<PAGE>

      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1998

                                                    REGISTRATION NO. 333-_______
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM S-1
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

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


                            NEW AMERICA NETWORK, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

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

<TABLE>
<S>                                     <C>                                    <C>
           Delaware                                 6531                           23-1916759
-------------------------------         ----------------------------           -------------------
(State or other jurisdiction of         (Primary Standard Industrial            (I.R.S. Employer
incorporation or organization)           Classification Code Number)           Identification No.)
</TABLE>

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

                               572 U.S. Route 130
                              Hightstown, NJ 08520
                                 (609) 448-4700
       ------------------------------------------------------------------
       (Address, including zip code, and telephone number, including area
               code, of registrant's principal executive offices)

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

                                 Gerald C. Finn
                             Chief Executive Officer
                               572 U.S. Route 130
                              Hightstown, NJ 08520
                                 (609) 448-4700
            ---------------------------------------------------------
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

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

                                 With copies to:



              Alan S. Pearce, Esq.                         Alan E. Davis, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP            Hal W. Mandel, Esq.
         1290 Avenue of the Americas                    Greenbaum, Rowe, Smith,
          New York, New York 10104                     Ravin, Davis & Himmel LLP
            Phone (212) 541-2000                          99 Wood Avenue South
                                                            Iselin, NJ 08830
                                                          Phone (732) 549-5600

     Approximate date of commencement of the proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.

     If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

     If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

     If delivery of the  prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|

<TABLE>
<CAPTION>
                                                     CALCULATION OF REGISTRATION FEE
====================================================================================================================================
    Title of Each Class of Securities        Amount To Be        Proposed Maximum           Proposed Maximum           Amount of
             To Be Registered                 Registered     Offering Price Per Share   Aggregate Offering Price    Registration Fee
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                      <C>                     <C>                       <C>
Common Stock, par value $.01 per share        11,987,746              $.01(1)                  $39,959(1)                 $13
Common Stock, par value $.01 per share       19,076,560(2)             $2.00                  $38,153,120               $11,562
Rights                                        17,076,560                --(3)                     --(3)                   --(3)
====================================================================================================================================
</TABLE>
(1)   Computed based on one-third of the of par value of the Common Stock in
      accordance with Rule 457(f)(2) of the Securities Act of 1933, as amended.
(2)   Of such shares of Common Stock, (i) 17,076,560 of such shares are reserved
      for issuance pursuant to the exercise of Rights, and to the extent such
      Rights are not exercised, for issuance in connection with the Concurrent
      Offering, and (ii) 2,000,000 of such Shares are reserved for issuance in
      the Concurrent Offering.


(3)   Pursuant to Rule 457(g), no separate registration fee is required with
      respect to the Rights.

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

     The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.

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

<PAGE>

                                EXPLANATORY NOTE

         This Registration Statement on Form S-1 of New America Network, Inc., a
Delaware corporation ("NAI Delaware"), contains a Prospectus for New America
International, Inc., a Maryland corporation ("NAI Maryland"). Prior to the
effectiveness of this Registration Statement, NAI Delaware will be merged with
and into NAI Maryland (the "Reincorporation Merger"), and NAI Maryland will be
the surviving corporation. The information in the Prospectus contained herein,
reflects the Reincorporation Merger and describes the registrant as it will
exist after the Reincorporation Merger. Part II of this Registration Statement
reflects information regarding the Registrant after the Reincorporation Merger.





<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

                    SUBJECT TO COMPLETION, DATED MAY 15, 1998

PROSPECTUS

                         New America International, Inc.

                           Shares of Common Stock and



                    Rights to Purchase Shares of Common Stock

     This Prospectus is being furnished in connection with (i) the distribution
(the "Distribution") by Kranzco Realty Trust, a Maryland real estate investment
trust ("Kranzco"), of an aggregate of 11,987,746 shares of common stock, par
value $.01 per share ("NAI Shares"), of New America International, Inc., a
Maryland corporation ("NAI"), to the holders of (a) outstanding common shares of
beneficial interest, par value $.01 per share, of Kranzco (the "Kranzco Common
Shares") and (b) outstanding Series B-1 and Series B-2 preferred shares of
beneficial interest, par value $.01 per share, of Kranzco (the "Kranzco Series B
Preferred Shares"), (ii) the distribution by NAI of rights (the "Rights") to
subscribe for purchase an aggregate of 17,076,560 NAI Shares (the "Basic
Subscription Privilege"), at a price of $2 per NAI Share (the "Subscription
Price"), to the holders of NAI Shares, including the Kranzco shareholders who
receive NAI Shares in the Distribution, (the distribution of the Rights and the
offer and sale of the underlying NAI Shares (the "Underlying Shares") is
referred to herein as the "Rights Offering"), and (iii) the concurrent offering
(the "Concurrent Offering") by NAI of those Underlying Shares that are not
otherwise subscribed for pursuant to the Rights Offering ("Excess Shares"),
first, to officers, directors and trustees of NAI and Kranzco (the "Executive
Group"), and then, to NAI's Broker Members (as defined herein) and the
principals, shareholders, partners, officers, managers and licensed real estate
agents of NAI's Broker Members in the United States (the "Broker Member Group").
See "The Distribution."

     See "Risk Factors" beginning on Page 17 for a discussion of certain factors
that should be considered in connection with an investment in the NAI Shares.

     It is expected that the Distribution and Rights Offering will be made on
______, 1998 (the "Distribution Effective Date"). The Distribution will be made
on the basis of one NAI Share for each Kranzco Common Share held by Kranzco
shareholders on _______, 1998 (the "Distribution Record Date"), and one NAI
Share for each Kranzco Common Share into which the Kranzco Series B Preferred
Shares held by Kranzco shareholders on the Distribution Record Date are
convertible (a "Kranzco Common Share Equivalent"). NAI will not receive any
proceeds from the Distribution.

     Prior to the Distribution and Rights Offering, there has been no public
market for the NAI Shares. Although the NAI Shares will be eligible for
quotation and trading on the OTC Bulletin Board after the Distribution, the NAI
Shares are not currently quoted on the OTC Bulletin Board or listed on any
national securities exchange or approved for quotation on any quotation system,
and there can be no assurance that a public market for the NAI Shares will
develop or provide liquidity. Stockholders of NAI who do not exercise all of
their Rights will own less of a percentage equity ownership and voting interest
in NAI after the Rights Offering, the Concurrent Offering and the Distribution.
In addition, stockholders of NAI who do exercise all of their rights may own
less of a percentage
                                                        (continued on next page)

     WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE


           SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
            COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
               OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
                  ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
                         REPRESENTATION TO THE CONTRARY
                             IS A CRIMINAL OFFENSE.

                The date of this Prospectus is __________,__ 1998

<PAGE>

(continued from cover)

equity ownership and voting interest in NAI if any Additional Shares (as defined
below) are purchased in the Concurrent Offering. There is no minimum number of
NAI Shares required to be sold as a condition to the consummation of the Rights
Offering or the Concurrent Offering. Gerald C. Finn and Jeffrey M. Finn,
individually, and as trustee of a trust for the benefit of Jeffrey M. Finn
(collectively, the "Finns"), jointly and severally, have agreed to exercise
Rights to purchase an aggregate of 500,000 NAI Shares and Kranzco has agreed to
exercise such number of Rights to purchase NAI Shares that would result in
Kranzco owning 9.8% of the issued and outstanding NAI Shares, before the
issuance of any Additional Shares.

     The Rights Offering will be made on the basis of one Right for each NAI
Share held by the NAI stockholders, including the Kranzco shareholders who
receive NAI Shares in the Distribution, on the Distribution Effective Date. Each
Right will entitle its holder (a "Holder") to purchase one NAI Share. A Holder
who validly exercises all of such Holder's Rights available as part of the Basic
Subscription Privilege will also be entitled to purchase a pro rata portion of
any Underlying Shares that are not otherwise subscribed for pursuant to the
exercise of Basic Subscription Privileges (the "Oversubscription Privilege").
Concurrently with the Rights Offering, NAI is offering the right to purchase any
Excess Shares, first, to the Executive Group (the "Executive Group Subscription
Privilege"), and then, to the Broker Member Group (the "Broker Member Group
Subscription Privilege;" together with the Executive Group Subscription
Privilege, the "Concurrent Privileges"). NAI has authorized an additional
2,000,000 NAI Shares ("Additional Shares") for issuance to the Broker Member
Group in order to ensure that the Broker Member Group will in the aggregate have
the right to purchase a minimum of 2,000,000 NAI Shares, to the extent that the
number of Excess Shares is not sufficient to satisfy the Broker Member Group
Subscription Privilege. There is no assurance that any Excess Shares will be
available for sale to the Executive Group or the Broker Member Group. Although
there will be a minimum of 2,000,000 Additional Shares available for
subscription by the Broker Member Group, there is no assurance that any member
of the Broker Member Group will receive all the Additional Shares for which such
member subscribes. See "The Rights Offering" and "Plan of Distribution."

     The Rights and the Concurrent Privileges will expire at 5:00 p.m., New York
Time, on _________ __, 1998, unless extended by NAI (such date, as it may be
extended on one or more occasions, is referred to herein as the "Expiration
Date"). In no event will the Expiration Date be extended beyond ___________,
1998. If NAI elects to extend the term of the Rights and the Concurrent
Privileges, it will issue a press release to such effect not later than the
first Business Day following the most recently announced Expiration Date. Funds
provided in payment of the Subscription Price will be held by First Union


National Bank, as the Subscription Agent, until the closing which will occur
promptly following the Expiration Date. The exercise of Rights and the
Concurrent Privileges is irrevocable once made, and no interest will be paid to
Holders exercising their Rights.

     No payment need be made by, or will be accepted from, Kranzco shareholders
for the NAI Shares to be received by them in the Distribution or from NAI
stockholders for the Rights to be received by them in the Rights Offering.
Furthermore, Kranzco shareholders will not be required to surrender or exchange
Kranzco Common Shares, in order to receive NAI Shares.

<PAGE>

                              AVAILABLE INFORMATION

     NAI has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (herein, together with all
amendments and exhibits thereto referred to as the "Registration Statement"), of
which this Prospectus forms a part, under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the NAI Shares offered pursuant to this
Prospectus. This Prospectus contains summaries of the material terms of the
documents referred to herein and therein, but does not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement. The Registration Statement as well as reports and other
information filed by NAI can be inspected without charge and copied at
prescribed rates at the public reference facilities maintained by the Commission
at the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its Regional Offices located as follows: Chicago
Regional Office, Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661-2511; and New York Regional Office, Seven World Trade Center,
Suite 1300, New York, New York 10048. The Commission maintains a web site that
contains reports, proxy, and information statements and other information
regarding registrants that file electronically with the Commission. The web site
is located at http://www.sec.gov.

     Statements contained in this Prospectus as to the contents of any contract
or other document that is filed as an exhibit to the Registration Statement are
not necessarily complete, and each such statement is qualified in its entirety
by reference to the full text of such contract or document.

     Upon consummation of the Distribution, NAI will be required to file reports
and other information with the Commission pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). In addition to applicable legal
requirements, if any, holders of NAI Shares will receive annual reports
containing audited financial statements with a report thereon by NAI's
independent public accountants.

<PAGE>

                               PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,


including the notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise stated, this Prospectus assumes that all Underlying Shares and
Additional Shares are purchased in the Rights Offering and the Concurrent
Offering, as the case may be. Unless the context otherwise requires, all
references in this Prospectus to: (i) "NAI" shall mean New America
International, Inc., a Maryland corporation which is the successor-by-merger to
New America Network, Inc., a Delaware corporation ("NAI Delaware"), and, where
applicable, "NAI" shall also refer to NAI Delaware, (ii) "NAI Shares" shall mean
NAI's common stock, par value $.01 per share. Unless otherwise indicated, the
information contained in this Prospectus assumes that the Exchange Offer
(defined below) was consummated immediately prior to the Distribution and the
Rights Offering.

                                       NAI

     New America International, Inc., ("NAI") operates a network (the "Network")
of independently owned, licensed real estate brokers ("Broker Members")
throughout the United States and, more recently, abroad. NAI, directly and
through its Broker Members, provides commercial real estate brokerage services
to local, regional, national and international businesses ("Clients"). NAI has
approximately 130 affiliated Broker Members, which employ approximately 2,400
agents, operating in approximately 200 markets, including North, Central and
South America and Western Europe. NAI believes it is represented in more North
American market areas than any national commercial real estate brokerage
company. Unlike other real estate broker networks, in addition to managing real
estate transactions generated by its Broker Members, NAI generates its own
source of real estate transactions for its Broker Members and actively manages
and tracks those transactions on behalf of Clients. In order to increase the
portfolio of services marketed to Clients and Broker Members, NAI has entered
into several alliance agreements with entities ("Alliance Members") which
provide real estate related services which complement NAI's brokerage
capabilities, including sealed-bid sales, real estate auctions, real estate
financing and appraisal services. As of March 31, 1998, the Network had an
inventory of approximately 1,775 assignments to buy, sell or lease real
property, with a transaction value of approximately $927 million, and which
would generate fees to NAI of approximately $6.5 million, if consummated. There
is no assurance that such inventory will result in any revenues to NAI.

     NAI earns revenues primarily from the sharing of brokerage commissions with
Broker Members who earn commissions from the acquisition, disposition or leasing
of real property assigned to them by NAI (approximately $2,686,000 or 46% of
NAI's net revenues for fiscal year 1997). NAI also earns revenues from (i) the
sharing of brokerage commissions with Broker Members who earn commissions from
the acquisition and/or disposition or leasing of real estate referred to them by
other Broker Members (approximately $1,063,000 or 18% of NAI's net revenues for
fiscal year 1997), (ii) the sharing of fees received from Alliance Members in
sealed-bid sales, auction transactions and other real estate-related services
(approximately $170,000 or 3% of NAI's net revenues for fiscal year 1997), and
(iii) the collection of annual membership fees paid by Broker Members and
Alliance Members (approximately $1,282,000 or 22% of NAI's net revenues for
fiscal year 1997). See "NAI Business."

     NAI began forming the Network in 1978 in order to meet the growing real
estate needs of large national and international corporations in multiple


markets. NAI meets the multiple market needs of its Clients and its Broker
Members by combining local representation with the management and control
capabilities of its centralized Corporate Services Department. NAI's Corporate
Services Department is

                                      -3-

<PAGE>

responsible for establishing and developing relationships with Clients in order
to generate assignments for the Network and its Broker Members. Currently, NAI
has 13 staff members in its Corporate Services Department serving over 100
Clients. These Clients include retail chains (such as Woolworth Corp.),
international companies (such as International Paper Company), service
businesses (such as Roadway Services, Inc.), and other larger owners of real
estate (such as the United States Postal Service, a new Client of NAI). NAI's
Clients are often involved in real estate transactions in multiple markets. In
addition, NAI has an Investment Sales Department which specializes in the
acquisition and disposition of real estate for Clients who are seeking to
acquire, or currently own, real estate for investment purposes. See
"Business--The Network," "--Corporate Services Department" and "--Investment
Sales."

     NAI maintains a proprietary information sharing and research intranet, in
order to efficiently and effectively coordinate with its Broker Members to meet
its Clients' needs. NAI's information systems consist of a transaction
management system and a central database information system. NAI's computerized
transaction management system allows Broker Members, the Corporate Services
Department and Clients to manage and track the progress of transactions assigned
to Broker Members, including those generated by its Broker Members. NAI's
databases include, among other things, real estate market data, demographic
information, Broker Member profiles, Broker Member listings, transaction
histories, Client relationship information and Client profiles. See
"Business--NAI Technology and Information Services."

     NAI's objective is to increase profitability by continuing to grow its
brokerage business, increase its international coverage, expand its Corporate
Services and Investment Sales Departments and to further develop its
non-brokerage real estate-related services, including sealed-bid sales and real
estate auctions, and to acquire or develop additional real estate-related
services (collectively, "Real Estate-Related Services"). To the extent funds are
available from the proceeds of the Rights Offering and the Concurrent Offering
referred to below, NAI's strategy will be to (i) expand NAI's Corporate Services
Department and Investment Sales Department to generate business from additional
Clients and in new markets, (ii) invest in or acquire brokerage firms (including
certain of those owned by Broker Members) and firms which provide Real
Estate-Related Services, (iii) train and support Broker Members to generate
additional business for the Network; (iv) continue to expand the Network into
international markets, (v) generate additional revenue by providing brokerage
and Real Estate-Related Services to Kranzco, (vi) expand and enhance NAI's real
estate technology and information services, (vii) opportunistically acquire and
develop real estate for its own account and (viii) utilize Real Estate-Related
Services to create and develop relationships with Clients.



     NAI's management team has extensive experience in the real estate brokerage
industry. Gerald C. Finn, founder and Chief Executive Officer of NAI, has over
25 years experience in the real estate industry. Jeffrey M. Finn, Gerald Finn's
son and President, Chief Operating Officer and Treasurer of NAI, has over 10
years experience in the commercial real estate services industry.

     NAI Delaware, the predecessor by merger to NAI, was incorporated under the
laws of the State of Delaware on February 5, 1974. On ________, 1998, NAI
Delaware was merged (referred to herein as the "Reincorporation Merger") with
and into its wholly-owned subsidiary, NAI, a corporation formed under the laws
of the State of Maryland. The executive offices of NAI are located at 572 Route
130, Hightstown, New Jersey 08520 and its telephone number is (609) 448-4700.

                                       -4-

<PAGE>

                           Prior Related Transactions

     On ____________, 1998, Kranzco, a self-administered and self-managed
Maryland real estate investment trust (a "REIT"), consummated an exchange offer
(the "Exchange Offer"), pursuant to which Kranzco acquired 80% of the
outstanding shares of common stock of NAI in exchange for an aggregate of
$8,000,000 of Kranzco ___% Convertible Subordinated Notes Due 2008 (the
"Notes"). Immediately following the consummation of the Exchange Offer, NAI, a
Delaware corporation, was merged with and into a wholly-owned subsidiary
incorporated in the state of Maryland, in order to reincorporate in Maryland for
corporate reasons, as well as to reduce certain franchise taxes which are
payable by NAI. The Reincorporation Merger resulted in each share of NAI in the
Delaware corporation being converted into 1.316172 shares of NAI, the Maryland
corporation.

     In connection with the Exchange Offer, on ______________, 1998, Kranzco,
NAI, and the Finns entered into an Exchange Agreement (the "Exchange Agreement")
which set forth certain terms and conditions of the Exchange Offer. The Finns,
jointly and severally, agreed in the Exchange Agreement, to exercise Rights to
purchase an aggregate of 500,000 NAI Shares and Kranzco agreed to exercise such
number of Rights to purchase NAI Shares that would result in Kranzco owning 9.8%
of the issued and outstanding NAI Shares, before the issuance of any Additional
Shares. In addition, upon consummation of the Distribution, NAI and Kranzco
entered into an Intercompany Agreement which provides for certain rights of
first opportunity and first notification which the companies have granted each
other and also provides for the provision of certain consulting services by
Kranzco to NAI. The Exchange Offer and the other transactions contemplated by
the Exchange Agreement, together with the Rights Offering, Concurrent Offering,
and the Reincorporation Merger are generally referred to herein as the "Related
Transactions." See "Related Transactions."

Reasons for the Exchange Offer and Subsequent Distribution

     Kranzco is a self-administered and self-managed equity REIT engaged in the
business of owning, managing, operating, leasing, acquiring and expanding
neighborhood and community shopping centers and, to a lesser extent,
free-standing retail properties. Kranzco is limited in its activities by the


investment limitations imposed by Federal income tax laws applicable to REITs,
which (i) limit the amount of income that a REIT can realize from certain
services that are not customarily furnished or rendered in connection with the
rental of real property in a particular geographic area, and (ii) limit
Kranzco's ownership in corporations other than REITs and qualified REIT
subsidiaries (a) to 10% of the outstanding voting securities of such
corporation, and (b) in that the value of any one corporation's securities
cannot exceed 5% of the value of Kranzco's total assets. Kranzco believes that
significant opportunities are available to investors in entities which provide
brokerage and Real Estate-Related Services, own properties other than
neighborhood and community shopping centers, and which are not limited in their
activities by the investment limitations imposed by Federal income tax laws
applicable to REITs. Accordingly, in light of the limitations on investments
imposed on REITs, Kranzco believes that effecting the Exchange Offer, the
Distribution, the Rights Offering and the Concurrent Offering, and establishing
an intercompany relationship between Kranzco and NAI will yield significant
benefits to Kranzco and its shareholders similar to those which may be obtained
by investors who are not so limited, while preserving Kranzco's REIT status. For
Kranzco, these benefits include:

         o        increased opportunities to acquire retail properties which
                  become available for sale through the Network, which might not
                  otherwise be available to Kranzco;

                                       -5-

<PAGE>


         o        greater access to a diverse range of tenants, in order to
                  re-tenant vacant space owned by Kranzco, including access to
                  non-retail tenants looking for space appropriate for office,
                  warehouse or other non-retail uses;

         o        the ability to enter into agreements with NAI to have NAI
                  develop new shopping centers or re-develop distressed shopping
                  centers for sale to Kranzco;

         o        the ability to enter into new geographic areas with the
                  assistance of NAI's real estate professionals;

         o        NAI disseminating Kranzco's acquisition criteria to Broker
                  Members through the Network, in order to create additional
                  opportunities to purchase retail properties;

         o        increased opportunities to purchase additional retail
                  properties which are included in portfolios with non-retail
                  properties, utilizing NAI to purchase the non-retail
                  properties or find a purchaser for the non-retail properties;

         o        access to NAI's sophisticated, real estate oriented computer
                  network, which includes information on real estate
                  transactions, market conditions and demographics;



         o        the ability to purchase Real Estate-Related Services at
                  competitive prices;

         o        the ability to own an equity interest in a company which owns
                  real estate and provides Real Estate-Related Services which
                  Kranzco, as a REIT, could not directly own or provide; and

         o        access to local property managers where Kranzco may own retail
                  properties, and the opportunity for Kranzco to manage retail
                  properties owned by NAI.

     NAI operates a network of independently owned, licensed real estate Broker
Members throughout the United States and, more recently, abroad, to provide
commercial real estate services to regional, national and international Clients.
NAI believes that a strategic relationship between companies which provide real
estate brokerage and services, such as NAI, and companies which own and operate
real estate, such as Kranzco, would provide significant benefits and
opportunities. For NAI, the benefits of entering into the strategic relationship
and consummating the Related Transactions (and under certain circumstances, to
the extent proceeds are available through the Rights Offering and the Concurrent
Offering) include:

         o        the opportunity as a public company, to raise additional
                  capital through the Rights Offering and the Concurrent
                  Offering and, to the extent possible, future equity and debt
                  offerings;

         o        the ability to expand its Corporate Services Department,
                  Investment Sales Department and Broker Services Department;

         o        the ability to invest in or acquire Broker Members or other
                  real estate service firms in order to strengthen the Network;

         o        access to new transactions by providing real estate brokerage
                  services to Kranzco through NAI's Network;

         o        the ability to accelerate the development of information
                  services and technology infrastructure to more efficiently
                  deliver services;

         o        the opportunity to offer to Kranzco Real Estate-Related
                  Services which NAI may develop;

         o        the opportunity to further develop existing Real
                  Estate-Related Services and to acquire or develop businesses
                  that provide Real Estate-Related Services;

         o        the ability to accelerate Network growth in international
                  markets;

         o        providing Broker Members the opportunity to manage selected
                  Kranzco shopping centers;

         o        the opportunity to enter into agreements with Kranzco to have


                  NAI develop new shopping centers or re-develop distressed
                  shopping centers for sale to Kranzco; and

                                       -6-

<PAGE>

         o        expansion of its business through access to the real estate
                  expertise of Kranzco's management.

     In the past Kranzco and NAI have worked together in a mutually beneficial
relationship. In December 1997, NAI's Investment Sales Department assisted
Kranzco in arranging for the acquisition of five shopping centers, aggregating
approximately 650,000 square feet of gross leasable area ("GLA"), for
approximately $44 million. NAI's Investment Sales Department initiated this
opportunity, and assisted Kranzco in acquiring the properties. Kranzco's
acquisition of such properties generated $100,000 in fee income to NAI. Kranzco
and NAI expect that the Intercompany Agreement will set forth a framework for a
mutually beneficial relationship in the future. See "Related Transactions--The
Intercompany Agreement."

                                The Distribution

Distributing Company................... Kranzco Realty Trust

Distributed Company ................... New America International, Inc., a
                                        Maryland corporation.

Distribution Agent..................... The Distribution Agent is First Union
                                        National Bank, 1525 West W.T. Harris
                                        Boulevard, 3C3, Charlotte, North
                                        Carolina 28262-1153, telephone: (800)
                                        829-8432.

Distribution Record Date............... ____________, 1998

Distribution Effective Date............ ____________, 1998

Manner of Effecting the Distribution... Kranzco will distribute 11,987,746 NAI
                                        Shares, which represents approximately
                                        70.2% of the outstanding NAI Shares, to
                                        holders of Kranzco Common Shares and
                                        Kranzco Common Share Equivalents, on the
                                        basis of one NAI Share for each Kranzco
                                        Common Share and one NAI Share for each
                                        Kranzco Common Share Equivalent held on
                                        the Distribution Record Date. See "The
                                        Distribution."

Results of the Distribution............ Upon the consummation of the
                                        Distribution, NAI will be an independent
                                        public company which will continue to
                                        conduct its business of providing real
                                        estate brokerage and related services to


                                        Clients. Kranzco will own approximately
                                        9.8% of the outstanding NAI Shares,
                                        Kranzco shareholders will own
                                        approximately 70.2% of the outstanding
                                        NAI Shares and the persons who owned NAI
                                        Shares prior to the Exchange Offer will
                                        own an

                                       -7-

<PAGE>

                                        aggregate of approximately 20% of the
                                        NAI Shares.

Federal Income Tax Consequences
of the Distribution.................... A Kranzco shareholder will be treated as
                                        receiving a distribution from Kranzco in
                                        an amount equal to the fair market value
                                        of the NAI Shares received by such
                                        shareholder. Depending on a Kranzco
                                        shareholder's adjusted tax basis in his
                                        or her Kranzco Common Shares or Kranzco
                                        Common Share Equivalents and the amount
                                        of Kranzco's current and accumulated
                                        earnings and profits, the Distribution
                                        will result in ordinary income, return
                                        of capital, capital gain or a
                                        combination thereof. Management projects
                                        that for a typical Kranzco common
                                        shareholder, the Distribution likely
                                        will result in an increase in the
                                        shareholder's return of capital and
                                        capital gain, but this result cannot be
                                        assured. See "Certain United States
                                        Federal Tax Considerations--Federal
                                        Income Taxation of the Distribution."

                               The Rights Offering

Rights................................. Simultaneously with the Distribution,
                                        NAI will distribute to holders of NAI
                                        Shares, including the Kranzco
                                        shareholders who receive NAI Shares in
                                        the Distribution, Rights to purchase an
                                        aggregate of 17,076,560 NAI Shares, on
                                        the basis of one Right for each NAI
                                        Share held by NAI Stockholders. The
                                        exercise of Rights is irrevocable once
                                        made, and no Underlying Shares will be
                                        issued until the closing of the Rights
                                        Offering. The Finns, jointly and
                                        severally, agreed in the Exchange
                                        Agreement, to exercise Rights to


                                        purchase an aggregate of 500,000 NAI
                                        Shares and Kranzco agreed to exercise
                                        such number of Rights to purchase NAI
                                        Shares that would result in Kranzco
                                        owning 9.8% of the issued and
                                        outstanding NAI Shares, before the
                                        issuance of any Additional Shares.

Rights Record Date..................... ______________, 1998, the "Rights Record
                                        Date" is the same date as the
                                        Distribution Effective Date. The Rights
                                        will also be distributed on the Rights
                                        Record Date.

                                       -8-

<PAGE>

Basic Subscription Privilege........... Holders are entitled to purchase at the
                                        Subscription Price one NAI Share for
                                        each Right held. See "The Rights
                                        Offering--The Rights" and
                                        "--Subscription Privileges--Basic
                                        Subscription Privilege."

Oversubscription Privilege............. Each Holder who elects to exercise his
                                        or her Basic Subscription Privilege may
                                        also subscribe at the Subscription Price
                                        for Underlying Shares, if any, remaining
                                        unissued after satisfaction of all
                                        subscriptions pursuant to the Basic
                                        Subscription Privilege. If an
                                        insufficient number of Underlying Shares
                                        is available to satisfy fully all
                                        elections to exercise the
                                        Oversubscription Privilege, the
                                        available Underlying Shares will be
                                        allocated on a pro rata basis among
                                        Holders who exercise their
                                        Oversubscription Privilege based on the
                                        respective numbers of Underlying Shares
                                        subscribed for by such Holders pursuant
                                        to the Basic Subscription Privilege. See
                                        "The Rights Offering--Subscription
                                        Privileges" and "Plan of Distribution."

Subscription Price..................... $2.00 in cash per NAI Share.

Transferability of Rights.............. The Rights are transferable.  The Basic
                                        Subscription Privilege and the
                                        Oversubscription Privilege are only
                                        transferable together, and any transfer
                                        of a Right will be deemed a transfer of
                                        both the Basic Subscription Privilege


                                        and the Oversubscription Privilege. See
                                        "The Rights Offering--Method of
                                        Transferring Rights." Although the
                                        Rights are transferable, NAI does not
                                        intend to list the Rights on any
                                        national securities exchange or
                                        automated quotation system. Accordingly,
                                        a market for the Rights may not develop
                                        and the Rights may be a highly illiquid
                                        security. Although the Rights and NAI
                                        Shares will be eligible for quotation
                                        and trading on the OTC Bulletin Board
                                        after the Distribution, the NAI Shares
                                        are not currently quoted on the OTC
                                        Bulletin Board or listed on any national
                                        securities exchange or approved for
                                        quotation on any quotation system, and
                                        there can be no assurance that a public
                                        market for the NAI Shares will develop
                                        or provide liquidity. See "Risk
                                        Factors--Determination of Offering
                                        Price; Absence of Prior Market; Trading
                                        Prices."

                                       -9-

<PAGE>

Expiration Date........................ _______, 1998, unless extended by NAI
                                        from time to time, provided that the
                                        Expiration Date shall not be later than
                                        ________, 1998, unless the Board of
                                        Directors of NAI (the "Board")
                                        determines that a material event has
                                        occurred which necessitates one or more
                                        further extensions of the Rights in
                                        order to permit adequate disclosure of
                                        information concerning such event to
                                        Holders. See "The Rights Offering--
                                        Expiration Date." If NAI elects to
                                        extend the term of the Rights, it will
                                        issue a press release to such effect not
                                        later than the first Business Day
                                        following the most recently announced
                                        Expiration Date. If NAI elects to extend
                                        the term of the Rights Offering by more
                                        than 14 calendar days, it will, in
                                        addition, cause written notice of such
                                        extension to be promptly sent to all
                                        Holders of record on the Rights Record
                                        Date. After the Expiration Date, the
                                        Rights will become void and have no
                                        value.



Subscription Agent..................... First Union National Bank

Federal Income Tax Consequences
of the Rights Offering................. Holders of NAI Shares (including Kranzco
                                        shareholders who receive NAI Shares in
                                        the Distribution) will not recognize
                                        taxable income for Federal income tax
                                        purposes in connection with the receipt
                                        of the Rights. See "Certain United
                                        States Federal Tax Considerations -
                                        Federal Income Taxation of the Rights
                                        Offering."

                             The Concurrent Offering

Executive Group Subscription
Privilege.............................. Concurrently with the Rights Offering,
                                        NAI is offering to the Executive Group
                                        the right to purchase any remaining
                                        Excess Shares, at the Subscription
                                        Price, after the Basic Subscription
                                        Privileges and Oversubscription
                                        Privileges have been fulfilled. If the
                                        number of Excess Shares is not
                                        sufficient to satisfy all subscriptions
                                        pursuant to the Executive Group
                                        Subscription Privilege, such Excess
                                        Shares will be allocated pro rata
                                        (subject to the elimination of
                                        fractional shares) among those
                                        exercising the Executive Group
                                        Subscription Privilege, in proportion to
                                        the number of NAI Shares requested
                                        pursuant to the Executive Group
                                        Subscription Privilege. See "The

                                      -10-
<PAGE>

                                        Concurrent Offering--Subscription
                                        Privileges" and "Plan of Distribution."

Broker Member
Subscription Privilege................. Also concurrently with the Rights
                                        Offering, NAI is offering to the Broker
                                        Member Group the right to purchase any
                                        remaining Excess Shares, at the
                                        Subscription Price, after the Basic
                                        Subscription Privileges,
                                        Oversubscription Privileges and
                                        Executive Group Subscription Privileges
                                        have been fulfilled. NAI has authorized
                                        2,000,000 Additional Shares for issuance
                                        to the Broker Member Group in order to


                                        ensure that the Broker Member Group will
                                        in the aggregate have the right to
                                        purchase a minimum of 2,000,000 NAI
                                        Shares, to the extent that the number of
                                        Excess Shares is not sufficient to
                                        satisfy the Broker Member Group
                                        Subscription Privilege. If, after
                                        fulfillment of the Executive Group
                                        Subscription Privilege, the number of
                                        Excess Shares and Additional Shares is
                                        not sufficient to satisfy all
                                        subscriptions pursuant to the Broker
                                        Member Group Subscription Privilege,
                                        such Excess Shares and Additional Shares
                                        will be allocated pro rata (subject to
                                        the elimination of fractional shares)
                                        among those exercising the Broker Member
                                        Group Subscription Privilege, in
                                        proportion to the number of NAI Shares
                                        requested pursuant to the Broker Member
                                        Group Subscription Privilege. See "The
                                        Concurrent Offering--Subscription
                                        Privileges" and "Plan of Distribution."

Guaranteed Additional Shares
for Broker Members..................... NAI has authorized 2,000,000 Additional
                                        Shares for issuance to the Broker Member
                                        Group in order to ensure that the Broker
                                        Member Group will in the aggregate have
                                        the right to purchase a minimum of
                                        2,000,000 NAI Shares.

Subscription Price..................... $2.00 in cash per NAI Share.

Non-transferability of Executive Group
and Broker Member Group
Subscription Privileges................ The right to purchase Excess Shares
                                        pursuant to the Executive Group
                                        Subscription Privilege and the right to
                                        purchase Excess Shares or Additional
                                        Shares pursuant to the Broker Member
                                        Group Subscription Privilege is not
                                        transferable.

                                      -11-

<PAGE>

Expiration Date........................ The Executive Group Subscription
                                        Privilege and the Broker Member Group
                                        Subscription Privilege shall expire on
                                        the Expiration Date of the Rights. See
                                        "The Rights Offering--Expiration Date."
                                        If NAI extends the term of the Executive


                                        Group Subscription Privilege and the
                                        Broker Member Group Subscription
                                        Privilege due to an extension of the
                                        Rights Offering, it will issue a press
                                        release to such effect not later than
                                        the first Business Day following the
                                        most recently announced Expiration Date.
                                        After the Expiration Date, the Executive
                                        Group Subscription Privilege and the
                                        Broker Member Group Subscription
                                        Privilege will become void.

Subscription Agent..................... First Union National Bank

Federal Income Tax Consequences
of the Rights Offering................. To the extent Underlying Shares are not
                                        purchased by NAI Stockholders in the
                                        Rights Offering, the remaining Excess
                                        Shares, will be subject to purchase
                                        first, pursuant to the Management
                                        Subscription Privilege and second,
                                        pursuant to the Broker Member Group
                                        Subscription Privilege. Although not
                                        entirely clear, the right to purchase
                                        Excess Shares, as well as Additional
                                        Shares, pursuant to the Concurrent
                                        Privileges will be treated for Federal
                                        income tax purpose as non- qualified
                                        stock options. As such, there are no
                                        Federal income tax consequences at the
                                        time the Excess Shares or Additional
                                        Shares are offered pursuant to the
                                        Concurrent Privileges. Upon exercise of
                                        a Right, the holder must report as
                                        ordinary income an amount equal to the
                                        excess, if any, of the fair market value
                                        of the NAI Shares on the date of
                                        exercise over the exercise price paid to
                                        acquire such shares. NAI will be allowed
                                        a tax deduction in like amount. The tax
                                        basis of NAI Shares acquired through
                                        exercise of the Concurrent Privileges
                                        will equal the price paid therefor and
                                        the holding period of such NAI Shares
                                        will begin on the date of exercise. Gain
                                        or loss on the sale of such NAI Shares
                                        will be classified as capital gain or
                                        loss taxable in the manner discussed in
                                        "Certain United States Federal Tax
                                        Considerations--Federal Income Taxation
                                        of the Rights Offering--Sale of the
                                        Rights."

                                      -12-



<PAGE>

                                     General

NAI Shares Outstanding after the
Rights Offering and the Concurrent
Offering............................... 36,153,120 NAI Shares will be
                                        outstanding after the Rights Offering
                                        and the Concurrent Offering based on
                                        17,076,560 NAI Shares outstanding on the
                                        Distribution Effective Date, assuming
                                        all of the Rights are exercised and all
                                        Additional Shares are purchased.

Closing of Rights Offer and Concurrent
Offering and Issuance of Shares........ The closing will occur and certificates
                                        representing Underlying Shares , Excess
                                        Shares and Additional Shares will be
                                        delivered to subscribers as soon as
                                        practicable after the closing date and
                                        after all prorations have been effected.
                                        See "The Rights Offering--Subscription
                                        Privileges" and "The Concurrent
                                        Offering--Concurrent Privileges." No
                                        Underlying Shares, Excess Shares or
                                        Additional Shares will be issued until
                                        the closing. Funds delivered to the
                                        Subscription Agent for the exercise of
                                        Subscription Privileges and the
                                        Concurrent Privileges will be held in
                                        escrow by the Subscription Agent until
                                        the closing. No interest will be paid on
                                        funds held by the Subscription Agent in
                                        respect of the Subscription Privileges
                                        and the Concurrent Privileges. Any
                                        excess funds submitted in connection
                                        with the Oversubscription Privilege or
                                        the Concurrent Privileges, will be
                                        returned as soon as practicable
                                        following the closing of the Rights
                                        Offering and the Concurrent Offering.

Trading Market......................... There is currently no public market for
                                        the NAI Shares or Rights. The NAI Shares
                                        and Rights will be eligible for
                                        quotation and trading on the OTC
                                        Bulletin Board after the Distribution
                                        and Rights Offering. There can be no
                                        assurance that a public market for the
                                        NAI Shares or Rights will develop or
                                        provide liquidity. See "Risk
                                        Factors--Determination of Offering
                                        Price; Absence of Prior Market; Trading


                                        Prices." There will be no trading market
                                        for the Concurrent Privileges.

Use of Proceeds........................ NAI will not receive any proceeds from
                                        the Distribution. The net proceeds to be
                                        received by

                                      -13-

<PAGE>

                                        NAI from the Rights Offering and the
                                        Concurrent Offering depends on the
                                        number of Rights exercised and the
                                        number of Underlying Shares or
                                        Additional Shares purchased in the
                                        Concurrent Offering, as the case may be.
                                        If all Rights are exercised and all of
                                        the Additional Shares are purchased, NAI
                                        expects the net proceeds available to it
                                        from the Rights Offering and the
                                        Concurrent Offering to be approximately
                                        $38,000,000. After paying the expenses
                                        of the Rights Offering, the Concurrent
                                        Offering and the Related Transactions,
                                        the proceeds from the Rights Offering
                                        and the Concurrent Offering will be used
                                        to (i) repurchase 101,000 shares of
                                        Series A Preferred Stock of NAI for an
                                        aggregate repurchase price of $202,000,
                                        (ii) repay approximately $643,000
                                        aggregate principal amount of
                                        indebtedness, (iii) grow NAI's Corporate
                                        Services Department and Investment Sales
                                        Department, and (iv) strategically
                                        acquire and develop Real Estate-Related
                                        Services. The balance of any proceeds
                                        will be invested in short-term
                                        commercial paper at a rate of
                                        approximately 5.5% per annum until used
                                        for general corporate and working
                                        capital purposes and to
                                        opportunistically acquire real estate.

                                        Although in the Exchange Agreement, (i)
                                        the Finns, jointly and severally, agreed
                                        to exercise Rights to purchase an
                                        aggregate of 500,000 NAI Shares and (ii)
                                        Kranzco agreed to exercise such number
                                        of Rights to purchase NAI Shares that
                                        would result in Kranzco owning 9.8% of
                                        the issued and outstanding NAI Shares
                                        (before the issuance of any Additional
                                        Shares), NAI does not have a written


                                        commitment from any other person to
                                        purchase any of the Underlying Shares or
                                        Additional Shares pursuant to the Rights
                                        Offering or the Concurrent Offering, as
                                        the case may be. In addition, no minimum
                                        amount of proceeds is required for NAI
                                        to consummate the Rights Offering or the
                                        Concurrent Offering. Accordingly, no
                                        assurances can be given as to the amount
                                        of gross proceeds that NAI will realize
                                        from the Rights Offering and the
                                        Concurrent Offering. See "Risk
                                        Factors--No Commitments to Purchase and
                                        No Minimum Size of Rights Offering or
                                        Concurrent Offering" and "Use of
                                        Proceeds."

                                      -14-

<PAGE>

Dividend Policy........................ NAI has not paid any dividends on the
                                        outstanding NAI Shares to date. The
                                        payment of dividends, if any, in the
                                        future is with the discretion of the
                                        Board and will depend on NAI's earnings,
                                        its capital requirements and financial
                                        condition. It is the present intention
                                        of the Board to retain all earnings, if
                                        any, for use in NAI's business operation
                                        and, accordingly, the Board does not
                                        expect to declare or pay any cash
                                        dividends in the foreseeable future,
                                        except as may be required by any
                                        outstanding shares of preferred stock of
                                        NAI.

Risk Factors........................... Prospective investors should consider
                                        certain factors discussed under "Risk
                                        Factors," including risks which may
                                        arise out of general economic
                                        conditions; interest rate levels;
                                        financial market performance; the
                                        transactional nature of NAI's business;
                                        the consolidation of the commercial real
                                        estate brokerage industry and the
                                        resulting increased competition for
                                        Broker Members and Clients; the
                                        potential impact of government
                                        regulations on sharing brokerage
                                        commissions, franchises, and
                                        environmental issues; potential
                                        conflicts of interest between NAI and
                                        Kranzco; no experience or limited


                                        experience in certain areas in which NAI
                                        intends to expand its business; the
                                        absence of a public market for the NAI
                                        Shares; NAI's limited financial
                                        resources and lack of future funding
                                        commitments; dependence on key
                                        employees; risk of limited growth; risks
                                        related to the intercompany agreement;
                                        potential conflicts of interest;
                                        historic lack of dividends; potential
                                        dilution; the institution of
                                        anti-takeover measures; anti-takeover
                                        effect of certain provisions of Maryland
                                        law and of NAI's charter and bylaws; no
                                        commitments to purchase Underlying
                                        Shares, Excess Shares or Additional
                                        Shares; no minimum amount of proceeds
                                        required to consummate the Rights
                                        Offering or Concurrent Offering; and the
                                        possible extension of the expiration
                                        date of the Rights Offering and the
                                        Concurrent Offering.

                                      -15-

<PAGE>

                      Summary Financial and Operating Data
           (In thousands, except ratio, property and per share data )

              The following sets forth summary financial, operating and other
data on a historical basis for NAI. Also set forth below are summary pro forma
financial, operating and other data for NAI at and for the nine months ended
March 31, 1998 and the year ended June 30, 1997. The pro forma balance sheet
data as of March 31, 1998 has been prepared as if the Exchange Offer, the
Distribution, the Rights Offering and the Concurrent Offering had occurred on
March 31, 1998. The pro forma operating and other data for the nine months ended
March 31, 1998 have been prepared as if the consummation of the Exchange Offer,
the Distribution, the Rights Offering and the Concurrent Offering had occurred
on July 1, 1997. The pro forma operating and other data for the year ended June
30, 1997 have been prepared as if the foregoing transactions had occurred on
July 1, 1996. The pro forma financial and operating data are not necessarily
indicative of what the actual financial position or results of operations of NAI
would have been as of the date or for the periods indicated, nor do they purport
to represent the results of operations or financial position for future periods.
This data should be read in conjunction with the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
                                                Nine Months Ended March 31,                Year Ended June 30,
                                             ---------------------------------    -------------------------------------
                                             Pro Forma           Historical       Pro Forma           Historical


                                             ---------       -----------------    ---------    -------------------------
                                                 1998        1998         1997       1997      1997      1996       1995
                                                 ----        ----         ----       ----      ----      ----       ----
OPERATING DATA:                               (unaudited) (unaudited)  (unaudited)(unaudited)
<S>                                           <C>         <C>          <C>        <C>        <C>       <C>         <C>
Revenue:
  Commissions..............................    $ 2,836     $ 2,836     $ 2,910    $  4,001   $ 4,001   $  4,124    $ 4,371
  License fees.............................      1,128       1,128         923       1,282     1,282      1,373      1,158
  Other....................................        474         474         563         618       618        523        470
  Interest.................................      1,238           0           0       1,650         0          0          0
                                               -------     -------     -------    --------   -------   --------    -------
  Total revenue............................      5,676       4,438       4,396       7,551     5,901      6,020      5,999
                                               -------     -------     -------    --------   -------   --------    -------
Costs and expenses:
  Commission expense.......................        602         602         788       1,143     1,143      1,782      1,485
  Sales and marketing......................        277         277         194         321       321        285        324
  Compensation and benefits................      1,832       1,832       1,911       2,528     2,528      2,438      1,981
  Operating expense........................      1,953       1,578       1,187       2,144     1,644      1,475      1,336
  Depreciation and amortization............         40          40          37          52        52         56         45
  Interest, net............................          0          47          47           0        60         48         46
                                               -------     -------     -------    --------   -------   --------    -------
  Total costs and expenses.................      4,704       4,376       4,164       6,188     5,748      6,084      5,217
                                               -------     -------     -------    --------   -------   --------    -------
  Income (loss) from operations............        972          62         232       1,363       153        (64)       782
                                               -------     -------     -------    --------   -------   -------     -------
Other expenses:
  Equity in loss of affiliate..............         12          12          15          25        25          5          0
  Loss on sale of real estate..............          0           0           0           0         0          0         65
                                               -------     -------     -------    --------   -------   --------    -------
  Total other expenses.....................         12          12          15          25        25          5         65
                                               -------     -------     -------    --------   -------   --------    -------
  Income (loss) from continuing operations
    before income taxes......................      960          50         217       1,338       128        (69)       717

  Income taxes.............................          5           5           0           0         0          0         35
                                               -------     -------     -------    --------   -------   --------    -------
  Income (loss) from continuing operations         955          45         217       1,338       128        (69)       682

  Loss from discontinued operations........          0           0         162           0       223        128        392
                                                ------      ------      -------       ----    ------    -------       ----

  Net income (loss)........................        955          45          55       1,338       (95)      (197)       290

  Preferred share distributions............          0           7           8           0        11         13         15
                                               -------     -------     -------    --------   -------   --------    -------
  Net income (loss) available to common
    shareholders...........................    $   955     $    38     $    47    $  1,338    $ (106)   $  (210)   $   275
                                               =======     =======     =======    ========    =======    =======    =======

  Net income (loss) per share..............    $  0.03     $  0.00     $  0.00    $   0.04    $(0.01)   $ (0.02)   $  0.02
                                               =======     =======     =======    ========    =======   ========    =======

Other data (unaudited):
Common shares outstanding..................     36,154      12,974      12,888      36,154    12,871     12,863     12,782


Weighted average shares outstanding........     36,100      12,954      12,888      35,912    12,883     12,860     12,648
Ratio of EBITDA to fixed charges(1)........      25.00        1.46        3.27       26.73      1.95       0.30       7.62
EBITDA.....................................    $ 1,000     $   137     $   301    $  1,390   $   240   $     35    $   808

Balance sheet data (1995 unaudited):
Total assets...............................    $38,138     $ 1,829     $ 1,807               $ 1,689   $  1,732    $ 1,649
Total debt.................................    $     0     $   643     $   550               $   575   $    496    $   441
Shareholders equity (deficit)..............    $36,128     $(1,026)    $  (983)              $(1,090)  $ (1,008)   $  (837)
</TABLE>
------------
(1) For purposes of these computations, EBITDA consists of income before
    interest expense, taxes, depreciation and amortization. Fixed charges
    include interest expense, depreciation and amortization, and preferred
    shares distributions.

                                      -16-

<PAGE>

                                 RISK FACTORS

         This Prospectus includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange
Act. All statements, other than statements of historical facts, included in this
Prospectus that address activities, events or developments that NAI expects,
believes or anticipates will or may occur in the future, including such matters
as future capital expenditures, the acquisition or development of real estate or
Real Estate-Related Services (including the amount and nature thereof), the
consolidation and expansion trends of the commercial real estate brokerage
industry, business strategies, expansion and growth of NAI's operations and
other such matters are forward-looking statements. Such statements are based on
assumptions and expectations which may not be realized and are inherently
subject to risks and uncertainties, many of which cannot be predicted with
accuracy and some of which might not even be anticipated. Prospective investors
are cautioned that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from those
anticipated in the forward-looking statements. Risks and other factors that
might cause differences, some of which could be material, include, but are not
limited to: general economic conditions; interest rate levels; financial market
performance; the transactional nature of NAI's business; the consolidation of
the commercial real estate brokerage industry and the resulting increased
competition for Broker Members and Clients; the potential impact of government
regulations on sharing brokerage commissions, franchises, and environmental
issues; potential conflicts of interest between NAI and Kranzco; no experience
or limited experience in certain areas in which NAI intends to expand its
business; the absence of a public market for the NAI Shares; NAI's limited
financial resources and lack of future funding commitments; dependence on key
employees; risk of limited growth; risks related to the intercompany agreement;
potential conflicts of interest; historic lack of dividends; potential dilution;
the institution of anti-takeover measures; anti-takeover effect of certain
provisions of Maryland law and of NAI's charter and bylaws; no commitments to
purchase Underlying Shares, Excess Shares or Additional Shares; and no minimum
amount of proceeds required to consummate the Rights Offering or the Concurrent
Offering; and the possible extension of the expiration date of the Rights
Offering and the Concurrent Offering.

         An investment in the NAI Shares involves various risks. Before
purchasing NAI Shares offered hereby, prospective investors should give special
consideration to the information set forth below, in addition to the information
set forth elsewhere in this Prospectus.

History of Losses and Limited Profits

         NAI has reported net losses in the fiscal years ended June 30, 1997 and
1996 of $105,445 and $209,580, respectively. See "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" for a discussion of such losses.

No Commitments to Purchase and No Minimum Size of Rights Offering or Concurrent
Offering



         NAI does not have a written commitment from any person to purchase any
of the Underlying Shares pursuant to the Rights Offering or to purchase any
Excess Shares or Additional Shares pursuant to the Concurrent Offering, except
that (i) the Finns, jointly and severally, have agreed to exercise Rights to
purchase an aggregate of 500,000 NAI Shares and (ii) Kranzco has agreed to
exercise such number of Rights to purchase NAI Shares that would result in
Kranzco owning 9.8% of the issued and outstanding NAI Shares, before the
issuance of any Additional Shares. In addition, no minimum amount of proceeds is
required for NAI to consummate the Rights Offering or the Concurrent Offering.
Accordingly, no assurances can be given as to the amount of gross proceeds that
NAI will realize from the Rights Offering

                                     -17-


<PAGE>


or the Concurrent Offering. NAI may not be able to achieve all the benefits it
would otherwise anticipate from the strategic relationship with Kranzco and the
Related Transactions if less than all of the Underlying Shares and Additional
Shares are sold.  See "The Rights Offering," "The Concurrent Offering," and
"Plan of Distribution."

Limited Financial Resources; No Future Funding Commitments

         NAI initially will rely primarily on its revenues and the proceeds of
the Rights Offering and the Concurrent Offering in order to finance its future
growth. NAI has not received any commitment with respect to any additional
funding from any third party (including Kranzco). Kranzco is not obligated to
provide any funds to NAI in the future or to assist NAI in obtaining additional
financing. If NAI is unable to obtain funding in the future, it may not be able
to pursue its growth strategy based on acquisitions and development, which may
have an adverse impact on the business, condition and prospects of NAI.

Competition; Ability to Retain Broker Members and Attract Additional Broker
Members

         NAI primarily seeks business from corporations, individual
owner/investors and national and international organizations with real estate
requirements in multiple market areas. NAI faces competition for clients from
(i) local and regional Commercial Real Estate Brokers, (ii) national
broker-owned companies with global alliances, and (iii) national/global
networks. Some of NAI's competitors include CB Commercial Real Estate Services
Group, Inc.; Colliers International Property Consultants; Cushman & Wakefield,
Inc.; Grubb & Ellis Company; Insignia Financial Group, Inc.; Trammell Crow
Company. Certain of NAI's competitors are better known and are larger, more
established companies with substantial capabilities. Consequently, NAI may be at
a disadvantage in competing with these companies in a number of markets.

         NAI's ability to earn revenues is directly related to its ability to
attract and retain successful, independently owned, commercial and industrial,
licensed real estate brokers ("Commercial Real Estate Brokers") in a substantial


number of market areas as Broker Members. The number of Broker Members in
different market areas, and their strength and reputation in their own local
markets, may directly affect the anticipated volume of commissions generated by
the Network, as well as NAI's ability to obtain exclusive assignments from a
national client base. NAI is presently competing for Broker Members with
cooperative commercial broker networks, as well as large national and regional
commercial real estate brokerage firms. There has been a consolidation of
Commercial Real Estate Brokers, which are better known and have greater
resources than NAI, that are actively seeking to acquire other real estate
brokerage and service companies. Certain of NAI's competitors, such as CB
Commercial and Grubb & Ellis are attempting to grow their businesses through
acquisitions and through entering into affiliation agreements with independent
Commercial Real Estate Brokers. To the extent these companies are successful in
acquiring or entering into affiliation agreements with independent Commercial
Real Estate Brokers, there may be a negative impact on NAI's ability to attract
and retain qualified Commercial Real Estate Brokers to join the Network as
Broker Members.

         In addition, approximately 60% of NAI's Broker Members are party to a
Membership Agreement which permits Broker Members to terminate the Membership
Agreement upon 45 days prior notice. Accordingly, there can be no assurance that
in light of the increased competition to retain or acquire Commercial Real
Estate Brokers, that Broker Members will not terminate, or renew their
Membership Agreements.

                                     -18-


<PAGE>


Collection of Fees from Broker Members

         Under its standard agreement with Broker Members, NAI is entitled to
receive a predetermined percentage of any brokerage commission earned from the
acquisition, disposition or leasing of real estate covered by such agreement.
Although NAI believes that it has established sufficient controls to monitor
transactions among Broker Members and the failure of a Broker Member to pay any
such commission will cause a termination of such Broker Member's membership in
the Network, no assurance can be given that NAI will be able to collect all
commissions due it by Broker Members. Substantially all of the revenues earned
by NAI, other than the payment of the Membership Fees, are earned by sharing in
commissions with Broker Members in 47 states. Most states permit licensed real
estate brokers to enter into commission sharing agreements with licensed real
estate brokers from other jurisdictions, however, some states impose certain
requirements with respect to entering into such agreements. While NAI believes
it is in compliance with substantially all of such requirements, to the extent
NAI has violated any such state law requirements it may not be able to enforce
its Membership Agreement and may be subject to civil liability and criminal
penalties. See "Business--Membership Agreements and Fees" and
"Business--Government Regulation--State Laws Governing Real Estate Brokers."


Effect of Increase in Membership Fees

         While NAI believes that its current schedule of Membership Fees will
not have a substantial effect on the number of new Broker Members or membership
renewals by existing Broker Members, no assurance can be given that increases in
the Membership Fees for new Broker Members, as well as increases in Membership
Fees for renewals by existing Broker Members, will not have an adverse effect on
the number of new Broker Members or membership renewals. See "Business--Broker
Members--Membership Agreements and Fees" and "Risk Factors--Competition; Ability
to Retain Broker Members and Attract Additional Broker Members."

Dependence on Key Employees

         NAI is dependent upon the experience and abilities of its founder and
Chief Executive Officer, Mr. Gerald C. Finn, and its current President and Chief
Operating Officer, Mr. Jeffrey Finn, both of whom are subject to employment
agreements.  Messrs. G. Finn and J. Finn are both directors and  large
stockholders and are involved in all aspects of NAI's business.  The loss of
either Mr. G. Finn's or Mr. J. Finn's services would be detrimental to the
continued development of NAI and would adversely affect the conduct of NAI's
business.  See "Business" and "Management," "Principal Stockholders" and "Use of
Proceeds."

Adverse Changes in Economic Conditions

         Substantially all of the revenues earned by NAI, other than the payment
of annual membership fees ("Membership Fees") by Broker Members and Alliance
Members, are earned by sharing in commissions generated by the Network. The
commissions generated by the Network are based upon the number and value of
transactions in which NAI and its Broker Members participate. The real estate
market is subject to volatility and is effected by general economic conditions.
Periods of economic slowdown or recession, rising interest rates or declining
demand for real estate may adversely affect NAI's business. Such economic
conditions could result in a general decline in rents and property prices, which
in turn would adversely affect revenues from brokerage commissions derived from
property sales and leases. Accordingly, the amount of revenues received by NAI
may be subject to substantial variation from year to year and prior revenues may
bear no relationship to future revenues. See "Business--Broker Members" and
"--Competition; Ability to Retain Broker Members and Attract Additional Broker
Members."

                                     -19-


<PAGE>

Risk of Limited Growth

         NAI's growth strategy is to increase profitability by continuing to
enlarge the Network by attracting and retaining Broker Members or by investing
in or acquiring affiliated brokerage firms and by continuing to expand into Real
Estate-Related Services by the acquisition of Real Estate-Related Service
companies and the development of Real Estate-Related Services. Accordingly, a
significant component of the growth of NAI may be through the acquisition of


Commercial Real Estate Brokers or companies which perform Real Estate-Related
Services. There can be no assurance that suitable acquisition opportunities will
be available to NAI or its affiliates or that NAI or its affiliates will not
overpay for acquisitions or that such acquisitions will be efficiently and
adequately integrated. There may be significant competition for targeted
acquisitions. Some of the companies in which NAI or its affiliates acquire an
interest may have little or no operating histories, may have historical
operating losses, and have competitors that are larger and more well
capitalized. Certain of the acquisitions of NAI or its affiliates may be
involved in sectors that are subject to increasing competition. As a result, the
costs incurred to acquire or reposition companies may be significant and may not
be recovered. Furthermore, there can be no assurance that acquisitions will not
be dilutive to NAI's earnings.

Limited Experience in Certain Areas

         NAI anticipates expanding the scope of its business beyond its current
focus on real estate brokerage transactions to the broader delivery of its Real
Estate-Related Services. NAI is not currently engaged in any negotiations to
provide for the acquisition or development of such Real Estate-Related Services,
and there is no assurance that NAI will be able to acquire, develop or provide
additional Real Estate-Related Services in the future.

Potential Impact of Franchise Laws

         The offer and sale of franchises is subject to a trade regulation rule
promulgated by the Federal Trade Commission ("FTC") entitled "Disclosure
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures" (the "Franchise Rule") that requires a franchisor to provide pre-sale
disclosure to a prospective franchisee prior to the sale of a franchise subject
to the Franchise Rule. NAI believes that by offering and selling memberships to
its Broker Members it may have been offering a "franchise" as defined by the
Federal Rule, however; NAI believes it is exempt from compliance with the
Franchise Rule.

         The offer and sale of franchises is also subject to certain state
franchise sales laws and state business opportunity laws (collectively, "State
Laws"). In addition, many states have laws that regulate certain substantive
aspects of the franchisor-franchisee relationship, including termination or
non-renewal of franchise agreements. NAI believes that by offering and selling
memberships to its Broker Members it may have been offering a "franchise," as
defined by the State Laws.

         While NAI believes that it is exempt from the requirements of many of
the State Laws in states in which it has entered into Member Agreements, NAI
believes that there are approximately six (6) states with a State Law in which
NAI has entered into Membership Agreements for which NAI may not be exempt, may
have failed to comply with the filing or registration and disclosure provisions
of such State Law, and for which it may be subject to certain sanctions or
potential liability. Additionally, there is no assurance that the exemptions
from compliance with the Federal Rule and the State Laws in states which NAI
believes there are exemptions on which NAI is relying, have been, or will
continue to be, available. Any sanctions or potential liability would include
that NAI may be subject to civil penalties imposed by state regulatory agencies,


and legal actions by existing Members for rescission of existing Membership
Agreements, restitution, and damages as a result of any violation of such law.
NAI believes that, if any


                                     -20-


<PAGE>


state regulatory agencies, or any of the Members, in such states sought such
remedies and any such action were successful, its potential liability could be
to refund certain fees. While NAI believes that it has strong defenses to any
alleged violation of any State Law, there can be no assurance that a court would
not take the position that NAI should have complied with such laws in connection
with those transactions.

         NAI has also recently entered into several Membership Agreements with
Members in foreign countries. NAI has, to date, not taken any actions to comply
with franchise-related laws in effect in those jurisdictions. While NAI believes
that it is in substantial compliance with such laws, and has good defenses to
any alleged violation of such laws, to the extent that NAI may not be in
compliance, it may be subject to actions by regulatory agencies and legal
actions by existing Members, and subject to fines, penalties, and damages.

Real Estate Investment Risks

         To the extent funds are available, NAI intends to strategically acquire
real property. Investments in real estate are subject to the risks incident to
the ownership and operation of real estate generally. The yields available from
equity investments in real estate depend on the amount of income generated and
expenses incurred. A commercial property's revenues and value may be adversely
affected by a number of factors, including the national, state and local
economic climate and real estate conditions (such as oversupply of or reduced
demand for space and changes in market rental rates); the perceptions of
prospective tenants of the safety, convenience and attractiveness of the
properties; the ability of the owner to provide adequate management, maintenance
and insurance; the ability to collect on a timely basis all rent from tenants;
the expense of periodically renovating, repairing and reletting spaces; and
increasing operating costs (including real estate taxes and utilities) which may
not be passed through to tenants. Certain significant expenditures associated
with investments in real estate (such as mortgage payments, real estate taxes,
insurance and maintenance costs) are generally not reduced when circumstances
cause a reduction in rental revenues from the property. If a property is
mortgaged to secure the payment of indebtedness and if the owner is unable to
meet its mortgage payments, a loss could be sustained as a result of foreclosure
on the property or the exercise of other remedies by the mortgagee. In addition,
real estate values and income from properties are also affected by such factors
as compliance with laws, including tax laws, interest rate levels and the
availability of financing. Also, the rentable square feet of commercial property
available for lease is often affected by market conditions and may therefore
fluctuate over time. Furthermore, equity real estate investments are 
relatively illiquid.



         NAI may engage in the selective development and construction of real
estate properties. Risks associated with development and construction activities
include the risks that development opportunities may be abandoned after
expending resources to determine feasibility; construction costs of a project
may exceed original estimates; occupancy rates and rents at a newly completed
property may not be sufficient to make the property profitable; financing may
not be available on favorable terms for development of a property; and
construction and lease-up may not be completed on schedule, resulting in
increased debt service expense and construction costs. Development activities
are also subject to risks relating to the inability to obtain, or delays in
obtaining, all necessary zoning, land-use, building, occupancy and other
required governmental permits and authorizations. In addition, new development
activities, regardless of whether they are ultimately successful, typically
require a substantial portion of management's time and attention.

         Under various federal, state and local environmental laws, ordinances
and regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of certain hazardous or toxic
substances on, under or in such property. Such laws often impose such liability
whether or not the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances, and the liability under certain
such laws may be strict and joint and several unless the

                                     -21-

<PAGE>

harm is divisible and there is a reasonable basis for allocating responsibility.
The costs of any required remediation or removal of such substances may be
substantial and the owner's or operator's liability therefor as to any property
is generally not limited under such laws, ordinances and regulations and could
exceed the value of the property and/or the aggregate assets of the owner or
operator. The presence of hazardous or toxic substances, or the failure to
properly remediate property affected by such substances, may adversely affect
the market value of the affected property, as well as the owner's ability to
sell or lease such property or to obtain financing using such property as
collateral.

Risks of Intercompany Agreement; Restrictions on NAI's Opportunities

         NAI and Kranzco have entered into an Intercompany Agreement to provide
both Kranzco and NAI with first opportunity rights or notification rights with
respect to certain business opportunities. See "Related
Transactions--Intercompany Agreement." While the Intercompany Agreement grants
NAI certain notification rights with respect to providing certain brokerage and
Real Estate-Related Services to Kranzco, Kranzco is not required to enter into
an agreement to purchase such services from NAI. Accordingly, there is no
assurance that the Intercompany Agreement will result in any revenues to NAI, or
that the benefits anticipated therefrom will be realized. The Intercompany
Agreement also provides Kranzco with certain first opportunity/notification
rights with respect to retail properties for sale which NAI is aware of through
the Network or otherwise; however, there is no assurance that Kranzco will
purchase such properties. Accordingly, the benefit to NAI of increased revenue


from transactions with Kranzco may not be realized.

         The Intercompany Agreement restricts NAI's opportunities in certain
instances. Although NAI does not currently invest in real estate, it may
determine to acquire properties in the future. Under the Intercompany Agreement,
NAI has agreed not to acquire or make investments in retail properties unless it
has notified Kranzco of the acquisition or investment opportunity, and Kranzco
has determined not to pursue such acquisition or investment. In addition, the
Intercompany Agreement provides that NAI may not enter into any type of
strategic relationship with any other REIT or real estate investment or
operating type entity without the prior written consent of Kranzco. NAI,
however, is permitted under the Intercompany Agreement to solicit assignments
from other REITs or real estate investment or operating type entities with
respect to the purchase, sale or lease of real estate, or the provision of Real
EstateRelated Services, subject to Kranzco's first opportunity rights. See
"Related Transactions--Intercompany Agreement." The restrictions imposed by the
Intercompany Agreement may prohibit NAI from pursuing business opportunities
which it believes may be beneficial.

Potential Conflicts of Interest

         Kranzco and NAI have several common members on its Board of Trustees
and Board of Directors, as the case may be, and have certain common executive
officers. Kranzco and NAI intend to operate in a relationship governed by the
Intercompany Agreement. In their relationship with Kranzco as a Client of NAI,
Kranzco and NAI may have conflicting views on the manner in which services and
opportunities are provided to Kranzco by NAI, or the manner in which
opportunities are provided to NAI by Kranzco, pursuant to the Intercompany
Agreement, and in the enforcement of the Intercompany Agreement. As a result,
the trustees and executives of Kranzco (who serve in similar capacities at NAI)
may well be presented with several decisions which provide them the opportunity
to benefit Kranzco to the detriment of NAI or benefit NAI to the detriment of
Kranzco. Such potential conflicts of interest will be present in all of the
numerous transactions between Kranzco and NAI. Officers and directors of a
corporation and officers and trustees of a trust owe duties to the shareholders
of such entities. There is a risk that the common management and members of the
Boards of NAI and Kranzco will lead to conflicts of interest in connection with
transactions between the two companies and opportunities presented to each of
the companies. Although, the Intercompany Agreement attempts to minimize the
conflicts which may arise

                                     -22-


<PAGE>



due to the common management and Board membership, there is no assurance that it
will successfully cover all conflicts, or that such conflicts may not negatively
affect one or both companies. See "Related Transactions--The Intercompany
Agreement" for a description of the relationship between Kranzco and NAI and the
Intercompany Agreement.



                   It is intended that each of Gerald C. Finn, Co-Chairman and
Chief Executive Officer of NAI, and Jeffrey M. Finn, President and Chief
Operating Officer of NAI, will be required to spend all of his respective
business time working for NAI. However, Mr. Finn is a nominee to the Board of
Trustees of Kranzco, and will also owe a fiduciary duty to the shareholders of
Kranzco. In addition, pursuant to the Intercompany Agreement, Norman M.
Kranzdorf serves as the Co-Chairman of NAI, Robert H. Dennis will serve as the
Chief Financial Officer of NAI, and Michael Kranzdorf serves as the Chief
Information Officer of NAI, in each case for a period of three years. Each of
Messrs. N. Kranzdorf, Dennis and M. Kranzdorf are also officers of Kranzco, and
will have a primary responsibility to Kranzco. Although each of Messrs. N.
Kranzdorf, Dennis, and M. Kranzdorf is committed to the success of NAI they are
also committed to the success of Kranzco, and none of Messrs. N. Kranzdorf,
Dennis, and M. Kranzdorf is committed to spending a particular amount of time on
NAI's or Kranzco's affairs, nor will any of them devote his full time to NAI or
Kranzco.

Determination of Offering Price; Absence of Prior Market; Trading Prices

         The Subscription Price of the NAI Shares issuable upon exercise of the
Rights and the Concurrent Privileges was determined by NAI and Kranzco based on
various factors, but does not necessarily bear any direct relationship to
established value criteria such as assets, earnings or book value. In
determining the offering price, NAI and Kranzco considered such factors as NAI's
limited financial resources, NAI's development since its organization, the
nature and risks of the real estate brokerage industry, the amount of dilution
to investors in NAI, the pricing and comparison of similar types of companies,
the prospects for the real estate brokerage industry, and the general condition
of the securities markets and the potential opportunities available to NAI if
the Rights Offering and the Concurrent Offering are fully subscribed.

         There is currently no public market for NAI Shares or the Rights. The
NAI Shares will be eligible for quotation and trading on the OTC Bulletin Board
after the Distribution, however, there can be no assurance that a public market
for the NAI Shares will develop or provide liquidity. If a trading market
develops, there can be no assurance as to the prices at which trading in the NAI
Shares will occur.

         The prices at which NAI Shares trade will be determined by the
marketplace and may be influenced by many factors, including, among others, the
performance and prospects of NAI and its affiliates, the depth and liquidity of
the market for NAI Shares, investor perception of NAI and its affiliates, the
sectors in which they operate, economic conditions in general, NAI's dividend
policy, and general financial and other market conditions. In addition,
financial markets have experienced extreme price and volume fluctuations that
have affected the market price of many stocks and that, at times, could be
viewed as unrelated or disproportionate to the operating performance of such
companies. Such fluctuations have also affected the share prices of many newly
public issuers. Such volatility and other factors may materially adversely
affect the market price of NAI Shares.

         While the Rights are transferable, NAI does not intend to list the
Rights on any national securities exchange or automated quotation system.
Accordingly, the Rights may be highly illiquid securities and it is unlikely


that a trading market will develop for the Rights. The Concurrent Privileges are
not transferable.


                                     -23-


<PAGE>


No Dividends

         NAI has not paid any dividends on the outstanding NAI Shares to date.
The payment of dividends, if any, in the future is with the discretion of the
Board and will depend on NAI's earnings, its capital requirements and financial
condition. It is the present intention of the Board to retain all earnings, if
any, for use in NAI's business operation and, accordingly, the Board does not
expect to declare or pay any cash dividends in the foreseeable future, except as
may be required by any outstanding shares of preferred stock of NAI.

Dilution

         NAI Stockholders who do not exercise their Basic Subscription Privilege
in full will realize a dilution in their percentage voting interest and
ownership interest in future net earnings, if any, of NAI to the extent that
rights are exercised by other Holders. In addition, even NAI Stockholders who
exercise their Basic Subscription Privilege in full will realize a dilution in
their percentage voting interest and ownership interest in future net earnings,
if any, of NAI if any Additional Shares are issued pursuant to the Broker Member
Group Subscription Privilege.

Institution of Anti-takeover Measures; Anti-takeover Effect of Certain
Provisions of Maryland Law and of NAI's Charter and Bylaws

         Certain provisions of NAI's Articles of Incorporation (the "Charter")
and bylaws (the "Bylaws") could have the effect of discouraging a third party
from pursuing a non-negotiated takeover of NAI or could delay, defer or prevent
a transaction or a change in control of NAI that might involve a premium price
for the NAI Shares or otherwise be in the best interests of NAI Stockholders.

                   Staggered Board. NAI's Board of Directors is divided into
three classes of directors. The initial terms of the first, second and third
classes will expire in 1999, 2000 and 2001, respectively. Beginning in 1999,
directors of each class will be chosen for three-year terms upon the expiration
of their current terms and each year one class of directors will be elected by
the stockholders. The staggered terms of directors may reduce the possibility of
a tender offer or an attempt to change control of NAI even though a tender offer
or change in control might be in the best interest of the stockholders. See
"Certain Provisions of Maryland Law and of NAI's Charter and Bylaws --
Classification of the Board of Directors."

                   Blank Check Stock. NAI's charter authorizes the Board of
Directors to cause NAI to issue additional authorized but unissued shares of NAI
common stock and to classify or reclassify any unissued shares of stock of NAI


in one or more classes or series of stock and to set the preferences, rights and
other terms of such classified or unclassified shares. See "Description of
Securities -- Common Stock" and "-Preferred Stock" and "-- Power to Issue
Additional Shares of Common Stock and Preferred Stock." Although the Board of
Directors has no such intention at the present time, it could establish a series
of NAI Preferred Stock that could, depending on the terms of such series, delay,
defer or prevent a transaction or a change in control of NAI that might involve
a premium price for the NAI Shares or otherwise be in the best interest of the
stockholders.

                   Other Provisions. The Charter and Bylaws of NAI also contain
other provisions that may delay, defer or prevent a transaction or a change in
control of NAI that might involve a premium price for the NAI Shares or
otherwise be in the best interest of the stockholders. See "Certain Provisions
of Maryland Law and of NAI's Charter and Bylaws -- Removal of Directors," "--
Business Combinations," "-- Control Share Acquisitions" and "-- Advance Notice
of Director Nominations and New Business."


                                     -24-


<PAGE>

Possible Extension of Expiration Date

         NAI has reserved the right to extend the Expiration Date for the Rights
Offering and the Concurrent Offering to as late as __________ __, 1998. Funds
deposited in payment of the Subscription Price for Underlying Shares, Excess
Shares or Additional Shares may not be withdrawn and no interest will be paid
thereon. See "The Rights Offering--Expiration Date" and "The Concurrent
Offering--Expiration Date."

                               USE OF PROCEEDS

         The net proceeds to be received from the Rights Offering and the
Concurrent Offering depend on the number of Rights exercised and the number of
Excess Shares and Additional Shares purchased. If all Rights are exercised and
all Additional Shares are purchased, NAI expects the net proceeds available to
it from the Rights Offering and the Concurrent Offering to be approximately
$38,000,000. After paying the expenses of the Rights Offering, the Concurrent
Offering and the Related Transactions, the proceeds from the Rights Offering and
the Concurrent Offering, will in the following order of priority, be used to (i)
repurchase 101,000 shares of Series A Preferred Stock of NAI for an aggregate
repurchase price of $202,000, (ii) repay approximately $643,000 aggregate
principal amount of indebtedness described below, (iii) expand NAI's Corporate
Services Department and Investment Sales Department, and (iv) strategically
acquire and develop Real Estate-Related Services. The balance of any proceeds
will be invested in short-term commercial paper at a rate of approximately 5.5%
per annum until used for general corporate and working capital purposes and to
opportunistically acquire real estate.

         The proceeds of the Rights Offering and the Concurrent Offering will be
used to repay (i) a 12% demand note, dated April 21, 1988, with an outstanding


principal balance of $110,500, issued by NAI to The Building Center, Inc., an
entity owned by Gerald and Norma Finn, (ii) two 10% demand notes, dated August
12, 1994 and May 16, 1997, respectively, issued by NAI to Gerald and Norma Finn,
with outstanding principal balances of $35,000 and $50,000, respectively, (iii)
a 12% demand note, dated April 24, 1988, issued by NAI to Gerald and Norma Finn,
with an outstanding principal balance of $145,000, (iv) three 10% demand notes,
dated August 6, 1993, September 14, 1993, and November 9, 1993, respectively,
issued by REALQuest, Inc., a wholly-owned subsidiary of NAI, to Gerald and Norma
Finn, with outstanding principal balances of $10,000, $20,000 and $10,000,
respectively, (v) a 12% demand note, dated April 24, 1991, issued by NAI to
Gerald and Norma Finn, with an outstanding principal balance of $58,235, (vi) a
loan by Gerald Finn and Norma Finn dated December 8, 1993, in the principal
amount of $2,500, (vii) $6,666.74 aggregate principal amount outstanding under a
demand Promissory Note, dated April 29, 1996, issued by NAI to First Washington
State Bank ("FWSB"), which bears interest at a variable rate equaling FWSB's
prime rate plus one percent, (viii) $100,000 aggregate principal amount
outstanding under a Promissory Note, dated October 2, 1997, issued by NAI to
FWSB pursuant to a Line of Credit (the "Line of Credit"), due October 2, 1998,
which bears interest at a variable rate equaling FWSB's prime rate plus one
percent and (ix) $95,000 aggregate principal amount outstanding pursuant to a
Promissory Note dated December 2, 1997, issued by NAI to FWSB pursuant to a term
loan due November 2002, which bears interest at a variable rate equaling FWSB's
prime rate plus one percent. The proceeds from the Term Loan and the Line of
Credit were used for general corporate and working capital purposes.

         In the event that all of the Underlying Shares, Excess Shares and
Additional Shares are not purchased, NAI has assumed a minimum number of
Underlying Shares, Excess Shares and Additional Shares being purchased (an
aggregate of 930,378 NAI Shares) ("Minimum NAI Shares") and a moderate number of
Underlying Shares, Excess Shares and Additional Shares being purchased (an
aggregate of 10,000,000 NAI Shares) ("Moderate NAI Shares"). The Minimum NAI
Shares were estimated by NAI to be the minimum amount of Underlying Shares to be
purchased primarily by NAI, Kranzco and the


                                     -25-


<PAGE>



officers and directors of both Kranzco and NAI. The Moderate NAI Shares were
estimated by NAI to approximate the mid-point between the Minimum NAI Shares and
the Maximum NAI Shares being purchased. The sale of the Minimum NAI Shares will
result in gross proceeds to NAI of $1,860,756 and 18,006,938 NAI Shares being
outstanding. The sale of the Moderate NAI Shares will result in gross proceeds
to NAI of $20,000,000 and 27,076,560 NAI Shares being outstanding.

         NAI does not have a written commitment from any person to purchase any
of the Underlying Shares pursuant to the Rights Offering or Excess Shares or
Additional Shares in the Concurrent Offering, except that (i) the Finns, jointly
and severally, have agreed to exercise Rights to purchase an aggregate of
500,000 NAI Shares and (ii) Kranzco has agreed to exercise such number of Rights


to purchase NAI Shares that would result in Kranzco owning 9.8% of the issued
and outstanding NAI Shares, before the issuance of any Additional Shares.
Accordingly, no assurances can be given as to the amount of gross proceeds that
NAI will realize from the Rights Offering and the Concurrent Offering. No
minimum amount of proceeds is required for NAI to consummate the Rights Offering
or the Concurrent Offering. See "Risk Factors--No Commitments to Purchase and No
Minimum Size of Rights Offering or Concurrent Offering."

         Pending such uses, the net proceeds may be invested in short-term
income-producing investments such as investment grade commercial paper,
government and government agency securities, money market funds that invest in
government securities, certificates of deposit and interest-bearing bank
accounts.

         NAI will not receive any proceeds from the Distribution.

                               DIVIDEND POLICY

         NAI has not paid any dividends on the outstanding NAI Shares to date.
The payment of dividends, if any, in the future is with the discretion of the
Board and will depend on NAI's earnings, its capital requirements and financial
condition. It is the present intention of the Board to retain all earnings, if
any, for use in NAI's business operation and, accordingly, the Board does not
expect to declare or pay any cash dividends in the foreseeable future, except as
may be required by any outstanding shares of preferred stock of NAI.


