U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2004
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number: 0-21419
CLICKNSETTLE.COM, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 23-2753988
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1010 Northern Boulevard
Great Neck, New York 11021
(Address of Principal Executive Offices)
(516) 829-4343
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the last 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 |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of February 11, 2005, 9,046,056
shares of common stock of the issuer were outstanding.
Transitional small business disclosure format (check one): Yes |_| No |X|
1
CLICKNSETTLE.COM, INC.
INDEX
PART I. FINANCIAL INFORMATION Page
----
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at
December 31, 2004 (unaudited)
and June 30, 2004 3
Consolidated Statements of Operations
for the three and six month periods ended
December 31, 2004 and 2003 (unaudited) 4
Consolidated Statements of Changes in
Stockholders' Equity and Comprehensive
Loss for the six-month periods ended
December 31, 2004 and 2003 (unaudited) 5
Consolidated Statements of Cash Flows
for the six month periods ended
December 31, 2004 and 2003 (unaudited) 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 14
ITEM 3. CONTROLS AND PROCEDURES 20
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 25
2
clickNsettle.com, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2004 2004
------------ ------------
(derived from
audited financial
ASSETS statements)
CURRENT ASSETS
Cash and cash equivalents $ 1,032,271 $ 730,869
Certificates of deposit -- 300,000
Marketable securities -- 237,191
Accounts receivable (net of allowance for doubtful accounts of $135,195) 291,532 327,937
Prepaid expenses and other current assets (net of allowance for
doubtful note receivable of $48,848) 83,382 60,303
------------ ------------
Total current assets 1,407,185 1,656,300
FURNITURE AND EQUIPMENT - AT COST, less accumulated depreciation -- --
OTHER ASSETS 49,726 49,726
------------ ------------
$ 1,456,911 $ 1,706,026
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 189,207 $ 242,070
Accrued expenses and other liabilities 329,680 277,893
Accrued payroll and employee benefits 53,651 49,065
Deferred revenues 211,787 173,418
------------ ------------
Total current liabilities 784,325 742,446
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - $.001 par value; 25,000,000 shares authorized;
8,701,554 shares issued and outstanding 8,702 8,702
Additional paid-in capital 10,104,325 10,104,325
Accumulated deficit (9,356,523) (9,116,951)
Accumulated other comprehensive income -- 51,422
Less common stock in treasury at cost, 252,498 shares (83,918) (83,918)
------------ ------------
Total stockholders' equity 672,586 963,580
------------ ------------
$ 1,456,911 $ 1,706,026
============ ============
The accompanying notes are an integral part of these statements.
3
clickNsettle.com, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended December 31, Six months ended December 31,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Net revenues $ 978,527 $ 927,068 $ 1,748,921 $ 1,914,854
----------- ----------- ----------- -----------
Operating costs and expenses
Cost of services 216,125 225,876 382,861 444,283
Sales and marketing expenses 308,479 325,161 562,076 648,663
General and administrative expenses 464,473 607,760 973,437 1,234,179
Loss on impairment of furniture and equipment 14,819 15,885
Reorganization costs 36,714 106,371
----------- ----------- ----------- -----------
1,040,610 1,158,797 2,040,630 2,327,125
----------- ----------- ----------- -----------
Loss from operations (62,083) (231,729) (291,709) (412,271)
Other income (expense)
Investment income (loss) 2,466 (8,717) 51,102 60,479
Other income 522 858 1,035 1,436
----------- ----------- ----------- -----------
2,988 (7,859) 52,137 61,915
----------- ----------- ----------- -----------
Loss before income taxes (59,095) (239,588) (239,572) (350,356)
Income taxes -- --
----------- ----------- ----------- -----------
NET LOSS $ (59,095) $ (239,588) $ (239,572) $ (350,356)
=========== =========== =========== ===========
Net loss per common share - basic and diluted $ (0.01) $ (0.03) $ (0.03) $ (0.04)
=========== =========== =========== ===========
Weighted-average shares outstanding - basic and diluted 8,449,056 8,449,056 8,449,056 8,449,056
=========== =========== =========== ===========
The accompanying notes are an integral part of these statements.
4
clickNsettle.com, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND
COMPREHENSIVE LOSS
Six months ended December 31, 2004 and 2003 (unaudited)
Accumulated
Common stock Additional other Common Total Compre-
----------------- paid-in Accumulated comprehensive stock in stockholders' hensive
Shares Amount capital deficit income (loss) treasury equity loss
-----------------------------------------------------------------------------------------------
Balances at June 30, 2003 1,450,259 $1,450 $10,111,577 ($8,394,247) $ 43,960 ($83,918) $ 1,678,822
Six-for-one forward stock split
effectuated on December 22, 2003 7,251,295 7,252 (7,252)
----------------------------------------------------------------------------------
8,701,554 8,702 10,104,325 (8,394,247) 43,960 (83,918) 1,678,822
Net loss (350,356) (350,356) $(350,356)
Change in unrealized gain (loss)
on marketable securities 11,039 11,039 11,039
---------
Comprehensive loss $(339,317)
=========
----------------------------------------------------------------------------------
Balances at December 31, 2003 8,701,554 8,702 10,104,325 (8,744,603) 54,999 (83,918) 1,339,505
==================================================================================
Balances at June 30, 2004 8,701,554 8,702 10,104,325 (9,116,951) 51,422 (83,918) 963,580
Net loss (239,572) (239,572) $(239,572)
Change in unrealized gain (loss)
on marketable securities (51,422) (51,422) (51,422)
---------
Comprehensive loss $(290,994)
=========
----------------------------------------------------------------------------------
Balances at December 31, 2004 8,701,554 8,702 10,104,325 (9,356,523) -- (83,918) 672,586
==================================================================================
The accompanying notes are an integral part of these statements.
