3. Receivable from Clearing Organizations
Receivable from clearing organizations at December 31, 1999 represents amounts on deposit with clearing organizations to facilitate the trade clearing process in the normal course of business. The Company has retained BNY ESI & Co., a subsidiary of the Bank of New York, as its primary clearing organization.
The Company has agreed to indemnify its clearing organizations for any losses which may be sustained as a result of the failure of the Company's customers to satisfy their obligations in connection with their securities transactions. Customer trades pending as of December 31, 1999 were subsequently settled without a material adverse impact to the Company.
4. Securities owned, at market value
At December 31, 1999
securities owned consist of the following:
| Equities |
$19,244
|
||
| Money market positions |
15,410
|
||
| Total |
$34,654
======== |
||
These securities are used in the facilitation of customer trade execution activities.
5. Related Party
Transactions
The Company is party
to a servicing agreement with its Parent, whereby the Parent provides
all personnel, occupancy, administrative and equipment usage services
of the Company without remuneration.
6. Net Capital Requirements
The Company is subject to the Uniform Net Capital Rule under the Securities and Exchange Act of 1934, as amended, which requires a broker-dealer to have, at all times, sufficient liquid assets to cover current indebtedness. In accordance with the rule, the Company is required to maintain minimum net capital, as defined, and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not excess 15 to 1. At December 31, 1999, the Company had net capital, as defined, of $658,934 which was $408,934 in excess of its required net capital of $250,000. The Company's net capital ratio was 0.67 to 1.
7. Commitments and Contingent Liabilities
The Company has not been named in any legal actions or arbitrations, and management of the Company is unaware of any threatened or pending legal actions.
8. Income Taxes
The Company is part of a group that files a consolidated U.S. Federal and combined state and local income tax returns. The Company accrues taxes as if they filed on a separate company return basis. The Company has a net operating loss carry forward of approximately $33,000 which expires by December 31, 2019. Due to the aquisition of the Company by the Parent, the use of certain operating loss carry forwards that existed at November 19, 1999 may be limited.
9. Financial Instruments with Off-Balance Sheet Risk
In the normal course of business, the Company's securities activities involve the execution, settlement and financing of various securities transactions for customers. These activities may expose the Company to risk in the event customers, other brokers and dealers, banks, depositories or clearing organizations are unable to fulfill their contractual obligations. The Company continuously monitors the credit worthiness of customers and third party providers. All customer security transactions are collateralized by securities purchased and/or cash received.
10. Year 2000 (unaudited)
Company management is not aware of any significant adverse effects of Year 2000 on the Company's systems and operations or on third party systems that interface with the Company's systems. Management has no information that indicates that a significant service provider may be unable to provide services to the Company because of Year 2000 problems. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the Year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly.