<PAGE>
 
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
    
                                   FORM 10-K/A     


(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the Fiscal Year Ended June 30, 1996

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the Transition Period From _______________ to ________________

Commission file number 0-15187
                       -------

                          Jack Carl/312-Futures, Inc.
                          ---------------------------
            (Exact name of registrant as specified in its charter)

           Delaware                                       36-3399452
--------------------------------              -------------------------------
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                     Identification Number)

          200 West Adams Street, Chicago, Illinois            60606
-----------------------------------------------------------------------------
          (Address of principal executive offices)         (Zip Code)

Registrant's telephone number, including area code: (312) 407-5726
                                                    --------------

Securities registered pursuant to Section 12(g) of the Act:

                         $.004 Par Value Common Stock

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes   X     No 
                                               -----      ----      

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.    X
            -----

     As of August 30, 1996, the aggregate market value of the voting stock held
by non-affiliates of the registrant was approximately $2,438,700.

     As of August 30, 1996, there were outstanding 33,624,530 shares of the
Registrant's common stock.
    
              This is page 1 of 170 sequentially numbered pages.     
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                                    PART I
                                    ------

Item 1 - Business
-----------------

(a)    General Development of Business.
---------------------------------------

     The Registrant was incorporated under the laws of the State of Illinois on
July 26, 1985 under the name SFA, Inc.  On August 1, 1985, SFA, Inc. acquired
100% of the capital stock of a corporation (the "Predecessor Corporation") from
Oppenheimer Rouse Futures, Inc.  The Registrant is the successor to the business
and operations of the Predecessor Corporation.  As of November 21, 1985, the
Predecessor Corporation was merged into SFA, Inc. and SFA, Inc., changed its
name to 312-Futures, Inc.  At that time and until Jack Carl Associates, Inc., a
privately held Delaware corporation, ("JCA"), merged on August 29, 1986, into
the Registrant, the Registrant's business activities were limited to effecting
transactions in futures contracts and options on futures contracts on a
"discounted basis" for retail customers nationwide.  The Registrant is the
surviving corporation of the merger and its corporate name was changed to Jack
Carl/312-Futures, Inc.  As a consequence of the merger, the Registrant's
brokerage activities were expanded and diversified with it succeeding to the
clearing membership of JCA on the Chicago Mercantile Exchange and clearing the
transactions on that Exchange for approximately 200 professional market makers
and for customers of introducing brokers on a fully disclosed basis.
Accordingly, for the fiscal year ended June 30, 1987, the Registrant was engaged
in the commodity brokerage business, which included effecting transactions in
futures contracts and options on futures contracts as a clearing member firm on
the Chicago Mercantile Exchange for its various customers.  During the fiscal
year ended June 30, 1987, the Registrant cleared its customer's transactions at
the Chicago Board of Trade and certain other exchanges on an omnibus basis
through its then affiliate, Index Futures Group, Inc. ("Index").

     On July 1, 1987, the Registrant purchased all of the stock of its
affiliate, Index.  Incidental to such purchase, the Registrant transferred all
of its commodity futures customer accounts to Index and, since such transfer,
such business has been conducted through Index and its divisions.  During fiscal
1988, in an effort to better manage risk, the Registrant effectively
discontinued the business of clearing transactions for professional market
makers.  On January 1, 1989, the Registrant voluntarily withdrew its
registration as a futures commission merchant.  The Registrant is currently a
holding company with its businesses conducted through its subsidiaries.

     On November 16, 1990, Jack Carl/312-Futures, Inc. and Index sold to Credit
Agricole Futures, Inc. certain assets used by Index in its clearing operations.
Concurrent with the sale, approximately 30 employees of Index became employees
of Credit

                                      -2-
<PAGE>
 
 
Agricole Futures, Inc.  Index continued to be a clearing member of various
commodity exchanges.

     In January, 1993, Brokers Resource Corp., at the time, a wholly-owned
subsidiary of Index, and a wholly-owned subsidiary of the Registrant, until it
was dissolved in May, 1996, sold the majority of its guaranteed introducing
broker business to an unrelated entity.

     In May, 1994, the Registrant, by written consent of the shareholders,
changed its state of incorporation from Illinois to Delaware.

     In July, 1994, the Registrant offered to its common stockholders the non-
transferable right to purchase, at a subscription price of $.02 per share, two-
thirds of a share of common stock for each one share of common stock owned of
record on July 15, 1994 ("Rights Offering").  53,799,304 shares of common stock
were available and purchased in the Rights Offering.

     Lee S. Casty, the Registrant's principal shareholder, Burton J. Meyer, the
Registrant's President and a director and Michael J. Moss, President of Index,
purchased their allocable number of shares in the Rights Offering.  In addition,
Messrs. Casty, Meyer and Moss purchased at the subscription price of $.02,
immediately following the expiration of the Rights Offering, the shares of
common stock which were not purchased by other shareholders so that all
53,799,304 shares of common stock were purchased.  The gross proceeds of the
Rights Offering were $1,076,000.

     Effective at the close of business November 4, 1994, the Registrant
effected a one-for-four reverse split of its common stock, par value $.001. Each
four shares of such common stock were reclassified and changed into one share of
common stock having a par value of $.004. Pursuant to the reverse split, the
Registrant is obligated to pay any holder of fractional shares resulting from
the reverse split $.05 per share of common stock up to a maximum of $.15 for
three shares. At the close of business on November 4, 1994, the outstanding
shares of common stock were reduced to approximately 33,624,565 shares from
134,498,260 shares before the reverse split. As the result of the repurchase of
fractional shares, there were outstanding as of June 30, 1996, 33,624,530 shares
of common stock.

     On May 31, 1996, an agreement was reached to sell, transfer and assign to
E.D.& F. Man International Inc. ("MINC") substantially all of the brokerage
accounts maintained by Index, together with all positions, securities, and other
assets held in or for such accounts and other agreed-upon assets used in the
conduct of the brokerage activities ("Sale of Assets").  MINC is a unit of E.D.&
F. Man Group, plc, a London-based international trading and finance
conglomerate.  This sale was completed as of July 1, 1996.

                                      -3-
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     As the result of this transaction, Index no longer acts as a futures broker
for public customers and has withdrawn as a clearing member from all commodity
exchanges, where there no longer will be any necessity for it to maintain such
status, though it remains a registered futures commission merchant. In addition,
commencing July 1, 1996, 207 of Index's 313 employees began employment at MINC
and 85 employees resigned or were terminated. During the next approximately six
months' transition period, MINC may terminate additional former Index employees.

     By withdrawing from clearing memberships, Index no longer will be required
to maintain substantial qualifying capital required to be a clearing member.
Furthermore, inasmuch as the public discount futures brokerage business as
conducted by Index was a labor intensive one, the substantial reduction in its
personnel should provide a substantial cost savings to Index and thereby the
Registrant.  Moreover, a portion of Index's regulatory capital represented by
subordinated loans will now be prepaid, thereby saving interest expense on the
principal amount of such loans.  In addition, other costs of operating a futures
brokerage firm dealing with the public, such as operating and maintaining
computer installations, substantial bookkeeping and accounting expenses,
communications systems expenses, and the like, will no longer be incurred by
Index.  The Registrant believes that the foregoing should enable it to reduce
its consolidated costs and expenses associated with operating a clearing futures
brokerage business and should make capital available for expansion or
establishment of other activities.  No such other activities, other than foreign
exchange trading, as yet have been identified.

     While the Registrant has not yet determined what, if any, other alternative
operations it may commence, there is no present intention either to liquidate
the Registrant or for it to "go private".

     The Registrant continues to believe that, while there are no current
proceeds to Index, the Sale of Assets will provide a significant stream of
income over approximately the next 5 1/2 years. The Registrant believes this is
especially true in light of the requirements that Index receive substantial
payments from MINC if certain major customer accounts are terminated or if MINC
disposes of or ceases the discount brokerage business it acquired from Index.
All payments under the Sale of Assets agreement are guaranteed by its ultimate
parent, E.D.& F. Man Group, plc, a worldwide conglomerate whose shares are
traded on the London Stock Exchange. The Registrant estimates, based on historic
levels of revenues as well as estimates of reductions in the business expenses
as the result of the transaction, that the total purchase price over the time
will be between $7,000,000 and $16,000,000. (This range is less than previously
estimated due to a general slowdown in trading volume in recent months.)
However, there can be no assurance that the aggregate purchase price will be in
that range. This is principally because of the uncertainty that former Index
customers will

                                      -4-
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not continue to maintain their account at MINC or trade there at levels similar
to their trading at Index, or the risk that MINC will not retain sufficient
former Index or other employees adequate to service such customers and their
trading. However, the Registrant does believe that the amounts it will receive
will likely be significant.

     In considering this transaction, the Board of Directors of the Registrant
took into account the continuing growth of competitive pressure on the retail
futures discount brokerage business, including the costs of providing additional
services to customers, the costs of additional regulatory capital necessary for
significant increases in the amounts of customer segregated funds to be held on
deposit, the potential "economies of scale" to Index based on the reductions in
costs for generating revenues from its customer base, and what appears to be the
continuing consolidation of firms in the futures brokerage industry, especially
with firms and other financial institutions of international stature. 
Historically in the futures industry when customer accounts have been
transferred from one firm to another, "trail commissions," or continuing
payments to the transferor over some period of time, have been commonplace. As
such, the Board of Directors believes that the level of payments to be received
over the course of the term of the agreement with MINC are favorable to Index
when compared with what the Board of Directors believes would have been the
results of operations had Index continued to operate as a futures commission
merchant and clearing member with all the attendant costs, both operationally
and with respect to regulatory capital, over the same time period.

     In addition, in light of his services in connection with finding and
negotiating the transaction with MINC and its ultimate parent, E.D.& F. Man
Group, plc, the Board of Directors determined that Mr. Lee S. Casty, the
principal stockholder of the Registrant, should receive a finder's fee. Shortly
following the closing of the transaction, Mr. Casty advised the Registrant that
he will decline to accept any finder's fee with respect to the transaction.

     With each payment Index is to receive, there will be an accompanying
written report prepared by MINC setting forth the computation and supporting
documentation in sufficient detail to permit Index to verify the accuracy of the
payment received.  This is true with respect to the quarterly payments and the
year end payments.  Any dispute under the agreement which the parties are unable
or unwilling to resolve informally are subject to submission to binding
arbitration to be held in Chicago, Illinois, in accordance with the Rules of the
American Arbitration Association.

     Index intends to account for the transaction as a contingent payment sale
of its business over the sixty-six month term of the payments to be received.
Accordingly, payments Index receives

                                      -5-
<PAGE>
 
will be taxed as income in the year of receipt.  Thus, there will be no direct
federal income tax assessed against any stockholder by reason of the
transaction, and Index will be taxed only as the payments are received.
    
     Effective at the close of business July 1, 1996, Burton J. Meyer, formerly
President of the Registrant, became an executive of MINC and as of that date
resigned all his positions with the Registrant and its subsidiaries. Because of
his expertise in operating the business transferred to MINC and the necessity
for the continued success of that business to maximize the purchase price to be
received by Index, it was a condition precedent to consummation of the
transaction by the Registrant that Mr. Meyer enter into an employment agreement
with MINC acceptable to him. Accordingly, Mr. Meyer entered into an employment
agreement with an initial term expiring June 30, 1998 to serve as President of
the Jack Carl Futures Discount Division of MINC and as a Managing Director of
the MINC Group Brokerage Division in charge of the activities transferred from
Index to MINC. Under the employment agreement, Mr. Meyer is to receive a base
salary of $300,000 per year and an annual incentive bonus based on the
profitability of MINC's operations under his direction.

     In terminating Mr. Meyer's employment agreement, the Board of Directors
authorized the Registrant to pay Mr. Meyer severance in the amount of $316,100.
Mr. Meyer will be paid an additional $316,100 by the Registrant if he leaves the
employ of MINC, voluntarily or involuntarily, before the expiration of twelve
months. In addition, in connection with such termination by the Registrant and
as an additional inducement to Mr. Meyer to accept employment with MINC, the
Board of Directors of the Registrant, on November 7, 1996 reissued to Mr. Meyer
options to purchase 1,250,000 shares of the Registrant's common stock at an
option price of $.24 per share. The original five year option to purchase
1,250,000 shares of the Registrant's common stock at an option price of $.24 per
share was granted to Mr. Meyer on February 28, 1994 and contained an early
termination if Mr. Meyer no longer is employed by the Registrant. The original
option agreement terminated July 1, 1996 upon Mr. Meyer's employment with
MINC.    

     The only contractual obligation for severance payments which the Registrant
has as a result of the Sale of Assets is to Philip Tanzar, formerly General
Counsel to the Registrant, in the amount of $100,000.  Mr. Tanzar is now
employed as an in-house counsel at MINC and has advised the Registrant that he
will waive such severance as long as he continues to be employed by MINC through
and including December 31, 1998.  Mr. Tanzar has also resigned as a director of
the Registrant effective October 1, 1996.

     The purchase price payable by MINC in connection with this transaction is
based on a percentage of the net income (as defined in the sales agreement) of
the transferred activities during the sixty-six month period following the sale.
As the purchase price is contingent upon the future earnings of the customer
accounts sold, none of which is guaranteed, no gain on the sale was reflected in
the financial statements for the year

                                      -6-
<PAGE>
 
ended June 30, 1996. Rather, income will be recognized as earned on a quarterly
basis over the next five and one-half years. A condition of the Sale of Assets
agreement required Mr. Casty, the principal shareholder, to sign a non-
competition agreement. As compensation for providing such an agreement, a
portion of the purchase price will be allocated to the principal shareholder and
recorded by the Registrant concurrently with its recognition of income as
described above. Management does not believe this amount will be significant.

     A net pre-tax, restructuring charge of $1,556,500, related to the Sale of
Assets, was reflected in the statement of operations for fiscal year 1996.
Additionally, a restructuring gain of $664,000, from the sale of Board of Trade
Clearing Corporation stock, will be reflected in income in fiscal 1997.
    
     Effective July 1, 1996, the Registrant's revenue stream will primarily
consist of the net income of the transferred activities, as defined in the Sale
of Assets agreement, interest on its capital and income from operations of Index
FX, Ltd. An unaudited pro forma consolidated statement of financial condition as
of June 30, 1996 and an unaudited pro forma consolidated statement of operations
for the year ended June 30, 1996 are included as part of the Registrant's 
financial statements. These pro forma financial statements represent the 
Registrant's unaudited financial position as of June 30, 1996 and the unaudited
results of operations for the year ended June 30, 1996 as if the Sale of Assets
had taken place on July 1, 1995.    

