STATE OF CALIFORNIA DEPARTMENT OF CORPORATIONS ANNUAL FINANCIAL REPORT PART III NAME OF LICENSEE: for the period from to STATEMENT OF INCOME (LOSS) REVENUE Commissions Gains or Losses on Principal transactions including unrealized gains and losses Underwriting Interest Income from the sale of investment company shares Other TOTAL REVENUE $ $ EXPENSES Employee compensation and benefits Commissions and floor brokerage Communications Promotional Interest Occupancy and equipment rental Taxes other than income taxes Other operating expenses $ TOTAL EXPENSES $ Income (loss) before income taxes and items below Income taxes Minority interest in income of consolidated subsidiaries Equity in earnings of unconsolidated subsidiaries Income (loss) before extraordinary items Extraordinary items Cumulative effect of changes in accounting principles NET INCOME (LOSS) 260.241.2 (PART III) (11-77) $ $ -1- American LegalNet, Inc. www.USCourtForms.com STATE OF CALIFORNIA DEPARTMENT OF CORPORATIONS ANNUAL FINANCIAL REPORT PART III NAME OF LICENSEE: for the period from to STATEMENT OF CHANGES IN OWNERSHIP EQUITY (SOLE PROPRIETORSHIP, PARTNERSHIP OR CORPORATION) Balance, beginning of period Net income (loss) Additions Deductions $ Balance, end of period $ STATEMENT OF CHANGES IN LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS Balance, beginning of period Increases Decreases $ Balance, end of period $ -2- American LegalNet, Inc. www.USCourtForms.com STATE OF CALIFORNIA DEPARTMENT OF CORPORATIONS ANNUAL FINANCIAL REPORT PART III NAME OF LICENSEE: as of COMPUTATION OF NET CAPITAL 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Total ownership equity (from Statement of Financial Condition) ..................................................... $ Deduct: Ownership equity not allowable for net capital ......................................................... ( Total ownership equity qualified net capital .............................. Add: A. Liabilities subordinated to claims of general creditors allowable in computation of net capital .................................. B. Other(deductions) or allowable credits (List) ............................ Total capital and allowable subordinated liabilities .......................... $ Deductions and/or charges: A. Total non-allowable assets from Statement of Financial Condition .................................. $ (Notes B and C) 1. Additional charges for customers' and non-customers' security accounts .............. 2. Additional charges for customers' and non-customers' commodity accounts ............. B. Aged fail-to-deliver: ............................ 1. Number of items ............... C. Aged short security differencesless reserve of ................. $ number of items ................. D. Secured demand note deficiency ................. E. Commodity futures contracts and spot commodities - proprietary capital charges .................................. F. Other deductions and/or charges ................. G. Option deductions and/or charges pursuant to Rule 260.216.12(c)(2)(J) and/or (K) ................. ( H. Total deductions and/or charges .......................................$ Other additions and/or allowable credits (List) ............................. Net Capital before haircuts on securities positions ..........................$ Haircuts on securities: (computed, where applicable, pursuant to Rule 260.216.12: A. Contractual securities commitments ................. B. Subordinated securities borrowings ................. C. Trading and Investment securities: 1. Bankers' acceptances, certificates of deposit and commercial paper ................. 2. U.S. and Canadian government obligations.................................... 3. State and municipal government obligations.................................... 4. Corporate obligations .......................... 5. Stocks and warrants ............................. 6. Options ........................................ 7. Arbitrage ..................................... 8. Other securities .............................. D. Undue concentration ................................ ( E. Other (List) ....................................... Net Capital ............................................................... $ ) )) ) OMIT PENNIES -3- American LegalNet, Inc. www.USCourtForms.com STATE OF CALIFORNIA DEPARTMENT OF CORPORATIONS ANNUAL FINANCIAL REPORT PART III NAME OF LICENSEE: as of COMPUTATION OF BASIC NET CAPITAL REQUIREMENT Part A 11. Minimum net capital required (6-2/3% of line 18) .............................. $ 12. Minimum dollar net capital requirement of reporting firm and minimum net capital requirement of subsidiaries computed in accordance with Note (A) .......................................... $ 13. Net capital requirement (greater of line 11 or 12) ............................ $ 14. Excess net capital (line 10 less 13) .......................................... $ COMPUTATION OF AGGREGATE INDEBTEDNESS Total A.1 liabilities from Statement of Financial Condition ................... $ Add: A. Drafts for immediate credit ........................... $ Market value of securities borrowed for which B. no equivalent value is paid or credited ............... $ C. Other unrecorded amounts (List) ....................... $ 17. Deduct: Adjustment based on deposits in Special Reserve Bank Accounts Rule 260.216.12(c)(1)(G) .............................................$ 18. Total aggregate indebtedness ................................................. $ 19. Percentage of aggregate indebtedness to net capital . (line 18 .by line 10) ........................................................% 15. 16. . . COMPUTATION OF ALTERNATE NET CAPITAL REQUIREMENT Part B 20. 4% of combined aggregate debit items as shown in Formula for Reserve Requirements pursuant to Rule 260.216.12.1 prepared as of the date of the net capital computation including both broker-dealers and consolidated subsidiaries' debits .............................................$ 21. Minimum dollar net capital requirement of reporting brokerdealer and minimum net capital requirement of subsidiaries computed in accordance with Note (A) ..........................................$ 22. Net capital requirement (greater of line 20 or 21) .............................$ 23. Excess net capital (line 10 less 22) ..........................................$ 24. Percentage of Net Capital to Aggregate Debits (line . 10 . by line 18 page 5-Part III ..............................................% 25. Net capital in excess of the greater of 7% of combined aggregate debit items or $100,000 .............................................$ OTHER RATIOS Part C 26. Percentage of debt to debt-equity total computed in accordance with Rule 260.216.12(d) ..................................................... % 27. Options deductions/Net Capital ratio (total (deductions under . . Rule 260.216.12(a)(6),(a)(7) and (c)(2)(J) Net Capital) .......................% NOTES: (A) The minimum net capital requirement should be computed by adding the minimum dollar net capital requirement of the reporting broker-dealer and, for each subsidiary to be consolidated, the greater of: 1. Minimum dollar net capital requirement, or 2. 6-2/3% of aggregate indebtedness or 4% of aggregate debits if alternative method is used. (B) Do not deduct the value of securities borrowed under subordination agreements or secured demand notes covered by subordination agreements not in satisfactory form and the market values of membership in exchange contributed for use of company and partners' securities which were included in non-allowable assets. (C) A list of all material non-allowable assets should be provided with this report. -4- American LegalNet, Inc. www.USCourtForms.com STATE OF CALIFORNIA DEPARTMENT OF CORPORATIONS ANNUAL FINANCIAL REPORT PART III NAME OF LICENSEE: as of COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS FOR BROKER-DEALERS UNDER RULE 260.216.12.1 (See Rule 260.216.12.1(n) and Related Notes) CREDIT BALANCES 1. Free credit balances and other credit balances in customers' security accounts (see Note A, Rule 260.216.12.1 ......................... $ 2. Monies borrowed collateralized by securities carried for the accounts of customers ........................................................ 3. Monies payable against customers' securities loaned .................. 4. Customer securities failed to receive ................................ 5. Credit balances in firm accounts which are attributable to principal sales to customers .................................................. 6. Market value of stock dividends, stock splits and similar distributions receivable outstanding over 30 calendar days .......................... 7. *Market value of short security count differences over 30 calendar days old ........................................................... 8. *Market value of short securities and credits (not to be offset by longs ......... or by debits) in all suspense accounts over 30 calendar days 9. Market value of securities which are in transfer in excess of 40 calendar days and have not been confirmed to be in transfer by the transfer agent of the issuer during the 40 days ........................................................ 