                                     -26-


<PAGE>

                                   DILUTION

         At March 31, 1998, NAI had a net tangible book value of $(1,026,123),
or $(0.08) per outstanding common share. Without taking into account any other
change in such net tangible book value after March 31, 1998, other than to give
effect to the recapitalization of NAI (through the Reincorporation Merger) at a
conversion rate of 1.316172 per common share outstanding, the Rights Offering,
the Concurrent Offering and the net proceeds therefrom, the net tangible book
value of NAI at March 31, 1998 would have been as follows given the range of the
number of Underlying Shares, Excess Shares and Additional Shares purchased:


<TABLE>
<CAPTION>
                                                            Net Tangible
                                                             Book Value         Per Share
                                                           -------------       ----------
<S>                                                         <C>                <C>
Minimum number of Underlying Shares,
Excess Shares and Additional Shares
purchased (930,378 NAI Shares)                                $  (165,367)       $ (.01)

Moderate number of Underlying Shares,
Excess Shares and Additional Shares
purchased (10,000,000 NAI Shares)                             $17,973,877        $ .66


Maximum number of Underlying Shares,
Excess Shares and Additional Shares
purchased (19,076,560 NAI Shares)                             $36,126,997        $1.00
</TABLE>

This amount represents an immediate increase in net tangible book value per NAI
Share and an immediate dilution in net tangible book value per NAI Share to new
investors as illustrated in the following table:

<TABLE>
<CAPTION>

                                                                Minimum               Moderate                 Maximum
                                                                -------               --------                 -------
<S>                                                             <C>                   <C>                     <C>
Subscription price per NAI Share in the
Rights Offering and the Concurrent
Offering                                                          $2.00                $2.00                  $2.00

     Net tangible book value per NAI Share
      before the Rights Offering and the
      Concurrent Offering(1)                                      $(.08)               $(.08)                 $(.08)

     Increase in net tangible book value per
      NAI Share attributable to the
      Rights Offering and the Concurrent
       Offering(2)                                                $ .07                $ .74                  $1.08
                                                                  ----                 -----                  -----
Net tangible book value per NAI Share
after the Rights Offering and the
Concurrent Offering(2)                                            $(.01)               $ .66                  $1.00
                                                                  ------                ----                  -----
Dilution in net tangible book value per NAI
Share to new investors(3)                                         $2.01                $1.34                  $1.00
                                                                  =====                =====                  =====
</TABLE>

(1) Net tangible book value per NAI share before the Rights Offering and the
Concurrent Offering is determined by dividing the net tangible book value of NAI
(total assets of $1,828,817 less total liabilities and redeemable convertible
preferred shares of $2,854,940) by the number of outstanding NAI Shares. 

(2) Based on a subscription price of $2.00 per NAI Share and estimated
transaction costs of $1,000,000.

(3) Dilution is determined by subtracting net tangible book value per NAI Share
after the Rights Offering and the Concurrent Offering from the subscription
price of $2.00 per NAI Share.


                                     -27-



<PAGE>


                                CAPITALIZATION

         The following table sets forth the capitalization of NAI (i) as of
March 31, 1998 and (ii) as adjusted to give effect to the consummation of the
Exchange Offer, the subsequent Distribution, the Rights Offering and the
Concurrent Offering and assuming all of the Underlying Shares and Additional
Shares are purchased. See "Use of Proceeds."(1)

<TABLE>
<CAPTION>
                                                                                     As of March 31, 1998
                                                                                     --------------------
                                                                                        (In thousands)
                                                                             Actual                   As adjusted
                                                                             ------                   -----------
<S>                                                                         <C>                       <C>
Debt:

Current portion of the long-term debt..................................   $      127                   $         0
Stockholders loans.....................................................          441                             0
Long-term debt.........................................................           75                             0
                                                                          -----------                   ----------

                  Total debt...........................................          643                             0
                                                                          ----------                   -----------

Convertible Preferred Stock; $0.01 par value per share;
101,000 shares issued and outstanding; (0 as adjusted) ................          202                             0
                                                                         -----------                   -----------

Stockholders' equity (deficit):

Common stock, $.01 par value; 200,000,000 authorized,
12,974,414 shares issued and outstanding; (36,153,120
as adjusted)..........................................................           134(2)                        362

Capital in excess of par value.......................................          2,553(2)                     39,245(3)(4)

Retained earnings (deficit)..........................................         (3,479)                       (3,479)
                                                                         -----------                   -----------
                  ...................................................           (792)                       36,128

Treasury stock, at cost(2)...........................................           (234)                            0(3)
                                                                         -----------                   -----------

                  Total stockholders' equity (deficit)...............         (1,026)                       36,128
                                                                         -----------                   -----------

                  Total capitalization...............................   $       (181)                  $    36,128
                                                                        ============                   ===========
</TABLE>



(1) The following table presents the capitalization of NAI, as adjusted to give
effect to the consummation of the Exchange Offer, the subsequent Distribution,
the Rights Offering and the Concurrent Offering and assuming the purchase of (a)
a minimum number of Underlying Shares, Excess Shares and Additional Shares (an
aggregate of 930,000 NAI Shares) and (b) a moderate number of Underlying Shares,
Excess Shares and Additional Shares (an aggregate of 10,000,000 NAI Shares):

<TABLE>
<CAPTION>
                                                                                         As Adjusted
                                                                                         -----------
                                                                                       (In thousands)
                                                                             (a)                       (b)
                                                                             ---                       ---  
                <S>                                                       <C>                    <C>
                Total debt............................................    $        0              $       0
                Convertible preferred stock...........................    $        0              $       0
                Common stock..........................................    $      180              $     271
                Capital in excess of par value........................    $    3,133(3)(4)        $  21,182(3)(4)
                Retained earnings (deficit)...........................    $   (3,479)             $  (3,479)
                Treasury stock........................................    $        0(3)           $       0(3)
                     Total capitalization.............................    $     (166)             $  17,974
                NAI Shares outstanding................................        18,007                 27,077

</TABLE>

(2)   Includes 434,675 NAI Shares issued and held in treasury stock as of March
      31, 1998.

(3)   Represents the retirement of 434,675 NAI Shares of treasury stock valued
      at $233,868 as adjusted.

(4)   Includes approximately $1,000,000 of transaction costs reflected as a
      reduction of equity.


                                     -28-


<PAGE>

                    SELECTED FINANCIAL AND OPERATING DATA
        (In thousands, except ratio, property data and per share data)

         The following sets forth selected financial, operating and other data
on an historical basis for NAI. Also set forth below are selected pro forma
financial, operating and other data for NAI at and for the nine months ended
March 31, 1998 and the year ended June 30, 1997. The pro forma balance sheet
data as of March 31, 1998 has been prepared as if the Exchange Offer, the
Distribution, the Rights Offering and the Concurrent Offering had occurred on
March 31, 1998. The pro forma operating and other data for the nine months ended
March 31, 1998 have been prepared as if the consummation of the Exchange Offer,
the Distribution, the Rights Offering and the Concurrent Offering had occurred


on July 1, 1997. The pro forma operating and other data for the year ended June
30, 1997 have been prepared as if the foregoing transactions had occurred on
July 1, 1996. The pro forma financial and operating data are not necessarily
indicative of what the actual financial position or results of operations of NAI
would have been as of the date or for the periods indicated, nor do they purport
to represent the results of operations or financial position for future periods.
This data should be read in conjunction with the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
                                 Nine Months Ended March 31,                             Year Ended June 30,
                               ------------------------------      ---------------------------------------------------------------
                               Pro Forma       Historical          Pro Forma                   Historical
                               ---------   ------------------      ---------  ----------------------------------------------------  
                                 1998        1998        1997        1997        1997      1996       1995      1994        1993
                                 ----        ----        ----        ----        ----      ----       ----      ----        ----
<S>                            <C>        <C>         <C>          <C>         <C>        <C>        <C>      <C>        <C>
OPERATING DATA:                (unaudited)(unaudited) (unaudited)  (unaudited)                               (unaudited) (unaudited)
Revenue:

  Commissions................. $ 2,836    $  2,836    $  2,910     $ 4,001     $ 4,001    $ 4,124    $4,371    $2,312      $2,563
  License fees................   1,128       1,128         923       1,282       1,282      1,373     1,158     1,081       1,007
  Other.......................     474         474         563         618         618        523       470       427         384
  Interest....................   1,238           0           0       1,650           0          0         0         0           0
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------
  Total revenue...............   5,676       4,438       4,396       7,551       5,901      6,020     5,999     3,820       3,954
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------

Costs and expenses:
  Commission expense..........     602         602         788       1,143       1,143      1,782     1,485       839         790
  Sales and marketing.........     277         277         194         321         321        285       324       274         283
  Compensation and benefits      1,832       1,832       1,911       2,528       2,528      2,438     1,981     1,895       1,648
  Operating expense...........   1,953       1,578       1,187       2,144       1,644      1,475     1,336     1,161       1,018
  Depreciation and amortization     40          40          37          52          52         56        45        53         152
  Interest, net...............       0          47          47           0          60         48        46        37          43
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------
  Total costs and expenses       4,704       4,376       4,164       6,188       5,748      6,084     5,217     4,259       3,934
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------

  Income (loss) from operations    972          62         232       1,363         153        (64)      782      (439)         20
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------
Other expenses:
  Equity in loss of affiliate       12          12          15          25          25          5         0         0           0
  Loss on sale of real estate        0           0           0           0           0          0        65         0           0
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------
  Total other expenses........      12          12          15          25          25          5        65         0           0
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------


  Income (loss) from continuing
    operations before income taxes 960          50         217       1,338         128        (69)      717      (439)         20

  Income taxes................       5           5           0           0           0          0        35         0           0
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------

  Income (loss) from continuing
        operations............     955          45         217        1,338         128       (69)      682     (439)           20

  Loss from discontinued
    operations................       0           0         162            0         223       128       392         0            0
                                 -----       -----       -----        -----       -----     -----     -----    ------      -------

  Net income (loss)...........     955          45          55        1,338         (95)     (197)      290      (439)          20

  Preferred share distributions      0           7           8            0          11        13        15         0            0
                                 -----       -----       -----        -----       -----     -----     -----    ------      -------

  Net income (loss) available 
  to common shareholders....... $   955   $     38    $     47     $  1,338    $   (106)  $  (210)   $  275    $ (439)     $    20
                                =======   ========    ========     ========    ========   =======    ======    ======      =======

  Net income (loss) per share.. $  0.03    $  0.00     $  0.00     $   0.04    $  (0.01)  $ (0.02)   $ 0.02    $(0.03)     $  0.00
                                =======   ========    ========     ========    ========   =======    ======    ======      =======


Other data (unaudited):
Common shares outstanding        36,154     12,974      12,888       36,154      12,871    12,863    12,782    12,523       12,655
Weighted average shares
outstanding..................    36,100     12,954      12,888       35,912      12,883    12,860    12,648    12,589       12,652
Ratio of EBITDA to fixed charges  25.00       1.46        3.27        26.73        1.95      0.30      7.62     (3.88)        1.10
EBITDA.......................   $ 1,000   $    137    $    301       $1,390    $    240   $    35   $   808     ($349)     $   215

Balance sheet data (1995 unaudited):
Total assets..................  $38,138   $  1,829    $  1,807                 $  1,689   $ 1,732   $ 1,649   $ 1,321      $ 1,447
Total debt....................  $     0   $    643    $    550                 $    575   $   496   $   441   $   466      $   358
Shareholders' equity (deficit)  $36,128   $ (1,026)   $   (983)                $ (1,090)  $(1,008)  $  (837)  $  (630)     $   (44)

</TABLE>


                                     -29-

<PAGE>



                       NEW AMERICA NETWORK, INC PRO FORMA
                         CONDENSED FINANCIAL INFORMATION

          The accompanying financial statements present the unaudited pro forma
condensed Balance Sheet of NAI as of March 31, 1998, the unaudited pro forma
condensed Statements of Operations of NAI for the nine months ended March 31,
1998 and for the year ended June 30, 1997, in each case after giving effect to
the Exchange Offer, the subsequent Distribution, the Rights Offering and the
Concurrent Offering (the "NAI Transaction").

         The unaudited pro forma combined condensed Balance Sheet as of March
31, 1998 is presented as if the NAI Transaction had occurred on March 31, 1998.
The unaudited pro forma condensed Statements of Operations for the nine months
ended March 31, 1998 and for the year ended June 30, 1997 are presented as if
the NAI Transaction had occurred on July 1, 1997 and 1996, respectively.

         Preparation of the pro forma financial information was based on
assumptions deemed appropriate by the management of NAI. The assumptions give
effect to the NAI Transaction in accordance with generally accepted accounting
principles. The pro forma financial information is unaudited and is not
necessarily indicative of the results which actually would have occurred if the
transactions had been consummated at the beginning of the periods presented, nor
does it purport to represent the future financial position and results of
operations for future periods. The pro forma information should be read in
conjunction with the historical financial statements of NAI included in this
Prospectus.


                                     -30-


<PAGE>

<TABLE>
<CAPTION>


                                         NEW AMERICA NETWORK, INC. AND SUBSIDIARIES
                                                  PRO FORMA BALANCE SHEET

                                                   As of March 31, 1998
                                                        (Unaudited)

                                                                             Reincorporation Merger,
                                                                                 Rights Offering          Pro Forma
                                                                                 and Concurrent           March 31,
                                                             Historical             Offering                 1998
                                                             ----------             --------                 ----



Assets:
     Current assets:

<S>                                                         <C>                    <C>                    <C>          
     Cash..............................................     $       220            $   36,309 (A),(B),(D) $   36,529
     Accounts receivable...............................             787                     0                    787
     Commissions receivable............................             637                     0                    637
     Notes and other receivables.......................               6                     0                      6
     Other current assets..............................              20                     0                     20
                                                                     --                     -                     --

     Total current assets..............................           1,670                36,309                 37,979
                                                                  -----                ------                 ------


Property and equipment (net)...........................             156                     0                    156

Other assets...........................................               3                     0                      3
                                                                      -                     -                      -

     Total assets......................................     $     1,829            $   36,309             $   38,138
                                                            ===========            ==========            ===========


Liabilities and stockholders' equity:

     Current liabilities

     Accounts payable and accrued expenses.............     $     1,016            $        0             $    1,016
     Accrued interest..................................              72                     0                     72
     Current portion of long-term debt.................             127                  (127)(B)                  0
     Stockholder loans.................................             441                  (441)(B)                  0
     Deferred revenue..................................             922                     0                    922
                                                                    ---                     -                    ---

     Total current liabilities.........................           2,578                  (568)                 2,010
                                                                  -----                 -----                  -----

Long-term debt.........................................              75                   (75)(B)                  0
                                                                     --                  ----                      -

     Total liabilities.................................           2,653                  (643)                 2,010
                                                                  -----                 -----                  -----

Redeemable convertible preferred stock.................             202                  (202)(D)                  0
                                                                    ---                  ----                      -

Stockholders' equity:

     Preferred stock...................................               0                     0                      0
     Common stock......................................             134                   228 (A)                362
     Additional paid-in capital........................           2,553                36,692 (A), (C)        39,245
     Accumulated deficit...............................          (3,479)                    0                 (3,479)
     Treasury stock, at cost...........................            (234)                  234 (C)                  0



     Total stockholders' equity........................          (1,026)               37,154                 36,128
                                                                 ------                ------                 ------

Total liabilities, redeemable convertible preferred

stock and stockholders' equity                              $     1,829            $   36,309            $    38,138
                                                              =========            ==========            ===========
</TABLE>


     The accompanying notes and management's assumption are an integral part of
                                  this statement.


                                                            -31-


<PAGE>


<TABLE>
<CAPTION>

                            NOTES AND MANAGEMENT'S ASSUMPTIONS TO NAI'S PRO FORMA BALANCE SHEET
                                                    as of March 31, 1998

A) To reflect the recapitalization of NAI's shares and reflect the Rights
Offering and the Concurrent Offering, net of costs.

<S>                                                                            <C>   
NAI shares outstanding prior to recapitalization                                   12,974
Recapitalization factor................................                          1.316172
NAI shares outstanding after recapitalization..........                            17,077


To reflect the Rights Offering and the Concurrent Offering, net of costs:
Underlying Shares and Additional Shares issued.........                            19,077
Subscription price per right...........................                        $     2.00
                                                                               ----------
Gross proceeds from the Rights Offering
and the Concurrent Offering............................                        $   38,154

Less: Offering costs...................................                        $    1,000
                                                                              -----------

Net proceeds from Rights Offering
and Concurrent Offering................................                        $   37,154


B) To reflect use of proceeds to pay down outstanding notes and loans payable.



     Current Portion of Long-Term Debt.................                        $     127
     Stockholder Loans.................................                        $     441
     Long-term Debt....................................                        $      75
                                                                              ----------

     Total debt repaid.................................                        $     643
                                                                              ==========

C) To reflect the retirement of the Treasury Stock.

D) To reflect the redemption of the redeemable convertible preferred shares.
</TABLE>


                                                            -32-


<PAGE>
<TABLE>
<CAPTION>

                                         NEW AMERICA NETWORK, INC. AND SUBSIDIARIES
                                       PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

                                          for the Nine Months Ended March 31, 1998
                                                        (Unaudited)

                                                                             
                                                                             Reincorporation Merger
                                                                                 Rights Offering            Pro Forma
                                                                                 and Concurrent             March 31,
                                                             Historical           Offering  (A)               1998
                                                             ----------             --------                  ----
Revenue:

<S>                                                         <C>                    <C>                   <C>        
     Commissions.......................................     $     2,836            $        0            $     2,836
     License fees......................................           1,128                     0                  1,128
     Other.............................................             474                     0                    474
     Interest income...................................               0                 1,238  (B)             1,238
                                                                      -                 -----                  -----

     Total revenue.....................................           4,438                 1,238                  5,676
                                                                  -----                 -----                  -----

Costs and expenses:

     Commission expense................................             602                     0                    602
     Sales and marketing...............................             277                     0                    277
     Compensation and benefits.........................           1,832                     0                  1,832
     Operating expense.................................           1,578                   375  (C)             1,953
     Depreciation and amortization.....................              40                     0                     40


     Interest, net.....................................              47                  (47)  (D)                 0
     Distributions on preferred shares.................               7                   (7)  (E)                 0
                                                                      -                   ---                      -

     Total costs and expenses..........................           4,383                   321                  4,704
                                                                  -----                   ---                  -----

Income (loss) from operations..........................              55                   917                    972

Other expenses:

Loss in investment in NAIS.............................              12                     0                     12
                                                                     --                     -                     --

     Total other expense...............................              12                     0                     12
                                                                     --                     -                     --

Income taxes...........................................               5                     0                      5
                                                                      -                     -                      -

Net income.............................................     $        38            $      917            $       955
                                                            ===========            ==========            ===========

Basic and diluted earnings per common share............     $      0.00                                  $      0.03
                                                            ===========                                  ===========

Basic and diluted earnings per recapitalized common share   $      0.00                                  $      0.03
                                                             ==========                                  ===========

Weighted average number of
  common shares outstanding............................          12,954

Weighted average number of common
  shares and equivalents outstanding...................          13,080

After recapitalization
----------------------
Weighted average number of
  common shares outstanding............................          17,050                                       36,100

Weighted average number of common shares and
  equivalents outstanding..............................          17,176                                       36,226
</TABLE>



                                                            -33-


<PAGE>


<TABLE>
<CAPTION>



                                         NEW AMERICA NETWORK, INC. AND SUBSIDIARIES
                                       PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

                                             for the Year Ending June 30, 1997
                                                        (Unaudited)

                                                                             Reincorporation Merger,
                                                                                 Rights Offering           Pro Forma
                                                                                 and Concurrent              June,
                                                             Historical              Offering    (A)        30 1997
                                                             ----------        -------------------      -----------

Revenue:

<S>                                                         <C>                    <C>                   <C>        
     Commissions.......................................     $     4,001            $        0            $     4,001
     License fees......................................           1,282                     0                  1,282
     Other.............................................             618                     0                    618
     Interest income...................................               0                 1,650  (B)             1,650
                                                                      -                 -----                  -----

     Total revenue.....................................           5,901                 1,650                  7,551
                                                                  -----                 -----                  -----

Costs and expenses:

     Commission expense................................           1,143                     0                  1,143
     Sales and marketing...............................             321                     0                    321
     Compensation and benefits.........................           2,528                     0                  2,528
     Operating expenses................................           1,644                   500  (C)             2,144
     Depreciation and amortization.....................              52                     0                     52
     Interest, net.....................................              60                   (60) (D)                 0
     Distributions on preferred shares.................              11                   (11) (E)                 0
                                                                     --                  ----                      -

     Total costs and expenses..........................           5,759                   429                  6,188
                                                                  -----                   ---                  -----

Income from operations.................................             142                 1,221                  1,363

Other expenses:

Loss in investment in NAIS.............................              25                     0                     25
                                                                     --                     -                     --

     Total other expenses..............................              25                     0                     25
                                                                     --                     -                     --

Income taxes...........................................               0                     0                      0
                                                                      -                     -                      -

Net income.............................................     $       117            $    1,221            $     1,338



Basic and diluted earnings per common share............     $      0.01                                  $      0.04
                                                            ===========                                  ===========

Basic and diluted earnings per recapitalized common share   $      0.01                                  $      0.04
                                                             ==========                                  ===========

Weighted average number of
  common shares outstanding............................          12,883

Weighted average number of common
   shares and equivalents outstanding..................          13,035

After recapitalization
Weighted average number of
  common shares outstanding............................          16,956                                       35,912

Weighted average number of common shares and
  equivalents outstanding..............................          17,108                                       36,064
</TABLE>


     The accompanying notes and management's assumptions are an integral 
                            part of this statement.
                                                           


                                                            -34-


<PAGE>



Footnotes to NAI's Pro Forma Consolidated Statements of Operations for the year
ended June 30, 1997 and the Nine Months ended March 31, 1998.

The Loss from Discontinued Operations is eliminated for purposes of the Pro
Forma Consolidated Statements of Operations for the year ended June 30, 1997.
<TABLE>

<S>                                                                                <C>                   <C>
                                                                                   March 31, 1998        June 30, 1997
                                                                                   --------------        -------------
</TABLE>

A)   To reflect the recapitalization of NAI Shares, the Rights Offering and the
     Concurrent Offering, net of costs.

B)   To reflect the interest earned on an investment contract for the net
     proceeds:

<TABLE>
<CAPTION>



                                Invested
                                  Cash                             Rate                             Interest Earned

<S>                             <C>                                <C>                        <C>            <C>   
Maximum proceeds                $30,000                            5.50%                       $1,238         $1,650
</TABLE>

C) To reflect fees and costs payable under the Intercompany Agreement.

D) To reflect the reduction of interest on the pay down of outstanding notes and
   loans payable.

<TABLE>
<CAPTION>

                                Debt Repaid                                                          Interest Saved

<S>                                <C>                                                        <C>                 <C>
                                   $659                                                       $47                 $60
</TABLE>

E)   To reflect the elimination of preferred share distributions in connection
     with the redemption of the redeemable convertible preferred shares.

08085-00046/514080.12

                                                            -35-


<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

         New America Network, Inc., which conducts business as New America
International ("NAI"), operates a network of independently owned, licensed real
estate brokers throughout the United States and abroad. NAI, directly and
through its Broker Members, provides commercial real estate brokerage and other
real estate-related services to local, regional, national and international
businesses. Unlike other real estate broker networks, in addition to managing
real estate transactions generated by its brokers, NAI generates its own source
of real estate transactions for its brokers and actively manages and tracks
those transactions on behalf of its Clients. In order to increase the portfolio
of services marketed to Clients and Broker Members, NAI has entered into several
alliance agreements with entities which provide real estate-related services
which complement NAI's brokerage capabilities, including sealed-bid sales, real
estate auctions, real estate financing and appraisals.

         NAI earns revenue primarily from the sharing of brokerage commissions
with Broker Members who earn commissions from the acquisition, disposition or
leasing of real property assigned to them by NAI. Revenue from brokerage
commissions is largely transactional in nature and subject to economic cycles.
However, NAI's geographic coverage, number of transactions and continuing client
base tend to minimize the impact of economic cycles on annual revenue. NAI also
earns revenue from (i) the sharing of brokerage commissions with Broker Members
who earn commissions from the acquisition and/or disposition or leasing of real
estate referred to them by other Broker Members, (ii) the sharing of fees
received from Alliance Members in sealed-bid sales, auction transactions and
other Real Estate-Related Services and (iii) the collection of annual membership
fees paid by Broker Members and Alliance Members ("License fees"). Other
revenues of NAI include primarily (i) marketing fees for Broker Members, which
is generally calculated as a percentage of the Broker Members' License fees, and
(ii) convention and meeting revenue. A major expense to NAI is the commission
expense which is a direct function of gross commission revenue levels. In
numerous instances, NAI collects a gross commission and must subsequently pay
the Broker Member their respective portion of the gross commission. Other
operating expenses of NAI includes professional fees, advertising and promotion
expenses, rental expenses and various other general and administrative costs
incurred by NAI in their day to day operations.

LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 1998  NAI had approximately $220,000 of cash on hand.

         NAI had loans outstanding of $643,000 at March 31, 1998. Of this
amount, $441,000 was due to related parties with interest rates ranging from 10%
to 12%. These loans are due on demand. In addition, NAI had a bank loan
outstanding of $6,666 which requires monthly payments of principal of $3,333
with interest at the bank's prime rate (8.5% at March 31, 1998) plus 1%. NAI
also had a bank loan outstanding of $95,000 which requires monthly payments of
principal and interest of $1,667 with interest at the bank's prime rate (8.5% at

March 31, 1998) plus 1%. This loan matures in November 2002. NAI also has a
$100,000 line of credit with First Washington State Bank which expires October
2, 1998. Interest on any outstanding borrowings is at the bank's prime rate
(8.5% at March 31, 1998) plus 1%. This line was fully utilized at March 31,
1998.

         Assuming all of the Underlying Shares and Additional Shares are
purchased in the Rights Offering and in the Concurrent Offering, NAI expects to
receive proceeds of approximately $38,000,000. Management will use such proceeds
in the following order of priority: (i) pay the expenses of the Rights Offering,
the Concurrent Offering and the Proposed Related Transactions, (ii) repurchase
shares of Series A Preferred Stock of NAI, (iii) repay outstanding indebtedness,
(iv) expand NAI's Corporate Services Department and Investment Sales Department,
and (v) acquire and develop Real Estate-Related Services. The balance of any
proceeds will be invested in short-term commercial paper at a rate of
approximately 5.5% per annum until used for general corporate and working
capital purposes and

                                     -36-

<PAGE>

to opportunistically acquire real estate. In the event that the full proceeds of
$38,000,000 is not received, management will use any proceeds received in the
above order.

         Management believes it has adequate access to capital to continue to
meet its short-term and long-term requirements and objectives. NAI's short-term
and long-term needs will be met from the proceeds of the Rights Offering and the
Concurrent Offering, cash flow from operations, bank loans or its credit line.

         NAI has established a Year 2000 compliance review process to assess the
impact of the Year 2000 on the company's business, operations and financial
condition. The process encompasses internal information technology systems,
office mechanical operation systems and the potential impact from Broker Members
and vendors. Management believes that NAI has no material exposure to the Year
2000 issues at this time.

RESULTS OF OPERATIONS

         Nine months ended March 31, 1998 versus the nine months ended March 31,
         -----------------------------------------------------------------------
1997
----
         Net income for common shareholders decreased $9,000, or 19%, from
$47,000 for the nine months ended March 31, 1997 to $38,000 for the same period
in 1998. This decrease is due to a combination of factors as described below.

         Revenue from commissions decreased $74,000, or 3%, from $2,910,000 for
the nine months ended March 31, 1997 to $2,836,000 for the same period in 1998.
This decrease is due to a decrease in broker to broker commissions which is
primarily the result of a lower dollar value of transactions in the broker to
broker area.


         License fees increased $205,000, or 22%, from $923,000 for the nine
months ended March 31, 1997 to $1,128,000 for the same period in 1998. The
increase was due to an increase in the number of international broker members
(which resulted in approximately $125,000 of additional fees) and increased
revenue from existing membership renewals (which increased approximately 5% per
annum over prior year's fees).

         Other revenue decreased $89,000, or 16%, from $563,000 for the nine
months ended March 31, 1997 to $474,000 for the nine months ended March 31,
1998. The decrease was due to a one time change in NAI's meeting and events
calendar in 1998 in which NAI did not hold one of its major meetings, the
National Council Symposium.

         Commission expense decreased $186,000, or 24%, from $788,000 for the
nine months ended March 31, 1997 to $602,000 for the nine months ended March 31,
1998. NAI's commission expense is proportionately less on a Network to Broker
transaction than on a Broker to Broker transaction. Because a greater percentage
of NAI's 1998 revenue was generated from its Network to Broker business than in
1997, the total commission expense decreased.

         Sales and marketing expenses increased $83,000, or 43%, from $194,000
for the nine months ended March 31, 1997 to $277,000 for the nine months ended
March 31, 1998. This increase was due primarily to increased costs of NAI's
annual convention and meetings, which was offset by a decrease in costs as a
result of NAI not holding its National Council Symposium in 1998.

         Compensation and benefits decreased $79,000, or 4%, from $1,911,000 for
the nine months ended March 31, 1997 to $1,832,000 for the nine months ended
March 31, 1998. This decrease was due primarily to the streamlining and
consolidation of staffing.

         Other operating expenses increased $391,000, or 33%, from $1,187,000
for the nine months ended March 31, 1997 to $1,578,000 for the nine months ended
March 31, 1998. This increase was due to an increase in public relations and
advertising relating to the change in the corporate trade name from New America
Network, Inc. to New America International, Inc.

                                     -37-

<PAGE>

         NAI had a loss from operations of discontinued businesses of $162,000
for the nine months ending March 31, 1997. NAI discontinued its New America
Financial Services ("NAFS") division which provided a wide array of financial
services. These services are currently provided by Alliance members. NAI had no
such loss for the same period in 1998.

         Year ended June 30, 1997 versus the year ended June 30, 1996
         ------------------------------------------------------------

         Net income (loss) for common shareholders increased $104,000, or 50%,
from a loss of ($210,000) in 1996 to a loss of ($106,000) in 1997. This increase
is due to a combination of factors as described below.


         Revenue from commissions decreased $123,000, or 3%, from $4,124,000 for
the year ended June 30, 1996 to $4,001,000 for the year ended June 30, 1997. The
decrease was primarily due to a decrease in broker to broker transactions.

         License fees decreased $91,000, or 7%, from $1,373,000 for the year
ended June 30, 1996 to $1,282,000 for the year ended June 30, 1997. The decrease
was due to the discontinuance of the property management services in early
fiscal 1997. Fees were recognized for the property management services for the
entire fiscal 1996 year.

         Other revenue increased $95,000, or 18%, from $523,000 for the year
ended June 30, 1996 to $618,000 for the year ended June 30, 1997. The increase
was primarily due to a new contract in 1997 in which NAI was paid $42,000 for
the use of their Real Estate Planning Guide on the internet. The residual
increase was due to a general increase in marketing assessments.

         Commission expense decreased $639,000, or 36%, from $1,782,000 for the
year ended June 30, 1996 to $1,143,000 for the year ended June 30, 1997. The
decrease was primarily due to a decrease in sealed bid transactions.

         Sales and marketing expenses increased $36,000, or 13%, from $285,000
for the year ended June 30, 1996 to $321,000 for the year ended June 30, 1997.
This increase was due to increased costs of conventions and meetings.

         Compensation and benefits increased $90,000, or 4%, from $2,438,000 for
the year ended June 30, 1996 to $2,528,000 for the year ended June 30, 1997.
This increase was due to the addition of personnel in the Corporate Services and
Brokerage Services areas.

         Other operating expenses increased $169,000, or 11%, from $1,475,000
for the year ended June 30, 1996 to $1,644,000 for the year ended June 30, 1997.
This increase was due to an increase in public relations and advertising
relating to changing the corporate trade name from New America Network, Inc. to
New America International, Inc.

         The loss from operations of discontinued businesses increased $95,000,
or 74%, from $128,000 for the year ended June 30, 1996 to $223,000 for the year
ended June 30, 1997. This loss represents the effect of the discontinuance of
NAFS in each respective year.

         Preferred share distributions decreased $2,000, or 15%, from $13,000
for the year ended June 30, 1996 to $11,000 for the year ended June 30, 1997.
This decrease was due to a redemption of 25,000 shares of NAI's preferred stock
for $50,000.

         Year ended June 30, 1996 versus the year ended June 30, 1995
         ------------------------------------------------------------

         Net income (loss) for common shareholders decreased $485,000 from
income of $275,000 in 1995 to a loss of ($210,000) in 1996. This decrease is due
to a combination of factors as described below.

                                     -38-



<PAGE>

         Revenue from commissions decreased $247,000, or 6%, from $4,371,000 for
the year ended June 30, 1995 to $4,124,000 for the year ended June 30, 1996. The
decrease was primarily due to a decrease in the Network to Broker commissions.
In 1995, there were two major Network to Broker deals which totaled
approximately $439,000. While these fees were not similarly earned in 1996, the
decrease was partially offset by an increase in sealed-bids and broker to broker
commissions.

         License fees increased $215,000, or 19%, from $1,158,000 for the year
ended June 30, 1995 to $1,373,000 for the year ended June 30, 1996. The increase
was primarily due to the fees earned by the property management services
($166,000) which was a new service provided in 1996.

         Other revenue increased $53,000, or 11%, from $470,000 for the year
ended June 30, 1995 to $523,000 for the year ended June 30, 1996. The increase
was primarily due to marketing assessment fees which were initiated in mid-year
in 1995 with a full year of revenues recognized in 1996.

         Commission expense increased $297,000, or 20%, from $1,485,000 for the
year ended June 30, 1995 to $1,782,000 for the year ended June 30, 1996. The
increase was primarily due to an increase in sealed bid sales in fiscal year
1996.

         Sales and marketing expenses decreased $39,000, or 12%, from $324,000
for the year ended June 30, 1995 to $285,000 for the year ended June 30, 1996.
This decrease was due to NAI eliminating its regional meetings in 1996 and
thereby incurring no costs with respect to these meetings.

         Compensation and benefits increased $457,000, or 23%, from $1,981,000
for the year ended June 30, 1995 to $2,438,000 for the year ended June 30, 1996.
This increase was due to an increase in personnel in the Northeast and Southeast
brokerage services regions, Corporate Services, Property Management and
Headquarters staff.

         Other operating expenses increased $139,000, or 10%, from $1,336,000
for the year ended June 30, 1995 to $1,475,000 for the year ended June 30, 1996.
This increase was primarily due to an increase in travel expenses for newly
hired regional staff as well as an increase in advertising and promotional
expenses.

         The loss from operations of discontinued businesses decreased $264,000,
or 67%, from $392,000 for the year ended June 30, 1995 to $128,000 for the year
ended June 30, 1996. This decrease was due to NAI recording a loss of
approximately $245,000 in 1995 related to the discontinuance of RealQuest, Inc.,
a wholly-owned subsidiary of NAI. NAI recorded a loss of approximately $147,000
and $128,000 for the discontinuance of NAFS for the years ended June 30, 1995
and 1996, respectively.

         Preferred share distributions decreased $2,000, or 16%, from $15,000
for the year ended June 30, 1995 to $13,000 for the year ended June 30, 1996.
This decrease was due to a redemption of 25,000 shares of NAI's preferred stock

for $50,000.


INFLATION

         Most of NAI's revenue is derived from commissions on the sale or lease
of commercial property and therefore is protected from inflation since an
increase in the sales prices or lease rates would generate additional revenue.
The majority of the license agreements signed by the Broker Members have fee
increases built in for the term of the agreements which are based on fixed
increases or increases over the Consumer Price Index. These two factors help
decrease NAI's exposure to inflation.

                                     -39-

<PAGE>

                                   BUSINESS

GENERAL DESCRIPTION

         NAI operates a Network of independently owned, licensed real estate
Broker Members throughout the United States and, more recently, abroad. NAI,
directly and through its Broker Members, provides commercial real estate
brokerage services to local, regional, national and international Clients. NAI
has approximately 130 affiliated Broker Members, which employ approximately
2,400 agents, operating in approximately 200 markets, including North, Central
and South America and Western Europe. NAI believes it is represented in more
North American market areas than any national commercial real estate brokerage
company. Unlike other real estate broker networks, in addition to managing real
estate transactions generated by its Broker Members, NAI generates its own
source of real estate transactions for its Broker Members and actively manages
and tracks those transactions on behalf of Clients. In order to increase the
portfolio of services marketed to Clients and Broker Members, NAI has entered
into several alliance agreements with Alliance Members which provide real estate
related services which complement NAI's brokerage capabilities, including
sealed-bid sales, real estate auctions, real estate financing and appraisal
services. As of March 31, 1998, the Network had an inventory of approximately
1,775 assignments to buy, sell or lease real property, with a transaction value
of approximately $927 million, and which would generate fees to NAI of
approximately $6.5 million, if consummated. There is no assurance that such
inventory will result in any revenues to NAI.

         NAI earns revenues primarily from the sharing of brokerage commissions
with Broker Members who earn commissions from the acquisition, disposition or
leasing of real property assigned to them by NAI (approximately $2,686,000 or
46% of NAI's net revenues for fiscal year 1997). NAI also earns revenues from
(i) the sharing of brokerage commissions with Broker Members who earn
commissions from the acquisition and/or disposition or leasing of real estate
referred to them by other Broker Members (approximately $1,063,000 or 18% of
NAI's net revenues for fiscal year 1997), (ii) the sharing of fees received from
Alliance Members in sealed-bid sales, auction transactions and other Real
Estate-Related Services (approximately $170,000 or 3% of NAI's net revenues for
fiscal year 1997), and (iii) the collection of annual membership fees paid by

Broker Members and Alliance Members (approximately $1,282,000 or 22% of NAI's
net revenues for fiscal year 1997).

         NAI began forming the Network in 1978 in order to meet the growing real
estate needs of large national and international corporations in multiple
markets. NAI meets the multiple market needs of its Clients and its Broker
Members by combining local representation with the management and control
capabilities of its centralized Corporate Services Department. NAI's Corporate
Services Department is responsible for establishing and developing relationships
with Clients in order to generate assignments for the Network and its Broker
Members. Currently, NAI has 13 staff members in its Corporate Services
Department serving over 100 Clients. These Clients include retail chains (such
as Woolworth Corp.), international companies (such as International Paper
Company), service businesses (such as Roadway Services, Inc.), and other larger
owners of real estate (such as the United States Postal Service, a new Client of
NAI). NAI's Clients are often involved in real estate transactions in multiple
markets. In addition, NAI has an Investment Sales Department which specializes
in the acquisition and disposition of real estate for Clients who are seeking to
acquire, or currently own, real estate for investment purposes. See "--Corporate
Services Department" and "--Investment Sales."

         NAI maintains a proprietary information sharing and research intranet,
in order to efficiently and effectively coordinate with its Broker Members to
meet its Clients' needs. NAI's information systems consist of a transaction
management system and a central database information system. NAI's computerized
transaction management system allows Broker Members, the Corporate Services
Department and Clients to manage and track the progress of transactions assigned
to Broker Members, including those

                                     -40-

<PAGE>

generated by its Broker Members.  NAI's databases include, among other things,
real estate market data, demographic information, Broker Member profiles, Broker
Member listings, transaction histories, Client relationship information and
Client profiles.  See "--NAI Technology and Information Services."

         NAI's objective is to increase profitability by continuing to grow its
brokerage business, increase its international coverage, expand its Corporate
Services and Investment Sales Departments and to further develop its
non-brokerage Real Estate-Related Services, including sealed-bid sales and real
estate auctions, and to acquire or develop additional Real Estate-Related
Services. To the extent funds are available from the proceeds of the Rights
Offering and the Concurrent Offering referred to below, NAI's strategy will be
to (i) expand NAI's Corporate Services Department and Investment Sales
Department to generate business from additional Clients and in new markets, (ii)
invest in or acquire brokerage firms (including certain of those owned by Broker
Members) and firms which provide Real Estate-Related Services, (iii) train and
support Broker Members to generate additional business for the Network; (iv)
continue to expand the Network into international markets, (v) generate
additional revenue by providing brokerage and Real Estate-Related Services to
Kranzco, (vi) expand and enhance NAI's real estate technology and information
services, (vii) opportunistically acquire and develop real estate for its own

account and (viii) utilize Real Estate-Related Services to create and develop
relationships with Clients.


THE NETWORK

         NAI began forming the Network in 1978 on the premise that local
commercial real estate brokers could not efficiently service the needs of
national and international businesses due to the extremely local nature of the
commercial real estate market. Previously, local commercial brokers could only
assist a business with respect to its needs in a limited market area; however,
large national and international corporations need real estate services in
multiple market areas. NAI's affiliated Network of Broker Members throughout the
United States enables NAI to simultaneously provide real estate services to
businesses with multiple requirements in a number of market areas. NAI, with
approximately 130 Broker Members in 47 states and 10 countries, provides real
estate services to its Clients throughout the United States and, more recently,
abroad. See "--Competition" and "Risk Factor--Competition; Ability to Retain
Broker Members and Attract Additional Broker Members."

         By agreeing to dispose of or acquire its real estate through the
Network, a Client can utilize one large brokerage network to simultaneously
execute numerous real estate transactions in different markets. Clients avoid
the time-consuming tasks of interviewing, establishing relationships with, and
negotiating with, different commercial real estate brokers, and minimize time
spent managing the status and progress of each transaction in multiple market
areas.

         Through the use of the Network's facilities and the individual
marketing know-how of the Broker Members, a seller or lessor can quickly
establish whether there is a strong demand for its property, while a purchaser
or lessee can immediately determine which properties being offered across the
country meet its requirements. To facilitate this process, NAI maintains
computerized information on potential lessors and lessees, types of properties
sought or available for sale in numerous markets, preferred locations, rental
rates, price and mortgage financing requirements and other relevant information.

BROKER MEMBERS

         NAI established the Network as a nationally recognized marketer of real
estate services, by obtaining quality Broker Members in major metropolitan areas
and smaller cities throughout the United States, as well as more recently in
foreign countries. NAI selects its Broker Members based upon a number of factors
including (a) the Broker Member's reputation in the industry, (b) the sales
volume of the Broker Member in its local market, (c) the Broker Member's ability
and desire to work with NAI and

                                     -41-

<PAGE>

NAI's stated method of operations, (d) the professionalism of the sales
associates as evidenced by industry designations and memberships and (e) the
Broker Member's performance in interviews performed by NAI. As of March 31,

1998, NAI had approximately 130 Broker Members in 47 states and 10 foreign
countries. Approximately 80 of the Network's Broker Members have been with NAI
for 5 years or longer.


         In order to ensure that the Network's standards for Broker Members are
consistently maintained, NAI has established a Broker Services Department. The
Broker Services Department, which consists of 11 members, focuses on training
Brokers to (i) develop and fulfill business on behalf of NAI, (ii) adhere to NAI
systems and processes, (iii) use the Network and its computer tracking systems
in order to manage real estate transactions assigned to them through the Network
and for their own internal use, (iv) effectively utilize NAI's national and
international identity, and (v) meet the needs of NAI's Clients. After a Broker
Member becomes a member of the Network, NAI performs periodic reviews to
determine whether such Broker Member is maintaining the standards set forth in
its Membership Agreement. In the past, NAI has replaced certain Broker Members
who have not met their obligations under the Membership Agreements. NAI intends
to continue this practice so that the Network can continue to provide high
quality service to its Clients.

MEMBERSHIP AGREEMENTS AND FEES

         Each Broker Member executes an agreement ("Membership Agreement") which
defines the legal relationship between NAI and the Broker Member, including the
Broker Member's obligations, the services to be provided by the Network and the
compensation to be paid for such services by the Broker Member (including an
annual membership fee and co-brokerage commission arrangements). Under the terms
of the Membership Agreement, the majority of Broker Members, in most instances,
obtain an exclusive territory and a license to use NAI's service marks including
"New America," "New America International," "NAI" and the "NAI Globe" logo.
Territories in the United States range in size from single cities to several
counties (sometimes in more than one state), or statewide depending on the
demographics of the area. International territories range in size from single
cities to, under certain circumstances, an entire country.

         In certain market areas, NAI has selected more than one Broker Member.
All such Broker Members are designated as "Specialty Members" as each
specializes in one or more types of real estate (i.e., Retail, Industrial or
Office). This practice was instituted to address situations in which no
individual commercial broker could be identified in a particular market area
meeting NAI's qualifications as a full service broker. It also reflects NAI's
recognition that in certain market areas the Network and its Clients could best
be served by Specialty Members.

         Over the past 18 months NAI has been transitioning Broker Members to a
new form of Membership Agreement. The old form, which typically provided for a
three year term, permitted members to terminate the Membership Agreement at any
time upon 45 days notice. The new form of Membership Agreement, which includes
stronger identity and performance standards as well as increased licensing fees,
does not allow early termination of the Membership Agreement except for cause.
NAI may terminate such agreements for specified causes upon forty-five (45) days
written notice to a Broker Member. Approximately 60% of the Broker Members have
executed the new form of Membership Agreement.


         Each Broker Member pays NAI an annual membership fee ("Membership
Fee"), which varies depending upon the population level of a Broker Member's
exclusive territory. Each Broker Member is also required to pay an annual
marketing assessment equal to 15% of its Membership Fee. NAI has agreed to spend
a minimum of 3.5% of the total annual Membership Fees it receives on marketing
activities annually. NAI earns most of its revenue from the co-brokerage
provisions contained in the Membership

                                     -42-

<PAGE>

Agreement. NAI's share of any brokerage commission earned from such services
ranges from 10% to 50% depending on NAI's involvement in the transaction. Of
NAI's net revenues for fiscal year 1997, approximately $2,686,000 or 46% were
earned through the sharing of brokerage commissions with Broker Members who earn
commissions from the acquisition, disposition or leasing of real property
assigned to them by NAI, approximately $1,063,000 or 18% of NAI's net revenues
were earned through the sharing of brokerage commissions with Broker Members who
earn commissions from the acquisition and/or disposition or leasing of real
estate referred to them by other Broker Members, and approximately $1,282,000 or
22% of NAI's net revenues were earned through the collection of annual
membership fees paid by Broker Members and Alliance Members.

         NAI's percentage of the Broker Member compensation may be decreased in
instances where the Network Client was introduced to the Network by a Broker
Member or where an assignment was originally identified by a Broker Member. In
those instances, the Broker Member who made the introduction or identified the
listing may be entitled to a portion of the commission.

BROKER SERVICES GROUP

         NAI believes that in addition to obtaining assignments and Clients for
Broker Members, the Network creates a framework within which Broker Members can
assist each other in their own businesses. In order to strengthen the
relationship among Broker Members, NAI conducts annual international conventions
and regional meetings on various aspects of utilizing the Network and
structuring transactions for all Broker Members. Also, the Network maintains a
Broker Member Advisory Council consisting of 24 Broker Members, which offers
advice to NAI regarding ways in which to improve the Network and the services
offered by it.

         Additional publications, advertising, promotional materials and public
relations enhance NAI's image and reputation. NAI membership and participation
is maintained in industry trade associations including the International Council
of Shopping Centers ("ICSC"), International Association of Corporate Real Estate
Executives ("NACORE"), Industrial Development Research Council ("IDRC") and
other similar groups.

         To further increase the Network's capabilities to service Clients, NAI
has established five Specialty Councils addressing various issues peculiar to
industrial, office, retail, land and investment properties. Each Specialty
Council is made up of Broker Members and/or sales persons associated with such
Broker Members who specialize in those areas. Through the personal relationships

which are established, NAI believes that council members gain a greater
recognition of each other's capabilities, local market knowledge and general
expertise.


CORPORATE SERVICES DEPARTMENT

         NAI's Corporate Services Department is responsible for establishing and
developing relationships with existing and potential Clients in order to
generate assignments for the Network and its Broker Members. NAI employs persons
with backgrounds in business and finance ("Corporate Service Executives") to
solicit and secure from existing and potential Clients, exclusive assignments to
acquire, dispose of or lease commercial real estate. The current trend of
downsizing corporate real estate departments has increased the need for
Corporate Services Executives, who can assist corporate real estate departments
with multiple transactions. The Corporate Services Department assists Clients in
managing multiple transactions through NAI's technology and information systems,
which facilitate up-to-date electronic and/or written reports which are
regularly sent to Clients and Broker Members. See "--NAI Technology and
Information Systems."

                                     -43-

<PAGE>

         NAI's Corporate Services Department has ongoing relationships with more
than 100 Clients, including the Hertz Corporation, Pepsi-Cola, Airborne Express,
and the International Paper Company. Substantially all NAI-generated assignments
from its Clients are exclusive to NAI and many assignments referred from one
Broker Member to another Broker Member are also exclusive to the initiating
Broker Member. These assignments include acquisitions, dispositions, buy-outs,
sales, leases and auctions of office, industrial and retail properties.
Assignments are obtained in NAI's name and then directed to the Broker Members
for execution. In certain circumstances the assignment, although secured by NAI,
is placed directly with the Broker Member. Resulting commissions are shared with
NAI as prescribed in the Broker Members Membership Agreement. See "Business--
Membership Agreements and Fees". In some instances, NAI will structure a partner
relationship with a Broker Member pursuant to which the Broker Member will act
as a Corporate Service Executive with respect to a Network Client. This
typically occurs when a Broker Member has a significant relationship with a
Client with national and international real estate needs. As of March 31, 1998,
NAI employed 13 staff members for its Corporate Services Department. Currently,
the majority of the Clients of the Corporate Service Department are located in
the eastern and north central United States; however, upon consummation of the
Exchange Offer, the Distribution, the Rights Offering and the Concurrent
Offering, NAI intends to retain additional Corporate Service Executives to
solicit Clients from throughout the United States and abroad.


INVESTMENT SALES

         In order to increase transactions generated for the Network, NAI has
established an Investment Sales Department, consisting of two real estate
professionals, which specializes in the acquisition and disposition of real
estate for Clients who are seeking to acquire, or who currently own, real estate
for investment purposes, rather than for the investor's business use. A specific
target of the Investment Sales Department is the identification and sale of
properties to REITs, as well as insurance companies or pension funds which may
be interested in the acquisition of real estate investments for their
portfolios.


         The Investment Sales Department works with Broker Members to assist
them in pursuing investment opportunities which the Department has identified.
The Investment Sales Department also works closely with the members of NAI's
Specialty Council for Investment Sales to stimulate Broker-toBroker investment
referrals and to obtain sources of financing for investment transactions.

         The Investment Sales Department has previously assisted Kranzco in
pursuing Kranzco's strategy of acquiring shopping centers. In December 1997,
Kranzco acquired five shopping centers, aggregating approximately 650,000 square
feet of GLA, for approximately $44 million. NAI's Investment Sales Department
initiated this opportunity, and assisted Kranzco in acquiring the properties.
Kranzco's acquisition of such properties generated $100,000 in fee income to
NAI.

         During the calendar year ended December 31, 1997, the Network
consummated 20 investment real estate transactions with a transaction value of
approximately $100,000,000, which resulted in approximately $400,000 of revenues
to NAI (which for financial purposes are reported as commissions).

REAL ESTATE-RELATED SERVICES

         NAI is in the process of widening its focus from a transactional core
to include more Real EstateRelated Services. These services include real estate
auctions and sealed-bid sales, real estate tax, valuation and appraisal
services, real estate information services (providing sales and marketing data
and demographic information), lease audits (review of leases for tenants in
order to ensure no overpayments were made), loan sales (purchases of defaulted
mortgages), and senior citizen housing (an investment specialty focusing on
facilities for the growing population of senior citizens). In order to expand
into Real Estate-Related Services, NAI has entered into several agreements with
Alliance Members pursuant to

                                     -44-

<PAGE>

which certain Real Estate-Related Services are provided by Alliance Members to
Broker Members and Clients. To date, the only Real Estate-Related Services which
have generated significant revenues, in addition to the membership fees paid by
Alliance Members, for NAI have related to national auctions and international
sealed-bid sales. See "Business -- Accelerated Marketing Programs" below.


         Each Alliance Member pays NAI an annual membership fee (an "Alliance
Membership Fee"), which varies depending upon the market opportunity and the NAI
Services to be provided. Of NAI's net revenues for calendar year 1997,
approximately $475,000 of NAI's net revenues were earned through the sharing of
fees received from Alliance Members in the sealed-bid sales and auction
transactions (which for financial purposes are reported as commissions) and
approximately $25,000 of NAI's net revenues were earned through the collection
of annual membership fees paid by Alliance Members (which for financial purposes
are reported as license fees). Other Real Estate-Related Services which have not
as yet provided significant revenues to NAI have been strategically implemented
in order to provide a full range of services which may fulfill the real estate
related needs of Clients. These services include lease auditing, appraisal
services; and real estate information services.

ACCELERATED MARKETING PROGRAM

         Through its Accelerated Marketing Program, NAI markets commercial real
estate properties for disposition through alternative vehicles for real estate
sales, such as sealed-bid sales and auctions. In 1994, NAI entered into
agreements with Terra Marketing and Terra Marketing, East (collectively,
"Terra"), an Alliance Member and specialist in international sealed-bid sales.
In the sealed-bid process, Terra puts together a portfolio of commercial and
industrial properties for sale. NAI and its Broker Members may assist Terra in
creating the portfolio of properties. The properties may be in varied locations
and have different owners. Terra then markets these properties to possible
purchasers through a brochure. Purchasers interested in any property may request
additional due diligence materials for a small fee. NAI Broker Members provide
sales support by providing site tours and providing useful local information for
those purchasers interested in visiting the site. The winning bids are selected
by the seller of the property and Terra, together. For the calendar year ended
December 31, 1997, NAI and Terra produced sealed-bid sales resulted in the sale
of approximately 19 properties with approximately $421,000 of revenues to NAI
(which for financial purposes are reported as commissions) and an additional
$2,500,000 of revenues to Terra, participating Broker Members and other brokers.
Fees earned in sealedbid sales are paid by Terra to NAI and its Broker Members.

         In 1989, NAI entered into an alliance agreement with Michael Fox
International, Inc., a specialist in national auction services ("Fox"). NAI and
local Broker Members work with Fox to provide and assist in auction sales. NAI
and Fox worked together on 15 auctions in the calendar year ended December 31,
1997. In the calendar year ended December 31, 1997, auction sales resulted in
approximately $50,000 of revenues to NAI and an additional $500,000 of revenues
to Fox, participating Broker Members and other brokers. Fees earned in auction
sales are paid by Fox to NAI and its Broker Members.

NAI TECHNOLOGY AND INFORMATION SERVICES

         NAI has invested substantially in technology to create advanced systems
to deliver services to its Clients and Broker Members, as well as to efficiently
manage its operations. NAI believes that technology is important to the
continued growth of NAI's business and the real estate brokerage industry
generally. NAI continually refines its proprietary intranet in order to
efficiently manage and track assignments, and communicate with Broker Members

and Clients.

         NAI's central information sharing and research intranet consists of two
proprietary software programs. REALTrac(TM), a transaction management system,
allows Broker Members, the Corporate

                                     -45-

<PAGE>

Services Department and the Investment Sales Department, to efficiently and
effectively manage and track the progress of transactions assigned to Broker
Members. REALTrac(TM) allows NAI staff to easily track multiple Client
assignments, and produce portfolio activity reports. REALNet(TM), NAI's central
database information system, includes, among other things, Broker Member
profiles, Broker Member listings, transaction histories, Client relationship
information and Client profiles.

         NAI maintains both public-access and secure, limited-access web sites
in order to provide computer access to NAI's Broker Members and Clients, as well
as the general public. Broker Members access REALTrac(TM) and REALNet(TM)
through www.members.naiweb.com, a secure, web-based system.
www.members.naiweb.com also hosts discussion groups; a site to post property
listings to NAI's internet site, www.naiweb.com; NAI's Marketing Resource Center
where Broker Members can download marketing presentations; current press
releases; and the "Market Maker" system which promotes Brokerto-Broker
opportunities. www.clients.naiweb is a secure site which has been designed to
allow Clients to log into NAI's information network and get immediate updates on
the status of any assignments which such Client has placed with the Network. The
information contained in this site is fed directly from the NAI REALTrac(TM)
system. This site also allows Clients to contact NAI staff that is working on
their assignments. NAI's website, www.naiweb.com, is a public site which conveys
NAI's image in the marketplace, houses interactive versions of NAI's marketing
materials, and NAI's annual Real Estate Planning Guide, a comprehensive,
market-by-market commercial real estate analysis of over 140 real estate
markets. Additionally, this site maintains a global property listings database
with over 1,500 active commercial property listings which are posted by Broker
Members.

         NAI provides Broker Members and Clients with key demographic, mapping
and site modeling services through its New America Information Services division
("NAIS"), previously operated as a joint venture which has been terminated. NAIS
annually licenses demographic databases from national information providers. The
information contained in these databases is then used to produce custom
demographic reports and sophisticated mapping services.

COMPETITION

         NAI primarily seeks business from corporations, individual
owner/investors and national and international organizations with real estate
requirements in multiple market areas. NAI faces competition for clients on a
local, regional and national basis from national broker-owned companies with
global alliances, and national/global networks, as well as local and regional
commercial brokerage firms. Some of NAI's largest competitors include CB

Commercial Real Estate Services Group, Inc.; Cushman & Wakefield, Inc.; Grubb &
Ellis Company; and Trammel Crow Company. However, NAI believes that it is in
more North American market areas than any of these competitors. Real estate
broker networks with which NAI competes include Colliers International; Oncor
International; and The Commercial Network. NAI distinguishes itself from other
real estate broker networks by generating its own source of real estate
transactions for its Broker Members and actively managing those transactions,
and does not simply facilitate an exchange of transactions generated solely by
network members, as is the case in other broker networks.

         NAI's ability to earn revenues is directly related to its ability to
attract and retain successful, independently owned, commercial and industrial,
licensed real estate brokers ("Commercial Real Estate Brokers") in a substantial
number of market areas as Broker Members. The number of brokers in different
market areas and their strength and reputation in their own local markets may
directly affect the anticipated volume of commissions generated through the
Network, as well as NAI's ability to obtain exclusive assignments from a
national client base. NAI is presently competing for Broker Members with
cooperative commercial broker networks, as well as large national and regional
commercial real estate brokerages. There has been a consolidation of real estate
brokerage and service companies, which are better known

                                     -46-

<PAGE>

and have greater resources than NAI that are actively seeking to acquire other
real estate brokerage and service companies. Certain of NAI's competitors, such
as CB Commercial and Grubb & Ellis, are attempting to grow their businesses
through acquisitions, as well as by entering into affiliation agreements with
independent Commercial Real Estate Brokers. To the extent these companies are
successful in acquiring or entering into affiliation agreements with independent
Commercial Real Estate Brokers, there may a negative impact on NAI's ability to
attract and retain qualified Commercial Real Estate Brokers as part of the
Network as Broker Members. However, approximately 80 Broker Members have been
members of the Network for 5 years or longer. See "Risk Factors - Competition;
Ability to Retain Broker Members and Attract Additional Broker Members."

         In addition, approximately 40% of NAI's Broker Members are party to a
Membership Agreement which permits Broker Members to terminate the Agreement
upon 45 days prior notice. Certain Broker Members may not view the Related
Transactions as favorable to them. Accordingly, there can be no assurance that
in light of the increased competition to retain or acquire Commercial Real
Estate Brokers, that Broker Members will not terminate, or renew, their
Membership Agreements. See "Risk Factors competition; ability to Retain Broker
Members and Attract Additional Broker Members."

GOVERNMENT REGULATION

STATE LAWS GOVERNING REAL ESTATE BROKERS

         Most states permit licensed real estate brokers to enter into
commission sharing agreements with licensed real estate brokers from other
jurisdictions. However, some states impose certain requirements with respect to

entering into such agreements. For example some states allow only the local
broker to conduct negotiations. Other states require a written commission
sharing agreement to be filed with the state real estate commission. Still other
states do not permit the out-of-state broker to conduct brokerage activities
within the state. NAI presently has real estate brokerage licenses in New
Jersey, Florida, New York, and Pennsylvania. See "Certain Transactions." NAI
presently shares commissions with brokers in 48 jurisdictions, including states
in which it has a license. NAI does not believe that it provides brokerage
services or conducts negotiations in those states in which it shares
commissions. In certain instances, NAI has not filed written fee sharing
agreements with state real estate commissions. To the extent NAI has potentially
violated any state law with respect to commission sharing, it may not be able to
enforce its Membership Agreement and may be subject to civil liability or
criminal penalties.

LAWS RELATED TO FRANCHISING

         The offer and sale of franchises is subject to federal law and certain
state laws. NAI believes that it is exempt from compliance with the Federal
Trade Commission's ("FTC") trade regulation rule entitled "Disclosure
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures" (the "Franchise Rule"). The Franchise Rule requires a franchisor to
provide pre-sale disclosure to a prospective franchisee prior to the sale of a
franchise subject to the Franchise Rule. Many states have franchise sales laws
that require a franchisor, prior to the offer or sale of a franchise in the
state, to comply with registration or filing requirements, and, prior to the
sale of a franchise, to provide a prospective franchisee with a current
franchise offering circular. Certain other states have business opportunity laws
that apply to some franchise agreements that also may require a seller to comply
with applicable registration or filing requirements and to provide pre-sale
disclosure. State franchise sales laws and business opportunity laws are
described below as "State Laws." In addition, many states have laws that
regulate certain substantive aspects of the franchisor-franchisee relationship,
including termination or non-renewal of franchise agreements.

                                     -47-

<PAGE>

         NAI believes that by offering and selling memberships to its Broker
Members it may have been offering a "franchise," as defined by the Franchise
Rule, but that the offer and sale of such memberships are a "fractional
franchise" and are exempt from compliance with the requirements of the Franchise
Rule. As defined in the Franchise Rule, a "fractional franchise" is a commercial
arrangement which meets the following two conditions: (a) the franchisee or any
of its current directors or executive officers has more than 2 years of prior
management experience at any time in the past in the business represented by the
franchise and (b) the parties anticipated or should have anticipated, at the
time they entered into their agreement, that the sales of the franchisee arising
from the proposed relationship would represent no more than 20% of the total
dollar volume of the franchisee's projected gross sales within at least one year
after the franchisee commences selling the goods or services under the parties'
agreement.


         NAI believes that it is exempt from compliance with the Franchise Rule,
since (a) its Broker Members and their directors or executive officers typically
had more than 2 years' experience as Commercial Real Estate Brokers at the time
they entered into their agreements with NAI and (b) at the time a Broker Member
entered into its Membership Agreement, neither NAI nor the Broker Member
anticipated or should have anticipated that the sales proceeds of any Broker
Member arising from membership in NAI would represent 20% or more of its sales.

         As of the date of the Prospectus, NAI has neither prepared nor
distributed a franchise disclosure document ("Franchise Disclosure Document").
NAI believes that it is exempt from the requirements of many of the State Laws
in states in which it has entered into Member Agreements, based on various
exemptions, including, without limitation, applicable state "fractional
franchise" exemptions (or the functional equivalent), exemptions in connection
with the licensing of a registered trademark, or sophisticated purchaser
exemptions. However, NAI appears to have been subject to certain requirements
(e.g., registration or disclosure requirements) under State Laws in certain
other states in which it has agreements with Broker Members. In some states,
although no exemptions may have been available, past violations by NAI of claims
under those State Laws would be time barred.

         NAI believes that there are approximately six (6) states with a State
Law in which NAI has entered into Membership Agreements for which NAI may not be
exempt, may have failed to comply with the filing or registration and disclosure
provisions of such State Law, and for which it may be subject to certain
sanctions or potential liability. Such sanctions or potential liability would
include that NAI may be subject to civil penalties imposed by state regulatory
agencies, and legal actions by existing Broker Members for rescission of
existing Broker Membership Agreements, restitution, and damages as a result of
any violation of such law. NAI believes that, if any state regulatory agencies
or any of the Broker Members in such states sought such remedies and any such
actions were successful, its potential liability could be to refund certain
payments made to NAI. NAI believes that it has strong defenses to any alleged
violation of any State Law. Notwithstanding, the applicability of such laws is
uncertain as applied to NAI's Membership Agreements, and there can be no
assurance that a court would not take the position that NAI should have complied
with such laws in connection with those transactions. In the future NAI intends
to comply with State Laws, where necessary, by preparation and delivery to
prospective Members of a Franchise Disclosure Document, and registering or
filing with necessary state authorities, and/or by complying with available
exemptions.

         In the future, NAI intends to comply with State Laws, where necessary,
by preparation and delivery to prospective Members of a Franchise Disclosure
Documents, and registering or filing with necessary state authorities, and/or by
complying with available exemptions.

         NAI has also recently entered into several Membership Agreements with
Members in foreign countries. NAI has, to date, not taken any actions to comply
with franchise-related laws in effect in those jurisdictions. NAI believes that
it is in substantial compliance with such laws, and has good defenses to

                                     -48-


<PAGE>

any alleged violation of such laws. To the extent that NAI may not be in
compliance, it may be subject to actions by regulatory agencies and legal
actions by existing Members, and subject to fines, penalties, and damages. In
the future, NAI intends to comply with such laws, where necessary, as applicable
in each relevant jurisdiction.

TRADEMARKS

         NAI has a registered servicemark on the principal register with the
United States Patent and Trademark Office for the logo design eagle and the
initials "NAI" and the name "New America."

LEGAL PROCEEDINGS

         There is no material litigation pending, or to its knowledge,
threatened against NAI or its properties.

PROPERTY

         NAI leases approximately 8,100 square feet of office space as its
corporate headquarters located at Route 130 and Maple Stream Road, Hightstown,
New Jersey. The landlord, The Building Center, Inc., is wholly owned by Gerald
C. Finn and his wife. See "Certain Transactions." The lease provides for an
annual rental of $102,000 plus the payment of maintenance expenses. The initial
lease, which expired on August 31, 1989, has been extended by an Extension of
Lease Agreement, dated April 15, 1998, which provides for a one year term with
automatic one year renewals, unless either party gives 90 days written notice.

                             RELATED TRANSACTIONS

THE EXCHANGE AGREEMENT

         On _________, 1998, Kranzco, NAI and the Finns entered into the
Exchange Agreement in connection with the Exchange Offer, which included certain
representations, warranties and indemnities. In the Exchange Agreement, (i) the
Finns, jointly and severally, agreed to exercise Rights to purchase an aggregate
of 500,000 NAI Shares and (ii) Kranzco agreed to exercise such number of Rights
to purchase NAI Shares that would result in Kranzco owning 9.8% of the issued
and outstanding NAI Shares, before the issuance of any Additional Shares. The
Finns also agreed not to sell or transfer, directly or indirectly, any NAI
Shares, Notes or any Kranzco Common Shares issuable upon conversion of the Notes
held by the Finns for a period of three years from the closing of the Exchange
Offer. The Finns also agreed, with certain exceptions, not to convert the Notes
into Kranzco Common Shares until three years from the date of issuance. NAI also
agreed that if the Related Transactions are consummated, all costs and expenses
incurred by all parties in connection with the Related Transactions will be paid
by NAI.

         In the Exchange Agreement NAI agreed to indemnify and hold harmless
Kranzco and its affiliates (each an "indemnified person") from and against, any
Losses (as defined in the Exchange Agreement) incurred by such indemnified
person by reason of or arising out of or in connection with the failure of NAI

to comply with (i) any Laws (as defined therein) relating to real estate brokers
or (ii) any federal or state franchise Laws.

                                     -49-

<PAGE>

INTERCOMPANY AGREEMENT

         Immediately following the Distribution, Kranzco and NAI will enter into
an Intercompany Agreement which provides for the manner in which NAI and Kranzco
expect to create opportunities for each other and for reducing potential
conflicts of interest.

Kranzco Right of First Opportunity; Notification Right

         The Intercompany Agreement provides that, if any REIT Opportunity (as
defined below) becomes available to NAI in which NAI is acting, intends to act
or will act as principal or participate for its own account (a "Principal REIT
Opportunity"), NAI will first offer such Principal REIT Opportunity to Kranzco.
If Kranzco rejects a Principal REIT Opportunity, or accepts such Principal REIT
Opportunity but thereafter provides, or is required by the provisions of the
Intercompany Agreement to provide, written notice to NAI that it is no longer
pursuing such Principal REIT Opportunity, NAI is, for a period of one year
thereafter, entitled to consummate the Principal REIT Opportunity or provide any
other person or entity the right to consummate such Principal REIT Opportunity
at a price, and on terms and conditions, that are not more favorable to NAI in
any material respect than the price and terms and conditions made available to
Kranzco relating to such Principal REIT Opportunity. A Principal REIT
Opportunity does not include the receipt of any commissions in cash or in kind
(including an equity interest in a REIT Opportunity) in connection with NAI
serving as a broker or intermediary in connection with the sale or lease of
retail real estate. "REIT Opportunity" means any opportunity, principally within
the United States, to (i) acquire, develop, lease, sell or make any investment
in retail real estate, real estate mortgages, real estate derivatives, or
entities that invest exclusively in or have a substantial portion of their
assets in any of the foregoing, so long as such investment would be consistent
with the requirements of the Code and regulations relating to Kranzco's status
as a REIT; or (ii) make any REIT-Qualified Investment. "REIT-Qualified
Investment" means an investment, at least 95% of the gross income from which
would qualify under the 95% gross income test set forth in section 856(c)(2) of
the Code (or could be structured so to qualify) and the ownership of which would
not cause Kranzco to violate the asset limitations set forth in section
856(c)(4) of the Code (or could be structured not to cause Kranzco to violate
the section 856(c)(4) limitations) and which otherwise meets the federal income
tax requirements applicable to REITs, or (ii) any other investments which may be
structured in a manner so as to be REIT-Qualified Investments, as determined by
Kranzco. Kranzco may from time to time provide written notice to NAI specifying
certain criteria, reasonably acceptable to NAI, for a REIT Opportunity in
addition to the criteria specified above in this definition of REIT Opportunity.
Any such written notice from Kranzco may be canceled by written notice given by
Kranzco at any time or, with NAI's consent, which shall not be unreasonably
withheld, modified by Kranzco by written notice at any time. The definition of
REIT Opportunity will be modified as appropriate from time to time in accordance

with any such written notices sent by Kranzco and reasonably acceptable to NAI.
A Principal REIT Opportunity does not include the receipt of any commissions in
cash or in kind (including an equity interest in a REIT Opportunity) in
connection with NAI serving as a broker or intermediary in connection with the
sale or lease of retail real estate.

         The Intercompany Agreement also provides that NAI will immediately
notify Kranzco in writing of any REIT Opportunity that becomes available or
known to NAI (through its Broker Members or otherwise) and which is not a
Principal REIT Opportunity and which in the reasonable opinion of NAI meets the
acquisition and investment criteria of Kranzco (which will be provided to NAI by
Kranzco from time to time) (a "Non-Principal REIT Opportunity"). In the event
Kranzco determines to pursue such NonPrincipal REIT Opportunity, NAI shall use
good faith efforts to cause its Broker Members to assist Kranzco in considering
and consummating such Non-Principal REIT Opportunity. In the event Kranzco
consummates a transaction that constitutes a Non-Principal REIT Opportunity,
Kranzco will pay NAI a fee to be mutually agreed to by NAI and Kranzco.

                                     -50-

<PAGE>

         In addition, if NAI develops or becomes aware of any acquisition or
investment opportunity with respect to real estate (other than a REIT
Opportunity) in which NAI intends to or has the opportunity to act as principal
or participate in for its own account, and NAI is not interested in pursuing
such opportunity, or the opportunity is otherwise unavailable to NAI, NAI will
immediately notify Kranzco in writing of such opportunity with such writing to
contain a description of all material terms concerning such opportunity and be
delivered to Kranzco with a copy of any written material or information in NAI's
possession regarding such opportunity.

         NAI will also, without any additional consideration, (i) disseminate
acquisition and investment criteria provided by Kranzco to its Broker Members,
(ii) disseminate information regarding space available for lease from Kranzco
(including tenant criteria) to its Broker Members, (iii) provide Kranzco
reasonable access to NAI personnel, NAI Broker Members and NAI's computer data
bases (other than confidential client information), (iv) cooperate with Kranzco
to develop new shopping centers or re-develop distressed shopping centers for
sale to Kranzco in a mutually agreeable manner, (v) provide Kranzco access to
local property managers within areas in which Kranzco owns retail properties and
(vi) disseminate such other materials and information regarding Kranzco and its
properties as Kranzco may reasonably request.

Limitation on Strategic Alliance

         NAI has agreed not to enter into, without the consent of Kranzco, any
type of strategic relationship with any other REIT or real estate investment or
operations type entity, including, without limitation, any equity investment by
any other REIT or real estate investment or operations type entity in NAI (other
than as a result of a purchase of NAI Shares in the public market), any equity
investment by NAI in any other REIT or real estate investment or operations type
entity, entering into any agreements which provide such entities with rights of
first opportunity or contain cooperation provisions of the type or relating to

the matters contained in the Intercompany Agreement (other than with respect to
consulting arrangements). Notwithstanding the foregoing, NAI shall be permitted
to solicit assignments from other REITs or real estate investment or operations
type entities with respect to the purchase or sale of real estate or the
provision of Real Estate Related Services, subject to Kranzco's rights of first
opportunity and notification.

NAI Right of First Opportunity for Services Opportunity

         The Intercompany Agreement provides that if Kranzco requires Services
(as defined below) (a "Services Opportunity"), Kranzco shall engage in
discussions with NAI regarding such Services Opportunity prior to retaining
another service provider to perform such Services unless, in the reasonable
judgment of Kranzco, offering such Services Opportunity to NAI would be
detrimental to Kranzco. Notwithstanding the foregoing, (i) Kranzco shall have no
obligation to retain NAI to perform any Services for Kranzco and (ii) any
Services provided by NAI to Kranzco shall (a) be at market rates and (b) on
terms and conditions as attractive as the best available for comparable services
offered by NAI or, to the extent within NAI's control, any broker member or
affiliated member of NAI to third parties. "Services" means real estate
brokerage services, local management and other maintenance services, and certain
other Real Estate-Related Services then provided by NAI, including sealed-bid
sales, due diligence and real estate auctions.

         The Intercompany Agreement also provides that in the event Kranzco
desires to purchase any retail real estate based upon an opportunity provided to
Kranzco by someone other than NAI (a "Purchase Opportunity"), Kranzco will
notify NAI of such Purchase Opportunity and will use its good faith efforts to
cause the broker for such Purchase Opportunity to share any brokerage
commissions for such Purchase Opportunity with NAI in accordance with industry
practice; provided, however, Kranzco is not required to comply with the
foregoing if the Purchase Opportunity is based upon an exclusive brokerage
arrangement or, if in the reasonable judgment of Kranzco, compliance with the
foregoing would be

                                     -51-

<PAGE>

detrimental to the relationship between Kranzco and such broker or would impede,
inhibit or slow down the proposed transaction. In connection with a Purchase
Opportunity in which NAI will be sharing in the brokerage commission, NAI agrees
to perform, without any consideration, any due diligence services requested by
Kranzco.

         In addition, in the event NAI desires to offer to Kranzco tenants any
Services currently provided by NAI (a "Tenant Services Opportunity"), NAI shall
notify Kranzco in writing of such Tenant Services Opportunity. Promptly
following the receipt of such notice, Kranzco has agreed to provide NAI with a
list of the mailing addresses of its tenants solely for purpose of NAI
soliciting such tenant with respect to such Tenant Services Opportunity. If NAI
notifies Kranzco of a Tenant Services Opportunity, Kranzco shall not for a
period of six months after NAI notifies Kranzco of a Tenant Services Opportunity
provide a list of the mailing addresses of its tenants to a competitor of NAI

with respect to such Tenant Services Opportunity.

Certain Employee Matters

         NAI and Kranzco have agreed to make reasonable and ongoing efforts to
ensure that members of management of each of NAI and Kranzco are given
appropriate salary, bonus and options and other compensation as may be
reasonably necessary to incentivize management to enhance value to shareholders
of both NAI and Kranzco. The NAI Board and the Kranzco Board will direct each of
their compensation committees to take into consideration the objective set forth
in the previous sentence in establishing compensation levels and performance
criteria for management of NAI and Kranzco. In order to further this objective,
NAI will grant to selected directors, officers, employees and consultants of NAI
ten-year options to purchase an aggregate of 1,472,300 NAI Shares at a price of
$2.00 per NAI Share.

         NAI and Kranzco also agreed to use their best efforts to cause, for a
period of three years from the date of the Intercompany Agreement, (i) Norman
Kranzdorf to serve as NAI's Co-Chairman, (ii) Robert Dennis to serve as NAI's
Chief Financial Officer, and (iii) Michael Kranzdorf to serve as NAI'S Chief
Information Officer. NAI acknowledged in the Intercompany Agreement that Norman
Kranzdorf, Robert Dennis and Michael Kranzdorf, as officers of Kranzco, will
have a primary responsibility to Kranzco and that none of such individuals are
committed to devoting a specific amount of time to NAI's affairs.

Consulting Services

         Pursuant to the terms of the Intercompany Agreement, Kranzco has agreed
to provide NAI with such consulting services relating to management
administrative, corporate, accounting, financial, legal, equity offering,
insurance, tax, data processing, human resources and operational matters as NAI
shall from time to time reasonably request. In consideration for Kranzco
entering into the Intercompany Agreement and providing such consulting and
administrative services, NAI has agreed, during the term of the Intercompany
Agreement or until such earlier date as the consulting arrangement is terminated
in accordance with its terms, to pay Kranzco an annual fee of $500,000, payable
in equal monthly installments on the first day of each month.

REIT Compliance

         Nothing in the Intercompany Agreement obligates any party to take any
action that could cause Kranzco to lose its qualification as a REIT under the
Code.

                                     -52-

<PAGE>

Cooperation in Equity Offerings

         The Intercompany Agreement also provides that, if either Kranzco or NAI
desires to engage in a public or private offering of its debt or equity
securities, the other party shall cooperate and provide such information and
personnel as is reasonably required in connection with such offering.


Term

         The Intercompany Agreement has a term of ten years and may be
terminated by a party only if the other party or any affiliate of such other
party is in default of the Intercompany Agreement or any other agreement entered
into by the parties thereto or any of their controlled affiliates, if such
default is material and remains uncured for fifteen days after receipt of notice
thereof.