5
clickNsettle.com, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six months ended December 31,
2004 2003
----------- -----------
Cash flows from operating activities
Net loss $ (239,572) $ (350,356)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation and amortization -- 35,824
(Gain) on sales of marketable securities (45,701) (54,683)
Loss on impairment of furniture and equipment 15,885
Provision for bad debts 1,523
Recovery from write-down of note receivable -- (300)
Changes in operating assets and liabilities
Decrease in accounts receivable 34,882 176,682
(Increase) in prepaid expenses, other current assets and other assets (23,078) (44,098)
(Decrease) in accounts payable, accrued expenses and other liabilities (1,076) (96,513)
Increase (decrease) in accrued payroll and employee benefits 4,586 (43,639)
Increase (decrease) in deferred revenues 38,369 (70,021)
----------- -----------
Net cash used in operating activities (214,182) (447,104)
----------- -----------
Cash flows from investing activities
Purchases of marketable securities and certificates of deposit -- (725,289)
Proceeds from sales of marketable securities and maturity of
certificates of deposit 531,469 624,262
Increase in receivable for securities sold (18,740)
Purchases of furniture and equipment (15,885) (11,024)
----------- -----------
Net cash provided by (used in) investing activities 515,584 (130,791)
----------- -----------
Cash flows from financing activities ----------- -----------
Net cash used in financing activities
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 301,402 (577,895)
Cash and cash equivalents at beginning of period 730,869 1,798,786
----------- -----------
Cash and cash equivalents at end of period $ 1,032,271 $ 1,220,891
=========== ===========
The accompanying notes are an integral part of these statements.
6
CLICKNSETTLE.COM, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
Six months ended December 31, 2004
(Unaudited)
1. The consolidated balance sheet as of December 31, 2004 and the related
consolidated statements of operations for the three and six month periods ended
December 31, 2004 and 2003 have been prepared by clickNsettle.com, Inc.,
including the accounts of its wholly-owned subsidiaries. In the opinion of
management, all adjustments necessary to present fairly the financial position
as of December 31, 2004 and for all periods presented, consisting of normal
recurring adjustments, have been made. Results of operations for the three and
six month periods ended December 31, 2004 are not necessarily indicative of the
operating results expected for the full year.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended June 30,
2004 included in the Company's Annual Report on Form 10-KSB. The accounting
policies used in preparing these consolidated financial statements are the same
as those described in the June 30, 2004 consolidated financial statements.
As a result of continued losses, the use of significant cash in operations and
the uncertainty as to the Company's ability to effect a merger or a similar
transaction with the intent to acquire a different operating business (see Note
8), there is substantial doubt about the Company's ability to continue as a
going concern. The Company's independent auditors have included a going concern
paragraph in their report on the June 30, 2004 consolidated financial statements
which have been prepared assuming the Company will continue as a going concern.
Accordingly, the accompanying consolidated financial statements do not include
any adjustments that may result should the Company be unable to continue as a
going concern.
2. Basic earnings per share are based on the weighted average number of common
shares outstanding without consideration of potential common stock. Diluted
earnings per share are based on the weighted-average number of common and
potential common shares outstanding. The calculation takes into account the
shares that may be issued upon exercise of stock options and warrants, reduced
by the shares that may be repurchased with the funds received from the exercise,
based on the average price during the period. Diluted earnings per share is the
same as basic earnings per share as potential common shares of 5,924,888 and
5,800,892 at December 31, 2004 and 2003, respectively, would be antidilutive as
the Company incurred net losses for the three and six month periods ended
December 31, 2004 and 2003.
3. For advertising and external public relations costs, the Company incurred
$76,580 and $45,512 for the quarters ended December 31, 2004 and 2003,
respectively, and $78,464 and $103,608 for the six months ended December 31,
2004 and 2003, respectively. Such amounts include advertising expenses related
to the Company's commitment with American Lawyer Media, Inc., for which the
Company incurred $75,854 and $43,265 for the quarters ended December 31, 2004
and 2003, respectively, and $75,854 and $92,280 for the six months ended
December 31, 2004 and 2003, respectively. As of December 31, 2004, the Company
had no commitments for future advertising.
4. On March 12, 2004, the Company extended its March 1998 purchase plan (the
"Plan"), pursuant to which the number of shares of common stock of the Company
eligible for purchase under the Plan remained at an aggregate of 1,600,002
shares. The Plan shall expire on the earlier of all of the shares being
purchased or March 12, 2005, provided, however, that the Plan may be
discontinued at any time by the Company. The Plan may also be extended on a
year-to-year basis. There were no
7
purchases in the six month period ended December 31, 2004, and, through December
31, 2004, the Company had purchased 252,498 shares under the Plan for an
aggregate cost of $83,918.
5. The components of comprehensive loss are as follows:
Three months ended December 31,
2004 2003
---- ----
Net loss $ (59,095) $(239,588)
Change in unrealized gain (loss)
on marketable securities -- 55,105
--------- ---------
Comprehensive loss $ (59,095) $(184,483)
--------- ---------
Six months ended December 31,
2004 2003
---- ----
Net loss $(239,572) $(350,356)
Change in unrealized gain (loss)
on marketable securities 11039
Reclassification adjustment - loss
included in net loss (51,422)
--------- ---------
Comprehensive loss $(290,994) $(339,317)
--------- ---------
6. In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 148 "Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of FASB Statement No.
123" ("SFAS No. 148"). SFAS No. 148 encourages, but does not require, companies
to record compensation cost for stock-based compensation plans at fair value. In
addition, SFAS No. 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation and amends the disclosure requirements of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
("SFAS No. 123"). SFAS No. 148 requires disclosures in the summary of
significant accounting policies in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results.
The Company adopted, effective December 31, 2002, the disclosure provisions of
SFAS No. 148 and continues to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations.
Accordingly, compensation expense cost is not recognized for options granted to
employees and to members of the board of directors when such options are granted
to board members in their capacity as directors. During the six-month periods
ended December 31, 2004 and 2003, the Company granted 0 and 240,000 options,
respectively, and no options were exercised during such six-month periods. In
January 2005, the Company's President exercised 600,000 options at an exercise
price of $0.042 per share. The fair value of each option grant is estimated on
the date of grant using the Black-Scholes option-pricing model. The following
table illustrates the effect on net loss and loss per share if the Company had
applied the fair value recognition provisions of SFAS No. 123 to stock-based
employee compensation.