(b)    Narrative Description of Business.
-----------------------------------------

General

     The Registrant is a holding company with its businesses conducted through
Index and other subsidiaries. The Registrant was a futures commission merchant
registered with the Commodity Futures Trading Commission ("CFTC") until January
1, 1989 when it voluntarily withdrew its registration as a futures commission
merchant. The Registrant no longer handles commodity futures customer accounts,
having transferred all of its accounts to Index. Effective July 1, 1996, neither
the Registrant nor any of its subsidiaries will handle commodity futures
customer accounts.

     Index is a futures commission merchant registered with the CFTC and the
Securities and Futures Authority ("SFA") in the United Kingdom and is a member
of the National Futures Association ("NFA"). Prior to the Sale of Assets, it was
involved in all aspects of brokerage of futures and options on futures
contracts. It was a clearing member of the Chicago Mercantile Exchange, the
Chicago Board of Trade, the Mid-America Commodity Exchange, the Commodity
Exchange, Inc., the New York Mercantile Exchange, the New York Futures Exchange,
the New York Cotton Exchange and the Coffee, Sugar & Cocoa Exchange. It provided
a full-range of futures brokerage, clearing and back office services for
professional, institutional and public commodities traders and, through a
subsidiary, Index Management Services, Inc., until July 1, 1996 acted as a
commodity pool operator. Index, until July 1, 1996, was the clearing agent for
other non-clearing futures commission merchants, financial institutions,
regional brokerage houses and introducing brokers.

                                      -7-
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     Index presently has one wholly-owned subsidiary, Index Management Services,
Inc. ("IMSI").  Index Futures Arb Group, Inc. ("Arb"), Index Forward Trading
Group, Inc. ("IFTG") and Index Currency Trading Group, Inc. ("ICTG") were
wholly-owned subsidiaries of Index until they were dissolved in fiscal 1995.

     IMSI, which was organized in May, 1986, is registered with the CFTC as a
commodity pool operator and is a member of the NFA.  IMSI was organized to
create and offer to the public, either by itself or in cooperation with others
through joint ventures, various commodity futures fund offerings which may be
marketed through broker-dealers or through participating regional brokerage
houses.  As of July 1, 1996, IMSI no longer operates commodity pools.

     Arb, a Delaware corporation, was organized in September, 1988, as Manhattan
Coin Exchange, Inc. and was thereafter renamed Jack Carl Options Management,
Inc.  In May, 1991, its name was changed to Index Futures Arb Group, Inc.  Its
business was to conduct proprietary arbitrage trading in foreign currencies.
Arb commenced and ceased operations during the year ended June 30, 1993.  Arb
was dormant during fiscal 1994 and was dissolved in fiscal 1995.

     IFTG, a Delaware corporation, was organized in July, 1992 to conduct
proprietary arbitrage trading in foreign currencies.  IFTG was dormant during
fiscal 1993 and 1994 and was dissolved in fiscal 1995.

     ICTG, a Delaware corporation was organized in July, 1992 to conduct
proprietary arbitrage trading in foreign currencies.  ICTG was dormant during
fiscal 1993 and 1994 and was dissolved in fiscal 1995.

     In addition to Index, Index Securities, Inc. ("ISI"), Jack Carl Management
and Trading, Inc. ("JCMT") and Index FX, Ltd. ("IFX") are wholly-owned
subsidiaries of the Registrant.  Stark Research, Inc. ("Stark") is a majority-
owned subsidiary of the Registrant.  Brokers Resource Corp. ("BRC"), formerly a
subsidiary of Index, was a subsidiary of the Registrant until its dissolution in
May, 1996.

     In December, 1993, Index transferred its investment in BRC to the
Registrant, in the form of a dividend.

     BRC, organized in February, 1985, was a non-clearing futures commission
merchant which provided a full range of services to the independent futures
professional.  These services included product development (such as providing
its customers with ideas in advertising and the generation of leads to increase
business), office operation services (such as assisting in compliance matters
and in acquiring equipment and systems that promote efficient operations) and
trading support services (including

                                      -8-
<PAGE>
 
 
availability of market information, providing accurate and timely statements and
access to international markets).  BRC was a member of the NFA and was
registered with the CFTC.  BRC was dissolved in May, 1996.

     In January, 1993, BRC sold the majority of its guaranteed introducing
broker business to an unrelated entity in return for a portion of future
earnings on such business. In connection with this sale, Index and BRC issued
a limited indemnification agreement to the purchaser.  The agreement covers
potential customer claims arising from activity prior to the sale.  There have
been no such claims to date. Subsequent to the sale, BRC's operations were
minimal.  In January, 1994, BRC voluntarily withdrew its registration as a
futures commission merchant.  

     ISI was organized in January, 1987 and is a registered securities broker-
dealer.  In June, 1990, ISI sold all of its customer accounts to an unrelated
party and its activities presently are primarily limited to acting as the
selling agent for commodity pools.  As a broker-dealer, ISI is regulated by the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc.

     JCMT was organized in January, 1992 to serve as a commodity trading advisor
("CTA") and is registered with the CFTC as a CTA.  The operations of JCMT were
minimal during fiscal 1994 and 1995.  There was no activity in 1996.

     In September, 1993, the Registrant purchased a controlling interest in
Stark and became the majority shareholder in that company.  Stark is an
investment research company which publishes monthly and quarterly magazines
regarding investments with a primary focus on funds investing in commodities.

     IFX, a British corporation located in London, England was organized in
August, 1995. IFX primarily makes a market in interbank foreign exchange
currencies for primarily non private customers. The transactions made with
customers are offset with money center banks and other major foreign exchange
dealing firms.

     Effective July 1, 1996, the Registrant's revenue stream will primarily
consist of the net income of transferred activities as defined in the Sale of
Assets agreement, interest on its capital and income from operations of IFX.

     Management intends to sell or dissolve all subsidiaries except Index and
IFX during the coming year.  All remaining companies, including the Registrant,
will be required to change their names in accordance with the Sale of Assets
agreement.

                                      -9-
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Customers

     The Registrant is a holding company.  Prior to the Sale of Assets, Index
was the Registrant's principal source of revenue and was the Registrant's
principal operating subsidiary responsible for commodity and futures related
activities.  Included in its full-range of services, Index maintained retail and
discount divisions.  With respect to its discount brokerage customers, Index
acted as an agent for the transmitting of orders and did not provide in-house
generated research.  Such discount brokerage customers obtained trading advice
elsewhere or made their own trading decisions.  Commissions charged by Index to
such discount brokerage customers were discounted from those charged by full
service commodity brokerage firms.  Index's discount customers were charged
round-turn transaction commissions which were generally between $12 and $30, as
compared to full service firms which management believes charged between $45 and
$100 per round-turn.  Index provided a full range of futures brokerage, clearing
and back office services for professional, institutional and public commodities
traders.  In addition, through its subsidiary IMSI, it created and offered to
the public, either by itself or in cooperation with others, various commodity
futures fund offerings which may have been marketed through broker-dealers or
through regional brokerage houses.

     Index's revenues from trading activities related directly to the volume of
its customers' orders, generally irrespective of the underlying prices of
futures contracts.  Such revenues were directly affected by substantial
fluctuations in trading volume. Trading volume may be affected by price levels
of commodity transactions which are directly affected by regional, national and
international economic and political conditions, broad trends in business and
finance, inflation and supply and demand of commodities underlying futures and
options contracts.

     A material amount of Index's revenues were derived from interest earned on
uncommitted cash balances of customer deposits.  This practice complies with
CFTC regulations and is standard industry practice.

Marketing

     For the fiscal year ended June 30, 1996, Index's primary marketing and
advertising activities centered around the promotion of its Jack Carl Futures
Discount Division utilizing the print and electronic media, primarily
newspapers, magazines and television, which report on the futures markets and
their activities.  Index, from time to time, engaged in promotions whereby it
provided subscriptions to independent research materials and/or portable futures
price quotation machines at advantageous prices or without charge.

                                      -10-
<PAGE>
 
 
Competition

     Prior to the Sale of Assets, Index competed directly with other firms, both
discount and full commission.  Competition among futures brokerage firms is
intense and is based upon both price and service.  Other institutions offer
their customers some or all of the same types of services provided by Index and
may offer more services than those provided by Index.  At the same time, the
number of active participants in futures trading is relatively small when
compared to those engaged in securities trading.  In addition, other independent
securities and commodities brokerage firms may enter the brokerage business in
direct competition with Index.

Regulation

     In order to maintain its listing on the National Association of Securities
Dealers' Automated Quotation System ("NASDAQ"), the Registrant must satisfy the
National Association of Securities Dealers, Inc.'s revised entry and maintenance
standards for NASDAQ listed stocks.  One such requirement is that a minimum of
two active market makers be maintained.

     In May, 1994, the Registrant was advised by NASDAQ that it had failed to
meet the two active market maker requirement and would become subject to a
formal delisting action if it failed to obtain the required market makers by
June 3, 1994.  The Registrant requested both a temporary exception to the
minimum active market maker requirement and a hearing on the matter.

     On August 17, 1994, the Registrant was advised by NASDAQ that the NASDAQ
Listing Qualifications Committee determined that an exception to the market
maker requirement would not be granted and, accordingly, the securities of the
Registrant were delisted from the NASDAQ SmallCap Market effective August 18,
1994.

     The Registrant appealed NASDAQ's decision and secured additional market
makers.  On December 7, 1994, the Registrant's common stock resumed trading on
the NASDAQ SmallCap Market.  The Registrant's common stock, from April 16, 1994
to December 6, 1994, was traded in the over-the-counter market OTC Bulletin
Board of the NASDAQ.

     Commodity exchanges and professionals in the United States are subject to
regulation by the CFTC under the Commodity Exchange Act, as amended (the "Act")
and the regulations promulgated thereunder, and by the NFA and by various self-
regulatory organizations.  The principal function of the CFTC is to promote
orderly and efficient commodity futures markets through regulation.

                                      -11-
<PAGE>
 
 
     As a futures commission merchant, Index is subject to the Act.  With
respect to domestic futures and options trading, the Act requires all futures
commission merchants, such as Index, to meet and maintain specified financial
requirements, and maintain segregated accounts for all customers' funds,
property and positions, and specified books and records on customer
transactions, all of which are open to inspection by the staff of the CFTC.
Failure to meet its regulatory requirements could subject Index to disciplinary
actions including fines, censure, suspension or revocation of registration.

     In addition, under the Act, the NFA is registered with the CFTC as a self-
regulatory body which has established and enforces training standards and
proficiency tests, minimum financial requirements and standards of fair
practice.  The CFTC has delegated its registration functions to the NFA.

     ISI is subject to the Uniform Net Capital Rule adopted by the Securities
and Exchange Commission and as such is required to maintain minimum net capital.
Throughout the year ISI was in compliance with such requirements.

     Index is subject to the minimum capital requirements under the Act and
accordingly, is required to maintain minimum adjusted net capital, as defined by
the CFTC.  Adjusted net capital changes from day to day, but at June 30, 1996,
Index had adjusted net capital of approximately $12,038,300 which was
approximately $5,216,200 in excess of its required minimum.  BRC also was
subject to the minimum capital requirement under the Act until January, 1994,
when BRC withdrew its registration as a Futures Commission Merchant.  The
minimum net capital requirements may effectively restrict, among other things,
the payment of cash dividends and the repayment of subordinated loans.

     The Chicago Mercantile Exchange was the designated self-regulatory
organization of Index until July 9, 1996 when the NFA assumed that role.  As
self-regulatory organizations, the NFA and the Chicago Mercantile Exchange have
authority to enforce their rules, the violation of which could lead to various
penalties, including expulsion.  Since NFA membership is mandatory for all CFTC
registered commodity professionals, loss or suspension of such membership would
preclude a firm from engaging in the futures business.

     The above-described regulatory structure may be modified by the CFTC or by
legislative changes enacted by the Congress.

     Prior to the Sale of Assets, Index was in the business of clearing and
executing futures contracts and options on futures contracts for the accounts of
its customers.  As such, Index guaranteed to the respective clearinghouses its
customers' performance under these contracts.  To reduce its risk, Index
required its customers to meet, at a minimum, the margin

                                      -12-
<PAGE>
 
 
requirement established by each of the exchanges on which the contract is
traded.  This margin is a good faith deposit from the customer which reduces the
risk to Index of failure on behalf of the customer to fulfill any obligation
under the contract.  To minimize its exposure to risk of loss due to market
variation, Index adjusted these margin requirements, as needed, due to daily
fluctuations in the values of the underlying positions.  If necessary, certain
positions may be liquidated to satisfy resulting changes in margin requirements.
Management believes that the margin deposits held at June 30, 1996, were
adequate to minimize the risk of material loss which could be created by the
positions held at that time.

     Index has a branch office in London, and as a result is also subject to the
rules and regulations of the SFA.  The SFA generally defers to the United States
regulators for activities in the United States.

Employees

     As of June 30, 1996, the Registrant had 313 full and part-time employees.
These employees included 105 floor operations employees, 80 back office
employees, 41 discount department employees, 60 sales employees and 27
administrative employees.  Effective with the Sale of Assets, 207 employees were
offered employment at MINC and 85 employees resigned or were terminated.


Item 2 - Properties
-------------------

     The Registrant leases office space at 200 West Adams Street, Chicago,
Illinois.  This location serves as the Registrant's primary business location
and corporate headquarters.

     At June 30, 1996, the Registrant or its subsidiaries also had offices at
the Chicago Mercantile Exchange Center, 30 South Wacker Drive, Chicago,
Illinois, 111 West Jackson Boulevard, Chicago, Illinois, 14 Wall Street, New
York, New York, 1020 Prospect Street, La Jolla, California and in London,
England, Zurich and Lugano, Switzerland and Istanbul, Turkey.  All such
facilities were leased at rates competitive for the respective locations.

     As of July 1, 1996, the leases for all offices, except for the corporate
headquarters and London, England, were transferred to MINC or terminated.


Item 3 - Legal Proceedings
--------------------------

     As a brokerage firm having numerous customers and correspondents, Index,
from time to time, is subject to various lawsuits, including civil litigation,
arbitrations and reparations proceedings and administrative proceedings by
regulators in the commodity futures industry relating to customers and
regulatory requirements incidental to carrying on such brokerage business.  Such
matters range from those in which

                                      -13-
<PAGE>
 
 
Index is a party plaintiff against customers to collect deficit amounts due from
customers, to customer complaints, allegations by regulatory authorities of
alleged improprieties by, or lack of registration of, employees of Index and the
like.  It also may be likely in some of these actions that allegations
requesting such items as monetary penalties, license suspensions or revocations
and the like will be made.  The number of such complaints, matters of litigation
and administrative proceedings amount to a small percentage of Index's total
business.  The foregoing discussion is also applicable to BRC.  Management of
the Registrant, after consultation with legal counsel, is of the opinion that
neither the Registrant nor Index, nor any of the Registrant's other
subsidiaries, is involved in any current civil litigation or administrative
proceeding which it believes would have a material adverse effect on either the
Registrant's, Index's, or any of the Registrant's other subsidiaries financial
condition.