                               THE DISTRIBUTION

BACKGROUND AND REASONS FOR THE DISTRIBUTION

         Kranzco is a self-administered and self-managed equity REIT engaged in
the business of owning, managing, operating, leasing, acquiring and expanding
neighborhood and community shopping centers and, to a lesser extent,
free-standing retail properties. Kranzco is limited in its activities by the
investment limitations imposed by Federal income tax laws applicable to REITs,
which (i) limit the amount of income that a REIT can realize from certain
services that are not customarily furnished or rendered in connection with the
rental of real property in a particular geographic area, and (ii) limit
Kranzco's ownership in corporations other than REITs and qualified REIT
subsidiaries (a) to 10% of the outstanding voting securities of such
corporation, and (b) in that the value of any one corporation's securities
cannot exceed 5% of the value of Kranzco's total assets. Kranzco believes that
significant opportunities are available to investors in entities which provide
brokerage and Real Estate-Related Services, own properties other than
neighborhood and community shopping centers, and which are not limited in their
activities by the investment limitations imposed by Federal income tax laws
applicable to REITs. Accordingly, in light of the limitations on investments
imposed on REITs, Kranzco believes that effecting the Exchange Offer, the
Distribution, the Rights Offering and the Concurrent Offering, and establishing
an intercompany relationship between Kranzco and NAI will yield significant
benefits to Kranzco and its shareholders similar to those which may be obtained
by investors who are not so limited, while preserving Kranzco's REIT status. For
Kranzco, these benefits include:

         o        increased opportunities to acquire retail properties which
                  become available for sale through the Network, which might not
                  otherwise be available to Kranzco;

         o        greater access to a diverse range of tenants, in order to
                  re-tenant vacant space owned by Kranzco, including access to
                  non-retail tenants looking for space appropriate for office,
                  warehouse or other non-retail uses;

         o        the ability to enter into agreements with NAI to have NAI
                  develop new shopping centers or re-develop distressed shopping
                  centers for sale to Kranzco;

         o        the ability to enter into new geographic areas with the 
                  assistance of NAI's real estate professionals;


         o        NAI disseminating Kranzco's acquisition criteria to Broker
                  Members through the Network, in order to create additional
                  opportunities to purchase retail properties;

         o        increased opportunities to purchase additional retail
                  properties which are included in portfolios with non-retail
                  properties, utilizing NAI to purchase the non-retail
                  properties or find a purchaser for the non-retail properties;

         o        access to NAI's sophisticated, real estate oriented computer
                  network, which includes information on real estate
                  transactions, market conditions and demographics;

                                     -53-

<PAGE>

         o        the ability to purchase Real Estate-Related Services at 
                  competitive prices;

         o        the ability to own an equity interest in a company which 
                  owns real estate and provides Real Estate-Related Services 
                  which Kranzco, as a REIT, could not directly own or provide; 
                  and

         o        access to local property managers where Kranzco may own retail
                  properties, and the opportunity for Kranzco to manage retail
                  properties owned by NAI.

         NAI operates a network of independently owned, licensed real estate
Broker Members throughout the United States and, more recently, abroad, to
provide commercial real estate services to regional, national and international
Clients. NAI believes that a strategic relationship between companies which
provide real estate brokerage and services, such as NAI, and companies which own
and operate real estate, such as Kranzco, would provide significant benefits and
opportunities. For NAI, the benefits of entering into the strategic relationship
and consummating the Related Transactions (and under certain circumstances, to
the extent proceeds are available through the Rights Offering and the Concurrent
Offering) include:

         o        the opportunity as a public company, to raise additional
                  capital through the Rights Offering and the Concurrent
                  Offering and, to the extent possible, future equity and debt
                  offerings;

         o        the ability to expand its Corporate Services Department, 
                  Investment Sales Department andBroker Services Department;

         o        the ability to invest in or acquire Broker Members or other 
                  real estate service firms inorder to strengthen the Network;

         o        access to new transactions by providing real estate brokerage
                   services to Kranzco through NAI's Network;


         o        the ability to accelerate the development of information 
                  services and technologyinfrastructure to more efficiently 
                  deliver services;

         o        the opportunity to offer to Kranzco Real Estate-Related 
                  Services which NAI may develop;

         o        the opportunity to further develop existing Real 
                  Estate-Related Services and to acquire or develop businesses 
                  that provide Real Estate-Related Services;

         o        the ability to accelerate Network growth in international 
                  markets; 

         o        providing Broker Members the opportunity to manage selected 
                  Kranzco shopping centers; 

         o        the opportunity to enter into agreements with Kranzco to have
                  NAI develop new shopping centers or re-develop distressed 
                  shopping centers for sale to Kranzco; and

         o        expansion of its business through access to the real estate 
                  expertise of Kranzco's management.

         In the past Kranzco and NAI have worked together in a mutually
beneficial relationship. In December 1997, NAI's Investment Sales Department
assisted Kranzco in arranging for the acquisition of five shopping centers,
aggregating approximately 650,000 square feet of GLA, for approximately $44
million. NAI's Investment Sales Department initiated this opportunity, and
assisted Kranzco in acquiring the properties. Kranzco's acquisition of such
properties generated $100,000 in fee income to NAI. Kranzco and NAI expect that
the Intercompany Agreement will set forth a framework for a mutually beneficial
relationship in the future. See "Related Transactions--The Intercompany
Agreement."

         A small number of REITs, operating under tax provisions that no longer
are available, have shares that are "paired" or "stapled" with shares of a
related operating company. The NAI Shares and Kranzco Common Shares are not, and
will not be, paired or stapled in any manner and may be owned and transferred
separately and independently of each other. However, shareholders who own NAI
Shares and Kranzco Common Shares will in effect have the economic equivalent of
a paired investment in NAI and Kranzco.

                                     -54-

<PAGE>

         The Kranzco Board recognized in its planning that the Distribution
would result in a transaction taxable to Kranzco stockholders (based on
Kranzco's current and accumulated earnings and profits) and possibly to Kranzco
depending on the fair market value of the NAI Shares on the Distribution
Effective Date. Upon review of this and other relevant factors, the Kranzco
Board concluded that the benefits of the Distribution would more than offset any
negative tax consequences of the Distribution. See "Certain United States

Federal Tax Considerations--Material Federal Income Tax Consequences of the
Distribution."

         Since the Distribution will be effected on the same day that Kranzco
acquires the NAI Shares, Kranzco believes that no gain or loss will be
recognized by it in connection with the Distribution because the fair market
value of the NAI Shares should be equal to their tax basis.

DISTRIBUTION AGENT

         The Distribution Agent is First Union National Bank, 1525 West W.T. 
Harris Boulevard, 3C3, Charlotte, North Carolina 28262-1153, telephone: (800)
829-8432.

MANNER OF EFFECTING THE DISTRIBUTION

         Kranzco will effect the Distribution on the Distribution Effective Date
by delivering 11,987,746 NAI Shares, which represents approximately 70.2% of the
outstanding NAI Shares, to the Distribution Agent for distribution to the
holders of the outstanding Kranzco Common Shares and Kranzco Common Share
Equivalents as of the close of business on the Distribution Record Date. The
Distribution will be made on the basis of one NAI Share for each Kranzco Common
Share and one NAI Share for each Kranzco Common Share Equivalent held as of the
close of business on the Distribution Record Date. The NAI Shares will be fully
paid and nonassessable, and the holders thereof will not be entitled to
preemptive rights. See "Description of Securities." It is expected that
certificates representing NAI Shares will be mailed to holders of Kranzco Common
Shares and Kranzco Series B Preferred Shares as soon as practicable after the
Distribution Effective Date.

         HOLDERS OF KRANZCO COMMON SHARES SHOULD NOT SEND CERTIFICATES TO NAI,
KRANZCO OR THE DISTRIBUTION AGENT. THE DISTRIBUTION AGENT WILL MAIL THE STOCK
CERTIFICATES REPRESENTING NAI SHARES AS SOON AS PRACTICABLE AFTER THE
DISTRIBUTION EFFECTIVE DATE. KRANZCO SHARE CERTIFICATES WILL CONTINUE TO
REPRESENT KRANZCO COMMON SHARES AND SERIES B PREFERRED SHARES AFTER THE
DISTRIBUTION IN THE SAME AMOUNT SHOWN ON THE CERTIFICATES.

         No holder of Kranzco Common Shares will be required to pay any cash or
other consideration for the NAI Shares to be received in the Distribution or to
surrender or exchange Kranzco Common Shares or to take any other action in order
to receive NAI Shares pursuant to the Distribution.

RESULTS OF THE DISTRIBUTION

         Upon the consummation of the Distribution, NAI will be an independent
public company which will continue to conduct its business of providing real
estate brokerage and related services to Clients. Kranzco will own approximately
9.8% of the outstanding NAI Shares, Kranzco shareholders will own approximately
70.2% of the outstanding NAI Shares and the persons who owned NAI Shares prior
to the Exchange Offer will own an aggregate of approximately 20% of the NAI
Shares. Although the NAI Shares will be eligible for quotation and trading on
the OTC Bulletin Board after the Distribution, the NAI Shares are not currently
quoted on the OTC Bulletin Board or listed on any national securities exchange
or approved for quotation on any quotation system, and there can be no assurance

that a public market for

                                     -55-

<PAGE>

the NAI Shares will develop or provide liquidity. See "Risk
Factors--Determination of Offering Price; Absence of Prior Market; Trading
Prices."


                            THE RIGHTS OFFERING

THE RIGHTS

         NAI is distributing, to the record holders of outstanding NAI Shares as
of __________ __, 1998 (the "Rights Record Date"), including holders of Kranzco
Common Shares and Kranzco Common Share Equivalents who receive NAI Shares in the
Distribution, at no cost to them, transferable Rights to purchase additional NAI
Shares at a Subscription Price of $2.00 per NAI Share. NAI will distribute one
Right for each NAI Share held on the Rights Record Date. Each Right will entitle
its Holder to purchase one NAI Share. The Rights to purchase NAI Shares pursuant
to the Basic Subscription Privilege and the Oversubscription Privilege will be
evidenced by transferable subscription certificates (the "Subscription
Certificates"). An aggregate of 17,076,560 Underlying Shares will be sold if all
Rights are exercised. The Finns, jointly and severally, agreed in the Exchange
Agreement, to exercise Rights to purchase an aggregate of 500,000 NAI Shares and
Kranzco agreed to exercise such number of Rights to purchase NAI Shares that
would result in Kranzco owning 9.8% of the issued and outstanding NAI Shares,
before the issuance of any Additional Shares. To the extent Underlying Shares
are not purchased in the Rights Offering such unsubscribed shares will be
offered to the Executive Group and the Broker Member Group in the Concurrent
Offering. In order to ensure that the Broker Member Group will have the right to
purchase NAI Shares, NAI has authorized an additional 2,000,000 NAI Shares for
issuance pursuant to the Broker Member Group Subscription Privilege. There is no
minimum number of Underlying Shares required to be sold as a condition to the
consummation of the Rights Offering or the Concurrent Offering.

SUBSCRIPTION PRIVILEGES

         Basic Subscription Privilege. Each Right will entitle the Holder
thereof to receive, upon payment of the Subscription Price, one NAI Share.
Certificates representing NAI Shares purchased pursuant to the Basic
Subscription Privilege will be delivered to subscribers as soon as practicable
after the closing date, irrespective of whether the Subscription Privilege is
exercised immediately prior to the Expiration Date or earlier. Holders
exercising their Subscription Privilege will not be stockholders of record with
respect to the shares issuable pursuant to such Subscription Privilege until the
closing of the Rights Offering, which is anticipated to occur five Business Days
after the Expiration Date. The term "Business Day" shall mean any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
banking institutions in New York City are authorized or required by law,
regulation or executive order to close.


         Oversubscription Privilege. Subject to the allocation described below,
each Right also carries the right to subscribe at the Subscription Price for any
Underlying Shares not subscribed for through the exercise of Basic Subscription
Privileges by other Holders. If the remaining Underlying Shares are not
sufficient to satisfy all subscriptions pursuant to the Oversubscription
Privilege, such Underlying Shares will be allocated pro rata (subject to the
elimination of fractional shares) among those Holders exercising the
Oversubscription Privilege, in proportion, not to the number of shares requested
pursuant to the Oversubscription Privilege, but to the number of shares each
Holder exercising the Oversubscription Privilege subscribed for pursuant to the
Basic Subscription Privilege; provided, however, that if such pro rata
allocation results in any Holder being allocated a greater number of Underlying
Shares than such Holder subscribed for pursuant to the exercise of such holder's
Oversubscription Privilege, then such Holder will be allocated only such number
of Underlying Shares as such Holder subscribed for and the remaining Underlying
Shares will be allocated among all other Holders exercising the Oversubscription
Privilege. Only beneficial holders who exercise the Basic Subscription privilege
in full will be entitled to exercise the Oversubscription Privilege.
Certificates representing the Underlying Shares purchased

                                     -56-

<PAGE>

pursuant to the Oversubscription Privilege will be delivered to subscribers as
soon as practicable after the closing date and after all prorations have been
effected.

         The Basic Subscription Privilege and the Oversubscription Privilege are
referred to herein as the "Subscription Privileges."

EXPIRATION DATE

         The Rights will expire at 5:00 p.m., New York time, on __________ __,
1998 unless extended by NAI from time to time. Notwithstanding the foregoing,
the Expiration Date in no event shall be later than __________ __, 1998, except
that NAI reserves the right to extend the exercise period on one or more
occasions if the Board determines that the occurrence of a material event
necessitates amendment of the Registration Statement or recirculation of the
Prospectus that forms a part thereof in order to permit time for the
distribution of such information. After the Expiration Date, unexercised Rights
will be null and void. NAI will not be obligated to honor any purported exercise
of Rights received by the Subscription Agent after the Expiration Date,
regardless of when the documents relating to such exercise were sent, except
pursuant to the Guaranteed Delivery Procedures described below.

EXERCISE OF RIGHTS

         Rights may be exercised by delivering to the Subscription Agent, on or
prior to 5:00 p.m., New York time, on the Expiration Date, the properly
completed and executed Subscription Certificate evidencing such Rights with any
required signatures guaranteed, together with payment in full of any Underlying
Shares being subscribed for pursuant to the Subscription Privileges (except as
permitted pursuant to clause (iii) of the next sentence). Such payment in full

must be by: (i) check or bank draft drawn upon a U.S. bank or postal telegraphic
or express money order payable to First Union National Bank, as Subscription
Agent; or (ii) wire transfer of funds to the account maintained by the
Subscription Agent for such purpose; or (iii) in such other manner as NAI may
approve in writing in the case of persons acquiring Underlying Shares at an
aggregate Subscription Price of $500,000 or more, provided in each case that the
full amount of such Subscription Price is received by the Subscription Agent in
currently available funds within five Business Days following the Expiration
Date (the payment method under (iii) being an "Approved Payment Method").
Payment of the Subscription Price will be deemed to have been received by the
Subscription Agent only upon (a) clearance of any uncertified check, (b) receipt
by the Subscription Agent of any certified check or bank draft drawn upon a
United States bank or of any postal, telegraphic or express money order, (c)
receipt of good funds in the Subscription Agent's account designated above, or
(d) receipt of good funds by the Subscription Agent through an Approved Payment
Method.

         If paying by uncertified personal check, please note that the funds
paid thereby may take at least five business days to clear. Accordingly, Holders
who wish to pay the Subscription Price by means of uncertified personal check
are urged to make payment sufficiently in advance of the Expiration Date to
ensure that such payment is received and clears by such date and are urged to
consider payment by means of certified or cashier's check, money order or wire
transfer of funds.

                                     -57-

<PAGE>

         The address to which the Subscription Certificates and payment of the
Subscription Price should be delivered is:

         First Union National Bank
         Attn: Reorganization Department
         1525 West W.T. Harris Boulevard 3C3
         Charlotte, N.C. 26262
         Tel. No.: (800) 829-8432
         Facsimile No.:(704) 590-7598

         Funds received in payment of the Subscription Price for the Underlying
Shares subscribed for pursuant to the Oversubscription Privilege will be held in
a segregated account pending issuance of such Underlying Shares. If a Holder
exercising an Oversubscription Privilege is allocated less than all of the
Underlying Shares that such Holder wished to subscribe for, the excess funds
paid by such Holder in respect of the Subscription Price for shares not issued
shall be returned by mail without interest or deduction as soon as practicable
after the closing date.

         A holder who holds NAI Shares for the account of others, such as a
broker, a trustee or a depository for securities, should notify the respective
beneficial owners of such shares as soon as possible to ascertain such
beneficial owner's intentions and to obtain instructions with respect to the
Rights. If the beneficial owner so instructs, the record Holder of such Rights
should complete the Subscription Certificate and submit it to the Subscription

Agent with the proper payment. In addition, the beneficial owner of NAI Shares
or Rights held through such a holder of record should contact the Holder and
request the Holder to effect transactions in accordance with the beneficial
owner's instructions.

         Unless a Subscription Certificate (i) provides that the NAI Shares to
be issued pursuant to the exercise of Right represented thereby are to be
delivered to the Holder or (ii) is submitted for the account of an Eligible
Guarantor Institution (as defined below), signatures on such Subscription
Certificate must be guaranteed by an Eligible Guarantor Institution.

         If either the number of Underlying Shares being subscribed for pursuant
to the Basic Subscription Privilege is not specified on the Subscription
Certificate, or the amount delivered is not enough to pay the Subscription Price
for all Underlying Shares stated to be subscribed for, the number of Underlying
Shares subscribed for will be assumed to be the maximum amount that could be
subscribed for upon payment of such amount. If the number of Underlying Shares
being subscribed for is not specified, or payment of the Subscription Price for
the indicated number of Rights that are being exercised exceeds the required
Subscription Price, the payment will be applied, until depleted, to subscribe
for Underlying Shares in the following order: (i) to subscribe for the number of
Underlying Shares indicated, if any, pursuant to the Basic Subscription
Privilege, (ii) to subscribe for Underlying Shares until the Basic Subscription
Privilege has been fully exercised with respect to all of the Rights represented
by the Subscription Certificate; and (iii) to subscribe for additional
Underlying Shares pursuant to the Oversubscription Privilege (subject to any
applicable proration).

         The Instructions included in the Subscription Certificates should be
read carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO
NAI.

         THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE RIGHTS HOLDER, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH CERTIFICATES
AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE

                                     -58-

<PAGE>

ALLOWED TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT
PRIOR TO 5:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, THE RIGHTS HOLDER
IS STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR
CASHIERS CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.

         All questions concerning the timeliness, validity, form and eligibility
of any exercise of Rights will be determined by NAI, whose determinations will
be final and binding. NAI, in its sole discretion, may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as it may determine, or reject the purported exercise of any Right.
Subscriptions will not be deemed to have been received or accepted until all

irregularities have been waived or cured within such time as NAI determines in
its sole discretion.

         Any questions or requests for assistance concerning the method of
exercising Rights or requests for additional copies of this Prospectus or the
Instructions or the Notice of Guaranteed Delivery should be directed to the
Subscription Agent, telephone number (800) 829-8432.

LATE DELIVERY OF SUBSCRIPTION CERTIFICATES

         If a Holder wishes to exercise Rights, but time will not permit such
Holder to cause the Subscription Certificates evidencing such Rights to reach
the Subscription Agent on or prior to the Expiration Date, such Rights may
nevertheless be exercised if all of the following conditions (the "Guaranteed
Delivery Procedures") are met:

                  (i) such Holder has caused payment in full of the Subscription
         Price for each Underlying Share being subscribed for pursuant to
         Subscription Certificate to be delivered to the Subscription Agent on
         or prior to the Expiration Date;

                  (ii) the Subscription Agent receives, on or prior to the
         Expiration Date, a guaranteed notice (a "Notice of Guaranteed
         Delivery"), substantially in the form provided with the Instructions as
         to Use of New America International, Inc. Subscription Certificates
         (the "Instructions") distributed with the Subscription Certificates,
         from an "Eligible Guarantor Institution" (as defined in Rule 17Ad-15
         under the Exchange Act), stating the name of the exercising Holder, the
         number of Rights represented by the Subscription Certificate(s) held by
         such exercising Holder, the number of Underlying Shares being
         subscribed for pursuant to the Subscription Privileges and guaranteeing
         the delivery to the Subscription Agent of any Subscription
         Certificate(s) evidencing such Rights within three Business Days
         following the date of the Notice of Guaranteed Delivery; and

                  (iii) the properly completed Subscription Certificate(s), with
         any required signatures guaranteed, is received by the Subscription
         Agent within three Business Days following the date of the Notice of
         Guaranteed Delivery relating thereto. The Notice of Guaranteed Delivery
         may be delivered to the Subscription Agent in the same manner as
         Subscription Certificates at the addresses set forth above, or may be
         transmitted to the Subscription Agent by facsimile transmission
         (telecopy number (704) 590-7598). Additional copies of the form of
         Notice of Guaranteed Delivery are available upon request from the
         Subscription Agent, whose address and telephone number are set forth
         under "Subscription Agent" below.

                                     -59-


<PAGE>

NO REVOCATION

         ONCE A HOLDER OF RIGHTS HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE
OR THE OVERSUBSCRIPTION PRIVILEGE SUCH EXERCISE MAY NOT BE REVOKED.

METHOD OF TRANSFERRING RIGHTS

         The Rights evidenced by a single Subscription Certificate may be
transferred in whole by endorsing the Subscription Certificate for transfer in
accordance with the accompanying instructions. A portion of the Rights evidenced
by a single Subscription Certificate may be transferred by delivering to the
Subscription Agent a Subscription Certificate properly endorsed for transfer,
with instructions to register such portion of the Rights evidenced thereby in
the name of the transferee and to issue a new Subscription Certificate to the
transferee evidencing such transferred Rights). In such event, a new
Subscription Certificate evidencing the balance of the Rights will be issued to
the Holder or, if the Holder so instructs, to an additional transferee.

         Holders wishing to transfer all or a portion of their Rights should
allow a sufficient amount of time prior to the Expiration Date for (i) the
transfer instruction to be received and processed by the Subscription Agent,
(ii) a new Subscription Certificate to be issued and transmitted to the
transferee or transferees with respect to the transferred Rights, and to the
transferor with respect to retained Rights, if any, and (iii) the Rights
evidenced by such new Subscription Certificates to be exercised or sold by the
recipients thereof. If time does not permit a transferee of a Right who wishes
to exercise its Right to deliver its Subscription Certificate to the
Subscription Agent on or before the Expiration Date, such transferee should make
use of the Guaranteed Delivery procedure described under "The Rights Offering --
Exercise of Rights." Neither NAI nor the Subscription Agent shall have any
liability to a transferee or transferor or Rights if Subscription Certificates
or new Subscription Certificates are not received in time for exercise or sale
prior to the Expiration Date.

         All commissions, fees and other expenses (including brokerage
commissions and transfer taxes) incurred in connection with the purchase, sale
or exercise of Rights will be for the account of the transferor or subscriber of
the Rights, and none of such commissions, fees or expenses will be paid by NAI
or the Subscription Agent.

SUBSCRIPTION AGENT

         NAI has appointed First Union National Bank as Subscription Agent for
the Rights Offering. Any questions or requests for additional copies of this
Prospectus or the Notice of Guaranteed Delivery may be directed to the
Subscription Agent at the telephone number and address below. The Subscription
Agent's address, which is the address to which the Subscription Certificates and
payment of the Subscription Price should be delivered, as well as the address to
which Notice of Guaranteed Delivery must be delivered, and the Subscription
Agent's telephone number and facsimile number, are:


         First Union National Bank
         Attn: Reorganization Department
         1525 West W.T. Harris Boulevard 3C3
         Charlotte, N.C.  28262
         Tel. No.: (800) 829-8432
         Facsimile No.:(704) 590-7598

         NAI will pay the fees and expenses of the Subscription Agent, and will
also agree to indemnify it from any liability which it may incur in connection
with the Rights Offering.

                                     -60-

<PAGE>

                           THE CONCURRENT OFFERING

ThE CONCURRENT PRIVILEGES

         Executive Group Subscription Privilege. Simultaneously with the Rights
Offering, NAI is offering to the Executive Group the right to purchase any
Underlying Shares that are not otherwise subscribed for pursuant to the Rights
Offering ("Excess Shares"), at the Subscription Price, after the Basic
Subscription Privileges and Oversubscription Privileges have been fulfilled. If
the number of Excess Shares is not sufficient to satisfy all subscriptions
pursuant to the Executive Group Subscription Privilege, such Excess Shares will
be allocated pro rata (subject to the elimination of fractional shares) among
those exercising the Executive Group Subscription Privilege, in proportion to
the number of NAI Shares requested pursuant to the Executive Group Subscription
Privilege. There is no assurance that any Excess Shares will be available for
purchase by the Executive Group pursuant to the Executive Group Subscription
Privilege.

         Broker Member Group Subscription Privilege. Simultaneously with the
Rights Offering, NAI is offering to the Broker Member Group, the right to
purchase any Excess Shares, at the Subscription Price, after the Executive Group
Subscription Privileges have been fulfilled. NAI has authorized an additional
2,000,000 Additional Shares in order to ensure that the Broker Member Group will
have the right to purchase an aggregate of 2,000,000 NAI Shares. If, after
fulfillment of the Executive Group Subscription Privilege, the number of Excess
Shares and Additional Shares is not sufficient to satisfy all subscriptions
pursuant to the Broker Member Group Subscription Privilege, such Excess Shares
and Additional Shares will be allocated pro rata (subject to the elimination of
fractional shares) among those exercising the Broker Member Group Subscription
Privilege, in proportion to the number of NAI Shares requested pursuant to the
Broker Member Group Subscription Privilege. There is no assurance that any
person subscribing pursuant to the Broker Member Group Subscription Privilege
will receive all of the NAI Shares for which such person subscribes.

         The Executive Group Subscription Privilege will be evidenced by
non-transferable subscription forms (the "Executive Group Subscription Form").
The Broker Member Group Subscription Privilege will be evidenced by
non-transferable subscription forms (the "Broker Member Subscription Form,"
together with the Executive Group Subscription Form, a "Subscription Form"). The

Executive Group Subscription Privilege and the Broker Member Group Subscription
Privilege are collectively referred to herein as the "Concurrent Privileges."
Certificates representing the Excess Shares or Additional Shares, as the case
may be, purchased pursuant to the Executive Group Subscription Privilege or the
Broker Member Group Subscription Privilege will be delivered to subscribers as
soon as practicable after the closing date and after all prorations have been
effected. See "Plan of Distribution."

EXPIRATION DATE

         The Concurrent Privileges will expire at 5:00 p.m., New York time, on
the Expiration Date for the Rights, currently __________ __, 1998 unless
extended by NAI from time to time. Notwithstanding the foregoing, the Expiration
Date in no event shall be later than __________ __, 1998, except that NAI
reserves the right to extend the exercise period on one or more occasions if the
Board determines that the occurrence of a material event necessitates amendment
of the Registration Statement or recirculation of the Prospectus that forms a
part thereof in order to permit time for the distribution of such information.
After the Expiration Date, unexercised Concurrent Privileges will be null and
void. NAI will not be obligated to honor any purported exercise of the
Concurrent Privileges received by the Subscription Agent after the Expiration
Date, regardless of when the documents relating to such exercise were sent.

                                     -61-

<PAGE>

EXERCISE OF CONCURRENT PRIVILEGES

         The Concurrent Privileges may be exercised by delivering to the
Subscription Agent, on or prior to 5:00 p.m., New York time, on the Expiration
Date, the properly completed and executed Subscription Form, evidencing such
Concurrent Privilege, together with payment in full of any Excess Shares or
Additional Shares, as the case may be, pursuant to the Concurrent Privileges
(except as permitted pursuant to clause (iii) of the next sentence). Such
payment in full must be by: (i) check or bank draft drawn upon a U.S. bank or
postal telegraphic or express money order payable to First Union National Bank,
as Subscription Agent; or (ii) wire transfer of funds to the account maintained
by the Subscription Agent for such purpose; or (iii) any Approved Payment
Method. Payment of the Subscription Price will be deemed to have been received
by the Subscription Agent only upon (a) clearance of any uncertified check, (b)
receipt by the Subscription Agent of any certified check or bank draft drawn
upon a United States bank or of any postal, telegraphic or express money order,
(c) receipt of good funds in the Subscription Agent's account designated above,
or (d) receipt of good funds by the Subscription Agent through an Approved
Payment Method.

         If paying by uncertified personal check, please note that the funds
paid thereby may take at least five business days to clear. Accordingly, persons
who wish to pay the Subscription Price by means of uncertified personal check
are urged to make payment sufficiently in advance of the Expiration Date to
ensure that such payment is received and clears by such date and are urged to
consider payment by means of certified or cashier's check, money order or wire
transfer of funds.


         The address to which the Subscription Forms, and payment of the
Subscription Price should be delivered is:

         First Union National Bank
         Attn: Reorganization Department
         1525 West W.T. Harris Boulevard 3C3
         Charlotte, N.C. 26262
         Tel. No.: (800) 829-8432
         Facsimile No.: (704) 590-7598

         Funds received in payment of the Subscription Price for the Excess
Shares and/or Additional Shares subscribed for pursuant to the Concurrent
Privileges will be held in a segregated account pending issuance of such Excess
Shares or Additional Shares, as the case may be. If a person exercising a
Concurrent Privilege is allocated less than all of the Excess Shares or
Additional Shares, as the case may be, that such Holder wished to subscribe for,
the excess funds paid by such Holder in respect of the Subscription Price for
shares not issued shall be returned by mail without interest or deduction as
soon as practicable after the closing date.

         If either the number of Excess Shares being subscribed for pursuant to
the Concurrent Privileges is not specified on the Subscription Form, or the
amount delivered is not enough to pay the Subscription Price for all Excess
Shares stated to be subscribed for, the number of Excess Shares subscribed for
will be assumed to be the maximum amount that could be subscribed for upon
payment of the amount delivered with the Subscription Form. If the number of
Excess Shares or Additional Shares, as the case may be, being subscribed for is
not specified, or payment of the Subscription Price for the indicated number of
Excess Shares or Additional Shares exceeds the required Subscription Price, the
payment will be applied, until depleted, to subscribe for Excess Shares or
Additional Shares, as the case may be.

         The Instructions included in the Subscription Forms should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION FORMS TO NAI.

                                     -62-

<PAGE>

         THE METHOD OF DELIVERY OF SUBSCRIPTION FORMS AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE HOLDER OF SUCH SUBSCRIPTION FORMS, BUT IF SENT BY MAIL IT IS RECOMMENDED
THAT SUCH CERTIFICATES AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE
ALLOWED TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT
PRIOR TO 5:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, THE SUBSCRIBER IS
STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIERS
CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.

         All questions concerning the timeliness, validity, form and eligibility
of any exercise of Concurrent Privileges will be determined by NAI, whose
determinations will be final and binding. NAI, in its sole discretion, may waive

any defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Concurrent Privileges. Subscriptions will not be deemed to have been received or
accepted until all irregularities have been waived or cured within such time as
NAI determines in its sole discretion.

         Any questions or requests for assistance concerning the method of
exercising Concurrent Privileges or requests for additional copies of this
Prospectus should be directed to the Subscription Agent, telephone number (800)
829-8432.

NO REVOCATION

         ONCE A MEMBER OF THE EXECUTIVE GROUP OR BROKER MEMBER GROUP HAS
EXERCISED THE EXECUTIVE GROUP SUBSCRIPTION PRIVILEGE OR THE BROKER MEMBER GROUP
SUBSCRIPTION PRIVILEGE, AS THE CASE MAY BE, SUCH EXERCISE MAY NOT BE REVOKED.

NON TRANSFERABILITY OF CONCURRENT PRIVILEGES

         THE EXECUTIVE GROUP SUBSCRIPTION FORM AND THE BROKER MEMBER GROUP
SUBSCRIPTION FORM ARE NOT TRANSFERABLE.

SUBSCRIPTION AGENT

         NAI has appointed First Union National Bank as Subscription Agent for
the Concurrent Offering. Any questions or requests for additional copies of this
Prospectus may be directed to the Subscription Agent at the telephone number and
address below. The Subscription Agent's address, which is the address to which
the Subscription Forms and payment of the Subscription Price should be
delivered, and the Subscription Agent's telephone number and facsimile number,
are:

         First Union National Bank
         Attn:  Reorganization Department
         1525 West W.T. Harris Boulevard 3C3
         Charlotte, N.C.  28262
         Tel. No.: (800) 829-8432
         Facsimile No.: (704) 590-7598

                                     -63-

<PAGE>

         NAI will pay the fees and expenses of the Subscription Agent, and will
also agree to indemnify it from any liability which it may incur in connection
with the Concurrent Offering.


               CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

         The following general discussion summarizes certain of the material
U.S. federal income tax aspects of the Rights Offering, the Concurrent Offering
and the Distribution. This discussion is a summary for general information only
and does not consider all aspects of U.S. federal income tax that may be

relevant to an NAI stockholder or a Kranzco shareholder in light of such
stockholder's or shareholder's personal circumstances.

         This discussion is limited to the U.S. federal income tax consequences
relevant to (i) a NAI Stockholder receiving Rights, (ii) a Kranzco shareholder
receiving NAI Shares in the Distribution or (iii) a member of the Executive
Group or Broker Member Group acquiring Excess Shares or Additional Shares
pursuant to the Concurrent Offering, and, in each case, who is (i) a citizen or
resident (as defined in Section 7701(b)(1) of the Code) of the United States,
(ii) treated as a domestic corporation or a domestic partnership, or (iii) an
estate or trust other than a "foreign estate" or "foreign trust" as defined in
Section 7701(a)(31) of the Code (a "U.S. Holder"). This discussion does not
address the tax consequences to a holder that is not a U.S. Holder. This
discussion is limited to (i) NAI Stockholders who hold NAI Shares, and will hold
the Rights and any NAI Shares acquired upon the exercise of Rights as capital
assets within the meaning of Section 1221 of the Code, and (ii) Kranzco
shareholders who hold Kranzco Common Shares and Kranzco Common Share Equivalents
as capital assets within the meaning of Section 1221 of the Code. This
discussion also does not address the U.S. federal income tax consequences to NAI
Stockholders or Kranzco shareholders subject to special treatment under the U.S.
federal income tax laws, such as dealers in securities or foreign currency,
tax-exempt entities, banks, thrift institutions, insurance companies or other
financial institutions, persons that hold Kranzco Common Shares and Kranzco
Common Share Equivalents or the Rights or NAI Shares acquired by exercising
Rights as part of a "straddle," a "hedge" against currency risk or a "conversion
transaction," persons that have a "functional currency" other than the U.S.
dollar, and investors in pass-through entities. Moreover, the effect of any
applicable state, local or foreign tax laws is not discussed.

         This discussion is based on the Code, existing and proposed regulations
thereunder, and current administrative rulings and court decisions. All the
foregoing is subject to change, possibly on a retroactive basis, and any such
change could affect the continuing validity of this discussion.

         EACH NAI STOCKHOLDER , KRANZCO SHAREHOLDER, AND PARTICIPANT IN THE
CONCURRENT OFFERING IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR CONCERNING
THE APPLICATION OF FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION, TO ITS PARTICULAR SITUATIONS. THE CONTENTS
OF THIS PROSPECTUS ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS OR TAX ADVICE.
EACH NAI STOCKHOLDER, KRANZCO SHAREHOLDER, AND PARTICIPANT IN THE CONCURRENT
OFFERING SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR AND/OR TAX ADVISOR AS
TO LEGAL, BUSINESS OR TAX ADVICE.

                                     -64-

<PAGE>

FEDERAL INCOME TAXATION OF THE RIGHTS OFFERING

         Distribution of the Rights

                  Holders of NAI Shares will not recognize taxable income for
federal income tax purposes in connection with the receipt of the Rights.


         Stockholder Basis and Holding Period of the Rights

                  Except as provided in the following sentence, the basis of the
Rights received by a NAI Stockholder as a distribution with respect to such
stockholder's NAI Shares will be zero. If, however, either (i) the fair market
value of the Rights on the date that the Rights are distributed is 15% or more
of the fair market value of the NAI Shares with respect to which they are
received, or (ii) the stockholder properly elects, in his or her federal income
tax return for the taxable year in which the Rights are received, to allocate
basis, then part of his or her basis in NAI Shares will be allocated between the
NAI Shares and the Rights in proportion to the fair market value of each on the
date of the Rights Offering.

                  The holding period of a stockholder with respect to the Rights
received as a distribution on such stockholder's NAI Shares will include the
stockholder's holding period for the NAI Shares with respect to which the Rights
were issued.

         Sale of the Rights

                  A NAI Stockholder who sells the Rights received in the Rights
Offering prior to exercise will recognize gain or loss equal to the difference
between the amount realized on the sale and such stockholder's adjusted basis
(if any) in the Rights sold. Such gain or loss will be capital gain or loss if
gain or loss from a sale of NAI Shares held by such stockholder would be
characterized as capital gain or loss at the time of such sale.

                  Generally such capital gain or loss will be classified as
short-term if the stockholder's holding period in the Rights is one year or less
and long-term if the stockholder's holding period in the Rights is more than one
year. In general, under current law, net long-term capital gains are subject to
a maximum marginal tax rate of 28% for individuals, estates and trusts if the
holding period is more than one year but not more than 18 months, and a maximum
marginal tax rate of 20% if the holding period is more than 18 months. Net short
term capital gains are taxed at the same rates as ordinary income. An individual
may deduct only $3,000 of net capital losses (net of capital gains) each year.

         Lapse of the Rights

                  NAI Stockholders who allow the Rights received by them to
lapse will not recognize any gain or loss, and no adjustment will be made to the
basis of the NAI Shares, if any, owned by such stockholders.

         Exercise of the Rights, Basis and Holding Period of Shares

                  NAI Stockholders will not recognize any gain or loss upon the
exercise of Rights. The basis of the NAI Shares acquired through exercise of the
Rights will be equal to the sum of the price paid therefor and the stockholder's
basis in such Rights (if any).

                                     -65-

<PAGE>


                  A NAI Stockholder's holding period for the NAI Shares acquired
through exercise of the Rights will begin on the date the Rights are exercised.

         Sale of Shares

                  The sale of NAI Shares acquired through exercise of the Rights
will result in the recognition of gain or loss to the NAI Stockholder in an
amount equal to the difference between the amount realized on the sale and the
stockholder's adjusted basis in the NAI Shares. Gain or loss on the sale of such
NAI Shares will be classified capital gain or loss taxable in the manner
discussed above in "Sale of the Rights."

         Backup Withholding

                  A U.S. Holder of Rights or NAI Shares may be subject to
"backup withholding" at a rate of 31% with respect to certain "reportable
payments," including dividend payments and, under certain circumstances,
proceeds from the disposition of Rights or NAI Shares. These backup withholding
rules apply if the U.S. Holder, among other things, (i) fails to furnish a
social security number or other taxpayer identification number ("TIN") certified
under penalties of perjury within a reasonable time after the request therefor,
(ii) furnishes an incorrect TIN, (iii) fails to report properly interest or
dividends, or (iv) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN furnished is the
correct number and that such U.S. Holder is not subject to backup withholding. A
U.S. Holder who does not provide NAI with its correct TIN also may be subject to
penalties. Any amount withheld from a payment to a U.S. Holder under the backup
withholding rules is creditable against the U.S. Holder's federal income tax
liability, provided the required information is furnished to the Service. Backup
withholding will not apply, however, with respect to payments made to certain
holders, including corporations and tax-exempt organizations, provided their
exemption from backup withholding is properly established.

         NAI will report to the U.S. Holders of Rights or NAI Shares and to the
Service the amount of any "reportable payments" for each calendar year and the
amount of tax withheld, if any, with respect to such payments.

FEDERAL INCOME TAXATION OF THE DISTRIBUTION

         Tax Consequences to Kranzco

                  To the extent the fair market value of the NAI Shares
distributed in the Distribution to Kranzco Shareholders exceeds Kranzco's tax
basis in such shares, gain will be recognized by Kranzco. Since the Distribution
will be effected on the same day that Kranzco acquires the NAI Shares (in an
arm's length transaction), Kranzco believes that no gain or loss will be
recognized by it in connection with the Distribution because the fair market
value of the NAI Shares should be equal to their tax basis. Assuming Kranzco
qualifies as a REIT and has a dividends paid deduction for distributions to its
shareholders at least equal to its REIT taxable income (as computed before
taking into account the dividends paid deduction), no REIT level tax will be
incurred on account of the Distribution. In the unlikely event Kranzco
recognizes gain in connection with the Distribution, it is believed that any
such gain will not cause Kranzco to fail to meet any of the income tests that a

REIT must satisfy or to incur any significant tax liabilities.

                                     -66-

<PAGE>

         Tax Consequences to Kranzco Shareholders

                  The Kranzco Distribution. The distribution of NAI Shares will
                  -------------------------
be taxable to Kranzco Shareholders to the same extent as any other distribution
made by Kranzco to its shareholders. Thus, so long as Kranzco qualifies for
taxation as a REIT, distributions with respect to its shares of beneficial
interest (the "Kranzco Shares"), including the Distribution, made out of current
or accumulated earnings and profits allocable thereto (and not designated as
capital gain dividends) will be includible by the shareholders as ordinary
income for Federal income tax purposes. For this purpose, the current and
accumulated earnings and profits of Kranzco will be allocated first to
distributions with respect to Series A-1 Preferred Shares, Series B Preferred
Shares, Series C Preferred Shares, Series D Preferred Shares and then to
distributions with respect to Kranzco Common Shares. None of these distributions
will be eligible for the dividends received deduction for corporate
shareholders. Distributions that are designated as capital gain dividends will
be taxed as long-term capital gains (to the extent they do not exceed Kranzco's
actual net capital gain for the taxable year) without regard to the period for
which the shareholder has held his shares. For a U.S. shareholder who is an
individual or an estate or trust, such capital gain dividends generally will be
taxable at the 28% rate applicable to mid-term capital gain (i.e., gains from
the sale of capital assets held for more than one year but not more than 18
months) except to the extent Kranzco designates the capital gain dividend as a
20% rate distribution or a 25% rate distribution, as the case may be, based on
certain IRS guidelines. Corporate shareholders may be required to treat up to
20% of certain capital gain dividends as ordinary income.

         Effective for Kranzco's taxable years beginning on and after January 1,
1998, if Kranzco elects to retain and pay income tax on any net long term
capital gain, domestic shareholders of Kranzco would include in their income as
long term capital gain their proportionate share of such net long term capital
gain. A domestic shareholder would also receive a refundable tax credit for such
shareholder's proportionate share of the tax paid by Kranzco on such retained
capital gains and an increase in its basis in the shares of Kranzco in an amount
equal to the shareholder's includible capital gains less its share of the tax
deemed paid.

         Distributions in excess of current or accumulated earnings and profits
will not be taxable to a shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's Kranzco Shares. Shareholders will be
required to reduce the tax basis of their Kranzco Shares by the amount of such
distributions until such basis has been reduced to zero, after which such
distributions will be taxable as capital gain (ordinary income in the case of a
shareholder who holds his Kranzco Shares as a dealer). The tax basis as so
reduced will be used in computing the capital gain or loss, if any, realized
upon sale of the Kranzco Shares. Any loss upon a sale or exchange of Kranzco
Shares by a shareholder who held such Kranzco Shares for six months or less
(after applying certain holding period rules) will generally be treated as a

long-term capital loss to the extent such shareholder previously received
capital gain distributions with respect to such Kranzco Shares.

         Management projects that for a typical Kranzco common shareholder, the
Distribution likely will result in an increase in the shareholder's return of
capital and capital gain, but this result cannot be assured.

         Shareholders may not include in their individual Federal income tax
returns any net operating losses or capital losses of Kranzco. In addition, any
distribution declared by Kranzco in October, November or December of any year
payable to a shareholder of record on a specified date in any such month shall
be treated as both paid by Kranzco and received by the shareholder on December
31 of such year, provided that the distribution is actually paid by Kranzco no
later than January 31 of the following

                                     -67-

<PAGE>

year. Kranzco may be required to withhold a portion of capital gain
distributions to any shareholders who fail to certify their non-foreign status
to Kranzco.

                  Basis of NAI Shares. A Kranzco shareholder's basis in the NAI
Shares received in the Distribution will equal the fair market value of such NAI
Shares, at the time of the Distribution.

                  Sale or Exchange of NAI Shares. Upon the sale or exchange of
NAI Shares to or with a person other than NAI, a U.S. Holder will recognize
capital gain or loss equal to the difference between the amount realized on such
sale or exchange and the holder's adjusted tax basis in such shares. Any capital
gain or loss recognized by an individual, estate or trust will generally be
treated as mid-term capital gain or loss, taxable at a maximum rate of 28%, if
the holder held such shares for more than one year but not more than 18 months,
or as net adjusted capital gain or loss, taxable at a maximum rate of 20%, if
the holder held such shares for more than 18 months.

         Backup Withholding

         A noncorporate U.S. Holder of Kranzco Shares who is not otherwise
exempt from backup withholding may be subject to backup withholding at the rate
of 31% with respect to distributions paid on, or the proceeds of a sale,
exchange or redemption of, the Kranzco Shares. Generally, backup withholding
applies only when the taxpayer (i) fails to furnish or certify his correct
taxpayer identification number to the payor in the manner requested, (ii) is
notified by the IRS that he has failed to report payments of interest or
dividends properly, or (iii) under certain circumstances, fails to certify that
he has not been notified by the IRS that he is subject to backup withholding for
failure to report interest or dividend payments. Any amounts withheld under the
backup withholding rules from a payment to a U.S. Holder will be allowed as a
credit against the holder's federal income tax liability or as a refund,
provided that the required information is furnished to the IRS. Holders should
consult their own tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining any applicable exemption.


FEDERAL INCOME TAXATION OF THE CONCURRENT OFFERING

         To the extent Underlying Shares are not purchased by NAI Stockholders
in the Rights Offering, the remaining Excess Shares, will be subject to purchase
first, pursuant to the Management Subscription Privilege and second, pursuant to
the Broker Member Group Subscription Privilege. Although not entirely clear, the
right to purchase Excess Shares, as well as Additional Shares, pursuant to the
Concurrent Privileges will be treated for Federal income tax purpose as
non-qualified stock options. As such, there are no Federal income tax
consequences at the time the Excess Shares or Additional Shares are offered
pursuant to the Concurrent Privileges. Upon exercise of a Right, the holder will
recognize as ordinary income an amount equal to the excess, if any, of the fair
market value of the NAI Shares on the date of exercise over the exercise price
paid to acquire such shares. Withholding taxes may be withheld by NAI in
connection with the recognition of such ordinary income. NAI will be allowed a
tax deduction in like amount. The tax basis of NAI Shares acquired through
exercise of the Concurrent Privileges will equal the price paid therefor and the
holding period of such NAI Shares will begin on the date of exercise. Gain or
loss on the sale of such NAI Shares will be classified as capital gain or loss
taxable in the manner discussed in "--Federal Income Taxation of the Rights
Offering--Sale of the Rights."

                                     -68-

<PAGE>

                                  MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

         NAI's Board of Directors consists of eight members who are divided into
three classes as noted below. Class I consists of two directors whose terms will
expire at the 1999 Annual Meetings of Shareholders. Classes II and III each
consist of three directors whose terms will expire at the 2000 and the 2001
Annual Meetings of Shareholders, respectively. The names and ages of the
directors and executive officers of NAI and the positions held by them are set
forth in the following table:

       Name           Age                  Position                 Term Expires
       ----           ---                  --------                 ------------
Gerald C. Finn        67  Co-Chairman of the Board, Chief Executive     2001
                          Officer and Director

Jeffrey M. Finn       35  President, Chief Operating Officer and        2000
                          Treasurer and Director
Norman M. Kranzdorf   67  Co-Chairman and  Director                     2001
Robert H. Dennis      51  Chief Financial Officer and Director          1999
Michael Kranzdorf     37  Chief Information Officer and Director        2000
Joseph Grossman       64  Director                                      1999
Peter O. Hanson       64  Director                                      2001
Bernard J. Korman     66  Director                                      2000
Norma J. Finn         65  Secretary



         Gerald C. Finn, NAI's principal founder, has served as the Chief
Executive Officer and a Director of NAI since 1974. He also served as NAI's
President from 1974 until 1995. He was elected as Chairman of the Board in May
1990 and became Co-Chairman of the Board upon consummation of the Exchange Offer
and the Reincorporation Merger. Prior to his association with NAI, Mr. Finn was
an active real estate broker and developer for his own account and for the
account of various entities in which he had an equity interest. He is a licensed
real estate broker and a member of NACORE, ICSC and IDRC, and is a founding
member of the Wharton School Real Estate Center.

         Jeffrey M. Finn, the son of Gerald C. Finn, has been employed full time
by NAI since January, 1984, and has served as Chief Operating Officer and
President since September 1995, as Treasurer of NAI since December 1987 and has
served as an Executive Vice President of NAI from 1992 to 1995. He has worked in
various capacities including brokerage and corporate services, as well as
Investment Sales prior to becoming Vice President-Marketing in 1988. Mr. Finn is
a graduate of Boston University's School of Management and is a licensed Real
Estate Salesperson in the State of New Jersey. Mr. Finn is a member of the ICSC,
IDRC, NACORE and the Wharton Real Estate Center Advisory Board.

         Norman M. Kranzdorf became the Co-Chairman of the Board of Directors 
of NAI upon consummation of the Reincorporation Merger.  Mr. Kranzdorf,  a
co-founder of Kranzco, has been a trustee and the President and Chief  Executive
Officer of Kranzco since its organization in June 1992.  Mr. Kranzdorf was the
President of Kranzco Realty, Inc., a general commercial real estate management
and brokerage company ("Kranzco Realty"), from 1979, when he founded Kranzco
Realty, to 1992.  He served

                                     -69-

<PAGE>

as President of Amterre Development, Inc. ("Amterre") from 1972 to 1981.
Amterre, the successor to Food Fair Properties, Inc., owned and operated over 50
shopping centers, as well as other single-tenant retail properties, on the
Eastern seaboard. Mr. Kranzdorf was also an officer and director of Kranzco
Management, Inc., a general commercial real estate manager and brokerage company
and a wholly-owned subsidiary of Kranzco Realty, from 1980, when it was founded,
to 1992. He is a member of the Board of Governors of NAREIT and a former trustee
of the ICSC.

         Robert H. Dennis became the Chief Financial Officer of NAI and a member
of the Board of Directors of NAI upon consummation of the Exchange Offer and the
Reincorporation Merger. Mr. Dennis has been a trustee of Kranzco since June 1994
and the Chief Financial Officer and Treasurer of Kranzco since its organization
in June 1992. Prior thereto he was the Chief Financial Officer and Assistant
Secretary of Kranzco Realty from 1981 to 1992.

         Michael Kranzdorf  became the Chief Information Officer of NAI and a
member of the Board of Directors of NAI upon consummation of the Exchange Offer
and the Reincorporation Merger. Mr. Kranzdorf was named Director of Information
Systems at Kranzco Realty Trust in 1994 and was elected a Vice President of

Kranzco in June 1996.  He has been with Kranzco since 1987 as a programmer and
designer.  Mr. Kranzdorf received his B.S. from Tufts University and his M.S.
from the University of Colorado, both in Electrical Engineering.  Prior to
joining Kranzco, he held positions at Texas Instruments, the University of
Colorado and owned a consulting and publishing company in Boulder, Colorado. 
Mr. Kranzdorf is a member of the ICSC and serves on the Research Committee, and
he has recently accepted the first Chairmanship of NAREIT's Technology
Committee.

         Joseph Grossman has served as a Director of NAI since March 1983.  Mr.
Grossman has been an independent real estate developer since 1961 and has
developed shopping centers and industrial, residential and recreational
properties for his own account.  Mr. Grossman is also one of the founding
members of the Tinton Falls State Bank and is a member of its advisory board.

         Peter O. Hanson has been a member of the Board since June 1990.  Mr
Hanson is Chairman of James E. Hanson, Inc., a broker member of NAI.  Mr. Hanson
has been active in Commercial/Industrial Brokerage and Development since 1959. 
A very active member of The Society of Industrial and Office Realtors ("SIOR"),
Mr. Hanson has served that organization as a leader at the state, regional and
national level.  He was SIOR's International President in 1985.  In addition,
Mr. Hanson has been an active member of NAI's Advisory Board and has served as
Chairman of such Board.  Mr. Hanson is a member of the Board of Trustees of
Meridian Trust and Meridian Industrial Trust.  Other civic and industry groups
have benefitted from his participation and leadership.  A 1955 graduate of
Colgate University (B.A. - Sociology), Mr. Hanson also was a captain in the
United States Air Force.

         Bernard J. Korman became a member of the Board of Directors of NAI upon
consummation of the Exchange Offer and the Reincorporation Merger.  Mr. Korman
is Chairman of Graduate Health System, Inc., a non-profit organization, and
NutraMax Products, Inc., a consumer healthcare products company.  Mr. Korman
served as President and Chief Executive Officer of MEDIQ Incorporated from 1981
to 1995 and as chairman of PCI Services, Inc. from 1992 to 1996.  Mr. Korman
currently is a director of The Pep Boys, Inc., Today's Man, Inc., The New
America High Income Fund, Inc., InnoServ Technologies, Inc., Omega Healthcare
Investors, Inc., Omega Worldwide, Inc. and Kranzco.

         Norma J. Finn has served as the Secretary of NAI since NAI's inception
in 1974.  Ms.  Finn attended the University of Delaware and has served as
secretary and a board member of a number of real estate development
corporations.  She has been active in numerous charitable activities including
being

                                     -70-

<PAGE>

President of Contact of Mercer County N.J. and on the national board of Contact,
and the board of the Delaware Valley United Fund.

         Officers of NAI are elected by the Board and hold office until their
successors are chosen and qualified or until their death, resignation or
removal.


DIRECTOR COMPENSATION

         It is NAI's policy to pay non-employee directors of NAI fees of $500
per meeting, as well as reimbursements for expenses incurred in attending
meetings of the Board. However, in lieu of paying outstanding directors' fees,
in January 1998, NAI issued 5,000 Shares to each non-employee director of NAI.

EXECUTIVE COMPENSATION

         The following table sets forth certain information with respect to the
cash and other compensation paid or accrued by NAI for services rendered by
Gerald Finn, NAI's Chief Executive Officer, and NAI's four other most highly
compensated executive officers whose salary and bonus exceeded $100,000
(collectively, the "Named Executives"), during the fiscal year ended June 30,
1997.

                          SUMMARY COMPENSATION TABLE

                                                                   Long-Term
                               Annual Compensation(1)             Compensation
                              ------------------------           --------------
                                                                   Restricted
Name & Principal Position     Year    Salary     Bonus           Stock Awards($)
-------------------------     ----    ------     -----           ---------------
                                       ($)        ($)            

Gerald C. Finn                1997   $125,000       --               $7,500(2)
Chairman and Chief
Executive Officer

Jeffrey M. Finn               1997   $110,000   $20,000              $2,250(2)
President, Chief
Operating Officer and
Treasurer

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

(1)      The total value of all perquisites and other personal benefits received
         by each individual was less than the lesser of $50,000 or ten percent
         of the total salary of and bonus paid or accrued by NAI for services
         rendered by each officer during the fiscal year.

(2)      Reflects grant of 25,000 restricted NAI Shares and 7,500 restricted NAI
         Shares to Gerald C. Finn and Jeffrey M. Finn, respectively. Such NAI
         Shares were granted in NAI's fiscal year 1998 with respect to
         performance in fiscal year 1997, pursuant to a Restricted Stock
         Agreement. Such NAI Shares were valued at $.30 per NAI Share, the value
         of the NAI Shares as determined by the Board of Directors. See
         "Management--Restricted Stock Agreements."

                                     -71-

<PAGE>


EMPLOYMENT AGREEMENTS

         NAI has entered into employment agreements with Messrs. G. Finn and J.
Finn (the "Senior Executives"), pursuant to which Mr. G. Finn serves as the
Co-Chairman of the Board of NAI and Mr. J. Finn serves as its President. Each of
the employment agreements with the Senior Executives have a term of 3 years,
which is automatically extended for successive one-year periods unless either
the Senior Executive or NAI gives prior notice not to extend the employment
agreement, as specified in the agreement. Each of the employment agreements
provides for annual compensation of $175,000 to each of Messrs. G. Finn and J.
Finn for the first year of the term. After the first year of each employment
agreement, salary and bonus for the Senior Executives will be determined by the
Compensation Committee. Pursuant to the employment agreements, each of the
Senior Executives is also entitled to incentive compensation to be determined by
the Compensation Committee.

         In the event that either of the Senior Executives is fired without
"cause," such Senior Executive shall be entitled to the lesser of two times (i)
the individual's annual base compensation or (ii) the individual's annual base
compensation remaining due under the terms of his employment agreement;
provided, however, that the Senior Executive shall not be entitled to any such
severance payment if he has received a payment upon a change in control as
described below. The employment agreements also contain certain provisions
relating to non-competition and confidentiality.

         Each employment agreement provides that upon a change in control and so
long as such individual is an employee of NAI immediately prior to such a change
in control, (a) the individual shall receive a lump sum severance payment equal
to two times the individual's annual compensation during the calendar year
preceding the calendar year during which the change in control has occurred, (b)
restricted NAI Shares then owned by the individual shall immediately vest and no
longer be subject to repurchase or other forfeiture restrictions, (c) NAI will
continue to provide life, accident, medical and dental insurance to the
individual for the period of 18 months after the change in control, and (d) in
the event the individual holds any options to purchase NAI Shares on the date of
the change in control, such individual shall be entitled to receive an amount
equal to, generally, the number of options to purchase NAI Shares then owned by
the individual multiplied by the amount, if any, that (i) the exercise price of
the options or the closing price of the NAI Shares on the date of the change in
control, whichever is less, exceeds (i) the average closing price of the NAI
Shares during the sixth month prior to the date of the change in control. If the
closing price of the NAI Shares as of the date of the change in control is
greater than the exercise price of such option then the individual can retain
the option or receive in exchange therefor cash equal to the number of shares
underlying the options multiplied by the amount by which the closing share value
exceeds the exercise price of the options. Each Severance Benefits Agreement
provides that, to the extent that any of the foregoing benefits granted to such
individual would cause him to be liable for excise tax liabilities, the benefits
available to him shall be reduced to an amount which would not require the
payment of any such excise tax, but only if doing so yields a greater after tax
amount to such individual.


RESTRICTED STOCK AGREEMENTS

         In the past, NAI has granted restricted NAI Shares to certain persons
providing services to NAI, including employees and Broker Members (each, a
"grantee"). Each grantee of restricted NAI Shares executed a form of Restricted
Stock Agreement, which contains certain representations and warranties made by
NAI and the grantee, and sets forth the terms and conditions of the grant,
including the limited conditions under which the grantee may transfer the
restricted NAI Shares. The Restricted Stock Agreement also provides NAI with an
option for a period of three years following the date of grant to repurchase the
restricted NAI Shares if the grantee's services to NAI are terminated (a
"Termination").

                                     -72-

<PAGE>

NAI may repurchase restricted NAI Shares, for a period of 90 days after the date
of Termination, at the following prices: $.10 per NAI Share for a termination
during the first year after the date of grant of the restricted NAI Shares; $.20
per NAI Share for a termination during the year after the second anniversary of
the date of grant of the restricted NAI Shares; and $.30 per NAI Share for a
termination during the year after the third anniversary of the date of grant of
the restricted NAI Shares. In connection with the Exchange Offer, NAI agreed to
eliminate the repurchase option with respect to all restricted NAI Shares owned
by NAI Stockholders after the consummation of the Exchange Offer, if such NAI
Stockholder tendered at least 80% of his or her restricted NAI Shares. The
release of any or all of the preceding restrictions could cause the holders of
restricted NAI Shares to immediately recognize ordinary income in an amount
equal to the excess of the fair market value of such NAI Shares at the time the
restrictions are released over any amounts paid to acquire such NAI Shares. In
addition, withholding taxes will be payable to NAI (or withheld by NAI from
amounts otherwise due such holders) in connection with any such recognition of
income. Holders of restricted NAI Shares are urged to consult their tax advisors
concerning the federal, state and local tax consequences of the release of any
restrictions on their NAI Shares.

NAI 1998 INCENTIVE PLAN

         General. Upon consummation of the Exchange Offer and the
Reincorporation Merger, NAI will adopt the NAI 1998 Incentive Plan (the "1998
Plan"). The purpose of the 1998 Plan is to align the interests of certain of
NAI's directors, officers and other employees and consultants with those of the
shareholders and to enable NAI to attract, compensate and retain selected
individuals to serve as directors, officers and employees and consultants who
will contribute to NAI's success and provide such individuals with appropriate
incentives and rewards for their performance.

         Awards to directors, officers and other employees and consultants under
the 1998 Plan may take the form of share options ("Options"), including
corresponding share appreciation rights ("SARs") and reload options, restricted
share awards, share purchase awards and performance based awards. The maximum
number of NAI Shares that may be the subject of awards under the 1998 Plan is
1,700,000 NAI Shares, or approximately 4.7% of the NAI Shares outstanding as of

May 13, 1998, assuming the Proposed Related Transactions had occurred.

         NAI Share Authorization. NAI Shares covered by any unexercised portions
of terminated Options, NAI Shares forfeited by participants and NAI Shares
subject to any awards which are otherwise surrendered by a participant without
receiving any payment or other benefit with respect thereto may again be subject
to new awards under the 1998 Plan. In the event the purchase price of an Option
is paid in whole or in part through the delivery of NAI Shares, the number of
NAI Shares issuable in connection with the exercise of the Option shall not
again be available for the grant of awards under the 1998 Plan. NAI Shares
subject to Options, or portions thereof, which have been surrendered in
connection with the exercise of SARs, are not again available for the grant of
awards under the 1998 Plan. The NAI Shares to be issued or delivered under the
1998 Plan are authorized and unissued shares, or issued NAI Shares that have
been reacquired by NAI.

         Incentive Plan Administration.  The 1998 Plan will be administered by a
committee of two or more non-employee directors (the "Committee"), which will
initially consist of Messrs. Bernard J. Korman and Joseph Grossman.  The
Committee will determine the directors, officers, employees and consultants who
will be eligible for and granted awards, determine the amount and type of
awards, establish rules and guidelines relating to the 1998 Plan, establish,
modify and terminate the terms and conditions of awards and take such other
action as may be necessary for the proper administration of the 1998 Plan.  All

                                     -73-

<PAGE>

directors, employees and certain consultants are currently eligible to
participate in the 1998 Plan. Eighty percent of the NAI Shares which may be the
subject of awards under the 1998 Plan are reserved for employees of NAI who are
not also employees of Kranzco, and 20% of the NAI Shares which may be the
subject of awards under the 1998 Plan are reserved for employees and consultants
of NAI who are also employees of Kranzco.

         Options. "Incentive Options" meeting the requirements of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and "Nonqualified
Options" that do not meet such requirements are both available for grant under
the 1998 Plan. The term of each Option will be determined by the Committee, but
no Incentive Option will be exercisable more than ten years after the date of
grant. Options may also be subject to restrictions on exercise, such as exercise
in periodic installments, as determined by the Committee. The exercise price for
Incentive Options must be at least equal to 100% of the fair market value of the
NAI Shares on the date of grant and the exercise price for Nonqualified Options
will be determined by the Committee at the time of grant. The exercise price can
be paid in cash, or if approved by the Committee, by tendering (actually or
constructively) NAI Shares owned by a participant.

         Incentive Options are not transferable except by will or the laws of
descent and distribution and may be exercised only by the participant (or his
guardian or legal representative) during his or her lifetime, except as provided
below. With the Committee's consent, Nonqualified Options may be transferable to
family members and entities for the benefit of the participant or his family

members. If a participant's employment with NAI or service as a director
terminates for any reason (other than death or disability), any unexercised or
unexpired Options held by the participant (or its permitted transferee) will be
deemed canceled and terminated on the date of such termination, unless the
Committee decides to extend the term of such Options for a period not exceeding
three months. If a participant dies while employed by NAI, including an employee
who is also a director, any unexercised or unexpired Options will, to the extent
exercisable on the date of death, be exercisable by the holder or by the
participant's estate or by any person who acquired such Options by bequest or
inheritance, at any time generally within one year after such death. If a
participant becomes totally disabled and his employment terminates as a result
of such disability, including an employee who is also a director, the holder or
the participant (or his guardian or legal representative) will have the
unqualified right to exercise any unexercised and unexpired Options held by the
participant (or its permitted transferee) generally for one year after such
termination.

         NAI Share Appreciation Rights. The 1998 Plan provides that SARs may be
granted in conjunction with a grant of Options. Each SAR must be associated with
a specific Option and must be granted at the time of grant of such Option. A SAR
is exercisable only to the extent the related Option is exercisable. Upon the
exercise of a SAR, the recipient is entitled to receive from NAI, without the
payment of any cash (except for any applicable withholding taxes), up to, but no
more than, an amount in cash or NAI Shares equal to the excess of (A) the fair
market value of one NAI Share on the date of such exercise over (B) the exercise
price of any related Option, times the number of NAI Shares in respect of which
such SAR shall have been exercised. Upon the exercise of a SAR, the related
share Option, or the portion thereof in respect of which such SAR is exercised,
will terminate. Upon the exercise of an Option granted in tandem with a SAR,
such tandem SAR will terminate.

         Reload Options. The Committee may grant, concurrently with the award of
any Option (each an "Underlying Option") to such participants, one or more
reload options (each a "Reload Option") to purchase for cash or, if permissible
under the Underlying Option, NAI Shares,  a number of NAI Shares equal to the
number of NAI Shares delivered (or deemed delivered) by the participant to NAI
to exercise the Underlying Option. Although an Underlying Option may be an
Incentive Option, a Reload Option is

                                     -74-

<PAGE>

not intended to qualify as an Incentive Option. A Reload Option may be granted
in connection with the exercise of an Option that is itself a Reload Option.
Each Reload Option will have the same expiration date as the Underlying Option
and an exercise price equal to the fair market value of the NAI Shares on the
date of grant of the Reload Option. A Reload Option is exercisable immediately.

         Reload Options permit a participant to retain, through the term of the
original Option, his or her economic interest in the sum of the NAI Shares
covered by such Options as well as the already-owned NAI Shares that could be
used to exercise such Option, by granting options on the number of NAI Shares
used to pay the exercise price of the original Option and subsequent Reload

Options. In this way, Reload Options provide a participant with the opportunity
to build up ownership of NAI Shares covered by an original Option earlier during
the Option term rather than through a single exercise at or near the end of the
Option term.

         Restricted NAI Shares. NAI may award restricted NAI Shares to a
participant. Such a grant gives a participant the right to receive NAI Shares
subject to a risk of forfeiture based upon certain conditions. The forfeiture
restrictions on the NAI Shares may be based upon performance standards, length
of service or other criteria as the Committee may determine. Until all
restrictions are satisfied, lapsed or waived, NAI will maintain custody over the
restricted NAI Shares but the participant will be able to vote the NAI Shares
and will be entitled to an amount equal to all distributions, if any, paid with
respect to the NAI Shares, as provided by the Committee. During such restrictive
period, the restricted NAI Shares may not be sold, assigned, transferred,
pledged or otherwise encumbered. Upon termination of employment, the participant
generally forfeits the right to the NAI Shares to the extent the applicable
performance standards, length of service requirements, or other measurement
criteria have not been met.

         NAI Share Purchase Awards. The 1998 Plan also permits the grant of
share purchase awards to participants. Participants who are granted a share
purchase award are provided with a share purchase loan to enable them to pay the
purchase price for the NAI Shares acquired pursuant to the award. The terms of
each share purchase loan will be determined by the Committee. The purchase price
of NAI Shares acquired with a share purchase loan is the fair market value on
the date of the award. The 1998 Plan provides that some or all of the share
purchase loan can be forgiven under terms determined by the Committee. At the
end of the loan term, the remainder of the share purchase loan will be due and
payable. The interest rate, if any, on a share purchase loan will be determined
by the Committee. NAI Share purchase loans may be recourse or nonrecourse under
terms determined by the Committee.

         If a participant's employment with NAI is terminated for any reason,
the balance of the purchase loans to such participant will be immediately due
and payable; provided, however, if a participant's employment terminates by
reason of death, disability, by NAI without "cause" or in the event of a charge
in control, the balance of such participant's purchase loans may be forgiven in
whole or in part as of the date of such occurrence at the discretion of the
Committee.

         Performance-Based Awards. Certain Awards granted under the 1998
Incentive Plan may be granted in a manner such that the Awards qualify as
"performance-based compensation"(as such term is used in Section 162(m) of the
Code and the regulations thereunder) and thus be exempt from the deduction
limitation imposed by Section 162(m) of the Code ("Performance-Based Awards").
In general, to qualify as a Performance Based Award, among other things, the
Committee must be comprised solely of two or more "outside directors." The
Committee shall have complete discretion in determining the number, amount and
timing of awards granted to each participant. Such Performance-Based Awards may
take the form of, without limitation, cash, Shares or any combination thereof.
The Committee shall set performance goals at its discretion which, depending on
the extent to which they are met, will determine


                                     -75-

<PAGE>

the number and/or value of such Performance-Based Awards that will be paid out
to the participants, and may attach to such Performance-Based Awards one or more
restrictions. The maximum cash amount of Performance-Based Awards to be awarded
to any employee during any fiscal year shall be $1,000,000.

         The Committee may use the following performance measures, among others,
(either individually or in any combination) to set performance targets with
respect to Awards intended to qualify as Performance-Based Awards: net sales;
pretax income before allocation of corporate overhead and bonus; budget;
earnings per share; net income; division, group or corporate financial goals;
return on stockholders' equity; return on assets; attainment of strategic and
operational initiatives; appreciation in and/or maintenance of the price of the
NAI Shares or any other publicly-traded securities of NAI; market share; gross
profits; earnings before taxes; earnings before interest and taxes; earnings
before interest, taxes, depreciation and amortization; economic value-added
models; comparisons with various stock market indices; and/or reductions in
costs.

         Antidilution Provisions. The number of NAI Shares authorized to be
issued under the 1998 Plan and subject to outstanding awards (and the grant or
exercise price thereof) may be adjusted to prevent dilution or enlargement of
rights in the event of any dividend or other distribution, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of NAI Shares or other
securities, the issuance of warrants or other rights to purchase NAI Shares or
other securities, or other similar capitalization change.

         Certain Federal Income Tax Consequences of the 1998 Plan. The following
is a brief summary of the principal federal income tax consequences of awards
under the 1998 Plan. The summary is based upon current federal income tax laws
and interpretations thereof, all of which are subject to change at any time,
possibly with retroactive effect. The summary is not intended to be exhaustive
and, among other things, does not describe state, local or foreign tax
consequences.

         A participant is not subject to federal income tax either at the time
of grant or at the time of exercise of an Incentive Option. However, upon
exercise, the difference between the fair market value of the NAI Shares and the
exercise price is an includible item subject to the possible application of the
alternative minimum tax. If a participant does not dispose of NAI Shares
acquired through the exercise of an Incentive Option in a "disqualifying
disposition" (i.e., no disposition occurs within two years from the date of
grant of the share option nor within one year of the transfer of the NAI Shares
to the participant), then the participant will be taxed only upon the gain, if
any, from the sale of such NAI Shares, and such gain will be taxable as gain
from the sale of a capital asset.

         NAI will not be allowed any tax deduction on the exercise of an
Incentive Option or, if the above holding period requirements are met, on the
sale of the underlying NAI Shares. If there is a disqualifying disposition

(i.e., one of the holding period requirements is not met), the participant will
be treated as receiving compensation subject to ordinary income tax in the year
of the disqualifying disposition and NAI will be entitled to a deduction for
compensation expense in an amount equal to the amount included in income by the
participant. The participant generally will be required to include in income an
amount equal to the difference between the fair market value of the NAI Shares
at the time of exercise and the exercise price. Any appreciation in value after
the time of exercise will be taxed as capital gain and will not result in any
deduction by NAI.

         If Nonqualified Options are granted to a participant, there are no
federal income tax consequences at the time of grant. Upon exercise of the
Option, the participant must report as ordinary income an amount equal to the
difference between the exercise price and the fair market value of the NAI
Shares on

                                     -76-

<PAGE>

the date of exercise. NAI will be allowed a tax deduction in like amount. Any
appreciation in value after the time of exercise will be taxed as capital gain
and will not result in any deduction by NAI.

         No income will be realized by a participant in connection with the
grant of any SAR. The participant must include in ordinary income the amount of
cash received and the fair market value on the exercise date of any NAI Shares
received upon the exercise of a SAR. NAI will be entitled to a deduction equal
to the amount included in such participant's income by reason of the exercise of
any SAR.

         The receipt of a Reload Option by a holder of an Incentive Option or a
Nonqualified Option (including a Reload Option) who pays the exercise price in
full or in part with previously acquired NAI Shares should not affect the tax
treatment of the exercise of such Incentive or Nonqualified Option (including
the amount of ordinary income, if any, recognized upon exercise). A participant
will not be subject to tax at the time a Reload Option is granted (except for
any income recognized upon the exercise of a Nonqualified Option at the time of
grant of the Reload Option). A Reload Option will constitute a Nonqualified
Option for federal income tax purposes and will be taxed as such in the manner
set forth above.

         A grant of restricted NAI Shares does not constitute a taxable event
for either a participant or NAI. However, the participant will be subject to
tax, at ordinary income rates, when the NAI Shares are no longer subject to a
substantial risk of forfeiture or they become transferable. NAI will be entitled
to take a commensurate deduction at that time.

         A participant may elect to recognize taxable ordinary income at the
time restricted NAI Shares are awarded in an amount equal to the fair market
value of the NAI Shares at the time of grant, determined without regard to any
forfeiture restrictions. If such an election is made, NAI will be entitled to a
deduction at that time in the same amount. Future appreciation on the NAI Shares
will be taxed at the capital gains rate when the NAI Shares are sold. However,

if, after making such an election, the NAI Shares are forfeited, the participant
will be unable to claim a deduction.

         In general, a participant who receives a share purchase award incurs no
tax liability and NAI does not receive any deduction at the time NAI Shares are
acquired through a share purchase award. However, as the share purchase loan is
forgiven, the participant will be required to recognize income in an amount
equal to the forgiven portion of the loan. NAI will be entitled to take a
commensurate deduction at such time.

         Applicable withholding taxes may be withheld in connection with any
award under the 1998 Plan. In that regard, the Committee has the discretion to
allow a participant to satisfy its withholding tax obligations with NAI Shares.

         Change in Control. Depending on the terms of a particular award as
determined by the Committee, upon the occurrence of a change in control of NAI,
all options and related SARs may become immediately exercisable, the restricted
NAI Shares may fully vest and share purchase loans may be forgiven in full.

         Termination, Amendment and ERISA Status. The 1998 Plan will terminate
by its terms and without any action by the Board ten years from the date the
1998 Plan was adopted. No awards may be made after that date. Awards outstanding
on such date will remain valid in accordance with their terms.

                                     -77-

<PAGE>

         The Committee may amend or alter the terms of awards under the 1998
Plan, including to provide for the forgiveness in whole or in part of share
purchase loans, the release of the NAI Shares securing such loans or the
termination or modification of the vesting or performance provisions of the
grants of restricted NAI Shares but no such action shall in any way impair the
rights of a participant under any award without such participant's consent.

         The Committee may amend or terminate the 1998 Plan. No such amendments
or termination of the 1998 Plan shall in any way impair the rights of a
participant under any award previously granted without such participant's
consent. In addition, any amendment or termination will be subject to
shareholder approval if approval is required by Federal or state law or
regulation or rule of any stock exchange or quotation system on which the NAI
Shares are listed or quoted.

         The 1998 Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1976, as amended ("ERISA").

NAI 1998 EMPLOYEE BONUS COMPENSATION PLAN

         General. Upon consummation of the Exchange Offer and the
Reincorporation Merger, NAI will adopt the NAI 1998 Employee Bonus Compensation
Plan (the "Bonus Compensation Plan"). The purpose of the Bonus Compensation Plan
is to compensate outstanding performance by employees of NAI and to enable NAI
to attract, compensate and retain selected individuals to serve as employees who
will contribute to NAI's success and provide such individuals with appropriate

incentives and rewards for their performance.

         Awards to employees under the Bonus Compensation Plan are in the form
of grants of NAI Shares. The maximum number of NAI Shares that may be the
subject of awards under the Bonus Compensation Plan is 8,500,000 NAI Shares (the
"Award Shares"), assuming all of the Rights are exercised, or approximately
23.5% of the NAI Shares outstanding as of May 13, 1998, assuming the Proposed
Related Transactions had occurred. If less than all of the Rights are exercised,
the number of NAI Shares available under the Bonus Compensation Plan will be
decreased by 25% of the amount by which 34,000,000 NAI Shares exceeds the number
of NAI Shares outstanding after the Rights are exercised. The NAI Shares to be
issued or delivered under the Bonus Compensation Plan are authorized and
unissued shares, or issued NAI Shares that have been reacquired by NAI.

         NAI Share Award Formula. Subject to the maximum number of NAI Shares
remaining available under the Bonus Compensation Plan each year there shall be
available for award under the Bonus Compensation Plan, a number of NAI Shares
equal to the product of 6.25% times NAI's pre-tax net income for such year
("Annual Award Shares").

         Bonus Compensation Plan Administration. The Board will make grants of
the Annual Award Shares within 6 months after the end of the fiscal year with
respect to which such Award Shares become available for grant based on the
recommendation of the Chief Executive Officer and the President of NAI. All
employees are currently eligible to participate in the Bonus Compensation Plan.
The selection of employees who participate in the Bonus Compensation Plan will
be determined solely at the discretion of the Board based on the recommendation
of the Chief Executive Officer and President of NAI.

         Antidilution Provisions. The number of NAI Shares authorized to be
issued under the Bonus Compensation Plan and subject to outstanding awards may
be adjusted to prevent dilution or enlargement of rights in the event of any
dividend or other distribution, recapitalization, stock split, reverse stock
split,

                                     -78-

<PAGE>

reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of NAI Shares or other securities, the issuance of
warrants or other rights to purchase NAI Shares or other securities, or other
similar capitalization change.

         Certain Federal Income Tax Consequences of the Bonus Compensation Plan.
The following is a brief summary of the principal federal income tax
consequences of awards under the Bonus Compensation Plan. The summary is based
upon current federal income tax laws and interpretations thereof, all of which
are subject to change at any time, possibly with retroactive effect. The summary
is not intended to be exhaustive and, among other things, does not describe
state, local or foreign tax consequences.

         A grant of Award Shares constitutes a taxable event for a participant.
The fair market value of the Award Shares on the date of grant is reportable by

the participant as income taxable at ordinary income rates, and will be subject
to applicable federal, state and local withholding taxes at the time of grant.
In that regard, the Board has the discretion to allow a participant to satisfy
its withholding tax obligations with NAI Shares. NAI will be entitled to take a
deduction at the time of grant equal to the amount of taxable income reportable
by the participant.

         Termination, Amendment and ERISA Status. The employees will first be
eligible for Award Shares under the Bonus Compensation Plan with respect to
NAI's fiscal year ended June 30, 1999. The last year employees of NAI will be
eligible for Award Shares under the Bonus Compensation Plan will be with respect
to NAI's fiscal year ended June 30, 2009.

         The Board may amend or terminate the Bonus Compensation Plan; however,
the Bonus Compensation Plan may not be amended without the consent of 80% of the
Board, including the consent of either Jeffrey M. Finn or Gerald C. Finn. No
such amendments or termination of the Bonus Compensation Plan shall in any way
impair the rights of a participant under any award previously granted without
such participant's consent. In addition, any amendment or termination will be
subject to shareholder approval if approval is required by Federal or state law
or regulation or rule of any stock exchange or quotation system on which the NAI
Shares are listed or quoted.

         The Bonus Compensation Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1976, as amended.

NAI 1998 STOCK OPTION PLAN

         General. Upon consummation of the Exchange Offer and the
Reincorporation Merger, NAI will adopt the NAI 1998 Stock Option Plan (the
"Option Plan"). The purpose of the Option Plan is to align the interests of
NAI's directors, officers, employees and consultants with those of the
shareholders and to enable NAI to attract, compensate and retain selected
individuals to serve as directors, officers, employees and consultants who will
contribute to NAI's success and provide such individuals with appropriate
incentives and rewards for their performance.

         Awards to directors, officers, employees and consultants under the
Option Plan are in the form of share Options. The maximum number of NAI Shares
that may be the subject of awards under the Option Plan is 3,583,992 NAI Shares,
or approximately 9.9% of the NAI Shares outstanding as of May 13, 1998, assuming
the Proposed Related Transactions had occurred. Options to purchase all NAI
Shares issuable under such plan were granted upon consummation of the
Reincorporation Merger.

                                     -79-

<PAGE>

         Bonus Incentive Plan Administration. The Option Plan will be
administered by a committee of two or more non-employee directors (the "Option
Plan Committee"), which will initially consist of Messrs. Joseph Grossman and
Bernard Korman. The Option Plan Committee will determine the directors,
officers, employees and consultants who will be eligible for and granted awards,

determine the amount and type of awards, establish rules and guidelines relating
to the Option Plan, establish, modify and terminate the terms and conditions of
awards and take such other action as may be necessary for the proper
administration of the Option Plan. All directors, officers, employees and
certain consultants are currently eligible to participate in the Option Plan.

         Options. It is intended that all of the Options granted under the
Option Plan will be "Nonqualified Options" that do not meet the requirements of
Section 422 of the Code. The exercise price can be paid in cash, or if approved
by the Option Plan Committee, by tendering (actually or constructively) NAI
Shares owned by a participant.

         With the Option Plan Committee's consent, Nonqualified Options may be
transferable to family members and entities for the benefit of the participant
or his family members. If a participant's employment with NAI or service as a
director or consultant terminates for any reason (other than death or
disability), any unexercised or unexpired Options held by the participant (or
its permitted transferee) will be deemed canceled and terminated on the date of
such termination, unless the Option Plan Committee decides to extend the term of
such Options for a period not exceeding three months. If a participant dies
while employed by NAI, including an employee who is also a director, any
unexercised or unexpired Options will, to the extent exercisable on the date of
death, be exercisable by the holder or by the participant's estate or by any
person who acquired such Options by bequest or inheritance, at any time
generally within one year after such death. If a participant becomes totally
disabled and his employment terminates as a result of such disability, including
an employee who is also a director, the holder or the participant (or his
guardian or legal representative) will have the unqualified right to exercise
any unexercised and unexpired Options held by the participant (or its permitted
transferee) generally for one year after such termination.

         Options Outstanding Under the Option Plan. Upon the consummation of the
Reincorporation Merger, there will be outstanding Nonqualified Options to
purchase 3,583,992 NAI Shares under the Option Plan at an exercise price of $2
per NAI Share. Directors of NAI hold ten-year Options to purchase an aggregate
of 1,013,150 NAI Shares under the Option Plan at an exercise price of $2 per NAI
Share. Each of Gerald C. Finn and Jeffrey M. Finn was granted a five-year Option
under the Option Plan to purchase 1,544,220 and 609,971 NAI Shares,
respectively, at an exercise price of $2 per NAI Share; the exercise price of
each such Option will automatically increase $.12 each year during which such
Option remains outstanding and unexercised.

         Antidilution Provisions. The number of NAI Shares authorized to be
issued under the Option Plan and subject to outstanding awards (and the grant or
exercise price thereof) may be adjusted to prevent dilution or enlargement of
rights in the event of any dividend or other distribution, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of NAI Shares or other
securities, the issuance of warrants or other rights to purchase NAI Shares or
other securities, or other similar capitalization change.

         Certain Federal Income Tax Consequences of the Option Plan. The
following is a brief summary of the principal federal income tax consequences of
awards under the Option Plan. The summary is based upon current federal income

tax laws and interpretations thereof, all of which are subject to change at any

                                     -80-

<PAGE>

time, possibly with retroactive effect. The summary is not intended to be
exhaustive and, among other things, does not describe state, local or foreign
tax consequences.

         For Nonqualified Options, there are no federal income tax consequences
at the time of grant. Upon exercise of the Option, the participant must report
as ordinary income an amount equal to the difference between the exercise price
and the fair market value of the NAI Shares on the date of exercise. NAI will be
allowed a tax deduction in like amount. Any appreciation in value after the time
of exercise will be taxed as capital gain and will not result in any deduction
by NAI.

         Applicable withholding taxes may be withheld in connection with the
exercise of any Nonqualified Option, under the Option Plan. In that regard, the
Option Plan Committee has the discretion to allow a participant to satisfy its
withholding tax obligations with NAI Shares.

         Termination, Amendment and ERISA Status. The Option Plan will terminate
by its terms and without any action by the Board ten years from the date the
Option Plan was adopted. No awards may be made after that date. Awards
outstanding on such date will remain valid in accordance with their terms.

         The Option Plan Committee may amend or alter the terms of awards under
the Option Plan but no such action shall in any way impair the rights of a
participant under any award without such participant's consent.

         The Option Plan Committee may amend or terminate the Option Plan. No
such amendments or termination of the Option Plan shall in any way impair the
rights of a participant under any award previously granted without such
participant's consent. In addition, any amendment or termination will be subject
to shareholder approval if approval is required by Federal or state law or
regulation or rule of any stock exchange or quotation system on which the NAI
Shares are listed or quoted.

         The Option Plan is not subject to the provisions of ERISA.

                                     -81-


<PAGE>

                            PRINCIPAL STOCKHOLDERS

         The following table sets forth certain information regarding beneficial
ownership of NAI Shares as of May 13, 1998 of: (i) Named Executive Officers,
(ii) NAI's executive officers and directors as a group, and (iii) all persons
known by NAI to be the beneficial owner of more than 5.0% of the outstanding NAI
Shares immediately prior to the Distribution, the Rights Offering and the
Concurrent Offering, and after giving effect to the Distribution, the Rights
Offering, the Concurrent Offering and the other Related Transactions. Unless
otherwise noted, the information contained in this table, including the
footnotes hereto, assumes that the Reincorporation Merger occurred on May 13,
1998, and each NAI Delaware Share was converted into 1.316172 NAI Maryland
Shares.

<TABLE>
<CAPTION>

                                              Number of NAI Shares                           Percent of Class
                                              --------------------                           ----------------
                                                                 After
                                          Before              Distribution,      Before Distribution,      After Distribution,
                                   Distribution, Rights      Rights Offering     Rights Offering and        Rights Offering
                                      Offering and           and Concurrent           Concurrent             and Concurrent
Name and Address                  Concurrent Offering (1)      Offering (2)          Offering (3)             Offering (3)
----------------                  -----------------------      ------------          ------------             ------------
<S>                                <C>                          <C>                   <C>                       <C>
Gerald C. Finn(4)(5)                    4,311,634               4,711,634                20.8%                    11.8%
Jeffrey M. Finn(4)(6)                   1,586,372               1,686,372                 7.7                      4.2
Norman M. Kranzdorf(7)(8)                 614,594                 829,138                 3.0                      2.1
Robert H. Dennis(4)(9)                     87,783                 104,466                 0.4                      0.3
Joseph Grossman(4)(10)                     25,759                 41,518                  0.2                      0.1
Peter O. Hanson(3)(11)                     78,112                146,224                  0.4                      0.4
Bernard J. Korman(4)(12)                   19,272                 24,044                  0.1                      0.1
Michael Kranzdorf(8)(13)                   31,607                 55,714                  0.2                      0.1
Kranzco Realty Trust(8)                 1,673,503              3,347,006                  8.0                      8.4
Executive Officers & Directors          6,210,664              7,054,641                 30.0                     17.7
as a group (9) persons                         

</TABLE>

         (1) The numbers in this column reflect NAI Share ownership assuming the
Reincorporation Merger has occurred. The actual number of NAI Delaware Shares
beneficially owned by each person on May 1, 1998, was as follows: Gerald Finn,
9,563,390 NAI Shares; Jeffrey Finn, 2,759,522 NAI Shares; Norman M. Kranzdorf,
no NAI Shares; Robert H. Dennis, no NAI Shares; Joseph Grossman, 59,867 NAI
Shares; Bernard J. Korman, no NAI Shares; Michael Kranzdorf, no NAI Shares;
Peter O. Hanson, 258,750 NAI Shares; Kranzco Realty Trust, no NAI Shares; and
Estate of John McMenamin, 535,597 NAI Shares.

         (2) The numbers in this column represent NAI Shares beneficially owned
by each such person, plus any NAI Shares which such person may acquire pursuant
to the Basic Subscription Privilege.


         (3) Each beneficial owner's percentage ownership is determined assuming
(i) that all NAI Shares issuable upon exercise of the Rights will be exercised,
except that (x) Gerald Finn only exercises rights to purchase 400,000 NAI
Shares, (y) Jeffrey Finn only exercises rights to purchase 100,000 NAI Shares
and (z) Kranzco only exercises rights to purchase 1,673,503 NAI Shares in order
to maintain a 9.8% ownership interest in the outstanding NAI Shares; (ii) that
all of the Additional Shares are purchased in the Concurrent Offering, (iii) all
other convertible securities, options or warrants held by such person (but not
those held by any other person) and which are exercisable within 60 days of May
1, 1998 have been exercised and (iii) that each person who was an NAI
Stockholder prior to the Exchange Offer tendered 80% of his or her NAI Shares in
the Exchange Offer.

         (4) The address of all of the executive officers and directors of NAI,
who are not employees of Kranzco, is 572 Route 130, Hightstown, New Jersey
08520, telephone (609) 448-4700.

                                     -82-

<PAGE>

         (5) Includes (i) 3,949 NAI Shares owned by the Building Center, Inc., a
corporation owned by Gerald and Norma Finn, (ii) 1,794,220 NAI Shares issuable
upon the exercise of options to purchase NAI Shares, (iii) 42,776 NAI Shares
owned by Mr. Finn's spouse and (iv) 526,469 NAI held in trust for Mr. J. Finn,
of which, in the future, Mr. G. Finn may be entitled to receive certain NAI
Shares. Does not include (i) 44,092 NAI Shares owned by Mr. G. Finn's children,
or (ii) 4,936 NAI Shares held by Mr. G. Finn as collateral for a loan to a
stockholder of NAI; Mr. Finn disclaims beneficial ownership of such NAI Shares.

         (6) Includes (i) 11,846 NAI Shares held in trust for Mr. Finn's minor
children, (ii) 4,584 NAI Shares owned by Brooktree Swim & Tennis Club, Inc., a
corporation owned by Mr. J. Finn and his spouse, (iii) 859,971 NAI Shares
issuable upon the exercise of options to purchase NAI Shares; and (iii) 526,469
NAI Shares held in a trust for the benefit of Mr. J. Finn, of which Mr. J. Finn
is trustee.

         (7) Includes (i) 14,206 NAI Shares owned by Mr. Kranzdorf's spouse, 
(ii) 36,000 NAI Shares owned by Mrs. Kranzdorf as trustee for the benefit of
Michael Kranzdorf and Betty Kranzdorf, (iii) 400,050 NAI Shares issuable upon
the exercise of options to purchase NAI Shares.  See "Management."

         (8) The address of Kranzco Realty Trust is 128 Fayette Street,
Conshohocken, Pennsylvania 19428, and the address of executive officers and
directors of NAI who are also employees of Kranzco is c/o Kranzco Realty Trust
at such address.

         (9) Includes (i) 169 NAI Shares owned by Mr. Dennis' spouse, and (ii)
71,100 NAI Shares issuable upon the exercise of options to purchase NAI Shares.

         (10) Includes 10,000 NAI Shares issuable upon the exercise of options 
to purchase NAI Shares.


         (11) Includes (i) 236 NAI Shares owned by Mr. Hanson's spouse, (ii) 
4,343 NAI Shares and 1,645 NAI Shares owned by James E. Hanson, Inc. and
Property Investors Associates, entities owned by Mr. Hanson, and (iii) 10,000
NAI Shares issuable upon the exercise of options to purchase NAI Shares.

         (12) Includes (i) 3,900 NAI Shares owned by Mr. Korman's spouse, and
(ii) 14,500 NAI Shares issuable upon the exercise of options to purchase NAI
Shares.

         (13) Includes (i) 7,500 NAI Shares issuable upon the exercise of
options to purchase NAI Shares, and (ii) 18,000 NAI Shares held in trust for Mr.
M. Kranzdorf. See note 6.

Registration Rights

         Kranzco and NAI will enter into a Registration Rights Agreement which
provides that at any time after the earlier of the date (i) one year from the
consummation of the Exchange Offer or (ii) that Kranzco determines, in its sole
discretion, that Kranzco is, or will in the future be, required to sell the NAI
Shares owned by it in order to maintain its status as a REIT, NAI will, upon a
written request of Kranzco, register any NAI Shares owned by Kranzco in a
Registration Statement under the Securities Act (the "Demand Rights"). NAI has
agreed to use all reasonable best efforts to keep such Registration Statement
effective for a period of two years commencing on the effective date of the
Registration Statement (or a shorter period if all the NAI Shares owned by
Kranzco have been sold or may be sold without any volume limitations pursuant to
Rule 144 under the Securities Act prior to the expiration of such two year
period). The Registration Rights Agreement provides Kranzco with two Demand
Rights, as well as piggyback Registration Rights.

                             CERTAIN TRANSACTIONS

         NAI currently leases space for its corporate offices in Hightstown, New
Jersey from The Building Center, Inc., a New Jersey corporation (the "Building
Center"), which is wholly owned by Gerald C. Finn and his wife, Norma Finn. See
"Business--Property." NAI believes that the terms of this lease are at or below
the fair market rental for comparable facilities in the area.

         NAI and its subsidiaries owe a director and officer of NAI, Gerald and
Norma Finn, and an entity owned by them, an aggregate principal of $441,235. A
portion of the proceeds of the Rights Offering and the Concurrent Offering will
be used to repay such indebtedness. See "Use of Proceeds" for a description of
such indebtedness.

         Gerald C. Finn is the licensed broker of record on the New Jersey Real
Estate Broker's License held by NAI upon which NAI's reciprocal real estate
broker's licenses in Pennsylvania and New York are based. Mr. Finn's sister,
Susan Finn, is the licensed broker of record on the Florida Real Estate Broker's
License held by NAI.

                                     -83-

<PAGE>


         Peter O. Hanson, a director of NAI is the owner of James E. Hanson,
Inc., a Broker Member of the Network. In the fiscal year ended June 30, 1998,
James E. Hanson, Inc., paid to NAI approximately $90,000 in fees for services
and assignments received through the Network.

         In connection with the Exchange Offer, Kranzco, NAI and the Finns
entered into an Exchange Agreement and have agreed to enter into certain related
transactions. In addition, immediately following the Distribution, NAI and
Kranzco intend to enter into the Intercompany Agreement. See "The Exchange
Agreement" and "Related Transactions." In addition, in the calendar year ended
December 31, 1997, with the assistance of NAI's Investment Sales Department,
Kranzco purchased certain retail properties. See "Business--Investment Sales."

                          DESCRIPTION OF SECURITIES

         The following summary of the terms of the stock of NAI does not purport
to be complete and is subject to and qualified in its entirety by reference to
NAI's Charter and NAI's Bylaws, copies of which are exhibits to the Registration
Statement of which this Prospectus is a part. See "Available Information." This
description reviews the securities of NAI rather than NAI Delaware, because
after the Exchange Offer is consummated, the Reincorporation Merger will be
effected and all NAI Delaware Shares will be converted into NAI Shares.

General

         The charter provides that NAI may issue up to 200,000,000 shares of
common stock, $.01 par value per share (referred to herein as the "NAI Shares").
As of May 13, 1997, after giving effect to the Reincorporation Merger, there
were 17,076,560 NAI Shares issued and outstanding, and 229 holders of record of
such NAI Shares. Under Maryland law, stockholders generally are not liable for
the corporation's debts or obligations.

Common Stock

         All NAI Shares offered hereby will be duly authorized, fully paid and
nonassessable. Subject to the preferential rights of any other class or series
of stock, holders of NAI Shares are entitled to receive dividends on such NAI
Shares if, as and when authorized and declared by the Board of Directors of NAI
out of assets legally available therefor and to share ratably in the assets of
NAI legally available for distribution to its stockholders in the event of its
liquidation, dissolution or winding up after payment of or adequate provision
for all known debts and liabilities of NAI.

         Each outstanding NAI Share entitles the holder to one vote on all
matters submitted to a vote of stockholders, including the election of directors
and, except as provided with respect to any other class or series of stock, the
holders of such shares will possess the exclusive voting power. There is no
cumulative voting in the election of directors, which means that the holders of
a majority of the outstanding NAI Shares can elect all of the directors then
standing for election and the holders of the remaining shares will not be able
to elect any directors.

         Holders of NAI Shares have no preference, conversion, exchange, sinking
fund, redemption or appraisal rights and have no preemptive rights to subscribe

for any securities of NAI. NAI Shares will have equal dividend, liquidation and
other rights.

         Under the Maryland General Corporation Law (the "MGCL"), a Maryland
corporation generally cannot dissolve, amend its charter, merge, sell all or
substantially all of its assets, engage in a share exchange or engage in similar
transactions outside the ordinary course of business unless approved by the
affirmative vote of stockholders holding at least two thirds of the shares
entitled to vote on the matter unless a lesser percentage (but not less than a
majority of all of the votes entitled to be cast on the matter) is set forth in
the corporation's charter. The charter of

                                     -84-

<PAGE>


NAI provides for approval of (i) a consolidation, (ii) a share exchange, (iii) a
merger in which NAI is the successor, and (iv) amendments to the charter (except
for amendments to the sections of the charter relating to the classification and
removal of directors) by the affirmative vote of stockholders holding at least
two thirds of the shares entitled to vote on the matter.

         The charter authorizes the Board of Directors to reclassify any
unissued shares of stock into other classes or series of stock and to establish
the number of shares in each class or series and to set the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
redemption for each such class or series.

Preferred Stock

         The charter authorizes the Board of Directors to classify any unissued
shares of Preferred Stock and to reclassify any previously classified but
unissued shares of any series, as authorized by the Board of Directors. Prior to
issuance of shares of each class or series, the Board is required by the MGCL
and the charter of NAI to set, subject to the provisions of the charter
regarding the restrictions on transfer of stock, the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption for each
such series. Thus, the Board could authorize the issuance of shares of Preferred
Stock with terms and conditions which could have the effect of delaying,
deferring or preventing a transaction or a change in control of NAI that might
involve a premium price for holders of NAI Shares or otherwise be in their best
interest.

Power to Issue Additional Shares of Common Stock and Preferred Stock

         NAI believes that the power of the Board of Directors to issue
additional authorized but unissued NAI Shares and to classify or reclassify
unissued shares of stock and thereafter to cause NAI to issue such classified or
reclassified shares of stock will provide NAI with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
needs which might arise. The additional classes or series, as well as the NAI

Shares, will be available for issuance without further action by NAI's
stockholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which NAI's securities may
be listed or traded. Although the Board of Directors has no intention at the
present time of doing so, it could authorize NAI to issue a class or series that
could, depending upon the terms of such class or series, delay, defer or prevent
a transaction or a change in control of NAI that might involve a premium price
for holders of NAI Shares or otherwise be in their best interest.

Series A Preferred Stock

Agreement with Holder of Series A Preferred Stock. In connection with the
Reincorporation Merger, NAI entered into a letter agreement, with the holder of
the 101,000 outstanding shares of Series A Preferred Stock which provides that
in connection with the holder of the outstanding Series A Preferred Stock
agreeing to waive any potential right of mandatory redemption which such holder
may be entitled in connection with the Reincorporation Merger, NAI will redeem
all of the outstanding shares of Series A Preferred Stock within five Business
Days of the closing of the Rights Offering. The holder of the outstanding shares
of Series A Preferred Stock also agreed in the letter agreement not to convert
the Series A Preferred Stock into NAI Shares and that the holder of Series A
Preferred Stock is not entitled to receive Rights in the Rights Offering.

Rank.  Shares of Series A Preferred Stock rank prior to the NAI Shares.

                                     -85-

<PAGE>

Dividends. Holders of shares of Series A Preferred Stock are entitled to
receive, when and as declared by the Board of Directors, out of any funds of NAI
legally available therefor, cumulative cash dividends at an annual rate of 4% of
the $2.00 liquidation value of each such share ($.08 per share per annum). Any
deficiency in the payment of full cumulative dividends on the outstanding shares
of Series A Preferred Stock must be fully paid, or a sum sufficient for the
payment thereof set apart for such payments, before NAI may pay or set aside for
payment any dividends with respect to the NAI Shares or any other stock of NAI
ranking junior to the Series A Preferred Stock as to dividends or amounts upon
liquidation ("Junior Stock").

Liquidating Distributions. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of any
shares of Series A Preferred Stock then outstanding are entitled to receive for
each such share liquidating distributions in the amount of $2.00 per share, plus
any declared and unpaid dividends thereon, before any distribution may be made
to the holders of NAI Shares or any other Junior Stock. This distribution may be
paid in cash or in property taken at its fair value.

         If the amounts available for distribution in respect of shares of
Series A Preferred Stock upon any such voluntary or involuntary liquidation,
dissolution or winding up are not sufficient to satisfy the full liquidation
rights of all of the outstanding shares of Series A Preferred Stock, then the
holders of such outstanding shares shall share ratably in any such distribution
of assets in proportion to the full respective preferential amounts to which

they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of Series A
Preferred Stock will not be entitled to any further participation in any
liquidating distribution of any remaining assets by the Corporation.

Optional Conversion by Holders. Holders of shares of Series A Preferred Stock
have the right to convert all or a part of such shares into a number of NAI
Shares equal to (i) $2.00 multiplied by the number of shares of Series A
Preferred Stock so converted divided by (ii) the lesser of $2.00 or the average
NASDAQ bid price for NAI Shares for the 30 day period previous to the date of
conversion election. Upon such conversion, the holder of shares of Series A
Preferred Stock being converted shall also receive a warrant, exercisable for a
period of one year after the conversion date, to purchase, at a price of $1.00
per share, one NAI Share for every ten shares of Series A Preferred Stock so
converted.

Mandatory Redemption. NAI must redeem at least 25,000 shares of Series A
Preferred Stock at a price of $2.00 per share, plus the amount of all unpaid
cumulative compounded dividends on such shares of Series A Preferred Stock, from
funds legally available for such purposes on October 1, 1998 and must redeem all
remaining shares on or before September 30, 1999. Also, NAI must redeem all
outstanding shares of Series A Preferred Stock upon the consolidation or merger
of NAI into or with another corporation or corporations, or the sale, lease or
transfer of all or a substantial part of the assets of NAI to another
corporation or corporations (each such event being a "Sale of Business"). If a
Sale of Business occurs, NAI must redeem shares of the Series A Preferred Stock
in the amounts and with the preferences and priorities as if a liquidation had
occurred. See "Liquidating Distributions."

Optional Redemption. NAI may redeem shares of Series A Preferred Stock at any
time at a price of $2.00 per share plus unpaid cumulative accrued dividends.

Voting Rights. Except as expressly provided below, or as required by the MGCL,
holders of shares of Series A Preferred Stock have no voting rights. When the
holders of shares of Series A Preferred Stock are entitled to vote, each Senior
Preferred Stock is entitled to one vote.

         The affirmative vote or consent of the holders of at least two-thirds
of the outstanding shares of Series A Preferred Stock, is required to (i)
increase the authorized amount of Series A Preferred Stock, or authorize or
create, or increase the authorized amount of, any additional class of stock
ranking prior to or on a parity with the Series A

                                     -86-

<PAGE>

Preferred Stock as to dividends or assets; or authorize or create, or increase
the authorized amount of, any class of stock or obligations convertible into or
evidencing the right to purchase any class of stock ranking prior to or on a
parity with the Series A Preferred Stock as to dividends or assets; (ii)
authorize or create, or increase the authorized amount of, any stock of NAI,
other than NAI Shares, which has the right to participate in the distribution of
the assets and earnings of NAI without limit as to per share amount; (iii)

amend, alter or appeal any of the provisions of the Charter or any of the
rights, preferences or powers of the Series A Preferred Stock as fixed in the
Certificate of Designations creating the Series A Preferred Stock, so as to
adversely affect the rights, preferences or powers of the shares of Series A
Preferred Stock or its holders, (iv) sell, lease or convey all, or substantially
all, of the property or business of NAI; (v) merge or consolidate with or into
any other corporation or corporations, unless the corporation surviving or
resulting from such merger or consolidation will have after such merger or
consolidation no class of stock either authorized or outstanding ranking prior
to or on a parity with the Series A Preferred Stock as to dividends or assets
with the same rights, preferences and powers as the Series A Preferred Stock,
and unless each holder of shares of Series A Preferred Stock at the time of such
merger or consolidation and in connection therewith shall continue to hold (in
the case of the merger in which NAI is the surviving corporation), his or her
shares of Series A Preferred Stock, or (in the case of the consolidation or
merger of NAI into some other corporation) shall receive the same number of
shares of Series A Preferred Stock, with the same rights, preferences and
powers, of such resulting corporation; or (vi) amend or repeal any of the
provisions of the section of the Certificate of Designations relating to voting
rights of holders of shares of Series A Preferred Stock.

Rights to Purchase NAI Shares

         Each NAI Share issued in the Distribution will be accompanied by a 
Right to purchase one additional NAI Share.  The Rights are exercisable for 45
days from the date of the Distribution at a Subscription Price of $2.00 per
share.  See "The Rights Offering."

Transfer Agent and Registrar

         The transfer agent and registrar for the NAI Shares and Rights will be
First Union National Bank.

                    CERTAIN PROVISIONS OF MARYLAND LAW AND
                         OF NAI'S CHARTER AND BYLAWS

The following summary of certain provisions of Maryland law and of the charter
and Bylaws of NAI does not purport to be complete and is subject to and
qualified in its entirety by reference to Maryland law and the charter and
Bylaws of NAI, copies of which are exhibits to the Registration Statement of
which this Prospectus is a part.  See "Available Information."

Classification of the Board of Directors

         The Bylaws provide that the number of directors of NAI may be
established by the Board of Directors but may not be fewer than the minimum
number required by the MGCL (which is three, unless the corporation has less
than three stockholders) nor more than 15. Any vacancy will be filled, at any
regular meeting or at any special meeting called for that purpose, by a majority
of the remaining directors, except that a vacancy resulting from an increase in
the number of directors must be filled by a majority of the entire Board of
Directors.

         Pursuant to the charter, the Board of Directors is divided into three

classes of directors. The initial terms of the Class I, Class II and Class III
directors will expire in 1999, 2000 and 2001, respectively. Beginning in 1999,
directors of each class will be chosen for three-year terms upon the expiration
of their current terms and each year one class of directors will be elected by
the stockholders. NAI believes that classification of the Board of Directors
will

                                     -87-

<PAGE>

help to assure the continuity and stability of NAI's business strategies and
policies as determined by the Board of Directors. Holders of NAI Shares will
have no right to cumulative voting in the election of directors. Consequently,
at each annual meeting of stockholders, the holders of a majority of the NAI
Shares will be able to elect all of the successors of the class of directors
whose terms expire at that meeting.

         The classified board provision could have the effect of making the
replacement of incumbent directors more time consuming and difficult. At least
two annual meetings of stockholders, instead of one, will generally be required
to effect a change in a majority of the Board of Directors. Thus, the classified
board provision could increase the likelihood that incumbent directors will
retain their positions. The staggered terms of directors may delay, defer or
prevent a tender offer or an attempt to change control of NAI, even though a
tender offer or change in control might be in the best interest of the
stockholders.

Removal of Directors

         The charter provides that a director may be removed only for cause (as
defined in the charter) and only by the affirmative vote of at least two-thirds
of the votes entitled to be cast in the election of directors. This provision,
when coupled with the provision in the Bylaws authorizing the Board of Directors
to fill vacant directorships, precludes stockholders from removing incumbent
directors except upon the existence of cause for removal and a substantial
affirmative vote and filling the vacancies created by such removal with their
own nominees.

Business Combinations

         Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns ten percent or more of the
voting power of the corporation's shares or an affiliate of the corporation who,
at any time within the two-year period prior to the date in question, was the
beneficial owner of ten percent or more of the voting power of the
then-outstanding voting stock of the corporation (an "Interested Stockholder")
or an affiliate of such an Interested Stockholder are prohibited for five years
after the most recent date on which the Interested Stockholder becomes an
Interested Stockholder. Thereafter, any such business combination must be
recommended by the board of directors of such corporation and approved by the
affirmative vote of at least (a) 80% of the votes entitled to be cast by holders

of outstanding shares of voting stock of the corporation and (b) two-thirds of
the votes entitled to be cast by holders of voting stock of the corporation
other than shares held by the Interested Stockholder with whom (or with whose
affiliate) the business combination is to be effected, unless, among other
conditions, the corporation's common stockholders receive a minimum price (as
defined in the MGCL) for their shares and the consideration is received in cash
or in the same form as previously paid by the Interested Stockholder for its
shares. These provisions of the MGCL do not apply, however, to business
combinations that are approved or exempted by the board of directors of the
corporation prior to the time that the Interested Stockholder becomes an
Interested Stockholder. Each of Kranzco, Gerald Finn, Jeffrey Finn and Norman
Kranzdorf may beneficially own more than ten percent of NAI's voting shares and
would, therefore, be subject to the business combination provision of the MGCL.
However, pursuant to the statute, NAI has exempted any business combinations
involving any of them and, consequently, the five-year prohibition and the
super-majority vote requirements will not apply to business combinations between
any of them and NAI. As a result, Kranzco, Gerald Finn, Jeffrey Finn and/or
Norman Kranzdorf may be able to enter into business combinations with NAI that
may not be in the best interest of its stockholders without compliance by NAI
with the super-majority vote requirements and the other provisions of the
statute.

                                     -88-

<PAGE>

Control Share Acquisitions

         The MGCL provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter, excluding shares of stock owned by the acquiror, by officers or by
directors who are employees of the corporation. "Control Shares" are voting
shares of stock which, if aggregated with all other such shares of stock
previously acquired by the acquiror or in respect of which the acquiror is able
to exercise or direct the exercise of voting power (except solely by virtue of a
revocable proxy), would entitle the acquiror to exercise voting power in
electing directors within one of the following ranges of voting power: (i)
one-fifth or more but less than one-third, (ii) one-third or more but less than
a majority, or (iii) a majority or more of all voting power. Control shares do
not include shares the acquiring person is then entitled to vote as a result of
having previously obtained stockholder approval. A "control share acquisition"
means the acquisition of control shares, subject to certain exceptions.

         A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the board of directors of the corporation to call a
special meeting of stockholders to be held within 50 days of demand to consider
the voting rights of the shares. If no request for a meeting is made, the
corporation may itself present the question at any stockholders meeting.

         If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
statute, then, subject to certain conditions and limitations, the corporation

may redeem any or all of the control shares (except those for which voting
rights have previously been approved) for fair value determined, without regard
to the absence of voting rights for the control shares, as of the date of the
last control share acquisition by the acquiror or of any meeting of stockholders
at which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a stockholders meeting and the
acquiror becomes entitled to vote a majority of the shares entitled to vote, all
other stockholders may exercise appraisal rights. The fair value of the shares
as determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition.

         The control share acquisition statute does not apply (a) to shares
acquired in a merger, consolidation or share exchange if the corporation is a
party to the transaction or (b) to acquisitions approved or exempted by the
charter or bylaws of the corporation.

         The Bylaws of NAI contain a provision exempting from the control share
acquisition statute any and all acquisitions by any person of NAI's shares of
stock. There can be no assurance that such provision will not be amended or
eliminated at any time in the future.

Dissolution of NAI

         The dissolution of NAI must be approved by the affirmative vote of the
holders of not less than two thirds of all of the votes entitled to be cast on
the matter.

Advance Notice of Director Nominations and New Business

         The Bylaws of NAI provide that (a) with respect to an annual meeting of
stockholders, nominations of persons for election to the Board of Directors and
the proposal of business to be considered by stockholders may be made only (i)
pursuant to NAI's notice of the meeting, (ii) by the Board of Directors or (iii)
by a stockholder who is entitled to vote at the meeting and has complied with
the advance notice procedures set forth in the Bylaws and (b) with respect to
special meetings of stockholders, only the business specified in NAI's notice of
meeting may be brought before the meeting of stockholders and nominations of
persons for election to the Board of Directors may be made only (i)

                                     -89-

<PAGE>

pursuant to NAI's notice of the meeting, (ii) by the Board of Directors or (iii)
provided that the Board of Directors has determined that directors shall be
elected at such meeting, by a stockholder who is entitled to vote at the meeting
and has complied with the advance notice provisions set forth in the Bylaws.

Anti-takeover Effect of Certain Provisions of Maryland Law and of the Charter
and Bylaws

         The business combination provisions (with respect to stockholders other
than Kranzco, Gerald Finn, Jeffrey Finn and Norman Kranzdorf) and, if the
applicable provision in the Bylaws is rescinded, the control share acquisition

provisions of the MGCL, the provisions of the charter on classification of the
Board of Directors and removal of directors and the advance notice provisions of
the Bylaws could delay, defer or prevent a transaction or a change in control of
NAI that might involve a premium price for holders of NAI Shares or otherwise be
in their best interest.

                       SHARES ELIGIBLE FOR FUTURE SALE

         The sale of a substantial number of NAI Shares, or the perception that
such sales could occur, could adversely affect prevailing market prices for the
NAI Shares. In addition, any such sale or perception could make it more
difficult for NAI to sell equity securities or equity related securities in the
future at a time and price that NAI deems appropriate. Upon consummation of the
Distribution, Rights Offering and the Concurrent Offering, assuming all of the
Rights are exercised and all the Additional Shares are purchased in the
Concurrent Offering, NAI will have a total of 36,153,120 NAI Shares outstanding,
of which the 31,064,306 NAI Shares offered in connection with the Distribution
and Rights Offering will be eligible for immediate sale in the public market
without restriction, unless they are held by "affiliates" of NAI within the
meaning of Rule 144 under the Securities Act. In addition, there will be
outstanding 5,088,815 NAI Shares which will be "restricted" securities within
the meaning of Rule 144 under the Securities Act. Substantially all of such NAI
Shares will be eligible for resale in accordance with the provisions of Rule 144
immediately upon consummation of the Distribution. Additionally, NAI has granted
options to (i) certain officers, directors, employees and consultants of NAI to
purchase an aggregate of 3,583,992 NAI Shares and (ii) certain directors and
trustees of NAI and Kranzco to purchase 50,000 NAI Shares. NAI has also reserved
for issuance (i) up to 1,700,000 NAI Shares for issuance pursuant to the 1998
Plan, (ii) up to 8,500,000 NAI Shares for issuance pursuant to the Bonus
Compensation Plan. See "Principal Shareholders," "Description of Capital Stock,"
"Management," and "Plan of Distribution." Gerald Finn and Jeffrey Finn have
agreed not to sell or transfer, directly or indirectly, any NAI Shares held by
the Finns for a period of three years from the closing of the Exchange Offer.

         In general, under Rule 144 as currently in effect, if one year has
elapsed since the later of the date of acquisition of restricted shares from NAI
or any "affiliate" of NAI, as that term is defined under the Securities Act, the
acquiror or subsequent holder thereof is entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1.0% of the then
outstanding NAI Shares or the average weekly trading volume of the NAI Shares
during the four calendar weeks preceding the date on which notice of the sale is
filed with the Commission. Sales under Rule 144 also are subject to certain
manner of sale provisions, notice requirements and the availability of current
public information about NAI. If two years have elapsed since the date of
acquisition of restricted shares from NAI or from any "affiliate" of NAI, and
the acquiror or subsequent holder thereof is deemed not to have been an
"affiliate" of NAI at any time during the three months preceding a sale, such
person would be entitled to sell such shares in the public market under Rule
144(k) without regard to the volume limitations, manner of sale provisions,
public information requirements or notice requirements.

         No prediction can be made as to the effect, if any, that future sales
of shares, or the availability of shares for future sale, will have on the
market price prevailing from time to time. Sales of substantial amounts of NAI

Shares, or the perception that such sales could occur, may affect adversely
prevailing market prices of the NAI Shares.

                                     -90-

<PAGE>


                             PLAN OF DISTRIBUTION

         The NAI Shares being issued in the Distribution, are being distributed
by Kranzco directly to the holders of Kranzco Common Shares and Kranzco Common
Share Equivalents on the Distribution Record Date, on the basis of one NAI Share
for each Kranzco Common Share and for each Kranzco Common Share Equivalent on
the Distribution Record Date. NAI intends to distribute Rights and copies of
this Prospectus to stockholders of record on the Rights Record Date promptly
following the effective date of the Registration Statement of which this
prospectus forms a part.

         In connection with the Concurrent Offering, NAI intends to distribute
Subscription Forms and copies of this Prospectus, to the members of the
Executive Group and the Broker Member Group, promptly following the effective
date of the Registration Statement of which this prospectus forms a part. NAI
will determine in its sole discretion whether any person is a member of the
Executive Group or the Broker Member Group. Any determinations by NAI as to the
members of the Executive Group or Broker Group is final.

         Holders of Rights who desire to subscribe for the purchase of NAI
Shares in the Rights Offering are urged to complete, date and sign the
Subscription Certificate and return it to the Subscription Agent on or before
the Expiration Date, together with payment in full for the subscribed for NAI
Shares should be directed to the Subscription Agent. There is no assurance that
any Underlying Shares will be available for purchase pursuant to the
Oversubscription Privilege.

         Members of the Executive Group and the Broker Member Group who desire
to subscribe for the purchase of NAI Shares in the Concurrent Offering are urged
to complete, date and sign the applicable Subscription Form and return it to the
Subscription Agent on or before the Expiration Date, together with payment in
full for the subscribed for NAI Shares should be directed to the Subscription
Agent. There is no assurance that any Excess Shares will be available for
purchase pursuant to the Executive Group Subscription Privilege or the Broker
Member Group Subscription Privilege, or that any member of the Broker Member
Group will be able to purchase all of the Additional Shares subscribed for
pursuant to the Broker Member Group Subscription Privilege.

         Certain employees, officers or directors of NAI may solicit responses
from holders of Subscription Certificates and Subscription Forms, but such
individuals will not receive any commissions or compensation for such services
other than their normal employment compensation.

                                   EXPERTS

         The consolidated financial statements of NAI included in this

Prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, to the extent and for the periods indicated in their reports, and
are included herein in reliance upon the authority of said firm as experts in
giving said report.

                                LEGAL MATTERS

         The validity of the Rights NAI Shares offered hereby will be passed
upon for NAI by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.
Certain matters of law will be passed upon for NAI by Robinson Silverman Pearce
Aronsohn & Berman LLP, New York, New York.

                                     -91-


<PAGE>
                      INDEX TO NEW AMERICA NETWORK, INC.

                      CONSOLIDATED FINANCIAL STATEMENTS
                         AS OF JUNE 30, 1997 AND 1996

                        TOGETHER WITH AUDITORS' REPORT

                                                                        Page
                                                                        ----  
Index to Financial Statements.........................................   F-1
Report of Independent Public Accountants..............................   F-2
Consolidated Balance Sheets...........................................   F-3
Consolidated Statements of Operations.................................   F-4
Consolidated Statements of Stockholders' Deficit......................   F-5
Consolidated Statements of Cash Flows.................................   F-6
Notes to Consolidated Financial Statements............................   F-7

                                     F-1


<PAGE>




                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of New America Network, Inc.:

We have audited the accompanying consolidated balance sheets of New America
Network, Inc. as of June 30, 1997 and 1996, and the related consolidated
statements of operations, stockholders' deficit and cash flows for each of the
three years in the period ended June 30, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of New
America Network, Inc. as of June 30, 1997 and 1996, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended June 30, 1997 in conformity with generally accepted accounting
principles.

Philadelphia, Pa.,
May 8, 1998

                                     F-2





<PAGE>



                          NEW AMERICA NETWORK, INC.

                         CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                      June 30
                                                                   March 31,         ----------------------------------------
                                                                     1998                   1997                   1996
                                                            ----------------------   --------------------   -----------------
                                                                  (unaudited)
<S>                                                         <C>                      <C>                    <C> 
                          ASSETS

CURRENT ASSETS:

     Cash                                                   $    220,246             $     61,506           $     75,085
Accounts receivable (net of allowance of $20,000 and
         $7,439 at June 30, 1997 and 1996)                       787,408                  576,924                716,378
     Commissions receivable                                      636,541                  856,194                726,941
     Notes and other receivables                                   6,299                   16,829                 19,566
     Other current assets                                         19,588                   20,456                 20,062
                                                            ------------             ------------           ------------
           Total current assets                                1,670,082                1,531,909              1,558,032
                                                            ------------             ------------           ------------

PROPERTY AND EQUIPMENT, net                                      156,353                  155,083                170,375

OTHER ASSETS, net                                                  2,382                    1,987                  3,895
                                                            ------------             ------------           ------------
           Total assets                                     $  1,828,817             $  1,688,979           $  1,732,302
                                                            ============             ============           ============

           LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:

     Accounts payable and accrued expenses                  $  1,015,718             $  1,051,859           $    985,216
     Accrued interest                                             71,887                  127,495                 95,193
     Current portion of long-term debt                           126,667                  133,333                 43,334
     Stockholder loans                                           441,235                  441,235                419,083
     Deferred revenue                                            922,433                  773,023                862,506
                                                            ------------             ------------           ------------
           Total current liabilities                           2,577,940                2,526,945              2,405,332
                                                            ------------             ------------           ------------

LONG-TERM DEBT                                                    75,000                       --                 33,333
                                                            ------------             ------------           ------------
           Total liabilities                                   2,652,940                2,526,945              2,438,665
                                                            ------------             ------------           ------------


REDEEMABLE CONVERTIBLE PREFERRED
      STOCK                                                      202,000                  252,000                302,000
                                                            ------------             ------------           ------------

COMMITMENTS AND CONTINGENCIES (Notes 8,
      9 and 10)

STOCKHOLDERS' DEFICIT:

     Common stock                                                134,091                  132,939                132,687
     Additional paid-in capital                                2,552,779                2,526,969              2,498,604
     Accumulated deficit                                      (3,479,125)              (3,517,206)            (3,411,761)
     Treasury stock, at cost                                    (233,868)                (232,668)              (227,893)
                                                            --------------           ------------           ------------
           Total stockholders' deficit                        (1,026,123)              (1,089,966)            (1,008,363)
                                                            ----------------         ------------           ------------ 
           Total liabilities, redeemable 
                convertible preferred                       $  1,828,817             $  1,688,979           $  1,732,302
                stock and stockholders' deficit             ============             ============           ============
                 
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                     F-3

<PAGE>



                          NEW AMERICA NETWORK, INC.

                    CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                   For the Nine Months                           For the Year Ended
                                                     Ended March 31                                    June 30
                                          -------------------------------------  -------------------------------------------------
                                                  1998               1997             1997             1996              1995
                                          --------------------  ---------------  ---------------  ---------------  ---------------
                                                          (unaudited)
<S>                                        <C>                  <C>              <C>              <C>              <C>
REVENUE:

     Commissions                          $    2,836,365        $    2,910,147   $    4,001,168   $    4,124,139   $    4,370,999
     License fees                              1,127,575               923,100        1,281,861        1,373,418        1,157,960
     Other                                       473,998               562,593          617,587          522,399          469,741
                                           -------------         -------------    -------------    -------------    -------------
         Total revenue                         4,437,938             4,395,840        5,900,616        6,019,956        5,998,700
                                           -------------         -------------    -------------    -------------    -------------

COSTS AND EXPENSES:

     Commission expense                          602,534               788,193        1,142,575        1,782,292        1,485,024
     Sales and marketing                         276,860               193,809          321,379          284,963          323,619
     Compensation and benefits                 1,831,783             1,911,151        2,527,676        2,437,395        1,980,962
     Other operating                           1,578,222             1,186,953        1,644,040        1,475,091        1,336,179
     Depreciation                                 39,789                36,874           52,518           56,321           44,779
     Interest, net                                46,906                46,678           59,639           48,035           45,811
                                           -------------         -------------    -------------    -------------    -------------
         Total costs and expenses              4,376,094             4,163,658        5,747,827        6,084,097        5,216,374
                                           -------------         -------------    -------------    -------------    -------------
         Income (loss) from operations            61,844               232,182          152,789          (64,141)         782,326
                                           -------------         -------------    -------------    -------------    -------------

OTHER EXPENSES:

     Equity in loss of affiliate                  11,603                14,866           24,863            4,763               --
     Loss on sale of real estate                      --                    --               --               --           65,323
                                           -------------         -------------    -------------    -------------    -------------
         Total other expenses                     11,603                14,866           24,863            4,763           65,323
                                           -------------         -------------    -------------    -------------    -------------
         Income (loss) from continuing
         operations before income taxes           50,241               217,316          127,926          (68,904)         717,003

INCOME TAXES                                       5,600                    --               --               --           35,000
                                           -------------         -------------    -------------    -------------    -------------   
     Income (loss) from continuing
     operations                                   44,641               217,316          127,926          (68,904)         682,003


LOSS FROM OPERATIONS OF
      DISCONTINUED BUSINESSES,

      net of tax (Note 7)                             --               161,938          222,791          128,096          392,412
                                           -------------         -------------    -------------    -------------    -------------   

NET INCOME (LOSS)                                 44,641                55,378          (94,865)        (197,000)         289,591
     Preferred share distributions                 6,560                 7,935           10,580           12,580           14,580
                                           -------------         -------------    -------------    -------------    -------------   

NET INCOME (LOSS) AVAILABLE               $       38,081        $       47,443   $     (105,445)  $     (209,580)  $      275,011
     TO COMMON SHAREHOLDERS                =============         =============    =============    ==============   =============
 </TABLE>

  The accompanying notes are an integral part of these financial statements.

                                     F-4

<PAGE>
                          NEW AMERICA NETWORK, INC.

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>

                                                  Common Stock          Additional
                                         ----------------------------     Paid-In      Accumulated      Treasury
                                             Shares       Par Value       Capital        Deficit         Stock           Total
                                         -------------  -------------   ----------   --------------   ------------    --------------
<S>                                      <C>            <C>             <C>          <C>              <C>             <C>          
BALANCE, JULY 1, 1994* ..............      12,523,120     $128,286      $2,349,943    $(3,477,192)     $(177,893)      $(1,176,856)
Stock issued ........................         358,970        3,590          80,850                                          84,440
Amortization of deferred compensation                                       30,169                                          30,169
Distributions on preferred stock ....                                                     (14,580)                         (14,580)
Treasury stock purchase .............        (100,000)                                                   (50,000)          (50,000) 
Net income ..........................                                                     289,591                          289,591
                                         ------------      -------       ---------     ----------       --------        ----------
BALANCE, JUNE 30, 1995 ..............      12,782,090      131,876       2,460,962     (3,202,181)      (227,893)         (837,236)
Stock issued ........................          81,110          811                                                             811
Amortization of deferred compensation                                       37,642                                          37,642
Distributions on preferred stock ....                                                     (12,580)                         (12,580)
Net loss ............................                                                    (197,000)                        (197,000)
                                         ------------      -------       ---------     ----------       --------        ----------
BALANCE, JUNE 30, 1996 ..............      12,863,200      132,687       2,498,604     (3,411,761)      (227,893)       (1,008,363)
Stock issued ........................          25,170          252                                                             252
Amortization of deferred compensation                                       28,365                                          28,365
Distributions on preferred stock ....                                                     (10,580)                         (10,580)
Treasury stock purchase .............         (17,125)                                                    (4,775)           (4,775)
Net loss ............................                                                     (94,865)                         (94,865)
                                         ------------      -------       ---------     ----------       --------        ----------
BALANCE, JUNE 30, 1997 ..............      12,871,245      132,939       2,526,969     (3,517,206)      (232,668)       (1,089,966)
Stock issued* .......................         115,169        1,152          13,250                                          14,402
Amortization of deferred
compensation* .......................                                       12,560                                          12,560
Distributions on preferred stock* ...                                                      (6,560)                          (6,560)
Treasury stock purchase* ............         (12,000)                                                    (1,200)           (1,200)
Net income* .........................                                                      44,641                           44,641
                                         ------------      -------       ---------     ----------       --------        ----------
BALANCE, MARCH 31, 1998* ............      12,974,414     $134,091      $2,552,779    $(3,479,125)     $(233,868)      $(1,026,123)
                                         ============      =======       =========     ==========       ========        ==========
</TABLE>

  The accompanying notes are an integral part of these financial statements.

*Unaudited

                                     F-5

<PAGE>
                            NEW AMERICA NETWORK, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                   For the Nine Months                           For the Year Ended
                                                     Ended March 31                                    June 30
                                          -------------------------------------  -------------------------------------------------
                                                  1998               1997             1997             1996              1995
                                          --------------------  ---------------  ---------------  ---------------  ---------------
                                                          (unaudited)
<S>                                       <C>                   <C>              <C>              <C>              <C>
CASH FLOWS FROM OPERATING

   ACTIVITIES:

   Net income (loss)                      $   44,641            $   55,378       $  (94,865)      $ (197,000)      $  289,591
   Adjustments to reconcile net income
      (loss) to net cash provided by
      (used in) operating activities
              Discontinued operations             --               161,938          222,791          128,096          392,412
              Equity in loss of affiliate     11,603                14,866           24,863            4,763               --
              Depreciation                    39,789                36,874           52,518           56,321           44,779
              Amortization of deferred 
                  compensation                26,962                22,092           28,617           38,453          114,609
              Loss on sale of real estate         --                    --               --               --           65,323
   Changes in assets and liabilities-
     (Increase) decrease in-
              Accounts receivable           (210,484)               92,074          139,454          (82,409)        (113,832)
              Commissions receivable         219,653               (98,337)        (129,253)         (25,464)        (412,959)
              Notes and other receivables    10,530                 (2,627)           2,737          (23,479)          (3,567)
              Other current assets          (10,735)                (5,074)         (25,257)          14,021           (8,084)
              Other assets                     (395)                    --            1,908           (4,140)             388
            Increase (decrease) in-
              Accounts payable and
                  accrued expenses           (91,749)               33,746           98,945          225,660           14,566
              Deferred revenue               149,410                 1,983          (89,483)          23,416          209,684
                                           ---------             ---------        ---------        ---------        ---------
            Net cash provided by
                  operating activities       189,225               312,913          232,975          158,238          592,910
                                           ---------             ---------        ---------        ---------        ---------


CASH FLOWS FROM INVESTING
   ACTIVITIES:

            Costs incurred by
                discontinued operations           --              (161,938)        (222,791)        (128,096)        (392,412)
            Proceeds from sale of real
                estate                            --                    --               --               --           75,000
            Disposal of property and
                equipment                         --                    --               --               --           57,706
            Purchase of property and
                equipment                    (41,059)              (33,602)         (37,226)        (149,060)              --
                                           ---------             ---------        ---------        ---------        ---------
              Net cash used in investing
                activities                   (41,059)             (195,540)        (260,017)        (277,156)        (259,706)
                                           ---------             ---------        ---------        ---------        ---------

CASH FLOWS FROM FINANCING

    ACTIVITIES:

            Distributions paid on
                preferred stock               (6,560)               (7,935)         (10,580)         (12,580)         (14,580)
            Treasury stock purchase           (1,200)               (4,775)          (4,775)              --          (50,000)
            Redemption of redeemable
              convertible preferred
              stock                          (50,000)              (50,000)         (50,000)         (50,000)         (50,000)
            Loan proceeds                    100,000                99,999          150,000          110,531            2,105
            Repayment of long-term debt      (31,666)              (45,675)         (71,182)         (55,365)         (43,345)
                                           ---------             ---------        ---------        ---------        ---------
            Net cash provided by
              (used in) financing
              activities                      10,574                (8,386)          13,463           (7,414)        (155,820)
                                           ---------             ---------        ---------        ---------        ---------

NET INCREASE (DECREASE) IN CASH              158,740               108,987          (13,579)        (126,332)         177,384

CASH, BEGINNING OF PERIOD                     61,506                75,085           75,085          201,417           24,033
                                           ---------             ---------        ---------        ---------        ---------

CASH, END OF PERIOD                       $  220,246            $  184,072       $   61,506       $   75,085       $  201,417
                                           =========             =========        =========        =========        =========
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                     F-6


<PAGE>

                          NEW AMERICA NETWORK, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                JUNE 30, 1997

1.   ORGANIZATION AND OPERATIONS:

New America Network, Inc. (the "Company") is a Delaware corporation, which has
developed a network of independently owned licensed real estate brokers to
provide commercial real estate brokerage and other real estate-related services.
The Company services national and international businesses which own or use real
estate throughout the United States and, to a lesser extent, abroad. The Company
provides brokerage and real estate services to institutional owners, lenders and
large corporations.

The financial statements as of March 31, 1998 and for the nine-month periods
ended March 31, 1998 and 1997 are unaudited; however, in the opinion of
management, all adjustments (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the financial statements for the unaudited
periods have been included. The results for the interim periods are not
necessarily indicative of the results for the full year.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.

Statements of Cash Flows

The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents for purposes of the statements of
cash flows. Cash paid for interest was $27,337, $16,799 and $15,937 for the
years ended June 30, 1997, 1996 and 1995, respectively, and $102,514 (unaudited)
and $16,491 (unaudited) for the nine month periods ended March 31, 1998 and
1997, respectively.

Earnings Per Share

In February 1997, the Financial Accounting Standards Board issued Statement No.

128, Earnings per Share ("SFAS") No. 128. SFAS No. 128 establishes standards for
computing and presenting earnings per share ("EPS") and applies to entities with
publicly held common stock or potential common stock. This statement simplifies
the standards for computing EPS previously found in APB Opinion No. 15,
"Earnings per Share," and makes them comparable to international EPS standards.

                                     F-7

<PAGE>


Basic EPS is based on the weighted average number of common shares outstanding.
The weighted average number of shares outstanding used in the Basic EPS
computations was 12,883,549, 12,860,322 and 12,648,300 for the years ended June
30, 1997, 1996 and 1995, respectively, and 12,954,181 (unaudited) and 12,887,632
(unaudited) for the nine-month periods ended March 31, 1998 and 1997,
respectively.

The Diluted EPS computations have been adjusted to give effect to common share
equivalents; specifically, redeemable convertible preferred stock outstanding.
The weighted average number of shares outstanding used in the Diluted EPS
computations was 13,034,549, 13,036,322 and 12,849,300 for the years ended June
30, 1997, 1996 and 1995, respectively, and 13,080,181 (unaudited) and 13,038,632
(unaudited) for the nine-month periods ended March 31, 1998 and 1997,
respectively.

The Company's per common share data is as follows:

<TABLE>
<CAPTION>
                                                March 31,         March 31,        June 30,         June 30,          June 30,
                                                  1998              1997             1997             1996              1995
                                              -----------       -----------       ----------       ----------        ----------  
                                              (unaudited)       (unaudited)
<S>                                         <C>               <C>               <C>                <C>               <C>
Income (loss) from continuing
operations                                  $            --    $          .01    $        (.01)    $        (.01)    $        .05

Discontinued operations                                  --              (.01)            (.02)             (.01)            (.03)
                                            ----------------  ----------------- ----------------   ----------------  --------------
Basic and diluted net income (loss)         $            --   $          --     $         (.01)    $        (.02)     $       .02
                                            ================  ================= ================   ================   ==============
</TABLE>

Property and Equipment

Property and equipment are stated at cost. Major renewals and betterments are
capitalized while replacements, maintenance and repairs that do not improve or
extend the life of the asset are expensed. As assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed from the
accounts, and any gain or loss is reflected.

Depreciation is computed using the straight-line method over the estimated
useful lives of the assets as follows:


<TABLE>
<CAPTION>
                                                                                                          June 30
                                                      Useful              March 31,       ---------------------------------------
                                                       Life                 1998                 1997                1996
                                                -------------------  -------------------  -------------------  ------------------
                                                                         (unaudited)
<S>                                             <C>                  <C>                  <C>                  <C> 

Office equipment                                      7 years        $           135,614  $           128,219  $          128,912
Leasehold improvements                                7 years                     13,626               13,626              13,626
Computer equipment                                    3 years                    185,342              151,679             127,508
                                                                     -------------------  -------------------  ------------------
                                                                                 334,582              293,524             270,046
Less - Accumulated depreciation                                                 (178,229)            (138,441)            (99,671)
                                                                     -------------------  -------------------  ------------------
Property and equipment, net                                          $           156,353  $           155,083  $          170,375
                                                                     ===================  ===================  ==================
</TABLE>

                                     F-8

<PAGE>

Investments

The Company accounts for its 50% investment in NAIS on the equity method. The
Company has a net (deficit) investment in NAIS of ($24,626) and $8,680 at June
30, 1997 and 1996, respectively, and is included in other current assets. The
joint venture was dissolved in February 1998.

The Company's share of NAIS' loss was $24,863, $4,763 and $0 for the years ended
June 30, 1997, 1996 and 1995, respectively.

Revenue Recognition and Deferred Revenue

License fees received from the Company's member broker firms are deferred and
recognized ratably over the term of the marketing service agreement, generally
over one to three years. Commissions from real estate sales brokered by the
Company are recognized at the time of the transfer of title. Commissions from
other network transactions are primarily recognized as they are earned. Such
commissions may be collected in installments over several years.

3.   INDEBTEDNESS:

Notes Payable

The Company had available a $100,000 line of credit from First Washington Bank
which expired on October 2, 1997. The line was secured by a second mortgage on
the Company's office building. Borrowings against this line were $100,000 and $0
as of June 30, 1997 and 1996, respectively. Interest was payable quarterly on
this line at a rate of prime plus 1%. This line was repaid on October 2, 1997.

On October 2, 1997, the Company entered into a $100,000 line of credit with
First Washington State Bank. The line is secured by a second mortgage on the
Company's office building and borrowings under the line bear interest at prime
plus 1% (8.5% (unaudited) at March 31, 1998) with a maturity date of October
1998. The Company had no outstanding borrowings against this line of credit at
June 30, 1997 and 1996, respectively, and $100,000 (unaudited) outstanding at
March 31, 1998.

The Company has a commercial installment loan in the amount of $80,000 from
First Washington Bank which is secured by equipment and personally guaranteed by
the Chief Executive Officer of the Company. The interest rate on this loan is
prime plus 1% which was 8.5% and 8.3% at June 30, 1997 and 1996, respectively,
and 8.5% (unaudited) at March 31, 1998. The outstanding principal balance on
this loan totaled $33,333 and $76,667 as of June 30, 1997 and 1996,
respectively. At March 31, 1998 principal of $6,666 was outstanding under this
loan. Principal and interest payments of $3,333 are due monthly with all
outstanding principal and interest due in full at the loan maturity date of May
1998.

At June 30, 1997, all outstanding indebtedness was payable within one year.

On December 2, 1997, the Company received $100,000 of proceeds from a term loan
with First Washington State Bank. The loan bears interest at the prime rate plus

1% (8.5% (unaudited) at March 31, 1998), with monthly principal payments of
$1,667 and a maturity date of November 2002. The loan is secured by a second
mortgage on the Company's office building and personally guaranteed by the Chief
Executive Officer of the Company. At March 31, 1998, principal of $95,000 was
outstanding under this loan, with remaining principal payments of $6,667 due in
fiscal year 1998, $19,992 due in fiscal years 1999 through 2002 and $8,365 due
thereafter.

                                     F-9

<PAGE>


Stockholder Loans

The Company had loans outstanding of $441,235 and $419,083 as of June 30, 1997
and June 30, 1996, respectively, from certain of its stockholders. These amounts
are due on demand and interest is payable at rates ranging from 10% to 12%.
During the years ended June 30, 1997 and 1996, the Company incurred interest of
$41,588 and $41,369 on these borrowings, respectively.

4.   RELATED PARTY TRANSACTIONS:

The Company rents office space in Hightstown, New Jersey, under the terms of an
operating lease from an affiliate owned by two officers of the Company. The
minimum annual rent under the lease is $102,000 and the lease expires in April
1999. The lease automatically renews for successive one-year periods and either
party may terminate the lease on 90 days written notice. During fiscal 1997,
1996 and 1995 the Company paid $102,000 in rent expense.

5.   REDEEMABLE CONVERTIBLE PREFERRED STOCK:

The Company issued 201,000 shares of Series A Redeemable Convertible Preferred
Stock ("Series A Preferred Stock"), par value $ .01 per share in April 1994 for
$402,000. The Series A Preferred Stock has a distribution rate of 4 percent of
the Exchange Price ($2.00). The distributions are payable in arrears on July 1,
October 1, January 1 and April 1.

The holders of shares of the Series A Preferred Stock are able to convert all or
part of such shares into shares of Common Stock of the Company equal to the
lesser of $2.00 or the average NASDAQ bid price per share, as defined. Upon such
conversion, the holder of shares of Series A Preferred Stock will also receive a
warrant to purchase, for one year, shares of common stock equal to one share of
common stock for every ten shares of Series A Preferred Stock converted at a
purchase price of $1 per share. No shares of Series A Preferred Stock have been
converted through June 30, 1997.

The Company is required to redeem in five consecutive annual installments of at
least 25,000 shares on October 1, 1994 through 1998, with all remaining shares
being redeemed on or before September 30, 1999. The Company has redeemed 75,000
shares through June 30, 1997 for a total value of $150,000. The Company paid
distributions of $10,580, $12,580 and $14,580 for the years ended June 30, 1997,
1996 and 1995, respectively.


6. STOCKHOLDERS' DEFICIT:

Common Stock

The Company had 200,000,000 shares of common stock, $.01 par value per share
authorized as of June 30, 1997 and 1996. The Company had 13,293,920 shares of
common stock issued and 12,871,245 shares outstanding as of June 30, 1997. The
Company had 13,268,750 shares of common stock issued and 12,863,200 shares
outstanding as of June 30, 1996. The Company had 13,409,089 (unaudited) shares
of common stock issued and 12,974,414 (unaudited) shares outstanding as of March
31, 1998.

Treasury Stock

The Company repurchases common stock at a weighted average stock price at
management's discretion. At June 30, 1997 and 1996, the Company had 422,675
shares of treasury stock valued at $232,668 and 405,550 shares of treasury stock
valued at $227,893, respectively. At March 31, 1998, the Company had 434,675
(unaudited) shares of treasury stock valued at $233,868 (unaudited).

                                     F-10

<PAGE>

7.   INCOME TAXES:

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes",
which adopts an asset and liability approach for financial accounting and
reporting for income taxes.

The Company files a consolidated federal tax return and state tax returns on a
separate company basis. At June 30, 1997, the Company had federal net operating
loss carryforwards of approximately $2,620,000 for application against future
taxable income.

The components of income tax provision (benefit) are as follows:

<TABLE>
<CAPTION>
                                                   For the Nine Months                           For the Year Ended
                                                     Ended March 31                                    June 30
                                          -------------------------------------  -------------------------------------------------
                                                  1998               1997             1997             1996              1995
                                          --------------------  ---------------  ---------------  ---------------  ---------------
                                                          (unaudited)
<S>                                        <C>                  <C>              <C>              <C>              <C>
Current:

  Federal                                  $      --            $       --       $       --       $       --       $       --
  State                                        5,600                    --               --               --               --
                                            --------             ---------        ---------        ---------        ---------
                                               5,600                    --               --               --               --
                                            --------             ---------        ---------        ---------        ---------
Deferred:

  Federal                                     (7,140)              (42,332)         (56,444)         112,808          (61,028)
  State                                          --                     --               --               --           35,000
                                            --------             ---------        ---------        ---------        ---------
                                              (7,140)              (42,332)         (56,444)         112,808          (26,028)
                                            --------             ---------        ---------        ---------        ---------
Valuation Allowance                            7,140                42,332           56,444         (112,808)          61,028
                                            --------             ---------        ---------        ---------        ---------
                                           $   5,600            $       --       $       --       $       --       $   35,000
                                            ========             =========        =========        =========        =========
</TABLE>

The reported provision for income taxes differs from that computed by
multiplying pre-tax income by the applicable statutory federal income tax rate
due primarily to state income taxes and the utilization of net operating loss
carryforwards.

                                     F-11


<PAGE>
The components of the net deferred tax asset (liability) are as follows:

<TABLE>
<CAPTION>
                                                                                               June 30
                                                       March 31,                ------------------------------------
                                                         1998                       1997                    1996
                                                    --------------              ------------            ------------
                                                     (Unaudited)
<S>                                               <C>                          <C>                      <C> 
Net operating loss carryfowards                   $      984,552               $  1,012,048             $    993,201
Other accruals and reserves                             (204,115)                  (232,313)                (269,910)
                                                  ----------------             ----------------         --------------
                                                         780,437                    779,735                  723,291
                                                  -----------------            ----------------         --------------
Valuation allowance                                     (780,437)                  (779,735)                (723,291)
                                                   --------------              ---------------          ---------------

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

A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. The Company has
established a valuation allowance for the entire net deferred tax.

8.   DISCONTINUED OPERATIONS:

During 1995 and 1997, the Company adopted plans to discontinue operations of
RealQuest, Inc. ("RealQuest") and New America Financial Services ("NAFS"),
respectively. Accordingly, the operating results of RealQuest and NAFS have been
segregated from continuing operations and reported as a separate line item on
the statement of operations for all periods presented.

Operating results from these discontinued operations are as follows:

<TABLE>
<CAPTION>
                                            1997                 1996                 1995
                                     -------------------  -------------------  ----------------
<S>                                  <C>                  <C>                  <C>
Total revenue                        $     9,530          $      26,250        $    129,055
Costs and expenses:
    Cost of services                          --                     --             (44,177)
    Operating expenses                  (232,321)              (154,346)           (477,290)
                                     -------------------  -------------------  ----------------
Loss from operations of              
  discontinued businesses $          $  (222,791)         $    (128,096)           (392,412)
                                     ===================  ===================  ================
</TABLE>
                  
No deferred tax benefit was recorded for these discontinued operations due to
the net operating loss carryforwards.


9.   SEVERANCE AGREEMENT:

On August 15, 1994, the Company entered into a severance agreement with an
employee. The Company agreed to pay the employee one year's full salary at the
higher of the employee's salary at the time of the agreement or at

                                     F-12

<PAGE>


the time of termination. This employee terminated on June 28, 1996, but
remained as an independent contractor until November 25, 1996, at which time
severance payments began. Payments aggregating $100,000 are to be made over a
two-year period and are included in accrued expenses.

10.  COMMITMENTS AND CONTINGENCIES:

All full-time employees over the age of 21 and who have completed one full year
of employment are eligible to participate in the Company's 401K plan. The
Company contributes to the plan at its own discretion. For the years ended June
30, 1997, 1996 and 1995 the Company's contribution to the plan amounted to
$7,000, $7,089 and $8,277, respectively.

In the normal course of business, there are various claims which have been
brought or asserted against the Company. After consultation with legal counsel,
in management's opinion such actions or claims will not have a material adverse
effect on the Company's financial position or results of operations.

11.  SUBSEQUENT EVENTS:

In March 1998, the Company signed a letter of intent to enter into a strategic
alliance with Kranzco Realty Trust ("Kranzco") that will recapitalize the
Company as a public company. The transaction is subject to certain conditions.
Under the terms of the agreement, Kranzco will conduct an exchange offer for 80%
of the outstanding common stock of the Company for $8,000,000 of Kranzco
convertible subordinated notes, convertible into common shares of beneficial
interest of Kranzco at $20 per share.

In connection with this transaction, the Company has agreed to effect a
reincorporation merger by merging into New America International, Inc., a
Maryland corporation and a wholly-owned subsidiary of the Company ("NAI
Maryland"). Upon the consummation of such merger, each share of the Company will
be converted into 1.316172 shares of NAI Maryland.

Kranzco is expected to spin off approximately 88% of its shares of the Company,
estimated to be approximately 12,000,000 shares or 70.2% of all outstanding
shares of the Company, to Kranzco's shareholders on a one-for-one basis. After
the spin off, the Company will issue rights to acquire additional shares of
common stock of the Company, at $2 per share, to all of its stockholders on a
one-for-one basis, exercisable for 45 days.

                                     F-13

<PAGE>

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

         NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY NAI. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUM STANCES, CREATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

                         ---------------------------
                          SUMMARY TABLE OF CONTENTS

                                                               Page

Available Information.........................................   2
Prospectus Summary............................................   3
Risk Factors..................................................  17
Use of Proceeds...............................................  25
Dividend Policy...............................................  26
Dilution......................................................  27
Capitalization................................................  28
Selected Financial and Operating  Data........................  29
New America Network, Inc. Pro Forma Condensed
  Financial Information.......................................  30
Management's Discussion and Analysis of
  Financial Condition and Results of Operations...............  36
Business......................................................  40
Related Transactions..........................................  49
The Distribution..............................................  53
The Rights Offering...........................................  56
The Concurrent Offering.......................................  61
Certain United States Tax Considerations......................  64
Management....................................................  69
Principal Shareholders........................................  82
Certain Transactions..........................................  83
Description of Securities.....................................  84
Certain Provisions of Maryland Law and of
  NAI's Charter and Bylaws....................................  87
Shares Eligible for Future Sale...............................  90
Plan of Distribution..........................................  91
Experts.......................................................  91
Legal Matters.................................................  91
Index to Financial Statements................................. F-1


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

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


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

                                 NEW AMERICA
                             INTERNATIONAL, INC.

                                 Common Stock
                       Rights to Purchase Common Stock

                            ---------------------
                                  PROSPECTUS
                            ---------------------

                                         , 1998

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


<PAGE>

                                   PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

         Set forth below is an estimate of the approximate amount of the fees
and expenses payable by the Registrant in connection with the issuance and
distribution of the Common Stock.

SEC Registration Fee........................................  $   11,575
Blue Sky Fees and Expenses..................................     100,000
Printing and Mailing Fees...................................     200,000
Counsel Fees and Expenses...................................     500,000
Accountant's Fees and Expenses..............................      75,000
Transfer Agent and Registrar Fees...........................      25,000
Miscellaneous...............................................      88,425

         Total..............................................  $1,000,000
                                                              ==========
--------------------
*  Estimate

Item 14. Indemnification of Directors and Officers

The MGCL permits a Maryland corporation to include in its charter a provision
limiting the liability of its directors and officers to the corporation and its
stockholders for money damages except for liability resulting from (a) actual
receipt of an improper benefit or profit in money, property or services or (b)
active and deliberate dishonesty established by a final judgment as being
material to the cause of action. The charter of NAI contains such a provision
which eliminates such liability to the maximum extent permitted by Maryland law.

           The charter of NAI authorizes it, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (a) any present or
former director or officer or (b) any individual who, while a director of NAI
and at the request of NAI, serves or has served another corporation, real estate
investment trust, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, partner or trustee of such
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or other enterprise from and against any claim or
liability to which such person may become subject or which such person may incur
by reason of his or her status as a present or former director or officer of
NAI. The Bylaws of NAI obligate it, to the maximum extent permitted by Maryland
law, to indemnify and to pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to (a) any present or former director or
officer who is made a party to the proceeding by reason of his service in that
capacity or (b) any individual who, while a director of NAI and at the request
of NAI, serves or has served another corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, real estate

investment trust, partnership, joint venture, trust, employee benefit plan or
other enterprise and who is made a party to the proceeding by reason of his
service in that capacity. The charter and Bylaws also permit NAI to indemnify
and advance expenses to any person who served a predecessor of NAI in any of the
capacities described above and to any employee or agent of NAI or a predecessor
of NAI.

                                     II-1

<PAGE>


           The MGCL requires a corporation (unless its charter provides
otherwise, which NAI's charter does not) to indemnify a director or officer who
has been successful, on the merits or otherwise, in the defense of any
proceeding to which he is made a party by reason of his service in that
capacity. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. However, under the MGCL, a Maryland
corporation may not indemnify for an adverse judgment in a suit by or in the
right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses to a director or officer upon the
corporation's receipt of (a) a written affirmation by the director or officer of
his good faith belief that he has met the standard of conduct necessary for
indemnification by the corporation and (b) a written undertaking by him or on
his behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met.

Item 15. Recent Sales of Unregistered Securities

         On August 1, 1994, the Board of Directors awarded 29 employees an
aggregate of 47,095 shares of Common Stock as bonus compensation for services
performed. The Board of Directors also awarded a consultant of the Registrant
1,875 shares of Common Stock as a performance bonus.

         On October 17, 1994, the Board of Directors awarded a consultant of the
Registrant 100,000 shares of Common Stock as a performance bonus.

         On March 6, 1995, Joseph Grossman, Peter O. Hanson and Marc Shegoski,
members of the Board of Directors purchased 5,000, 50,000 and 10,000 shares of
Common Stock, respectively, at a price of $.50 per share.

         On June 5, 1995, the Board of Directors awarded Matthew Arnold, Derrick
Mashore, David Blanchard and Jeffrey Finn, senior level employees of the

Registrant, 30,000, 50,000, 45,000 and 20,000 shares of Common Stock as bonus
compensation for services performed.

         On July 10, 1995, the Board of Directors awarded 34 employees an
aggregate of 60,157 shares of Common Stock as bonus compensation for services
performed. The Board of Directors also awarded a consultant of the Registrant
6,875 shares of Common Stock as a performance bonus.

         On July 27, 1995, the Board of Directors awarded 53 Broker Members an
aggregate of 14,078 shares of Common Stock as a bonus.

         On July 9, 1996, the Board of Directors awarded 38 employees an
aggregate of 25,170 shares of Common Stock as bonus compensation.

         On July 28, 1997, the Board of Directors awarded 34 employees an
aggregate of 89,669 shares of Common Stock as bonus compensation for services
permed. The Board also awarded a consultant of the Registrant 500 shares of
Common Stock as a performance bonus.

                                     II-2

<PAGE>

         On January 14, 1997, the Board of Directors awarded each of Matthew
Arnold, Joseph Grossman, Peter O. Hanson, Robert McMenamin and Marc Shegoski,
the non-employees directors of the Registrant, 5,000 shares of Common Stock for
their service on the Board.

         The transactions listed above were made in reliance upon the exemption
from registration provisions under the Securities Act of 1933, as amended,
contained in Section 4(2) thereof.

Item 16. Exhibits and Financial Statement Schedules

                           A)         Exhibits.

2.1      Form of Exchange Agreement, among Kranzco Realty Trust, Gerald Finn,
         Jeffrey Finn, and a trust for the benefit of Jeffrey Finn.*

3.1      Amended and Restated Articles of Incorporation of the Registrant 
         (Delaware).*

3.2      Amended and Restated Bylaws of the Registrant (Delaware).*

3.3      Proposed Articles of Incorporation of the Registrant (Maryland).*

3.2      Proposed Bylaws of the Registrant (Maryland).*

4.1      Form of Common Stock Certificate.*

4.2      Form of Subscription Certificate.*

4.3      Executive Group Subscription Form.*


4.4      Broker Member Group Subscription Form.*

5.1      Opinion of Ballard Spahr Andrews & Ingersoll, LLP.*

10.1     Form of Restricted Stock Agreement between New America Network, Inc. 
         and selected employees.

10.2     Form of Employment Agreement with Gerald Finn.*

10.3     Form of Employment Agreement with Jeffrey Finn.*

10.4     Lease dated August 15, 1984 between New America Network, Inc. and The 
         Building Center.

10.5     Amendment dated April 15, 1998 to Lease Agreement between New America 
         Network, Inc. and The Building Center, Inc.*

10.6     New America International, Inc. 1998 Incentive Plan.*

10.7     New America International, Inc. 1998 Bonus Compensation Plan.*

10.8     New America International, Inc. 1998 Stock Option Plan.*

                                     II-3

<PAGE>

10.9     Loan Agreement dated October 2, 1997 between New America Network, 
         Inc. and First Washington State Bank.*

10.10    Form of Intercompany Agreement between Kranzco Realty Trust and the 
         Registrant.*

21.1     List of Subsidiaries of Registrant.*

23.1     Consent of Ballard Spahr Andrews & Ingersoll LLP (included in Exhibit 
         5.1).*

23.2     Consent of Arthur Andersen LLP.

24.1     Powers of Attorney (included on Signature Page).

27.1     Financial Data Schedule.

--------------------
*        To be filed by Amendment.

                           B)         Financial Statement Schedules.

         None.

         All other schedules have been omitted because they are not required or
not material or because the required information is included in the financial
statements included elsewhere herein.


Item 17. Undertakings

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

         The undersigned registrant hereby undertakes that:

                  (1) To file, during any period in which offers or sales are
         being made, a post-effective amendment to this registration statement:

                      (i) To include any prospectus required by Section 
                          10(a)(3) of the Securities Act of 1933;

                                     II-4


<PAGE>

                      (ii) To reflect in the prospectus any facts or events
                  arising after the effective date of the registration statement
                  (or the most recent post-effective amendment thereof) which,
                  individually or in the aggregate, represent a fundamental
                  change in the information set forth in the registration
                  statement. Notwithstanding the foregoing, any increase or
                  decrease in volume of securities offered (if the total dollar
                  value of securities offered would not exceed that which was
                  registered) and any deviation from the low or high end of the
                  estimated maximum offering range may be reflected in the form
                  of prospectus filed with the Commission pursuant to Rule
                  424(b) if, in the aggregate, the changes in volume and price
                  represent no more than a 20% change in the maximum aggregate
                  offering price set forth in the "Calculation of Registration
                  Fee" table in the effective registration statement;

                         (iii) To include any material information with respect
                  to the plan of distribution not previously disclosed in the
                  registration statement or any material change to such
                  information in the registration statement;


                  (2) That, for the purpose of determining any liability under
         the Securities Act of 1933, each such post-effective amendment shall be
         deemed to be a new registration statement relating to the securities
         offered therein, and the offering of such securities at that time shall
         be deemed to be the initial bona fide offering thereof.

                  (3) To remove from registration by means of a post-effective
         amendment any of the securities being registered which remain unsold at
         the termination of the offering.

                  (4) For purposes of determining any liability under the Act,
         the information omitted from the form of prospectus filed as part of
         this registration statement in reliance upon Rule 430A and contained in
         a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
         or (4) or 497(h) under the Act shall be deemed to be part of this
         registration statement as of the time it was declared effective.

                  (5) For the purpose of determining any liability under the
         Act, each post-effective amendment that contains a form of prospectus
         shall be deemed to be a new registration statement relating to the
         securities offered therein, and the offering of such securities at that
         time shall be deemed to be the initial bona fide offering thereof.


                                     II-5

<PAGE>

                                  SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Hightstown,
State of New Jersey, on the 15th day of May, 1998.

                                       New America International, Inc.

                                       By /s/Gerald Finn
                                          -------------------------------------
                                          Gerald Finn
                                          Chairman and Chief Executive Officer

                              POWER OF ATTORNEY

         Each person whose signature appears below hereby constitutes and
appoints Gerald Finn and Jeffrey Finn, his true and lawful attorneys-in-fact and
agents, with full powers of substitution, for him and in his name, place and
stead, in any and all capacities, to sign and to file any and all amendments,
including post-effective amendments and any registration statements filed
pursuant to Rule 462(b), to this Registration Statement with the Securities and
Exchange Commission, granting to each said attorney-in-fact and agent power and
authority to perform any other act on behalf of the undersigned required to be
done in connection therewith.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>


     SIGNATURE                                        TITLE                              DATE
     ---------                                        -----                              ----
<S>                                              <C>                                    <C>

/s/ Gerald Finn                                  Chief Executive Officer;               May 15, 1998
------------------------------------             Chairman (Principal Executive
    Gerald Finn                                  Officer)

/s/ Jeffrey Finn                                 President; Chief Operating Offering    May 15, 1998
-----------------------------------              and Director
    Jeffrey Finn                                 

/s/ Matthew Arnold                               Director                               May 15, 1998
-----------------------------------
    Matthew Arnold

/s/ Joseph Grossman                              Director                               May 15, 1998
----------------------------------- 

    Joseph Grossman

/s/ Peter Hanson                                 Director                               May 15, 1998
----------------------------------- 
    Peter Hanson

/s/ Robert McMenamin                             Director                               May 15, 1998
----------------------------------- 
    Robert McMenamin

/s/ Marc Shegoski                                Director                               May 15, 1998
----------------------------------- 
    Marc Shegoski

/s/ Margaret B. Smith                            Controller (Principal Financial        May 15, 1998
-------------------------------                  Officer) 
    Margaret B. Smith                            

</TABLE>
                                     II-6

<PAGE>

                                EXHIBIT INDEX


2.1      Form of Exchange Agreement, among Kranzco Realty Trust, Gerald Finn,
         Jeffrey Finn, and a trust for the benefit of Jeffrey Finn.*

3.1      Amended and Restated Articles of Incorporation of the Registrant 
         (Delaware).*

3.2      Amended and Restated Bylaws of the Registrant (Delaware).*

3.3      Proposed Articles of Incorporation of the Registrant (Maryland).*

3.2      Proposed Bylaws of the Registrant (Maryland).*

4.1      Form of Common Stock Certificate.*

4.2      Form of Subscription Certificate.*

4.3      Executive Group Subscription Form.*

4.4      Broker Member Group Subscription Form.*

5.1      Opinion of Ballard Spahr Andrews & Ingersoll, LLP.*

10.1     Form of Restricted Stock Agreement between New America Network, Inc. 
         and selected employees.

10.2     Form of Employment Agreement with Gerald Finn.*

10.3     Form of Employment Agreement with Jeffrey Finn.*

10.4     Lease dated August 15, 1984 between New America Network, Inc. and The 
         Building Center.

10.5     Amendment dated April 15, 1998 to Lease Agreement between New America 
         Network, Inc. and The Building Center, Inc.*

10.6     New America International, Inc. 1998 Incentive Plan.*

10.7     New America International, Inc. 1998 Bonus Compensation Plan.*

10.8     New America International, Inc. 1998 Stock Option Plan.*

10.9     Loan Agreement dated October 2, 1997 between New America Network, 
         Inc. and First Washington State Bank.*

10.10    Form of Intercompany Agreement between Kranzco Realty Trust and the 
         Registrant.*

21.1     List of Subsidiaries of Registrant.*


23.1     Consent of Ballard Spahr Andrews & Ingersoll LLP (included in Exhibit 
         5.1).*

23.2     Consent of Arthur Andersen LLP.

24.1     Powers of Attorney (included on Signature Page).

27.1     Financial Data Schedule.

--------------------
*        To be filed by Amendment.
[{"type": "S-1", "sequence": "1", "description": "REGISTRATION STATEMENT", "secsgml_size_bytes": 455961}]
{"company-data": {"conformed-name": "NEW AMERICA NETWORK INC", "cik": "0000729211", "assigned-sic": "6552", "irs-number": "231916759", "state-of-incorporation": "DE", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-52745", "film-number": "98622367"}, "business-address": {"street1": "572 US ROUTE 130", "city": "HIGHSTOWN", "state": "NJ", "zip": "08520", "phone": "6094484700"}, "mail-address": {"street1": "572 US ROUTE 130", "city": "HIGHTSTOWN", "state": "NJ", "zip": "08520"}}
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1998

                                                    REGISTRATION NO. 333-_______
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM S-1
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

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

                            NEW AMERICA NETWORK, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                           ---------------------------
Delaware                                 6531                           23-1916759
-------------------------------         ----------------------------           -------------------
(State or other jurisdiction of         (Primary Standard Industrial            (I.R.S. Employer
incorporation or organization)           Classification Code Number)           Identification No.)
---------------------------

                               572 U.S. Route 130
                              Hightstown, NJ 08520
                                 (609) 448-4700
       ------------------------------------------------------------------
       (Address, including zip code, and telephone number, including area
               code, of registrant's principal executive offices)

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

                                 Gerald C. Finn
                             Chief Executive Officer
                               572 U.S. Route 130
                              Hightstown, NJ 08520
                                 (609) 448-4700
            ---------------------------------------------------------
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

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

                                 With copies to:

              Alan S. Pearce, Esq.                         Alan E. Davis, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP            Hal W. Mandel, Esq.
         1290 Avenue of the Americas                    Greenbaum, Rowe, Smith,
          New York, New York 10104                     Ravin, Davis & Himmel LLP
            Phone (212) 541-2000                          99 Wood Avenue South
                                                            Iselin, NJ 08830
                                                          Phone (732) 549-5600

     Approximate date of commencement of the proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.

     If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

     If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

     If delivery of the  prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
    Title of Each Class of Securities        Amount To Be        Proposed Maximum           Proposed Maximum           Amount of
             To Be Registered                 Registered     Offering Price Per Share   Aggregate Offering Price    Registration Fee
------------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per share        11,987,746              $.01(1)                  $39,959(1)                 $13
Common Stock, par value $.01 per share       19,076,560(2)             $2.00                  $38,153,120               $11,562
Rights                                        17,076,560                --(3)                     --(3)                   --(3)
====================================================================================================================================
(1)   Computed based on one-third of the of par value of the Common Stock in
      accordance with Rule 457(f)(2) of the Securities Act of 1933, as amended.
(2)   Of such shares of Common Stock, (i) 17,076,560 of such shares are reserved
      for issuance pursuant to the exercise of Rights, and to the extent such
      Rights are not exercised, for issuance in connection with the Concurrent
      Offering, and (ii) 2,000,000 of such Shares are reserved for issuance in
      the Concurrent Offering.

(3)   Pursuant to Rule 457(g), no separate registration fee is required with
      respect to the Rights.

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

     The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.

================================================================================
EXPLANATORY NOTE

         This Registration Statement on Form S-1 of New America Network, Inc., a
Delaware corporation ("NAI Delaware"), contains a Prospectus for New America
International, Inc., a Maryland corporation ("NAI Maryland"). Prior to the
effectiveness of this Registration Statement, NAI Delaware will be merged with
and into NAI Maryland (the "Reincorporation Merger"), and NAI Maryland will be
the surviving corporation. The information in the Prospectus contained herein,
reflects the Reincorporation Merger and describes the registrant as it will
exist after the Reincorporation Merger. Part II of this Registration Statement
reflects information regarding the Registrant after the Reincorporation Merger.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

                    SUBJECT TO COMPLETION, DATED MAY 15, 1998

PROSPECTUS

                         New America International, Inc.

                           Shares of Common Stock and

                    Rights to Purchase Shares of Common Stock

     This Prospectus is being furnished in connection with (i) the distribution
(the "Distribution") by Kranzco Realty Trust, a Maryland real estate investment
trust ("Kranzco"), of an aggregate of 11,987,746 shares of common stock, par
value $.01 per share ("NAI Shares"), of New America International, Inc., a
Maryland corporation ("NAI"), to the holders of (a) outstanding common shares of
beneficial interest, par value $.01 per share, of Kranzco (the "Kranzco Common
Shares") and (b) outstanding Series B-1 and Series B-2 preferred shares of
beneficial interest, par value $.01 per share, of Kranzco (the "Kranzco Series B
Preferred Shares"), (ii) the distribution by NAI of rights (the "Rights") to
subscribe for purchase an aggregate of 17,076,560 NAI Shares (the "Basic
Subscription Privilege"), at a price of $2 per NAI Share (the "Subscription
Price"), to the holders of NAI Shares, including the Kranzco shareholders who
receive NAI Shares in the Distribution, (the distribution of the Rights and the
offer and sale of the underlying NAI Shares (the "Underlying Shares") is
referred to herein as the "Rights Offering"), and (iii) the concurrent offering
(the "Concurrent Offering") by NAI of those Underlying Shares that are not
otherwise subscribed for pursuant to the Rights Offering ("Excess Shares"),
first, to officers, directors and trustees of NAI and Kranzco (the "Executive
Group"), and then, to NAI's Broker Members (as defined herein) and the
principals, shareholders, partners, officers, managers and licensed real estate
agents of NAI's Broker Members in the United States (the "Broker Member Group").
See "The Distribution."

     See "Risk Factors" beginning on Page 17 for a discussion of certain factors
that should be considered in connection with an investment in the NAI Shares.

     It is expected that the Distribution and Rights Offering will be made on
______, 1998 (the "Distribution Effective Date"). The Distribution will be made
on the basis of one NAI Share for each Kranzco Common Share held by Kranzco
shareholders on _______, 1998 (the "Distribution Record Date"), and one NAI
Share for each Kranzco Common Share into which the Kranzco Series B Preferred
Shares held by Kranzco shareholders on the Distribution Record Date are
convertible (a "Kranzco Common Share Equivalent"). NAI will not receive any
proceeds from the Distribution.

     Prior to the Distribution and Rights Offering, there has been no public
market for the NAI Shares. Although the NAI Shares will be eligible for
quotation and trading on the OTC Bulletin Board after the Distribution, the NAI
Shares are not currently quoted on the OTC Bulletin Board or listed on any
national securities exchange or approved for quotation on any quotation system,
and there can be no assurance that a public market for the NAI Shares will
develop or provide liquidity. Stockholders of NAI who do not exercise all of
their Rights will own less of a percentage equity ownership and voting interest
in NAI after the Rights Offering, the Concurrent Offering and the Distribution.
In addition, stockholders of NAI who do exercise all of their rights may own
less of a percentage
                                                        (continued on next page)

     WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE

           SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
            COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
               OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
                  ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
                         REPRESENTATION TO THE CONTRARY
                             IS A CRIMINAL OFFENSE.

                The date of this Prospectus is __________,__ 1998
(continued from cover)

equity ownership and voting interest in NAI if any Additional Shares (as defined
below) are purchased in the Concurrent Offering. There is no minimum number of
NAI Shares required to be sold as a condition to the consummation of the Rights
Offering or the Concurrent Offering. Gerald C. Finn and Jeffrey M. Finn,
individually, and as trustee of a trust for the benefit of Jeffrey M. Finn
(collectively, the "Finns"), jointly and severally, have agreed to exercise
Rights to purchase an aggregate of 500,000 NAI Shares and Kranzco has agreed to
exercise such number of Rights to purchase NAI Shares that would result in
Kranzco owning 9.8% of the issued and outstanding NAI Shares, before the
issuance of any Additional Shares.

     The Rights Offering will be made on the basis of one Right for each NAI
Share held by the NAI stockholders, including the Kranzco shareholders who
receive NAI Shares in the Distribution, on the Distribution Effective Date. Each
Right will entitle its holder (a "Holder") to purchase one NAI Share. A Holder
who validly exercises all of such Holder's Rights available as part of the Basic
Subscription Privilege will also be entitled to purchase a pro rata portion of
any Underlying Shares that are not otherwise subscribed for pursuant to the
exercise of Basic Subscription Privileges (the "Oversubscription Privilege").
Concurrently with the Rights Offering, NAI is offering the right to purchase any
Excess Shares, first, to the Executive Group (the "Executive Group Subscription
Privilege"), and then, to the Broker Member Group (the "Broker Member Group
Subscription Privilege;" together with the Executive Group Subscription
Privilege, the "Concurrent Privileges"). NAI has authorized an additional
2,000,000 NAI Shares ("Additional Shares") for issuance to the Broker Member
Group in order to ensure that the Broker Member Group will in the aggregate have
the right to purchase a minimum of 2,000,000 NAI Shares, to the extent that the
number of Excess Shares is not sufficient to satisfy the Broker Member Group
Subscription Privilege. There is no assurance that any Excess Shares will be
available for sale to the Executive Group or the Broker Member Group. Although
there will be a minimum of 2,000,000 Additional Shares available for
subscription by the Broker Member Group, there is no assurance that any member
of the Broker Member Group will receive all the Additional Shares for which such
member subscribes. See "The Rights Offering" and "Plan of Distribution."

     The Rights and the Concurrent Privileges will expire at 5:00 p.m., New York
Time, on _________ __, 1998, unless extended by NAI (such date, as it may be
extended on one or more occasions, is referred to herein as the "Expiration
Date"). In no event will the Expiration Date be extended beyond ___________,
1998. If NAI elects to extend the term of the Rights and the Concurrent
Privileges, it will issue a press release to such effect not later than the
first Business Day following the most recently announced Expiration Date. Funds
provided in payment of the Subscription Price will be held by First Union

National Bank, as the Subscription Agent, until the closing which will occur
promptly following the Expiration Date. The exercise of Rights and the
Concurrent Privileges is irrevocable once made, and no interest will be paid to
Holders exercising their Rights.

     No payment need be made by, or will be accepted from, Kranzco shareholders
for the NAI Shares to be received by them in the Distribution or from NAI
stockholders for the Rights to be received by them in the Rights Offering.
Furthermore, Kranzco shareholders will not be required to surrender or exchange
Kranzco Common Shares, in order to receive NAI Shares.
AVAILABLE INFORMATION

     NAI has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (herein, together with all
amendments and exhibits thereto referred to as the "Registration Statement"), of
which this Prospectus forms a part, under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the NAI Shares offered pursuant to this
Prospectus. This Prospectus contains summaries of the material terms of the
documents referred to herein and therein, but does not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement. The Registration Statement as well as reports and other
information filed by NAI can be inspected without charge and copied at
prescribed rates at the public reference facilities maintained by the Commission
at the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its Regional Offices located as follows: Chicago
Regional Office, Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661-2511; and New York Regional Office, Seven World Trade Center,
Suite 1300, New York, New York 10048. The Commission maintains a web site that
contains reports, proxy, and information statements and other information
regarding registrants that file electronically with the Commission. The web site
is located at http://www.sec.gov.

     Statements contained in this Prospectus as to the contents of any contract
or other document that is filed as an exhibit to the Registration Statement are
not necessarily complete, and each such statement is qualified in its entirety
by reference to the full text of such contract or document.

     Upon consummation of the Distribution, NAI will be required to file reports
and other information with the Commission pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). In addition to applicable legal
requirements, if any, holders of NAI Shares will receive annual reports
containing audited financial statements with a report thereon by NAI's
independent public accountants.
PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,

including the notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise stated, this Prospectus assumes that all Underlying Shares and
Additional Shares are purchased in the Rights Offering and the Concurrent
Offering, as the case may be. Unless the context otherwise requires, all
references in this Prospectus to: (i) "NAI" shall mean New America
International, Inc., a Maryland corporation which is the successor-by-merger to
New America Network, Inc., a Delaware corporation ("NAI Delaware"), and, where
applicable, "NAI" shall also refer to NAI Delaware, (ii) "NAI Shares" shall mean
NAI's common stock, par value $.01 per share. Unless otherwise indicated, the
information contained in this Prospectus assumes that the Exchange Offer
(defined below) was consummated immediately prior to the Distribution and the
Rights Offering.

                                       NAI

     New America International, Inc., ("NAI") operates a network (the "Network")
of independently owned, licensed real estate brokers ("Broker Members")
throughout the United States and, more recently, abroad. NAI, directly and
through its Broker Members, provides commercial real estate brokerage services
to local, regional, national and international businesses ("Clients"). NAI has
approximately 130 affiliated Broker Members, which employ approximately 2,400
agents, operating in approximately 200 markets, including North, Central and
South America and Western Europe. NAI believes it is represented in more North
American market areas than any national commercial real estate brokerage
company. Unlike other real estate broker networks, in addition to managing real
estate transactions generated by its Broker Members, NAI generates its own
source of real estate transactions for its Broker Members and actively manages
and tracks those transactions on behalf of Clients. In order to increase the
portfolio of services marketed to Clients and Broker Members, NAI has entered
into several alliance agreements with entities ("Alliance Members") which
provide real estate related services which complement NAI's brokerage
capabilities, including sealed-bid sales, real estate auctions, real estate
financing and appraisal services. As of March 31, 1998, the Network had an
inventory of approximately 1,775 assignments to buy, sell or lease real
property, with a transaction value of approximately $927 million, and which
would generate fees to NAI of approximately $6.5 million, if consummated. There
is no assurance that such inventory will result in any revenues to NAI.

     NAI earns revenues primarily from the sharing of brokerage commissions with
Broker Members who earn commissions from the acquisition, disposition or leasing
of real property assigned to them by NAI (approximately $2,686,000 or 46% of
NAI's net revenues for fiscal year 1997). NAI also earns revenues from (i) the
sharing of brokerage commissions with Broker Members who earn commissions from
the acquisition and/or disposition or leasing of real estate referred to them by
other Broker Members (approximately $1,063,000 or 18% of NAI's net revenues for
fiscal year 1997), (ii) the sharing of fees received from Alliance Members in
sealed-bid sales, auction transactions and other real estate-related services
(approximately $170,000 or 3% of NAI's net revenues for fiscal year 1997), and
(iii) the collection of annual membership fees paid by Broker Members and
Alliance Members (approximately $1,282,000 or 22% of NAI's net revenues for
fiscal year 1997). See "NAI Business."

     NAI began forming the Network in 1978 in order to meet the growing real
estate needs of large national and international corporations in multiple

markets. NAI meets the multiple market needs of its Clients and its Broker
Members by combining local representation with the management and control
capabilities of its centralized Corporate Services Department. NAI's Corporate
Services Department is

                                      -3-
responsible for establishing and developing relationships with Clients in order
to generate assignments for the Network and its Broker Members. Currently, NAI
has 13 staff members in its Corporate Services Department serving over 100
Clients. These Clients include retail chains (such as Woolworth Corp.),
international companies (such as International Paper Company), service
businesses (such as Roadway Services, Inc.), and other larger owners of real
estate (such as the United States Postal Service, a new Client of NAI). NAI's
Clients are often involved in real estate transactions in multiple markets. In
addition, NAI has an Investment Sales Department which specializes in the
acquisition and disposition of real estate for Clients who are seeking to
acquire, or currently own, real estate for investment purposes. See
"Business--The Network," "--Corporate Services Department" and "--Investment
Sales."

     NAI maintains a proprietary information sharing and research intranet, in
order to efficiently and effectively coordinate with its Broker Members to meet
its Clients' needs. NAI's information systems consist of a transaction
management system and a central database information system. NAI's computerized
transaction management system allows Broker Members, the Corporate Services
Department and Clients to manage and track the progress of transactions assigned
to Broker Members, including those generated by its Broker Members. NAI's
databases include, among other things, real estate market data, demographic
information, Broker Member profiles, Broker Member listings, transaction
histories, Client relationship information and Client profiles. See
"Business--NAI Technology and Information Services."

     NAI's objective is to increase profitability by continuing to grow its
brokerage business, increase its international coverage, expand its Corporate
Services and Investment Sales Departments and to further develop its
non-brokerage real estate-related services, including sealed-bid sales and real
estate auctions, and to acquire or develop additional real estate-related
services (collectively, "Real Estate-Related Services"). To the extent funds are
available from the proceeds of the Rights Offering and the Concurrent Offering
referred to below, NAI's strategy will be to (i) expand NAI's Corporate Services
Department and Investment Sales Department to generate business from additional
Clients and in new markets, (ii) invest in or acquire brokerage firms (including
certain of those owned by Broker Members) and firms which provide Real
Estate-Related Services, (iii) train and support Broker Members to generate
additional business for the Network; (iv) continue to expand the Network into
international markets, (v) generate additional revenue by providing brokerage
and Real Estate-Related Services to Kranzco, (vi) expand and enhance NAI's real
estate technology and information services, (vii) opportunistically acquire and
develop real estate for its own account and (viii) utilize Real Estate-Related
Services to create and develop relationships with Clients.

     NAI's management team has extensive experience in the real estate brokerage
industry. Gerald C. Finn, founder and Chief Executive Officer of NAI, has over
25 years experience in the real estate industry. Jeffrey M. Finn, Gerald Finn's
son and President, Chief Operating Officer and Treasurer of NAI, has over 10
years experience in the commercial real estate services industry.

     NAI Delaware, the predecessor by merger to NAI, was incorporated under the
laws of the State of Delaware on February 5, 1974. On ________, 1998, NAI
Delaware was merged (referred to herein as the "Reincorporation Merger") with
and into its wholly-owned subsidiary, NAI, a corporation formed under the laws
of the State of Maryland. The executive offices of NAI are located at 572 Route
130, Hightstown, New Jersey 08520 and its telephone number is (609) 448-4700.

                                       -4-
Prior Related Transactions

     On ____________, 1998, Kranzco, a self-administered and self-managed
Maryland real estate investment trust (a "REIT"), consummated an exchange offer
(the "Exchange Offer"), pursuant to which Kranzco acquired 80% of the
outstanding shares of common stock of NAI in exchange for an aggregate of
$8,000,000 of Kranzco ___% Convertible Subordinated Notes Due 2008 (the
"Notes"). Immediately following the consummation of the Exchange Offer, NAI, a
Delaware corporation, was merged with and into a wholly-owned subsidiary
incorporated in the state of Maryland, in order to reincorporate in Maryland for
corporate reasons, as well as to reduce certain franchise taxes which are
payable by NAI. The Reincorporation Merger resulted in each share of NAI in the
Delaware corporation being converted into 1.316172 shares of NAI, the Maryland
corporation.

     In connection with the Exchange Offer, on ______________, 1998, Kranzco,
NAI, and the Finns entered into an Exchange Agreement (the "Exchange Agreement")
which set forth certain terms and conditions of the Exchange Offer. The Finns,
jointly and severally, agreed in the Exchange Agreement, to exercise Rights to
purchase an aggregate of 500,000 NAI Shares and Kranzco agreed to exercise such
number of Rights to purchase NAI Shares that would result in Kranzco owning 9.8%
of the issued and outstanding NAI Shares, before the issuance of any Additional
Shares. In addition, upon consummation of the Distribution, NAI and Kranzco
entered into an Intercompany Agreement which provides for certain rights of
first opportunity and first notification which the companies have granted each
other and also provides for the provision of certain consulting services by
Kranzco to NAI. The Exchange Offer and the other transactions contemplated by
the Exchange Agreement, together with the Rights Offering, Concurrent Offering,
and the Reincorporation Merger are generally referred to herein as the "Related
Transactions." See "Related Transactions."

Reasons for the Exchange Offer and Subsequent Distribution

     Kranzco is a self-administered and self-managed equity REIT engaged in the
business of owning, managing, operating, leasing, acquiring and expanding
neighborhood and community shopping centers and, to a lesser extent,
free-standing retail properties. Kranzco is limited in its activities by the

investment limitations imposed by Federal income tax laws applicable to REITs,
which (i) limit the amount of income that a REIT can realize from certain
services that are not customarily furnished or rendered in connection with the
rental of real property in a particular geographic area, and (ii) limit
Kranzco's ownership in corporations other than REITs and qualified REIT
subsidiaries (a) to 10% of the outstanding voting securities of such
corporation, and (b) in that the value of any one corporation's securities
cannot exceed 5% of the value of Kranzco's total assets. Kranzco believes that
significant opportunities are available to investors in entities which provide
brokerage and Real Estate-Related Services, own properties other than
neighborhood and community shopping centers, and which are not limited in their
activities by the investment limitations imposed by Federal income tax laws
applicable to REITs. Accordingly, in light of the limitations on investments
imposed on REITs, Kranzco believes that effecting the Exchange Offer, the
Distribution, the Rights Offering and the Concurrent Offering, and establishing
an intercompany relationship between Kranzco and NAI will yield significant
benefits to Kranzco and its shareholders similar to those which may be obtained
by investors who are not so limited, while preserving Kranzco's REIT status. For
Kranzco, these benefits include:

         o        increased opportunities to acquire retail properties which
                  become available for sale through the Network, which might not
                  otherwise be available to Kranzco;

                                       -5-
o        greater access to a diverse range of tenants, in order to
                  re-tenant vacant space owned by Kranzco, including access to
                  non-retail tenants looking for space appropriate for office,
                  warehouse or other non-retail uses;

         o        the ability to enter into agreements with NAI to have NAI
                  develop new shopping centers or re-develop distressed shopping
                  centers for sale to Kranzco;

         o        the ability to enter into new geographic areas with the
                  assistance of NAI's real estate professionals;

         o        NAI disseminating Kranzco's acquisition criteria to Broker
                  Members through the Network, in order to create additional
                  opportunities to purchase retail properties;

         o        increased opportunities to purchase additional retail
                  properties which are included in portfolios with non-retail
                  properties, utilizing NAI to purchase the non-retail
                  properties or find a purchaser for the non-retail properties;

         o        access to NAI's sophisticated, real estate oriented computer
                  network, which includes information on real estate
                  transactions, market conditions and demographics;

         o        the ability to purchase Real Estate-Related Services at
                  competitive prices;

         o        the ability to own an equity interest in a company which owns
                  real estate and provides Real Estate-Related Services which
                  Kranzco, as a REIT, could not directly own or provide; and

         o        access to local property managers where Kranzco may own retail
                  properties, and the opportunity for Kranzco to manage retail
                  properties owned by NAI.

     NAI operates a network of independently owned, licensed real estate Broker
Members throughout the United States and, more recently, abroad, to provide
commercial real estate services to regional, national and international Clients.
NAI believes that a strategic relationship between companies which provide real
estate brokerage and services, such as NAI, and companies which own and operate
real estate, such as Kranzco, would provide significant benefits and
opportunities. For NAI, the benefits of entering into the strategic relationship
and consummating the Related Transactions (and under certain circumstances, to
the extent proceeds are available through the Rights Offering and the Concurrent
Offering) include:

         o        the opportunity as a public company, to raise additional
                  capital through the Rights Offering and the Concurrent
                  Offering and, to the extent possible, future equity and debt
                  offerings;

         o        the ability to expand its Corporate Services Department,
                  Investment Sales Department and Broker Services Department;

         o        the ability to invest in or acquire Broker Members or other
                  real estate service firms in order to strengthen the Network;

         o        access to new transactions by providing real estate brokerage
                  services to Kranzco through NAI's Network;

         o        the ability to accelerate the development of information
                  services and technology infrastructure to more efficiently
                  deliver services;

         o        the opportunity to offer to Kranzco Real Estate-Related
                  Services which NAI may develop;

         o        the opportunity to further develop existing Real
                  Estate-Related Services and to acquire or develop businesses
                  that provide Real Estate-Related Services;

         o        the ability to accelerate Network growth in international
                  markets;

         o        providing Broker Members the opportunity to manage selected
                  Kranzco shopping centers;

         o        the opportunity to enter into agreements with Kranzco to have

                  NAI develop new shopping centers or re-develop distressed
                  shopping centers for sale to Kranzco; and

                                       -6-
o        expansion of its business through access to the real estate
                  expertise of Kranzco's management.

     In the past Kranzco and NAI have worked together in a mutually beneficial
relationship. In December 1997, NAI's Investment Sales Department assisted
Kranzco in arranging for the acquisition of five shopping centers, aggregating
approximately 650,000 square feet of gross leasable area ("GLA"), for
approximately $44 million. NAI's Investment Sales Department initiated this
opportunity, and assisted Kranzco in acquiring the properties. Kranzco's
acquisition of such properties generated $100,000 in fee income to NAI. Kranzco
and NAI expect that the Intercompany Agreement will set forth a framework for a
mutually beneficial relationship in the future. See "Related Transactions--The
Intercompany Agreement."

                                The Distribution

Distributing Company................... Kranzco Realty Trust

Distributed Company ................... New America International, Inc., a
                                        Maryland corporation.

Distribution Agent..................... The Distribution Agent is First Union
                                        National Bank, 1525 West W.T. Harris
                                        Boulevard, 3C3, Charlotte, North
                                        Carolina 28262-1153, telephone: (800)
                                        829-8432.

Distribution Record Date............... ____________, 1998

Distribution Effective Date............ ____________, 1998

Manner of Effecting the Distribution... Kranzco will distribute 11,987,746 NAI
                                        Shares, which represents approximately
                                        70.2% of the outstanding NAI Shares, to
                                        holders of Kranzco Common Shares and
                                        Kranzco Common Share Equivalents, on the
                                        basis of one NAI Share for each Kranzco
                                        Common Share and one NAI Share for each
                                        Kranzco Common Share Equivalent held on
                                        the Distribution Record Date. See "The
                                        Distribution."

Results of the Distribution............ Upon the consummation of the
                                        Distribution, NAI will be an independent
                                        public company which will continue to
                                        conduct its business of providing real
                                        estate brokerage and related services to

                                        Clients. Kranzco will own approximately
                                        9.8% of the outstanding NAI Shares,
                                        Kranzco shareholders will own
                                        approximately 70.2% of the outstanding
                                        NAI Shares and the persons who owned NAI
                                        Shares prior to the Exchange Offer will
                                        own an

                                       -7-
aggregate of approximately 20% of the
                                        NAI Shares.

Federal Income Tax Consequences
of the Distribution.................... A Kranzco shareholder will be treated as
                                        receiving a distribution from Kranzco in
                                        an amount equal to the fair market value
                                        of the NAI Shares received by such
                                        shareholder. Depending on a Kranzco
                                        shareholder's adjusted tax basis in his
                                        or her Kranzco Common Shares or Kranzco
                                        Common Share Equivalents and the amount
                                        of Kranzco's current and accumulated
                                        earnings and profits, the Distribution
                                        will result in ordinary income, return
                                        of capital, capital gain or a
                                        combination thereof. Management projects
                                        that for a typical Kranzco common
                                        shareholder, the Distribution likely
                                        will result in an increase in the
                                        shareholder's return of capital and
                                        capital gain, but this result cannot be
                                        assured. See "Certain United States
                                        Federal Tax Considerations--Federal
                                        Income Taxation of the Distribution."

                               The Rights Offering

Rights................................. Simultaneously with the Distribution,
                                        NAI will distribute to holders of NAI
                                        Shares, including the Kranzco
                                        shareholders who receive NAI Shares in
                                        the Distribution, Rights to purchase an
                                        aggregate of 17,076,560 NAI Shares, on
                                        the basis of one Right for each NAI
                                        Share held by NAI Stockholders. The
                                        exercise of Rights is irrevocable once
                                        made, and no Underlying Shares will be
                                        issued until the closing of the Rights
                                        Offering. The Finns, jointly and
                                        severally, agreed in the Exchange
                                        Agreement, to exercise Rights to

                                        purchase an aggregate of 500,000 NAI
                                        Shares and Kranzco agreed to exercise
                                        such number of Rights to purchase NAI
                                        Shares that would result in Kranzco
                                        owning 9.8% of the issued and
                                        outstanding NAI Shares, before the
                                        issuance of any Additional Shares.

Rights Record Date..................... ______________, 1998, the "Rights Record
                                        Date" is the same date as the
                                        Distribution Effective Date. The Rights
                                        will also be distributed on the Rights
                                        Record Date.

                                       -8-
Basic Subscription Privilege........... Holders are entitled to purchase at the
                                        Subscription Price one NAI Share for
                                        each Right held. See "The Rights
                                        Offering--The Rights" and
                                        "--Subscription Privileges--Basic
                                        Subscription Privilege."

Oversubscription Privilege............. Each Holder who elects to exercise his
                                        or her Basic Subscription Privilege may
                                        also subscribe at the Subscription Price
                                        for Underlying Shares, if any, remaining
                                        unissued after satisfaction of all
                                        subscriptions pursuant to the Basic
                                        Subscription Privilege. If an
                                        insufficient number of Underlying Shares
                                        is available to satisfy fully all
                                        elections to exercise the
                                        Oversubscription Privilege, the
                                        available Underlying Shares will be
                                        allocated on a pro rata basis among
                                        Holders who exercise their
                                        Oversubscription Privilege based on the
                                        respective numbers of Underlying Shares
                                        subscribed for by such Holders pursuant
                                        to the Basic Subscription Privilege. See
                                        "The Rights Offering--Subscription
                                        Privileges" and "Plan of Distribution."

Subscription Price..................... $2.00 in cash per NAI Share.

Transferability of Rights.............. The Rights are transferable.  The Basic
                                        Subscription Privilege and the
                                        Oversubscription Privilege are only
                                        transferable together, and any transfer
                                        of a Right will be deemed a transfer of
                                        both the Basic Subscription Privilege

                                        and the Oversubscription Privilege. See
                                        "The Rights Offering--Method of
                                        Transferring Rights." Although the
                                        Rights are transferable, NAI does not
                                        intend to list the Rights on any
                                        national securities exchange or
                                        automated quotation system. Accordingly,
                                        a market for the Rights may not develop
                                        and the Rights may be a highly illiquid
                                        security. Although the Rights and NAI
                                        Shares will be eligible for quotation
                                        and trading on the OTC Bulletin Board
                                        after the Distribution, the NAI Shares
                                        are not currently quoted on the OTC
                                        Bulletin Board or listed on any national
                                        securities exchange or approved for
                                        quotation on any quotation system, and
                                        there can be no assurance that a public
                                        market for the NAI Shares will develop
                                        or provide liquidity. See "Risk
                                        Factors--Determination of Offering
                                        Price; Absence of Prior Market; Trading
                                        Prices."

                                       -9-
Expiration Date........................ _______, 1998, unless extended by NAI
                                        from time to time, provided that the
                                        Expiration Date shall not be later than
                                        ________, 1998, unless the Board of
                                        Directors of NAI (the "Board")
                                        determines that a material event has
                                        occurred which necessitates one or more
                                        further extensions of the Rights in
                                        order to permit adequate disclosure of
                                        information concerning such event to
                                        Holders. See "The Rights Offering--
                                        Expiration Date." If NAI elects to
                                        extend the term of the Rights, it will
                                        issue a press release to such effect not
                                        later than the first Business Day
                                        following the most recently announced
                                        Expiration Date. If NAI elects to extend
                                        the term of the Rights Offering by more
                                        than 14 calendar days, it will, in
                                        addition, cause written notice of such
                                        extension to be promptly sent to all
                                        Holders of record on the Rights Record
                                        Date. After the Expiration Date, the
                                        Rights will become void and have no
                                        value.

Subscription Agent..................... First Union National Bank

Federal Income Tax Consequences
of the Rights Offering................. Holders of NAI Shares (including Kranzco
                                        shareholders who receive NAI Shares in
                                        the Distribution) will not recognize
                                        taxable income for Federal income tax
                                        purposes in connection with the receipt
                                        of the Rights. See "Certain United
                                        States Federal Tax Considerations -
                                        Federal Income Taxation of the Rights
                                        Offering."

                             The Concurrent Offering

Executive Group Subscription
Privilege.............................. Concurrently with the Rights Offering,
                                        NAI is offering to the Executive Group
                                        the right to purchase any remaining
                                        Excess Shares, at the Subscription
                                        Price, after the Basic Subscription
                                        Privileges and Oversubscription
                                        Privileges have been fulfilled. If the
                                        number of Excess Shares is not
                                        sufficient to satisfy all subscriptions
                                        pursuant to the Executive Group
                                        Subscription Privilege, such Excess
                                        Shares will be allocated pro rata
                                        (subject to the elimination of
                                        fractional shares) among those
                                        exercising the Executive Group
                                        Subscription Privilege, in proportion to
                                        the number of NAI Shares requested
                                        pursuant to the Executive Group
                                        Subscription Privilege. See "The

                                      -10-
Concurrent Offering--Subscription
                                        Privileges" and "Plan of Distribution."

Broker Member
Subscription Privilege................. Also concurrently with the Rights
                                        Offering, NAI is offering to the Broker
                                        Member Group the right to purchase any
                                        remaining Excess Shares, at the
                                        Subscription Price, after the Basic
                                        Subscription Privileges,
                                        Oversubscription Privileges and
                                        Executive Group Subscription Privileges
                                        have been fulfilled. NAI has authorized
                                        2,000,000 Additional Shares for issuance
                                        to the Broker Member Group in order to

                                        ensure that the Broker Member Group will
                                        in the aggregate have the right to
                                        purchase a minimum of 2,000,000 NAI
                                        Shares, to the extent that the number of
                                        Excess Shares is not sufficient to
                                        satisfy the Broker Member Group
                                        Subscription Privilege. If, after
                                        fulfillment of the Executive Group
                                        Subscription Privilege, the number of
                                        Excess Shares and Additional Shares is
                                        not sufficient to satisfy all
                                        subscriptions pursuant to the Broker
                                        Member Group Subscription Privilege,
                                        such Excess Shares and Additional Shares
                                        will be allocated pro rata (subject to
                                        the elimination of fractional shares)
                                        among those exercising the Broker Member
                                        Group Subscription Privilege, in
                                        proportion to the number of NAI Shares
                                        requested pursuant to the Broker Member
                                        Group Subscription Privilege. See "The
                                        Concurrent Offering--Subscription
                                        Privileges" and "Plan of Distribution."

Guaranteed Additional Shares
for Broker Members..................... NAI has authorized 2,000,000 Additional
                                        Shares for issuance to the Broker Member
                                        Group in order to ensure that the Broker
                                        Member Group will in the aggregate have
                                        the right to purchase a minimum of
                                        2,000,000 NAI Shares.

Subscription Price..................... $2.00 in cash per NAI Share.

Non-transferability of Executive Group
and Broker Member Group
Subscription Privileges................ The right to purchase Excess Shares
                                        pursuant to the Executive Group
                                        Subscription Privilege and the right to
                                        purchase Excess Shares or Additional
                                        Shares pursuant to the Broker Member
                                        Group Subscription Privilege is not
                                        transferable.

                                      -11-
Expiration Date........................ The Executive Group Subscription
                                        Privilege and the Broker Member Group
                                        Subscription Privilege shall expire on
                                        the Expiration Date of the Rights. See
                                        "The Rights Offering--Expiration Date."
                                        If NAI extends the term of the Executive

                                        Group Subscription Privilege and the
                                        Broker Member Group Subscription
                                        Privilege due to an extension of the
                                        Rights Offering, it will issue a press
                                        release to such effect not later than
                                        the first Business Day following the
                                        most recently announced Expiration Date.
                                        After the Expiration Date, the Executive
                                        Group Subscription Privilege and the
                                        Broker Member Group Subscription
                                        Privilege will become void.

Subscription Agent..................... First Union National Bank

Federal Income Tax Consequences
of the Rights Offering................. To the extent Underlying Shares are not
                                        purchased by NAI Stockholders in the
                                        Rights Offering, the remaining Excess
                                        Shares, will be subject to purchase
                                        first, pursuant to the Management
                                        Subscription Privilege and second,
                                        pursuant to the Broker Member Group
                                        Subscription Privilege. Although not
                                        entirely clear, the right to purchase
                                        Excess Shares, as well as Additional
                                        Shares, pursuant to the Concurrent
                                        Privileges will be treated for Federal
                                        income tax purpose as non- qualified
                                        stock options. As such, there are no
                                        Federal income tax consequences at the
                                        time the Excess Shares or Additional
                                        Shares are offered pursuant to the
                                        Concurrent Privileges. Upon exercise of
                                        a Right, the holder must report as
                                        ordinary income an amount equal to the
                                        excess, if any, of the fair market value
                                        of the NAI Shares on the date of
                                        exercise over the exercise price paid to
                                        acquire such shares. NAI will be allowed
                                        a tax deduction in like amount. The tax
                                        basis of NAI Shares acquired through
                                        exercise of the Concurrent Privileges
                                        will equal the price paid therefor and
                                        the holding period of such NAI Shares
                                        will begin on the date of exercise. Gain
                                        or loss on the sale of such NAI Shares
                                        will be classified as capital gain or
                                        loss taxable in the manner discussed in
                                        "Certain United States Federal Tax
                                        Considerations--Federal Income Taxation
                                        of the Rights Offering--Sale of the
                                        Rights."

                                      -12-
General

NAI Shares Outstanding after the
Rights Offering and the Concurrent
Offering............................... 36,153,120 NAI Shares will be
                                        outstanding after the Rights Offering
                                        and the Concurrent Offering based on
                                        17,076,560 NAI Shares outstanding on the
                                        Distribution Effective Date, assuming
                                        all of the Rights are exercised and all
                                        Additional Shares are purchased.

Closing of Rights Offer and Concurrent
Offering and Issuance of Shares........ The closing will occur and certificates
                                        representing Underlying Shares , Excess
                                        Shares and Additional Shares will be
                                        delivered to subscribers as soon as
                                        practicable after the closing date and
                                        after all prorations have been effected.
                                        See "The Rights Offering--Subscription
                                        Privileges" and "The Concurrent
                                        Offering--Concurrent Privileges." No
                                        Underlying Shares, Excess Shares or
                                        Additional Shares will be issued until
                                        the closing. Funds delivered to the
                                        Subscription Agent for the exercise of
                                        Subscription Privileges and the
                                        Concurrent Privileges will be held in
                                        escrow by the Subscription Agent until
                                        the closing. No interest will be paid on
                                        funds held by the Subscription Agent in
                                        respect of the Subscription Privileges
                                        and the Concurrent Privileges. Any
                                        excess funds submitted in connection
                                        with the Oversubscription Privilege or
                                        the Concurrent Privileges, will be
                                        returned as soon as practicable
                                        following the closing of the Rights
                                        Offering and the Concurrent Offering.

Trading Market......................... There is currently no public market for
                                        the NAI Shares or Rights. The NAI Shares
                                        and Rights will be eligible for
                                        quotation and trading on the OTC
                                        Bulletin Board after the Distribution
                                        and Rights Offering. There can be no
                                        assurance that a public market for the
                                        NAI Shares or Rights will develop or
                                        provide liquidity. See "Risk
                                        Factors--Determination of Offering
                                        Price; Absence of Prior Market; Trading

                                        Prices." There will be no trading market
                                        for the Concurrent Privileges.

Use of Proceeds........................ NAI will not receive any proceeds from
                                        the Distribution. The net proceeds to be
                                        received by

                                      -13-
NAI from the Rights Offering and the
                                        Concurrent Offering depends on the
                                        number of Rights exercised and the
                                        number of Underlying Shares or
                                        Additional Shares purchased in the
                                        Concurrent Offering, as the case may be.
                                        If all Rights are exercised and all of
                                        the Additional Shares are purchased, NAI
                                        expects the net proceeds available to it
                                        from the Rights Offering and the
                                        Concurrent Offering to be approximately
                                        $38,000,000. After paying the expenses
                                        of the Rights Offering, the Concurrent
                                        Offering and the Related Transactions,
                                        the proceeds from the Rights Offering
                                        and the Concurrent Offering will be used
                                        to (i) repurchase 101,000 shares of
                                        Series A Preferred Stock of NAI for an
                                        aggregate repurchase price of $202,000,
                                        (ii) repay approximately $643,000
                                        aggregate principal amount of
                                        indebtedness, (iii) grow NAI's Corporate
                                        Services Department and Investment Sales
                                        Department, and (iv) strategically
                                        acquire and develop Real Estate-Related
                                        Services. The balance of any proceeds
                                        will be invested in short-term
                                        commercial paper at a rate of
                                        approximately 5.5% per annum until used
                                        for general corporate and working
                                        capital purposes and to
                                        opportunistically acquire real estate.

                                        Although in the Exchange Agreement, (i)
                                        the Finns, jointly and severally, agreed
                                        to exercise Rights to purchase an
                                        aggregate of 500,000 NAI Shares and (ii)
                                        Kranzco agreed to exercise such number
                                        of Rights to purchase NAI Shares that
                                        would result in Kranzco owning 9.8% of
                                        the issued and outstanding NAI Shares
                                        (before the issuance of any Additional
                                        Shares), NAI does not have a written

                                        commitment from any other person to
                                        purchase any of the Underlying Shares or
                                        Additional Shares pursuant to the Rights
                                        Offering or the Concurrent Offering, as
                                        the case may be. In addition, no minimum
                                        amount of proceeds is required for NAI
                                        to consummate the Rights Offering or the
                                        Concurrent Offering. Accordingly, no
                                        assurances can be given as to the amount
                                        of gross proceeds that NAI will realize
                                        from the Rights Offering and the
                                        Concurrent Offering. See "Risk
                                        Factors--No Commitments to Purchase and
                                        No Minimum Size of Rights Offering or
                                        Concurrent Offering" and "Use of
                                        Proceeds."

                                      -14-
Dividend Policy........................ NAI has not paid any dividends on the
                                        outstanding NAI Shares to date. The
                                        payment of dividends, if any, in the
                                        future is with the discretion of the
                                        Board and will depend on NAI's earnings,
                                        its capital requirements and financial
                                        condition. It is the present intention
                                        of the Board to retain all earnings, if
                                        any, for use in NAI's business operation
                                        and, accordingly, the Board does not
                                        expect to declare or pay any cash
                                        dividends in the foreseeable future,
                                        except as may be required by any
                                        outstanding shares of preferred stock of
                                        NAI.

Risk Factors........................... Prospective investors should consider
                                        certain factors discussed under "Risk
                                        Factors," including risks which may
                                        arise out of general economic
                                        conditions; interest rate levels;
                                        financial market performance; the
                                        transactional nature of NAI's business;
                                        the consolidation of the commercial real
                                        estate brokerage industry and the
                                        resulting increased competition for
                                        Broker Members and Clients; the
                                        potential impact of government
                                        regulations on sharing brokerage
                                        commissions, franchises, and
                                        environmental issues; potential
                                        conflicts of interest between NAI and
                                        Kranzco; no experience or limited

                                        experience in certain areas in which NAI
                                        intends to expand its business; the
                                        absence of a public market for the NAI
                                        Shares; NAI's limited financial
                                        resources and lack of future funding
                                        commitments; dependence on key
                                        employees; risk of limited growth; risks
                                        related to the intercompany agreement;
                                        potential conflicts of interest;
                                        historic lack of dividends; potential
                                        dilution; the institution of
                                        anti-takeover measures; anti-takeover
                                        effect of certain provisions of Maryland
                                        law and of NAI's charter and bylaws; no
                                        commitments to purchase Underlying
                                        Shares, Excess Shares or Additional
                                        Shares; no minimum amount of proceeds
                                        required to consummate the Rights
                                        Offering or Concurrent Offering; and the
                                        possible extension of the expiration
                                        date of the Rights Offering and the
                                        Concurrent Offering.

                                      -15-
Summary Financial and Operating Data
           (In thousands, except ratio, property and per share data )

              The following sets forth summary financial, operating and other
data on a historical basis for NAI. Also set forth below are summary pro forma
financial, operating and other data for NAI at and for the nine months ended
March 31, 1998 and the year ended June 30, 1997. The pro forma balance sheet
data as of March 31, 1998 has been prepared as if the Exchange Offer, the
Distribution, the Rights Offering and the Concurrent Offering had occurred on
March 31, 1998. The pro forma operating and other data for the nine months ended
March 31, 1998 have been prepared as if the consummation of the Exchange Offer,
the Distribution, the Rights Offering and the Concurrent Offering had occurred
on July 1, 1997. The pro forma operating and other data for the year ended June
30, 1997 have been prepared as if the foregoing transactions had occurred on
July 1, 1996. The pro forma financial and operating data are not necessarily
indicative of what the actual financial position or results of operations of NAI
would have been as of the date or for the periods indicated, nor do they purport
to represent the results of operations or financial position for future periods.
This data should be read in conjunction with the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.
Nine Months Ended March 31,                Year Ended June 30,
                                             ---------------------------------    -------------------------------------
                                             Pro Forma           Historical       Pro Forma           Historical

                                             ---------       -----------------    ---------    -------------------------
                                                 1998        1998         1997       1997      1997      1996       1995
                                                 ----        ----         ----       ----      ----      ----       ----
OPERATING DATA:                               (unaudited) (unaudited)  (unaudited)(unaudited)
Revenue:
  Commissions..............................    $ 2,836     $ 2,836     $ 2,910    $  4,001   $ 4,001   $  4,124    $ 4,371
  License fees.............................      1,128       1,128         923       1,282     1,282      1,373      1,158
  Other....................................        474         474         563         618       618        523        470
  Interest.................................      1,238           0           0       1,650         0          0          0
                                               -------     -------     -------    --------   -------   --------    -------
  Total revenue............................      5,676       4,438       4,396       7,551     5,901      6,020      5,999
                                               -------     -------     -------    --------   -------   --------    -------
Costs and expenses:
  Commission expense.......................        602         602         788       1,143     1,143      1,782      1,485
  Sales and marketing......................        277         277         194         321       321        285        324
  Compensation and benefits................      1,832       1,832       1,911       2,528     2,528      2,438      1,981
  Operating expense........................      1,953       1,578       1,187       2,144     1,644      1,475      1,336
  Depreciation and amortization............         40          40          37          52        52         56         45
  Interest, net............................          0          47          47           0        60         48         46
                                               -------     -------     -------    --------   -------   --------    -------
  Total costs and expenses.................      4,704       4,376       4,164       6,188     5,748      6,084      5,217
                                               -------     -------     -------    --------   -------   --------    -------
  Income (loss) from operations............        972          62         232       1,363       153        (64)       782
                                               -------     -------     -------    --------   -------   -------     -------
Other expenses:
  Equity in loss of affiliate..............         12          12          15          25        25          5          0
  Loss on sale of real estate..............          0           0           0           0         0          0         65
                                               -------     -------     -------    --------   -------   --------    -------
  Total other expenses.....................         12          12          15          25        25          5         65
                                               -------     -------     -------    --------   -------   --------    -------
  Income (loss) from continuing operations
    before income taxes......................      960          50         217       1,338       128        (69)       717

  Income taxes.............................          5           5           0           0         0          0         35
                                               -------     -------     -------    --------   -------   --------    -------
  Income (loss) from continuing operations         955          45         217       1,338       128        (69)       682

  Loss from discontinued operations........          0           0         162           0       223        128        392
                                                ------      ------      -------       ----    ------    -------       ----

  Net income (loss)........................        955          45          55       1,338       (95)      (197)       290

  Preferred share distributions............          0           7           8           0        11         13         15
                                               -------     -------     -------    --------   -------   --------    -------
  Net income (loss) available to common
    shareholders...........................    $   955     $    38     $    47    $  1,338    $ (106)   $  (210)   $   275
                                               =======     =======     =======    ========    =======    =======    =======

  Net income (loss) per share..............    $  0.03     $  0.00     $  0.00    $   0.04    $(0.01)   $ (0.02)   $  0.02
                                               =======     =======     =======    ========    =======   ========    =======

Other data (unaudited):
Common shares outstanding..................     36,154      12,974      12,888      36,154    12,871     12,863     12,782

Weighted average shares outstanding........     36,100      12,954      12,888      35,912    12,883     12,860     12,648
Ratio of EBITDA to fixed charges(1)........      25.00        1.46        3.27       26.73      1.95       0.30       7.62
EBITDA.....................................    $ 1,000     $   137     $   301    $  1,390   $   240   $     35    $   808

Balance sheet data (1995 unaudited):
Total assets...............................    $38,138     $ 1,829     $ 1,807               $ 1,689   $  1,732    $ 1,649
Total debt.................................    $     0     $   643     $   550               $   575   $    496    $   441
Shareholders equity (deficit)..............    $36,128     $(1,026)    $  (983)              $(1,090)  $ (1,008)   $  (837)
------------
(1) For purposes of these computations, EBITDA consists of income before
    interest expense, taxes, depreciation and amortization. Fixed charges
    include interest expense, depreciation and amortization, and preferred
    shares distributions.

                                      -16-
RISK FACTORS

         This Prospectus includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange
Act. All statements, other than statements of historical facts, included in this
Prospectus that address activities, events or developments that NAI expects,
believes or anticipates will or may occur in the future, including such matters
as future capital expenditures, the acquisition or development of real estate or
Real Estate-Related Services (including the amount and nature thereof), the
consolidation and expansion trends of the commercial real estate brokerage
industry, business strategies, expansion and growth of NAI's operations and
other such matters are forward-looking statements. Such statements are based on
assumptions and expectations which may not be realized and are inherently
subject to risks and uncertainties, many of which cannot be predicted with
accuracy and some of which might not even be anticipated. Prospective investors
are cautioned that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from those
anticipated in the forward-looking statements. Risks and other factors that
might cause differences, some of which could be material, include, but are not
limited to: general economic conditions; interest rate levels; financial market
performance; the transactional nature of NAI's business; the consolidation of
the commercial real estate brokerage industry and the resulting increased
competition for Broker Members and Clients; the potential impact of government
regulations on sharing brokerage commissions, franchises, and environmental
issues; potential conflicts of interest between NAI and Kranzco; no experience
or limited experience in certain areas in which NAI intends to expand its
business; the absence of a public market for the NAI Shares; NAI's limited
financial resources and lack of future funding commitments; dependence on key
employees; risk of limited growth; risks related to the intercompany agreement;
potential conflicts of interest; historic lack of dividends; potential dilution;
the institution of anti-takeover measures; anti-takeover effect of certain
provisions of Maryland law and of NAI's charter and bylaws; no commitments to
purchase Underlying Shares, Excess Shares or Additional Shares; and no minimum
amount of proceeds required to consummate the Rights Offering or the Concurrent
Offering; and the possible extension of the expiration date of the Rights
Offering and the Concurrent Offering.

         An investment in the NAI Shares involves various risks. Before
purchasing NAI Shares offered hereby, prospective investors should give special
consideration to the information set forth below, in addition to the information
set forth elsewhere in this Prospectus.

History of Losses and Limited Profits

         NAI has reported net losses in the fiscal years ended June 30, 1997 and
1996 of $105,445 and $209,580, respectively. See "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" for a discussion of such losses.

No Commitments to Purchase and No Minimum Size of Rights Offering or Concurrent
Offering

         NAI does not have a written commitment from any person to purchase any
of the Underlying Shares pursuant to the Rights Offering or to purchase any
Excess Shares or Additional Shares pursuant to the Concurrent Offering, except
that (i) the Finns, jointly and severally, have agreed to exercise Rights to
purchase an aggregate of 500,000 NAI Shares and (ii) Kranzco has agreed to
exercise such number of Rights to purchase NAI Shares that would result in
Kranzco owning 9.8% of the issued and outstanding NAI Shares, before the
issuance of any Additional Shares. In addition, no minimum amount of proceeds is
required for NAI to consummate the Rights Offering or the Concurrent Offering.
Accordingly, no assurances can be given as to the amount of gross proceeds that
NAI will realize from the Rights Offering

                                     -17-
or the Concurrent Offering. NAI may not be able to achieve all the benefits it
would otherwise anticipate from the strategic relationship with Kranzco and the
Related Transactions if less than all of the Underlying Shares and Additional
Shares are sold.  See "The Rights Offering," "The Concurrent Offering," and
"Plan of Distribution."

Limited Financial Resources; No Future Funding Commitments

         NAI initially will rely primarily on its revenues and the proceeds of
the Rights Offering and the Concurrent Offering in order to finance its future
growth. NAI has not received any commitment with respect to any additional
funding from any third party (including Kranzco). Kranzco is not obligated to
provide any funds to NAI in the future or to assist NAI in obtaining additional
financing. If NAI is unable to obtain funding in the future, it may not be able
to pursue its growth strategy based on acquisitions and development, which may
have an adverse impact on the business, condition and prospects of NAI.

Competition; Ability to Retain Broker Members and Attract Additional Broker
Members

         NAI primarily seeks business from corporations, individual
owner/investors and national and international organizations with real estate
requirements in multiple market areas. NAI faces competition for clients from
(i) local and regional Commercial Real Estate Brokers, (ii) national
broker-owned companies with global alliances, and (iii) national/global
networks. Some of NAI's competitors include CB Commercial Real Estate Services
Group, Inc.; Colliers International Property Consultants; Cushman & Wakefield,
Inc.; Grubb & Ellis Company; Insignia Financial Group, Inc.; Trammell Crow
Company. Certain of NAI's competitors are better known and are larger, more
established companies with substantial capabilities. Consequently, NAI may be at
a disadvantage in competing with these companies in a number of markets.

         NAI's ability to earn revenues is directly related to its ability to
attract and retain successful, independently owned, commercial and industrial,
licensed real estate brokers ("Commercial Real Estate Brokers") in a substantial

number of market areas as Broker Members. The number of Broker Members in
different market areas, and their strength and reputation in their own local
markets, may directly affect the anticipated volume of commissions generated by
the Network, as well as NAI's ability to obtain exclusive assignments from a
national client base. NAI is presently competing for Broker Members with
cooperative commercial broker networks, as well as large national and regional
commercial real estate brokerage firms. There has been a consolidation of
Commercial Real Estate Brokers, which are better known and have greater
resources than NAI, that are actively seeking to acquire other real estate
brokerage and service companies. Certain of NAI's competitors, such as CB
Commercial and Grubb & Ellis are attempting to grow their businesses through
acquisitions and through entering into affiliation agreements with independent
Commercial Real Estate Brokers. To the extent these companies are successful in
acquiring or entering into affiliation agreements with independent Commercial
Real Estate Brokers, there may be a negative impact on NAI's ability to attract
and retain qualified Commercial Real Estate Brokers to join the Network as
Broker Members.

         In addition, approximately 60% of NAI's Broker Members are party to a
Membership Agreement which permits Broker Members to terminate the Membership
Agreement upon 45 days prior notice. Accordingly, there can be no assurance that
in light of the increased competition to retain or acquire Commercial Real
Estate Brokers, that Broker Members will not terminate, or renew their
Membership Agreements.

                                     -18-
Collection of Fees from Broker Members

         Under its standard agreement with Broker Members, NAI is entitled to
receive a predetermined percentage of any brokerage commission earned from the
acquisition, disposition or leasing of real estate covered by such agreement.
Although NAI believes that it has established sufficient controls to monitor
transactions among Broker Members and the failure of a Broker Member to pay any
such commission will cause a termination of such Broker Member's membership in
the Network, no assurance can be given that NAI will be able to collect all
commissions due it by Broker Members. Substantially all of the revenues earned
by NAI, other than the payment of the Membership Fees, are earned by sharing in
commissions with Broker Members in 47 states. Most states permit licensed real
estate brokers to enter into commission sharing agreements with licensed real
estate brokers from other jurisdictions, however, some states impose certain
requirements with respect to entering into such agreements. While NAI believes
it is in compliance with substantially all of such requirements, to the extent
NAI has violated any such state law requirements it may not be able to enforce
its Membership Agreement and may be subject to civil liability and criminal
penalties. See "Business--Membership Agreements and Fees" and
"Business--Government Regulation--State Laws Governing Real Estate Brokers."

Effect of Increase in Membership Fees

         While NAI believes that its current schedule of Membership Fees will
not have a substantial effect on the number of new Broker Members or membership
renewals by existing Broker Members, no assurance can be given that increases in
the Membership Fees for new Broker Members, as well as increases in Membership
Fees for renewals by existing Broker Members, will not have an adverse effect on
the number of new Broker Members or membership renewals. See "Business--Broker
Members--Membership Agreements and Fees" and "Risk Factors--Competition; Ability
to Retain Broker Members and Attract Additional Broker Members."

Dependence on Key Employees

         NAI is dependent upon the experience and abilities of its founder and
Chief Executive Officer, Mr. Gerald C. Finn, and its current President and Chief
Operating Officer, Mr. Jeffrey Finn, both of whom are subject to employment
agreements.  Messrs. G. Finn and J. Finn are both directors and  large
stockholders and are involved in all aspects of NAI's business.  The loss of
either Mr. G. Finn's or Mr. J. Finn's services would be detrimental to the
continued development of NAI and would adversely affect the conduct of NAI's
business.  See "Business" and "Management," "Principal Stockholders" and "Use of
Proceeds."

Adverse Changes in Economic Conditions

         Substantially all of the revenues earned by NAI, other than the payment
of annual membership fees ("Membership Fees") by Broker Members and Alliance
Members, are earned by sharing in commissions generated by the Network. The
commissions generated by the Network are based upon the number and value of
transactions in which NAI and its Broker Members participate. The real estate
market is subject to volatility and is effected by general economic conditions.
Periods of economic slowdown or recession, rising interest rates or declining
demand for real estate may adversely affect NAI's business. Such economic
conditions could result in a general decline in rents and property prices, which
in turn would adversely affect revenues from brokerage commissions derived from
property sales and leases. Accordingly, the amount of revenues received by NAI
may be subject to substantial variation from year to year and prior revenues may
bear no relationship to future revenues. See "Business--Broker Members" and
"--Competition; Ability to Retain Broker Members and Attract Additional Broker
Members."

                                     -19-
Risk of Limited Growth

         NAI's growth strategy is to increase profitability by continuing to
enlarge the Network by attracting and retaining Broker Members or by investing
in or acquiring affiliated brokerage firms and by continuing to expand into Real
Estate-Related Services by the acquisition of Real Estate-Related Service
companies and the development of Real Estate-Related Services. Accordingly, a
significant component of the growth of NAI may be through the acquisition of

Commercial Real Estate Brokers or companies which perform Real Estate-Related
Services. There can be no assurance that suitable acquisition opportunities will
be available to NAI or its affiliates or that NAI or its affiliates will not
overpay for acquisitions or that such acquisitions will be efficiently and
adequately integrated. There may be significant competition for targeted
acquisitions. Some of the companies in which NAI or its affiliates acquire an
interest may have little or no operating histories, may have historical
operating losses, and have competitors that are larger and more well
capitalized. Certain of the acquisitions of NAI or its affiliates may be
involved in sectors that are subject to increasing competition. As a result, the
costs incurred to acquire or reposition companies may be significant and may not
be recovered. Furthermore, there can be no assurance that acquisitions will not
be dilutive to NAI's earnings.

Limited Experience in Certain Areas

         NAI anticipates expanding the scope of its business beyond its current
focus on real estate brokerage transactions to the broader delivery of its Real
Estate-Related Services. NAI is not currently engaged in any negotiations to
provide for the acquisition or development of such Real Estate-Related Services,
and there is no assurance that NAI will be able to acquire, develop or provide
additional Real Estate-Related Services in the future.

Potential Impact of Franchise Laws

         The offer and sale of franchises is subject to a trade regulation rule
promulgated by the Federal Trade Commission ("FTC") entitled "Disclosure
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures" (the "Franchise Rule") that requires a franchisor to provide pre-sale
disclosure to a prospective franchisee prior to the sale of a franchise subject
to the Franchise Rule. NAI believes that by offering and selling memberships to
its Broker Members it may have been offering a "franchise" as defined by the
Federal Rule, however; NAI believes it is exempt from compliance with the
Franchise Rule.

         The offer and sale of franchises is also subject to certain state
franchise sales laws and state business opportunity laws (collectively, "State
Laws"). In addition, many states have laws that regulate certain substantive
aspects of the franchisor-franchisee relationship, including termination or
non-renewal of franchise agreements. NAI believes that by offering and selling
memberships to its Broker Members it may have been offering a "franchise," as
defined by the State Laws.

         While NAI believes that it is exempt from the requirements of many of
the State Laws in states in which it has entered into Member Agreements, NAI
believes that there are approximately six (6) states with a State Law in which
NAI has entered into Membership Agreements for which NAI may not be exempt, may
have failed to comply with the filing or registration and disclosure provisions
of such State Law, and for which it may be subject to certain sanctions or
potential liability. Additionally, there is no assurance that the exemptions
from compliance with the Federal Rule and the State Laws in states which NAI
believes there are exemptions on which NAI is relying, have been, or will
continue to be, available. Any sanctions or potential liability would include
that NAI may be subject to civil penalties imposed by state regulatory agencies,

and legal actions by existing Members for rescission of existing Membership
Agreements, restitution, and damages as a result of any violation of such law.
NAI believes that, if any

                                     -20-
state regulatory agencies, or any of the Members, in such states sought such
remedies and any such action were successful, its potential liability could be
to refund certain fees. While NAI believes that it has strong defenses to any
alleged violation of any State Law, there can be no assurance that a court would
not take the position that NAI should have complied with such laws in connection
with those transactions.

         NAI has also recently entered into several Membership Agreements with
Members in foreign countries. NAI has, to date, not taken any actions to comply
with franchise-related laws in effect in those jurisdictions. While NAI believes
that it is in substantial compliance with such laws, and has good defenses to
any alleged violation of such laws, to the extent that NAI may not be in
compliance, it may be subject to actions by regulatory agencies and legal
actions by existing Members, and subject to fines, penalties, and damages.

Real Estate Investment Risks

         To the extent funds are available, NAI intends to strategically acquire
real property. Investments in real estate are subject to the risks incident to
the ownership and operation of real estate generally. The yields available from
equity investments in real estate depend on the amount of income generated and
expenses incurred. A commercial property's revenues and value may be adversely
affected by a number of factors, including the national, state and local
economic climate and real estate conditions (such as oversupply of or reduced
demand for space and changes in market rental rates); the perceptions of
prospective tenants of the safety, convenience and attractiveness of the
properties; the ability of the owner to provide adequate management, maintenance
and insurance; the ability to collect on a timely basis all rent from tenants;
the expense of periodically renovating, repairing and reletting spaces; and
increasing operating costs (including real estate taxes and utilities) which may
not be passed through to tenants. Certain significant expenditures associated
with investments in real estate (such as mortgage payments, real estate taxes,
insurance and maintenance costs) are generally not reduced when circumstances
cause a reduction in rental revenues from the property. If a property is
mortgaged to secure the payment of indebtedness and if the owner is unable to
meet its mortgage payments, a loss could be sustained as a result of foreclosure
on the property or the exercise of other remedies by the mortgagee. In addition,
real estate values and income from properties are also affected by such factors
as compliance with laws, including tax laws, interest rate levels and the
availability of financing. Also, the rentable square feet of commercial property
available for lease is often affected by market conditions and may therefore
fluctuate over time. Furthermore, equity real estate investments are 
relatively illiquid.

         NAI may engage in the selective development and construction of real
estate properties. Risks associated with development and construction activities
include the risks that development opportunities may be abandoned after
expending resources to determine feasibility; construction costs of a project
may exceed original estimates; occupancy rates and rents at a newly completed
property may not be sufficient to make the property profitable; financing may
not be available on favorable terms for development of a property; and
construction and lease-up may not be completed on schedule, resulting in
increased debt service expense and construction costs. Development activities
are also subject to risks relating to the inability to obtain, or delays in
obtaining, all necessary zoning, land-use, building, occupancy and other
required governmental permits and authorizations. In addition, new development
activities, regardless of whether they are ultimately successful, typically
require a substantial portion of management's time and attention.

         Under various federal, state and local environmental laws, ordinances
and regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of certain hazardous or toxic
substances on, under or in such property. Such laws often impose such liability
whether or not the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances, and the liability under certain
such laws may be strict and joint and several unless the

                                     -21-
harm is divisible and there is a reasonable basis for allocating responsibility.
The costs of any required remediation or removal of such substances may be
substantial and the owner's or operator's liability therefor as to any property
is generally not limited under such laws, ordinances and regulations and could
exceed the value of the property and/or the aggregate assets of the owner or
operator. The presence of hazardous or toxic substances, or the failure to
properly remediate property affected by such substances, may adversely affect
the market value of the affected property, as well as the owner's ability to
sell or lease such property or to obtain financing using such property as
collateral.

Risks of Intercompany Agreement; Restrictions on NAI's Opportunities

         NAI and Kranzco have entered into an Intercompany Agreement to provide
both Kranzco and NAI with first opportunity rights or notification rights with
respect to certain business opportunities. See "Related
Transactions--Intercompany Agreement." While the Intercompany Agreement grants
NAI certain notification rights with respect to providing certain brokerage and
Real Estate-Related Services to Kranzco, Kranzco is not required to enter into
an agreement to purchase such services from NAI. Accordingly, there is no
assurance that the Intercompany Agreement will result in any revenues to NAI, or
that the benefits anticipated therefrom will be realized. The Intercompany
Agreement also provides Kranzco with certain first opportunity/notification
rights with respect to retail properties for sale which NAI is aware of through
the Network or otherwise; however, there is no assurance that Kranzco will
purchase such properties. Accordingly, the benefit to NAI of increased revenue

from transactions with Kranzco may not be realized.

         The Intercompany Agreement restricts NAI's opportunities in certain
instances. Although NAI does not currently invest in real estate, it may
determine to acquire properties in the future. Under the Intercompany Agreement,
NAI has agreed not to acquire or make investments in retail properties unless it
has notified Kranzco of the acquisition or investment opportunity, and Kranzco
has determined not to pursue such acquisition or investment. In addition, the
Intercompany Agreement provides that NAI may not enter into any type of
strategic relationship with any other REIT or real estate investment or
operating type entity without the prior written consent of Kranzco. NAI,
however, is permitted under the Intercompany Agreement to solicit assignments
from other REITs or real estate investment or operating type entities with
respect to the purchase, sale or lease of real estate, or the provision of Real
EstateRelated Services, subject to Kranzco's first opportunity rights. See
"Related Transactions--Intercompany Agreement." The restrictions imposed by the
Intercompany Agreement may prohibit NAI from pursuing business opportunities
which it believes may be beneficial.

Potential Conflicts of Interest

         Kranzco and NAI have several common members on its Board of Trustees
and Board of Directors, as the case may be, and have certain common executive
officers. Kranzco and NAI intend to operate in a relationship governed by the
Intercompany Agreement. In their relationship with Kranzco as a Client of NAI,
Kranzco and NAI may have conflicting views on the manner in which services and
opportunities are provided to Kranzco by NAI, or the manner in which
opportunities are provided to NAI by Kranzco, pursuant to the Intercompany
Agreement, and in the enforcement of the Intercompany Agreement. As a result,
the trustees and executives of Kranzco (who serve in similar capacities at NAI)
may well be presented with several decisions which provide them the opportunity
to benefit Kranzco to the detriment of NAI or benefit NAI to the detriment of
Kranzco. Such potential conflicts of interest will be present in all of the
numerous transactions between Kranzco and NAI. Officers and directors of a
corporation and officers and trustees of a trust owe duties to the shareholders
of such entities. There is a risk that the common management and members of the
Boards of NAI and Kranzco will lead to conflicts of interest in connection with
transactions between the two companies and opportunities presented to each of
the companies. Although, the Intercompany Agreement attempts to minimize the
conflicts which may arise

                                     -22-
due to the common management and Board membership, there is no assurance that it
will successfully cover all conflicts, or that such conflicts may not negatively
affect one or both companies. See "Related Transactions--The Intercompany
Agreement" for a description of the relationship between Kranzco and NAI and the
Intercompany Agreement.

                   It is intended that each of Gerald C. Finn, Co-Chairman and
Chief Executive Officer of NAI, and Jeffrey M. Finn, President and Chief
Operating Officer of NAI, will be required to spend all of his respective
business time working for NAI. However, Mr. Finn is a nominee to the Board of
Trustees of Kranzco, and will also owe a fiduciary duty to the shareholders of
Kranzco. In addition, pursuant to the Intercompany Agreement, Norman M.
Kranzdorf serves as the Co-Chairman of NAI, Robert H. Dennis will serve as the
Chief Financial Officer of NAI, and Michael Kranzdorf serves as the Chief
Information Officer of NAI, in each case for a period of three years. Each of
Messrs. N. Kranzdorf, Dennis and M. Kranzdorf are also officers of Kranzco, and
will have a primary responsibility to Kranzco. Although each of Messrs. N.
Kranzdorf, Dennis, and M. Kranzdorf is committed to the success of NAI they are
also committed to the success of Kranzco, and none of Messrs. N. Kranzdorf,
Dennis, and M. Kranzdorf is committed to spending a particular amount of time on
NAI's or Kranzco's affairs, nor will any of them devote his full time to NAI or
Kranzco.

Determination of Offering Price; Absence of Prior Market; Trading Prices

         The Subscription Price of the NAI Shares issuable upon exercise of the
Rights and the Concurrent Privileges was determined by NAI and Kranzco based on
various factors, but does not necessarily bear any direct relationship to
established value criteria such as assets, earnings or book value. In
determining the offering price, NAI and Kranzco considered such factors as NAI's
limited financial resources, NAI's development since its organization, the
nature and risks of the real estate brokerage industry, the amount of dilution
to investors in NAI, the pricing and comparison of similar types of companies,
the prospects for the real estate brokerage industry, and the general condition
of the securities markets and the potential opportunities available to NAI if
the Rights Offering and the Concurrent Offering are fully subscribed.

         There is currently no public market for NAI Shares or the Rights. The
NAI Shares will be eligible for quotation and trading on the OTC Bulletin Board
after the Distribution, however, there can be no assurance that a public market
for the NAI Shares will develop or provide liquidity. If a trading market
develops, there can be no assurance as to the prices at which trading in the NAI
Shares will occur.

         The prices at which NAI Shares trade will be determined by the
marketplace and may be influenced by many factors, including, among others, the
performance and prospects of NAI and its affiliates, the depth and liquidity of
the market for NAI Shares, investor perception of NAI and its affiliates, the
sectors in which they operate, economic conditions in general, NAI's dividend
policy, and general financial and other market conditions. In addition,
financial markets have experienced extreme price and volume fluctuations that
have affected the market price of many stocks and that, at times, could be
viewed as unrelated or disproportionate to the operating performance of such
companies. Such fluctuations have also affected the share prices of many newly
public issuers. Such volatility and other factors may materially adversely
affect the market price of NAI Shares.

         While the Rights are transferable, NAI does not intend to list the
Rights on any national securities exchange or automated quotation system.
Accordingly, the Rights may be highly illiquid securities and it is unlikely

that a trading market will develop for the Rights. The Concurrent Privileges are
not transferable.

                                     -23-
No Dividends

         NAI has not paid any dividends on the outstanding NAI Shares to date.
The payment of dividends, if any, in the future is with the discretion of the
Board and will depend on NAI's earnings, its capital requirements and financial
condition. It is the present intention of the Board to retain all earnings, if
any, for use in NAI's business operation and, accordingly, the Board does not
expect to declare or pay any cash dividends in the foreseeable future, except as
may be required by any outstanding shares of preferred stock of NAI.

Dilution

         NAI Stockholders who do not exercise their Basic Subscription Privilege
in full will realize a dilution in their percentage voting interest and
ownership interest in future net earnings, if any, of NAI to the extent that
rights are exercised by other Holders. In addition, even NAI Stockholders who
exercise their Basic Subscription Privilege in full will realize a dilution in
their percentage voting interest and ownership interest in future net earnings,
if any, of NAI if any Additional Shares are issued pursuant to the Broker Member
Group Subscription Privilege.

Institution of Anti-takeover Measures; Anti-takeover Effect of Certain
Provisions of Maryland Law and of NAI's Charter and Bylaws

         Certain provisions of NAI's Articles of Incorporation (the "Charter")
and bylaws (the "Bylaws") could have the effect of discouraging a third party
from pursuing a non-negotiated takeover of NAI or could delay, defer or prevent
a transaction or a change in control of NAI that might involve a premium price
for the NAI Shares or otherwise be in the best interests of NAI Stockholders.

                   Staggered Board. NAI's Board of Directors is divided into
three classes of directors. The initial terms of the first, second and third
classes will expire in 1999, 2000 and 2001, respectively. Beginning in 1999,
directors of each class will be chosen for three-year terms upon the expiration
of their current terms and each year one class of directors will be elected by
the stockholders. The staggered terms of directors may reduce the possibility of
a tender offer or an attempt to change control of NAI even though a tender offer
or change in control might be in the best interest of the stockholders. See
"Certain Provisions of Maryland Law and of NAI's Charter and Bylaws --
Classification of the Board of Directors."

                   Blank Check Stock. NAI's charter authorizes the Board of
Directors to cause NAI to issue additional authorized but unissued shares of NAI
common stock and to classify or reclassify any unissued shares of stock of NAI

in one or more classes or series of stock and to set the preferences, rights and
other terms of such classified or unclassified shares. See "Description of
Securities -- Common Stock" and "-Preferred Stock" and "-- Power to Issue
Additional Shares of Common Stock and Preferred Stock." Although the Board of
Directors has no such intention at the present time, it could establish a series
of NAI Preferred Stock that could, depending on the terms of such series, delay,
defer or prevent a transaction or a change in control of NAI that might involve
a premium price for the NAI Shares or otherwise be in the best interest of the
stockholders.

                   Other Provisions. The Charter and Bylaws of NAI also contain
other provisions that may delay, defer or prevent a transaction or a change in
control of NAI that might involve a premium price for the NAI Shares or
otherwise be in the best interest of the stockholders. See "Certain Provisions
of Maryland Law and of NAI's Charter and Bylaws -- Removal of Directors," "--
Business Combinations," "-- Control Share Acquisitions" and "-- Advance Notice
of Director Nominations and New Business."

                                     -24-
Possible Extension of Expiration Date

         NAI has reserved the right to extend the Expiration Date for the Rights
Offering and the Concurrent Offering to as late as __________ __, 1998. Funds
deposited in payment of the Subscription Price for Underlying Shares, Excess
Shares or Additional Shares may not be withdrawn and no interest will be paid
thereon. See "The Rights Offering--Expiration Date" and "The Concurrent
Offering--Expiration Date."

                               USE OF PROCEEDS

         The net proceeds to be received from the Rights Offering and the
Concurrent Offering depend on the number of Rights exercised and the number of
Excess Shares and Additional Shares purchased. If all Rights are exercised and
all Additional Shares are purchased, NAI expects the net proceeds available to
it from the Rights Offering and the Concurrent Offering to be approximately
$38,000,000. After paying the expenses of the Rights Offering, the Concurrent
Offering and the Related Transactions, the proceeds from the Rights Offering and
the Concurrent Offering, will in the following order of priority, be used to (i)
repurchase 101,000 shares of Series A Preferred Stock of NAI for an aggregate
repurchase price of $202,000, (ii) repay approximately $643,000 aggregate
principal amount of indebtedness described below, (iii) expand NAI's Corporate
Services Department and Investment Sales Department, and (iv) strategically
acquire and develop Real Estate-Related Services. The balance of any proceeds
will be invested in short-term commercial paper at a rate of approximately 5.5%
per annum until used for general corporate and working capital purposes and to
opportunistically acquire real estate.

         The proceeds of the Rights Offering and the Concurrent Offering will be
used to repay (i) a 12% demand note, dated April 21, 1988, with an outstanding

principal balance of $110,500, issued by NAI to The Building Center, Inc., an
entity owned by Gerald and Norma Finn, (ii) two 10% demand notes, dated August
12, 1994 and May 16, 1997, respectively, issued by NAI to Gerald and Norma Finn,
with outstanding principal balances of $35,000 and $50,000, respectively, (iii)
a 12% demand note, dated April 24, 1988, issued by NAI to Gerald and Norma Finn,
with an outstanding principal balance of $145,000, (iv) three 10% demand notes,
dated August 6, 1993, September 14, 1993, and November 9, 1993, respectively,
issued by REALQuest, Inc., a wholly-owned subsidiary of NAI, to Gerald and Norma
Finn, with outstanding principal balances of $10,000, $20,000 and $10,000,
respectively, (v) a 12% demand note, dated April 24, 1991, issued by NAI to
Gerald and Norma Finn, with an outstanding principal balance of $58,235, (vi) a
loan by Gerald Finn and Norma Finn dated December 8, 1993, in the principal
amount of $2,500, (vii) $6,666.74 aggregate principal amount outstanding under a
demand Promissory Note, dated April 29, 1996, issued by NAI to First Washington
State Bank ("FWSB"), which bears interest at a variable rate equaling FWSB's
prime rate plus one percent, (viii) $100,000 aggregate principal amount
outstanding under a Promissory Note, dated October 2, 1997, issued by NAI to
FWSB pursuant to a Line of Credit (the "Line of Credit"), due October 2, 1998,
which bears interest at a variable rate equaling FWSB's prime rate plus one
percent and (ix) $95,000 aggregate principal amount outstanding pursuant to a
Promissory Note dated December 2, 1997, issued by NAI to FWSB pursuant to a term
loan due November 2002, which bears interest at a variable rate equaling FWSB's
prime rate plus one percent. The proceeds from the Term Loan and the Line of
Credit were used for general corporate and working capital purposes.

         In the event that all of the Underlying Shares, Excess Shares and
Additional Shares are not purchased, NAI has assumed a minimum number of
Underlying Shares, Excess Shares and Additional Shares being purchased (an
aggregate of 930,378 NAI Shares) ("Minimum NAI Shares") and a moderate number of
Underlying Shares, Excess Shares and Additional Shares being purchased (an
aggregate of 10,000,000 NAI Shares) ("Moderate NAI Shares"). The Minimum NAI
Shares were estimated by NAI to be the minimum amount of Underlying Shares to be
purchased primarily by NAI, Kranzco and the

                                     -25-
officers and directors of both Kranzco and NAI. The Moderate NAI Shares were
estimated by NAI to approximate the mid-point between the Minimum NAI Shares and
the Maximum NAI Shares being purchased. The sale of the Minimum NAI Shares will
result in gross proceeds to NAI of $1,860,756 and 18,006,938 NAI Shares being
outstanding. The sale of the Moderate NAI Shares will result in gross proceeds
to NAI of $20,000,000 and 27,076,560 NAI Shares being outstanding.