8
Three months ended December 31,
2004 2003
---- ----
Net loss, as reported $ (59,095) $ (239,588)
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects (12,993) (41,010)
---------- ----------
Proforma net loss $ (72,088) $ (280,598)
---------- ----------
Net loss per common share:
Basic and diluted - as reported $ (0.01) $ (0.03)
Basic and diluted - pro forma $ (0.01) $ (0.03)
Six months ended December 31,
2004 2003
---- ----
Net loss, as reported $ (239,572) $ (350,356)
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects (25,986) (81,648)
---------- ----------
Proforma net loss $ (265,558) $ (432,004)
---------- ----------
Net loss per common share:
Basic and diluted - as reported $ (0.03) $ (0.04)
Basic and diluted - pro forma $ (0.03) $ (0.05)
7. In December 2004, the FASB issued SFAS No. 123 (R), "Accounting for
Stock-Based Compensation." SFAS No. 123 (R) establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
for goods or services. This statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. SFAS No. 123 (R) requires that the fair value of such equity
instruments be recognized as an expense in the historical financial statements
as services are performed. Prior to SFAS No. 123 (R), only certain pro forma
disclosures of fair value were required. SFAS No. 123 (R) shall be effective for
the Company as of the beginning of the first interim reporting period that
begins after June 15, 2005. The adoption of this statement is not expected to
have a material impact on the financial statements of the Company commencing
with the first quarter ending September 30, 2005.
8. In July 2004, the Board of Directors decided to explore strategic
alternatives for the Company in an effort to protect shareholder value. As a
result of the numerous scandals in recent years and the passing of the
Sarbanes-Oxley Act of 2002 to safeguard shareholders, micro-cap companies such
as the Company are faced with mounting legal and audit fees to meet the new
compliance requirements now needed to remain as a publicly traded entity. In
addition to being expensive in
9
terms of out-of-pocket expenditures, these requirements are costly in that they
are time-consuming and place a strain on the Company's limited personnel
resources.
On October 18, 2004, the Company entered into a definitive asset purchase
agreement (the "Asset Purchase Agreement") with National Arbitration and
Mediation, Inc. (the "Buyer"), a company affiliated with the Company's Chief
Executive Officer, Roy Israel. Pursuant to the Asset Purchase Agreement, the
Buyer had the right to acquire the assets of the Company's dispute resolution
business (the "ADR business"). In consideration, the Buyer was to assume all
current and future liabilities and commitments of the ADR business. Furthermore,
Mr. Israel agreed not to trigger his change-in-control provision under his
employment contract as a result of the Buyer acquiring the ADR business. If such
provision was triggered upon the sale or liquidation of the ADR business, the
Company would owe Mr. Israel, in one lump sum, approximately $1,015,000 as such
amount represents three times his then current base salary. Additionally, the
Asset Purchase Agreement provides that a minimum of $200,000 in cash is to
remain with the Company before giving affect to transaction costs. This cash
will be utilized by the Company to pay for the costs associated with the sale of
the ADR business, for continued public reporting obligations and potentially to
acquire a new operating business or enter into a business combination. Based on
a final balance sheet that will be prepared after the closing date, the cash to
be retained by the Company may increase to the extent of 60% of the excess of
the Remaining Net Capital before Commitments over $380,462 as of the closing
date. The Remaining Net Capital Before Commitments shall mean the fair market
value of the assets purchased less the following: (a) recorded liabilities
assumed and (b) $200,000 in cash to remain with the Company (to be adjusted
based on the timing of payments for the transaction costs). The transaction
costs, which are to be paid by the Company with the $200,000 cash balance, is
expected to include, but not be limited to, legal, accounting, tax advice and
the cost of the fairness opinion. During the three months and six months ended
December 31, 2004, the Company incurred $36,714 and $106,371, respectively, of
such costs, which are included in Reorganization Costs on the accompanying
statement of operations. At December 31, 2004, $2,743 of such amount is unpaid
and included in accounts payable in the accompanying balance sheet.
The Board of Directors received an opinion, dated October 15, 2004, from an
unrelated party, Capitalink, L.C., that, as of that date, based upon and subject
to the assumptions made, matters considered and limitations on its review as set
forth in the opinion, the purchase consideration is fair, from a financial point
of view, to the Company's unaffiliated stockholders.
On January 13, 2005, at the annual meeting of shareholders, the Company's
shareholders approved the transaction. Immediately thereafter, the Company
completed the sale of the ADR business. In connection therewith, the Buyer
assumed the current and future commitments of the Company. Specifically, the
Company has been released from its lease agreements for office space in Great
Neck and Brooklyn, New York and from its employment agreements with its
President and Chief Financial Officer. Additionally, the Buyer has guaranteed
the payments due on the remainder of the Company's automobile lease. The Buyer
has assumed the remaining payments due on the lease of a postage meter (which
approximates $2,000 in total) until such time as the lessor issues a release of
liability to the Company. Furthermore, in accordance with the Company's stock
option plan, all unvested employees options vested as of the date of the sale of
the ADR business. As the Company did not retain any employees subsequent to the
sale, all employee options will expire if not exercised on or by April 13, 2005.
Since the consummation of the sale, the Company has no operating business.
Currently, the Company is actively searching for a new operating business to
acquire or to enter into a business combination. There can be no assurances that
an operating entity will be acquired or that a business combination will be
consummated.
10
9. On February 2, 2005, the Company was informed by the Boston Stock Exchange
("BSE") that the Company's listing thereon would be suspended as of the close of
trading that day. The suspension is due to the fact that the Company, after the
sale of its sole operating business, is no longer in compliance with the BSE's
requirements of $1,000,000 in total assets and $500,000 in shareholders' equity.