     Notwithstanding that, the following matters are ordinary and  routine
litigation incidental to the business, the Registrant believes it appropriate to
set forth the following information:

     On September 29, 1992, the CFTC filed an administrative action against
Index alleging that on or about October 24, 1989, Index violated certain
sections of the Commodity Exchange Act and CFTC Regulations alleging the
conversion of funds of a commodity pool, and failure to properly segregate and
separately account for, treat and deal with customer funds.  In April, 1994,
Index, without admitting or denying the allegations, paid a $100,000 penalty to
the CFTC, settling the administrative action.  In a related action in the United
States District Court for the Northern District of Illinois entitled CFTC v.
                                                                     -------
Tobin, et al; John Troelstrup, Equity Receiver v. Index Futures Group, Inc. (89
---------------------------------------------------------------------------    
C 8576), the equity receiver of the alleged commodity pool operator brought an
action to recover losses of approximately $600,000, alleging various theories
such as constructive trust, negligence, breach of fiduciary duty and conversion.
On May 29, 1996, the district judge dismissed the complaint in its entirety.
Supplemental Plaintiff filed a Notice of Appeal with the U.S. Court of Appeals
for the Seventh Circuit on June 28, 1996.  The Seventh Circuit has yet to rule
on whether this case may be appealed.

     Index was also defending against a Demand for Arbitration (Klein v. Index
                                                                --------------
Futures Group, Inc. and Jay Tuch, 95-ARB-29) filed on March 20, 1995, before the
--------------------------------                                                
National Futures Association ("NFA").  The claimant, a former client, was
seeking damages of $1,000,000, alleging misrepresentation of risk and
unauthorized trading.  In July, 1996, an arbitration panel entered an award of
no damages for the claimant.

                                      -14-
<PAGE>
 
 
     In Arnold and Edith Katzowski v. Philip B. Jones and Index Futures Group,
        ----------------------------------------------------------------------
Inc., (E.D. Pa. No. 95-CV-1181), Index defended a complaint filed by former
----                                                                       
partners of a general partnership which cleared its trades at Index.  The
plaintiffs alleged that the general partner, a co-defendant, defrauded them by
failing to disclose risks and misrepresenting account performance.  Index is
alleged to have aided and abetted the general partner by permitting him to act
as a Commodity Pool Operator without proper registration and by furnishing
account statements and other account data to the general partner which were then
altered by the general partner and used to defraud plaintiffs.  Plaintiffs'
actual losses were approximately $157,000.  This case was settled in November,
1995 for $25,000.

     Edward Schwarz ("Schwarz"), a former executive of Index whose employment
was terminated as a result of the Sale of Assets, has rejected Index's severance
payment offer. Schwarz has made a demand for $500,000, and has threatened
litigation, if a satisfactory offer of settlement is not made. The Registrant
believes that its original severance offer was reasonable and Schwarz's claims
are without merit.

Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

     During the fourth quarter of the fiscal year ended June 30, 1996, no
matters were submitted to a vote of security holders. However, on June 11, 1996,
a definite Information Statement ("Information Statement") was filed by the
Registrant with the Securities and Exchange Commission and sent to stockholders
to notify them, in accordance with Section 228 of the Delaware General
Corporation Law, that the holders of a sufficient number of votes by written
consent, on July 1, 1996, would consent to the transaction between Index and
MINC. No votes were solicited and no meeting was held. On September 4, 1996, the
Registrant sent a notice to its security holders that the Sale of Assets was
completed on July 1, 1996. MINC's principal office is located at Two World
Financial Center, New York, New York 19281-2700.

     As noted above, no consents were solicited by the Information Statement.
Delaware law does not provide dissenters' rights for a transaction such as the
Sale of Assets. On July 1, 1996, a total of 19,443,354 shares of the 33,624,530
shares of common stock issued and outstanding of the Registrant and owned by Mr.
Lee S. Casty, his two minor children, his father, Mr. David Casty, and Mr.
Burton J. Meyer, at the time President of the Registrant, constituting 57.82% (a
majority) of all the issued and outstanding common stock of the Registrant, by
written consent in lieu of a meeting, authorized the Registrant, as the sole
shareholder of Index, to consummate the Sale of Assets.

                                     -15-
<PAGE>
 
 
                                    PART II
                                    -------

Item 5 - Market for Registrant's Common Equity and Related
----------------------------------------------------------
Stockholder Matters
-------------------

Principal Markets

     Since June 10, 1986, the Registrant's securities have been traded in the
over-the-counter market.  The common stock was, until April 15, 1994, quoted on
NASDAQ.

     In order to maintain its listing on NASDAQ, the Registrant, must satisfy
the National Association of Securities Dealers, Inc.'s revised entry and
maintenance standards for NASDAQ listed stocks.  One such requirement is that a
minimum of two active market makers be maintained.

     In May, 1994, the Registrant was advised by NASDAQ that it had failed to
meet the two active market maker requirement and would become subject to a
formal delisting action if it failed to obtain the required market makers by
June 3, 1994.  The Registrant requested both a temporary exception to the
minimum active market maker requirement and a hearing on the matter.

     On August 17, 1994, the Registrant was advised by NASDAQ that the NASDAQ
Listing Qualifications Committee determined that an exception to the market
maker requirement would not be granted and, accordingly, the securities of the
Registrant were delisted from the NASDAQ SmallCap Market effective August 18,
1994.

     The Registrant appealed NASDAQ's decision and secured additional market
makers.  On December 7, 1994 the Registrant's common stock resumed trading on
the NASDAQ SmallCap Market.  The Registrant's common stock, from April 16, 1994
to December 6, 1994, was traded in the over-the-counter market OTC Bulletin
Board of the NASDAQ.

     In July, 1994, the Registrant offered to its common stockholders the non-
transferable right to purchase, at a subscription price of $.02 per share, two-
thirds of a share of common stock for each one share of common stock owned of
record on July 15, 1994. 53,799,304 shares of common stock were available and
purchased in the Rights Offering.

     Lee S. Casty, the Registrant's principal shareholder, Burton J. Meyer, the
Registrant's President and a director and Michael J. Moss, President of Index,
purchased their allocable number of shares in the Rights Offering.  In addition,
Messrs. Casty, Meyer and Moss purchased at the subscription price of $.02,
immediately following the expiration of the Rights Offering, the shares of
common stock which were not purchased by other shareholders so that all
53,799,304 shares of common stock

                                      -16-
<PAGE>
 
 
were purchased.  The gross proceeds of the Rights Offering were $1,076,000.

     Effective at the close of business November 4, 1994, the Registrant
effected a one-for-four reverse split of its common stock, par value $.001. Each
four shares of such common stock were reclassified and changed into one share of
common stock having a par value of $.004. Pursuant to the reverse split, the
Registrant is obligated to pay any holder of fractional shares resulting from
the reverse split $.05 per share of common stock up to a maximum of $.15 for
three shares. At the close of business on November 4, 1994, the outstanding
shares of common stock were reduced to approximately 33,624,565 shares from
134,498,260 shares before the reverse split. As the result of the repurchase of
fractional shares, there were outstanding as of June 30, 1996, 33,624,530 shares
of common stock.

     Set forth below is the range of high and low, trade prices per share of the
common stock in the over-the-counter market as reported by NASDAQ for the
periods indicated.  The quotations do not include retail markups, markdowns, or
commissions. The prices have been restated for the November 4, 1994 one-for-four
reverse split of common stock.

     On August 30, 1996, the closing representative bid price and ask price per
share of common stock, as reported through NASDAQ, in the over-the-counter
market was bid: 1/8; ask: 3/16.

<TABLE>
<CAPTION>
 
Type of                       Quarter
Security                       Ended            High Trade        Low Trade
--------                      -------           ----------        ---------
<S>                           <C>               <C>               <C>
              
Common Stock                   12/31/94 (1)         1/4               1/8
                                3/31/95             3/16              1/8
                                6/30/95             9/32              1/8
                                9/30/95             13/32             5/32
                               12/31/95             9/32              1/8
                                3/31/96             3/16              3/32
                                6/30/96             13/32             3/32
                                8/31/96 (2)         3/16              1/8
</TABLE>

(1)  Includes only the period December 7, through December 31, 1994.

(2)  Includes only the months of July, 1996 and August, 1996.

     Although the Registrant's common stock was traded on NASDAQ there are no
bid and ask quotations available for the period April 15, 1994 through August
18, 1994, due to lack of market maker participation.  Set forth below is the
range of high and low trade prices per share of common stock or the range of
high and low, bid and ask prices per share of common stock in the OTC Bulletin
Board market as reported by NASDAQ for the periods indicated.  The quotations do
not include retail markups,

                                      -17-
<PAGE>
 
 
markdowns or commissions.  The prices have been restated for the November 4,
1994 one-for-four reverse split of common stock.  On December 6, 1994, the last
day of trading on the OTC Bulletin Board, the closing trade price per share of
common stock as quoted through NASDAQ's OTC Bulletin Board was $.125.

<TABLE>
<CAPTION>
 
Type of
Security          Period                  High Trade          Low Trade
--------          ------                --------------     ----------------
<S>               <C>                     <C>              <C>
                                   
Common Stock      7/01/94-8/18/94             1/4                1/16
                                   
                                              Bid                Ask
                                        --------------     ----------------
                                         High     Low        High    Low
                                        ------  ------     -------  -------
                                   
                  8/18/94-9/30/94        $.16   $.04        $.20    $.16
                 10/01/94-12/06/94       $.20   $.03125     $.25    $.09375
</TABLE>

Approximate Number of Holders of Securities

     As of August 30, 1996, there were 1,015 holders of record of the
Registrant's common stock.  The Registrant believes it has a greater number of
shareholders because the Registrant believes that a substantial amount of its
common stock is held of record in street name by broker-dealers for their
customers.

Dividends

     The Registrant has never paid a cash dividend on its common stock and does
not expect to pay a cash dividend in the foreseeable future, but intends to
devote all funds to the operation of its business.


Item 6 - Selected Financial Data
--------------------------------

                         Summary Financial Information

     The following table presents summary historical information for the
Registrant.  This summary information is derived from the historical financial
statements of the Registrant.

                                      -18-
<PAGE>
 
 
                       HISTORICAL FINANCIAL INFORMATION

                                
<TABLE> 
<CAPTION> 
                                                               JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                                                               --------------------------------------------

                                                                             Year Ended June 30,
                                                   ------------------------------------------------------------------------
 
                                                       1996           1995           1994           1993           1992
                                                       ----           ----           ----           ----           ----     
Operating Data:
<S>                                                <C>             <C>            <C>            <C>            <C> 
Revenues                                            $41,134,900    $41,658,300    $37,565,300    $36,670,400    $39,227,300
                                                     ==========     ==========     ==========     ==========     ==========
Income (loss) before income taxes
  and extraordinary item                            $(1,307,200)   $ 3,947,800    $   992,300    $   308,900    $ 1,210,100
Income tax expense (benefit)                           (174,100)     1,536,200        406,200        149,600        361,600
                                                     ----------     ----------     ----------     ----------     ----------
 
Income (loss) before extraordinary item              (1,133,100)     2,411,600        586,100        159,300        848,500
Extraordinary item (1)                                        -              -              -              -          3,000
                                                     ----------     ----------     ----------     ----------     ----------
  Net income (loss)                                  (1,133,100)     2,411,600        586,100        159,300        851,500
 
Assumed cumulative dividend on Class A
  preferred stock                                       (40,000)       (40,000)       (40,000)       (40,000)       (40,000)
                                                     ----------     ----------     ----------     ----------     ----------
 
Net income (loss) applicable to
  common stock                                      $(1,173,100)   $ 2,371,600    $   546,100    $   119,300    $   811,500
                                                     ==========     ==========     ==========     ==========     ==========
Primary earnings (loss) share as
  restated for the one-for-four
  reverse split of common stock (2):
 
  Income (loss) before extraordinary item           $      (.03)   $       .08    $       .03    $       .01    $       .04
                                                     ==========     ==========     ==========     ==========     ==========
 
  Net income (loss)                                 $      (.03)   $       .08    $       .03    $       .01    $       .04
                                                     ==========     ==========     ==========     ==========     ==========
  Weighted average number of shares
    outstanding, as restated for the
    one-for-four reverse split of
    common stock                                     33,721,179     30,680,524     20,175,612     20,178,239     20,178,239
                                                     ==========     ==========     ==========     ==========     ==========
Fully diluted earnings (loss) per share
  as restated for the one-for-four
  reverse split of common stock (2):
 
  Income (loss) before extraordinary item          $       (.03)  $        .08   $        .03   $        .01   $        .04
                                                   ============   ============   ============   ============   ============
 
  Net income (loss)                                $       (.03)  $        .08   $        .03   $        .01   $        .04
                                                   ============   ============   ============   ============   ============
  Weighted average number of shares
    outstanding, as restated for the
    one-for-four reverse split of
    common stock                                     33,721,179     30,680,524     20,175,612     20,178,239     20,178,239
                                                   ============   ============   ============   ============   ============

<CAPTION>  
Balance Sheet Data:
                                                                               As of June 30,
                                                   ------------------------------------------------------------------------
 
                                                       1996           1995           1994           1993           1992
                                                       ----           ----           ----           ----           ----     

<S>                                                <C>             <C>            <C>            <C>            <C>
Total assets                                       $239,887,700   $190,932,400   $202,806,200   $151,817,500   $143,654,300
 
Notes payable                                         6,390,000      6,390,000      7,690,000      9,615,600     10,140,600
 
Subordinated debt                                     4,000,000      1,690,000      2,000,000              -        225,000
 
Stockholders' equity                                  6,216,500      7,364,100      3,876,500      3,295,200      3,135,900
</TABLE>

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

(1)  Represents tax benefits resulting from utilization of net operating loss
     carryforward.

(2)  Earnings per share are computed on the basis of the weighted average number
     of shares of common stock outstanding during each year, adjusted for the
     effect of common stock equivalents arising from the assumed exercise of
     stock options and warrants if dilutive.

                                      -19-
<PAGE>
 
 
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations for the Year Ended
--------------------------------
June 30, 1996
-------------

Liquidity and Capital Resources

     Jack Carl/312-Futures, Inc. ("JC/312") is a holding company that operates
its business through its various subsidiaries.  JC/312 is a significant source
of capital for its subsidiaries through subordinated loans.