         NAI does not have a written commitment from any person to purchase any
of the Underlying Shares pursuant to the Rights Offering or Excess Shares or
Additional Shares in the Concurrent Offering, except that (i) the Finns, jointly
and severally, have agreed to exercise Rights to purchase an aggregate of
500,000 NAI Shares and (ii) Kranzco has agreed to exercise such number of Rights

to purchase NAI Shares that would result in Kranzco owning 9.8% of the issued
and outstanding NAI Shares, before the issuance of any Additional Shares.
Accordingly, no assurances can be given as to the amount of gross proceeds that
NAI will realize from the Rights Offering and the Concurrent Offering. No
minimum amount of proceeds is required for NAI to consummate the Rights Offering
or the Concurrent Offering. See "Risk Factors--No Commitments to Purchase and No
Minimum Size of Rights Offering or Concurrent Offering."

         Pending such uses, the net proceeds may be invested in short-term
income-producing investments such as investment grade commercial paper,
government and government agency securities, money market funds that invest in
government securities, certificates of deposit and interest-bearing bank
accounts.

         NAI will not receive any proceeds from the Distribution.

                               DIVIDEND POLICY

         NAI has not paid any dividends on the outstanding NAI Shares to date.
The payment of dividends, if any, in the future is with the discretion of the
Board and will depend on NAI's earnings, its capital requirements and financial
condition. It is the present intention of the Board to retain all earnings, if
any, for use in NAI's business operation and, accordingly, the Board does not
expect to declare or pay any cash dividends in the foreseeable future, except as
may be required by any outstanding shares of preferred stock of NAI.

                                     -26-
DILUTION

         At March 31, 1998, NAI had a net tangible book value of $(1,026,123),
or $(0.08) per outstanding common share. Without taking into account any other
change in such net tangible book value after March 31, 1998, other than to give
effect to the recapitalization of NAI (through the Reincorporation Merger) at a
conversion rate of 1.316172 per common share outstanding, the Rights Offering,
the Concurrent Offering and the net proceeds therefrom, the net tangible book
value of NAI at March 31, 1998 would have been as follows given the range of the
number of Underlying Shares, Excess Shares and Additional Shares purchased:
Net Tangible
                                                             Book Value         Per Share
                                                           -------------       ----------
Minimum number of Underlying Shares,
Excess Shares and Additional Shares
purchased (930,378 NAI Shares)                                $  (165,367)       $ (.01)

Moderate number of Underlying Shares,
Excess Shares and Additional Shares
purchased (10,000,000 NAI Shares)                             $17,973,877        $ .66

Maximum number of Underlying Shares,
Excess Shares and Additional Shares
purchased (19,076,560 NAI Shares)                             $36,126,997        $1.00
This amount represents an immediate increase in net tangible book value per NAI
Share and an immediate dilution in net tangible book value per NAI Share to new
investors as illustrated in the following table:
Minimum               Moderate                 Maximum
                                                                -------               --------                 -------
Subscription price per NAI Share in the
Rights Offering and the Concurrent
Offering                                                          $2.00                $2.00                  $2.00

     Net tangible book value per NAI Share
      before the Rights Offering and the
      Concurrent Offering(1)                                      $(.08)               $(.08)                 $(.08)

     Increase in net tangible book value per
      NAI Share attributable to the
      Rights Offering and the Concurrent
       Offering(2)                                                $ .07                $ .74                  $1.08
                                                                  ----                 -----                  -----
Net tangible book value per NAI Share
after the Rights Offering and the
Concurrent Offering(2)                                            $(.01)               $ .66                  $1.00
                                                                  ------                ----                  -----
Dilution in net tangible book value per NAI
Share to new investors(3)                                         $2.01                $1.34                  $1.00
                                                                  =====                =====                  =====
(1) Net tangible book value per NAI share before the Rights Offering and the
Concurrent Offering is determined by dividing the net tangible book value of NAI
(total assets of $1,828,817 less total liabilities and redeemable convertible
preferred shares of $2,854,940) by the number of outstanding NAI Shares. 

(2) Based on a subscription price of $2.00 per NAI Share and estimated
transaction costs of $1,000,000.

(3) Dilution is determined by subtracting net tangible book value per NAI Share
after the Rights Offering and the Concurrent Offering from the subscription
price of $2.00 per NAI Share.

                                     -27-
CAPITALIZATION

         The following table sets forth the capitalization of NAI (i) as of
March 31, 1998 and (ii) as adjusted to give effect to the consummation of the
Exchange Offer, the subsequent Distribution, the Rights Offering and the
Concurrent Offering and assuming all of the Underlying Shares and Additional
Shares are purchased. See "Use of Proceeds."(1)
As of March 31, 1998
                                                                                     --------------------
                                                                                        (In thousands)
                                                                             Actual                   As adjusted
                                                                             ------                   -----------
Debt:

Current portion of the long-term debt..................................   $      127                   $         0
Stockholders loans.....................................................          441                             0
Long-term debt.........................................................           75                             0
                                                                          -----------                   ----------

                  Total debt...........................................          643                             0
                                                                          ----------                   -----------

Convertible Preferred Stock; $0.01 par value per share;
101,000 shares issued and outstanding; (0 as adjusted) ................          202                             0
                                                                         -----------                   -----------

Stockholders' equity (deficit):

Common stock, $.01 par value; 200,000,000 authorized,
12,974,414 shares issued and outstanding; (36,153,120
as adjusted)..........................................................           134(2)                        362

Capital in excess of par value.......................................          2,553(2)                     39,245(3)(4)

Retained earnings (deficit)..........................................         (3,479)                       (3,479)
                                                                         -----------                   -----------
                  ...................................................           (792)                       36,128

Treasury stock, at cost(2)...........................................           (234)                            0(3)
                                                                         -----------                   -----------

                  Total stockholders' equity (deficit)...............         (1,026)                       36,128
                                                                         -----------                   -----------

                  Total capitalization...............................   $       (181)                  $    36,128
                                                                        ============                   ===========
(1) The following table presents the capitalization of NAI, as adjusted to give
effect to the consummation of the Exchange Offer, the subsequent Distribution,
the Rights Offering and the Concurrent Offering and assuming the purchase of (a)
a minimum number of Underlying Shares, Excess Shares and Additional Shares (an
aggregate of 930,000 NAI Shares) and (b) a moderate number of Underlying Shares,
Excess Shares and Additional Shares (an aggregate of 10,000,000 NAI Shares):
As Adjusted
                                                                                         -----------
                                                                                       (In thousands)
                                                                             (a)                       (b)
                                                                             ---                       ---
Total debt............................................    $        0              $       0
                Convertible preferred stock...........................    $        0              $       0
                Common stock..........................................    $      180              $     271
                Capital in excess of par value........................    $    3,133(3)(4)        $  21,182(3)(4)
                Retained earnings (deficit)...........................    $   (3,479)             $  (3,479)
                Treasury stock........................................    $        0(3)           $       0(3)
                     Total capitalization.............................    $     (166)             $  17,974
                NAI Shares outstanding................................        18,007                 27,077
(2)   Includes 434,675 NAI Shares issued and held in treasury stock as of March
      31, 1998.

(3)   Represents the retirement of 434,675 NAI Shares of treasury stock valued
      at $233,868 as adjusted.

(4)   Includes approximately $1,000,000 of transaction costs reflected as a
      reduction of equity.

                                     -28-
SELECTED FINANCIAL AND OPERATING DATA
        (In thousands, except ratio, property data and per share data)

         The following sets forth selected financial, operating and other data
on an historical basis for NAI. Also set forth below are selected pro forma
financial, operating and other data for NAI at and for the nine months ended
March 31, 1998 and the year ended June 30, 1997. The pro forma balance sheet
data as of March 31, 1998 has been prepared as if the Exchange Offer, the
Distribution, the Rights Offering and the Concurrent Offering had occurred on
March 31, 1998. The pro forma operating and other data for the nine months ended
March 31, 1998 have been prepared as if the consummation of the Exchange Offer,
the Distribution, the Rights Offering and the Concurrent Offering had occurred

on July 1, 1997. The pro forma operating and other data for the year ended June
30, 1997 have been prepared as if the foregoing transactions had occurred on
July 1, 1996. The pro forma financial and operating data are not necessarily
indicative of what the actual financial position or results of operations of NAI
would have been as of the date or for the periods indicated, nor do they purport
to represent the results of operations or financial position for future periods.
This data should be read in conjunction with the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.
Nine Months Ended March 31,                             Year Ended June 30,
                               ------------------------------      ---------------------------------------------------------------
                               Pro Forma       Historical          Pro Forma                   Historical
                               ---------   ------------------      ---------  ----------------------------------------------------  
                                 1998        1998        1997        1997        1997      1996       1995      1994        1993
                                 ----        ----        ----        ----        ----      ----       ----      ----        ----
OPERATING DATA:                (unaudited)(unaudited) (unaudited)  (unaudited)                               (unaudited) (unaudited)
Revenue:

  Commissions................. $ 2,836    $  2,836    $  2,910     $ 4,001     $ 4,001    $ 4,124    $4,371    $2,312      $2,563
  License fees................   1,128       1,128         923       1,282       1,282      1,373     1,158     1,081       1,007
  Other.......................     474         474         563         618         618        523       470       427         384
  Interest....................   1,238           0           0       1,650           0          0         0         0           0
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------
  Total revenue...............   5,676       4,438       4,396       7,551       5,901      6,020     5,999     3,820       3,954
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------

Costs and expenses:
  Commission expense..........     602         602         788       1,143       1,143      1,782     1,485       839         790
  Sales and marketing.........     277         277         194         321         321        285       324       274         283
  Compensation and benefits      1,832       1,832       1,911       2,528       2,528      2,438     1,981     1,895       1,648
  Operating expense...........   1,953       1,578       1,187       2,144       1,644      1,475     1,336     1,161       1,018
  Depreciation and amortization     40          40          37          52          52         56        45        53         152
  Interest, net...............       0          47          47           0          60         48        46        37          43
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------
  Total costs and expenses       4,704       4,376       4,164       6,188       5,748      6,084     5,217     4,259       3,934
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------

  Income (loss) from operations    972          62         232       1,363         153        (64)      782      (439)         20
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------
Other expenses:
  Equity in loss of affiliate       12          12          15          25          25          5         0         0           0
  Loss on sale of real estate        0           0           0           0           0          0        65         0           0
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------
  Total other expenses........      12          12          15          25          25          5        65         0           0
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------

  Income (loss) from continuing
    operations before income taxes 960          50         217       1,338         128        (69)      717      (439)         20

  Income taxes................       5           5           0           0           0          0        35         0           0
                                 -----       -----       -----       -----       -----      -----     -----     -----      ------

  Income (loss) from continuing
        operations............     955          45         217        1,338         128       (69)      682     (439)           20

  Loss from discontinued
    operations................       0           0         162            0         223       128       392         0            0
                                 -----       -----       -----        -----       -----     -----     -----    ------      -------

  Net income (loss)...........     955          45          55        1,338         (95)     (197)      290      (439)          20

  Preferred share distributions      0           7           8            0          11        13        15         0            0
                                 -----       -----       -----        -----       -----     -----     -----    ------      -------

  Net income (loss) available 
  to common shareholders....... $   955   $     38    $     47     $  1,338    $   (106)  $  (210)   $  275    $ (439)     $    20
                                =======   ========    ========     ========    ========   =======    ======    ======      =======

  Net income (loss) per share.. $  0.03    $  0.00     $  0.00     $   0.04    $  (0.01)  $ (0.02)   $ 0.02    $(0.03)     $  0.00
                                =======   ========    ========     ========    ========   =======    ======    ======      =======

Other data (unaudited):
Common shares outstanding        36,154     12,974      12,888       36,154      12,871    12,863    12,782    12,523       12,655
Weighted average shares
outstanding..................    36,100     12,954      12,888       35,912      12,883    12,860    12,648    12,589       12,652
Ratio of EBITDA to fixed charges  25.00       1.46        3.27        26.73        1.95      0.30      7.62     (3.88)        1.10
EBITDA.......................   $ 1,000   $    137    $    301       $1,390    $    240   $    35   $   808     ($349)     $   215

Balance sheet data (1995 unaudited):
Total assets..................  $38,138   $  1,829    $  1,807                 $  1,689   $ 1,732   $ 1,649   $ 1,321      $ 1,447
Total debt....................  $     0   $    643    $    550                 $    575   $   496   $   441   $   466      $   358
Shareholders' equity (deficit)  $36,128   $ (1,026)   $   (983)                $ (1,090)  $(1,008)  $  (837)  $  (630)     $   (44)
-29-
NEW AMERICA NETWORK, INC PRO FORMA
                         CONDENSED FINANCIAL INFORMATION

          The accompanying financial statements present the unaudited pro forma
condensed Balance Sheet of NAI as of March 31, 1998, the unaudited pro forma
condensed Statements of Operations of NAI for the nine months ended March 31,
1998 and for the year ended June 30, 1997, in each case after giving effect to
the Exchange Offer, the subsequent Distribution, the Rights Offering and the
Concurrent Offering (the "NAI Transaction").

         The unaudited pro forma combined condensed Balance Sheet as of March
31, 1998 is presented as if the NAI Transaction had occurred on March 31, 1998.
The unaudited pro forma condensed Statements of Operations for the nine months
ended March 31, 1998 and for the year ended June 30, 1997 are presented as if
the NAI Transaction had occurred on July 1, 1997 and 1996, respectively.

         Preparation of the pro forma financial information was based on
assumptions deemed appropriate by the management of NAI. The assumptions give
effect to the NAI Transaction in accordance with generally accepted accounting
principles. The pro forma financial information is unaudited and is not
necessarily indicative of the results which actually would have occurred if the
transactions had been consummated at the beginning of the periods presented, nor
does it purport to represent the future financial position and results of
operations for future periods. The pro forma information should be read in
conjunction with the historical financial statements of NAI included in this
Prospectus.

                                     -30-
NEW AMERICA NETWORK, INC. AND SUBSIDIARIES
                                                  PRO FORMA BALANCE SHEET

                                                   As of March 31, 1998
                                                        (Unaudited)

                                                                             Reincorporation Merger,
                                                                                 Rights Offering          Pro Forma
                                                                                 and Concurrent           March 31,
                                                             Historical             Offering                 1998
                                                             ----------             --------                 ----

Assets:
     Current assets:
Cash..............................................     $       220            $   36,309 (A),(B),(D) $   36,529
     Accounts receivable...............................             787                     0                    787
     Commissions receivable............................             637                     0                    637
     Notes and other receivables.......................               6                     0                      6
     Other current assets..............................              20                     0                     20
                                                                     --                     -                     --

     Total current assets..............................           1,670                36,309                 37,979
                                                                  -----                ------                 ------

Property and equipment (net)...........................             156                     0                    156

Other assets...........................................               3                     0                      3
                                                                      -                     -                      -

     Total assets......................................     $     1,829            $   36,309             $   38,138
                                                            ===========            ==========            ===========

Liabilities and stockholders' equity:

     Current liabilities

     Accounts payable and accrued expenses.............     $     1,016            $        0             $    1,016
     Accrued interest..................................              72                     0                     72
     Current portion of long-term debt.................             127                  (127)(B)                  0
     Stockholder loans.................................             441                  (441)(B)                  0
     Deferred revenue..................................             922                     0                    922
                                                                    ---                     -                    ---

     Total current liabilities.........................           2,578                  (568)                 2,010
                                                                  -----                 -----                  -----

Long-term debt.........................................              75                   (75)(B)                  0
                                                                     --                  ----                      -

     Total liabilities.................................           2,653                  (643)                 2,010
                                                                  -----                 -----                  -----

Redeemable convertible preferred stock.................             202                  (202)(D)                  0
                                                                    ---                  ----                      -

Stockholders' equity:

     Preferred stock...................................               0                     0                      0
     Common stock......................................             134                   228 (A)                362
     Additional paid-in capital........................           2,553                36,692 (A), (C)        39,245
     Accumulated deficit...............................          (3,479)                    0                 (3,479)
     Treasury stock, at cost...........................            (234)                  234 (C)                  0

     Total stockholders' equity........................          (1,026)               37,154                 36,128
                                                                 ------                ------                 ------

Total liabilities, redeemable convertible preferred

stock and stockholders' equity                              $     1,829            $   36,309            $    38,138
                                                              =========            ==========            ===========
The accompanying notes and management's assumption are an integral part of
                                  this statement.

                                                            -31-
NOTES AND MANAGEMENT'S ASSUMPTIONS TO NAI'S PRO FORMA BALANCE SHEET
                                                    as of March 31, 1998

A) To reflect the recapitalization of NAI's shares and reflect the Rights
Offering and the Concurrent Offering, net of costs.
NAI shares outstanding prior to recapitalization                                   12,974
Recapitalization factor................................                          1.316172
NAI shares outstanding after recapitalization..........                            17,077

To reflect the Rights Offering and the Concurrent Offering, net of costs:
Underlying Shares and Additional Shares issued.........                            19,077
Subscription price per right...........................                        $     2.00
                                                                               ----------
Gross proceeds from the Rights Offering
and the Concurrent Offering............................                        $   38,154

Less: Offering costs...................................                        $    1,000
                                                                              -----------

Net proceeds from Rights Offering
and Concurrent Offering................................                        $   37,154

B) To reflect use of proceeds to pay down outstanding notes and loans payable.

     Current Portion of Long-Term Debt.................                        $     127
     Stockholder Loans.................................                        $     441
     Long-term Debt....................................                        $      75
                                                                              ----------

     Total debt repaid.................................                        $     643
                                                                              ==========

C) To reflect the retirement of the Treasury Stock.

D) To reflect the redemption of the redeemable convertible preferred shares.
-32-
NEW AMERICA NETWORK, INC. AND SUBSIDIARIES
                                       PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

                                          for the Nine Months Ended March 31, 1998
                                                        (Unaudited)

                                                                             
                                                                             Reincorporation Merger
                                                                                 Rights Offering            Pro Forma
                                                                                 and Concurrent             March 31,
                                                             Historical           Offering  (A)               1998
                                                             ----------             --------                  ----
Revenue:
Commissions.......................................     $     2,836            $        0            $     2,836
     License fees......................................           1,128                     0                  1,128
     Other.............................................             474                     0                    474
     Interest income...................................               0                 1,238  (B)             1,238
                                                                      -                 -----                  -----

     Total revenue.....................................           4,438                 1,238                  5,676
                                                                  -----                 -----                  -----

Costs and expenses:

     Commission expense................................             602                     0                    602
     Sales and marketing...............................             277                     0                    277
     Compensation and benefits.........................           1,832                     0                  1,832
     Operating expense.................................           1,578                   375  (C)             1,953
     Depreciation and amortization.....................              40                     0                     40

     Interest, net.....................................              47                  (47)  (D)                 0
     Distributions on preferred shares.................               7                   (7)  (E)                 0
                                                                      -                   ---                      -

     Total costs and expenses..........................           4,383                   321                  4,704
                                                                  -----                   ---                  -----

Income (loss) from operations..........................              55                   917                    972

Other expenses:

Loss in investment in NAIS.............................              12                     0                     12
                                                                     --                     -                     --

     Total other expense...............................              12                     0                     12
                                                                     --                     -                     --

Income taxes...........................................               5                     0                      5
                                                                      -                     -                      -

Net income.............................................     $        38            $      917            $       955
                                                            ===========            ==========            ===========

Basic and diluted earnings per common share............     $      0.00                                  $      0.03
                                                            ===========                                  ===========

Basic and diluted earnings per recapitalized common share   $      0.00                                  $      0.03
                                                             ==========                                  ===========

Weighted average number of
  common shares outstanding............................          12,954

Weighted average number of common
  shares and equivalents outstanding...................          13,080

After recapitalization
----------------------
Weighted average number of
  common shares outstanding............................          17,050                                       36,100

Weighted average number of common shares and
  equivalents outstanding..............................          17,176                                       36,226
-33-
NEW AMERICA NETWORK, INC. AND SUBSIDIARIES
                                       PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

                                             for the Year Ending June 30, 1997
                                                        (Unaudited)

                                                                             Reincorporation Merger,
                                                                                 Rights Offering           Pro Forma
                                                                                 and Concurrent              June,
                                                             Historical              Offering    (A)        30 1997
                                                             ----------        -------------------      -----------

Revenue:
Commissions.......................................     $     4,001            $        0            $     4,001
     License fees......................................           1,282                     0                  1,282
     Other.............................................             618                     0                    618
     Interest income...................................               0                 1,650  (B)             1,650
                                                                      -                 -----                  -----

     Total revenue.....................................           5,901                 1,650                  7,551
                                                                  -----                 -----                  -----

Costs and expenses:

     Commission expense................................           1,143                     0                  1,143
     Sales and marketing...............................             321                     0                    321
     Compensation and benefits.........................           2,528                     0                  2,528
     Operating expenses................................           1,644                   500  (C)             2,144
     Depreciation and amortization.....................              52                     0                     52
     Interest, net.....................................              60                   (60) (D)                 0
     Distributions on preferred shares.................              11                   (11) (E)                 0
                                                                     --                  ----                      -

     Total costs and expenses..........................           5,759                   429                  6,188
                                                                  -----                   ---                  -----

Income from operations.................................             142                 1,221                  1,363

Other expenses:

Loss in investment in NAIS.............................              25                     0                     25
                                                                     --                     -                     --

     Total other expenses..............................              25                     0                     25
                                                                     --                     -                     --

Income taxes...........................................               0                     0                      0
                                                                      -                     -                      -

Net income.............................................     $       117            $    1,221            $     1,338

Basic and diluted earnings per common share............     $      0.01                                  $      0.04
                                                            ===========                                  ===========

Basic and diluted earnings per recapitalized common share   $      0.01                                  $      0.04
                                                             ==========                                  ===========

Weighted average number of
  common shares outstanding............................          12,883

Weighted average number of common
   shares and equivalents outstanding..................          13,035

After recapitalization
Weighted average number of
  common shares outstanding............................          16,956                                       35,912

Weighted average number of common shares and
  equivalents outstanding..............................          17,108                                       36,064
The accompanying notes and management's assumptions are an integral 
                            part of this statement.
                                                           

                                                            -34-
Footnotes to NAI's Pro Forma Consolidated Statements of Operations for the year
ended June 30, 1997 and the Nine Months ended March 31, 1998.

The Loss from Discontinued Operations is eliminated for purposes of the Pro
Forma Consolidated Statements of Operations for the year ended June 30, 1997.
March 31, 1998        June 30, 1997
                                                                                   --------------        -------------
A)   To reflect the recapitalization of NAI Shares, the Rights Offering and the
     Concurrent Offering, net of costs.

B)   To reflect the interest earned on an investment contract for the net
     proceeds:
Invested
                                  Cash                             Rate                             Interest Earned
Maximum proceeds                $30,000                            5.50%                       $1,238         $1,650
C) To reflect fees and costs payable under the Intercompany Agreement.

D) To reflect the reduction of interest on the pay down of outstanding notes and
   loans payable.
Debt Repaid                                                          Interest Saved
$659                                                       $47                 $60
E)   To reflect the elimination of preferred share distributions in connection
     with the redemption of the redeemable convertible preferred shares.

08085-00046/514080.12

                                                            -35-
MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

         New America Network, Inc., which conducts business as New America
International ("NAI"), operates a network of independently owned, licensed real
estate brokers throughout the United States and abroad. NAI, directly and
through its Broker Members, provides commercial real estate brokerage and other
real estate-related services to local, regional, national and international
businesses. Unlike other real estate broker networks, in addition to managing
real estate transactions generated by its brokers, NAI generates its own source
of real estate transactions for its brokers and actively manages and tracks
those transactions on behalf of its Clients. In order to increase the portfolio
of services marketed to Clients and Broker Members, NAI has entered into several
alliance agreements with entities which provide real estate-related services
which complement NAI's brokerage capabilities, including sealed-bid sales, real
estate auctions, real estate financing and appraisals.

         NAI earns revenue primarily from the sharing of brokerage commissions
with Broker Members who earn commissions from the acquisition, disposition or
leasing of real property assigned to them by NAI. Revenue from brokerage
commissions is largely transactional in nature and subject to economic cycles.
However, NAI's geographic coverage, number of transactions and continuing client
base tend to minimize the impact of economic cycles on annual revenue. NAI also
earns revenue from (i) the sharing of brokerage commissions with Broker Members
who earn commissions from the acquisition and/or disposition or leasing of real
estate referred to them by other Broker Members, (ii) the sharing of fees
received from Alliance Members in sealed-bid sales, auction transactions and
other Real Estate-Related Services and (iii) the collection of annual membership
fees paid by Broker Members and Alliance Members ("License fees"). Other
revenues of NAI include primarily (i) marketing fees for Broker Members, which
is generally calculated as a percentage of the Broker Members' License fees, and
(ii) convention and meeting revenue. A major expense to NAI is the commission
expense which is a direct function of gross commission revenue levels. In
numerous instances, NAI collects a gross commission and must subsequently pay
the Broker Member their respective portion of the gross commission. Other
operating expenses of NAI includes professional fees, advertising and promotion
expenses, rental expenses and various other general and administrative costs
incurred by NAI in their day to day operations.

LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 1998  NAI had approximately $220,000 of cash on hand.

         NAI had loans outstanding of $643,000 at March 31, 1998. Of this
amount, $441,000 was due to related parties with interest rates ranging from 10%
to 12%. These loans are due on demand. In addition, NAI had a bank loan
outstanding of $6,666 which requires monthly payments of principal of $3,333
with interest at the bank's prime rate (8.5% at March 31, 1998) plus 1%. NAI
also had a bank loan outstanding of $95,000 which requires monthly payments of
principal and interest of $1,667 with interest at the bank's prime rate (8.5% at

March 31, 1998) plus 1%. This loan matures in November 2002. NAI also has a
$100,000 line of credit with First Washington State Bank which expires October
2, 1998. Interest on any outstanding borrowings is at the bank's prime rate
(8.5% at March 31, 1998) plus 1%. This line was fully utilized at March 31,
1998.

         Assuming all of the Underlying Shares and Additional Shares are
purchased in the Rights Offering and in the Concurrent Offering, NAI expects to
receive proceeds of approximately $38,000,000. Management will use such proceeds
in the following order of priority: (i) pay the expenses of the Rights Offering,
the Concurrent Offering and the Proposed Related Transactions, (ii) repurchase
shares of Series A Preferred Stock of NAI, (iii) repay outstanding indebtedness,
(iv) expand NAI's Corporate Services Department and Investment Sales Department,
and (v) acquire and develop Real Estate-Related Services. The balance of any
proceeds will be invested in short-term commercial paper at a rate of
approximately 5.5% per annum until used for general corporate and working
capital purposes and

                                     -36-
to opportunistically acquire real estate. In the event that the full proceeds of
$38,000,000 is not received, management will use any proceeds received in the
above order.

         Management believes it has adequate access to capital to continue to
meet its short-term and long-term requirements and objectives. NAI's short-term
and long-term needs will be met from the proceeds of the Rights Offering and the
Concurrent Offering, cash flow from operations, bank loans or its credit line.

         NAI has established a Year 2000 compliance review process to assess the
impact of the Year 2000 on the company's business, operations and financial
condition. The process encompasses internal information technology systems,
office mechanical operation systems and the potential impact from Broker Members
and vendors. Management believes that NAI has no material exposure to the Year
2000 issues at this time.

RESULTS OF OPERATIONS

         Nine months ended March 31, 1998 versus the nine months ended March 31,
         -----------------------------------------------------------------------
1997
----
         Net income for common shareholders decreased $9,000, or 19%, from
$47,000 for the nine months ended March 31, 1997 to $38,000 for the same period
in 1998. This decrease is due to a combination of factors as described below.

         Revenue from commissions decreased $74,000, or 3%, from $2,910,000 for
the nine months ended March 31, 1997 to $2,836,000 for the same period in 1998.
This decrease is due to a decrease in broker to broker commissions which is
primarily the result of a lower dollar value of transactions in the broker to
broker area.

         License fees increased $205,000, or 22%, from $923,000 for the nine
months ended March 31, 1997 to $1,128,000 for the same period in 1998. The
increase was due to an increase in the number of international broker members
(which resulted in approximately $125,000 of additional fees) and increased
revenue from existing membership renewals (which increased approximately 5% per
annum over prior year's fees).

         Other revenue decreased $89,000, or 16%, from $563,000 for the nine
months ended March 31, 1997 to $474,000 for the nine months ended March 31,
1998. The decrease was due to a one time change in NAI's meeting and events
calendar in 1998 in which NAI did not hold one of its major meetings, the
National Council Symposium.

         Commission expense decreased $186,000, or 24%, from $788,000 for the
nine months ended March 31, 1997 to $602,000 for the nine months ended March 31,
1998. NAI's commission expense is proportionately less on a Network to Broker
transaction than on a Broker to Broker transaction. Because a greater percentage
of NAI's 1998 revenue was generated from its Network to Broker business than in
1997, the total commission expense decreased.

         Sales and marketing expenses increased $83,000, or 43%, from $194,000
for the nine months ended March 31, 1997 to $277,000 for the nine months ended
March 31, 1998. This increase was due primarily to increased costs of NAI's
annual convention and meetings, which was offset by a decrease in costs as a
result of NAI not holding its National Council Symposium in 1998.

         Compensation and benefits decreased $79,000, or 4%, from $1,911,000 for
the nine months ended March 31, 1997 to $1,832,000 for the nine months ended
March 31, 1998. This decrease was due primarily to the streamlining and
consolidation of staffing.

         Other operating expenses increased $391,000, or 33%, from $1,187,000
for the nine months ended March 31, 1997 to $1,578,000 for the nine months ended
March 31, 1998. This increase was due to an increase in public relations and
advertising relating to the change in the corporate trade name from New America
Network, Inc. to New America International, Inc.

                                     -37-
NAI had a loss from operations of discontinued businesses of $162,000
for the nine months ending March 31, 1997. NAI discontinued its New America
Financial Services ("NAFS") division which provided a wide array of financial
services. These services are currently provided by Alliance members. NAI had no
such loss for the same period in 1998.

         Year ended June 30, 1997 versus the year ended June 30, 1996
         ------------------------------------------------------------

         Net income (loss) for common shareholders increased $104,000, or 50%,
from a loss of ($210,000) in 1996 to a loss of ($106,000) in 1997. This increase
is due to a combination of factors as described below.

         Revenue from commissions decreased $123,000, or 3%, from $4,124,000 for
the year ended June 30, 1996 to $4,001,000 for the year ended June 30, 1997. The
decrease was primarily due to a decrease in broker to broker transactions.

         License fees decreased $91,000, or 7%, from $1,373,000 for the year
ended June 30, 1996 to $1,282,000 for the year ended June 30, 1997. The decrease
was due to the discontinuance of the property management services in early
fiscal 1997. Fees were recognized for the property management services for the
entire fiscal 1996 year.

         Other revenue increased $95,000, or 18%, from $523,000 for the year
ended June 30, 1996 to $618,000 for the year ended June 30, 1997. The increase
was primarily due to a new contract in 1997 in which NAI was paid $42,000 for
the use of their Real Estate Planning Guide on the internet. The residual
increase was due to a general increase in marketing assessments.

         Commission expense decreased $639,000, or 36%, from $1,782,000 for the
year ended June 30, 1996 to $1,143,000 for the year ended June 30, 1997. The
decrease was primarily due to a decrease in sealed bid transactions.

         Sales and marketing expenses increased $36,000, or 13%, from $285,000
for the year ended June 30, 1996 to $321,000 for the year ended June 30, 1997.
This increase was due to increased costs of conventions and meetings.

         Compensation and benefits increased $90,000, or 4%, from $2,438,000 for
the year ended June 30, 1996 to $2,528,000 for the year ended June 30, 1997.
This increase was due to the addition of personnel in the Corporate Services and
Brokerage Services areas.

         Other operating expenses increased $169,000, or 11%, from $1,475,000
for the year ended June 30, 1996 to $1,644,000 for the year ended June 30, 1997.
This increase was due to an increase in public relations and advertising
relating to changing the corporate trade name from New America Network, Inc. to
New America International, Inc.

         The loss from operations of discontinued businesses increased $95,000,
or 74%, from $128,000 for the year ended June 30, 1996 to $223,000 for the year
ended June 30, 1997. This loss represents the effect of the discontinuance of
NAFS in each respective year.

         Preferred share distributions decreased $2,000, or 15%, from $13,000
for the year ended June 30, 1996 to $11,000 for the year ended June 30, 1997.
This decrease was due to a redemption of 25,000 shares of NAI's preferred stock
for $50,000.

         Year ended June 30, 1996 versus the year ended June 30, 1995
         ------------------------------------------------------------

         Net income (loss) for common shareholders decreased $485,000 from
income of $275,000 in 1995 to a loss of ($210,000) in 1996. This decrease is due
to a combination of factors as described below.

                                     -38-
Revenue from commissions decreased $247,000, or 6%, from $4,371,000 for
the year ended June 30, 1995 to $4,124,000 for the year ended June 30, 1996. The
decrease was primarily due to a decrease in the Network to Broker commissions.
In 1995, there were two major Network to Broker deals which totaled
approximately $439,000. While these fees were not similarly earned in 1996, the
decrease was partially offset by an increase in sealed-bids and broker to broker
commissions.

         License fees increased $215,000, or 19%, from $1,158,000 for the year
ended June 30, 1995 to $1,373,000 for the year ended June 30, 1996. The increase
was primarily due to the fees earned by the property management services
($166,000) which was a new service provided in 1996.

         Other revenue increased $53,000, or 11%, from $470,000 for the year
ended June 30, 1995 to $523,000 for the year ended June 30, 1996. The increase
was primarily due to marketing assessment fees which were initiated in mid-year
in 1995 with a full year of revenues recognized in 1996.

         Commission expense increased $297,000, or 20%, from $1,485,000 for the
year ended June 30, 1995 to $1,782,000 for the year ended June 30, 1996. The
increase was primarily due to an increase in sealed bid sales in fiscal year
1996.

         Sales and marketing expenses decreased $39,000, or 12%, from $324,000
for the year ended June 30, 1995 to $285,000 for the year ended June 30, 1996.
This decrease was due to NAI eliminating its regional meetings in 1996 and
thereby incurring no costs with respect to these meetings.

         Compensation and benefits increased $457,000, or 23%, from $1,981,000
for the year ended June 30, 1995 to $2,438,000 for the year ended June 30, 1996.
This increase was due to an increase in personnel in the Northeast and Southeast
brokerage services regions, Corporate Services, Property Management and
Headquarters staff.

         Other operating expenses increased $139,000, or 10%, from $1,336,000
for the year ended June 30, 1995 to $1,475,000 for the year ended June 30, 1996.
This increase was primarily due to an increase in travel expenses for newly
hired regional staff as well as an increase in advertising and promotional
expenses.

         The loss from operations of discontinued businesses decreased $264,000,
or 67%, from $392,000 for the year ended June 30, 1995 to $128,000 for the year
ended June 30, 1996. This decrease was due to NAI recording a loss of
approximately $245,000 in 1995 related to the discontinuance of RealQuest, Inc.,
a wholly-owned subsidiary of NAI. NAI recorded a loss of approximately $147,000
and $128,000 for the discontinuance of NAFS for the years ended June 30, 1995
and 1996, respectively.

         Preferred share distributions decreased $2,000, or 16%, from $15,000
for the year ended June 30, 1995 to $13,000 for the year ended June 30, 1996.
This decrease was due to a redemption of 25,000 shares of NAI's preferred stock

for $50,000.

INFLATION

         Most of NAI's revenue is derived from commissions on the sale or lease
of commercial property and therefore is protected from inflation since an
increase in the sales prices or lease rates would generate additional revenue.
The majority of the license agreements signed by the Broker Members have fee
increases built in for the term of the agreements which are based on fixed
increases or increases over the Consumer Price Index. These two factors help
decrease NAI's exposure to inflation.

                                     -39-
BUSINESS

GENERAL DESCRIPTION

         NAI operates a Network of independently owned, licensed real estate
Broker Members throughout the United States and, more recently, abroad. NAI,
directly and through its Broker Members, provides commercial real estate
brokerage services to local, regional, national and international Clients. NAI
has approximately 130 affiliated Broker Members, which employ approximately
2,400 agents, operating in approximately 200 markets, including North, Central
and South America and Western Europe. NAI believes it is represented in more
North American market areas than any national commercial real estate brokerage
company. Unlike other real estate broker networks, in addition to managing real
estate transactions generated by its Broker Members, NAI generates its own
source of real estate transactions for its Broker Members and actively manages
and tracks those transactions on behalf of Clients. In order to increase the
portfolio of services marketed to Clients and Broker Members, NAI has entered
into several alliance agreements with Alliance Members which provide real estate
related services which complement NAI's brokerage capabilities, including
sealed-bid sales, real estate auctions, real estate financing and appraisal
services. As of March 31, 1998, the Network had an inventory of approximately
1,775 assignments to buy, sell or lease real property, with a transaction value
of approximately $927 million, and which would generate fees to NAI of
approximately $6.5 million, if consummated. There is no assurance that such
inventory will result in any revenues to NAI.

         NAI earns revenues primarily from the sharing of brokerage commissions
with Broker Members who earn commissions from the acquisition, disposition or
leasing of real property assigned to them by NAI (approximately $2,686,000 or
46% of NAI's net revenues for fiscal year 1997). NAI also earns revenues from
(i) the sharing of brokerage commissions with Broker Members who earn
commissions from the acquisition and/or disposition or leasing of real estate
referred to them by other Broker Members (approximately $1,063,000 or 18% of
NAI's net revenues for fiscal year 1997), (ii) the sharing of fees received from
Alliance Members in sealed-bid sales, auction transactions and other Real
Estate-Related Services (approximately $170,000 or 3% of NAI's net revenues for
fiscal year 1997), and (iii) the collection of annual membership fees paid by

Broker Members and Alliance Members (approximately $1,282,000 or 22% of NAI's
net revenues for fiscal year 1997).

         NAI began forming the Network in 1978 in order to meet the growing real
estate needs of large national and international corporations in multiple
markets. NAI meets the multiple market needs of its Clients and its Broker
Members by combining local representation with the management and control
capabilities of its centralized Corporate Services Department. NAI's Corporate
Services Department is responsible for establishing and developing relationships
with Clients in order to generate assignments for the Network and its Broker
Members. Currently, NAI has 13 staff members in its Corporate Services
Department serving over 100 Clients. These Clients include retail chains (such
as Woolworth Corp.), international companies (such as International Paper
Company), service businesses (such as Roadway Services, Inc.), and other larger
owners of real estate (such as the United States Postal Service, a new Client of
NAI). NAI's Clients are often involved in real estate transactions in multiple
markets. In addition, NAI has an Investment Sales Department which specializes
in the acquisition and disposition of real estate for Clients who are seeking to
acquire, or currently own, real estate for investment purposes. See "--Corporate
Services Department" and "--Investment Sales."

         NAI maintains a proprietary information sharing and research intranet,
in order to efficiently and effectively coordinate with its Broker Members to
meet its Clients' needs. NAI's information systems consist of a transaction
management system and a central database information system. NAI's computerized
transaction management system allows Broker Members, the Corporate Services
Department and Clients to manage and track the progress of transactions assigned
to Broker Members, including those

                                     -40-
generated by its Broker Members.  NAI's databases include, among other things,
real estate market data, demographic information, Broker Member profiles, Broker
Member listings, transaction histories, Client relationship information and
Client profiles.  See "--NAI Technology and Information Services."

         NAI's objective is to increase profitability by continuing to grow its
brokerage business, increase its international coverage, expand its Corporate
Services and Investment Sales Departments and to further develop its
non-brokerage Real Estate-Related Services, including sealed-bid sales and real
estate auctions, and to acquire or develop additional Real Estate-Related
Services. To the extent funds are available from the proceeds of the Rights
Offering and the Concurrent Offering referred to below, NAI's strategy will be
to (i) expand NAI's Corporate Services Department and Investment Sales
Department to generate business from additional Clients and in new markets, (ii)
invest in or acquire brokerage firms (including certain of those owned by Broker
Members) and firms which provide Real Estate-Related Services, (iii) train and
support Broker Members to generate additional business for the Network; (iv)
continue to expand the Network into international markets, (v) generate
additional revenue by providing brokerage and Real Estate-Related Services to
Kranzco, (vi) expand and enhance NAI's real estate technology and information
services, (vii) opportunistically acquire and develop real estate for its own

account and (viii) utilize Real Estate-Related Services to create and develop
relationships with Clients.

THE NETWORK

         NAI began forming the Network in 1978 on the premise that local
commercial real estate brokers could not efficiently service the needs of
national and international businesses due to the extremely local nature of the
commercial real estate market. Previously, local commercial brokers could only
assist a business with respect to its needs in a limited market area; however,
large national and international corporations need real estate services in
multiple market areas. NAI's affiliated Network of Broker Members throughout the
United States enables NAI to simultaneously provide real estate services to
businesses with multiple requirements in a number of market areas. NAI, with
approximately 130 Broker Members in 47 states and 10 countries, provides real
estate services to its Clients throughout the United States and, more recently,
abroad. See "--Competition" and "Risk Factor--Competition; Ability to Retain
Broker Members and Attract Additional Broker Members."

         By agreeing to dispose of or acquire its real estate through the
Network, a Client can utilize one large brokerage network to simultaneously
execute numerous real estate transactions in different markets. Clients avoid
the time-consuming tasks of interviewing, establishing relationships with, and
negotiating with, different commercial real estate brokers, and minimize time
spent managing the status and progress of each transaction in multiple market
areas.

         Through the use of the Network's facilities and the individual
marketing know-how of the Broker Members, a seller or lessor can quickly
establish whether there is a strong demand for its property, while a purchaser
or lessee can immediately determine which properties being offered across the
country meet its requirements. To facilitate this process, NAI maintains
computerized information on potential lessors and lessees, types of properties
sought or available for sale in numerous markets, preferred locations, rental
rates, price and mortgage financing requirements and other relevant information.

BROKER MEMBERS

         NAI established the Network as a nationally recognized marketer of real
estate services, by obtaining quality Broker Members in major metropolitan areas
and smaller cities throughout the United States, as well as more recently in
foreign countries. NAI selects its Broker Members based upon a number of factors
including (a) the Broker Member's reputation in the industry, (b) the sales
volume of the Broker Member in its local market, (c) the Broker Member's ability
and desire to work with NAI and

                                     -41-
NAI's stated method of operations, (d) the professionalism of the sales
associates as evidenced by industry designations and memberships and (e) the
Broker Member's performance in interviews performed by NAI. As of March 31,

1998, NAI had approximately 130 Broker Members in 47 states and 10 foreign
countries. Approximately 80 of the Network's Broker Members have been with NAI
for 5 years or longer.

         In order to ensure that the Network's standards for Broker Members are
consistently maintained, NAI has established a Broker Services Department. The
Broker Services Department, which consists of 11 members, focuses on training
Brokers to (i) develop and fulfill business on behalf of NAI, (ii) adhere to NAI
systems and processes, (iii) use the Network and its computer tracking systems
in order to manage real estate transactions assigned to them through the Network
and for their own internal use, (iv) effectively utilize NAI's national and
international identity, and (v) meet the needs of NAI's Clients. After a Broker
Member becomes a member of the Network, NAI performs periodic reviews to
determine whether such Broker Member is maintaining the standards set forth in
its Membership Agreement. In the past, NAI has replaced certain Broker Members
who have not met their obligations under the Membership Agreements. NAI intends
to continue this practice so that the Network can continue to provide high
quality service to its Clients.

MEMBERSHIP AGREEMENTS AND FEES

         Each Broker Member executes an agreement ("Membership Agreement") which
defines the legal relationship between NAI and the Broker Member, including the
Broker Member's obligations, the services to be provided by the Network and the
compensation to be paid for such services by the Broker Member (including an
annual membership fee and co-brokerage commission arrangements). Under the terms
of the Membership Agreement, the majority of Broker Members, in most instances,
obtain an exclusive territory and a license to use NAI's service marks including
"New America," "New America International," "NAI" and the "NAI Globe" logo.
Territories in the United States range in size from single cities to several
counties (sometimes in more than one state), or statewide depending on the
demographics of the area. International territories range in size from single
cities to, under certain circumstances, an entire country.

         In certain market areas, NAI has selected more than one Broker Member.
All such Broker Members are designated as "Specialty Members" as each
specializes in one or more types of real estate (i.e., Retail, Industrial or
Office). This practice was instituted to address situations in which no
individual commercial broker could be identified in a particular market area
meeting NAI's qualifications as a full service broker. It also reflects NAI's
recognition that in certain market areas the Network and its Clients could best
be served by Specialty Members.

         Over the past 18 months NAI has been transitioning Broker Members to a
new form of Membership Agreement. The old form, which typically provided for a
three year term, permitted members to terminate the Membership Agreement at any
time upon 45 days notice. The new form of Membership Agreement, which includes
stronger identity and performance standards as well as increased licensing fees,
does not allow early termination of the Membership Agreement except for cause.
NAI may terminate such agreements for specified causes upon forty-five (45) days
written notice to a Broker Member. Approximately 60% of the Broker Members have
executed the new form of Membership Agreement.

         Each Broker Member pays NAI an annual membership fee ("Membership
Fee"), which varies depending upon the population level of a Broker Member's
exclusive territory. Each Broker Member is also required to pay an annual
marketing assessment equal to 15% of its Membership Fee. NAI has agreed to spend
a minimum of 3.5% of the total annual Membership Fees it receives on marketing
activities annually. NAI earns most of its revenue from the co-brokerage
provisions contained in the Membership

                                     -42-
Agreement. NAI's share of any brokerage commission earned from such services
ranges from 10% to 50% depending on NAI's involvement in the transaction. Of
NAI's net revenues for fiscal year 1997, approximately $2,686,000 or 46% were
earned through the sharing of brokerage commissions with Broker Members who earn
commissions from the acquisition, disposition or leasing of real property
assigned to them by NAI, approximately $1,063,000 or 18% of NAI's net revenues
were earned through the sharing of brokerage commissions with Broker Members who
earn commissions from the acquisition and/or disposition or leasing of real
estate referred to them by other Broker Members, and approximately $1,282,000 or
22% of NAI's net revenues were earned through the collection of annual
membership fees paid by Broker Members and Alliance Members.

         NAI's percentage of the Broker Member compensation may be decreased in
instances where the Network Client was introduced to the Network by a Broker
Member or where an assignment was originally identified by a Broker Member. In
those instances, the Broker Member who made the introduction or identified the
listing may be entitled to a portion of the commission.

BROKER SERVICES GROUP

         NAI believes that in addition to obtaining assignments and Clients for
Broker Members, the Network creates a framework within which Broker Members can
assist each other in their own businesses. In order to strengthen the
relationship among Broker Members, NAI conducts annual international conventions
and regional meetings on various aspects of utilizing the Network and
structuring transactions for all Broker Members. Also, the Network maintains a
Broker Member Advisory Council consisting of 24 Broker Members, which offers
advice to NAI regarding ways in which to improve the Network and the services
offered by it.

         Additional publications, advertising, promotional materials and public
relations enhance NAI's image and reputation. NAI membership and participation
is maintained in industry trade associations including the International Council
of Shopping Centers ("ICSC"), International Association of Corporate Real Estate
Executives ("NACORE"), Industrial Development Research Council ("IDRC") and
other similar groups.

         To further increase the Network's capabilities to service Clients, NAI
has established five Specialty Councils addressing various issues peculiar to
industrial, office, retail, land and investment properties. Each Specialty
Council is made up of Broker Members and/or sales persons associated with such
Broker Members who specialize in those areas. Through the personal relationships

which are established, NAI believes that council members gain a greater
recognition of each other's capabilities, local market knowledge and general
expertise.

CORPORATE SERVICES DEPARTMENT

         NAI's Corporate Services Department is responsible for establishing and
developing relationships with existing and potential Clients in order to
generate assignments for the Network and its Broker Members. NAI employs persons
with backgrounds in business and finance ("Corporate Service Executives") to
solicit and secure from existing and potential Clients, exclusive assignments to
acquire, dispose of or lease commercial real estate. The current trend of
downsizing corporate real estate departments has increased the need for
Corporate Services Executives, who can assist corporate real estate departments
with multiple transactions. The Corporate Services Department assists Clients in
managing multiple transactions through NAI's technology and information systems,
which facilitate up-to-date electronic and/or written reports which are
regularly sent to Clients and Broker Members. See "--NAI Technology and
Information Systems."

                                     -43-
NAI's Corporate Services Department has ongoing relationships with more
than 100 Clients, including the Hertz Corporation, Pepsi-Cola, Airborne Express,
and the International Paper Company. Substantially all NAI-generated assignments
from its Clients are exclusive to NAI and many assignments referred from one
Broker Member to another Broker Member are also exclusive to the initiating
Broker Member. These assignments include acquisitions, dispositions, buy-outs,
sales, leases and auctions of office, industrial and retail properties.
Assignments are obtained in NAI's name and then directed to the Broker Members
for execution. In certain circumstances the assignment, although secured by NAI,
is placed directly with the Broker Member. Resulting commissions are shared with
NAI as prescribed in the Broker Members Membership Agreement. See "Business--
Membership Agreements and Fees". In some instances, NAI will structure a partner
relationship with a Broker Member pursuant to which the Broker Member will act
as a Corporate Service Executive with respect to a Network Client. This
typically occurs when a Broker Member has a significant relationship with a
Client with national and international real estate needs. As of March 31, 1998,
NAI employed 13 staff members for its Corporate Services Department. Currently,
the majority of the Clients of the Corporate Service Department are located in
the eastern and north central United States; however, upon consummation of the
Exchange Offer, the Distribution, the Rights Offering and the Concurrent
Offering, NAI intends to retain additional Corporate Service Executives to
solicit Clients from throughout the United States and abroad.

INVESTMENT SALES

         In order to increase transactions generated for the Network, NAI has
established an Investment Sales Department, consisting of two real estate
professionals, which specializes in the acquisition and disposition of real
estate for Clients who are seeking to acquire, or who currently own, real estate
for investment purposes, rather than for the investor's business use. A specific
target of the Investment Sales Department is the identification and sale of
properties to REITs, as well as insurance companies or pension funds which may
be interested in the acquisition of real estate investments for their
portfolios.

         The Investment Sales Department works with Broker Members to assist
them in pursuing investment opportunities which the Department has identified.
The Investment Sales Department also works closely with the members of NAI's
Specialty Council for Investment Sales to stimulate Broker-toBroker investment
referrals and to obtain sources of financing for investment transactions.

         The Investment Sales Department has previously assisted Kranzco in
pursuing Kranzco's strategy of acquiring shopping centers. In December 1997,
Kranzco acquired five shopping centers, aggregating approximately 650,000 square
feet of GLA, for approximately $44 million. NAI's Investment Sales Department
initiated this opportunity, and assisted Kranzco in acquiring the properties.
Kranzco's acquisition of such properties generated $100,000 in fee income to
NAI.

         During the calendar year ended December 31, 1997, the Network
consummated 20 investment real estate transactions with a transaction value of
approximately $100,000,000, which resulted in approximately $400,000 of revenues
to NAI (which for financial purposes are reported as commissions).

REAL ESTATE-RELATED SERVICES

         NAI is in the process of widening its focus from a transactional core
to include more Real EstateRelated Services. These services include real estate
auctions and sealed-bid sales, real estate tax, valuation and appraisal
services, real estate information services (providing sales and marketing data
and demographic information), lease audits (review of leases for tenants in
order to ensure no overpayments were made), loan sales (purchases of defaulted
mortgages), and senior citizen housing (an investment specialty focusing on
facilities for the growing population of senior citizens). In order to expand
into Real Estate-Related Services, NAI has entered into several agreements with
Alliance Members pursuant to

                                     -44-
which certain Real Estate-Related Services are provided by Alliance Members to
Broker Members and Clients. To date, the only Real Estate-Related Services which
have generated significant revenues, in addition to the membership fees paid by
Alliance Members, for NAI have related to national auctions and international
sealed-bid sales. See "Business -- Accelerated Marketing Programs" below.

         Each Alliance Member pays NAI an annual membership fee (an "Alliance
Membership Fee"), which varies depending upon the market opportunity and the NAI
Services to be provided. Of NAI's net revenues for calendar year 1997,
approximately $475,000 of NAI's net revenues were earned through the sharing of
fees received from Alliance Members in the sealed-bid sales and auction
transactions (which for financial purposes are reported as commissions) and
approximately $25,000 of NAI's net revenues were earned through the collection
of annual membership fees paid by Alliance Members (which for financial purposes
are reported as license fees). Other Real Estate-Related Services which have not
as yet provided significant revenues to NAI have been strategically implemented
in order to provide a full range of services which may fulfill the real estate
related needs of Clients. These services include lease auditing, appraisal
services; and real estate information services.

ACCELERATED MARKETING PROGRAM

         Through its Accelerated Marketing Program, NAI markets commercial real
estate properties for disposition through alternative vehicles for real estate
sales, such as sealed-bid sales and auctions. In 1994, NAI entered into
agreements with Terra Marketing and Terra Marketing, East (collectively,
"Terra"), an Alliance Member and specialist in international sealed-bid sales.
In the sealed-bid process, Terra puts together a portfolio of commercial and
industrial properties for sale. NAI and its Broker Members may assist Terra in
creating the portfolio of properties. The properties may be in varied locations
and have different owners. Terra then markets these properties to possible
purchasers through a brochure. Purchasers interested in any property may request
additional due diligence materials for a small fee. NAI Broker Members provide
sales support by providing site tours and providing useful local information for
those purchasers interested in visiting the site. The winning bids are selected
by the seller of the property and Terra, together. For the calendar year ended
December 31, 1997, NAI and Terra produced sealed-bid sales resulted in the sale
of approximately 19 properties with approximately $421,000 of revenues to NAI
(which for financial purposes are reported as commissions) and an additional
$2,500,000 of revenues to Terra, participating Broker Members and other brokers.
Fees earned in sealedbid sales are paid by Terra to NAI and its Broker Members.

         In 1989, NAI entered into an alliance agreement with Michael Fox
International, Inc., a specialist in national auction services ("Fox"). NAI and
local Broker Members work with Fox to provide and assist in auction sales. NAI
and Fox worked together on 15 auctions in the calendar year ended December 31,
1997. In the calendar year ended December 31, 1997, auction sales resulted in
approximately $50,000 of revenues to NAI and an additional $500,000 of revenues
to Fox, participating Broker Members and other brokers. Fees earned in auction
sales are paid by Fox to NAI and its Broker Members.

NAI TECHNOLOGY AND INFORMATION SERVICES

         NAI has invested substantially in technology to create advanced systems
to deliver services to its Clients and Broker Members, as well as to efficiently
manage its operations. NAI believes that technology is important to the
continued growth of NAI's business and the real estate brokerage industry
generally. NAI continually refines its proprietary intranet in order to
efficiently manage and track assignments, and communicate with Broker Members

and Clients.

         NAI's central information sharing and research intranet consists of two
proprietary software programs. REALTrac(TM), a transaction management system,
allows Broker Members, the Corporate

                                     -45-
Services Department and the Investment Sales Department, to efficiently and
effectively manage and track the progress of transactions assigned to Broker
Members. REALTrac(TM) allows NAI staff to easily track multiple Client
assignments, and produce portfolio activity reports. REALNet(TM), NAI's central
database information system, includes, among other things, Broker Member
profiles, Broker Member listings, transaction histories, Client relationship
information and Client profiles.

         NAI maintains both public-access and secure, limited-access web sites
in order to provide computer access to NAI's Broker Members and Clients, as well
as the general public. Broker Members access REALTrac(TM) and REALNet(TM)
through www.members.naiweb.com, a secure, web-based system.
www.members.naiweb.com also hosts discussion groups; a site to post property
listings to NAI's internet site, www.naiweb.com; NAI's Marketing Resource Center
where Broker Members can download marketing presentations; current press
releases; and the "Market Maker" system which promotes Brokerto-Broker
opportunities. www.clients.naiweb is a secure site which has been designed to
allow Clients to log into NAI's information network and get immediate updates on
the status of any assignments which such Client has placed with the Network. The
information contained in this site is fed directly from the NAI REALTrac(TM)
system. This site also allows Clients to contact NAI staff that is working on
their assignments. NAI's website, www.naiweb.com, is a public site which conveys
NAI's image in the marketplace, houses interactive versions of NAI's marketing
materials, and NAI's annual Real Estate Planning Guide, a comprehensive,
market-by-market commercial real estate analysis of over 140 real estate
markets. Additionally, this site maintains a global property listings database
with over 1,500 active commercial property listings which are posted by Broker
Members.

         NAI provides Broker Members and Clients with key demographic, mapping
and site modeling services through its New America Information Services division
("NAIS"), previously operated as a joint venture which has been terminated. NAIS
annually licenses demographic databases from national information providers. The
information contained in these databases is then used to produce custom
demographic reports and sophisticated mapping services.

COMPETITION

         NAI primarily seeks business from corporations, individual
owner/investors and national and international organizations with real estate
requirements in multiple market areas. NAI faces competition for clients on a
local, regional and national basis from national broker-owned companies with
global alliances, and national/global networks, as well as local and regional
commercial brokerage firms. Some of NAI's largest competitors include CB

Commercial Real Estate Services Group, Inc.; Cushman & Wakefield, Inc.; Grubb &
Ellis Company; and Trammel Crow Company. However, NAI believes that it is in
more North American market areas than any of these competitors. Real estate
broker networks with which NAI competes include Colliers International; Oncor
International; and The Commercial Network. NAI distinguishes itself from other
real estate broker networks by generating its own source of real estate
transactions for its Broker Members and actively managing those transactions,
and does not simply facilitate an exchange of transactions generated solely by
network members, as is the case in other broker networks.

         NAI's ability to earn revenues is directly related to its ability to
attract and retain successful, independently owned, commercial and industrial,
licensed real estate brokers ("Commercial Real Estate Brokers") in a substantial
number of market areas as Broker Members. The number of brokers in different
market areas and their strength and reputation in their own local markets may
directly affect the anticipated volume of commissions generated through the
Network, as well as NAI's ability to obtain exclusive assignments from a
national client base. NAI is presently competing for Broker Members with
cooperative commercial broker networks, as well as large national and regional
commercial real estate brokerages. There has been a consolidation of real estate
brokerage and service companies, which are better known

                                     -46-
and have greater resources than NAI that are actively seeking to acquire other
real estate brokerage and service companies. Certain of NAI's competitors, such
as CB Commercial and Grubb & Ellis, are attempting to grow their businesses
through acquisitions, as well as by entering into affiliation agreements with
independent Commercial Real Estate Brokers. To the extent these companies are
successful in acquiring or entering into affiliation agreements with independent
Commercial Real Estate Brokers, there may a negative impact on NAI's ability to
attract and retain qualified Commercial Real Estate Brokers as part of the
Network as Broker Members. However, approximately 80 Broker Members have been
members of the Network for 5 years or longer. See "Risk Factors - Competition;
Ability to Retain Broker Members and Attract Additional Broker Members."

         In addition, approximately 40% of NAI's Broker Members are party to a
Membership Agreement which permits Broker Members to terminate the Agreement
upon 45 days prior notice. Certain Broker Members may not view the Related
Transactions as favorable to them. Accordingly, there can be no assurance that
in light of the increased competition to retain or acquire Commercial Real
Estate Brokers, that Broker Members will not terminate, or renew, their
Membership Agreements. See "Risk Factors competition; ability to Retain Broker
Members and Attract Additional Broker Members."

GOVERNMENT REGULATION

STATE LAWS GOVERNING REAL ESTATE BROKERS

         Most states permit licensed real estate brokers to enter into
commission sharing agreements with licensed real estate brokers from other
jurisdictions. However, some states impose certain requirements with respect to

entering into such agreements. For example some states allow only the local
broker to conduct negotiations. Other states require a written commission
sharing agreement to be filed with the state real estate commission. Still other
states do not permit the out-of-state broker to conduct brokerage activities
within the state. NAI presently has real estate brokerage licenses in New
Jersey, Florida, New York, and Pennsylvania. See "Certain Transactions." NAI
presently shares commissions with brokers in 48 jurisdictions, including states
in which it has a license. NAI does not believe that it provides brokerage
services or conducts negotiations in those states in which it shares
commissions. In certain instances, NAI has not filed written fee sharing
agreements with state real estate commissions. To the extent NAI has potentially
violated any state law with respect to commission sharing, it may not be able to
enforce its Membership Agreement and may be subject to civil liability or
criminal penalties.

LAWS RELATED TO FRANCHISING

         The offer and sale of franchises is subject to federal law and certain
state laws. NAI believes that it is exempt from compliance with the Federal
Trade Commission's ("FTC") trade regulation rule entitled "Disclosure
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures" (the "Franchise Rule"). The Franchise Rule requires a franchisor to
provide pre-sale disclosure to a prospective franchisee prior to the sale of a
franchise subject to the Franchise Rule. Many states have franchise sales laws
that require a franchisor, prior to the offer or sale of a franchise in the
state, to comply with registration or filing requirements, and, prior to the
sale of a franchise, to provide a prospective franchisee with a current
franchise offering circular. Certain other states have business opportunity laws
that apply to some franchise agreements that also may require a seller to comply
with applicable registration or filing requirements and to provide pre-sale
disclosure. State franchise sales laws and business opportunity laws are
described below as "State Laws." In addition, many states have laws that
regulate certain substantive aspects of the franchisor-franchisee relationship,
including termination or non-renewal of franchise agreements.

                                     -47-
NAI believes that by offering and selling memberships to its Broker
Members it may have been offering a "franchise," as defined by the Franchise
Rule, but that the offer and sale of such memberships are a "fractional
franchise" and are exempt from compliance with the requirements of the Franchise
Rule. As defined in the Franchise Rule, a "fractional franchise" is a commercial
arrangement which meets the following two conditions: (a) the franchisee or any
of its current directors or executive officers has more than 2 years of prior
management experience at any time in the past in the business represented by the
franchise and (b) the parties anticipated or should have anticipated, at the
time they entered into their agreement, that the sales of the franchisee arising
from the proposed relationship would represent no more than 20% of the total
dollar volume of the franchisee's projected gross sales within at least one year
after the franchisee commences selling the goods or services under the parties'
agreement.

         NAI believes that it is exempt from compliance with the Franchise Rule,
since (a) its Broker Members and their directors or executive officers typically
had more than 2 years' experience as Commercial Real Estate Brokers at the time
they entered into their agreements with NAI and (b) at the time a Broker Member
entered into its Membership Agreement, neither NAI nor the Broker Member
anticipated or should have anticipated that the sales proceeds of any Broker
Member arising from membership in NAI would represent 20% or more of its sales.

         As of the date of the Prospectus, NAI has neither prepared nor
distributed a franchise disclosure document ("Franchise Disclosure Document").
NAI believes that it is exempt from the requirements of many of the State Laws
in states in which it has entered into Member Agreements, based on various
exemptions, including, without limitation, applicable state "fractional
franchise" exemptions (or the functional equivalent), exemptions in connection
with the licensing of a registered trademark, or sophisticated purchaser
exemptions. However, NAI appears to have been subject to certain requirements
(e.g., registration or disclosure requirements) under State Laws in certain
other states in which it has agreements with Broker Members. In some states,
although no exemptions may have been available, past violations by NAI of claims
under those State Laws would be time barred.

         NAI believes that there are approximately six (6) states with a State
Law in which NAI has entered into Membership Agreements for which NAI may not be
exempt, may have failed to comply with the filing or registration and disclosure
provisions of such State Law, and for which it may be subject to certain
sanctions or potential liability. Such sanctions or potential liability would
include that NAI may be subject to civil penalties imposed by state regulatory
agencies, and legal actions by existing Broker Members for rescission of
existing Broker Membership Agreements, restitution, and damages as a result of
any violation of such law. NAI believes that, if any state regulatory agencies
or any of the Broker Members in such states sought such remedies and any such
actions were successful, its potential liability could be to refund certain
payments made to NAI. NAI believes that it has strong defenses to any alleged
violation of any State Law. Notwithstanding, the applicability of such laws is
uncertain as applied to NAI's Membership Agreements, and there can be no
assurance that a court would not take the position that NAI should have complied
with such laws in connection with those transactions. In the future NAI intends
to comply with State Laws, where necessary, by preparation and delivery to
prospective Members of a Franchise Disclosure Document, and registering or
filing with necessary state authorities, and/or by complying with available
exemptions.

         In the future, NAI intends to comply with State Laws, where necessary,
by preparation and delivery to prospective Members of a Franchise Disclosure
Documents, and registering or filing with necessary state authorities, and/or by
complying with available exemptions.

         NAI has also recently entered into several Membership Agreements with
Members in foreign countries. NAI has, to date, not taken any actions to comply
with franchise-related laws in effect in those jurisdictions. NAI believes that
it is in substantial compliance with such laws, and has good defenses to

                                     -48-
any alleged violation of such laws. To the extent that NAI may not be in
compliance, it may be subject to actions by regulatory agencies and legal
actions by existing Members, and subject to fines, penalties, and damages. In
the future, NAI intends to comply with such laws, where necessary, as applicable
in each relevant jurisdiction.

TRADEMARKS

         NAI has a registered servicemark on the principal register with the
United States Patent and Trademark Office for the logo design eagle and the
initials "NAI" and the name "New America."

LEGAL PROCEEDINGS

         There is no material litigation pending, or to its knowledge,
threatened against NAI or its properties.

PROPERTY

         NAI leases approximately 8,100 square feet of office space as its
corporate headquarters located at Route 130 and Maple Stream Road, Hightstown,
New Jersey. The landlord, The Building Center, Inc., is wholly owned by Gerald
C. Finn and his wife. See "Certain Transactions." The lease provides for an
annual rental of $102,000 plus the payment of maintenance expenses. The initial
lease, which expired on August 31, 1989, has been extended by an Extension of
Lease Agreement, dated April 15, 1998, which provides for a one year term with
automatic one year renewals, unless either party gives 90 days written notice.

                             RELATED TRANSACTIONS

THE EXCHANGE AGREEMENT

         On _________, 1998, Kranzco, NAI and the Finns entered into the
Exchange Agreement in connection with the Exchange Offer, which included certain
representations, warranties and indemnities. In the Exchange Agreement, (i) the
Finns, jointly and severally, agreed to exercise Rights to purchase an aggregate
of 500,000 NAI Shares and (ii) Kranzco agreed to exercise such number of Rights
to purchase NAI Shares that would result in Kranzco owning 9.8% of the issued
and outstanding NAI Shares, before the issuance of any Additional Shares. The
Finns also agreed not to sell or transfer, directly or indirectly, any NAI
Shares, Notes or any Kranzco Common Shares issuable upon conversion of the Notes
held by the Finns for a period of three years from the closing of the Exchange
Offer. The Finns also agreed, with certain exceptions, not to convert the Notes
into Kranzco Common Shares until three years from the date of issuance. NAI also
agreed that if the Related Transactions are consummated, all costs and expenses
incurred by all parties in connection with the Related Transactions will be paid
by NAI.

         In the Exchange Agreement NAI agreed to indemnify and hold harmless
Kranzco and its affiliates (each an "indemnified person") from and against, any
Losses (as defined in the Exchange Agreement) incurred by such indemnified
person by reason of or arising out of or in connection with the failure of NAI

to comply with (i) any Laws (as defined therein) relating to real estate brokers
or (ii) any federal or state franchise Laws.

                                     -49-
INTERCOMPANY AGREEMENT

         Immediately following the Distribution, Kranzco and NAI will enter into
an Intercompany Agreement which provides for the manner in which NAI and Kranzco
expect to create opportunities for each other and for reducing potential
conflicts of interest.

Kranzco Right of First Opportunity; Notification Right

         The Intercompany Agreement provides that, if any REIT Opportunity (as
defined below) becomes available to NAI in which NAI is acting, intends to act
or will act as principal or participate for its own account (a "Principal REIT
Opportunity"), NAI will first offer such Principal REIT Opportunity to Kranzco.
If Kranzco rejects a Principal REIT Opportunity, or accepts such Principal REIT
Opportunity but thereafter provides, or is required by the provisions of the
Intercompany Agreement to provide, written notice to NAI that it is no longer
pursuing such Principal REIT Opportunity, NAI is, for a period of one year
thereafter, entitled to consummate the Principal REIT Opportunity or provide any
other person or entity the right to consummate such Principal REIT Opportunity
at a price, and on terms and conditions, that are not more favorable to NAI in
any material respect than the price and terms and conditions made available to
Kranzco relating to such Principal REIT Opportunity. A Principal REIT
Opportunity does not include the receipt of any commissions in cash or in kind
(including an equity interest in a REIT Opportunity) in connection with NAI
serving as a broker or intermediary in connection with the sale or lease of
retail real estate. "REIT Opportunity" means any opportunity, principally within
the United States, to (i) acquire, develop, lease, sell or make any investment
in retail real estate, real estate mortgages, real estate derivatives, or
entities that invest exclusively in or have a substantial portion of their
assets in any of the foregoing, so long as such investment would be consistent
with the requirements of the Code and regulations relating to Kranzco's status
as a REIT; or (ii) make any REIT-Qualified Investment. "REIT-Qualified
Investment" means an investment, at least 95% of the gross income from which
would qualify under the 95% gross income test set forth in section 856(c)(2) of
the Code (or could be structured so to qualify) and the ownership of which would
not cause Kranzco to violate the asset limitations set forth in section
856(c)(4) of the Code (or could be structured not to cause Kranzco to violate
the section 856(c)(4) limitations) and which otherwise meets the federal income
tax requirements applicable to REITs, or (ii) any other investments which may be
structured in a manner so as to be REIT-Qualified Investments, as determined by
Kranzco. Kranzco may from time to time provide written notice to NAI specifying
certain criteria, reasonably acceptable to NAI, for a REIT Opportunity in
addition to the criteria specified above in this definition of REIT Opportunity.
Any such written notice from Kranzco may be canceled by written notice given by
Kranzco at any time or, with NAI's consent, which shall not be unreasonably
withheld, modified by Kranzco by written notice at any time. The definition of
REIT Opportunity will be modified as appropriate from time to time in accordance

with any such written notices sent by Kranzco and reasonably acceptable to NAI.
A Principal REIT Opportunity does not include the receipt of any commissions in
cash or in kind (including an equity interest in a REIT Opportunity) in
connection with NAI serving as a broker or intermediary in connection with the
sale or lease of retail real estate.

         The Intercompany Agreement also provides that NAI will immediately
notify Kranzco in writing of any REIT Opportunity that becomes available or
known to NAI (through its Broker Members or otherwise) and which is not a
Principal REIT Opportunity and which in the reasonable opinion of NAI meets the
acquisition and investment criteria of Kranzco (which will be provided to NAI by
Kranzco from time to time) (a "Non-Principal REIT Opportunity"). In the event
Kranzco determines to pursue such NonPrincipal REIT Opportunity, NAI shall use
good faith efforts to cause its Broker Members to assist Kranzco in considering
and consummating such Non-Principal REIT Opportunity. In the event Kranzco
consummates a transaction that constitutes a Non-Principal REIT Opportunity,
Kranzco will pay NAI a fee to be mutually agreed to by NAI and Kranzco.

                                     -50-
In addition, if NAI develops or becomes aware of any acquisition or
investment opportunity with respect to real estate (other than a REIT
Opportunity) in which NAI intends to or has the opportunity to act as principal
or participate in for its own account, and NAI is not interested in pursuing
such opportunity, or the opportunity is otherwise unavailable to NAI, NAI will
immediately notify Kranzco in writing of such opportunity with such writing to
contain a description of all material terms concerning such opportunity and be
delivered to Kranzco with a copy of any written material or information in NAI's
possession regarding such opportunity.

         NAI will also, without any additional consideration, (i) disseminate
acquisition and investment criteria provided by Kranzco to its Broker Members,
(ii) disseminate information regarding space available for lease from Kranzco
(including tenant criteria) to its Broker Members, (iii) provide Kranzco
reasonable access to NAI personnel, NAI Broker Members and NAI's computer data
bases (other than confidential client information), (iv) cooperate with Kranzco
to develop new shopping centers or re-develop distressed shopping centers for
sale to Kranzco in a mutually agreeable manner, (v) provide Kranzco access to
local property managers within areas in which Kranzco owns retail properties and
(vi) disseminate such other materials and information regarding Kranzco and its
properties as Kranzco may reasonably request.

Limitation on Strategic Alliance

         NAI has agreed not to enter into, without the consent of Kranzco, any
type of strategic relationship with any other REIT or real estate investment or
operations type entity, including, without limitation, any equity investment by
any other REIT or real estate investment or operations type entity in NAI (other
than as a result of a purchase of NAI Shares in the public market), any equity
investment by NAI in any other REIT or real estate investment or operations type
entity, entering into any agreements which provide such entities with rights of
first opportunity or contain cooperation provisions of the type or relating to

the matters contained in the Intercompany Agreement (other than with respect to
consulting arrangements). Notwithstanding the foregoing, NAI shall be permitted
to solicit assignments from other REITs or real estate investment or operations
type entities with respect to the purchase or sale of real estate or the
provision of Real Estate Related Services, subject to Kranzco's rights of first
opportunity and notification.

NAI Right of First Opportunity for Services Opportunity

         The Intercompany Agreement provides that if Kranzco requires Services
(as defined below) (a "Services Opportunity"), Kranzco shall engage in
discussions with NAI regarding such Services Opportunity prior to retaining
another service provider to perform such Services unless, in the reasonable
judgment of Kranzco, offering such Services Opportunity to NAI would be
detrimental to Kranzco. Notwithstanding the foregoing, (i) Kranzco shall have no
obligation to retain NAI to perform any Services for Kranzco and (ii) any
Services provided by NAI to Kranzco shall (a) be at market rates and (b) on
terms and conditions as attractive as the best available for comparable services
offered by NAI or, to the extent within NAI's control, any broker member or
affiliated member of NAI to third parties. "Services" means real estate
brokerage services, local management and other maintenance services, and certain
other Real Estate-Related Services then provided by NAI, including sealed-bid
sales, due diligence and real estate auctions.

         The Intercompany Agreement also provides that in the event Kranzco
desires to purchase any retail real estate based upon an opportunity provided to
Kranzco by someone other than NAI (a "Purchase Opportunity"), Kranzco will
notify NAI of such Purchase Opportunity and will use its good faith efforts to
cause the broker for such Purchase Opportunity to share any brokerage
commissions for such Purchase Opportunity with NAI in accordance with industry
practice; provided, however, Kranzco is not required to comply with the
foregoing if the Purchase Opportunity is based upon an exclusive brokerage
arrangement or, if in the reasonable judgment of Kranzco, compliance with the
foregoing would be

                                     -51-
detrimental to the relationship between Kranzco and such broker or would impede,
inhibit or slow down the proposed transaction. In connection with a Purchase
Opportunity in which NAI will be sharing in the brokerage commission, NAI agrees
to perform, without any consideration, any due diligence services requested by
Kranzco.

         In addition, in the event NAI desires to offer to Kranzco tenants any
Services currently provided by NAI (a "Tenant Services Opportunity"), NAI shall
notify Kranzco in writing of such Tenant Services Opportunity. Promptly
following the receipt of such notice, Kranzco has agreed to provide NAI with a
list of the mailing addresses of its tenants solely for purpose of NAI
soliciting such tenant with respect to such Tenant Services Opportunity. If NAI
notifies Kranzco of a Tenant Services Opportunity, Kranzco shall not for a
period of six months after NAI notifies Kranzco of a Tenant Services Opportunity
provide a list of the mailing addresses of its tenants to a competitor of NAI

with respect to such Tenant Services Opportunity.

Certain Employee Matters

         NAI and Kranzco have agreed to make reasonable and ongoing efforts to
ensure that members of management of each of NAI and Kranzco are given
appropriate salary, bonus and options and other compensation as may be
reasonably necessary to incentivize management to enhance value to shareholders
of both NAI and Kranzco. The NAI Board and the Kranzco Board will direct each of
their compensation committees to take into consideration the objective set forth
in the previous sentence in establishing compensation levels and performance
criteria for management of NAI and Kranzco. In order to further this objective,
NAI will grant to selected directors, officers, employees and consultants of NAI
ten-year options to purchase an aggregate of 1,472,300 NAI Shares at a price of
$2.00 per NAI Share.

         NAI and Kranzco also agreed to use their best efforts to cause, for a
period of three years from the date of the Intercompany Agreement, (i) Norman
Kranzdorf to serve as NAI's Co-Chairman, (ii) Robert Dennis to serve as NAI's
Chief Financial Officer, and (iii) Michael Kranzdorf to serve as NAI'S Chief
Information Officer. NAI acknowledged in the Intercompany Agreement that Norman
Kranzdorf, Robert Dennis and Michael Kranzdorf, as officers of Kranzco, will
have a primary responsibility to Kranzco and that none of such individuals are
committed to devoting a specific amount of time to NAI's affairs.

Consulting Services

         Pursuant to the terms of the Intercompany Agreement, Kranzco has agreed
to provide NAI with such consulting services relating to management
administrative, corporate, accounting, financial, legal, equity offering,
insurance, tax, data processing, human resources and operational matters as NAI
shall from time to time reasonably request. In consideration for Kranzco
entering into the Intercompany Agreement and providing such consulting and
administrative services, NAI has agreed, during the term of the Intercompany
Agreement or until such earlier date as the consulting arrangement is terminated
in accordance with its terms, to pay Kranzco an annual fee of $500,000, payable
in equal monthly installments on the first day of each month.

REIT Compliance

         Nothing in the Intercompany Agreement obligates any party to take any
action that could cause Kranzco to lose its qualification as a REIT under the
Code.

                                     -52-
Cooperation in Equity Offerings

         The Intercompany Agreement also provides that, if either Kranzco or NAI
desires to engage in a public or private offering of its debt or equity
securities, the other party shall cooperate and provide such information and
personnel as is reasonably required in connection with such offering.

Term

         The Intercompany Agreement has a term of ten years and may be
terminated by a party only if the other party or any affiliate of such other
party is in default of the Intercompany Agreement or any other agreement entered
into by the parties thereto or any of their controlled affiliates, if such
default is material and remains uncured for fifteen days after receipt of notice
thereof.