However, the BSE has agreed to provide a 90-day extension through May 2, 2005.
If the Company were to regain compliance on or before that day, the Company's
stock would not be delisted from the BSE.
The Company's common stock continues to be quoted on the OTC Bulletin Board
under the stock symbol CLIK.
10. The following unaudited pro forma condensed balance sheet of the Company is
based on and should be read in conjunction with the historical financial
statements and notes thereto appearing in the Company's Annual Report on Form
10-KSB for the fiscal year ended June 30, 2004. The Pro Forma Condensed
Consolidated Balance Sheet as of December 31, 2004 reflects the financial
position of the Company after giving effect to the sale on January 13, 2005 and
assumes that such transaction was consummated as of December 31, 2004.
Non-recurring items representing the costs of the transaction and the estimated
loss on the transaction are reflected in the pro forma balance sheet in the
stockholders' equity line.
In the opinion of Management, the accompanying pro forma condensed consolidated
balance sheet includes all material adjustments necessary to reflect, on a pro
forma basis, the impact of the transaction on the historical balance sheet of
the Company. The adjustments are described in the notes to the unaudited pro
forma condensed consolidated balance sheet and are set forth in the "Pro Forma
Adjustments" column.
The unaudited pro forma condensed consolidated balance sheet has been presented
for illustrative purposes only and is not necessarily indicative of the future
financial position of the Company, or of the financial position of the Company
had the transaction been in effect as of the date presented.
11
clickNsettle.com, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2004
(unaudited)
Pro Forma Adjustments
---------------------
As Effects of the Pro
Reported Transaction (1) Other (2) Forma (3)
--------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,032,271 (767,642) $ 264,629
Accounts receivable, net 291,532 (291,532) --
Prepaid expenses and other current assets, net 83,382 (1,349) 82,033
--------------------------------------------------------------
Total current assets 1,407,185 (1,060,523) -- 346,662
FURNITURE AND EQUIPMENT, net -- --
OTHER ASSETS 49,726 (49,726) --
--------------------------------------------------------------
$ 1,456,911 $(1,110,249) $ -- $ 346,662
==============================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 189,207 $ (176,957) $ 12,250
Accrued expenses and other liabilities 329,680 (277,219) 22,629 75,090
Accrued payroll and employee benefits 53,651 (53,651) --
Deferred revenues 211,787 (211,787) --
--------------------------------------------------------------
Total current liabilities 784,325 (719,614) 22,629 87,340
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - $.001 par value; 25,000,000 shares authorized;
8,701,554 shares issued and outstanding 8,702 8,702
Additional paid-in capital 10,104,325 10,104,325
Accumulated deficit (9,356,523) (390,635) (22,629) (9,769,787)
Less common stock in treasury at cost, 252,498 shares (83,918) (83,918)
--------------------------------------------------------------
Total stockholders' equity 672,586 (390,635) (22,629) 259,322
--------------------------------------------------------------
$ 1,456,911 $(1,110,249) $ -- $ 346,662
==============================================================
See accompanying Notes to Pro Forma Condensed Financial Information.
12
clickNsettle.com, Inc. and Subsidiaries
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
(1) The pro forma balance sheet reflects the financial position of the Company
after giving effect to the sale of principally all the Company's assets
and liabilities and assumes that such transaction was consummated as of
December 31, 2004. As such, the Company would recognize a financial
reporting loss equal to the excess of assets sold (excluding assets
remaining with the Company) over the recorded liabilities assumed by the
Buyer and other adjustments as follows:
Book value of liabilities assumed 719,614
Consideration by Buyer in providing future management services 30,000
Book value of assets sold (1,140,249)
-----------
Book loss on Transaction $ (390,635)
===========
Such loss is reflected in stockholders' equity in the column "Effects of
the Transaction" on the accompanying pro forma balance sheet.
The cash that is to remain in the Company after the Transaction is to
increase to the extent of 60% of the excess of the Remaining Net Capital
before Commitments (as defined) over $380,462 as of the closing date. The
Remaining Net Capital Before Commitments is calculated as the fair market
value of the assets purchased less the following: (a) recorded liabilities
assumed and (b) $96,371 (that is, $200,000 in cash to remain with the
Company less payments of $103,629 already made through December 31, 2004
for certain of the Transaction costs). As of December 31, 2004, the
Remaining Net Capital Before Commitments would have been $660,892.
Therefore, $280,430 represents the amount in excess of $380,462; 60% of
which, or $168,258 is additional cash to remain in the Company. Therefore,
total remaining cash in the Company would be $264,629 before unpaid
Transaction costs, taxes and other payables and accrued liabilities.
(2) The Company estimates that $129,000 will be incurred for expenses related
to the Transaction (which will include the costs of legal, accounting, tax
advice and the fairness opinion) and for taxes as follows:
Estimated legal, accounting and tax advice $ 74,000
Cost of fairness opinion 42,500
--------
Subtotal 116,500
Estimated taxes on Transaction 12,500
--------
Total net non-recurring expenses $129,000
Of such total, $106,371 has already been recorded in the historical
December 31, 2004 financial statements. Therefore, an additional $22,629
of accrued expenses are recorded on the accompanying pro forma balance
sheet. Such amount is reflected in stockholders' equity in the column
"Other" on the accompanying pro forma balance sheet.
(3) After the Transaction, the pro forma balance sheet contains cash, a
prepaid balance for insurance, market fees and management services to be
provided by the Buyer and accounts payable and accrued liabilities for
unpaid Transaction costs and taxes and for recurring accounting and other
market-related services.
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
From time to time, including in this quarterly report on Form
10-QSB, clickNsettle.com, Inc. (formerly NAM Corporation) (the Company, or we)
may publish forward-looking statements relating to such matters as anticipated
financial performance, business prospects, future operations, new products,
research and development activities and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, we note that a
variety of factors could cause our actual results to differ materially from the
anticipated results or other expectations expressed in our forward-looking
statements.
RISK FACTORS
We face risks. These risks include those described below and may
include additional risks of which we are not currently aware or which we
currently do not believe are material. If any of the events or circumstances
described in the following risks actually occurs, our financial condition or
results of operations could be adversely affected. These risks should be read in
conjunction with the other information set forth in this report.
We do Not have an Operating Business and if the Company Acquires a New Business,
the Shareholders may Suffer Significant Dilution
On January 13, 2005, the Company sold its ADR business. The Company
is searching for an operating entity to acquire or to enter into a business
combination. There can be no assurances that an operating entity will be
acquired or that a business combination will be consummated. Also, the cash
retained by the Company may not be sufficient to pay for the costs associated
with the sale of the ADR business, for continued public reporting obligations
and to acquire a new operating business or to enter into a business combination.
In addition, if the Company does acquire a new operating business or enters into
a business combination, it is expected that such transaction will be
accomplished by the issuance of stock of the Company resulting in significant
dilution.
We have Recent, and Anticipate Continuing, Losses and have Going Concern
Considerations
We have incurred operating losses during the last eight years and
through December 31, 2004. Going forward, if we do not acquire another operating
business, there will be no future revenues being generated. However, the Company
will continue to incur costs for continued public reporting obligations. Also,
it is likely that in order to acquire a new operating business or to enter into
a business combination, costs will be incurred. Therefore, the results of our
operations and our financial condition may be materially and adversely affected.
The Company's independent auditors have included a going concern
paragraph in their report on the June 30, 2004 consolidated financial statements
which have been prepared assuming the Company will continue as a going concern.
As a result of continued losses, the use of significant cash in operations and
the uncertainty as to the Company's ability to effect a merger or a similar
transaction with the intent to acquire a different operating business, there is
substantial doubt about the Company's ability to continue as a going concern.
14
Our Current Stockholders Have the Ability to Exert Significant Control
Our executive officers, directors, and their affiliates beneficially
own 4,268,648 shares or approximately 47.2% of the common stock outstanding
based on 9,049,056 shares of common stock outstanding as of February 11, 2005.
Of that number, Mr. Israel beneficially owns 2,925,788 shares or approximately
32.3% of the common stock. As a result, these stockholders acting in concert may
have significant influence on votes to elect or remove any or all of our
directors and to control substantially all corporate activities in which we are
involved, including tender offers, mergers, proxy contests or other purchases of
common stock.
Our Common Stock is Traded on the NASD OTC Electronic Bulletin Board and is
subject to the Penny Stock Rules
Trading in our securities has been conducted in the over-the-counter
market in the NASD's OTC Electronic Bulletin Board. As a result, an investor may
find it more difficult to purchase, dispose of and obtain accurate quotations as
to the value of our securities.
In addition, as the trading price of our common stock has been less
than $5.00 per share, trading in our common stock is also subject to the
requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under that
rule, broker/dealers who recommend such low-priced securities to persons other
than established customers and accredited investors must satisfy special sales
practice requirements, including (a) a requirement that they make an
individualized written suitability determination for the purchaser and (b)
receive the purchaser's written consent prior to the transaction.
The Securities Enforcement Remedies and Penny Stock Reform Act of
1990 also requires additional disclosure in connection with any trades involving
a stock defined as a penny stock (generally, any equity security not traded on
an exchange or quoted on The NASDAQ SmallCap Market that has a market price of
less than $5.00 per share), including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith. Such requirements could severely limit the market
liquidity of our securities and the ability of stockholders to sell their
securities in the secondary market.
On February 2, 2005, the Company was informed by the Boston Stock
Exchange ("BSE") that the Company's listing thereon would be suspended as of the
close of trading that day. The suspension is due to the fact that the Company,
after the sale of its sole operating business, is no longer in compliance with
the BSE's requirements of $1,000,000 in total assets and $500,000 in
shareholders' equity. However, the BSE has agreed to provide a 90-day extension
through May 2, 2005. If the Company were to regain compliance on or before that
day, the Company's stock would not be delisted from the BSE.
15
GENERAL
Through January 13, 2005, we provided alternative dispute resolution
services, or ADR services, to insurance companies, law firms, corporations and
municipalities. We focused the majority of our marketing efforts on developing
and expanding relationships with these entities, which we believe are some of
the largest consumers of ADR services.
Second Quarter Ended December 31, 2004 Compared to Second Quarter Ended December
31, 2003
Revenues. Revenues increased 5.6% to $978,527 for the three months
ended December 31, 2004 from $927,068 for the three months ended December 31,
2003. The increase is primarily due to an increase in the number of cases heard
between the periods offset by a decrease in the average dollars earned per
hearing.
Cost of Services. Cost of services decreased 4.3% to $216,125 for
the second quarter ended December 31, 2004 from $225,876 for the second quarter
ended December 31, 2003. Additionally, the cost of services as a percentage of
revenues declined slightly from 24.4% for the prior year quarterly period to
22.1% for the current year quarterly period. The ratio of cost of services to
revenues will fluctuate based on the type of cases administered, the number of
hours per case and our ability (or inability) to take advantage of volume
arrangements with hearing officers which usually lower the cost per case.
Sales and Marketing. Sales and marketing costs decreased 5.1% to
$308,479 for the second quarter ended December 31, 2004 from $325,161 for the
second quarter ended December 31, 2003. Sales and marketing costs as a
percentage of revenues decreased to 31.5% in the second quarter of fiscal year
2005 from 35.1% in the second quarter of fiscal year 2004. Most of the decrease
relates to salaries and related costs, travel and entertainment and promotions,
which, in the aggregate, decreased by approximately $48,000. Such decrease was
offset by an increase in advertising costs of approximately $31,000.
General and Administrative. General and administrative costs
decreased 23.6% to $464,473 for the second quarter ended December 31, 2004 from
$607,760 for the second quarter ended December 31, 2003. We incurred lower
charges in the amount of approximately $78,600 for legal expenses, depreciation,
bad debts, auto expenses, contributions and employee recruiting. The Company is
no longer recording depreciation expense as the Company has recorded a loss from
impairment on its furniture and equipment equal to its net book value. The
remainder of the decrease (approximately $66,200) relates to employee costs and
related items (including benefits, payroll taxes and outside services). Employee
costs declined as, due to our electronic case administration system, we required
fewer personnel in our information technology department and for other
administrative functions. In prior years, costs had increased in these areas to
further develop the Company's proprietary computer systems, for which a patent
was granted in July 2004. Additionally, as of July 14, 2004, those employees
earning in excess of $100,000 voluntarily agreed to a 15% reduction in their
salary. General and administrative costs as a percentage of revenues decreased
to 47.5% for the second quarter ended December 31, 2004 from 65.6% for the
second quarter ended December 31, 2003.
Loss on Impairment of Furniture and Equipment. As of June 30, 2004,
we recorded a loss on the impairment of furniture and equipment equal to its net
book value due to uncertainty as to the Company's ability to continue as a going
concern. In the second quarter of fiscal year 2005, we recorded an additional
loss on impairment equal to the price paid for
16
furniture and equipment purchased during the quarter. See Liquidity and Capital
Resources below. No similar loss was recognized in the prior year period.
Reorganization Costs. During the quarter ended December 31, 2004,
the Company incurred $36,714 in costs related to services rendered in connection
with the transaction to sell the Company's ADR business. These costs include
professional fees for legal, accounting and tax.
Other Income (Expense). Other income (expense) changed from an
expense of $7,859 for the second quarter ended December 31, 2003 to income of
$2,988 for the second quarter ended December 31, 2004. Other income (expense) is
composed primarily of investment income and realized gains (losses) generated
from investments. Realized losses were $11,475 in the second quarter of fiscal
year 2004 versus $0 in the second quarter of fiscal year 2005, resulting in an
increase of $11,475.
Income Taxes. Tax benefits resulting from net losses incurred for
the three- month periods ended December 31, 2004 and 2003 were not recognized as
we recorded a full valuation allowance against the net operating loss
carryforwards during the periods.
Net Loss. For the three months ended December 31, 2004, we had a net
loss of $59,095 as compared to a net loss of $239,588 for the three months ended
December 31, 2003. The loss declined primarily as a result of (a) cost cutting
measures including a voluntary 15% salary reduction for employees earning more
than $100,000 per annum and (b) an increase of 5.6% in revenues as insurance
companies made an accelerated effort to close out cases by their year-end,
offset by impairment and reorganization costs.
Six Months Ended December 31, 2004 Compared to Six Months Ended December 31,
2003
Revenues. Revenues decreased 8.7% to $1,748,921 for the six months
ended December 31, 2004 from $1,914,854 for the six months ended December 31,
2003. The decline is primarily due to a decrease in the average dollars earned
per hearing.
Cost of Services. Cost of services decreased 13.8% to $382,861 for
the six months ended December 31, 2004 from $444,283 for the six months ended
December 31, 2003. Additionally, the cost of services as a percentage of
revenues declined from 23.2% for the prior year six-month period to 21.9% for
the current year six-month period. The ratio of cost of services to revenues
will fluctuate based on the type of cases administered, the number of hours per
case and our ability (or inability) to take advantage of volume arrangements
with hearing officers which usually lower the cost per case.
Sales and Marketing. Sales and marketing costs decreased 13.3% to
$562,076 for the six months ended December 31, 2004 from $648,663 for the six
months ended December 31, 2003. Sales and marketing costs as a percentage of
revenues decreased to 32.1% for the first six months of fiscal year 2005 from
33.9% for the first six months of fiscal year 2004. Most of the decrease relates
to salaries and related costs, travel and entertainment and promotions, which,
in the aggregate, decreased by approximately $62,200. Additionally, advertising
costs declined by approximately $25,100.
General and Administrative. General and administrative costs
decreased 21.1% to $973,437 for the six months ended December 31, 2004 from
$1,234,179 for the six months ended December 31, 2003. Most of the decrease
(approximately $157,600) relates to employee costs and related items (including
benefits, payroll taxes and outside services). Employee costs declined as, due
to our electronic case administration system, we required fewer personnel in our
17
information technology department and for other administrative functions. In
prior years, costs had increased in these areas to further develop the Company's
proprietary computer systems, for which a patent was granted in July 2004.
Additionally, as of July 14, 2004, those employees earning in excess of $100,000
voluntarily agreed to a 15% reduction in their salary. Further, we incurred
lower charges in the amount of approximately $102,800 for depreciation, legal
fees, bad debts, contributions, auto expenses and employee recruitment. The
Company is no longer recording depreciation expense as the Company has recorded
a loss from impairment on its furniture and equipment equal to its net book
value. General and administrative costs as a percentage of revenues decreased to
55.7% for the six months ended December 31, 2004 from 64.5% for the six months
ended December 31, 2003.
Loss on Impairment of Furniture and Equipment. As of June 30, 2004,
we recorded a loss on the impairment of furniture and equipment equal to its net
book value due to uncertainty as to the Company's ability to continue as a going
concern. In the first six months of fiscal year 2005, we recorded an additional
loss on impairment equal to the price paid for furniture and equipment purchased
during the period. See Liquidity and Capital Resources below. No similar loss
was recognized in the prior year period.
Reorganization Costs. During the six months ended December 31, 2004,
the Company incurred $106,371 in costs related to services rendered in
connection with the impending transaction to sell the Company's ADR business.
These costs include professional fees to an investment banking firm and for
legal, accounting and tax advice. An investment banking firm was hired by the
disinterested members of the Board of Directors to opine as to whether or not
the terms of the proposed transaction was fair, from a financial point of view,
to the unaffiliated stockholders.
Other Income. Other income declined from $61,915 for the six months
ended December 31, 2003 to $52,137 for the six months ended December 31, 2004.