     Index is subject to the minimum capital requirements adopted and
administered by various exchanges and regulatory bodies. Among these are
requirements for registered futures commission merchants to maintain minimum net
capital based on a percentage of the amount of customer funds required to be
segregated. During the year ended June 30, 1996, Index's segregated asset
requirement increased by approximately $27,976,800 to $183,950,300. At June 30,
1996, Index's segregated funds exceeded the requirement by $3,536,200. Index is
also required to secure all balances due to U.S. based customers for activities
in foreign futures or options. At June 30, 1996, funds secured in separate
accounts exceeded secured requirements by $4,333,300. These increases in the
segregated and secured asset requirements resulted in a increase in Index's net
capital requirements. As of June 30, 1996, Index's regulatory capital exceeded
the minimum net capital requirements of the CFTC by $5,216,200.

     Prior to March, 1996, Index exceeded the net capital requirements of the
CFTC and the various exchanges of which it is a member.  In March, 1996, at the
request of its non-regulated customers trading in the cash markets, Index
transferred funds to IFX.  Upon clarification of the net capital rules, it was
determined that the receivable from IFX could not accurately be classified as a
current asset.  As a result, Index was under early warning and minimum capital
requirements. As of March 31, 1996, Index's regulatory capital was $11,272,800
less than the minimum net capital requirements of the CFTC. Index informed the
Chicago Mercantile Exchange and the CFTC of the capital deficiency. Index took
immediate action to correct the deficiency and as of April 23, 1996, was fully
in compliance with minimum net capital requirements.

       The Registrant, at June 30, 1996, had $6,390,000 in notes payable to
related parties and $4,000,000 of subordinated debt maturing during the year
ending June 30, 1997. The majority of the proceeds from the notes were loaned to
Index in the form of subordinated loans which are included in net capital for
regulatory purposes. Index had a $4,000,000 revolving subordinated debt line of
credit. As of June 30, 1996, Index borrowed the total $4,000,000 from this line
of credit. These borrowings were repaid in full in August, 1996 and the line of

                                      -20-
<PAGE>
 
 
credit was cancelled.  The ability to refinance its debt depends on the lenders
desire to continue such loans with the Registrant.

     The Registrant has historically satisfied its needs for capital from (i)
subordinated loans and notes payable, which, in the aggregate, increased
$2,310,000 at June 30, 1996 compared to the prior year, and (ii) the proceeds
from the issuance of stock, which since inception through June 30, 1996 were
approximately $8,930,000.  It is anticipated that the Registrant's short-term
and long-term capital needs will primarily be satisfied through loans,
operations and investing activities as well as from the proceeds of the issuance
of stock.  As the business now exists subsequent to the Sale of Assets, the
Registrant's capital needs are significantly reduced.  This may change if the
Registrant enters into new business ventures.

     The Registrant, during fiscal 1996 generated $3,000,000 cash from new
subordinated loans from its revolving credit line.  This cash was used for
various operating activities as well as to repay $690,000 of subordinated debt
and for start up costs, including purchases of furniture and equipment, incurred
by the Registrant's London subsidiary, which began trading operations in
October, 1995.

     The majority of the Registrant's assets are liquid in nature and are not
significantly affected by inflation.  However, the rate of inflation affects the
Registrant's expenses, such as employee compensation and other operating
expenses.


Results of Operations - Fiscal 1996 Compared to Fiscal 1995

     The Registrant's commission revenues relate directly to the volume of its
customers' orders, generally irrespective of the underlying prices of futures
contracts.  Trading volume may be affected by price levels of commodities which
are directly affected by regional, national and international economic and
political conditions, broad trends in business and finance, inflation and supply
and demand of the commodities underlying futures and options contracts.

     In January, 1993, BRC, at the time a wholly-owned subsidiary of Index, and
a wholly-owned subsidiary of the Registrant until it was dissolved in May, 1996,
sold the majority of its guaranteed introducing broker business to an unrelated
entity in return for a portion of future earnings on such business through
January 15, 1995.

     The Company, during fiscal 1996, organized IFX, located in London, England
to conduct foreign exchange business.  IFX incurred start up costs early in the
year and commenced trading operations in October, 1995.  The revenue generated
by IFX is recorded as trading gains.

                                      -21-
<PAGE>
 
     On May 31, 1996, an agreement was reached to sell, transfer and assign to
MINC substantially all of the brokerage accounts maintained by IFG, together
with all positions, securities, and other assets held in or for such accounts
and other agreed-upon assets used in the conduct of the brokerage activities.
MINC is a unit of E.D.& F. Man Group, plc, a London-based international trading
and finance conglomerate.  This sale was completed as of July 1, 1996.  Shortly
thereafter, Index ceased being a clearing member at all exchanges, though it
remains a registered futures commission merchant.

     The purchase price payable by MINC in connection with this transaction is
based on a percentage of the net income (as defined in the sales agreement) of
the transferred activities during the sixty-six month period following the sale.
As the purchase price is contingent upon the future earnings of the customer
accounts sold, none of which is guaranteed, no gain on the sale was reflected in
the financial statements for the year ended June 30, 1996.  Rather, income will
be recognized as earned on a quarterly basis over the next five and one-half
years. A condition of the Sale of Assets agreement required the principal
shareholder to sign a non-competition agreement. As compensation for providing
such an agreement, a portion of the purchase price will be allocated to the
principal shareholder and recorded by the Registrant concurrently with its
recognition of income as described above. Management does not believe this
amount will be significant.

     A net pre-tax, restructuring charge of $1,556,500, related to the Sale of
Assets, was reflected in the statement of operations for fiscal year 1996.
Additionally, a restructuring gain of $664,000, from the sale of Board of Trade
Clearing Corporation stock, will be reflected in income in fiscal 1997.
    
     Effective July 1, 1996, the Registrant's revenue stream will primarily
consist of the net income of the transferred activities, as defined in the Sale
of Assets agreement, interest on its capital and income from operations of IFX. 
An unaudited pro forma consolidated statement of financial condition as of June 
30, 1996 and an unaudited pro forma consolidated statement of operations for the
year ended June 30, 1996 are included as part of the Registrant's financial 
statements. These pro forma financial statements represent the Registrant's 
unaudited financial position as of June 30, 1996 and the unaudited results of 
operations for the year ended June 30, 1996 as if the Sale of Assets had taken 
place on July 1, 1995.     

     Commission revenues, which generally are related to trading volume,
decreased $3,058,500 or 9% in 1996.  Included in commission revenue for 1995 is
$481,900 from the sale of BRC's introducing broker business.  Commission
revenue, excluding the affect of the BRC revenue, decreased 8% on an 8% increase
in trading volume.  The decrease in commission revenue compared to the increase
in trading volume is primarily attributable to the Registrant's business mix
which has changed toward business that generates higher trading volume and lower
revenues and expenses per trade than other types of retail business.  Included
in this type of business are accounts from non-clearing futures commission
merchants, other wholesale business and execution only business.

                                      -22-
<PAGE>
 
 
     Interest income increased $555,800 in 1996 compared to 1995.  The
increase in interest income is primarily attributable to the following factors.
The Registrant's continuing to invest in longer term U.S. Government obligations
which increases the yield on its investments.  Such investments are interest
rate sensitive which cause fluctuation in income as interest rates vary.  The
change in the appreciation of these investments due to market value fluctuations
generated a $301,200 decrease in interest income in 1996 compared to 1995.
Also, the Registrant during 1996, by increasing its customer base and by
increasing its subordinated debt borrowings, had additional funds available to
invest and those investments generally yielded higher returns because interest
rates, for the majority of fiscal 1996, continued their upward trend.

     Trading gains increased $2,246,500 during the year ended June 30, 1996.
Included in trading gains in fiscal 1996 is $2,058,900 of revenue generated from
IFX.

     Commissions, floor brokerage and clearing costs decreased $1,556,300 or 8%
in 1996.  The decrease in expense is the result of the gradual restructuring of
sales agreements to include the absorption of certain production related costs
by certain sales people before commissions are earned, thus reducing commission
expense.  Also, as part of the restructuring, certain sales people are being
compensated by salary in addition to commissions.  Another reason for the
decrease in commissions, floor brokerage and clearing costs is the change in
business mix toward business which generates higher trading volume and lower
commission revenues and expenses per trade than other types of retail business.
Included in this type of business are accounts from non-clearing futures
commission merchants, other wholesale business and execution only business.

     Compensation and related benefits increased $1,588,400 or 18% during fiscal
1996. The increase is the result of an increase in the number of employees,
which includes employees at IFX, and salary increases. Also contributing to the
increase is the restructuring of sales agreements which provide for certain
sales people to be compensated by salary in addition to commissions.

     Interest expense increased $915,900 during fiscal 1996 compared to fiscal
1995.  Included in interest expense during 1996 is a $100,000 interest accrual
related to the settlement of prior revenue agent reviews through 1992.  The
balance of the increases are the result of higher interest rates on the
Company's obligations during fiscal 1996 and increased customer deposits on
which the Company pays interest expense.

                                      -23-
<PAGE>
 
 
     Business promotion expense increased $493,900 during fiscal 1996 compared
to fiscal 1995.  The increase is primarily the result of a general increase in
print advertising, promotions and increased television advertising during fiscal
1996.

     Doubtful accounts expense increased $726,600 in fiscal 1996 compared to
1995.  This increase is due to a $586,000 credit to bad debt expense in fiscal
1995.  The credit was primarily the result of the receipt of a bankruptcy
settlement for a bad debt which was previously written off, collection of
deficit accounts and a reduction in the Registrant's bad debt experience.

     During fiscal 1996, the Registrant took a net pre-tax restructuring charge
of $1,556,500, related to the sale of brokerage accounts to MINC.

     The aforementioned revenue and expenses resulted in a net loss of
$1,133,100 or $.03 per share for fiscal 1996 compared to net income of
$2,411,600 or $.08 per share for fiscal 1995.


Results of Operations - Fiscal 1995 Compared to Fiscal 1994

     Commission revenues, which generally are related to trading volume,
increased $135,900 in 1995 on a 21% increase in trading volume.  The revenue
from the sale of BRC in the amounts of $481,900 and $982,000 for 1995 and 1994,
respectively, is included in commission revenue.  The small increase in
commission revenue compared to the increase in trading volume is primarily
attributable to the Registrant's business mix which has changed toward business
that generates higher trading volume and lower revenue and expense per trade
than other types of retail business.  Included in this type of business are
accounts from non-clearing futures commission merchants, other wholesale
business and execution only business.

     Interest income increased $3,975,300 in 1995 compared to 1994.   This
increase in interest income is attributable to the following factors.  The
Registrant is continuing to invest in longer term U.S. Government obligations
which increases the yield on its investments.  These investments are interest
rate sensitive which cause fluctuations in income as interest rates vary.  The
change in the appreciation of these investments due to market value fluctuations
generated an increase in interest income of $494,300 in 1995 compared to 1994.
The Registrant, during 1995, by increasing its customers base, had additional
funds available to invest and those investments generally yielded higher returns
because interest rates continued their upward trend during fiscal 1995.

     Commissions, floor brokerage and clearing costs decreased $1,198,500 or 6%
in 1995.  The decrease is the result of the gradual restructuring of sales
agreements to include the

                                      -24-
<PAGE>
 

absorption of certain production related costs by certain sales people before
commissions are earned.  Also, as a part of the restructuring, certain sales
people are being compensated by salary in addition to commissions.  Another
reason for the decrease in commissions, floor brokerage and clearing costs is
the change in business mix toward business which generates higher trading volume
and lower commission revenue and expense per trade than other types of retail
business.  Included in this type of  business are accounts from non-clearing
futures commission merchants, other wholesale business and execution only
business.

     Compensation and related benefits increased $1,342,700 or 18% in 1995.  The
increase is attributed to a 15% increase in the number of employees and salary
increases.  Another factor contributing to the increase is the restructuring of
sales agreements which provide for certain sales people to be compensated by
salary in addition to commissions.

     Interest expense increased $1,515,300 in 1995.  The increase is the result
of higher interest rates on the Registrant's obligations during fiscal 1995 and
increased deposits on which the Registrant pays interest expense.

     Business promotion increased $457,700 or 37% in 1995 compared to 1994.  The
increase is the result of a general increase in the advertising of Index's
discount division which included a series of television commercials.

     Communications expense decreased $301,500 or 15% in 1995 compared to 1994.
The decrease is the result of a change in long distance carrier which led to
lower rates and a one time $50,000 "sign-on" credit.  The Registrant also
realized savings resulting from its increased capital expenditures on more
efficient communications equipment.

     Professional and consulting fees decreased $446,100 in 1995.  The decrease
is the result of a decrease in legal fees incurred in fiscal 1995 due to
decreased activity on pending litigation.

     Doubtful accounts expense decreased $635,100 in 1995 compared to 1994.  The
decrease is the result of the receipt of funds from a bankruptcy settlement for
a debt that was previously written off, collection of deficit accounts and a
reduction in the Registrant's bad debt experience.

     The aforementioned revenue and expenses resulted in net income of
$2,411,600 or $.08 per share for fiscal 1995 compared to net income of $586,100
or $.03 per share for fiscal 1994.

                                      -25-
<PAGE>
 
 
Item 8 - Financial Statements and Supplementary Data
----------------------------------------------------

     For financial information, see the financial statements and notes thereto
set forth at Item 14 hereof.


Item 9 - Changes In and Disagreements With Accountants On Accounting and
------------------------------------------------------------------------
Financial Disclosures
---------------------

     The Registrant did not have any changes in, or any material disagreements
on accounting and financial disclosure with, its accountants in fiscal 1996 or
1995.


