses on securities and
the accounting for impairment losses on debt securities. These standards do not amend existing
guidance related to other-than-temporary impairments of equity securities. These standards are
effective for fiscal years and interim periods ended after June 15, 2009, and was effective for
the Company in the first quarter of the fiscal year beginning June 1, 2009. The implementation
of this standard did not have a material effect on its consolidated balance sheet or required
financial statement disclosures.
 Impact of Inflation
  
 Item 3: Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4T. Controls and Procedures.
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  -40-




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Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matter to a Vote of Security Holders.
    All proposals were approved by the Companys stockholders and warrantholders as follows:
 Proposal
    
    Voted for
    
    
    Voted Against
    
    
    Votes Abstained1. The merger proposal
    
    
    3,917,367
    
    
    
    1,887,918
    
    
    
    300,0002. Proposal to change
name of the Company
    
    
    4,004,919
    
    
    
    1,545,966
    
    
    
    554,4003. Proposal to create
Class A Stock
    
    
    4,004,919
    
    
    
    1,545,966
    
    
    
    554,400
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##### Table of Contents



Proposal
    
    Voted for
    
    
    Voted Against
    
    
    Votes Abstained4. Proposal to increase
number of authorized
capital stock
    
    
    4,004,919
    
    
    
    1,545,966
    
    
    
    554,4005. Proposal to make the
Companys corporate
existence perpetual
    
    
    4,004,919
    
    
    
    1,545,966
    
    
    
    554,4006. Proposal to adopt
the Incentive Plan
    
    
    4,031,603
    
    
    
    1,519,282
    
    
    
    554,4007. Warrant redemption
proposal
    
    
    6,692,536
    
    
    
    698,738
    
    
    
    0
 
 Item 5. Other Information.
  
 Item 6. Exhibits
 10.1
    
    Form of Restricted Stock Award Agreement under the registrants 2009 Stock Option
and Compensation Plan
 31.1
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 31.2
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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##### Table of Contents



SIGNATURES
  National American University Holdings, Inc.
 Dated:
January 12, 2010
    
    By:
    
    /s/ Ronald ShapeRonald L. Shape, Ed. D.Chief Executive Officer and

Chief Financial Officer
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##### Table of Contents



Exhibit Index
 Exhibit
    
    Description10.1
    
    Form of Restricted Stock Award Agreement under the registrants 2009 Stock Option
and Compensation Plan31.1
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 -44-