Other income is composed primarily of investment income and realized gains
(losses) generated from investments. Realized gains were $45,701 for the first
six months of fiscal year 2005 versus $54,683 for the first six months of fiscal
year 2004, resulting in a decline of $8,982. During the first quarter of fiscal
year 2005, the Company sold its entire portfolio of marketable securities which
resulted in the aforementioned gain.
Income Taxes. Tax benefits resulting from net losses incurred for
the six-month periods ended December 31, 2004 and 2003 were not recognized as we
recorded a full valuation allowance against the net operating loss carryforwards
during the periods.
Net Loss. For the six months ended December 31, 2004, we had a net
loss of $239,572 as compared to a net loss of $350,356 for the six months ended
December 31, 2003. The loss declined principally due to reductions in operating
costs and expenses offset by a decline in revenues and an increase in
reorganization costs.
Liquidity and Capital Resources
At December 31, 2004, the Company had a working capital surplus of
$622,860 compared to $913,854 at June 30, 2004. The decrease in working capital
occurred primarily as a result of the loss from operations.
18
Net cash used in operating activities was $214,182 for the six
months ended December 31, 2004 versus $447,104 in the prior comparable period.
Cash used in operating activities principally decreased due to a lower loss from
operations and by changes in operating assets and liabilities.
Net cash provided by investing activities was $515,584 for the six
months ended December 31, 2004 versus net cash used in investing activities of
$130,791 in the comparable prior period. The change in cash from investing
activities was primarily due to the fact that during the first six months of
fiscal year 2005, the Company sold its marketable securities and its
certificates of deposit matured, the proceeds of which were invested primarily
in money market funds.
There were no financing activities during the six months ended
December 31, 2004 and 2003.
We have incurred net losses and had negative cash flow from
operations during the last eight years and through December 31, 2004. Cash and
cash equivalents arising principally from equity transactions have provided
sufficient working capital to fund losses incurred and capital expenditures, as
well as to provide cash to redeem preferred stock outstanding and to purchase
treasury stock. As of December 31, 2004, we had $1,032,271 in aggregate cash and
cash equivalents.
In July 2004, our Board of Directors decided to explore strategic
alternatives for the Company in an effort to protect shareholder value. As a
result of the numerous scandals in recent years and the passing of the
Sarbanes-Oxley Act of 2002 to safeguard shareholders, micro-cap companies such
as ours are faced with mounting legal and audit fees to meet the new compliance
requirements now needed to remain as a publicly traded entity. In addition to
being expensive in terms of out-of-pocket expenditures, these requirements are
costly in that they are time-consuming and place a strain on our limited
personnel resources.
On October 18, 2004, the Company entered into a definitive asset
purchase agreement with National Arbitration and Mediation, Inc., a company
affiliated with the Company's Chief Executive Officer. Pursuant to the Asset
Purchase Agreement, the Buyer had the right to acquire the assets of the
Company's ADR business. In consideration, the Buyer was to assume all current
and future liabilities and commitments of the ADR business. Furthermore, Mr.
Israel agreed not to trigger his change-in-control provision under his
employment contract as a result of the Buyer acquiring the ADR business. If such
provision was triggered upon the sale or liquidation of the ADR business, the
Company would owe Mr. Israel, in one lump sum, approximately $1,015,000 as such
amount represents three times his then current base salary. Additionally, the
Asset Purchase Agreement provides that a minimum of $200,000 in cash is to
remain with the Company, before giving affect to transaction costs. This cash
will be utilized by the Company to pay for the costs associated with the sale of
the ADR business, for continued public reporting obligations and potentially to
acquire a new operating business or enter into a business combination. Based on
a final balance sheet that will be prepared after the closing date, the cash to
be retained by the Company may increase to the extent of 60% of the excess of
the Remaining Net Capital before Commitments over $380,462 as of the closing
date. The Remaining Net Capital Before Commitments shall mean the fair market
value of the assets purchased less the following: (a) recorded liabilities
assumed and (b) $200,000 in cash to remain with the Company (to be adjusted
based on the timing of payments for the transaction costs). The transaction
costs, which are to be paid by the Company with the $200,000 cash balance, is
expected to include, but not be limited to, legal, accounting, tax advice and
the cost of the fairness opinion. During the three and six months ended December
31, 2004, the Company incurred $36,714 and $106,371, respectively, of such
costs, which are included in Reorganization
19
Costs on the accompanying statement of operations. At December 31, 2004, $2,743
of such amount is unpaid and included in accounts payable in the accompanying
balance sheet.
The Board of Directors received an opinion, dated October 15, 2004,
from an unrelated party, Capitalink, L.C., that, as of that date, based upon and
subject to the assumptions made, matters considered and limitations on its
review as set forth in the opinion, the purchase consideration is fair, from a
financial point of view, to the Company's unaffiliated stockholders. Capitalink,
L.C. is an investment-banking firm that is regularly engaged in the evaluation
of businesses and their securities in connection with mergers, acquisitions,
corporate restructurings and private placements.
On January 13, 2005, at the annual meeting of shareholders, the
Company's shareholders approved the transaction. Immediately thereafter, the
Company completed the sale of the ADR business. In connection therewith, the
Buyer assumed the current and future commitments of the Company. Specifically,
the Company has been released from its lease agreements for office space in
Great Neck and Brooklyn, New York and from its employment agreements with its
President and Chief Financial Officer. Additionally, the Buyer has guaranteed
the payments due on the remainder of the Company's automobile lease. The Buyer
has assumed the remaining payments due on the lease of a postage meter (which
approximates $2,000 in total) until such time as the lessor issues a release of
liability to the Company. Furthermore, in accordance with the Company's stock
option plan, all unvested employees options vested as of the date of the sale of
the ADR business. As the Company did not retain any employees subsequent to the
sale, all employee options will expire if not exercised on or by April 13, 2005.
Since the consummation of the sale, the Company has no operating
business. Currently, the Company is actively searching for a new operating
business to acquire or to enter into a business combination. There can be no
assurances that an operating entity will be acquired or that a business
combination will be consummated.
As a result of continued losses, the use of significant cash in
operations and the uncertainty as to the Company's ability to effect a merger or
a similar transaction with the intent to acquire a different operating business,
there is substantial doubt about the Company's ability to continue as a going
concern. The Company's independent auditors have included a going concern
paragraph in their report on the June 30, 2004 consolidated financial statements
which have been prepared assuming the Company will continue as a going concern.
Accordingly, the accompanying consolidated financial statements do not include
any adjustments that may result should the Company be unable to continue as a
going concern.
Controls and Procedures
A. Evaluation of Disclosure Controls and Procedures:
Our disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported, within the time
period specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in the reports filed under the
Exchange Act is accumulated and communicated to management, including the
President and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. As of the end of the period covered by this
report, we carried out an evaluation, under the supervision and with
participation of our management, including our President and Chief
20
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based upon and as of the date of that
evaluation, the President and Chief Financial Officer concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports we file and submit under the Exchange
Act are recorded, processed, summarized and reported as and when required.
B. Changes in Internal Control over Financial Reporting:
There were no changes in our internal controls over financial reporting
identified in connection with our evaluation of these controls as of the end of
the period covered by this report that could have significantly affected those
controls subsequent to the date of the evaluation referred to in the previous
paragraph, including any correction action with regard to significant
deficiencies and material weakness.
21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of matters to a Vote of Security Holders.
Not applicable.
Item 5. Other information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit
Number Description of Document
------ -----------------------
3.1(a) Certificate of Incorporation, as amended(1)
3.1(d) Certificate of Amendment of Certificate of Incorporation(7)
3.1(e) Certificate of Amendment of Certificate of Incorporation, as
amended(10)
3.1(f) Certificate of Amendment of Certificate of Incorporation, second
amendment(14)
3.2 By-Laws of the Company, as amended(3)
4.1 Stock Purchase Agreement dated May 10, 2000(6)
4.2 Stock Purchase Warrant dated May 10, 2000(6)
4.3 Exchangeable Preferred Stock and Warrants Purchase Agreement(5)
10.1 1996 Stock Option Plan, amended and restated(3)
10.2 Employment Agreement between Company and Roy Israel effective July
1, 2002(11)
10.5 Employment Agreement between Company and Patricia
Giuliani-Rheaume(2)
10.7 Lease Agreement for Great Neck, New York facility(1)
10.7.1 Amendment to Lease Agreement for Great Neck, New York facility(4)
10.7.2 Second Amendment to Lease Agreement for Great Neck, New York
facility(9)
10.14 Advertising Agreement dated August 11, 2000(8)
10.14.1 Amendment to Advertising Agreement dated August 11, 2000(12)
10.14.2 Second Amendment to Advertising Agreement dated August 11, 2000(13)
10.14.3 Third Amendment to Advertising Agreement dated August 11, 2000(14)
10.16 Asset Purchase Agreement dated October 18, 2004(15)
31.1 Rule 13a-14(a)/15d-14(a) Certification (CEO)**
31.2 Rule 13a-14(a)/15d-14(a) Certification (CFO)**
32.1 Section 1350 Certification (CEO)**
32.2 Section 1350 Certification (CFO)**
22
----------
(1) Incorporated herein in its entirety by reference to the Company's
Registration Statement on Form SB-2, Registration No. 333-9493, as filed
with the Securities and Exchange Commission on August 2, 1996.
(2) Incorporated herein in its entirety by reference to the Company's 1997
Annual Report on Form 10-KSB.
(3) Incorporated herein in its entirety by reference to the Company's 1998
Annual Report on Form 10-KSB.
(4) Incorporated herein in its entirety by reference to the Company's 1999
Annual Report on Form 10-KSB.
(5) Incorporated herein in its entirety by reference to the Company's SB-2
filed on March 28, 2000.
(6) Incorporated herein in its entirety by reference to the Company's Form 8-K
filed on May 17, 2000.
(7) Incorporated herein in its entirety by reference to the Company's Form 8-K
filed on June 21, 2000.
(8) Incorporated herein in its entirety by reference to the Company's Form 8-K
filed on August 24, 2000.
(9) Incorporated herein in its entirety by reference to the Company's 2000
Annual Report on Form 10-KSB.
(10) Incorporated herein in its entirety by reference to the Company's 2001
Annual Report on Form 10-KSB.
(11) Incorporated herein in its entirety by reference to the Company's 2002
Annual Report on Form 10-KSB.
(12) Incorporated herein in its entirety by reference to the Company's 2003
Annual Report on Form 10-KSB.
(13) Incorporated herein in its entirety by reference to the Company's
Quarterly Report for the quarter ended December 31, 2003 on Form 10-QSB.
(14) Incorporated herein in its entirety by reference to the Company's 2004
Annual Report on Form 10-KSB.
(15) Incorporated herein in its entirety by reference to the Company's Form 8-K
filed on October 20, 2004.
** Filed herewith.
23
(b) Reports on Form 8-K.
Form 8-K was filed on October 20, 2004 to announce that the Company
entered into a definitive asset purchase agreement with National
Arbitration and Mediation, Inc., a company affiliated with the
Company's Chief Executive Officer, pursuant to which the buyer would
acquire the assets and assume all current and future liabilities of
the Company's dispute resolution business.
Form 8-K was filed on November 16, 2004 by the Company to announce
its revenues and results for the first quarter ended September 30,
2004.
Form 8-K was filed on January 18, 2005 by the Company to announce
the completion of its sale of its dispute resolution business on
January 13, 2005.
24
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CLICKNSETTLE.COM, INC.
Date: February 11, 2005 By: /s/ Roy Israel
----------------------------------
Roy Israel, President and CEO
Date: February 11, 2005 By: /s/ Patricia A. Giuliani-Rheaume
----------------------------------
Patricia A. Giuliani-Rheaume, Vice
President, Treasurer and CFO
25