                                   PART III
                                   --------

Item 10 - Directors and Executive Officers
------------------------------------------

     The Directors and Executive Officers of the Registrant as of June 30, 1996
were as follows:

<TABLE>
<CAPTION>
 
         Name                  Age                  Office
-----------------------        ---        ---------------------------
<S>                            <C>        <C>
                                          
Burton J. Meyer                 49        President and Director
                                          
Joel M. Eidelstein              29        Director
                                          
George A. Myers                 46        Director
                                          
Allyson D. Laackman             39        Chief Financial Officer
                                          
Bruce E. Mathias                45        Treasurer and Secretary
                                          
Michael J. Moss                 49        President of Index
                                          
Philip A. Tanzar                46        Director and Vice President
                                          and General Counsel
</TABLE>

     Burton J. Meyer has been with the Registrant since its inception and has
been a Director since August, 1986 and President since July, 1987.  Since July
20, 1987, Mr. Meyer has also been an executive vice president and a director of
Index, president of the Jack Carl/312-Futures discount division of Index until
November, 1990 when he became Chief Executive Officer of Index.  Also since July
20, 1987, Mr. Meyer has been a director of Brokers Resource Corp. ("BRC"), a
wholly-owned subsidiary of the Registrant, a director of Index Securities, Inc.
("ISI"), a wholly-owned subsidiary of the Registrant, since September, 1988. Mr.
Meyer has been a director of Index Management Services, Inc. ("IMSI"), a wholly-
owned subsidiary of Index, since November, 1990 and served as president from
November, 1990 until January, 1992 and has been chief executive officer of IMSI
since May, 1992.  Since May, 1991, Mr. Meyer has also been president and

                                      -26-
<PAGE>
 
 
secretary of Index Futures Arb Group, Inc. ("Arb").  Since January, 1992, Mr.
Meyer has been vice president of Jack Carl Management and Trading, Inc.
("JCMT").  Since July, 1992, Mr. Meyer has been president of Index Forward
Trading Group, Inc. ("IFTG") and Index Currency Trading Group, Inc. ("ICTG").

     All officer positions Mr. Meyer held with the Registrant and its
subsidiaries were effectively terminated with the expiration of his employment
contract on July 1, 1996.  Mr. Meyer resigned as a Director effective as of the
close of business July 1, 1996.

     Joel M. Eidelstein was elected Director of the Registrant effective
November 16, 1990.  Mr. Eidelstein graduated from Brandeis University in May,
1988.  Since June, 1988, until immediately prior to the Sale of Assets, he was
an independent trader and a floor manager with Index.

     George A. Myers was elected Director of the Registrant effective November
16, 1990.  Mr. Myers, since 1981, has been managing general partner of MC
Capital, a diversified real estate company with offices in Chicago, Illinois;
Phoenix, Arizona; and San Diego, California.

     On September 14, 1992, Allyson D. Laackman, became Chief Financial Officer
of the Registrant, BRC and ISI and chief financial officer and director of
Index, Arb, JCMT, IFTG and ICTG.  Ms. Laackman was also Chief Financial Officer
and director of IMSI from September 14, 1992 until she voluntarily resigned from
those positions in January, 1994.  Prior to joining the Registrant, Ms.
Laackman, a Certified Public Accountant, had been with Arthur Andersen & Co.
since 1981 and was an experienced manager in the financial services division.

     Bruce E. Mathias has been Treasurer of the Registrant since November 16,
1990.  Mr. Mathias was also Assistant Secretary of the Registrant from November
16, 1990 until he was appointed Secretary in March, 1994.  He was also Chief
Financial Officer of the Registrant, Index, BRC, IMSI, RDI and Arb from
November, 1990 until January, 1992 when he was elected president of IMSI until
February, 1994, when he was reappointed chief financial officer of IMSI.  Prior
to November, 1990 he was the Director of Financial Reporting of the Registrant
from May, 1987 and secretary of Index since November, 1987.  In addition, since
November 16, 1990, he has been treasurer and a director of Index and treasurer
and assistant secretary of BRC.  Since November, 1990, Mr. Mathias has been a
director of IMSI.  Mr. Mathias is a Certified Public Accountant.

     Michael J. Moss has been president and a director of Index since January,
1992.  Prior to joining Index, Mr. Moss was an independent floor trader from
1978 until 1987.  Mr. Moss was senior vice president of Gerald, Inc., a futures
commission merchant, from 1987 until December, 1991.

                                      -27-
<PAGE>
 
 
     In accepting employment with MINC, Mr. Moss resigned as president effective
July 1, 1996.

     Philip A. Tanzar joined 312-Futures, Inc. at its inception in 1983.  Mr.
Tanzar was chief operating officer of the discount brokerage division of Index
from 1986 until November, 1990.  In November, 1990, Mr. Tanzar was appointed
chief operating officer of Index until March, 1993 when Mr. Tanzar was appointed
Vice President and General Counsel of the Registrant, Index, BRC and IMSI.  In
February, 1994, Mr. Tanzar was elected a Director of the Registrant.  On
September 24, 1996, Mr. Tanzar resigned as a Director of the Registrant
effective October, 1, 1996.

     All executive officer positions Mr. Tanzar held with the Registrant and its
subsidiaries were effectively terminated, upon accepting employment with MINC.,
on July 1, 1996.

     Directors are elected and serve until the next annual meeting or until
their successors are elected and qualified.  Officers are elected annually by
the Board of Directors.

                                      -28-
<PAGE>
 
 
Item 11 - Executive Compensation
--------------------------------

   The following table sets forth all cash compensation paid by the Registrant
as well as the number of stock options earned by the Registrant's chief
executive officer and the three other most highly compensated executive
officers, exceeding $100,000, during the last three fiscal years.

<TABLE>
<CAPTION>

                                                    SUMMARY COMPENSATION TABLE
                                                        Annual Compensation
                                           --------------------------------------------
                                                                                           Long Term
                                                                                          Compensation
                                                                                          ------------
Name and                      Year                                       Other               Option
Principal                     Ended                                      Annual              Awards          All Other
Position                     June 30,     Salary        Bonus          Compensation         (Shs) (5)        Compensation
-----------------------      --------     --------      --------       ------------       ------------       ------------
<S>                          <C>          <C>           <C>            <C>                <C>                <C> 
Burton J. Meyer (1) (6)      1996         $300,000      $344,600             -                     -           $316,100
  President and              1995         $300,000      $153,700             -                     -    
    Director                 1994         $225,000      $ 50,000             -               1,250,000  
                                                                                                        
Michael J. Moss (2) (6)      1996              -             -          $538,800                   -                -
  President                  1995              -             -          $668,200                   -    
    of Index                 1994              -             -          $414,100               500,000  
                                                                                                        
Allyson D. Laackman (3)      1996         $135,000      $74,700              -                     -                -
  Chief Financial            1995         $133,200      $14,100              -                     -    
    Officer                  1994         $125,000      $ 5,800              -                     -    
                                                                                                        
Philip A. Tanzar (4)(6)      1996         $130,000      $14,300              -                     -                -
  Director and Vice          1995         $122,000      $16,700              -                     -
    President and            1994         $117,000      $ 2,600              -                     -
    General Counsel
</TABLE>

--------------------------------
(1) Mr. Meyer's bonuses relate to the prior fiscal years.  All Other
    Compensation is a severance payment.  Mr. Meyer resigned as a Director as of
    the close of business July 1, 1996.

(2) Mr. Moss's 500,000 options expired June 30, 1995.  Other annual compensation
    is commissions.

(3) Ms. Laackman earned a $38,800 bonus for fiscal 1994 and 1995, $24,700 of
    which was paid in fiscal 1996.  Also, Ms. Laackman earned a $50,000 bonus
    for fiscal 1996, which was paid in fiscal 1996.

(4) Mr. Tanzar became a Director effective February, 1994.  He has resigned 
    October 1, 1996.

(5) The options have been restated for the November, 1994 one-for-four reverse
    split.

(6) Resigned from executive officer positions effective July 1, 1996.

                                      -29-
<PAGE>
 
 
   Fiscal 1996 Option Grants Table

   The following table sets forth stock options granted to the Registrant's
chief executive officer and the Registrant's three other most highly compensated
executive officers during fiscal 1996.  Under Securities and Exchange Commission
regulations, companies are required to project an estimate of appreciation of
the underlying shares of stock during the option term.  The Registrant has
chosen the 5% - 10% formula approved by the SEC.  However, the ultimate value
will depend on the market value of the Registrant's stock at a future date,
which may or may not correspond to the projections below.

<TABLE> 
<CAPTION> 
                                                   OPTION GRANTS IN FISCAL 1996

Individual Grants
----------------------------------------------------------------------------------------------------

                                                                                                           Potential Realizable
                                                                                                          Value at Assumed Annual
                                                                                                           Rates of Stock Price
                                                   % of                                                        Appreciation
                                                Total Options                                                 for Option Term
                                                 Granted to                                               -----------------------
                              Options            Employees in          Exercise           Expiration    
Name                          Granted            Fiscal Year            Price                Date             5%           10%
--------------------          --------          -------------          --------           ----------      ---------     ---------
<S>                           <C>               <C>                    <C>                <C>             <C>           <C> 
</TABLE> 

No options were granted to the Registrant's chief executive officer or the
Registrant's three other most highly compensated executive officers during
fiscal 1996.

                                      -30-
<PAGE>
 
 
   Fiscal 1996 Option Exercises and Year-End Value Table

   The following table sets forth options exercised by the Registrant's chief
executive officer and the Registrant's three other most highly compensated
executive officers during fiscal 1996, and the number and value of all
unexercised options at year end.  The value of "in-the-money" options refers to
options having an exercise price which is less than the market price of the
Registrant's stock on June 30, 1996.
<TABLE>
<CAPTION>
                                                                                                           Value of
                                                                                    Number of            Unexercised
                                                                                   Unexercised          In-the-Money
                                                                                   Options at            Options at
                                       Shares Acquired                            June 30, 1996         June 30, 1996
                                         on Exercise            Value             Exercisable/          Exercisable/
Name                                                           Realized           Unexercisable         Unexercisable
----------------------------           ---------------         --------           -------------         -------------
<S>                                    <C>                     <C>                <C>                   <C>
                                                                                     
Burton J. Meyer                               -                   -                 1,850,000/0             $15,625/0
                                                                                     
Michael J. Moss                               -                   -                         0/0                  $0/0
                                                                                                                 
Allyson D. Laackman                           -                   -                   125,000/0                  $0/0
                                                                                                                 
Philip A. Tanzar                              -                   -                    25,000/0                  $0/0
 
</TABLE>

                                      -31-
<PAGE>
 
 
   Compensation of Directors

   Directors are not currently compensated in connection with their duties as
directors, but may be reimbursed for expenses incurred by them.

   Executive Employment Contracts

   Mr. Meyer's employment agreement, effective July 1, 1994, provides, among
other things, that he serve as the Registrant's President and for a base annual
compensation of $300,000 for a term ending July 1, 1996.  In addition to his
base annual compensation, Mr. Meyer is entitled to an incentive bonus if certain
pre-tax earnings levels are achieved, or if such pre-tax earnings levels are not
achieved, Mr. Meyer may receive a discretionary bonus.

   In the event that the terms of Mr. Meyer's employment agreement are not
extended by the Registrant, for reasons other than "good cause", on terms
substantially equivalent to the current terms, the Registrant is obligated to
pay Mr. Meyer a severance of $300,000 plus an amount equal to the bonus for the
previous fiscal year.

   As a result of the Sale of Assets, Mr. Meyer's employment contract was not
extended.  As a settlement of his contract the Board of Directors agreed to pay
Mr. Meyer $316,100 in severance.  If Mr. Meyer's position at MINC is terminated
voluntarily or involuntarily prior to July 1, 1997, Mr. Meyer will be entitled
to receive additional severance of $316,100.

   Ms. Laackman's employment agreement, effective September 14, 1994, provides,
among other things, that she serve as the Registrant's Chief Financial Officer
and for a base annual compensation of $135,000 for a term ending December 31,
1995.  In addition to her base annual compensation, Ms. Laackman is entitled to
a discretionary bonus which may not exceed 100% of her base salary.

   Effective July 1, 1995, Ms. Laackman signed another employment agreement
which supersedes the September 14, 1994 agreement.  This agreement provides,
among other things, that she serve as the Registrant's Chief Financial Officer
and for a base annual compensation of $135,000 for a term ending June 30, 1996.
In addition to her base annual compensation, Ms. Laackman is entitled to an
annual bonus if certain pre-tax earnings levels are achieved.

   In the event that the terms of Ms. Laackman's employment are not extended by
the Registrant, for reasons other than "good cause", on terms substantially
equivalent to the current terms, the Registrant is obligated to pay Ms. Laackman
a severance equal to nine months of base salary.  The severance may be reduced

                                      -32-
<PAGE>
 
 
under certain circumstances.  This contract has not yet been extended, however,
Ms. Laackman continues to serve as Chief Financial Officer.

   Mr. Tanzar's employment agreement, effective November 1, 1993, provides,
among other things, that he serve as the Registrant's Vice President and General
Counsel and for a base annual compensation of $122,000 for a term ending
December 31, 1995.  In addition to his base annual rate of compensation, Mr.
Tanzar is entitled to a guaranteed bonus of $5,000 per annum.  However, such
bonus may exceed $5,000 as determined by the President of the Registrant.

   Mr. Tanzar's employment agreement, effective December 31, 1995, provides,
among other things, that he serves as the Registrant's Vice President and
General Counsel and for a base annual compensation of $138,200 for a term ending
December 31, 1996.  In addition to his base annual rate of compensation, Mr.
Tanzar is entitled to a discretionary bonus.

   In the event that the terms of Mr. Tanzar's employment are not extended by
the Registrant for reasons other than "good cause", on terms substantially
equivalent to the current terms, the Registrant is obligated to pay Mr. Tanzar a
severance of $100,000.

   Effective July 1, 1996 Mr. Tanzar accepted employment at MINC, thereby
terminating his employment contract with the Registrant.  As an inducement for
Mr. Tanzar to accept employment with MINC and as a settlement of his contract,
the Registrant has agreed to pay him up to $100,000 as severance if he is
terminated by MINC prior to January 1, 1999.

   Mr. Moss's letter of understanding dated August 4, 1993 provides, among other
things, that he serve as President of Index and for a monthly draw of $20,000
against commissions earned for the term of employment a term ending June 30,
1995.  Mr. Moss's agreement was extended, on July 1, 1995, until June 30, 1997.
In the event that the terms of Mr. Moss's letter of understanding are not
renewed under the same general terms or he is terminated without cause, Index is
obligated to pay Mr. Moss any commissions due him for the nine months following
the termination without cause or the expiration and non-renewal of the letter of
understanding.  This agreement was terminated when Mr. Moss accepted employment
with MINC on July 1, 1996.

       Compensation Committee Interlocks and Insider Participation
            Compensation Decisions

   The Registrant does not have a compensation committee.  Prior to the Sale of
Assets, Mr. Burton J. Meyer, at the time, President and a Director of the
Registrant, participated in the negotiations of employment agreements for
executive officers of the Registrant.