                               THE DISTRIBUTION

BACKGROUND AND REASONS FOR THE DISTRIBUTION

         Kranzco is a self-administered and self-managed equity REIT engaged in
the business of owning, managing, operating, leasing, acquiring and expanding
neighborhood and community shopping centers and, to a lesser extent,
free-standing retail properties. Kranzco is limited in its activities by the
investment limitations imposed by Federal income tax laws applicable to REITs,
which (i) limit the amount of income that a REIT can realize from certain
services that are not customarily furnished or rendered in connection with the
rental of real property in a particular geographic area, and (ii) limit
Kranzco's ownership in corporations other than REITs and qualified REIT
subsidiaries (a) to 10% of the outstanding voting securities of such
corporation, and (b) in that the value of any one corporation's securities
cannot exceed 5% of the value of Kranzco's total assets. Kranzco believes that
significant opportunities are available to investors in entities which provide
brokerage and Real Estate-Related Services, own properties other than
neighborhood and community shopping centers, and which are not limited in their
activities by the investment limitations imposed by Federal income tax laws
applicable to REITs. Accordingly, in light of the limitations on investments
imposed on REITs, Kranzco believes that effecting the Exchange Offer, the
Distribution, the Rights Offering and the Concurrent Offering, and establishing
an intercompany relationship between Kranzco and NAI will yield significant
benefits to Kranzco and its shareholders similar to those which may be obtained
by investors who are not so limited, while preserving Kranzco's REIT status. For
Kranzco, these benefits include:

         o        increased opportunities to acquire retail properties which
                  become available for sale through the Network, which might not
                  otherwise be available to Kranzco;

         o        greater access to a diverse range of tenants, in order to
                  re-tenant vacant space owned by Kranzco, including access to
                  non-retail tenants looking for space appropriate for office,
                  warehouse or other non-retail uses;

         o        the ability to enter into agreements with NAI to have NAI
                  develop new shopping centers or re-develop distressed shopping
                  centers for sale to Kranzco;

         o        the ability to enter into new geographic areas with the 
                  assistance of NAI's real estate professionals;

         o        NAI disseminating Kranzco's acquisition criteria to Broker
                  Members through the Network, in order to create additional
                  opportunities to purchase retail properties;

         o        increased opportunities to purchase additional retail
                  properties which are included in portfolios with non-retail
                  properties, utilizing NAI to purchase the non-retail
                  properties or find a purchaser for the non-retail properties;

         o        access to NAI's sophisticated, real estate oriented computer
                  network, which includes information on real estate
                  transactions, market conditions and demographics;

                                     -53-
o        the ability to purchase Real Estate-Related Services at 
                  competitive prices;

         o        the ability to own an equity interest in a company which 
                  owns real estate and provides Real Estate-Related Services 
                  which Kranzco, as a REIT, could not directly own or provide; 
                  and

         o        access to local property managers where Kranzco may own retail
                  properties, and the opportunity for Kranzco to manage retail
                  properties owned by NAI.

         NAI operates a network of independently owned, licensed real estate
Broker Members throughout the United States and, more recently, abroad, to
provide commercial real estate services to regional, national and international
Clients. NAI believes that a strategic relationship between companies which
provide real estate brokerage and services, such as NAI, and companies which own
and operate real estate, such as Kranzco, would provide significant benefits and
opportunities. For NAI, the benefits of entering into the strategic relationship
and consummating the Related Transactions (and under certain circumstances, to
the extent proceeds are available through the Rights Offering and the Concurrent
Offering) include:

         o        the opportunity as a public company, to raise additional
                  capital through the Rights Offering and the Concurrent
                  Offering and, to the extent possible, future equity and debt
                  offerings;

         o        the ability to expand its Corporate Services Department, 
                  Investment Sales Department andBroker Services Department;

         o        the ability to invest in or acquire Broker Members or other 
                  real estate service firms inorder to strengthen the Network;

         o        access to new transactions by providing real estate brokerage
                   services to Kranzco through NAI's Network;

         o        the ability to accelerate the development of information 
                  services and technologyinfrastructure to more efficiently 
                  deliver services;

         o        the opportunity to offer to Kranzco Real Estate-Related 
                  Services which NAI may develop;

         o        the opportunity to further develop existing Real 
                  Estate-Related Services and to acquire or develop businesses 
                  that provide Real Estate-Related Services;

         o        the ability to accelerate Network growth in international 
                  markets; 

         o        providing Broker Members the opportunity to manage selected 
                  Kranzco shopping centers; 

         o        the opportunity to enter into agreements with Kranzco to have
                  NAI develop new shopping centers or re-develop distressed 
                  shopping centers for sale to Kranzco; and

         o        expansion of its business through access to the real estate 
                  expertise of Kranzco's management.

         In the past Kranzco and NAI have worked together in a mutually
beneficial relationship. In December 1997, NAI's Investment Sales Department
assisted Kranzco in arranging for the acquisition of five shopping centers,
aggregating approximately 650,000 square feet of GLA, for approximately $44
million. NAI's Investment Sales Department initiated this opportunity, and
assisted Kranzco in acquiring the properties. Kranzco's acquisition of such
properties generated $100,000 in fee income to NAI. Kranzco and NAI expect that
the Intercompany Agreement will set forth a framework for a mutually beneficial
relationship in the future. See "Related Transactions--The Intercompany
Agreement."

         A small number of REITs, operating under tax provisions that no longer
are available, have shares that are "paired" or "stapled" with shares of a
related operating company. The NAI Shares and Kranzco Common Shares are not, and
will not be, paired or stapled in any manner and may be owned and transferred
separately and independently of each other. However, shareholders who own NAI
Shares and Kranzco Common Shares will in effect have the economic equivalent of
a paired investment in NAI and Kranzco.

                                     -54-
The Kranzco Board recognized in its planning that the Distribution
would result in a transaction taxable to Kranzco stockholders (based on
Kranzco's current and accumulated earnings and profits) and possibly to Kranzco
depending on the fair market value of the NAI Shares on the Distribution
Effective Date. Upon review of this and other relevant factors, the Kranzco
Board concluded that the benefits of the Distribution would more than offset any
negative tax consequences of the Distribution. See "Certain United States

Federal Tax Considerations--Material Federal Income Tax Consequences of the
Distribution."

         Since the Distribution will be effected on the same day that Kranzco
acquires the NAI Shares, Kranzco believes that no gain or loss will be
recognized by it in connection with the Distribution because the fair market
value of the NAI Shares should be equal to their tax basis.

DISTRIBUTION AGENT

         The Distribution Agent is First Union National Bank, 1525 West W.T. 
Harris Boulevard, 3C3, Charlotte, North Carolina 28262-1153, telephone: (800)
829-8432.

MANNER OF EFFECTING THE DISTRIBUTION

         Kranzco will effect the Distribution on the Distribution Effective Date
by delivering 11,987,746 NAI Shares, which represents approximately 70.2% of the
outstanding NAI Shares, to the Distribution Agent for distribution to the
holders of the outstanding Kranzco Common Shares and Kranzco Common Share
Equivalents as of the close of business on the Distribution Record Date. The
Distribution will be made on the basis of one NAI Share for each Kranzco Common
Share and one NAI Share for each Kranzco Common Share Equivalent held as of the
close of business on the Distribution Record Date. The NAI Shares will be fully
paid and nonassessable, and the holders thereof will not be entitled to
preemptive rights. See "Description of Securities." It is expected that
certificates representing NAI Shares will be mailed to holders of Kranzco Common
Shares and Kranzco Series B Preferred Shares as soon as practicable after the
Distribution Effective Date.

         HOLDERS OF KRANZCO COMMON SHARES SHOULD NOT SEND CERTIFICATES TO NAI,
KRANZCO OR THE DISTRIBUTION AGENT. THE DISTRIBUTION AGENT WILL MAIL THE STOCK
CERTIFICATES REPRESENTING NAI SHARES AS SOON AS PRACTICABLE AFTER THE
DISTRIBUTION EFFECTIVE DATE. KRANZCO SHARE CERTIFICATES WILL CONTINUE TO
REPRESENT KRANZCO COMMON SHARES AND SERIES B PREFERRED SHARES AFTER THE
DISTRIBUTION IN THE SAME AMOUNT SHOWN ON THE CERTIFICATES.

         No holder of Kranzco Common Shares will be required to pay any cash or
other consideration for the NAI Shares to be received in the Distribution or to
surrender or exchange Kranzco Common Shares or to take any other action in order
to receive NAI Shares pursuant to the Distribution.

RESULTS OF THE DISTRIBUTION

         Upon the consummation of the Distribution, NAI will be an independent
public company which will continue to conduct its business of providing real
estate brokerage and related services to Clients. Kranzco will own approximately
9.8% of the outstanding NAI Shares, Kranzco shareholders will own approximately
70.2% of the outstanding NAI Shares and the persons who owned NAI Shares prior
to the Exchange Offer will own an aggregate of approximately 20% of the NAI
Shares. Although the NAI Shares will be eligible for quotation and trading on
the OTC Bulletin Board after the Distribution, the NAI Shares are not currently
quoted on the OTC Bulletin Board or listed on any national securities exchange
or approved for quotation on any quotation system, and there can be no assurance

that a public market for

                                     -55-
the NAI Shares will develop or provide liquidity. See "Risk
Factors--Determination of Offering Price; Absence of Prior Market; Trading
Prices."

                            THE RIGHTS OFFERING

THE RIGHTS

         NAI is distributing, to the record holders of outstanding NAI Shares as
of __________ __, 1998 (the "Rights Record Date"), including holders of Kranzco
Common Shares and Kranzco Common Share Equivalents who receive NAI Shares in the
Distribution, at no cost to them, transferable Rights to purchase additional NAI
Shares at a Subscription Price of $2.00 per NAI Share. NAI will distribute one
Right for each NAI Share held on the Rights Record Date. Each Right will entitle
its Holder to purchase one NAI Share. The Rights to purchase NAI Shares pursuant
to the Basic Subscription Privilege and the Oversubscription Privilege will be
evidenced by transferable subscription certificates (the "Subscription
Certificates"). An aggregate of 17,076,560 Underlying Shares will be sold if all
Rights are exercised. The Finns, jointly and severally, agreed in the Exchange
Agreement, to exercise Rights to purchase an aggregate of 500,000 NAI Shares and
Kranzco agreed to exercise such number of Rights to purchase NAI Shares that
would result in Kranzco owning 9.8% of the issued and outstanding NAI Shares,
before the issuance of any Additional Shares. To the extent Underlying Shares
are not purchased in the Rights Offering such unsubscribed shares will be
offered to the Executive Group and the Broker Member Group in the Concurrent
Offering. In order to ensure that the Broker Member Group will have the right to
purchase NAI Shares, NAI has authorized an additional 2,000,000 NAI Shares for
issuance pursuant to the Broker Member Group Subscription Privilege. There is no
minimum number of Underlying Shares required to be sold as a condition to the
consummation of the Rights Offering or the Concurrent Offering.

SUBSCRIPTION PRIVILEGES

         Basic Subscription Privilege. Each Right will entitle the Holder
thereof to receive, upon payment of the Subscription Price, one NAI Share.
Certificates representing NAI Shares purchased pursuant to the Basic
Subscription Privilege will be delivered to subscribers as soon as practicable
after the closing date, irrespective of whether the Subscription Privilege is
exercised immediately prior to the Expiration Date or earlier. Holders
exercising their Subscription Privilege will not be stockholders of record with
respect to the shares issuable pursuant to such Subscription Privilege until the
closing of the Rights Offering, which is anticipated to occur five Business Days
after the Expiration Date. The term "Business Day" shall mean any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
banking institutions in New York City are authorized or required by law,
regulation or executive order to close.

         Oversubscription Privilege. Subject to the allocation described below,
each Right also carries the right to subscribe at the Subscription Price for any
Underlying Shares not subscribed for through the exercise of Basic Subscription
Privileges by other Holders. If the remaining Underlying Shares are not
sufficient to satisfy all subscriptions pursuant to the Oversubscription
Privilege, such Underlying Shares will be allocated pro rata (subject to the
elimination of fractional shares) among those Holders exercising the
Oversubscription Privilege, in proportion, not to the number of shares requested
pursuant to the Oversubscription Privilege, but to the number of shares each
Holder exercising the Oversubscription Privilege subscribed for pursuant to the
Basic Subscription Privilege; provided, however, that if such pro rata
allocation results in any Holder being allocated a greater number of Underlying
Shares than such Holder subscribed for pursuant to the exercise of such holder's
Oversubscription Privilege, then such Holder will be allocated only such number
of Underlying Shares as such Holder subscribed for and the remaining Underlying
Shares will be allocated among all other Holders exercising the Oversubscription
Privilege. Only beneficial holders who exercise the Basic Subscription privilege
in full will be entitled to exercise the Oversubscription Privilege.
Certificates representing the Underlying Shares purchased

                                     -56-
pursuant to the Oversubscription Privilege will be delivered to subscribers as
soon as practicable after the closing date and after all prorations have been
effected.

         The Basic Subscription Privilege and the Oversubscription Privilege are
referred to herein as the "Subscription Privileges."

EXPIRATION DATE

         The Rights will expire at 5:00 p.m., New York time, on __________ __,
1998 unless extended by NAI from time to time. Notwithstanding the foregoing,
the Expiration Date in no event shall be later than __________ __, 1998, except
that NAI reserves the right to extend the exercise period on one or more
occasions if the Board determines that the occurrence of a material event
necessitates amendment of the Registration Statement or recirculation of the
Prospectus that forms a part thereof in order to permit time for the
distribution of such information. After the Expiration Date, unexercised Rights
will be null and void. NAI will not be obligated to honor any purported exercise
of Rights received by the Subscription Agent after the Expiration Date,
regardless of when the documents relating to such exercise were sent, except
pursuant to the Guaranteed Delivery Procedures described below.

EXERCISE OF RIGHTS

         Rights may be exercised by delivering to the Subscription Agent, on or
prior to 5:00 p.m., New York time, on the Expiration Date, the properly
completed and executed Subscription Certificate evidencing such Rights with any
required signatures guaranteed, together with payment in full of any Underlying
Shares being subscribed for pursuant to the Subscription Privileges (except as
permitted pursuant to clause (iii) of the next sentence). Such payment in full

must be by: (i) check or bank draft drawn upon a U.S. bank or postal telegraphic
or express money order payable to First Union National Bank, as Subscription
Agent; or (ii) wire transfer of funds to the account maintained by the
Subscription Agent for such purpose; or (iii) in such other manner as NAI may
approve in writing in the case of persons acquiring Underlying Shares at an
aggregate Subscription Price of $500,000 or more, provided in each case that the
full amount of such Subscription Price is received by the Subscription Agent in
currently available funds within five Business Days following the Expiration
Date (the payment method under (iii) being an "Approved Payment Method").
Payment of the Subscription Price will be deemed to have been received by the
Subscription Agent only upon (a) clearance of any uncertified check, (b) receipt
by the Subscription Agent of any certified check or bank draft drawn upon a
United States bank or of any postal, telegraphic or express money order, (c)
receipt of good funds in the Subscription Agent's account designated above, or
(d) receipt of good funds by the Subscription Agent through an Approved Payment
Method.

         If paying by uncertified personal check, please note that the funds
paid thereby may take at least five business days to clear. Accordingly, Holders
who wish to pay the Subscription Price by means of uncertified personal check
are urged to make payment sufficiently in advance of the Expiration Date to
ensure that such payment is received and clears by such date and are urged to
consider payment by means of certified or cashier's check, money order or wire
transfer of funds.

                                     -57-
The address to which the Subscription Certificates and payment of the
Subscription Price should be delivered is:

         First Union National Bank
         Attn: Reorganization Department
         1525 West W.T. Harris Boulevard 3C3
         Charlotte, N.C. 26262
         Tel. No.: (800) 829-8432
         Facsimile No.:(704) 590-7598

         Funds received in payment of the Subscription Price for the Underlying
Shares subscribed for pursuant to the Oversubscription Privilege will be held in
a segregated account pending issuance of such Underlying Shares. If a Holder
exercising an Oversubscription Privilege is allocated less than all of the
Underlying Shares that such Holder wished to subscribe for, the excess funds
paid by such Holder in respect of the Subscription Price for shares not issued
shall be returned by mail without interest or deduction as soon as practicable
after the closing date.

         A holder who holds NAI Shares for the account of others, such as a
broker, a trustee or a depository for securities, should notify the respective
beneficial owners of such shares as soon as possible to ascertain such
beneficial owner's intentions and to obtain instructions with respect to the
Rights. If the beneficial owner so instructs, the record Holder of such Rights
should complete the Subscription Certificate and submit it to the Subscription

Agent with the proper payment. In addition, the beneficial owner of NAI Shares
or Rights held through such a holder of record should contact the Holder and
request the Holder to effect transactions in accordance with the beneficial
owner's instructions.

         Unless a Subscription Certificate (i) provides that the NAI Shares to
be issued pursuant to the exercise of Right represented thereby are to be
delivered to the Holder or (ii) is submitted for the account of an Eligible
Guarantor Institution (as defined below), signatures on such Subscription
Certificate must be guaranteed by an Eligible Guarantor Institution.

         If either the number of Underlying Shares being subscribed for pursuant
to the Basic Subscription Privilege is not specified on the Subscription
Certificate, or the amount delivered is not enough to pay the Subscription Price
for all Underlying Shares stated to be subscribed for, the number of Underlying
Shares subscribed for will be assumed to be the maximum amount that could be
subscribed for upon payment of such amount. If the number of Underlying Shares
being subscribed for is not specified, or payment of the Subscription Price for
the indicated number of Rights that are being exercised exceeds the required
Subscription Price, the payment will be applied, until depleted, to subscribe
for Underlying Shares in the following order: (i) to subscribe for the number of
Underlying Shares indicated, if any, pursuant to the Basic Subscription
Privilege, (ii) to subscribe for Underlying Shares until the Basic Subscription
Privilege has been fully exercised with respect to all of the Rights represented
by the Subscription Certificate; and (iii) to subscribe for additional
Underlying Shares pursuant to the Oversubscription Privilege (subject to any
applicable proration).

         The Instructions included in the Subscription Certificates should be
read carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO
NAI.

         THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE RIGHTS HOLDER, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH CERTIFICATES
AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE

                                     -58-
ALLOWED TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT
PRIOR TO 5:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, THE RIGHTS HOLDER
IS STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR
CASHIERS CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.

         All questions concerning the timeliness, validity, form and eligibility
of any exercise of Rights will be determined by NAI, whose determinations will
be final and binding. NAI, in its sole discretion, may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as it may determine, or reject the purported exercise of any Right.
Subscriptions will not be deemed to have been received or accepted until all

irregularities have been waived or cured within such time as NAI determines in
its sole discretion.

         Any questions or requests for assistance concerning the method of
exercising Rights or requests for additional copies of this Prospectus or the
Instructions or the Notice of Guaranteed Delivery should be directed to the
Subscription Agent, telephone number (800) 829-8432.

LATE DELIVERY OF SUBSCRIPTION CERTIFICATES

         If a Holder wishes to exercise Rights, but time will not permit such
Holder to cause the Subscription Certificates evidencing such Rights to reach
the Subscription Agent on or prior to the Expiration Date, such Rights may
nevertheless be exercised if all of the following conditions (the "Guaranteed
Delivery Procedures") are met:

                  (i) such Holder has caused payment in full of the Subscription
         Price for each Underlying Share being subscribed for pursuant to
         Subscription Certificate to be delivered to the Subscription Agent on
         or prior to the Expiration Date;

                  (ii) the Subscription Agent receives, on or prior to the
         Expiration Date, a guaranteed notice (a "Notice of Guaranteed
         Delivery"), substantially in the form provided with the Instructions as
         to Use of New America International, Inc. Subscription Certificates
         (the "Instructions") distributed with the Subscription Certificates,
         from an "Eligible Guarantor Institution" (as defined in Rule 17Ad-15
         under the Exchange Act), stating the name of the exercising Holder, the
         number of Rights represented by the Subscription Certificate(s) held by
         such exercising Holder, the number of Underlying Shares being
         subscribed for pursuant to the Subscription Privileges and guaranteeing
         the delivery to the Subscription Agent of any Subscription
         Certificate(s) evidencing such Rights within three Business Days
         following the date of the Notice of Guaranteed Delivery; and

                  (iii) the properly completed Subscription Certificate(s), with
         any required signatures guaranteed, is received by the Subscription
         Agent within three Business Days following the date of the Notice of
         Guaranteed Delivery relating thereto. The Notice of Guaranteed Delivery
         may be delivered to the Subscription Agent in the same manner as
         Subscription Certificates at the addresses set forth above, or may be
         transmitted to the Subscription Agent by facsimile transmission
         (telecopy number (704) 590-7598). Additional copies of the form of
         Notice of Guaranteed Delivery are available upon request from the
         Subscription Agent, whose address and telephone number are set forth
         under "Subscription Agent" below.

                                     -59-
NO REVOCATION

         ONCE A HOLDER OF RIGHTS HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE
OR THE OVERSUBSCRIPTION PRIVILEGE SUCH EXERCISE MAY NOT BE REVOKED.

METHOD OF TRANSFERRING RIGHTS

         The Rights evidenced by a single Subscription Certificate may be
transferred in whole by endorsing the Subscription Certificate for transfer in
accordance with the accompanying instructions. A portion of the Rights evidenced
by a single Subscription Certificate may be transferred by delivering to the
Subscription Agent a Subscription Certificate properly endorsed for transfer,
with instructions to register such portion of the Rights evidenced thereby in
the name of the transferee and to issue a new Subscription Certificate to the
transferee evidencing such transferred Rights). In such event, a new
Subscription Certificate evidencing the balance of the Rights will be issued to
the Holder or, if the Holder so instructs, to an additional transferee.

         Holders wishing to transfer all or a portion of their Rights should
allow a sufficient amount of time prior to the Expiration Date for (i) the
transfer instruction to be received and processed by the Subscription Agent,
(ii) a new Subscription Certificate to be issued and transmitted to the
transferee or transferees with respect to the transferred Rights, and to the
transferor with respect to retained Rights, if any, and (iii) the Rights
evidenced by such new Subscription Certificates to be exercised or sold by the
recipients thereof. If time does not permit a transferee of a Right who wishes
to exercise its Right to deliver its Subscription Certificate to the
Subscription Agent on or before the Expiration Date, such transferee should make
use of the Guaranteed Delivery procedure described under "The Rights Offering --
Exercise of Rights." Neither NAI nor the Subscription Agent shall have any
liability to a transferee or transferor or Rights if Subscription Certificates
or new Subscription Certificates are not received in time for exercise or sale
prior to the Expiration Date.

         All commissions, fees and other expenses (including brokerage
commissions and transfer taxes) incurred in connection with the purchase, sale
or exercise of Rights will be for the account of the transferor or subscriber of
the Rights, and none of such commissions, fees or expenses will be paid by NAI
or the Subscription Agent.

SUBSCRIPTION AGENT

         NAI has appointed First Union National Bank as Subscription Agent for
the Rights Offering. Any questions or requests for additional copies of this
Prospectus or the Notice of Guaranteed Delivery may be directed to the
Subscription Agent at the telephone number and address below. The Subscription
Agent's address, which is the address to which the Subscription Certificates and
payment of the Subscription Price should be delivered, as well as the address to
which Notice of Guaranteed Delivery must be delivered, and the Subscription
Agent's telephone number and facsimile number, are:

         First Union National Bank
         Attn: Reorganization Department
         1525 West W.T. Harris Boulevard 3C3
         Charlotte, N.C.  28262
         Tel. No.: (800) 829-8432
         Facsimile No.:(704) 590-7598

         NAI will pay the fees and expenses of the Subscription Agent, and will
also agree to indemnify it from any liability which it may incur in connection
with the Rights Offering.

                                     -60-
THE CONCURRENT OFFERING

ThE CONCURRENT PRIVILEGES

         Executive Group Subscription Privilege. Simultaneously with the Rights
Offering, NAI is offering to the Executive Group the right to purchase any
Underlying Shares that are not otherwise subscribed for pursuant to the Rights
Offering ("Excess Shares"), at the Subscription Price, after the Basic
Subscription Privileges and Oversubscription Privileges have been fulfilled. If
the number of Excess Shares is not sufficient to satisfy all subscriptions
pursuant to the Executive Group Subscription Privilege, such Excess Shares will
be allocated pro rata (subject to the elimination of fractional shares) among
those exercising the Executive Group Subscription Privilege, in proportion to
the number of NAI Shares requested pursuant to the Executive Group Subscription
Privilege. There is no assurance that any Excess Shares will be available for
purchase by the Executive Group pursuant to the Executive Group Subscription
Privilege.

         Broker Member Group Subscription Privilege. Simultaneously with the
Rights Offering, NAI is offering to the Broker Member Group, the right to
purchase any Excess Shares, at the Subscription Price, after the Executive Group
Subscription Privileges have been fulfilled. NAI has authorized an additional
2,000,000 Additional Shares in order to ensure that the Broker Member Group will
have the right to purchase an aggregate of 2,000,000 NAI Shares. If, after
fulfillment of the Executive Group Subscription Privilege, the number of Excess
Shares and Additional Shares is not sufficient to satisfy all subscriptions
pursuant to the Broker Member Group Subscription Privilege, such Excess Shares
and Additional Shares will be allocated pro rata (subject to the elimination of
fractional shares) among those exercising the Broker Member Group Subscription
Privilege, in proportion to the number of NAI Shares requested pursuant to the
Broker Member Group Subscription Privilege. There is no assurance that any
person subscribing pursuant to the Broker Member Group Subscription Privilege
will receive all of the NAI Shares for which such person subscribes.

         The Executive Group Subscription Privilege will be evidenced by
non-transferable subscription forms (the "Executive Group Subscription Form").
The Broker Member Group Subscription Privilege will be evidenced by
non-transferable subscription forms (the "Broker Member Subscription Form,"
together with the Executive Group Subscription Form, a "Subscription Form"). The

Executive Group Subscription Privilege and the Broker Member Group Subscription
Privilege are collectively referred to herein as the "Concurrent Privileges."
Certificates representing the Excess Shares or Additional Shares, as the case
may be, purchased pursuant to the Executive Group Subscription Privilege or the
Broker Member Group Subscription Privilege will be delivered to subscribers as
soon as practicable after the closing date and after all prorations have been
effected. See "Plan of Distribution."

EXPIRATION DATE

         The Concurrent Privileges will expire at 5:00 p.m., New York time, on
the Expiration Date for the Rights, currently __________ __, 1998 unless
extended by NAI from time to time. Notwithstanding the foregoing, the Expiration
Date in no event shall be later than __________ __, 1998, except that NAI
reserves the right to extend the exercise period on one or more occasions if the
Board determines that the occurrence of a material event necessitates amendment
of the Registration Statement or recirculation of the Prospectus that forms a
part thereof in order to permit time for the distribution of such information.
After the Expiration Date, unexercised Concurrent Privileges will be null and
void. NAI will not be obligated to honor any purported exercise of the
Concurrent Privileges received by the Subscription Agent after the Expiration
Date, regardless of when the documents relating to such exercise were sent.

                                     -61-
EXERCISE OF CONCURRENT PRIVILEGES

         The Concurrent Privileges may be exercised by delivering to the
Subscription Agent, on or prior to 5:00 p.m., New York time, on the Expiration
Date, the properly completed and executed Subscription Form, evidencing such
Concurrent Privilege, together with payment in full of any Excess Shares or
Additional Shares, as the case may be, pursuant to the Concurrent Privileges
(except as permitted pursuant to clause (iii) of the next sentence). Such
payment in full must be by: (i) check or bank draft drawn upon a U.S. bank or
postal telegraphic or express money order payable to First Union National Bank,
as Subscription Agent; or (ii) wire transfer of funds to the account maintained
by the Subscription Agent for such purpose; or (iii) any Approved Payment
Method. Payment of the Subscription Price will be deemed to have been received
by the Subscription Agent only upon (a) clearance of any uncertified check, (b)
receipt by the Subscription Agent of any certified check or bank draft drawn
upon a United States bank or of any postal, telegraphic or express money order,
(c) receipt of good funds in the Subscription Agent's account designated above,
or (d) receipt of good funds by the Subscription Agent through an Approved
Payment Method.

         If paying by uncertified personal check, please note that the funds
paid thereby may take at least five business days to clear. Accordingly, persons
who wish to pay the Subscription Price by means of uncertified personal check
are urged to make payment sufficiently in advance of the Expiration Date to
ensure that such payment is received and clears by such date and are urged to
consider payment by means of certified or cashier's check, money order or wire
transfer of funds.

         The address to which the Subscription Forms, and payment of the
Subscription Price should be delivered is:

         First Union National Bank
         Attn: Reorganization Department
         1525 West W.T. Harris Boulevard 3C3
         Charlotte, N.C. 26262
         Tel. No.: (800) 829-8432
         Facsimile No.: (704) 590-7598

         Funds received in payment of the Subscription Price for the Excess
Shares and/or Additional Shares subscribed for pursuant to the Concurrent
Privileges will be held in a segregated account pending issuance of such Excess
Shares or Additional Shares, as the case may be. If a person exercising a
Concurrent Privilege is allocated less than all of the Excess Shares or
Additional Shares, as the case may be, that such Holder wished to subscribe for,
the excess funds paid by such Holder in respect of the Subscription Price for
shares not issued shall be returned by mail without interest or deduction as
soon as practicable after the closing date.

         If either the number of Excess Shares being subscribed for pursuant to
the Concurrent Privileges is not specified on the Subscription Form, or the
amount delivered is not enough to pay the Subscription Price for all Excess
Shares stated to be subscribed for, the number of Excess Shares subscribed for
will be assumed to be the maximum amount that could be subscribed for upon
payment of the amount delivered with the Subscription Form. If the number of
Excess Shares or Additional Shares, as the case may be, being subscribed for is
not specified, or payment of the Subscription Price for the indicated number of
Excess Shares or Additional Shares exceeds the required Subscription Price, the
payment will be applied, until depleted, to subscribe for Excess Shares or
Additional Shares, as the case may be.

         The Instructions included in the Subscription Forms should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION FORMS TO NAI.

                                     -62-
THE METHOD OF DELIVERY OF SUBSCRIPTION FORMS AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE HOLDER OF SUCH SUBSCRIPTION FORMS, BUT IF SENT BY MAIL IT IS RECOMMENDED
THAT SUCH CERTIFICATES AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE
ALLOWED TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT
PRIOR TO 5:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, THE SUBSCRIBER IS
STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIERS
CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.

         All questions concerning the timeliness, validity, form and eligibility
of any exercise of Concurrent Privileges will be determined by NAI, whose
determinations will be final and binding. NAI, in its sole discretion, may waive

any defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Concurrent Privileges. Subscriptions will not be deemed to have been received or
accepted until all irregularities have been waived or cured within such time as
NAI determines in its sole discretion.

         Any questions or requests for assistance concerning the method of
exercising Concurrent Privileges or requests for additional copies of this
Prospectus should be directed to the Subscription Agent, telephone number (800)
829-8432.

NO REVOCATION

         ONCE A MEMBER OF THE EXECUTIVE GROUP OR BROKER MEMBER GROUP HAS
EXERCISED THE EXECUTIVE GROUP SUBSCRIPTION PRIVILEGE OR THE BROKER MEMBER GROUP
SUBSCRIPTION PRIVILEGE, AS THE CASE MAY BE, SUCH EXERCISE MAY NOT BE REVOKED.

NON TRANSFERABILITY OF CONCURRENT PRIVILEGES

         THE EXECUTIVE GROUP SUBSCRIPTION FORM AND THE BROKER MEMBER GROUP
SUBSCRIPTION FORM ARE NOT TRANSFERABLE.

SUBSCRIPTION AGENT

         NAI has appointed First Union National Bank as Subscription Agent for
the Concurrent Offering. Any questions or requests for additional copies of this
Prospectus may be directed to the Subscription Agent at the telephone number and
address below. The Subscription Agent's address, which is the address to which
the Subscription Forms and payment of the Subscription Price should be
delivered, and the Subscription Agent's telephone number and facsimile number,
are:

         First Union National Bank
         Attn:  Reorganization Department
         1525 West W.T. Harris Boulevard 3C3
         Charlotte, N.C.  28262
         Tel. No.: (800) 829-8432
         Facsimile No.: (704) 590-7598

                                     -63-
NAI will pay the fees and expenses of the Subscription Agent, and will
also agree to indemnify it from any liability which it may incur in connection
with the Concurrent Offering.

               CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

         The following general discussion summarizes certain of the material
U.S. federal income tax aspects of the Rights Offering, the Concurrent Offering
and the Distribution. This discussion is a summary for general information only
and does not consider all aspects of U.S. federal income tax that may be

relevant to an NAI stockholder or a Kranzco shareholder in light of such
stockholder's or shareholder's personal circumstances.

         This discussion is limited to the U.S. federal income tax consequences
relevant to (i) a NAI Stockholder receiving Rights, (ii) a Kranzco shareholder
receiving NAI Shares in the Distribution or (iii) a member of the Executive
Group or Broker Member Group acquiring Excess Shares or Additional Shares
pursuant to the Concurrent Offering, and, in each case, who is (i) a citizen or
resident (as defined in Section 7701(b)(1) of the Code) of the United States,
(ii) treated as a domestic corporation or a domestic partnership, or (iii) an
estate or trust other than a "foreign estate" or "foreign trust" as defined in
Section 7701(a)(31) of the Code (a "U.S. Holder"). This discussion does not
address the tax consequences to a holder that is not a U.S. Holder. This
discussion is limited to (i) NAI Stockholders who hold NAI Shares, and will hold
the Rights and any NAI Shares acquired upon the exercise of Rights as capital
assets within the meaning of Section 1221 of the Code, and (ii) Kranzco
shareholders who hold Kranzco Common Shares and Kranzco Common Share Equivalents
as capital assets within the meaning of Section 1221 of the Code. This
discussion also does not address the U.S. federal income tax consequences to NAI
Stockholders or Kranzco shareholders subject to special treatment under the U.S.
federal income tax laws, such as dealers in securities or foreign currency,
tax-exempt entities, banks, thrift institutions, insurance companies or other
financial institutions, persons that hold Kranzco Common Shares and Kranzco
Common Share Equivalents or the Rights or NAI Shares acquired by exercising
Rights as part of a "straddle," a "hedge" against currency risk or a "conversion
transaction," persons that have a "functional currency" other than the U.S.
dollar, and investors in pass-through entities. Moreover, the effect of any
applicable state, local or foreign tax laws is not discussed.

         This discussion is based on the Code, existing and proposed regulations
thereunder, and current administrative rulings and court decisions. All the
foregoing is subject to change, possibly on a retroactive basis, and any such
change could affect the continuing validity of this discussion.

         EACH NAI STOCKHOLDER , KRANZCO SHAREHOLDER, AND PARTICIPANT IN THE
CONCURRENT OFFERING IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR CONCERNING
THE APPLICATION OF FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION, TO ITS PARTICULAR SITUATIONS. THE CONTENTS
OF THIS PROSPECTUS ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS OR TAX ADVICE.
EACH NAI STOCKHOLDER, KRANZCO SHAREHOLDER, AND PARTICIPANT IN THE CONCURRENT
OFFERING SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR AND/OR TAX ADVISOR AS
TO LEGAL, BUSINESS OR TAX ADVICE.

                                     -64-
FEDERAL INCOME TAXATION OF THE RIGHTS OFFERING

         Distribution of the Rights

                  Holders of NAI Shares will not recognize taxable income for
federal income tax purposes in connection with the receipt of the Rights.

         Stockholder Basis and Holding Period of the Rights

                  Except as provided in the following sentence, the basis of the
Rights received by a NAI Stockholder as a distribution with respect to such
stockholder's NAI Shares will be zero. If, however, either (i) the fair market
value of the Rights on the date that the Rights are distributed is 15% or more
of the fair market value of the NAI Shares with respect to which they are
received, or (ii) the stockholder properly elects, in his or her federal income
tax return for the taxable year in which the Rights are received, to allocate
basis, then part of his or her basis in NAI Shares will be allocated between the
NAI Shares and the Rights in proportion to the fair market value of each on the
date of the Rights Offering.

                  The holding period of a stockholder with respect to the Rights
received as a distribution on such stockholder's NAI Shares will include the
stockholder's holding period for the NAI Shares with respect to which the Rights
were issued.

         Sale of the Rights

                  A NAI Stockholder who sells the Rights received in the Rights
Offering prior to exercise will recognize gain or loss equal to the difference
between the amount realized on the sale and such stockholder's adjusted basis
(if any) in the Rights sold. Such gain or loss will be capital gain or loss if
gain or loss from a sale of NAI Shares held by such stockholder would be
characterized as capital gain or loss at the time of such sale.

                  Generally such capital gain or loss will be classified as
short-term if the stockholder's holding period in the Rights is one year or less
and long-term if the stockholder's holding period in the Rights is more than one
year. In general, under current law, net long-term capital gains are subject to
a maximum marginal tax rate of 28% for individuals, estates and trusts if the
holding period is more than one year but not more than 18 months, and a maximum
marginal tax rate of 20% if the holding period is more than 18 months. Net short
term capital gains are taxed at the same rates as ordinary income. An individual
may deduct only $3,000 of net capital losses (net of capital gains) each year.

         Lapse of the Rights

                  NAI Stockholders who allow the Rights received by them to
lapse will not recognize any gain or loss, and no adjustment will be made to the
basis of the NAI Shares, if any, owned by such stockholders.

         Exercise of the Rights, Basis and Holding Period of Shares

                  NAI Stockholders will not recognize any gain or loss upon the
exercise of Rights. The basis of the NAI Shares acquired through exercise of the
Rights will be equal to the sum of the price paid therefor and the stockholder's
basis in such Rights (if any).

                                     -65-
A NAI Stockholder's holding period for the NAI Shares acquired
through exercise of the Rights will begin on the date the Rights are exercised.

         Sale of Shares

                  The sale of NAI Shares acquired through exercise of the Rights
will result in the recognition of gain or loss to the NAI Stockholder in an
amount equal to the difference between the amount realized on the sale and the
stockholder's adjusted basis in the NAI Shares. Gain or loss on the sale of such
NAI Shares will be classified capital gain or loss taxable in the manner
discussed above in "Sale of the Rights."

         Backup Withholding

                  A U.S. Holder of Rights or NAI Shares may be subject to
"backup withholding" at a rate of 31% with respect to certain "reportable
payments," including dividend payments and, under certain circumstances,
proceeds from the disposition of Rights or NAI Shares. These backup withholding
rules apply if the U.S. Holder, among other things, (i) fails to furnish a
social security number or other taxpayer identification number ("TIN") certified
under penalties of perjury within a reasonable time after the request therefor,
(ii) furnishes an incorrect TIN, (iii) fails to report properly interest or
dividends, or (iv) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN furnished is the
correct number and that such U.S. Holder is not subject to backup withholding. A
U.S. Holder who does not provide NAI with its correct TIN also may be subject to
penalties. Any amount withheld from a payment to a U.S. Holder under the backup
withholding rules is creditable against the U.S. Holder's federal income tax
liability, provided the required information is furnished to the Service. Backup
withholding will not apply, however, with respect to payments made to certain
holders, including corporations and tax-exempt organizations, provided their
exemption from backup withholding is properly established.

         NAI will report to the U.S. Holders of Rights or NAI Shares and to the
Service the amount of any "reportable payments" for each calendar year and the
amount of tax withheld, if any, with respect to such payments.

FEDERAL INCOME TAXATION OF THE DISTRIBUTION

         Tax Consequences to Kranzco

                  To the extent the fair market value of the NAI Shares
distributed in the Distribution to Kranzco Shareholders exceeds Kranzco's tax
basis in such shares, gain will be recognized by Kranzco. Since the Distribution
will be effected on the same day that Kranzco acquires the NAI Shares (in an
arm's length transaction), Kranzco believes that no gain or loss will be
recognized by it in connection with the Distribution because the fair market
value of the NAI Shares should be equal to their tax basis. Assuming Kranzco
qualifies as a REIT and has a dividends paid deduction for distributions to its
shareholders at least equal to its REIT taxable income (as computed before
taking into account the dividends paid deduction), no REIT level tax will be
incurred on account of the Distribution. In the unlikely event Kranzco
recognizes gain in connection with the Distribution, it is believed that any
such gain will not cause Kranzco to fail to meet any of the income tests that a

REIT must satisfy or to incur any significant tax liabilities.

                                     -66-
Tax Consequences to Kranzco Shareholders

                  The Kranzco Distribution. The distribution of NAI Shares will
                  -------------------------
be taxable to Kranzco Shareholders to the same extent as any other distribution
made by Kranzco to its shareholders. Thus, so long as Kranzco qualifies for
taxation as a REIT, distributions with respect to its shares of beneficial
interest (the "Kranzco Shares"), including the Distribution, made out of current
or accumulated earnings and profits allocable thereto (and not designated as
capital gain dividends) will be includible by the shareholders as ordinary
income for Federal income tax purposes. For this purpose, the current and
accumulated earnings and profits of Kranzco will be allocated first to
distributions with respect to Series A-1 Preferred Shares, Series B Preferred
Shares, Series C Preferred Shares, Series D Preferred Shares and then to
distributions with respect to Kranzco Common Shares. None of these distributions
will be eligible for the dividends received deduction for corporate
shareholders. Distributions that are designated as capital gain dividends will
be taxed as long-term capital gains (to the extent they do not exceed Kranzco's
actual net capital gain for the taxable year) without regard to the period for
which the shareholder has held his shares. For a U.S. shareholder who is an
individual or an estate or trust, such capital gain dividends generally will be
taxable at the 28% rate applicable to mid-term capital gain (i.e., gains from
the sale of capital assets held for more than one year but not more than 18
months) except to the extent Kranzco designates the capital gain dividend as a
20% rate distribution or a 25% rate distribution, as the case may be, based on
certain IRS guidelines. Corporate shareholders may be required to treat up to
20% of certain capital gain dividends as ordinary income.

         Effective for Kranzco's taxable years beginning on and after January 1,
1998, if Kranzco elects to retain and pay income tax on any net long term
capital gain, domestic shareholders of Kranzco would include in their income as
long term capital gain their proportionate share of such net long term capital
gain. A domestic shareholder would also receive a refundable tax credit for such
shareholder's proportionate share of the tax paid by Kranzco on such retained
capital gains and an increase in its basis in the shares of Kranzco in an amount
equal to the shareholder's includible capital gains less its share of the tax
deemed paid.

         Distributions in excess of current or accumulated earnings and profits
will not be taxable to a shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's Kranzco Shares. Shareholders will be
required to reduce the tax basis of their Kranzco Shares by the amount of such
distributions until such basis has been reduced to zero, after which such
distributions will be taxable as capital gain (ordinary income in the case of a
shareholder who holds his Kranzco Shares as a dealer). The tax basis as so
reduced will be used in computing the capital gain or loss, if any, realized
upon sale of the Kranzco Shares. Any loss upon a sale or exchange of Kranzco
Shares by a shareholder who held such Kranzco Shares for six months or less
(after applying certain holding period rules) will generally be treated as a

long-term capital loss to the extent such shareholder previously received
capital gain distributions with respect to such Kranzco Shares.

         Management projects that for a typical Kranzco common shareholder, the
Distribution likely will result in an increase in the shareholder's return of
capital and capital gain, but this result cannot be assured.

         Shareholders may not include in their individual Federal income tax
returns any net operating losses or capital losses of Kranzco. In addition, any
distribution declared by Kranzco in October, November or December of any year
payable to a shareholder of record on a specified date in any such month shall
be treated as both paid by Kranzco and received by the shareholder on December
31 of such year, provided that the distribution is actually paid by Kranzco no
later than January 31 of the following

                                     -67-
year. Kranzco may be required to withhold a portion of capital gain
distributions to any shareholders who fail to certify their non-foreign status
to Kranzco.

                  Basis of NAI Shares. A Kranzco shareholder's basis in the NAI
Shares received in the Distribution will equal the fair market value of such NAI
Shares, at the time of the Distribution.

                  Sale or Exchange of NAI Shares. Upon the sale or exchange of
NAI Shares to or with a person other than NAI, a U.S. Holder will recognize
capital gain or loss equal to the difference between the amount realized on such
sale or exchange and the holder's adjusted tax basis in such shares. Any capital
gain or loss recognized by an individual, estate or trust will generally be
treated as mid-term capital gain or loss, taxable at a maximum rate of 28%, if
the holder held such shares for more than one year but not more than 18 months,
or as net adjusted capital gain or loss, taxable at a maximum rate of 20%, if
the holder held such shares for more than 18 months.

         Backup Withholding

         A noncorporate U.S. Holder of Kranzco Shares who is not otherwise
exempt from backup withholding may be subject to backup withholding at the rate
of 31% with respect to distributions paid on, or the proceeds of a sale,
exchange or redemption of, the Kranzco Shares. Generally, backup withholding
applies only when the taxpayer (i) fails to furnish or certify his correct
taxpayer identification number to the payor in the manner requested, (ii) is
notified by the IRS that he has failed to report payments of interest or
dividends properly, or (iii) under certain circumstances, fails to certify that
he has not been notified by the IRS that he is subject to backup withholding for
failure to report interest or dividend payments. Any amounts withheld under the
backup withholding rules from a payment to a U.S. Holder will be allowed as a
credit against the holder's federal income tax liability or as a refund,
provided that the required information is furnished to the IRS. Holders should
consult their own tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining any applicable exemption.

FEDERAL INCOME TAXATION OF THE CONCURRENT OFFERING

         To the extent Underlying Shares are not purchased by NAI Stockholders
in the Rights Offering, the remaining Excess Shares, will be subject to purchase
first, pursuant to the Management Subscription Privilege and second, pursuant to
the Broker Member Group Subscription Privilege. Although not entirely clear, the
right to purchase Excess Shares, as well as Additional Shares, pursuant to the
Concurrent Privileges will be treated for Federal income tax purpose as
non-qualified stock options. As such, there are no Federal income tax
consequences at the time the Excess Shares or Additional Shares are offered
pursuant to the Concurrent Privileges. Upon exercise of a Right, the holder will
recognize as ordinary income an amount equal to the excess, if any, of the fair
market value of the NAI Shares on the date of exercise over the exercise price
paid to acquire such shares. Withholding taxes may be withheld by NAI in
connection with the recognition of such ordinary income. NAI will be allowed a
tax deduction in like amount. The tax basis of NAI Shares acquired through
exercise of the Concurrent Privileges will equal the price paid therefor and the
holding period of such NAI Shares will begin on the date of exercise. Gain or
loss on the sale of such NAI Shares will be classified as capital gain or loss
taxable in the manner discussed in "--Federal Income Taxation of the Rights
Offering--Sale of the Rights."

                                     -68-
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

         NAI's Board of Directors consists of eight members who are divided into
three classes as noted below. Class I consists of two directors whose terms will
expire at the 1999 Annual Meetings of Shareholders. Classes II and III each
consist of three directors whose terms will expire at the 2000 and the 2001
Annual Meetings of Shareholders, respectively. The names and ages of the
directors and executive officers of NAI and the positions held by them are set
forth in the following table:

       Name           Age                  Position                 Term Expires
       ----           ---                  --------                 ------------
Gerald C. Finn        67  Co-Chairman of the Board, Chief Executive     2001
                          Officer and Director

Jeffrey M. Finn       35  President, Chief Operating Officer and        2000
                          Treasurer and Director
Norman M. Kranzdorf   67  Co-Chairman and  Director                     2001
Robert H. Dennis      51  Chief Financial Officer and Director          1999
Michael Kranzdorf     37  Chief Information Officer and Director        2000
Joseph Grossman       64  Director                                      1999
Peter O. Hanson       64  Director                                      2001
Bernard J. Korman     66  Director                                      2000
Norma J. Finn         65  Secretary

         Gerald C. Finn, NAI's principal founder, has served as the Chief
Executive Officer and a Director of NAI since 1974. He also served as NAI's
President from 1974 until 1995. He was elected as Chairman of the Board in May
1990 and became Co-Chairman of the Board upon consummation of the Exchange Offer
and the Reincorporation Merger. Prior to his association with NAI, Mr. Finn was
an active real estate broker and developer for his own account and for the
account of various entities in which he had an equity interest. He is a licensed
real estate broker and a member of NACORE, ICSC and IDRC, and is a founding
member of the Wharton School Real Estate Center.

         Jeffrey M. Finn, the son of Gerald C. Finn, has been employed full time
by NAI since January, 1984, and has served as Chief Operating Officer and
President since September 1995, as Treasurer of NAI since December 1987 and has
served as an Executive Vice President of NAI from 1992 to 1995. He has worked in
various capacities including brokerage and corporate services, as well as
Investment Sales prior to becoming Vice President-Marketing in 1988. Mr. Finn is
a graduate of Boston University's School of Management and is a licensed Real
Estate Salesperson in the State of New Jersey. Mr. Finn is a member of the ICSC,
IDRC, NACORE and the Wharton Real Estate Center Advisory Board.

         Norman M. Kranzdorf became the Co-Chairman of the Board of Directors 
of NAI upon consummation of the Reincorporation Merger.  Mr. Kranzdorf,  a
co-founder of Kranzco, has been a trustee and the President and Chief  Executive
Officer of Kranzco since its organization in June 1992.  Mr. Kranzdorf was the
President of Kranzco Realty, Inc., a general commercial real estate management
and brokerage company ("Kranzco Realty"), from 1979, when he founded Kranzco
Realty, to 1992.  He served

                                     -69-
as President of Amterre Development, Inc. ("Amterre") from 1972 to 1981.
Amterre, the successor to Food Fair Properties, Inc., owned and operated over 50
shopping centers, as well as other single-tenant retail properties, on the
Eastern seaboard. Mr. Kranzdorf was also an officer and director of Kranzco
Management, Inc., a general commercial real estate manager and brokerage company
and a wholly-owned subsidiary of Kranzco Realty, from 1980, when it was founded,
to 1992. He is a member of the Board of Governors of NAREIT and a former trustee
of the ICSC.

         Robert H. Dennis became the Chief Financial Officer of NAI and a member
of the Board of Directors of NAI upon consummation of the Exchange Offer and the
Reincorporation Merger. Mr. Dennis has been a trustee of Kranzco since June 1994
and the Chief Financial Officer and Treasurer of Kranzco since its organization
in June 1992. Prior thereto he was the Chief Financial Officer and Assistant
Secretary of Kranzco Realty from 1981 to 1992.

         Michael Kranzdorf  became the Chief Information Officer of NAI and a
member of the Board of Directors of NAI upon consummation of the Exchange Offer
and the Reincorporation Merger. Mr. Kranzdorf was named Director of Information
Systems at Kranzco Realty Trust in 1994 and was elected a Vice President of

Kranzco in June 1996.  He has been with Kranzco since 1987 as a programmer and
designer.  Mr. Kranzdorf received his B.S. from Tufts University and his M.S.
from the University of Colorado, both in Electrical Engineering.  Prior to
joining Kranzco, he held positions at Texas Instruments, the University of
Colorado and owned a consulting and publishing company in Boulder, Colorado. 
Mr. Kranzdorf is a member of the ICSC and serves on the Research Committee, and
he has recently accepted the first Chairmanship of NAREIT's Technology
Committee.

         Joseph Grossman has served as a Director of NAI since March 1983.  Mr.
Grossman has been an independent real estate developer since 1961 and has
developed shopping centers and industrial, residential and recreational
properties for his own account.  Mr. Grossman is also one of the founding
members of the Tinton Falls State Bank and is a member of its advisory board.

         Peter O. Hanson has been a member of the Board since June 1990.  Mr
Hanson is Chairman of James E. Hanson, Inc., a broker member of NAI.  Mr. Hanson
has been active in Commercial/Industrial Brokerage and Development since 1959. 
A very active member of The Society of Industrial and Office Realtors ("SIOR"),
Mr. Hanson has served that organization as a leader at the state, regional and
national level.  He was SIOR's International President in 1985.  In addition,
Mr. Hanson has been an active member of NAI's Advisory Board and has served as
Chairman of such Board.  Mr. Hanson is a member of the Board of Trustees of
Meridian Trust and Meridian Industrial Trust.  Other civic and industry groups
have benefitted from his participation and leadership.  A 1955 graduate of
Colgate University (B.A. - Sociology), Mr. Hanson also was a captain in the
United States Air Force.

         Bernard J. Korman became a member of the Board of Directors of NAI upon
consummation of the Exchange Offer and the Reincorporation Merger.  Mr. Korman
is Chairman of Graduate Health System, Inc., a non-profit organization, and
NutraMax Products, Inc., a consumer healthcare products company.  Mr. Korman
served as President and Chief Executive Officer of MEDIQ Incorporated from 1981
to 1995 and as chairman of PCI Services, Inc. from 1992 to 1996.  Mr. Korman
currently is a director of The Pep Boys, Inc., Today's Man, Inc., The New
America High Income Fund, Inc., InnoServ Technologies, Inc., Omega Healthcare
Investors, Inc., Omega Worldwide, Inc. and Kranzco.

         Norma J. Finn has served as the Secretary of NAI since NAI's inception
in 1974.  Ms.  Finn attended the University of Delaware and has served as
secretary and a board member of a number of real estate development
corporations.  She has been active in numerous charitable activities including
being

                                     -70-
President of Contact of Mercer County N.J. and on the national board of Contact,
and the board of the Delaware Valley United Fund.

         Officers of NAI are elected by the Board and hold office until their
successors are chosen and qualified or until their death, resignation or
removal.

DIRECTOR COMPENSATION

         It is NAI's policy to pay non-employee directors of NAI fees of $500
per meeting, as well as reimbursements for expenses incurred in attending
meetings of the Board. However, in lieu of paying outstanding directors' fees,
in January 1998, NAI issued 5,000 Shares to each non-employee director of NAI.

EXECUTIVE COMPENSATION

         The following table sets forth certain information with respect to the
cash and other compensation paid or accrued by NAI for services rendered by
Gerald Finn, NAI's Chief Executive Officer, and NAI's four other most highly
compensated executive officers whose salary and bonus exceeded $100,000
(collectively, the "Named Executives"), during the fiscal year ended June 30,
1997.

                          SUMMARY COMPENSATION TABLE

                                                                   Long-Term
                               Annual Compensation(1)             Compensation
                              ------------------------           --------------
                                                                   Restricted
Name & Principal Position     Year    Salary     Bonus           Stock Awards($)
-------------------------     ----    ------     -----           ---------------
                                       ($)        ($)            

Gerald C. Finn                1997   $125,000       --               $7,500(2)
Chairman and Chief
Executive Officer

Jeffrey M. Finn               1997   $110,000   $20,000              $2,250(2)
President, Chief
Operating Officer and
Treasurer

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

(1)      The total value of all perquisites and other personal benefits received
         by each individual was less than the lesser of $50,000 or ten percent
         of the total salary of and bonus paid or accrued by NAI for services
         rendered by each officer during the fiscal year.

(2)      Reflects grant of 25,000 restricted NAI Shares and 7,500 restricted NAI
         Shares to Gerald C. Finn and Jeffrey M. Finn, respectively. Such NAI
         Shares were granted in NAI's fiscal year 1998 with respect to
         performance in fiscal year 1997, pursuant to a Restricted Stock
         Agreement. Such NAI Shares were valued at $.30 per NAI Share, the value
         of the NAI Shares as determined by the Board of Directors. See
         "Management--Restricted Stock Agreements."

                                     -71-
EMPLOYMENT AGREEMENTS

         NAI has entered into employment agreements with Messrs. G. Finn and J.
Finn (the "Senior Executives"), pursuant to which Mr. G. Finn serves as the
Co-Chairman of the Board of NAI and Mr. J. Finn serves as its President. Each of
the employment agreements with the Senior Executives have a term of 3 years,
which is automatically extended for successive one-year periods unless either
the Senior Executive or NAI gives prior notice not to extend the employment
agreement, as specified in the agreement. Each of the employment agreements
provides for annual compensation of $175,000 to each of Messrs. G. Finn and J.
Finn for the first year of the term. After the first year of each employment
agreement, salary and bonus for the Senior Executives will be determined by the
Compensation Committee. Pursuant to the employment agreements, each of the
Senior Executives is also entitled to incentive compensation to be determined by
the Compensation Committee.

         In the event that either of the Senior Executives is fired without
"cause," such Senior Executive shall be entitled to the lesser of two times (i)
the individual's annual base compensation or (ii) the individual's annual base
compensation remaining due under the terms of his employment agreement;
provided, however, that the Senior Executive shall not be entitled to any such
severance payment if he has received a payment upon a change in control as
described below. The employment agreements also contain certain provisions
relating to non-competition and confidentiality.

         Each employment agreement provides that upon a change in control and so
long as such individual is an employee of NAI immediately prior to such a change
in control, (a) the individual shall receive a lump sum severance payment equal
to two times the individual's annual compensation during the calendar year
preceding the calendar year during which the change in control has occurred, (b)
restricted NAI Shares then owned by the individual shall immediately vest and no
longer be subject to repurchase or other forfeiture restrictions, (c) NAI will
continue to provide life, accident, medical and dental insurance to the
individual for the period of 18 months after the change in control, and (d) in
the event the individual holds any options to purchase NAI Shares on the date of
the change in control, such individual shall be entitled to receive an amount
equal to, generally, the number of options to purchase NAI Shares then owned by
the individual multiplied by the amount, if any, that (i) the exercise price of
the options or the closing price of the NAI Shares on the date of the change in
control, whichever is less, exceeds (i) the average closing price of the NAI
Shares during the sixth month prior to the date of the change in control. If the
closing price of the NAI Shares as of the date of the change in control is
greater than the exercise price of such option then the individual can retain
the option or receive in exchange therefor cash equal to the number of shares
underlying the options multiplied by the amount by which the closing share value
exceeds the exercise price of the options. Each Severance Benefits Agreement
provides that, to the extent that any of the foregoing benefits granted to such
individual would cause him to be liable for excise tax liabilities, the benefits
available to him shall be reduced to an amount which would not require the
payment of any such excise tax, but only if doing so yields a greater after tax
amount to such individual.

RESTRICTED STOCK AGREEMENTS

         In the past, NAI has granted restricted NAI Shares to certain persons
providing services to NAI, including employees and Broker Members (each, a
"grantee"). Each grantee of restricted NAI Shares executed a form of Restricted
Stock Agreement, which contains certain representations and warranties made by
NAI and the grantee, and sets forth the terms and conditions of the grant,
including the limited conditions under which the grantee may transfer the
restricted NAI Shares. The Restricted Stock Agreement also provides NAI with an
option for a period of three years following the date of grant to repurchase the
restricted NAI Shares if the grantee's services to NAI are terminated (a
"Termination").

                                     -72-
NAI may repurchase restricted NAI Shares, for a period of 90 days after the date
of Termination, at the following prices: $.10 per NAI Share for a termination
during the first year after the date of grant of the restricted NAI Shares; $.20
per NAI Share for a termination during the year after the second anniversary of
the date of grant of the restricted NAI Shares; and $.30 per NAI Share for a
termination during the year after the third anniversary of the date of grant of
the restricted NAI Shares. In connection with the Exchange Offer, NAI agreed to
eliminate the repurchase option with respect to all restricted NAI Shares owned
by NAI Stockholders after the consummation of the Exchange Offer, if such NAI
Stockholder tendered at least 80% of his or her restricted NAI Shares. The
release of any or all of the preceding restrictions could cause the holders of
restricted NAI Shares to immediately recognize ordinary income in an amount
equal to the excess of the fair market value of such NAI Shares at the time the
restrictions are released over any amounts paid to acquire such NAI Shares. In
addition, withholding taxes will be payable to NAI (or withheld by NAI from
amounts otherwise due such holders) in connection with any such recognition of
income. Holders of restricted NAI Shares are urged to consult their tax advisors
concerning the federal, state and local tax consequences of the release of any
restrictions on their NAI Shares.

NAI 1998 INCENTIVE PLAN

         General. Upon consummation of the Exchange Offer and the
Reincorporation Merger, NAI will adopt the NAI 1998 Incentive Plan (the "1998
Plan"). The purpose of the 1998 Plan is to align the interests of certain of
NAI's directors, officers and other employees and consultants with those of the
shareholders and to enable NAI to attract, compensate and retain selected
individuals to serve as directors, officers and employees and consultants who
will contribute to NAI's success and provide such individuals with appropriate
incentives and rewards for their performance.

         Awards to directors, officers and other employees and consultants under
the 1998 Plan may take the form of share options ("Options"), including
corresponding share appreciation rights ("SARs") and reload options, restricted
share awards, share purchase awards and performance based awards. The maximum
number of NAI Shares that may be the subject of awards under the 1998 Plan is
1,700,000 NAI Shares, or approximately 4.7% of the NAI Shares outstanding as of

May 13, 1998, assuming the Proposed Related Transactions had occurred.

         NAI Share Authorization. NAI Shares covered by any unexercised portions
of terminated Options, NAI Shares forfeited by participants and NAI Shares
subject to any awards which are otherwise surrendered by a participant without
receiving any payment or other benefit with respect thereto may again be subject
to new awards under the 1998 Plan. In the event the purchase price of an Option
is paid in whole or in part through the delivery of NAI Shares, the number of
NAI Shares issuable in connection with the exercise of the Option shall not
again be available for the grant of awards under the 1998 Plan. NAI Shares
subject to Options, or portions thereof, which have been surrendered in
connection with the exercise of SARs, are not again available for the grant of
awards under the 1998 Plan. The NAI Shares to be issued or delivered under the
1998 Plan are authorized and unissued shares, or issued NAI Shares that have
been reacquired by NAI.

         Incentive Plan Administration.  The 1998 Plan will be administered by a
committee of two or more non-employee directors (the "Committee"), which will
initially consist of Messrs. Bernard J. Korman and Joseph Grossman.  The
Committee will determine the directors, officers, employees and consultants who
will be eligible for and granted awards, determine the amount and type of
awards, establish rules and guidelines relating to the 1998 Plan, establish,
modify and terminate the terms and conditions of awards and take such other
action as may be necessary for the proper administration of the 1998 Plan.  All

                                     -73-
directors, employees and certain consultants are currently eligible to
participate in the 1998 Plan. Eighty percent of the NAI Shares which may be the
subject of awards under the 1998 Plan are reserved for employees of NAI who are
not also employees of Kranzco, and 20% of the NAI Shares which may be the
subject of awards under the 1998 Plan are reserved for employees and consultants
of NAI who are also employees of Kranzco.

         Options. "Incentive Options" meeting the requirements of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and "Nonqualified
Options" that do not meet such requirements are both available for grant under
the 1998 Plan. The term of each Option will be determined by the Committee, but
no Incentive Option will be exercisable more than ten years after the date of
grant. Options may also be subject to restrictions on exercise, such as exercise
in periodic installments, as determined by the Committee. The exercise price for
Incentive Options must be at least equal to 100% of the fair market value of the
NAI Shares on the date of grant and the exercise price for Nonqualified Options
will be determined by the Committee at the time of grant. The exercise price can
be paid in cash, or if approved by the Committee, by tendering (actually or
constructively) NAI Shares owned by a participant.

         Incentive Options are not transferable except by will or the laws of
descent and distribution and may be exercised only by the participant (or his
guardian or legal representative) during his or her lifetime, except as provided
below. With the Committee's consent, Nonqualified Options may be transferable to
family members and entities for the benefit of the participant or his family

members. If a participant's employment with NAI or service as a director
terminates for any reason (other than death or disability), any unexercised or
unexpired Options held by the participant (or its permitted transferee) will be
deemed canceled and terminated on the date of such termination, unless the
Committee decides to extend the term of such Options for a period not exceeding
three months. If a participant dies while employed by NAI, including an employee
who is also a director, any unexercised or unexpired Options will, to the extent
exercisable on the date of death, be exercisable by the holder or by the
participant's estate or by any person who acquired such Options by bequest or
inheritance, at any time generally within one year after such death. If a
participant becomes totally disabled and his employment terminates as a result
of such disability, including an employee who is also a director, the holder or
the participant (or his guardian or legal representative) will have the
unqualified right to exercise any unexercised and unexpired Options held by the
participant (or its permitted transferee) generally for one year after such
termination.

         NAI Share Appreciation Rights. The 1998 Plan provides that SARs may be
granted in conjunction with a grant of Options. Each SAR must be associated with
a specific Option and must be granted at the time of grant of such Option. A SAR
is exercisable only to the extent the related Option is exercisable. Upon the
exercise of a SAR, the recipient is entitled to receive from NAI, without the
payment of any cash (except for any applicable withholding taxes), up to, but no
more than, an amount in cash or NAI Shares equal to the excess of (A) the fair
market value of one NAI Share on the date of such exercise over (B) the exercise
price of any related Option, times the number of NAI Shares in respect of which
such SAR shall have been exercised. Upon the exercise of a SAR, the related
share Option, or the portion thereof in respect of which such SAR is exercised,
will terminate. Upon the exercise of an Option granted in tandem with a SAR,
such tandem SAR will terminate.

         Reload Options. The Committee may grant, concurrently with the award of
any Option (each an "Underlying Option") to such participants, one or more
reload options (each a "Reload Option") to purchase for cash or, if permissible
under the Underlying Option, NAI Shares,  a number of NAI Shares equal to the
number of NAI Shares delivered (or deemed delivered) by the participant to NAI
to exercise the Underlying Option. Although an Underlying Option may be an
Incentive Option, a Reload Option is

                                     -74-
not intended to qualify as an Incentive Option. A Reload Option may be granted
in connection with the exercise of an Option that is itself a Reload Option.
Each Reload Option will have the same expiration date as the Underlying Option
and an exercise price equal to the fair market value of the NAI Shares on the
date of grant of the Reload Option. A Reload Option is exercisable immediately.

         Reload Options permit a participant to retain, through the term of the
original Option, his or her economic interest in the sum of the NAI Shares
covered by such Options as well as the already-owned NAI Shares that could be
used to exercise such Option, by granting options on the number of NAI Shares
used to pay the exercise price of the original Option and subsequent Reload

Options. In this way, Reload Options provide a participant with the opportunity
to build up ownership of NAI Shares covered by an original Option earlier during
the Option term rather than through a single exercise at or near the end of the
Option term.

         Restricted NAI Shares. NAI may award restricted NAI Shares to a
participant. Such a grant gives a participant the right to receive NAI Shares
subject to a risk of forfeiture based upon certain conditions. The forfeiture
restrictions on the NAI Shares may be based upon performance standards, length
of service or other criteria as the Committee may determine. Until all
restrictions are satisfied, lapsed or waived, NAI will maintain custody over the
restricted NAI Shares but the participant will be able to vote the NAI Shares
and will be entitled to an amount equal to all distributions, if any, paid with
respect to the NAI Shares, as provided by the Committee. During such restrictive
period, the restricted NAI Shares may not be sold, assigned, transferred,
pledged or otherwise encumbered. Upon termination of employment, the participant
generally forfeits the right to the NAI Shares to the extent the applicable
performance standards, length of service requirements, or other measurement
criteria have not been met.

         NAI Share Purchase Awards. The 1998 Plan also permits the grant of
share purchase awards to participants. Participants who are granted a share
purchase award are provided with a share purchase loan to enable them to pay the
purchase price for the NAI Shares acquired pursuant to the award. The terms of
each share purchase loan will be determined by the Committee. The purchase price
of NAI Shares acquired with a share purchase loan is the fair market value on
the date of the award. The 1998 Plan provides that some or all of the share
purchase loan can be forgiven under terms determined by the Committee. At the
end of the loan term, the remainder of the share purchase loan will be due and
payable. The interest rate, if any, on a share purchase loan will be determined
by the Committee. NAI Share purchase loans may be recourse or nonrecourse under
terms determined by the Committee.

         If a participant's employment with NAI is terminated for any reason,
the balance of the purchase loans to such participant will be immediately due
and payable; provided, however, if a participant's employment terminates by
reason of death, disability, by NAI without "cause" or in the event of a charge
in control, the balance of such participant's purchase loans may be forgiven in
whole or in part as of the date of such occurrence at the discretion of the
Committee.

         Performance-Based Awards. Certain Awards granted under the 1998
Incentive Plan may be granted in a manner such that the Awards qualify as
"performance-based compensation"(as such term is used in Section 162(m) of the
Code and the regulations thereunder) and thus be exempt from the deduction
limitation imposed by Section 162(m) of the Code ("Performance-Based Awards").
In general, to qualify as a Performance Based Award, among other things, the
Committee must be comprised solely of two or more "outside directors." The
Committee shall have complete discretion in determining the number, amount and
timing of awards granted to each participant. Such Performance-Based Awards may
take the form of, without limitation, cash, Shares or any combination thereof.
The Committee shall set performance goals at its discretion which, depending on
the extent to which they are met, will determine

                                     -75-
the number and/or value of such Performance-Based Awards that will be paid out
to the participants, and may attach to such Performance-Based Awards one or more
restrictions. The maximum cash amount of Performance-Based Awards to be awarded
to any employee during any fiscal year shall be $1,000,000.

         The Committee may use the following performance measures, among others,
(either individually or in any combination) to set performance targets with
respect to Awards intended to qualify as Performance-Based Awards: net sales;
pretax income before allocation of corporate overhead and bonus; budget;
earnings per share; net income; division, group or corporate financial goals;
return on stockholders' equity; return on assets; attainment of strategic and
operational initiatives; appreciation in and/or maintenance of the price of the
NAI Shares or any other publicly-traded securities of NAI; market share; gross
profits; earnings before taxes; earnings before interest and taxes; earnings
before interest, taxes, depreciation and amortization; economic value-added
models; comparisons with various stock market indices; and/or reductions in
costs.

         Antidilution Provisions. The number of NAI Shares authorized to be
issued under the 1998 Plan and subject to outstanding awards (and the grant or
exercise price thereof) may be adjusted to prevent dilution or enlargement of
rights in the event of any dividend or other distribution, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of NAI Shares or other
securities, the issuance of warrants or other rights to purchase NAI Shares or
other securities, or other similar capitalization change.

         Certain Federal Income Tax Consequences of the 1998 Plan. The following
is a brief summary of the principal federal income tax consequences of awards
under the 1998 Plan. The summary is based upon current federal income tax laws
and interpretations thereof, all of which are subject to change at any time,
possibly with retroactive effect. The summary is not intended to be exhaustive
and, among other things, does not describe state, local or foreign tax
consequences.

         A participant is not subject to federal income tax either at the time
of grant or at the time of exercise of an Incentive Option. However, upon
exercise, the difference between the fair market value of the NAI Shares and the
exercise price is an includible item subject to the possible application of the
alternative minimum tax. If a participant does not dispose of NAI Shares
acquired through the exercise of an Incentive Option in a "disqualifying
disposition" (i.e., no disposition occurs within two years from the date of
grant of the share option nor within one year of the transfer of the NAI Shares
to the participant), then the participant will be taxed only upon the gain, if
any, from the sale of such NAI Shares, and such gain will be taxable as gain
from the sale of a capital asset.

         NAI will not be allowed any tax deduction on the exercise of an
Incentive Option or, if the above holding period requirements are met, on the
sale of the underlying NAI Shares. If there is a disqualifying disposition

(i.e., one of the holding period requirements is not met), the participant will
be treated as receiving compensation subject to ordinary income tax in the year
of the disqualifying disposition and NAI will be entitled to a deduction for
compensation expense in an amount equal to the amount included in income by the
participant. The participant generally will be required to include in income an
amount equal to the difference between the fair market value of the NAI Shares
at the time of exercise and the exercise price. Any appreciation in value after
the time of exercise will be taxed as capital gain and will not result in any
deduction by NAI.

         If Nonqualified Options are granted to a participant, there are no
federal income tax consequences at the time of grant. Upon exercise of the
Option, the participant must report as ordinary income an amount equal to the
difference between the exercise price and the fair market value of the NAI
Shares on

                                     -76-
the date of exercise. NAI will be allowed a tax deduction in like amount. Any
appreciation in value after the time of exercise will be taxed as capital gain
and will not result in any deduction by NAI.

         No income will be realized by a participant in connection with the
grant of any SAR. The participant must include in ordinary income the amount of
cash received and the fair market value on the exercise date of any NAI Shares
received upon the exercise of a SAR. NAI will be entitled to a deduction equal
to the amount included in such participant's income by reason of the exercise of
any SAR.

         The receipt of a Reload Option by a holder of an Incentive Option or a
Nonqualified Option (including a Reload Option) who pays the exercise price in
full or in part with previously acquired NAI Shares should not affect the tax
treatment of the exercise of such Incentive or Nonqualified Option (including
the amount of ordinary income, if any, recognized upon exercise). A participant
will not be subject to tax at the time a Reload Option is granted (except for
any income recognized upon the exercise of a Nonqualified Option at the time of
grant of the Reload Option). A Reload Option will constitute a Nonqualified
Option for federal income tax purposes and will be taxed as such in the manner
set forth above.

         A grant of restricted NAI Shares does not constitute a taxable event
for either a participant or NAI. However, the participant will be subject to
tax, at ordinary income rates, when the NAI Shares are no longer subject to a
substantial risk of forfeiture or they become transferable. NAI will be entitled
to take a commensurate deduction at that time.

         A participant may elect to recognize taxable ordinary income at the
time restricted NAI Shares are awarded in an amount equal to the fair market
value of the NAI Shares at the time of grant, determined without regard to any
forfeiture restrictions. If such an election is made, NAI will be entitled to a
deduction at that time in the same amount. Future appreciation on the NAI Shares
will be taxed at the capital gains rate when the NAI Shares are sold. However,

if, after making such an election, the NAI Shares are forfeited, the participant
will be unable to claim a deduction.

         In general, a participant who receives a share purchase award incurs no
tax liability and NAI does not receive any deduction at the time NAI Shares are
acquired through a share purchase award. However, as the share purchase loan is
forgiven, the participant will be required to recognize income in an amount
equal to the forgiven portion of the loan. NAI will be entitled to take a
commensurate deduction at such time.

         Applicable withholding taxes may be withheld in connection with any
award under the 1998 Plan. In that regard, the Committee has the discretion to
allow a participant to satisfy its withholding tax obligations with NAI Shares.

         Change in Control. Depending on the terms of a particular award as
determined by the Committee, upon the occurrence of a change in control of NAI,
all options and related SARs may become immediately exercisable, the restricted
NAI Shares may fully vest and share purchase loans may be forgiven in full.

         Termination, Amendment and ERISA Status. The 1998 Plan will terminate
by its terms and without any action by the Board ten years from the date the
1998 Plan was adopted. No awards may be made after that date. Awards outstanding
on such date will remain valid in accordance with their terms.

                                     -77-
The Committee may amend or alter the terms of awards under the 1998
Plan, including to provide for the forgiveness in whole or in part of share
purchase loans, the release of the NAI Shares securing such loans or the
termination or modification of the vesting or performance provisions of the
grants of restricted NAI Shares but no such action shall in any way impair the
rights of a participant under any award without such participant's consent.

         The Committee may amend or terminate the 1998 Plan. No such amendments
or termination of the 1998 Plan shall in any way impair the rights of a
participant under any award previously granted without such participant's
consent. In addition, any amendment or termination will be subject to
shareholder approval if approval is required by Federal or state law or
regulation or rule of any stock exchange or quotation system on which the NAI
Shares are listed or quoted.

         The 1998 Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1976, as amended ("ERISA").

NAI 1998 EMPLOYEE BONUS COMPENSATION PLAN

         General. Upon consummation of the Exchange Offer and the
Reincorporation Merger, NAI will adopt the NAI 1998 Employee Bonus Compensation
Plan (the "Bonus Compensation Plan"). The purpose of the Bonus Compensation Plan
is to compensate outstanding performance by employees of NAI and to enable NAI
to attract, compensate and retain selected individuals to serve as employees who
will contribute to NAI's success and provide such individuals with appropriate

incentives and rewards for their performance.

         Awards to employees under the Bonus Compensation Plan are in the form
of grants of NAI Shares. The maximum number of NAI Shares that may be the
subject of awards under the Bonus Compensation Plan is 8,500,000 NAI Shares (the
"Award Shares"), assuming all of the Rights are exercised, or approximately
23.5% of the NAI Shares outstanding as of May 13, 1998, assuming the Proposed
Related Transactions had occurred. If less than all of the Rights are exercised,
the number of NAI Shares available under the Bonus Compensation Plan will be
decreased by 25% of the amount by which 34,000,000 NAI Shares exceeds the number
of NAI Shares outstanding after the Rights are exercised. The NAI Shares to be
issued or delivered under the Bonus Compensation Plan are authorized and
unissued shares, or issued NAI Shares that have been reacquired by NAI.

         NAI Share Award Formula. Subject to the maximum number of NAI Shares
remaining available under the Bonus Compensation Plan each year there shall be
available for award under the Bonus Compensation Plan, a number of NAI Shares
equal to the product of 6.25% times NAI's pre-tax net income for such year
("Annual Award Shares").

         Bonus Compensation Plan Administration. The Board will make grants of
the Annual Award Shares within 6 months after the end of the fiscal year with
respect to which such Award Shares become available for grant based on the
recommendation of the Chief Executive Officer and the President of NAI. All
employees are currently eligible to participate in the Bonus Compensation Plan.
The selection of employees who participate in the Bonus Compensation Plan will
be determined solely at the discretion of the Board based on the recommendation
of the Chief Executive Officer and President of NAI.

         Antidilution Provisions. The number of NAI Shares authorized to be
issued under the Bonus Compensation Plan and subject to outstanding awards may
be adjusted to prevent dilution or enlargement of rights in the event of any
dividend or other distribution, recapitalization, stock split, reverse stock
split,

                                     -78-
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of NAI Shares or other securities, the issuance of
warrants or other rights to purchase NAI Shares or other securities, or other
similar capitalization change.

         Certain Federal Income Tax Consequences of the Bonus Compensation Plan.
The following is a brief summary of the principal federal income tax
consequences of awards under the Bonus Compensation Plan. The summary is based
upon current federal income tax laws and interpretations thereof, all of which
are subject to change at any time, possibly with retroactive effect. The summary
is not intended to be exhaustive and, among other things, does not describe
state, local or foreign tax consequences.

         A grant of Award Shares constitutes a taxable event for a participant.
The fair market value of the Award Shares on the date of grant is reportable by

the participant as income taxable at ordinary income rates, and will be subject
to applicable federal, state and local withholding taxes at the time of grant.
In that regard, the Board has the discretion to allow a participant to satisfy
its withholding tax obligations with NAI Shares. NAI will be entitled to take a
deduction at the time of grant equal to the amount of taxable income reportable
by the participant.

         Termination, Amendment and ERISA Status. The employees will first be
eligible for Award Shares under the Bonus Compensation Plan with respect to
NAI's fiscal year ended June 30, 1999. The last year employees of NAI will be
eligible for Award Shares under the Bonus Compensation Plan will be with respect
to NAI's fiscal year ended June 30, 2009.

         The Board may amend or terminate the Bonus Compensation Plan; however,
the Bonus Compensation Plan may not be amended without the consent of 80% of the
Board, including the consent of either Jeffrey M. Finn or Gerald C. Finn. No
such amendments or termination of the Bonus Compensation Plan shall in any way
impair the rights of a participant under any award previously granted without
such participant's consent. In addition, any amendment or termination will be
subject to shareholder approval if approval is required by Federal or state law
or regulation or rule of any stock exchange or quotation system on which the NAI
Shares are listed or quoted.

         The Bonus Compensation Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1976, as amended.

NAI 1998 STOCK OPTION PLAN

         General. Upon consummation of the Exchange Offer and the
Reincorporation Merger, NAI will adopt the NAI 1998 Stock Option Plan (the
"Option Plan"). The purpose of the Option Plan is to align the interests of
NAI's directors, officers, employees and consultants with those of the
shareholders and to enable NAI to attract, compensate and retain selected
individuals to serve as directors, officers, employees and consultants who will
contribute to NAI's success and provide such individuals with appropriate
incentives and rewards for their performance.

         Awards to directors, officers, employees and consultants under the
Option Plan are in the form of share Options. The maximum number of NAI Shares
that may be the subject of awards under the Option Plan is 3,583,992 NAI Shares,
or approximately 9.9% of the NAI Shares outstanding as of May 13, 1998, assuming
the Proposed Related Transactions had occurred. Options to purchase all NAI
Shares issuable under such plan were granted upon consummation of the
Reincorporation Merger.

                                     -79-
Bonus Incentive Plan Administration. The Option Plan will be
administered by a committee of two or more non-employee directors (the "Option
Plan Committee"), which will initially consist of Messrs. Joseph Grossman and
Bernard Korman. The Option Plan Committee will determine the directors,
officers, employees and consultants who will be eligible for and granted awards,

determine the amount and type of awards, establish rules and guidelines relating
to the Option Plan, establish, modify and terminate the terms and conditions of
awards and take such other action as may be necessary for the proper
administration of the Option Plan. All directors, officers, employees and
certain consultants are currently eligible to participate in the Option Plan.