10. Other (list) 11. TOTAL CREDITS .................................................................... $ DEBIT BALANCES 12. *Debit balances in customers' cash and margin accounts excluding unsecured accounts and accounts doubtful of collection net of deductions pursuant to Note B, Rule 260.216.12.1(n)3 ................. $ 13. Securities borrowed to effectuate short sales by customers and securities borrowed to make delivery on customers' securities failed to deliver ................................................... 14. Failed to deliver of customers' securities not older than 30 calendar days ....................................................... 15. Other (list) ........................................................ 16. *Aggregate debit items .............................................................$ 17. *Less 3% (for alternative method only - see Rule 260.216.12(f)(5)(A) ................. 18. *TOTAL RULE 260.216.12.1 DEBITS .................................................... $ RESERVE COMPUTATION 19. Excess of total debits over total credits (line 18 less line 11) ................... $ 20. Excess of total credits over total debits (line 11 less line 18) ................... 21. If computation permitted on a monthly basis, enter 105% of excess of total credits over total debits ................................................ 22. Amount held on deposit in "Reserve Bank Account(s)" including value of qualified securities, at end of reporting period .......................... ................... 23. Amount of deposit (or withdrawal), including qualified securities 24. New amount in Reserve Bank Account(s) after adding deposit value of qualified securities ......... or subtracting withdrawal including $ 25. Date of deposit (MM/DD/YY) ....................................................... OMIT PENNIES FREQUENCY OF COMPUTATION 26. Daily Weekly Monthly *In the event the Net Capital Requirement is computed under the alternative method, this "Reserve Formula" shall be-prepared in accordance with the requirements of paragraph (f) of Rule 26O.216.12. -5- American LegalNet, Inc. www.USCourtForms.com STATE OF CALIFORNIA DEPARTMENT OF CORPORATIONS ANNUAL FINANCIAL REPORT PART III NAME OF LICENSEE: as of COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS FOR BROKER-DEALERS UNDER RULE 260.216.12.1 (continued) EXEMPTIVE PROVISIONS 27. If an exemption from Rule 260.216.12.1 is claimed, identify below the section upon which such exemption is based (check one only) ....................... A. (j)(1) $2,500 capital category as per Rule 260.216.12 .. B. (j)(2)(i) "Special Account for the Exclusive Benefit of Customers" maintained C. (j)(2)(ii) All customer transactions cleared through another broker-dealer on a fully disclosed basis. Name of clearing firm D. (j)(3) - Exempted by order of the Commissioner .................................. Information for Possession or Control Requirements Under Rule 260.216.12.1 State the market valuation and the number of items of: 1. Customers' fully paid securities and excess margin securities not in the respondent's possession or control as of the report date (for which instructions to reduce to possession or control had been issued as of the report date) but for which the required action was not taken by respondent within the time frames specified under Rule 260.216 12 1. Notes A and B .......................... $ A. Number of items............................................. 2. Customers' fully paid securities and excess margin securities for which instructions to reduce to possession or control had not been issued as of the report date, excluding items arising from "temporary lags which result from normal business operations" as permitted under Rule 260.216.12.1. Notes B and C ... $ A. Number of Items ............................................. 3. The system and procedures utilized in complying with the requirement to maintain physical possession or control of customers' fully paid and excess margin securities have been tested and are functioning in a manner adequate to fulfill the requirements of Rule 260.216.12.1 ............... OMIT PENNIES Yes No NOTES A - Do not include in 1. customers' fully paid and excess margin securities required by Rule 260.216.12.1 to be in possession or control but for which no action was required by the respondent as of the report date or required action was taken by respondent within the time frames specified under Rule 260.216.12.1. B - State separately in response to Items 1. and 2. whether the securities reported in response thereto were subsequently reduced to possession or control by the respondent. C - Be sure to include in item 2. only items not arising from "temporary lags which result from normal business operations" as permitted in Rule 260.216.12.1. -6- American LegalNet, Inc. www.USCourtForms.com