                                      -33-
<PAGE>
 
Item 12 - Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

   The following table sets forth as of August 30, 1996, certain information
regarding the common stock beneficially owned by each present director, the
Registrant's chief executive officer and the Registrant's three other most
highly compensated officers, each person known by the Registrant to own more
than five percent or more of the common stock of the Registrant and all present
officers and directors as a group:
<TABLE>
<CAPTION>
    
                                                          Approximate         
                                    Amount and Nature of    Percent           
          Name                      Beneficial Ownership    of Class          
--------------------------          --------------------  ------------        
<S>                                 <C>                   <C>                 
                                                                              
Lee S. Casty   (1) (2) (3)                16,164,453        48.07%            
                                                                              
Burton J. Meyer(4) (7) (8)                 2,321,074         6.78%             
                                                                              
Joel M. Eidelstein                           127,975          .38             
                                                                              
George A. Myers                                3,666          .01             
                                                                              
Allyson D. Laackman    (5)                   125,000          .37             
                                                                              
Michael J. Moss        (7)                 1,801,063         5.36             
                                                                              
Philip A. Tanzar   (6) (7) (9)                25,000          .07             
                                                                              
All officers and directors                                                    
  as a group (5 persons)                     306,641          .91             
</TABLE>     

(1)  Does not give effect to 400,000 shares of Class A Preferred Stock, $1.00
     par value, one vote per share, beneficially owned by Mr. Casty and
     constituting 100% of the issued and outstanding Class A Preferred Stock of
     the Registrant.  By giving effect to one vote per share of the Class A
     Preferred Stock the percentage of the total number of votes that can be
     cast by Mr. Casty will increase.
(2)  Mr. Casty may be deemed a parent and promoter of the Registrant as those
     terms are defined under the Securities Act of 1933, as amended.
(3)  c/o French-American Securities, Inc., 200 West Adams Street, Suite 1500,
     Chicago, Illinois 60606.    
(4)  Includes 600,000 exercisable options, of which beneficial ownership can be
     acquired. Does not include 1,250,000 options which terminated July 1, 1996,
     upon Mr. Meyer's employment with MINC. As part of the resolution of matters
     concerning Mr. Meyer's employment agreement such options were reissued by
     the Board of Directors on November 7, 1996.     
(5)  Includes 125,000 exercisable options, of which beneficial ownership can be
     acquired.
(6)  Includes 25,000 exercisable options, of which beneficial ownership can be
     acquired.
(7)  Ceased to be an executive officer effective July 1, 1996.
(8)  Resigned as Director effective close of business July 1, 1996.
(9)  Resigned as a Director effective October 1, 1996.

                                     -34-
<PAGE>
 
 
     In July, 1994, the Registrant offered to holders of record of its common
stock, the non-transferable right to purchase, at  a subscription price of $.02
per share, two-thirds of a share of common stock for each one share of common
stock owned of record on July 15, 1994, by such shareholder ("Rights Offering").
53,799,304 shares of common stock were available in the Rights Offering.

     Lee S. Casty, the Registrant's principal shareholder, Burton J. Meyer the
Registrant's President and a director and Michael J. Moss, President of Index,
purchased their allocable number of shares in the Rights Offering.  In addition,
Messrs. Casty, Meyer and Moss purchased at the subscription price of $.02,
immediately following the expiration of the Rights Offering, the shares of
common stock which were not purchased by other shareholders so that all
53,799,304 shares of common stock available were purchased.  The gross proceeds
of the Rights Offering were $1,076,000.

     The Registrant, on October 24, 1994, received shareholder approval to amend
its Certificate of Incorporation which resulted in a reverse split of its common
stock, effective November 4, 1994, on a basis whereby each four shares of common
stock was reclassified and changed into one share of common stock having a par
value of $.004.

Item 13 - Certain Transactions
------------------------------

     Effective November 30, 1985, Mr. Casty, the principal shareholder, loaned
the Registrant $400,000 evidenced by a "satisfactory subordination agreement"
approved by the regulatory authorities to which the Registrant is subject.  This
subordinated loan was due to mature on December 1, 1988.  On March 5, 1986, the
Registrant amended its Articles of Incorporation to authorize 400,000 shares of
Preferred Stock, par value $1.00 per share, 10% cumulative, all of which
Preferred Stock was thereupon issued to Mr. Casty in satisfaction of such
subordinated loan.  The Preferred Stock is redeemable, with cumulative
dividends, at the option of the Registrant under certain circumstances.  At June
30, 1996, cumulative dividends in arrears amounted to $413,300.  No liability
for these dividends has been recorded as dividends are not payable until
declared.  As part of the Merger, the Articles of Incorporation of the
Registrant were amended and the Preferred Stock was redesignated "Class A
Preferred Stock."

     In January, 1996, all notes payable due to Mr. Casty aggregating $940,000
were extended to January 31, 1997.

     The Registrant, during the year ended June 30, 1996, paid Mr. Casty,
approximately $117,900 in interest on notes payable.

                                     -35-
<PAGE>
 
 
     In August, 1995, Mr. Casty made a $1,000,000 short term advance to the
Registrant.  The Registrant repaid the advance in September, 1995.

     The Registrant, during the year ended June 30, 1996, earned $53,500 of
interest income on a note receivable from C. Adam, Ltd., a company wholly-owned
by Mr. Casty.

     In January, 1996, all notes payable to French-American Securities, Inc., a
company wholly-owned by Mr. Casty, aggregating $4,550,000 were extended to
January 31, 1997.

     The Registrant, during the year ended June 30, 1996, paid French-American
Securities, Inc. $570,600 in interest on notes payable.

     In January, 1996, all notes payable to Mr. Meyer aggregating $900,000 were
extended to January 31, 1997.

     The Registrant during the year ended June 30, 1996 paid Mr. Meyer $112,900
in interest on notes payable.

     The Registrant, during the year ended June 30, 1996, paid Mr. Meyer $61,500
for rent of an exchange membership.

                                     -36-
<PAGE>
 
                                    PART IV
                                    -------

Item 14 - Exhibits, Financial Statement Schedules and Reports on
----------------------------------------------------------------
Form 8-K
--------

(a)  The following documents are filed as a part of this report:

(1)  Financial Statements:

     The following financial statements are attached to this Form 10-K
commencing on page 41.
                                                            Page
                                                            ----
    
Jack Carl/312-Futures, Inc:     

  Report of Independent Public Accountants                    41

  Consolidated Statements of Financial Condition
    as of June 30, 1996 and 1995                              42

  Consolidated Statements of Operations for the Years
    Ended June 30, 1996, 1995 and 1994                        43

  Consolidated Statements of Changes in Stockholders'
    Equity for the Years Ended June 30, 1996, 1995 and
    1994 as Restated for the One-For-Four Reverse Split of
    Common Stock                                              44

  Consolidated Statements of Changes in Liabilities
    Subordinated to Claims of General Creditors for
    the Years Ended June 30, 1996, 1995 and 1994              45

  Consolidated Statements of Cash Flows for the Years
    Ended June 30, 1996, 1995 and 1994                        46

  Notes to Consolidated Financial Statements                  48
    
  Unaudited Pro Forma Consolidated Statement of Financial
    Condition as of June 30, 1996                             65

  Unaudited Pro Forma Consolidated Statement of Operations
    for the Year Ended June 30, 1996                          66  

  Notes to Unaudited Pro Forma Consolidated Statements
    of Financial Condition and Operations                     67

E.D. & F. Man International Inc.:

  Report of Independent Accountants                           69 

  Consolidated Statement of Financial Condition
    as of March 31, 1996                                      70

  Consolidated Statement of Operations for the Year Ended
    March 31, 1996                                            71   

  Consolidated Statement of Changes in Subordinated
    Liabilities for the Year Ended March 31, 1996             72

  Consolidated Statement of Changes in Stockholder's Equity
    for the Year Ended March 31, 1996                         73

  Consolidated Statement of Cash Flows for the Year Ended
    March 31, 1996                                            74

  Notes to Consolidated Financial Statements                  75

  Supplemental Information                                    82

(2)  Schedules
     ---------

  Schedule II - Valuation and qualifying accounts             88     

     All other schedules called for under Regulation S-X are not submitted
because they are not applicable or not required or because the required
information is not material or is included in the financial statements or notes
thereto.

                                     -37-
<PAGE>
 
 
(3)  Exhibits
     --------

     The following exhibits required by Item 601 of Regulation S-K to be filed
herewith are incorporated by reference to previously filed documents:

     Exhibit No.    Description
     -----------    -----------

                    The following exhibits are hereby incorporated by reference
                    from Form 10-K for the Registrant as filed on September 27,
                    1993 with the Securities and Exchange Commission:

       10.34        Letter of understanding, dated August 4, 1993, between Index
                    Futures Group, Inc. and Michael Moss.

                    The following exhibits are hereby incorporated by reference
                    from Form 10-K for the Registrant as filed on September 28,
                    1994 with the Securities and Exchange Commission:

        3.1         Certificate of Incorporation of 312 Merger Corporation

        3.2         By-Laws of 312 Merger Corp.

        3.3         Certificate of Ownership and Merger of Jack Carl/312-
                    Futures, Inc. (an Illinois Corporation) into 312 Merger
                    Corporation (a Delaware Corporation)

       10.35        Employment agreement, dated November 1, 1993, between Jack
                    Carl/312-Futures, Inc. and Philip A. Tanzar.

       10.36        Employment agreement, dated January 7, 1994, between Jack
                    Carl/312-Futures, Inc. and Anthony J. Pecoraro.

       10.37        Employment agreement dated July 1, 1994, between Jack
                    Carl/312-Futures, Inc. and Burton J. Meyer.
 
                    The following exhibits are hereby incorporated by reference
                    from Form 10-K for the Registrant as filed on September 27,
                    1995 with the Securities and Exchange Commission:

       10.38        Employment agreement, dated September 14, 1994, between Jack
                    Carl/312-Futures, Inc. and Allyson D. Laackman

                                     -38-
<PAGE>

       10.39        Employment agreement, dated July 1, 1995, between Jack
                    Carl/312-Futures, Inc. and Allyson D. Laackman

       10.40        Letter containing terms of employment, dated January 27,
                    1995, between Index Futures Group (UK) Limited and Charles
                    Romilly

       10.41        Letter of understanding, dated July 1, 1995, between Index
                    Futures Group, Inc. and Michael Moss

                    The following exhibits are filed herewith:

       10.42        Employment agreement, dated December 31, 1995, between Jack
                    Carl/312-Futures, Inc. and Philip A. Tanzar

       10.43        Heads of Agreement, dated July 19, 1995 between Jack
                    Carl/312-Futures, Inc., Simon Drabble, Graham Wellesley and
                    Lorenzo Naldini

       10.44        Service Agreement, dated July 19, 1995 between Index Forex
                    Limited and Simon Drabble, Graham Wellesley and Lorenzo
                    Naldini
    
       10.45        Service Agreement dated September 1, 1995 between Index FX 
                    Limited and Simon Drabble

       10.46        Service Agreement dated November 13, 1995 between Index FX 
                    Limited and Graham Wellesley
 
       10.47        Service Agreement dated November 13, 1995 between Index 
                    Forex Limited and Lorenzo Naldini

       10.48        Letters containing terms of employment dated October 12,
                    1995 and October 27, 1995 between Index FX Limited and
                    Barrie J. Swift

       10.49        Letter containing terms of employment dated February 6, 1996
                    between Index FX Ltd and Figen Yardimci

       10.50        Letter containing terms of employment dated March 19, 1996 
                    between Index FX Limited and Charles Owens     

       11.1         Computation of Earnings per Common Share

       17.1         Letter confirming resignation, dated September 26, 1996,
                    from Burton J. Meyer

       17.2         Letter of resignation, dated September 24, 1996, from Philip
                    A. Tanzar

       21.1         Subsidiaries of the Registrant

       24.1         Power of Attorney

       27           Financial Data Schedule (Edgar Version Only)

       99.1         Report on Form 8-K for the Registrant as filed on June 14,
                    1996 with the Securities and Exchange Commission

(b)  Reports on Form 8-K:

     The Registrant filed a report on Form 8-K on June 14, 1996, reporting under
     item 2, a consummation of a material sale to E.D.& F. Man International
     Inc., substantially all of the business of the Registrant's principal
     wholly-owned subsidiary, Index Futures Group, Inc.

                                     -39-
<PAGE>
 
                                                                    EXHIBIT 24.1
 
                                  SIGNATURES
                                  ----------

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                          JACK CARL/312-FUTURES, INC.
--------------------------------------------------------------------------------

By:                        /S/ ALLYSON D. LAACKMAN
--------------------------------------------------------------------------------
            Allyson D. Laackman, Chief Financial Officer

    
Date:  December 30, 1996      

                               POWER OF ATTORNEY
    
     Each person whose signature appears below hereby constitutes and appoints
Allyson D. Laackman his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution for him in his name, place and stead,
in any and all capacities, to sign this Form 10-K/A and all amendments thereto
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission under the
Securities Exchange Act of 1934.     

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-K has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature                Title                     Date
---------                -----                     ----

    
/S/ ALLYSON D. LAACKMAN  Chief Financial Officer   December 30, 1996     
----------------------                                              
Allyson D. Laackman

    
/S/ JOEL M. EIDELSTEIN   Director                  December 30, 1996     
----------------------                                              
Joel M. Eidelstein

    
/S/ GEORGE A. MYERS      Director                  December 30, 1996     
----------------------                                              
George A. Myers


         
                                     -40-
<PAGE>
 
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                   ----------------------------------------


To the Stockholders of
Jack Carl/312-Futures, Inc.
and Subsidiaries:

We have audited the accompanying consolidated statements of financial condition
of JACK CARL/312-FUTURES, INC. (a Delaware corporation) AND SUBSIDIARIES as of
June 30, 1996 and 1995, and the related consolidated statements of operations,
changes in stockholders' equity, changes in liabilities subordinated to claims
of general creditors and cash flows for the years ended June 30, 1996, 1995 and
1994.  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 financial statements referred to above present fairly, in
all material respects, the financial position of Jack Carl/312-Futures, Inc. and
Subsidiaries as of June 30, 1996 and 1995, and the results of their operations
and their cash flows for the years ended June 30, 1996, 1995 and 1994, in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commissions rules and is not a part of the basic financial
statements.  This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, fairly
states, in all material respects, the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.