         Options. It is intended that all of the Options granted under the
Option Plan will be "Nonqualified Options" that do not meet the requirements of
Section 422 of the Code. The exercise price can be paid in cash, or if approved
by the Option Plan Committee, by tendering (actually or constructively) NAI
Shares owned by a participant.

         With the Option Plan Committee's consent, Nonqualified Options may be
transferable to family members and entities for the benefit of the participant
or his family members. If a participant's employment with NAI or service as a
director or consultant terminates for any reason (other than death or
disability), any unexercised or unexpired Options held by the participant (or
its permitted transferee) will be deemed canceled and terminated on the date of
such termination, unless the Option Plan Committee decides to extend the term of
such Options for a period not exceeding three months. If a participant dies
while employed by NAI, including an employee who is also a director, any
unexercised or unexpired Options will, to the extent exercisable on the date of
death, be exercisable by the holder or by the participant's estate or by any
person who acquired such Options by bequest or inheritance, at any time
generally within one year after such death. If a participant becomes totally
disabled and his employment terminates as a result of such disability, including
an employee who is also a director, the holder or the participant (or his
guardian or legal representative) will have the unqualified right to exercise
any unexercised and unexpired Options held by the participant (or its permitted
transferee) generally for one year after such termination.

         Options Outstanding Under the Option Plan. Upon the consummation of the
Reincorporation Merger, there will be outstanding Nonqualified Options to
purchase 3,583,992 NAI Shares under the Option Plan at an exercise price of $2
per NAI Share. Directors of NAI hold ten-year Options to purchase an aggregate
of 1,013,150 NAI Shares under the Option Plan at an exercise price of $2 per NAI
Share. Each of Gerald C. Finn and Jeffrey M. Finn was granted a five-year Option
under the Option Plan to purchase 1,544,220 and 609,971 NAI Shares,
respectively, at an exercise price of $2 per NAI Share; the exercise price of
each such Option will automatically increase $.12 each year during which such
Option remains outstanding and unexercised.

         Antidilution Provisions. The number of NAI Shares authorized to be
issued under the Option Plan and subject to outstanding awards (and the grant or
exercise price thereof) may be adjusted to prevent dilution or enlargement of
rights in the event of any dividend or other distribution, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of NAI Shares or other
securities, the issuance of warrants or other rights to purchase NAI Shares or
other securities, or other similar capitalization change.

         Certain Federal Income Tax Consequences of the Option Plan. The
following is a brief summary of the principal federal income tax consequences of
awards under the Option Plan. The summary is based upon current federal income

tax laws and interpretations thereof, all of which are subject to change at any

                                     -80-
time, possibly with retroactive effect. The summary is not intended to be
exhaustive and, among other things, does not describe state, local or foreign
tax consequences.

         For Nonqualified Options, there are no federal income tax consequences
at the time of grant. Upon exercise of the Option, the participant must report
as ordinary income an amount equal to the difference between the exercise price
and the fair market value of the NAI Shares on the date of exercise. NAI will be
allowed a tax deduction in like amount. Any appreciation in value after the time
of exercise will be taxed as capital gain and will not result in any deduction
by NAI.

         Applicable withholding taxes may be withheld in connection with the
exercise of any Nonqualified Option, under the Option Plan. In that regard, the
Option Plan Committee has the discretion to allow a participant to satisfy its
withholding tax obligations with NAI Shares.

         Termination, Amendment and ERISA Status. The Option Plan will terminate
by its terms and without any action by the Board ten years from the date the
Option Plan was adopted. No awards may be made after that date. Awards
outstanding on such date will remain valid in accordance with their terms.

         The Option Plan Committee may amend or alter the terms of awards under
the Option Plan but no such action shall in any way impair the rights of a
participant under any award without such participant's consent.

         The Option Plan Committee may amend or terminate the Option Plan. No
such amendments or termination of the Option Plan shall in any way impair the
rights of a participant under any award previously granted without such
participant's consent. In addition, any amendment or termination will be subject
to shareholder approval if approval is required by Federal or state law or
regulation or rule of any stock exchange or quotation system on which the NAI
Shares are listed or quoted.

         The Option Plan is not subject to the provisions of ERISA.

                                     -81-
PRINCIPAL STOCKHOLDERS

         The following table sets forth certain information regarding beneficial
ownership of NAI Shares as of May 13, 1998 of: (i) Named Executive Officers,
(ii) NAI's executive officers and directors as a group, and (iii) all persons
known by NAI to be the beneficial owner of more than 5.0% of the outstanding NAI
Shares immediately prior to the Distribution, the Rights Offering and the
Concurrent Offering, and after giving effect to the Distribution, the Rights
Offering, the Concurrent Offering and the other Related Transactions. Unless
otherwise noted, the information contained in this table, including the
footnotes hereto, assumes that the Reincorporation Merger occurred on May 13,
1998, and each NAI Delaware Share was converted into 1.316172 NAI Maryland
Shares.
Number of NAI Shares                           Percent of Class
                                              --------------------                           ----------------
                                                                 After
                                          Before              Distribution,      Before Distribution,      After Distribution,
                                   Distribution, Rights      Rights Offering     Rights Offering and        Rights Offering
                                      Offering and           and Concurrent           Concurrent             and Concurrent
Name and Address                  Concurrent Offering (1)      Offering (2)          Offering (3)             Offering (3)
----------------                  -----------------------      ------------          ------------             ------------
Gerald C. Finn(4)(5)                    4,311,634               4,711,634                20.8%                    11.8%
Jeffrey M. Finn(4)(6)                   1,586,372               1,686,372                 7.7                      4.2
Norman M. Kranzdorf(7)(8)                 614,594                 829,138                 3.0                      2.1
Robert H. Dennis(4)(9)                     87,783                 104,466                 0.4                      0.3
Joseph Grossman(4)(10)                     25,759                 41,518                  0.2                      0.1
Peter O. Hanson(3)(11)                     78,112                146,224                  0.4                      0.4
Bernard J. Korman(4)(12)                   19,272                 24,044                  0.1                      0.1
Michael Kranzdorf(8)(13)                   31,607                 55,714                  0.2                      0.1
Kranzco Realty Trust(8)                 1,673,503              3,347,006                  8.0                      8.4
Executive Officers & Directors          6,210,664              7,054,641                 30.0                     17.7
as a group (9) persons
(1) The numbers in this column reflect NAI Share ownership assuming the
Reincorporation Merger has occurred. The actual number of NAI Delaware Shares
beneficially owned by each person on May 1, 1998, was as follows: Gerald Finn,
9,563,390 NAI Shares; Jeffrey Finn, 2,759,522 NAI Shares; Norman M. Kranzdorf,
no NAI Shares; Robert H. Dennis, no NAI Shares; Joseph Grossman, 59,867 NAI
Shares; Bernard J. Korman, no NAI Shares; Michael Kranzdorf, no NAI Shares;
Peter O. Hanson, 258,750 NAI Shares; Kranzco Realty Trust, no NAI Shares; and
Estate of John McMenamin, 535,597 NAI Shares.

         (2) The numbers in this column represent NAI Shares beneficially owned
by each such person, plus any NAI Shares which such person may acquire pursuant
to the Basic Subscription Privilege.

         (3) Each beneficial owner's percentage ownership is determined assuming
(i) that all NAI Shares issuable upon exercise of the Rights will be exercised,
except that (x) Gerald Finn only exercises rights to purchase 400,000 NAI
Shares, (y) Jeffrey Finn only exercises rights to purchase 100,000 NAI Shares
and (z) Kranzco only exercises rights to purchase 1,673,503 NAI Shares in order
to maintain a 9.8% ownership interest in the outstanding NAI Shares; (ii) that
all of the Additional Shares are purchased in the Concurrent Offering, (iii) all
other convertible securities, options or warrants held by such person (but not
those held by any other person) and which are exercisable within 60 days of May
1, 1998 have been exercised and (iii) that each person who was an NAI
Stockholder prior to the Exchange Offer tendered 80% of his or her NAI Shares in
the Exchange Offer.

         (4) The address of all of the executive officers and directors of NAI,
who are not employees of Kranzco, is 572 Route 130, Hightstown, New Jersey
08520, telephone (609) 448-4700.

                                     -82-
(5) Includes (i) 3,949 NAI Shares owned by the Building Center, Inc., a
corporation owned by Gerald and Norma Finn, (ii) 1,794,220 NAI Shares issuable
upon the exercise of options to purchase NAI Shares, (iii) 42,776 NAI Shares
owned by Mr. Finn's spouse and (iv) 526,469 NAI held in trust for Mr. J. Finn,
of which, in the future, Mr. G. Finn may be entitled to receive certain NAI
Shares. Does not include (i) 44,092 NAI Shares owned by Mr. G. Finn's children,
or (ii) 4,936 NAI Shares held by Mr. G. Finn as collateral for a loan to a
stockholder of NAI; Mr. Finn disclaims beneficial ownership of such NAI Shares.

         (6) Includes (i) 11,846 NAI Shares held in trust for Mr. Finn's minor
children, (ii) 4,584 NAI Shares owned by Brooktree Swim & Tennis Club, Inc., a
corporation owned by Mr. J. Finn and his spouse, (iii) 859,971 NAI Shares
issuable upon the exercise of options to purchase NAI Shares; and (iii) 526,469
NAI Shares held in a trust for the benefit of Mr. J. Finn, of which Mr. J. Finn
is trustee.

         (7) Includes (i) 14,206 NAI Shares owned by Mr. Kranzdorf's spouse, 
(ii) 36,000 NAI Shares owned by Mrs. Kranzdorf as trustee for the benefit of
Michael Kranzdorf and Betty Kranzdorf, (iii) 400,050 NAI Shares issuable upon
the exercise of options to purchase NAI Shares.  See "Management."

         (8) The address of Kranzco Realty Trust is 128 Fayette Street,
Conshohocken, Pennsylvania 19428, and the address of executive officers and
directors of NAI who are also employees of Kranzco is c/o Kranzco Realty Trust
at such address.

         (9) Includes (i) 169 NAI Shares owned by Mr. Dennis' spouse, and (ii)
71,100 NAI Shares issuable upon the exercise of options to purchase NAI Shares.

         (10) Includes 10,000 NAI Shares issuable upon the exercise of options 
to purchase NAI Shares.

         (11) Includes (i) 236 NAI Shares owned by Mr. Hanson's spouse, (ii) 
4,343 NAI Shares and 1,645 NAI Shares owned by James E. Hanson, Inc. and
Property Investors Associates, entities owned by Mr. Hanson, and (iii) 10,000
NAI Shares issuable upon the exercise of options to purchase NAI Shares.

         (12) Includes (i) 3,900 NAI Shares owned by Mr. Korman's spouse, and
(ii) 14,500 NAI Shares issuable upon the exercise of options to purchase NAI
Shares.

         (13) Includes (i) 7,500 NAI Shares issuable upon the exercise of
options to purchase NAI Shares, and (ii) 18,000 NAI Shares held in trust for Mr.
M. Kranzdorf. See note 6.

Registration Rights

         Kranzco and NAI will enter into a Registration Rights Agreement which
provides that at any time after the earlier of the date (i) one year from the
consummation of the Exchange Offer or (ii) that Kranzco determines, in its sole
discretion, that Kranzco is, or will in the future be, required to sell the NAI
Shares owned by it in order to maintain its status as a REIT, NAI will, upon a
written request of Kranzco, register any NAI Shares owned by Kranzco in a
Registration Statement under the Securities Act (the "Demand Rights"). NAI has
agreed to use all reasonable best efforts to keep such Registration Statement
effective for a period of two years commencing on the effective date of the
Registration Statement (or a shorter period if all the NAI Shares owned by
Kranzco have been sold or may be sold without any volume limitations pursuant to
Rule 144 under the Securities Act prior to the expiration of such two year
period). The Registration Rights Agreement provides Kranzco with two Demand
Rights, as well as piggyback Registration Rights.

                             CERTAIN TRANSACTIONS

         NAI currently leases space for its corporate offices in Hightstown, New
Jersey from The Building Center, Inc., a New Jersey corporation (the "Building
Center"), which is wholly owned by Gerald C. Finn and his wife, Norma Finn. See
"Business--Property." NAI believes that the terms of this lease are at or below
the fair market rental for comparable facilities in the area.

         NAI and its subsidiaries owe a director and officer of NAI, Gerald and
Norma Finn, and an entity owned by them, an aggregate principal of $441,235. A
portion of the proceeds of the Rights Offering and the Concurrent Offering will
be used to repay such indebtedness. See "Use of Proceeds" for a description of
such indebtedness.

         Gerald C. Finn is the licensed broker of record on the New Jersey Real
Estate Broker's License held by NAI upon which NAI's reciprocal real estate
broker's licenses in Pennsylvania and New York are based. Mr. Finn's sister,
Susan Finn, is the licensed broker of record on the Florida Real Estate Broker's
License held by NAI.

                                     -83-
Peter O. Hanson, a director of NAI is the owner of James E. Hanson,
Inc., a Broker Member of the Network. In the fiscal year ended June 30, 1998,
James E. Hanson, Inc., paid to NAI approximately $90,000 in fees for services
and assignments received through the Network.

         In connection with the Exchange Offer, Kranzco, NAI and the Finns
entered into an Exchange Agreement and have agreed to enter into certain related
transactions. In addition, immediately following the Distribution, NAI and
Kranzco intend to enter into the Intercompany Agreement. See "The Exchange
Agreement" and "Related Transactions." In addition, in the calendar year ended
December 31, 1997, with the assistance of NAI's Investment Sales Department,
Kranzco purchased certain retail properties. See "Business--Investment Sales."

                          DESCRIPTION OF SECURITIES

         The following summary of the terms of the stock of NAI does not purport
to be complete and is subject to and qualified in its entirety by reference to
NAI's Charter and NAI's Bylaws, copies of which are exhibits to the Registration
Statement of which this Prospectus is a part. See "Available Information." This
description reviews the securities of NAI rather than NAI Delaware, because
after the Exchange Offer is consummated, the Reincorporation Merger will be
effected and all NAI Delaware Shares will be converted into NAI Shares.

General

         The charter provides that NAI may issue up to 200,000,000 shares of
common stock, $.01 par value per share (referred to herein as the "NAI Shares").
As of May 13, 1997, after giving effect to the Reincorporation Merger, there
were 17,076,560 NAI Shares issued and outstanding, and 229 holders of record of
such NAI Shares. Under Maryland law, stockholders generally are not liable for
the corporation's debts or obligations.

Common Stock

         All NAI Shares offered hereby will be duly authorized, fully paid and
nonassessable. Subject to the preferential rights of any other class or series
of stock, holders of NAI Shares are entitled to receive dividends on such NAI
Shares if, as and when authorized and declared by the Board of Directors of NAI
out of assets legally available therefor and to share ratably in the assets of
NAI legally available for distribution to its stockholders in the event of its
liquidation, dissolution or winding up after payment of or adequate provision
for all known debts and liabilities of NAI.

         Each outstanding NAI Share entitles the holder to one vote on all
matters submitted to a vote of stockholders, including the election of directors
and, except as provided with respect to any other class or series of stock, the
holders of such shares will possess the exclusive voting power. There is no
cumulative voting in the election of directors, which means that the holders of
a majority of the outstanding NAI Shares can elect all of the directors then
standing for election and the holders of the remaining shares will not be able
to elect any directors.

         Holders of NAI Shares have no preference, conversion, exchange, sinking
fund, redemption or appraisal rights and have no preemptive rights to subscribe

for any securities of NAI. NAI Shares will have equal dividend, liquidation and
other rights.

         Under the Maryland General Corporation Law (the "MGCL"), a Maryland
corporation generally cannot dissolve, amend its charter, merge, sell all or
substantially all of its assets, engage in a share exchange or engage in similar
transactions outside the ordinary course of business unless approved by the
affirmative vote of stockholders holding at least two thirds of the shares
entitled to vote on the matter unless a lesser percentage (but not less than a
majority of all of the votes entitled to be cast on the matter) is set forth in
the corporation's charter. The charter of

                                     -84-
NAI provides for approval of (i) a consolidation, (ii) a share exchange, (iii) a
merger in which NAI is the successor, and (iv) amendments to the charter (except
for amendments to the sections of the charter relating to the classification and
removal of directors) by the affirmative vote of stockholders holding at least
two thirds of the shares entitled to vote on the matter.

         The charter authorizes the Board of Directors to reclassify any
unissued shares of stock into other classes or series of stock and to establish
the number of shares in each class or series and to set the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
redemption for each such class or series.

Preferred Stock

         The charter authorizes the Board of Directors to classify any unissued
shares of Preferred Stock and to reclassify any previously classified but
unissued shares of any series, as authorized by the Board of Directors. Prior to
issuance of shares of each class or series, the Board is required by the MGCL
and the charter of NAI to set, subject to the provisions of the charter
regarding the restrictions on transfer of stock, the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption for each
such series. Thus, the Board could authorize the issuance of shares of Preferred
Stock with terms and conditions which could have the effect of delaying,
deferring or preventing a transaction or a change in control of NAI that might
involve a premium price for holders of NAI Shares or otherwise be in their best
interest.

Power to Issue Additional Shares of Common Stock and Preferred Stock

         NAI believes that the power of the Board of Directors to issue
additional authorized but unissued NAI Shares and to classify or reclassify
unissued shares of stock and thereafter to cause NAI to issue such classified or
reclassified shares of stock will provide NAI with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
needs which might arise. The additional classes or series, as well as the NAI

Shares, will be available for issuance without further action by NAI's
stockholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which NAI's securities may
be listed or traded. Although the Board of Directors has no intention at the
present time of doing so, it could authorize NAI to issue a class or series that
could, depending upon the terms of such class or series, delay, defer or prevent
a transaction or a change in control of NAI that might involve a premium price
for holders of NAI Shares or otherwise be in their best interest.

Series A Preferred Stock

Agreement with Holder of Series A Preferred Stock. In connection with the
Reincorporation Merger, NAI entered into a letter agreement, with the holder of
the 101,000 outstanding shares of Series A Preferred Stock which provides that
in connection with the holder of the outstanding Series A Preferred Stock
agreeing to waive any potential right of mandatory redemption which such holder
may be entitled in connection with the Reincorporation Merger, NAI will redeem
all of the outstanding shares of Series A Preferred Stock within five Business
Days of the closing of the Rights Offering. The holder of the outstanding shares
of Series A Preferred Stock also agreed in the letter agreement not to convert
the Series A Preferred Stock into NAI Shares and that the holder of Series A
Preferred Stock is not entitled to receive Rights in the Rights Offering.

Rank.  Shares of Series A Preferred Stock rank prior to the NAI Shares.

                                     -85-
Dividends. Holders of shares of Series A Preferred Stock are entitled to
receive, when and as declared by the Board of Directors, out of any funds of NAI
legally available therefor, cumulative cash dividends at an annual rate of 4% of
the $2.00 liquidation value of each such share ($.08 per share per annum). Any
deficiency in the payment of full cumulative dividends on the outstanding shares
of Series A Preferred Stock must be fully paid, or a sum sufficient for the
payment thereof set apart for such payments, before NAI may pay or set aside for
payment any dividends with respect to the NAI Shares or any other stock of NAI
ranking junior to the Series A Preferred Stock as to dividends or amounts upon
liquidation ("Junior Stock").

Liquidating Distributions. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of any
shares of Series A Preferred Stock then outstanding are entitled to receive for
each such share liquidating distributions in the amount of $2.00 per share, plus
any declared and unpaid dividends thereon, before any distribution may be made
to the holders of NAI Shares or any other Junior Stock. This distribution may be
paid in cash or in property taken at its fair value.

         If the amounts available for distribution in respect of shares of
Series A Preferred Stock upon any such voluntary or involuntary liquidation,
dissolution or winding up are not sufficient to satisfy the full liquidation
rights of all of the outstanding shares of Series A Preferred Stock, then the
holders of such outstanding shares shall share ratably in any such distribution
of assets in proportion to the full respective preferential amounts to which

they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of Series A
Preferred Stock will not be entitled to any further participation in any
liquidating distribution of any remaining assets by the Corporation.

Optional Conversion by Holders. Holders of shares of Series A Preferred Stock
have the right to convert all or a part of such shares into a number of NAI
Shares equal to (i) $2.00 multiplied by the number of shares of Series A
Preferred Stock so converted divided by (ii) the lesser of $2.00 or the average
NASDAQ bid price for NAI Shares for the 30 day period previous to the date of
conversion election. Upon such conversion, the holder of shares of Series A
Preferred Stock being converted shall also receive a warrant, exercisable for a
period of one year after the conversion date, to purchase, at a price of $1.00
per share, one NAI Share for every ten shares of Series A Preferred Stock so
converted.

Mandatory Redemption. NAI must redeem at least 25,000 shares of Series A
Preferred Stock at a price of $2.00 per share, plus the amount of all unpaid
cumulative compounded dividends on such shares of Series A Preferred Stock, from
funds legally available for such purposes on October 1, 1998 and must redeem all
remaining shares on or before September 30, 1999. Also, NAI must redeem all
outstanding shares of Series A Preferred Stock upon the consolidation or merger
of NAI into or with another corporation or corporations, or the sale, lease or
transfer of all or a substantial part of the assets of NAI to another
corporation or corporations (each such event being a "Sale of Business"). If a
Sale of Business occurs, NAI must redeem shares of the Series A Preferred Stock
in the amounts and with the preferences and priorities as if a liquidation had
occurred. See "Liquidating Distributions."

Optional Redemption. NAI may redeem shares of Series A Preferred Stock at any
time at a price of $2.00 per share plus unpaid cumulative accrued dividends.

Voting Rights. Except as expressly provided below, or as required by the MGCL,
holders of shares of Series A Preferred Stock have no voting rights. When the
holders of shares of Series A Preferred Stock are entitled to vote, each Senior
Preferred Stock is entitled to one vote.

         The affirmative vote or consent of the holders of at least two-thirds
of the outstanding shares of Series A Preferred Stock, is required to (i)
increase the authorized amount of Series A Preferred Stock, or authorize or
create, or increase the authorized amount of, any additional class of stock
ranking prior to or on a parity with the Series A

                                     -86-
Preferred Stock as to dividends or assets; or authorize or create, or increase
the authorized amount of, any class of stock or obligations convertible into or
evidencing the right to purchase any class of stock ranking prior to or on a
parity with the Series A Preferred Stock as to dividends or assets; (ii)
authorize or create, or increase the authorized amount of, any stock of NAI,
other than NAI Shares, which has the right to participate in the distribution of
the assets and earnings of NAI without limit as to per share amount; (iii)

amend, alter or appeal any of the provisions of the Charter or any of the
rights, preferences or powers of the Series A Preferred Stock as fixed in the
Certificate of Designations creating the Series A Preferred Stock, so as to
adversely affect the rights, preferences or powers of the shares of Series A
Preferred Stock or its holders, (iv) sell, lease or convey all, or substantially
all, of the property or business of NAI; (v) merge or consolidate with or into
any other corporation or corporations, unless the corporation surviving or
resulting from such merger or consolidation will have after such merger or
consolidation no class of stock either authorized or outstanding ranking prior
to or on a parity with the Series A Preferred Stock as to dividends or assets
with the same rights, preferences and powers as the Series A Preferred Stock,
and unless each holder of shares of Series A Preferred Stock at the time of such
merger or consolidation and in connection therewith shall continue to hold (in
the case of the merger in which NAI is the surviving corporation), his or her
shares of Series A Preferred Stock, or (in the case of the consolidation or
merger of NAI into some other corporation) shall receive the same number of
shares of Series A Preferred Stock, with the same rights, preferences and
powers, of such resulting corporation; or (vi) amend or repeal any of the
provisions of the section of the Certificate of Designations relating to voting
rights of holders of shares of Series A Preferred Stock.

Rights to Purchase NAI Shares

         Each NAI Share issued in the Distribution will be accompanied by a 
Right to purchase one additional NAI Share.  The Rights are exercisable for 45
days from the date of the Distribution at a Subscription Price of $2.00 per
share.  See "The Rights Offering."

Transfer Agent and Registrar

         The transfer agent and registrar for the NAI Shares and Rights will be
First Union National Bank.

                    CERTAIN PROVISIONS OF MARYLAND LAW AND
                         OF NAI'S CHARTER AND BYLAWS

The following summary of certain provisions of Maryland law and of the charter
and Bylaws of NAI does not purport to be complete and is subject to and
qualified in its entirety by reference to Maryland law and the charter and
Bylaws of NAI, copies of which are exhibits to the Registration Statement of
which this Prospectus is a part.  See "Available Information."

Classification of the Board of Directors

         The Bylaws provide that the number of directors of NAI may be
established by the Board of Directors but may not be fewer than the minimum
number required by the MGCL (which is three, unless the corporation has less
than three stockholders) nor more than 15. Any vacancy will be filled, at any
regular meeting or at any special meeting called for that purpose, by a majority
of the remaining directors, except that a vacancy resulting from an increase in
the number of directors must be filled by a majority of the entire Board of
Directors.

         Pursuant to the charter, the Board of Directors is divided into three

classes of directors. The initial terms of the Class I, Class II and Class III
directors will expire in 1999, 2000 and 2001, respectively. Beginning in 1999,
directors of each class will be chosen for three-year terms upon the expiration
of their current terms and each year one class of directors will be elected by
the stockholders. NAI believes that classification of the Board of Directors
will

                                     -87-
help to assure the continuity and stability of NAI's business strategies and
policies as determined by the Board of Directors. Holders of NAI Shares will
have no right to cumulative voting in the election of directors. Consequently,
at each annual meeting of stockholders, the holders of a majority of the NAI
Shares will be able to elect all of the successors of the class of directors
whose terms expire at that meeting.

         The classified board provision could have the effect of making the
replacement of incumbent directors more time consuming and difficult. At least
two annual meetings of stockholders, instead of one, will generally be required
to effect a change in a majority of the Board of Directors. Thus, the classified
board provision could increase the likelihood that incumbent directors will
retain their positions. The staggered terms of directors may delay, defer or
prevent a tender offer or an attempt to change control of NAI, even though a
tender offer or change in control might be in the best interest of the
stockholders.

Removal of Directors

         The charter provides that a director may be removed only for cause (as
defined in the charter) and only by the affirmative vote of at least two-thirds
of the votes entitled to be cast in the election of directors. This provision,
when coupled with the provision in the Bylaws authorizing the Board of Directors
to fill vacant directorships, precludes stockholders from removing incumbent
directors except upon the existence of cause for removal and a substantial
affirmative vote and filling the vacancies created by such removal with their
own nominees.

Business Combinations

         Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns ten percent or more of the
voting power of the corporation's shares or an affiliate of the corporation who,
at any time within the two-year period prior to the date in question, was the
beneficial owner of ten percent or more of the voting power of the
then-outstanding voting stock of the corporation (an "Interested Stockholder")
or an affiliate of such an Interested Stockholder are prohibited for five years
after the most recent date on which the Interested Stockholder becomes an
Interested Stockholder. Thereafter, any such business combination must be
recommended by the board of directors of such corporation and approved by the
affirmative vote of at least (a) 80% of the votes entitled to be cast by holders

of outstanding shares of voting stock of the corporation and (b) two-thirds of
the votes entitled to be cast by holders of voting stock of the corporation
other than shares held by the Interested Stockholder with whom (or with whose
affiliate) the business combination is to be effected, unless, among other
conditions, the corporation's common stockholders receive a minimum price (as
defined in the MGCL) for their shares and the consideration is received in cash
or in the same form as previously paid by the Interested Stockholder for its
shares. These provisions of the MGCL do not apply, however, to business
combinations that are approved or exempted by the board of directors of the
corporation prior to the time that the Interested Stockholder becomes an
Interested Stockholder. Each of Kranzco, Gerald Finn, Jeffrey Finn and Norman
Kranzdorf may beneficially own more than ten percent of NAI's voting shares and
would, therefore, be subject to the business combination provision of the MGCL.
However, pursuant to the statute, NAI has exempted any business combinations
involving any of them and, consequently, the five-year prohibition and the
super-majority vote requirements will not apply to business combinations between
any of them and NAI. As a result, Kranzco, Gerald Finn, Jeffrey Finn and/or
Norman Kranzdorf may be able to enter into business combinations with NAI that
may not be in the best interest of its stockholders without compliance by NAI
with the super-majority vote requirements and the other provisions of the
statute.

                                     -88-
Control Share Acquisitions

         The MGCL provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter, excluding shares of stock owned by the acquiror, by officers or by
directors who are employees of the corporation. "Control Shares" are voting
shares of stock which, if aggregated with all other such shares of stock
previously acquired by the acquiror or in respect of which the acquiror is able
to exercise or direct the exercise of voting power (except solely by virtue of a
revocable proxy), would entitle the acquiror to exercise voting power in
electing directors within one of the following ranges of voting power: (i)
one-fifth or more but less than one-third, (ii) one-third or more but less than
a majority, or (iii) a majority or more of all voting power. Control shares do
not include shares the acquiring person is then entitled to vote as a result of
having previously obtained stockholder approval. A "control share acquisition"
means the acquisition of control shares, subject to certain exceptions.

         A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the board of directors of the corporation to call a
special meeting of stockholders to be held within 50 days of demand to consider
the voting rights of the shares. If no request for a meeting is made, the
corporation may itself present the question at any stockholders meeting.

         If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
statute, then, subject to certain conditions and limitations, the corporation

may redeem any or all of the control shares (except those for which voting
rights have previously been approved) for fair value determined, without regard
to the absence of voting rights for the control shares, as of the date of the
last control share acquisition by the acquiror or of any meeting of stockholders
at which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a stockholders meeting and the
acquiror becomes entitled to vote a majority of the shares entitled to vote, all
other stockholders may exercise appraisal rights. The fair value of the shares
as determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition.

         The control share acquisition statute does not apply (a) to shares
acquired in a merger, consolidation or share exchange if the corporation is a
party to the transaction or (b) to acquisitions approved or exempted by the
charter or bylaws of the corporation.

         The Bylaws of NAI contain a provision exempting from the control share
acquisition statute any and all acquisitions by any person of NAI's shares of
stock. There can be no assurance that such provision will not be amended or
eliminated at any time in the future.

Dissolution of NAI

         The dissolution of NAI must be approved by the affirmative vote of the
holders of not less than two thirds of all of the votes entitled to be cast on
the matter.

Advance Notice of Director Nominations and New Business

         The Bylaws of NAI provide that (a) with respect to an annual meeting of
stockholders, nominations of persons for election to the Board of Directors and
the proposal of business to be considered by stockholders may be made only (i)
pursuant to NAI's notice of the meeting, (ii) by the Board of Directors or (iii)
by a stockholder who is entitled to vote at the meeting and has complied with
the advance notice procedures set forth in the Bylaws and (b) with respect to
special meetings of stockholders, only the business specified in NAI's notice of
meeting may be brought before the meeting of stockholders and nominations of
persons for election to the Board of Directors may be made only (i)

                                     -89-
pursuant to NAI's notice of the meeting, (ii) by the Board of Directors or (iii)
provided that the Board of Directors has determined that directors shall be
elected at such meeting, by a stockholder who is entitled to vote at the meeting
and has complied with the advance notice provisions set forth in the Bylaws.

Anti-takeover Effect of Certain Provisions of Maryland Law and of the Charter
and Bylaws

         The business combination provisions (with respect to stockholders other
than Kranzco, Gerald Finn, Jeffrey Finn and Norman Kranzdorf) and, if the
applicable provision in the Bylaws is rescinded, the control share acquisition

provisions of the MGCL, the provisions of the charter on classification of the
Board of Directors and removal of directors and the advance notice provisions of
the Bylaws could delay, defer or prevent a transaction or a change in control of
NAI that might involve a premium price for holders of NAI Shares or otherwise be
in their best interest.

                       SHARES ELIGIBLE FOR FUTURE SALE

         The sale of a substantial number of NAI Shares, or the perception that
such sales could occur, could adversely affect prevailing market prices for the
NAI Shares. In addition, any such sale or perception could make it more
difficult for NAI to sell equity securities or equity related securities in the
future at a time and price that NAI deems appropriate. Upon consummation of the
Distribution, Rights Offering and the Concurrent Offering, assuming all of the
Rights are exercised and all the Additional Shares are purchased in the
Concurrent Offering, NAI will have a total of 36,153,120 NAI Shares outstanding,
of which the 31,064,306 NAI Shares offered in connection with the Distribution
and Rights Offering will be eligible for immediate sale in the public market
without restriction, unless they are held by "affiliates" of NAI within the
meaning of Rule 144 under the Securities Act. In addition, there will be
outstanding 5,088,815 NAI Shares which will be "restricted" securities within
the meaning of Rule 144 under the Securities Act. Substantially all of such NAI
Shares will be eligible for resale in accordance with the provisions of Rule 144
immediately upon consummation of the Distribution. Additionally, NAI has granted
options to (i) certain officers, directors, employees and consultants of NAI to
purchase an aggregate of 3,583,992 NAI Shares and (ii) certain directors and
trustees of NAI and Kranzco to purchase 50,000 NAI Shares. NAI has also reserved
for issuance (i) up to 1,700,000 NAI Shares for issuance pursuant to the 1998
Plan, (ii) up to 8,500,000 NAI Shares for issuance pursuant to the Bonus
Compensation Plan. See "Principal Shareholders," "Description of Capital Stock,"
"Management," and "Plan of Distribution." Gerald Finn and Jeffrey Finn have
agreed not to sell or transfer, directly or indirectly, any NAI Shares held by
the Finns for a period of three years from the closing of the Exchange Offer.

         In general, under Rule 144 as currently in effect, if one year has
elapsed since the later of the date of acquisition of restricted shares from NAI
or any "affiliate" of NAI, as that term is defined under the Securities Act, the
acquiror or subsequent holder thereof is entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1.0% of the then
outstanding NAI Shares or the average weekly trading volume of the NAI Shares
during the four calendar weeks preceding the date on which notice of the sale is
filed with the Commission. Sales under Rule 144 also are subject to certain
manner of sale provisions, notice requirements and the availability of current
public information about NAI. If two years have elapsed since the date of
acquisition of restricted shares from NAI or from any "affiliate" of NAI, and
the acquiror or subsequent holder thereof is deemed not to have been an
"affiliate" of NAI at any time during the three months preceding a sale, such
person would be entitled to sell such shares in the public market under Rule
144(k) without regard to the volume limitations, manner of sale provisions,
public information requirements or notice requirements.

         No prediction can be made as to the effect, if any, that future sales
of shares, or the availability of shares for future sale, will have on the
market price prevailing from time to time. Sales of substantial amounts of NAI

Shares, or the perception that such sales could occur, may affect adversely
prevailing market prices of the NAI Shares.

                                     -90-
PLAN OF DISTRIBUTION

         The NAI Shares being issued in the Distribution, are being distributed
by Kranzco directly to the holders of Kranzco Common Shares and Kranzco Common
Share Equivalents on the Distribution Record Date, on the basis of one NAI Share
for each Kranzco Common Share and for each Kranzco Common Share Equivalent on
the Distribution Record Date. NAI intends to distribute Rights and copies of
this Prospectus to stockholders of record on the Rights Record Date promptly
following the effective date of the Registration Statement of which this
prospectus forms a part.

         In connection with the Concurrent Offering, NAI intends to distribute
Subscription Forms and copies of this Prospectus, to the members of the
Executive Group and the Broker Member Group, promptly following the effective
date of the Registration Statement of which this prospectus forms a part. NAI
will determine in its sole discretion whether any person is a member of the
Executive Group or the Broker Member Group. Any determinations by NAI as to the
members of the Executive Group or Broker Group is final.

         Holders of Rights who desire to subscribe for the purchase of NAI
Shares in the Rights Offering are urged to complete, date and sign the
Subscription Certificate and return it to the Subscription Agent on or before
the Expiration Date, together with payment in full for the subscribed for NAI
Shares should be directed to the Subscription Agent. There is no assurance that
any Underlying Shares will be available for purchase pursuant to the
Oversubscription Privilege.

         Members of the Executive Group and the Broker Member Group who desire
to subscribe for the purchase of NAI Shares in the Concurrent Offering are urged
to complete, date and sign the applicable Subscription Form and return it to the
Subscription Agent on or before the Expiration Date, together with payment in
full for the subscribed for NAI Shares should be directed to the Subscription
Agent. There is no assurance that any Excess Shares will be available for
purchase pursuant to the Executive Group Subscription Privilege or the Broker
Member Group Subscription Privilege, or that any member of the Broker Member
Group will be able to purchase all of the Additional Shares subscribed for
pursuant to the Broker Member Group Subscription Privilege.

         Certain employees, officers or directors of NAI may solicit responses
from holders of Subscription Certificates and Subscription Forms, but such
individuals will not receive any commissions or compensation for such services
other than their normal employment compensation.

                                   EXPERTS

         The consolidated financial statements of NAI included in this

Prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, to the extent and for the periods indicated in their reports, and
are included herein in reliance upon the authority of said firm as experts in
giving said report.

                                LEGAL MATTERS

         The validity of the Rights NAI Shares offered hereby will be passed
upon for NAI by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.
Certain matters of law will be passed upon for NAI by Robinson Silverman Pearce
Aronsohn & Berman LLP, New York, New York.

                                     -91-
INDEX TO NEW AMERICA NETWORK, INC.

                      CONSOLIDATED FINANCIAL STATEMENTS
                         AS OF JUNE 30, 1997 AND 1996

                        TOGETHER WITH AUDITORS' REPORT

                                                                        Page
                                                                        ----  
Index to Financial Statements.........................................   F-1
Report of Independent Public Accountants..............................   F-2
Consolidated Balance Sheets...........................................   F-3
Consolidated Statements of Operations.................................   F-4
Consolidated Statements of Stockholders' Deficit......................   F-5
Consolidated Statements of Cash Flows.................................   F-6
Notes to Consolidated Financial Statements............................   F-7

                                     F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of New America Network, Inc.:

We have audited the accompanying consolidated balance sheets of New America
Network, Inc. as of June 30, 1997 and 1996, and the related consolidated
statements of operations, stockholders' deficit and cash flows for each of the
three years in the period ended June 30, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of New
America Network, Inc. as of June 30, 1997 and 1996, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended June 30, 1997 in conformity with generally accepted accounting
principles.

Philadelphia, Pa.,
May 8, 1998

                                     F-2
NEW AMERICA NETWORK, INC.

                         CONSOLIDATED BALANCE SHEETS
June 30
                                                                   March 31,         ----------------------------------------
                                                                     1998                   1997                   1996
                                                            ----------------------   --------------------   -----------------
                                                                  (unaudited)
ASSETS

CURRENT ASSETS:

     Cash                                                   $    220,246             $     61,506           $     75,085
Accounts receivable (net of allowance of $20,000 and
         $7,439 at June 30, 1997 and 1996)                       787,408                  576,924                716,378
     Commissions receivable                                      636,541                  856,194                726,941
     Notes and other receivables                                   6,299                   16,829                 19,566
     Other current assets                                         19,588                   20,456                 20,062
                                                            ------------             ------------           ------------
           Total current assets                                1,670,082                1,531,909              1,558,032
                                                            ------------             ------------           ------------

PROPERTY AND EQUIPMENT, net                                      156,353                  155,083                170,375

OTHER ASSETS, net                                                  2,382                    1,987                  3,895
                                                            ------------             ------------           ------------
           Total assets                                     $  1,828,817             $  1,688,979           $  1,732,302
                                                            ============             ============           ============

           LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:

     Accounts payable and accrued expenses                  $  1,015,718             $  1,051,859           $    985,216
     Accrued interest                                             71,887                  127,495                 95,193
     Current portion of long-term debt                           126,667                  133,333                 43,334
     Stockholder loans                                           441,235                  441,235                419,083
     Deferred revenue                                            922,433                  773,023                862,506
                                                            ------------             ------------           ------------
           Total current liabilities                           2,577,940                2,526,945              2,405,332
                                                            ------------             ------------           ------------

LONG-TERM DEBT                                                    75,000                       --                 33,333
                                                            ------------             ------------           ------------
           Total liabilities                                   2,652,940                2,526,945              2,438,665
                                                            ------------             ------------           ------------

REDEEMABLE CONVERTIBLE PREFERRED
      STOCK                                                      202,000                  252,000                302,000
                                                            ------------             ------------           ------------

COMMITMENTS AND CONTINGENCIES (Notes 8,
      9 and 10)

STOCKHOLDERS' DEFICIT:

     Common stock                                                134,091                  132,939                132,687
     Additional paid-in capital                                2,552,779                2,526,969              2,498,604
     Accumulated deficit                                      (3,479,125)              (3,517,206)            (3,411,761)
     Treasury stock, at cost                                    (233,868)                (232,668)              (227,893)
                                                            --------------           ------------           ------------
           Total stockholders' deficit                        (1,026,123)              (1,089,966)            (1,008,363)
                                                            ----------------         ------------           ------------ 
           Total liabilities, redeemable 
                convertible preferred                       $  1,828,817             $  1,688,979           $  1,732,302
                stock and stockholders' deficit             ============             ============           ============
The accompanying notes are an integral part of these financial statements.

                                     F-3
NEW AMERICA NETWORK, INC.

                    CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months                           For the Year Ended
                                                     Ended March 31                                    June 30
                                          -------------------------------------  -------------------------------------------------
                                                  1998               1997             1997             1996              1995
                                          --------------------  ---------------  ---------------  ---------------  ---------------
                                                          (unaudited)
REVENUE:

     Commissions                          $    2,836,365        $    2,910,147   $    4,001,168   $    4,124,139   $    4,370,999
     License fees                              1,127,575               923,100        1,281,861        1,373,418        1,157,960
     Other                                       473,998               562,593          617,587          522,399          469,741
                                           -------------         -------------    -------------    -------------    -------------
         Total revenue                         4,437,938             4,395,840        5,900,616        6,019,956        5,998,700
                                           -------------         -------------    -------------    -------------    -------------

COSTS AND EXPENSES:

     Commission expense                          602,534               788,193        1,142,575        1,782,292        1,485,024
     Sales and marketing                         276,860               193,809          321,379          284,963          323,619
     Compensation and benefits                 1,831,783             1,911,151        2,527,676        2,437,395        1,980,962
     Other operating                           1,578,222             1,186,953        1,644,040        1,475,091        1,336,179
     Depreciation                                 39,789                36,874           52,518           56,321           44,779
     Interest, net                                46,906                46,678           59,639           48,035           45,811
                                           -------------         -------------    -------------    -------------    -------------
         Total costs and expenses              4,376,094             4,163,658        5,747,827        6,084,097        5,216,374
                                           -------------         -------------    -------------    -------------    -------------
         Income (loss) from operations            61,844               232,182          152,789          (64,141)         782,326
                                           -------------         -------------    -------------    -------------    -------------

OTHER EXPENSES:

     Equity in loss of affiliate                  11,603                14,866           24,863            4,763               --
     Loss on sale of real estate                      --                    --               --               --           65,323
                                           -------------         -------------    -------------    -------------    -------------
         Total other expenses                     11,603                14,866           24,863            4,763           65,323
                                           -------------         -------------    -------------    -------------    -------------
         Income (loss) from continuing
         operations before income taxes           50,241               217,316          127,926          (68,904)         717,003

INCOME TAXES                                       5,600                    --               --               --           35,000
                                           -------------         -------------    -------------    -------------    -------------   
     Income (loss) from continuing
     operations                                   44,641               217,316          127,926          (68,904)         682,003

LOSS FROM OPERATIONS OF
      DISCONTINUED BUSINESSES,

      net of tax (Note 7)                             --               161,938          222,791          128,096          392,412
                                           -------------         -------------    -------------    -------------    -------------   

NET INCOME (LOSS)                                 44,641                55,378          (94,865)        (197,000)         289,591
     Preferred share distributions                 6,560                 7,935           10,580           12,580           14,580
                                           -------------         -------------    -------------    -------------    -------------   

NET INCOME (LOSS) AVAILABLE               $       38,081        $       47,443   $     (105,445)  $     (209,580)  $      275,011
     TO COMMON SHAREHOLDERS                =============         =============    =============    ==============   =============
The accompanying notes are an integral part of these financial statements.

                                     F-4
NEW AMERICA NETWORK, INC.

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Common Stock          Additional
                                         ----------------------------     Paid-In      Accumulated      Treasury
                                             Shares       Par Value       Capital        Deficit         Stock           Total
                                         -------------  -------------   ----------   --------------   ------------    --------------
BALANCE, JULY 1, 1994* ..............      12,523,120     $128,286      $2,349,943    $(3,477,192)     $(177,893)      $(1,176,856)
Stock issued ........................         358,970        3,590          80,850                                          84,440
Amortization of deferred compensation                                       30,169                                          30,169
Distributions on preferred stock ....                                                     (14,580)                         (14,580)
Treasury stock purchase .............        (100,000)                                                   (50,000)          (50,000) 
Net income ..........................                                                     289,591                          289,591
                                         ------------      -------       ---------     ----------       --------        ----------
BALANCE, JUNE 30, 1995 ..............      12,782,090      131,876       2,460,962     (3,202,181)      (227,893)         (837,236)
Stock issued ........................          81,110          811                                                             811
Amortization of deferred compensation                                       37,642                                          37,642
Distributions on preferred stock ....                                                     (12,580)                         (12,580)
Net loss ............................                                                    (197,000)                        (197,000)
                                         ------------      -------       ---------     ----------       --------        ----------
BALANCE, JUNE 30, 1996 ..............      12,863,200      132,687       2,498,604     (3,411,761)      (227,893)       (1,008,363)
Stock issued ........................          25,170          252                                                             252
Amortization of deferred compensation                                       28,365                                          28,365
Distributions on preferred stock ....                                                     (10,580)                         (10,580)
Treasury stock purchase .............         (17,125)                                                    (4,775)           (4,775)
Net loss ............................                                                     (94,865)                         (94,865)
                                         ------------      -------       ---------     ----------       --------        ----------
BALANCE, JUNE 30, 1997 ..............      12,871,245      132,939       2,526,969     (3,517,206)      (232,668)       (1,089,966)
Stock issued* .......................         115,169        1,152          13,250                                          14,402
Amortization of deferred
compensation* .......................                                       12,560                                          12,560
Distributions on preferred stock* ...                                                      (6,560)                          (6,560)
Treasury stock purchase* ............         (12,000)                                                    (1,200)           (1,200)
Net income* .........................                                                      44,641                           44,641
                                         ------------      -------       ---------     ----------       --------        ----------
BALANCE, MARCH 31, 1998* ............      12,974,414     $134,091      $2,552,779    $(3,479,125)     $(233,868)      $(1,026,123)
                                         ============      =======       =========     ==========       ========        ==========
The accompanying notes are an integral part of these financial statements.

*Unaudited

                                     F-5
NEW AMERICA NETWORK, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months                           For the Year Ended
                                                     Ended March 31                                    June 30
                                          -------------------------------------  -------------------------------------------------
                                                  1998               1997             1997             1996              1995
                                          --------------------  ---------------  ---------------  ---------------  ---------------
                                                          (unaudited)
CASH FLOWS FROM OPERATING

   ACTIVITIES:

   Net income (loss)                      $   44,641            $   55,378       $  (94,865)      $ (197,000)      $  289,591
   Adjustments to reconcile net income
      (loss) to net cash provided by
      (used in) operating activities
              Discontinued operations             --               161,938          222,791          128,096          392,412
              Equity in loss of affiliate     11,603                14,866           24,863            4,763               --
              Depreciation                    39,789                36,874           52,518           56,321           44,779
              Amortization of deferred 
                  compensation                26,962                22,092           28,617           38,453          114,609
              Loss on sale of real estate         --                    --               --               --           65,323
   Changes in assets and liabilities-
     (Increase) decrease in-
              Accounts receivable           (210,484)               92,074          139,454          (82,409)        (113,832)
              Commissions receivable         219,653               (98,337)        (129,253)         (25,464)        (412,959)
              Notes and other receivables    10,530                 (2,627)           2,737          (23,479)          (3,567)
              Other current assets          (10,735)                (5,074)         (25,257)          14,021           (8,084)
              Other assets                     (395)                    --            1,908           (4,140)             388
            Increase (decrease) in-
              Accounts payable and
                  accrued expenses           (91,749)               33,746           98,945          225,660           14,566
              Deferred revenue               149,410                 1,983          (89,483)          23,416          209,684
                                           ---------             ---------        ---------        ---------        ---------
            Net cash provided by
                  operating activities       189,225               312,913          232,975          158,238          592,910
                                           ---------             ---------        ---------        ---------        ---------

CASH FLOWS FROM INVESTING
   ACTIVITIES:

            Costs incurred by
                discontinued operations           --              (161,938)        (222,791)        (128,096)        (392,412)
            Proceeds from sale of real
                estate                            --                    --               --               --           75,000
            Disposal of property and
                equipment                         --                    --               --               --           57,706
            Purchase of property and
                equipment                    (41,059)              (33,602)         (37,226)        (149,060)              --
                                           ---------             ---------        ---------        ---------        ---------
              Net cash used in investing
                activities                   (41,059)             (195,540)        (260,017)        (277,156)        (259,706)
                                           ---------             ---------        ---------        ---------        ---------

CASH FLOWS FROM FINANCING

    ACTIVITIES:

            Distributions paid on
                preferred stock               (6,560)               (7,935)         (10,580)         (12,580)         (14,580)
            Treasury stock purchase           (1,200)               (4,775)          (4,775)              --          (50,000)
            Redemption of redeemable
              convertible preferred
              stock                          (50,000)              (50,000)         (50,000)         (50,000)         (50,000)
            Loan proceeds                    100,000                99,999          150,000          110,531            2,105
            Repayment of long-term debt      (31,666)              (45,675)         (71,182)         (55,365)         (43,345)
                                           ---------             ---------        ---------        ---------        ---------
            Net cash provided by
              (used in) financing
              activities                      10,574                (8,386)          13,463           (7,414)        (155,820)
                                           ---------             ---------        ---------        ---------        ---------

NET INCREASE (DECREASE) IN CASH              158,740               108,987          (13,579)        (126,332)         177,384

CASH, BEGINNING OF PERIOD                     61,506                75,085           75,085          201,417           24,033
                                           ---------             ---------        ---------        ---------        ---------

CASH, END OF PERIOD                       $  220,246            $  184,072       $   61,506       $   75,085       $  201,417
                                           =========             =========        =========        =========        =========
The accompanying notes are an integral part of these financial statements.

                                     F-6
NEW AMERICA NETWORK, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                JUNE 30, 1997

1.   ORGANIZATION AND OPERATIONS:

New America Network, Inc. (the "Company") is a Delaware corporation, which has
developed a network of independently owned licensed real estate brokers to
provide commercial real estate brokerage and other real estate-related services.
The Company services national and international businesses which own or use real
estate throughout the United States and, to a lesser extent, abroad. The Company
provides brokerage and real estate services to institutional owners, lenders and
large corporations.

The financial statements as of March 31, 1998 and for the nine-month periods
ended March 31, 1998 and 1997 are unaudited; however, in the opinion of
management, all adjustments (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the financial statements for the unaudited
periods have been included. The results for the interim periods are not
necessarily indicative of the results for the full year.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.

Statements of Cash Flows

The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents for purposes of the statements of
cash flows. Cash paid for interest was $27,337, $16,799 and $15,937 for the
years ended June 30, 1997, 1996 and 1995, respectively, and $102,514 (unaudited)
and $16,491 (unaudited) for the nine month periods ended March 31, 1998 and
1997, respectively.

Earnings Per Share

In February 1997, the Financial Accounting Standards Board issued Statement No.

128, Earnings per Share ("SFAS") No. 128. SFAS No. 128 establishes standards for
computing and presenting earnings per share ("EPS") and applies to entities with
publicly held common stock or potential common stock. This statement simplifies
the standards for computing EPS previously found in APB Opinion No. 15,
"Earnings per Share," and makes them comparable to international EPS standards.

                                     F-7
Basic EPS is based on the weighted average number of common shares outstanding.
The weighted average number of shares outstanding used in the Basic EPS
computations was 12,883,549, 12,860,322 and 12,648,300 for the years ended June
30, 1997, 1996 and 1995, respectively, and 12,954,181 (unaudited) and 12,887,632
(unaudited) for the nine-month periods ended March 31, 1998 and 1997,
respectively.

The Diluted EPS computations have been adjusted to give effect to common share
equivalents; specifically, redeemable convertible preferred stock outstanding.
The weighted average number of shares outstanding used in the Diluted EPS
computations was 13,034,549, 13,036,322 and 12,849,300 for the years ended June
30, 1997, 1996 and 1995, respectively, and 13,080,181 (unaudited) and 13,038,632
(unaudited) for the nine-month periods ended March 31, 1998 and 1997,
respectively.

The Company's per common share data is as follows:
March 31,         March 31,        June 30,         June 30,          June 30,
                                                  1998              1997             1997             1996              1995
                                              -----------       -----------       ----------       ----------        ----------  
                                              (unaudited)       (unaudited)
Income (loss) from continuing
operations                                  $            --    $          .01    $        (.01)    $        (.01)    $        .05

Discontinued operations                                  --              (.01)            (.02)             (.01)            (.03)
                                            ----------------  ----------------- ----------------   ----------------  --------------
Basic and diluted net income (loss)         $            --   $          --     $         (.01)    $        (.02)     $       .02
                                            ================  ================= ================   ================   ==============
Property and Equipment

Property and equipment are stated at cost. Major renewals and betterments are
capitalized while replacements, maintenance and repairs that do not improve or
extend the life of the asset are expensed. As assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed from the
accounts, and any gain or loss is reflected.

Depreciation is computed using the straight-line method over the estimated
useful lives of the assets as follows:
June 30
                                                      Useful              March 31,       ---------------------------------------
                                                       Life                 1998                 1997                1996
                                                -------------------  -------------------  -------------------  ------------------
                                                                         (unaudited)
Office equipment                                      7 years        $           135,614  $           128,219  $          128,912
Leasehold improvements                                7 years                     13,626               13,626              13,626
Computer equipment                                    3 years                    185,342              151,679             127,508
                                                                     -------------------  -------------------  ------------------
                                                                                 334,582              293,524             270,046
Less - Accumulated depreciation                                                 (178,229)            (138,441)            (99,671)
                                                                     -------------------  -------------------  ------------------
Property and equipment, net                                          $           156,353  $           155,083  $          170,375
                                                                     ===================  ===================  ==================
F-8
Investments

The Company accounts for its 50% investment in NAIS on the equity method. The
Company has a net (deficit) investment in NAIS of ($24,626) and $8,680 at June
30, 1997 and 1996, respectively, and is included in other current assets. The
joint venture was dissolved in February 1998.

The Company's share of NAIS' loss was $24,863, $4,763 and $0 for the years ended
June 30, 1997, 1996 and 1995, respectively.

Revenue Recognition and Deferred Revenue

License fees received from the Company's member broker firms are deferred and
recognized ratably over the term of the marketing service agreement, generally
over one to three years. Commissions from real estate sales brokered by the
Company are recognized at the time of the transfer of title. Commissions from
other network transactions are primarily recognized as they are earned. Such
commissions may be collected in installments over several years.

3.   INDEBTEDNESS:

Notes Payable

The Company had available a $100,000 line of credit from First Washington Bank
which expired on October 2, 1997. The line was secured by a second mortgage on
the Company's office building. Borrowings against this line were $100,000 and $0
as of June 30, 1997 and 1996, respectively. Interest was payable quarterly on
this line at a rate of prime plus 1%. This line was repaid on October 2, 1997.

On October 2, 1997, the Company entered into a $100,000 line of credit with
First Washington State Bank. The line is secured by a second mortgage on the
Company's office building and borrowings under the line bear interest at prime
plus 1% (8.5% (unaudited) at March 31, 1998) with a maturity date of October
1998. The Company had no outstanding borrowings against this line of credit at
June 30, 1997 and 1996, respectively, and $100,000 (unaudited) outstanding at
March 31, 1998.

The Company has a commercial installment loan in the amount of $80,000 from
First Washington Bank which is secured by equipment and personally guaranteed by
the Chief Executive Officer of the Company. The interest rate on this loan is
prime plus 1% which was 8.5% and 8.3% at June 30, 1997 and 1996, respectively,
and 8.5% (unaudited) at March 31, 1998. The outstanding principal balance on
this loan totaled $33,333 and $76,667 as of June 30, 1997 and 1996,
respectively. At March 31, 1998 principal of $6,666 was outstanding under this
loan. Principal and interest payments of $3,333 are due monthly with all
outstanding principal and interest due in full at the loan maturity date of May
1998.

At June 30, 1997, all outstanding indebtedness was payable within one year.

On December 2, 1997, the Company received $100,000 of proceeds from a term loan
with First Washington State Bank. The loan bears interest at the prime rate plus

1% (8.5% (unaudited) at March 31, 1998), with monthly principal payments of
$1,667 and a maturity date of November 2002. The loan is secured by a second
mortgage on the Company's office building and personally guaranteed by the Chief
Executive Officer of the Company. At March 31, 1998, principal of $95,000 was
outstanding under this loan, with remaining principal payments of $6,667 due in
fiscal year 1998, $19,992 due in fiscal years 1999 through 2002 and $8,365 due
thereafter.

                                     F-9
Stockholder Loans

The Company had loans outstanding of $441,235 and $419,083 as of June 30, 1997
and June 30, 1996, respectively, from certain of its stockholders. These amounts
are due on demand and interest is payable at rates ranging from 10% to 12%.
During the years ended June 30, 1997 and 1996, the Company incurred interest of
$41,588 and $41,369 on these borrowings, respectively.

4.   RELATED PARTY TRANSACTIONS:

The Company rents office space in Hightstown, New Jersey, under the terms of an
operating lease from an affiliate owned by two officers of the Company. The
minimum annual rent under the lease is $102,000 and the lease expires in April
1999. The lease automatically renews for successive one-year periods and either
party may terminate the lease on 90 days written notice. During fiscal 1997,
1996 and 1995 the Company paid $102,000 in rent expense.

5.   REDEEMABLE CONVERTIBLE PREFERRED STOCK:

The Company issued 201,000 shares of Series A Redeemable Convertible Preferred
Stock ("Series A Preferred Stock"), par value $ .01 per share in April 1994 for
$402,000. The Series A Preferred Stock has a distribution rate of 4 percent of
the Exchange Price ($2.00). The distributions are payable in arrears on July 1,
October 1, January 1 and April 1.

The holders of shares of the Series A Preferred Stock are able to convert all or
part of such shares into shares of Common Stock of the Company equal to the
lesser of $2.00 or the average NASDAQ bid price per share, as defined. Upon such
conversion, the holder of shares of Series A Preferred Stock will also receive a
warrant to purchase, for one year, shares of common stock equal to one share of
common stock for every ten shares of Series A Preferred Stock converted at a
purchase price of $1 per share. No shares of Series A Preferred Stock have been
converted through June 30, 1997.

The Company is required to redeem in five consecutive annual installments of at
least 25,000 shares on October 1, 1994 through 1998, with all remaining shares
being redeemed on or before September 30, 1999. The Company has redeemed 75,000
shares through June 30, 1997 for a total value of $150,000. The Company paid
distributions of $10,580, $12,580 and $14,580 for the years ended June 30, 1997,
1996 and 1995, respectively.

6. STOCKHOLDERS' DEFICIT:

Common Stock

The Company had 200,000,000 shares of common stock, $.01 par value per share
authorized as of June 30, 1997 and 1996. The Company had 13,293,920 shares of
common stock issued and 12,871,245 shares outstanding as of June 30, 1997. The
Company had 13,268,750 shares of common stock issued and 12,863,200 shares
outstanding as of June 30, 1996. The Company had 13,409,089 (unaudited) shares
of common stock issued and 12,974,414 (unaudited) shares outstanding as of March
31, 1998.

Treasury Stock

The Company repurchases common stock at a weighted average stock price at
management's discretion. At June 30, 1997 and 1996, the Company had 422,675
shares of treasury stock valued at $232,668 and 405,550 shares of treasury stock
valued at $227,893, respectively. At March 31, 1998, the Company had 434,675
(unaudited) shares of treasury stock valued at $233,868 (unaudited).

                                     F-10
7.   INCOME TAXES:

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes",
which adopts an asset and liability approach for financial accounting and
reporting for income taxes.

The Company files a consolidated federal tax return and state tax returns on a
separate company basis. At June 30, 1997, the Company had federal net operating
loss carryforwards of approximately $2,620,000 for application against future
taxable income.

The components of income tax provision (benefit) are as follows:
For the Nine Months                           For the Year Ended
                                                     Ended March 31                                    June 30
                                          -------------------------------------  -------------------------------------------------
                                                  1998               1997             1997             1996              1995
                                          --------------------  ---------------  ---------------  ---------------  ---------------
                                                          (unaudited)
Current:

  Federal                                  $      --            $       --       $       --       $       --       $       --
  State                                        5,600                    --               --               --               --
                                            --------             ---------        ---------        ---------        ---------
                                               5,600                    --               --               --               --
                                            --------             ---------        ---------        ---------        ---------
Deferred:

  Federal                                     (7,140)              (42,332)         (56,444)         112,808          (61,028)
  State                                          --                     --               --               --           35,000
                                            --------             ---------        ---------        ---------        ---------
                                              (7,140)              (42,332)         (56,444)         112,808          (26,028)
                                            --------             ---------        ---------        ---------        ---------
Valuation Allowance                            7,140                42,332           56,444         (112,808)          61,028
                                            --------             ---------        ---------        ---------        ---------
                                           $   5,600            $       --       $       --       $       --       $   35,000
                                            ========             =========        =========        =========        =========
The reported provision for income taxes differs from that computed by
multiplying pre-tax income by the applicable statutory federal income tax rate
due primarily to state income taxes and the utilization of net operating loss
carryforwards.

                                     F-11
The components of the net deferred tax asset (liability) are as follows:
June 30
                                                       March 31,                ------------------------------------
                                                         1998                       1997                    1996
                                                    --------------              ------------            ------------
                                                     (Unaudited)
Net operating loss carryfowards                   $      984,552               $  1,012,048             $    993,201
Other accruals and reserves                             (204,115)                  (232,313)                (269,910)
                                                  ----------------             ----------------         --------------
                                                         780,437                    779,735                  723,291
                                                  -----------------            ----------------         --------------
Valuation allowance                                     (780,437)                  (779,735)                (723,291)
                                                   --------------              ---------------          ---------------

     Net                                          $          -                 $         -              $          -
                                                   ====================         ======================   ==================
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. The Company has
established a valuation allowance for the entire net deferred tax.

8.   DISCONTINUED OPERATIONS:

During 1995 and 1997, the Company adopted plans to discontinue operations of
RealQuest, Inc. ("RealQuest") and New America Financial Services ("NAFS"),
respectively. Accordingly, the operating results of RealQuest and NAFS have been
segregated from continuing operations and reported as a separate line item on
the statement of operations for all periods presented.

Operating results from these discontinued operations are as follows:
1997                 1996                 1995
                                     -------------------  -------------------  ----------------
Total revenue                        $     9,530          $      26,250        $    129,055
Costs and expenses:
    Cost of services                          --                     --             (44,177)
    Operating expenses                  (232,321)              (154,346)           (477,290)
                                     -------------------  -------------------  ----------------
Loss from operations of              
  discontinued businesses $          $  (222,791)         $    (128,096)           (392,412)
                                     ===================  ===================  ================
No deferred tax benefit was recorded for these discontinued operations due to
the net operating loss carryforwards.

9.   SEVERANCE AGREEMENT:

On August 15, 1994, the Company entered into a severance agreement with an
employee. The Company agreed to pay the employee one year's full salary at the
higher of the employee's salary at the time of the agreement or at

                                     F-12
the time of termination. This employee terminated on June 28, 1996, but
remained as an independent contractor until November 25, 1996, at which time
severance payments began. Payments aggregating $100,000 are to be made over a
two-year period and are included in accrued expenses.

10.  COMMITMENTS AND CONTINGENCIES:

All full-time employees over the age of 21 and who have completed one full year
of employment are eligible to participate in the Company's 401K plan. The
Company contributes to the plan at its own discretion. For the years ended June
30, 1997, 1996 and 1995 the Company's contribution to the plan amounted to
$7,000, $7,089 and $8,277, respectively.

In the normal course of business, there are various claims which have been
brought or asserted against the Company. After consultation with legal counsel,
in management's opinion such actions or claims will not have a material adverse
effect on the Company's financial position or results of operations.

11.  SUBSEQUENT EVENTS:

In March 1998, the Company signed a letter of intent to enter into a strategic
alliance with Kranzco Realty Trust ("Kranzco") that will recapitalize the
Company as a public company. The transaction is subject to certain conditions.
Under the terms of the agreement, Kranzco will conduct an exchange offer for 80%
of the outstanding common stock of the Company for $8,000,000 of Kranzco
convertible subordinated notes, convertible into common shares of beneficial
interest of Kranzco at $20 per share.

In connection with this transaction, the Company has agreed to effect a
reincorporation merger by merging into New America International, Inc., a
Maryland corporation and a wholly-owned subsidiary of the Company ("NAI
Maryland"). Upon the consummation of such merger, each share of the Company will
be converted into 1.316172 shares of NAI Maryland.

Kranzco is expected to spin off approximately 88% of its shares of the Company,
estimated to be approximately 12,000,000 shares or 70.2% of all outstanding
shares of the Company, to Kranzco's shareholders on a one-for-one basis. After
the spin off, the Company will issue rights to acquire additional shares of
common stock of the Company, at $2 per share, to all of its stockholders on a
one-for-one basis, exercisable for 45 days.

                                     F-13
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

         NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY NAI. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUM STANCES, CREATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

                         ---------------------------
                          SUMMARY TABLE OF CONTENTS

                                                               Page

Available Information.........................................   2
Prospectus Summary............................................   3
Risk Factors..................................................  17
Use of Proceeds...............................................  25
Dividend Policy...............................................  26
Dilution......................................................  27
Capitalization................................................  28
Selected Financial and Operating  Data........................  29
New America Network, Inc. Pro Forma Condensed
  Financial Information.......................................  30
Management's Discussion and Analysis of
  Financial Condition and Results of Operations...............  36
Business......................................................  40
Related Transactions..........................................  49
The Distribution..............................................  53
The Rights Offering...........................................  56
The Concurrent Offering.......................................  61
Certain United States Tax Considerations......................  64
Management....................................................  69
Principal Shareholders........................................  82
Certain Transactions..........................................  83
Description of Securities.....................................  84
Certain Provisions of Maryland Law and of
  NAI's Charter and Bylaws....................................  87
Shares Eligible for Future Sale...............................  90
Plan of Distribution..........................................  91
Experts.......................................................  91
Legal Matters.................................................  91
Index to Financial Statements................................. F-1

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

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                                 NEW AMERICA
                             INTERNATIONAL, INC.

                                 Common Stock
                       Rights to Purchase Common Stock

                            ---------------------
                                  PROSPECTUS
                            ---------------------

                                         , 1998

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

         Set forth below is an estimate of the approximate amount of the fees
and expenses payable by the Registrant in connection with the issuance and
distribution of the Common Stock.

SEC Registration Fee........................................  $   11,575
Blue Sky Fees and Expenses..................................     100,000
Printing and Mailing Fees...................................     200,000
Counsel Fees and Expenses...................................     500,000
Accountant's Fees and Expenses..............................      75,000
Transfer Agent and Registrar Fees...........................      25,000
Miscellaneous...............................................      88,425

         Total..............................................  $1,000,000
                                                              ==========
--------------------
*  Estimate

Item 14. Indemnification of Directors and Officers

The MGCL permits a Maryland corporation to include in its charter a provision
limiting the liability of its directors and officers to the corporation and its
stockholders for money damages except for liability resulting from (a) actual
receipt of an improper benefit or profit in money, property or services or (b)
active and deliberate dishonesty established by a final judgment as being
material to the cause of action. The charter of NAI contains such a provision
which eliminates such liability to the maximum extent permitted by Maryland law.

           The charter of NAI authorizes it, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (a) any present or
former director or officer or (b) any individual who, while a director of NAI
and at the request of NAI, serves or has served another corporation, real estate
investment trust, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, partner or trustee of such
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or other enterprise from and against any claim or
liability to which such person may become subject or which such person may incur
by reason of his or her status as a present or former director or officer of
NAI. The Bylaws of NAI obligate it, to the maximum extent permitted by Maryland
law, to indemnify and to pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to (a) any present or former director or
officer who is made a party to the proceeding by reason of his service in that
capacity or (b) any individual who, while a director of NAI and at the request
of NAI, serves or has served another corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, real estate

investment trust, partnership, joint venture, trust, employee benefit plan or
other enterprise and who is made a party to the proceeding by reason of his
service in that capacity. The charter and Bylaws also permit NAI to indemnify
and advance expenses to any person who served a predecessor of NAI in any of the
capacities described above and to any employee or agent of NAI or a predecessor
of NAI.

                                     II-1
The MGCL requires a corporation (unless its charter provides
otherwise, which NAI's charter does not) to indemnify a director or officer who
has been successful, on the merits or otherwise, in the defense of any
proceeding to which he is made a party by reason of his service in that
capacity. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. However, under the MGCL, a Maryland
corporation may not indemnify for an adverse judgment in a suit by or in the
right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses to a director or officer upon the
corporation's receipt of (a) a written affirmation by the director or officer of
his good faith belief that he has met the standard of conduct necessary for
indemnification by the corporation and (b) a written undertaking by him or on
his behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met.

Item 15. Recent Sales of Unregistered Securities

         On August 1, 1994, the Board of Directors awarded 29 employees an
aggregate of 47,095 shares of Common Stock as bonus compensation for services
performed. The Board of Directors also awarded a consultant of the Registrant
1,875 shares of Common Stock as a performance bonus.

         On October 17, 1994, the Board of Directors awarded a consultant of the
Registrant 100,000 shares of Common Stock as a performance bonus.

         On March 6, 1995, Joseph Grossman, Peter O. Hanson and Marc Shegoski,
members of the Board of Directors purchased 5,000, 50,000 and 10,000 shares of
Common Stock, respectively, at a price of $.50 per share.

         On June 5, 1995, the Board of Directors awarded Matthew Arnold, Derrick
Mashore, David Blanchard and Jeffrey Finn, senior level employees of the

Registrant, 30,000, 50,000, 45,000 and 20,000 shares of Common Stock as bonus
compensation for services performed.

         On July 10, 1995, the Board of Directors awarded 34 employees an
aggregate of 60,157 shares of Common Stock as bonus compensation for services
performed. The Board of Directors also awarded a consultant of the Registrant
6,875 shares of Common Stock as a performance bonus.

         On July 27, 1995, the Board of Directors awarded 53 Broker Members an
aggregate of 14,078 shares of Common Stock as a bonus.

         On July 9, 1996, the Board of Directors awarded 38 employees an
aggregate of 25,170 shares of Common Stock as bonus compensation.

         On July 28, 1997, the Board of Directors awarded 34 employees an
aggregate of 89,669 shares of Common Stock as bonus compensation for services
permed. The Board also awarded a consultant of the Registrant 500 shares of
Common Stock as a performance bonus.

                                     II-2
On January 14, 1997, the Board of Directors awarded each of Matthew
Arnold, Joseph Grossman, Peter O. Hanson, Robert McMenamin and Marc Shegoski,
the non-employees directors of the Registrant, 5,000 shares of Common Stock for
their service on the Board.

         The transactions listed above were made in reliance upon the exemption
from registration provisions under the Securities Act of 1933, as amended,
contained in Section 4(2) thereof.

Item 16. Exhibits and Financial Statement Schedules

                           A)         Exhibits.

2.1      Form of Exchange Agreement, among Kranzco Realty Trust, Gerald Finn,
         Jeffrey Finn, and a trust for the benefit of Jeffrey Finn.*

3.1      Amended and Restated Articles of Incorporation of the Registrant 
         (Delaware).*

3.2      Amended and Restated Bylaws of the Registrant (Delaware).*

3.3      Proposed Articles of Incorporation of the Registrant (Maryland).*

3.2      Proposed Bylaws of the Registrant (Maryland).*

4.1      Form of Common Stock Certificate.*

4.2      Form of Subscription Certificate.*

4.3      Executive Group Subscription Form.*

4.4      Broker Member Group Subscription Form.*

5.1      Opinion of Ballard Spahr Andrews & Ingersoll, LLP.*

10.1     Form of Restricted Stock Agreement between New America Network, Inc. 
         and selected employees.

10.2     Form of Employment Agreement with Gerald Finn.*

10.3     Form of Employment Agreement with Jeffrey Finn.*

10.4     Lease dated August 15, 1984 between New America Network, Inc. and The 
         Building Center.

10.5     Amendment dated April 15, 1998 to Lease Agreement between New America 
         Network, Inc. and The Building Center, Inc.*

10.6     New America International, Inc. 1998 Incentive Plan.*

10.7     New America International, Inc. 1998 Bonus Compensation Plan.*

10.8     New America International, Inc. 1998 Stock Option Plan.*

                                     II-3
10.9     Loan Agreement dated October 2, 1997 between New America Network, 
         Inc. and First Washington State Bank.*

10.10    Form of Intercompany Agreement between Kranzco Realty Trust and the 
         Registrant.*

21.1     List of Subsidiaries of Registrant.*

23.1     Consent of Ballard Spahr Andrews & Ingersoll LLP (included in Exhibit 
         5.1).*

23.2     Consent of Arthur Andersen LLP.

24.1     Powers of Attorney (included on Signature Page).

27.1     Financial Data Schedule.

--------------------
*        To be filed by Amendment.

                           B)         Financial Statement Schedules.

         None.

         All other schedules have been omitted because they are not required or
not material or because the required information is included in the financial
statements included elsewhere herein.

Item 17. Undertakings

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

         The undersigned registrant hereby undertakes that:

                  (1) To file, during any period in which offers or sales are
         being made, a post-effective amendment to this registration statement:

                      (i) To include any prospectus required by Section 
                          10(a)(3) of the Securities Act of 1933;

                                     II-4
(ii) To reflect in the prospectus any facts or events
                  arising after the effective date of the registration statement
                  (or the most recent post-effective amendment thereof) which,
                  individually or in the aggregate, represent a fundamental
                  change in the information set forth in the registration
                  statement. Notwithstanding the foregoing, any increase or
                  decrease in volume of securities offered (if the total dollar
                  value of securities offered would not exceed that which was
                  registered) and any deviation from the low or high end of the
                  estimated maximum offering range may be reflected in the form
                  of prospectus filed with the Commission pursuant to Rule
                  424(b) if, in the aggregate, the changes in volume and price
                  represent no more than a 20% change in the maximum aggregate
                  offering price set forth in the "Calculation of Registration
                  Fee" table in the effective registration statement;

                         (iii) To include any material information with respect
                  to the plan of distribution not previously disclosed in the
                  registration statement or any material change to such
                  information in the registration statement;

                  (2) That, for the purpose of determining any liability under
         the Securities Act of 1933, each such post-effective amendment shall be
         deemed to be a new registration statement relating to the securities
         offered therein, and the offering of such securities at that time shall
         be deemed to be the initial bona fide offering thereof.

                  (3) To remove from registration by means of a post-effective
         amendment any of the securities being registered which remain unsold at
         the termination of the offering.

                  (4) For purposes of determining any liability under the Act,
         the information omitted from the form of prospectus filed as part of
         this registration statement in reliance upon Rule 430A and contained in
         a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
         or (4) or 497(h) under the Act shall be deemed to be part of this
         registration statement as of the time it was declared effective.

                  (5) For the purpose of determining any liability under the
         Act, each post-effective amendment that contains a form of prospectus
         shall be deemed to be a new registration statement relating to the
         securities offered therein, and the offering of such securities at that
         time shall be deemed to be the initial bona fide offering thereof.

                                     II-5
SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Hightstown,
State of New Jersey, on the 15th day of May, 1998.

                                       New America International, Inc.

                                       By /s/Gerald Finn
                                          -------------------------------------
                                          Gerald Finn
                                          Chairman and Chief Executive Officer

                              POWER OF ATTORNEY

         Each person whose signature appears below hereby constitutes and
appoints Gerald Finn and Jeffrey Finn, his true and lawful attorneys-in-fact and
agents, with full powers of substitution, for him and in his name, place and
stead, in any and all capacities, to sign and to file any and all amendments,
including post-effective amendments and any registration statements filed
pursuant to Rule 462(b), to this Registration Statement with the Securities and
Exchange Commission, granting to each said attorney-in-fact and agent power and
authority to perform any other act on behalf of the undersigned required to be
done in connection therewith.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE                                        TITLE                              DATE
     ---------                                        -----                              ----
/s/ Gerald Finn                                  Chief Executive Officer;               May 15, 1998
------------------------------------             Chairman (Principal Executive
    Gerald Finn                                  Officer)

/s/ Jeffrey Finn                                 President; Chief Operating Offering    May 15, 1998
-----------------------------------              and Director
    Jeffrey Finn                                 

/s/ Matthew Arnold                               Director                               May 15, 1998
-----------------------------------
    Matthew Arnold

/s/ Joseph Grossman                              Director                               May 15, 1998
----------------------------------- 

    Joseph Grossman

/s/ Peter Hanson                                 Director                               May 15, 1998
----------------------------------- 
    Peter Hanson

/s/ Robert McMenamin                             Director                               May 15, 1998
----------------------------------- 
    Robert McMenamin

/s/ Marc Shegoski                                Director                               May 15, 1998
----------------------------------- 
    Marc Shegoski

/s/ Margaret B. Smith                            Controller (Principal Financial        May 15, 1998
-------------------------------                  Officer) 
    Margaret B. Smith
II-6
EXHIBIT INDEX

2.1      Form of Exchange Agreement, among Kranzco Realty Trust, Gerald Finn,
         Jeffrey Finn, and a trust for the benefit of Jeffrey Finn.*

3.1      Amended and Restated Articles of Incorporation of the Registrant 
         (Delaware).*

3.2      Amended and Restated Bylaws of the Registrant (Delaware).*

3.3      Proposed Articles of Incorporation of the Registrant (Maryland).*

3.2      Proposed Bylaws of the Registrant (Maryland).*

4.1      Form of Common Stock Certificate.*

4.2      Form of Subscription Certificate.*

4.3      Executive Group Subscription Form.*

4.4      Broker Member Group Subscription Form.*

5.1      Opinion of Ballard Spahr Andrews & Ingersoll, LLP.*

10.1     Form of Restricted Stock Agreement between New America Network, Inc. 
         and selected employees.

10.2     Form of Employment Agreement with Gerald Finn.*

10.3     Form of Employment Agreement with Jeffrey Finn.*

10.4     Lease dated August 15, 1984 between New America Network, Inc. and The 
         Building Center.

10.5     Amendment dated April 15, 1998 to Lease Agreement between New America 
         Network, Inc. and The Building Center, Inc.*

10.6     New America International, Inc. 1998 Incentive Plan.*

10.7     New America International, Inc. 1998 Bonus Compensation Plan.*

10.8     New America International, Inc. 1998 Stock Option Plan.*

10.9     Loan Agreement dated October 2, 1997 between New America Network, 
         Inc. and First Washington State Bank.*

10.10    Form of Intercompany Agreement between Kranzco Realty Trust and the 
         Registrant.*

21.1     List of Subsidiaries of Registrant.*

23.1     Consent of Ballard Spahr Andrews & Ingersoll LLP (included in Exhibit 
         5.1).*

23.2     Consent of Arthur Andersen LLP.

24.1     Powers of Attorney (included on Signature Page).

27.1     Financial Data Schedule.

--------------------
*        To be filed by Amendment.