Chicago, Illinois,
September 27, 1996

                                     -41-
<PAGE>
 
 
                  JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             JUNE 30, 1996 AND 1995

                                     ASSETS

<TABLE>
<CAPTION>
                                                  1996              1995
                                                  ----              ----
<S>                                           <C>              <C>   
 
Cash                                          $  1,587,300     $  1,034,900
Cash segregated or secured under Commodity
 Exchange Act                                    2,009,500        1,181,700
U.S. Government obligations                    144,328,800       82,885,600
Other short term investments                    28,856,100              -
Deposits with clearing organizations            43,488,500       78,030,700
Warehouse receipts                                 959,500        1,537,200
Receivables:
  Brokers and dealers                            2,291,900        9,253,400
  Clearing organizations                        12,383,200       12,627,900

<CAPTION>  
                      1996           1995
                      ----           ----
  <S>               <C>            <C>        <C>              <C> 
  Customers         $1,138,400     $1,152,200
  Affiliates             1,000          7,300
  Other              1,061,800        379,100
  Less - Allowance   
   for doubtful 
   accounts           (409,300)      (191,900)   1,791,900        1,346,700
                     ---------      ---------
<CAPTION> 
<S>                                           <C>              <C>   
Investments in and advances to
 affiliated partnerships                               -             39,100
Notes receivable                                   627,200          633,700
Exchange memberships, at cost (market value 
 of $960,400 in 1996 and $1,228,100 in 1995        781,300          781,300
Furniture, equipment, and leasehold 
 improvements, net of accumulated depreciation 
 and amortization of $2,213,400 in 1996 and 
 $1,602,800 in 1995                                279,500          682,900
Goodwill, net of accumulated amortization of 
 $4,596,400 in 1996 and $4,054,500 in 1995             -            541,900
Other assets                                       503,000          355,400
                                               -----------      -----------
 
            Total                             $239,887,700     $190,932,400
                                               ===========      ===========
</TABLE>


                   LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION> 
Payables:
<S>                                           <C>              <C>
  Clearing organizations                      $    165,900     $    185,900
  Customers                                    216,705,300      168,500,000
  Officers and employees                         2,865,000        2,221,500
Accounts payable and accrued expenses            3,545,000        4,580,900
Notes payable                                    6,390,000        6,390,000
                                               -----------      -----------
 
            Total                              229,671,200      181,878,300
                                               -----------      -----------
 
Liabilities subordinated to claims of
 general creditors                               4,000,000        1,690,000
                                               -----------      -----------
 
Stockholders' equity:
  Class A preferred stock, $1 par value;
   10% cumulative, redeemable, 400,000 
   shares authorized and outstanding               400,000          400,000
  Common stock, restated for reverse
   split, $.004 par value; 150,000,000 shares 
   authorized, 33,624,530 and 33,624,532
   shares issued and outstanding in 1996
   and 1995, respectively                          134,500          134,500
  Paid-in capital                                8,395,300        8,395,300
  Retained deficit                              (2,698,800)      (1,565,700)
  Cumulative translation adjustment                (14,500)             -
                                               -----------      -----------
 
     Total stockholders' equity                  6,216,500        7,364,100
                                               -----------      -----------
 
            Total                             $239,887,700     $190,932,400
                                               ===========      ===========
</TABLE>


   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                      -42-
<PAGE>
 
 
                  JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                           1996          1995          1994
                                           ----          ----          ----     
<S>                                    <C>           <C>           <C>
Revenues:
 Commissions                           $30,606,500   $33,665,000   $33,529,100
 Interest                                7,920,800     7,365,000     3,389,700
 Trading gains, net                      2,411,400       164,900       330,300
 Other                                     196,200       463,400       316,200
                                       -----------   -----------   -----------
 
  Total revenues                        41,134,900    41,658,300    37,565,300
                                       -----------   -----------   -----------
 
Expenses:
 Commissions, floor brokerage and
  clearing costs                        16,825,600    18,381,900    19,580,400
 Compensation and related benefits      10,536,500     8,948,100     7,605,400
 Interest                                4,238,900     3,323,000     1,807,700
 Communications                          2,066,800     1,672,000     1,973,500
 Business promotion                      2,173,900     1,680,000     1,222,300
 Rent and other occupancy costs          1,546,300     1,465,900     1,382,600
 Professional and consulting fees          670,400       451,100       897,200
 Depreciation                              320,800       234,800       254,900
 Amortization of goodwill                   53,600        53,600        53,600
 Doubtful accounts expense (benefit)       140,600      (586,000)       49,100
 Other                                   2,312,200     2,086,100     1,746,300
 Restructuring charge, net               1,556,500           -             -
                                       -----------   -----------   -----------
 
  Total expenses                        42,442,100    37,710,500    36,573,000
                                       -----------   -----------   -----------
 
 
Income (loss) before income taxes       (1,307,200)    3,947,800       992,300
Income tax expense (benefit)              (174,100)    1,536,200       406,200
                                       -----------   -----------   -----------
 
Net income (loss)                       (1,133,100)    2,411,600       586,100
 
Assumed cumulative dividend on Class
 A preferred stock                         (40,000)      (40,000)      (40,000)
                                       -----------   -----------   -----------
 
Net income (loss) applicable to
 common stock                          $(1,173,100)  $ 2,371,600   $   546,100
                                       ===========   ===========   ===========
 
Primary earnings (loss) per share,
 restated for reverse split:
 
 Net income (loss)                     $      (.03)  $       .08   $       .03
                                       ===========   ===========   ===========
 
 Weighted average number of shares
  outstanding                           33,721,179    30,680,524    20,175,612
                                       ===========   ===========   ===========
 
Fully diluted earnings (loss) per
 share, restated for reverse split:
 
 Net income (loss)                     $      (.03)  $       .08   $       .03
                                       ===========   ===========   ===========
 
 Weighted average number of shares
  outstanding                           33,721,179    30,680,524    20,175,612
                                       ===========   ===========   ===========
</TABLE>


   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                      -43-
<PAGE>
 
 
                  JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994

        (AS RESTATED FOR THE ONE-FOR-FOUR REVERSE SPLIT OF COMMON STOCK)

<TABLE>  
<CAPTION> 
                           
                                Class A        Common Stock                                   Cumulative          
                                Preferred      ------------        Paid-In     Retained      Translation          
                                Stock        Shares     Amount     Capital     Deficit        Adjustment     Total 
                                ---------    -----------------     -------     --------      ------------    ----- 
 
<S>                             <C>       <C>          <C>         <C>        <C>          <C>          <C>
Balance June 30, 1993           $400,000  20,178,239   $80,700  $ 7,377,900   $(4,563,400)  $        -   $ 3,295,200
 
Conversion of redeemable
 convertible preferred stock           -      (3,500)        -       (4,800)            -            -        (4,800)
 
Net income                             -           -         -            -       586,100            -       586,100
                                --------  ----------   -------  -----------   -----------   -----------   ----------   
Balance June 30, 1994            400,000  20,174,739    80,700    7,373,100    (3,977,300)           -     3,876,500
 
Issuance of common stock
 pursuant to rights offering           -  13,449,826    53,800    1,022,200             -            -     1,076,000
 
Repurchase of common stock
 pursuant to reverse split             -         (33)        -            -             -            -             -
 
Net income                             -           -         -            -     2,411,600            -     2,411,600
                                --------  ----------   -------   ----------   -----------  -----------   -----------  
Balance June 30, 1995            400,000  33,624,532   134,500    8,395,300    (1,565,700)           -     7,364,100
 
Repurchase of common
 stock pursuant to
 reverse split                         -          (2)        -            -             -            -             -
 
Net (loss)                             -           -         -            -    (1,133,100)           -    (1,133,100)
 
Foreign currency translation           -           -         -            -             -      (14,500)      (14,500)
                                --------  ----------   -------   ----------   -----------   -----------   -----------
 
Balance June 30, 1996           $400,000  33,624,530   $134,500  $8,395,300   $(2,698,800)  $  (14,500)   $6,216,500
                                ========  ==========   ========  ==========   ===========   ===========   ==========                

</TABLE>



   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                      -44-
<PAGE>
 
 
                  JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF CHANGES IN LIABILITIES
                   SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
                  FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994

<TABLE> 

          <S>                                            <C> 
          Balance, June 30, 1993                         $        -
          New borrowings                                  2,000,000
                                                          ---------
          Balance, June 30, 1994                          2,000,000
          New borrowings                                  1,190,000
          Reissuance                                      2,000,000
          Reductions:                                     
            Repayments                                   (1,500,000)
            Maturities                                   (2,000,000)
                                                         ---------- 
          Balance, June 30, 1995                         $1,690,000
          New borrowings                                  4,000,000
          Maturities                                     (1,690,000)
                                                         ---------- 
          Balance, June 30, 1996                         $4,000,000
                                                         ==========                  
</TABLE> 

           The accompanying notes are an integral part of the consolidated
       financial statements.

                                      -45-
<PAGE>
 
 
                  JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
 
                                                                     1996           1995           1994
                                                                -------------  -------------  -------------
<S>                                                             <C>             <C>            <C>
 
Cash Flows From Operating Activities:
  Net income (loss)                                              $ (1,133,100)  $  2,411,600   $    586,100
    Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
    Depreciation and amortization                                     374,400        288,400        308,500
    Deferred taxes                                                   (272,300)       315,600        175,000
    Doubtful accounts expense (benefit)                               140,600       (586,000)        49,100
    Gain on sale of assets                                                  -              -         (8,500)
    Equity in net (gain) loss of affiliated partnerships               (6,400)        18,700          7,900
    Restructuring charge, net                                       1,556,500              -              -
 
  Changes in:
    Cash segregated or secured under
      Commodity Exchange Act                                         (827,800)     2,098,100     (1,726,700)
      U.S. Government obligations                                 (61,443,200)    40,898,300    (19,094,900)
      Other short term investments                                (28,856,100)             -              -
      Deposits with clearing organizations                         34,542,200    (25,147,900)   (23,442,900)
      Warehouse receipts                                              577,700       (573,500)      (234,400)
      Receivables                                                   6,620,400     (5,633,200)    (6,503,900)
      Other assets                                                     92,800       (188,500)        34,900
      Payables                                                     48,828,800    (14,577,900)    49,007,500
      Accounts payable and accrued expenses                        (1,699,000)       826,500      1,325,500
                                                                  ------------  ------------   ------------
      Cash provided by (used in) operating activities              (1,504,500)       150,200        483,200
                                                                  ------------  ------------   ------------
        Cash Flows From Investing Activities:
          (Increase) decrease in investments in and advances
           to affiliated partnerships                                  45,500        (13,400)        98,000
         Decrease in notes receivable                                   6,500          7,600         30,000
         Purchase of exchange membership                                    -       (130,000)             -
         Purchase of furniture, equipment and leasehold
           improvements                                              (290,600)      (357,800)      (227,900)
         Rebate from purchase of equipment                                  -         50,000              -
         Proceeds from sale of assets                                       -              -          8,500
                                                                  ------------  ------------   ------------
 
           Cash (used in) investing activities                       (238,600)      (443,600)       (91,400)
                                                                  ------------  ------------   ------------
 
       Cash Flows From Financing Activities:
         Increase in short term advance                             1,000,000              -              -
         Repayment of short term advance                           (1,000,000)             -              -
         Increase in liabilities subordinated
           to claims of general creditors                           3,000,000      1,190,000      2,000,000
         Repayment of liabilities subordinated 
           to claims of general creditors                            (690,000)    (1,500,000)             -
         Repayments of notes payable                                        -     (1,300,000)    (1,925,600)
         Conversion of redeemable convertible preferred stock               -              -         (4,800)
         Issuance of common stock pursuant to rights offering               -      1,076,000              -
                                                                 ------------   ------------   ------------
 
           Cash provided by (used in) financing activities          2,310,000       (534,000)        69,600
                                                                  -----------   ------------   ------------
 
       Effect of exchange rate changes on cash                        (14,500)             -              -
                                                                  -----------   ------------   ------------
       Increase (decrease) in cash                                    552,400       (827,400)       461,400
 
       Cash, beginning of period                                    1,034,900      1,862,300      1,400,900
                                                                 ------------   ------------   ------------
 
       Cash, end of period                                       $  1,587,300   $  1,034,900   $  1,862,300
                                                                 ============   ============   ============
</TABLE>
           The accompanying notes are an integral part of the consolidated
       financial statements.

                                      -46-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994


                  Supplemental Schedule of Non Cash Investing
                           and Financing Activities


1996

     Notes payable aggregating $6,390,000 due January 31, 1996 were extended to
January 31, 1997.

     In February, 1996, $1,000,000 of a $1,690,000 subordinated loan was
extended to February 24, 1997.  The remaining $690,000 was repaid.


1995

     Notes payable aggregating $7,590,000, due January 31, 1995 were extended to
January 31, 1996, of which $1,200,000 was subsequently repaid.

     In March, 1995 a subordinated loan in the amount of $2,000,000 was extended
to February 28, 1996.


1994

     Notes payable aggregating $3,700,600, due July 31, 1993 were extended to
July 31, 1994.  A $540,000 note payable due July 31, 1993 was extended to
January 1, 1994 and subsequently extended to January 31, 1994.

     A $250,000 note payable due November 1, 1993 was extended to November 1,
1994.  Notes payable aggregating $5,000,000 due December 31, 1993 were extended
to January 31, 1994.

     In February, 1994, all notes payable due at various dates, were extended to
January 1995.


                                     -47-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 1996


NOTE 1 - ORGANIZATION OF JACK CARL/312-FUTURES, INC.

     Jack Carl/312-Futures, Inc. ("JC/312") and Subsidiaries, (the "Company"),
engages principally in the business of effecting transactions in futures and
options on futures contracts for the accounts of customers and the operation of
commodity pools.  Index Futures Group, Inc. ("Index"), the principal operating
subsidiary of JC/312, is a registered futures commission merchant with the
Commodity Futures Trading Commission ("CFTC").  Another subsidiary of JC/312 is
a registered broker-dealer.  Subsequent to June 30, 1996, Index sold,
transferred and assigned substantially all of its brokerage accounts ("Sale of
Assets") to E.D.& F. Man International Inc. ("MINC"). (See Note 19)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

     The consolidated financial statements include the accounts of JC/312 and
its wholly-owned subsidiaries, Index, Index Securities, Inc., Jack Carl
Management and Trading, Inc. and Index FX, Ltd. ("Index FX") as well as those of
its majority-owned subsidiary, Stark Research, Inc. All material intercompany
accounts and transactions are eliminated in consolidation. Brokers Resource
Corp., formerly a subsidiary of JC/312, was dissolved in May, 1996.

     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 those estimates.

     Revenue Recognition

     Commission revenues on commodity futures and options transactions and
related commission expenses are recorded on a half-turn basis.

     U.S. Government Obligations

     U.S. Government obligations are valued at market.  The change in unrealized
appreciation on house and customer funds invested in U.S. Government obligations
is reflected in interest income.

                                     -48-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Investments in Partnerships

     The investments in partnerships are accounted for on the equity method.

     Furniture, Equipment and Leasehold Improvements

     Furniture and equipment are depreciated using the straight-line method over
the estimated useful lives of the assets. Leasehold improvements are amortized
using the straight-line method over the lesser of their useful lives or the
remaining terms of the leases. See Note 19 for the effect of the Sale of Assets
on furniture, equipment and leasehold improvements.

     Goodwill

     Prior to the Sale of Assets, the excess of cost over estimated fair value
of net assets acquired was reflected as goodwill and was being amortized over
twenty years.  Goodwill arose as a result of business combinations which
occurred in 1985 and 1986.  As a result of the Sale of Assets, the remaining
goodwill was written off as of June 30, 1996.  See Note 19 for further
information.

     Customer-Owned Securities

     Customer-owned securities are reflected at market value in the consolidated
statements of financial condition.  This presentation has no effect on
stockholders' equity.  At June 30, 1996 and 1995, the total market value of
customer-owned securities included in the consolidated statements of financial
condition as both assets and liabilities was $46,891,300 and $45,768,800,
respectively.

     Income Taxes

     Deferred income taxes are provided to reflect the tax effects of timing
differences between financial and tax reporting.  The nature of the timing
differences are discussed in Note 12.

     Earnings per Share

     Earnings per share are computed on the basis of the weighted average number
of shares of common stock outstanding during each year, adjusted for the effect
of common stock equivalents arising from the assumed exercise of stock options,
if dilutive.  The

                                     -49-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

earnings per share data has been restated for the November, 1994 one-for-four
reverse split of common stock.

     Reclassification

     Certain amounts previously reported have been reclassified to conform to
the current method of presentation.

     New Pronouncements

     The Company is required to adopt Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation",
effective July 1, 1996.  This statement requires a fair value based method of
accounting for employee stock options, and establishes disclosure requirements
for stock-based employee compensation arrangements.  Management has not yet
calculated the effect of adopting SFAS 123.  However, it does not believe that
it will have a material impact on its financial statements.

NOTE 3 - ASSETS SEGREGATED AND SECURED UNDER COMMODITY EXCHANGE             
         ACT

     Under the Commodity Exchange Act, Index is required to segregate all
balances due to customers in connection with transactions in regulated
commodities.  In addition, in accordance with CFTC Regulation 30.7, Index is
required to secure all balances due to U.S. customers for activities in foreign
futures or options.  Segregated and secured assets included in the consolidated
statements of financial condition at June 30, are as follows:
<TABLE>
<CAPTION>
                                            1996          1995
                                        ------------  ------------
 
<S>                                     <C>           <C>
Cash                                    $  2,009,500  $  1,181,700
U.S. Government obligations              142,898,700    81,482,000
Deposits with clearing
  organizations                           37,464,000    69,531,900
Receivables from clearing
  organizations, net                      12,223,000    12,043,300
Receivables from brokers and dealers       1,879,000     8,436,200
Warehouse receipts                           959,500     1,537,200
                                        ------------  ------------
 
     Total segregated and
       secured assets                   $197,433,700  $174,212,300
                                        ============  ============
    Amount required to be
       segregated and secured           $189,564,200  $167,730,300
                                        ============  ============
</TABLE>

                                     -50-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 4 - OTHER SHORT TERM INVESTMENTS

     Other short term investments consist of $28,856,100 of time deposits due
July 1, 1996.


NOTE 5 - DEPOSITS WITH CLEARING ORGANIZATIONS

     Deposits with clearing organizations, including house and customer funds,
at June 30, are as follows:
<TABLE>
<CAPTION>
 
                                              1996         1995
                                           -----------  -----------
<S>                                        <C>          <C>
 
U.S. Government obligations                $37,961,600  $75,964,600
Guarantee deposits                           1,232,300    1,163,700
Stock in exchange clearing organization
 at cost (market value of $1,024,000 in
 1996 and $960,000 in 1995)                    360,000      360,000
Cash margins                                 3,934,600      542,400
                                           -----------  -----------
 
  Total                                    $43,488,500  $78,030,700
                                           ===========  ===========
</TABLE>

NOTE 6 - INVESTMENTS IN AND ADVANCES TO AFFILIATED PARTNERSHIPS

     Index Management Services, Inc. ("IMSI"), a subsidiary of Index, as a
general partner, invested in commodity pools and was a Co-general partner of
Index Asset Management Partners ("IAMP"), which was a general partner of a
commodity pool.  In addition, IMSI was also the sponsor of an exempted Cayman
Islands limited liability company.  At June 30, the investment in and advances
to such entities consist of the following:
<TABLE>
<CAPTION>
 
                                             1996         1995   
                                            -------      ------- 

                <S>                         <C>          <C>     
                Investment                  $   -        $28,000 
                Advances                        -         11,100 
                                            -------      ------- 
                                                                 
                      Total                 $   -        $39,100 
                                            =======      =======  
</TABLE>


                                     -51-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 6 - INVESTMENTS IN AND ADVANCES TO AFFILIATED PARTNERSHIPS (Continued)

     IMSI was required to maintain minimum net worth and investments in the
commodity pools as defined in the commodity pool partnership agreements.  At
June 30, 1995, IMSI was in compliance with those requirements.  At June 30, 1996
there were no such requirements.  Index provided commodity brokerage services to
the pools at agreed upon rates and IMSI received administrative fees from
certain pools.


NOTE 7 - NOTES PAYABLE

     Notes payable at June 30, consist of the following:
<TABLE>
<CAPTION>
 
                                              1996        1995
                                           ----------  ----------
<S>                                        <C>         <C>
Principal stockholder,
  interest at prime plus 4%, due:
  January 31, 1997 and January 31, 1996    $  540,000  $  540,000
  January 31, 1997 and January 31, 1996       400,000     400,000
 
Affiliates and other related parties,
  interest at prime plus 4%, due:
  January 31, 1997 and January 31, 1996     2,000,000   2,000,000
  January 31, 1997 and January 31, 1996     1,800,000   1,800,000
  January 31, 1997 and January 31, 1996       750,000     750,000
  January 31, 1997 and January 31, 1996       750,000     750,000
  January 31, 1997 and January 31, 1996       150,000     150,000
                                           ----------  ----------
 
          Total                            $6,390,000  $6,390,000
                                           ==========  ==========
</TABLE>

     Interest paid on notes payable during the years ended June 30, 1996, 1995
and 1994 was $801,400, $894,100 and $764,000, respectively, substantially all of
which was paid to related parties.

                                     -52-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996

NOTE 7 - NOTES PAYABLE (Continued)

     The weighted average interest rates on short-term borrowings outstanding at
June 30, 1996 and 1995 are 11.8% and 12.9%, respectively.  Short-term borrowings
include notes payable and liabilities subordinated to claims of general
creditors.  The weighted average interest rate was calculated by dividing
interest expense by the related average amount outstanding in June.

     At June 30, 1996, all notes payable mature during the year ended June 30,
1997.  In September, 1996, $900,000 of notes payable to affiliates and other
related parties were repaid.


NOTE 8 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS

     Liabilities subordinated to claims of general creditors at June 30, consist
of the following:
<TABLE>
<CAPTION>
                                            1996        1995
                                         ----------  ----------
Bank, interest at prime plus 3%, due:
<S>                                      <C>         <C>
  February 28, 1996                      $      -    $1,690,000
  September 30, 1996                      1,750,000           -
  February 26, 1997                       1,000,000           -
  April 28, 1997                          1,250,000           -
                                         ----------  ----------
 
    Total                                $4,000,000  $1,690,000
                                         ==========  ==========
</TABLE>

     These liabilities are borrowed in accordance with the terms of a revolving
subordinated debt line totalling $4,000,000.  Had any of the remaining funds
been borrowed, during fiscal 1995, Index's regulatory capital would have
increased on a dollar for dollar basis.  The full amount of the borrowing was
repaid in August, 1996 and the line was cancelled.

     Interest expense on liabilities subordinated to claims of general creditors
during the years ended June 30, 1996, 1995, and 1994 was $352,000, $234,100 and
$54,400, respectively.

NOTE 9 - STOCKHOLDERS' EQUITY

     Rights Offering

     In July, 1994, the Company offered to its common stockholders the non-
transferable right to purchase, at a subscription price of $.02 per share, two-
thirds of a share of common stock for each one share of common stock owned of
record on July 15, 1994.  53,799,304 shares of common stock were  available and
purchased in the Rights Offering.  The gross proceeds of the Rights Offering
were $1,076,000.

                                     -53-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 9 - STOCKHOLDERS' EQUITY (Continued)

     Class A Preferred Stock

     The Company has issued 400,000 shares of Class A preferred stock, 10%
cumulative, to its principal stockholder.  The shares are redeemable at par,
with accumulated dividends, at the option of the Company.  At June 30, 1996,
cumulative dividends in arrears amounted to $413,300 or $1.03 per share.  No
liability for these dividends has been recorded as dividends are not payable
until declared.

     Common Stock

     Effective at the close of business November 4, 1994, the Company effected a
one-for-four reverse split of its common stock, par value $.001. Each four
shares of such common stock were reclassified and changed into one share of
common stock having a par value of $.004. Pursuant to the reverse split, the
Company is obligated to pay any holder of fractional shares resulting from the
reverse split $.05 per share of common stock up to a maximum of $.15 for three
shares. At the close of business on November 4, 1994, the outstanding shares of
common stock were reduced to approximately 33,624,565 shares from 134,498,260
shares before the reverse split. As the result of the repurchase of fractional
shares, there are outstanding as of June 30, 1996, 33,624,530 shares of common
stock.

     All outstanding share, earnings per share and weighted average information
has been restated to reflect the one-for-four reverse split of common stock.

     Stock Option Plan

     In March, 1986, the Company adopted an incentive stock option plan
reserving 500,000 shares of common stock.  In December, 1990, the Company
granted options for 410,000 shares at the then market price exercisable through
December, 2000.  The Company also has granted options other than in accordance
with the March 1986 incentive stock option plan.

     In January, 1995, the Company granted to two officers options totalling
250,000 shares of common stock exercisable from January 3, 1995 until the
termination of their respective agreements.  On June 30, 1995, options granted
in May, 1994 expired and options for 500,000 shares of common stock were

                                     -54-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 9 - STOCKHOLDERS' EQUITY (Continued)

forfeited.  The following summarizes, after restatement for the November 4, 1994
one-for-four reverse stock split, all outstanding options at June 30, 1996.

        Shares             Shares       Shares     Shares      Shares
        Granted   Price  Exercisable   Forfeited  Cancelled   Remaining
        -------   -----  -----------   ---------  ---------   ---------

Dec.
1990     410,000  $.60       317,500      72,969     19,531     317,500

Feb.
1992     125,000  $.25       125,000         -          -       125,000

May
1992      75,000  $.60        50,000      25,000        -        50,000

Sept.
1992     125,000  $.375      125,000         -          -       125,000

Feb.
1994   1,250,000  $.24     1,250,000         -          -     1,250,000

Jan.
1995     250,000  $.125      250,000         -          -       250,000
       ---------           ---------     -------     ------   ---------

Total  2,235,000           2,117,500      97,969     19,531   2,117,500
       =========           =========     =======     ======   =========

NOTE 10 - RELATED PARTY TRANSACTIONS

     A note receivable in the amount of $627,200 arose in connection with
advances made by the Company to an affiliated entity. These demand receivables
were converted into a demand note bearing interest at 8% and was subsequently
changed to the prime rate of interest. The Company earned $53,500, $52,400, and
$39,000 of interest income on this note during the years ended June 30, 1996,
1995 and 1994, respectively.

     The Company rents from an officer and director, an exchange membership
having a market value at June 30, 1996 of approximately $525,000. Rent expense
for the years ended June 30, 1996, 1995 and 1994 was $61,500, $64,000, and
$49,200, respectively.

                                     -55-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996



NOTE 10 - RELATED PARTY TRANSACTIONS (Continued)

     Certain exchange memberships owned by officers and others, having an
aggregate market value of $4,870,000 have been pledged to various exchange
clearinghouses or corporations on behalf of the Company and may be used by them
under certain circumstances to fulfill the Company's obligations to those
clearinghouses or corporations. These exchange memberships are not included in
the Company's consolidated statements of financial condition. The Company in the
ordinary course of business, guarantees certain loans which are secured by
exchange memberships owned by an individual who is an officer and director, and
by the principal shareholder.

    The Company receives funds, in the form of loans, from its principal
shareholder, an affiliated company and an officer and director of the Company.
See Note 7 for the terms and balances at June 30, 1996 and 1995.

     In August, 1995, the principal stockholder made a $1,000,000 short term
advance to the Company.  The Company repaid the advance in September, 1995.

     Pursuant to the Rights Offering, the principal shareholder, the president
of the Company and the president of Index, immediately following the expiration
of the Rights Offering, purchased, in addition to their allocable number of
shares in the Rights Offering, 9,768,516, 4,884,259 and 4,884,259 shares,
respectively, of the Registrant's common stock at the subscription price of $.02
per share. Such shares were the shares not purchased by other shareholders
during the Rights Offering.


NOTE 11 - SALE OF BRC ASSETS

     In January, 1993, Brokers Resource Corp. ("BRC"), at the time a wholly-
owned subsidiary of Index and until it was dissolved in May, 1996, a wholly-
owned subsidiary of the Company, sold the majority of its guaranteed introducing
broker business to an unrelated entity in return for a portion of future
earnings on such business through January 15, 1995. No gain was recognized at
the date of the sale due to the uncertainty of future earnings. During the years
ended June 30, 1995 and 1994, the Company earned $481,900, and $982,000,
respectively, from the transaction, which is included in commission income. The
revenue stream from this transaction ended effective January 15, 1995.

                                     -56-
<PAGE>
 
 
            JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           June 30, 1996

NOTE 12-INCOME TAXES

    The provision for Federal income taxes for each of the years ended June 30,
is as follows:
<TABLE>
<CAPTION>
 
                           1996        1995        1994
                        ----------  ----------  ----------
<S>                     <C>         <C>         <C>
 
   Current               $  98,200  $1,220,600   $ 581,200
   Deferred               (272,300)    315,600    (175,000)
                        ----------  ----------  ----------
 
     Total provision     $(174,100) $1,536,200   $ 406,200
                        ==========  ==========  ==========
</TABLE>
     State income tax expense is immaterial for the years ended June 30, 1996,
1995 and 1994.

     Reconciliation of the total provision for income taxes to the Federal
statutory rate for the years ended June 30, is as follows:

<TABLE>
<CAPTION> 
                          1996              1995              1994
                          ----              ----              ----
                         Amount   %        Amount  %         Amount  %
                    -----------------   --------------   --------------
<S>                 <C>                <C>                <C> 
At Federal
 statutory rate     $ (444,400)  34.0  $1,342,300  34.0   $337,400  34.0

Amortization of
 goodwill              184,300  (14.1)     18,200    .5     18,200   1.8

Non-taxable
 translation gain      (10,600)    .8         -      -         -      -

Additional tax due IRS
 for 1987-1989
 settlement             30,300   (2.3)     49,500   1.2        -      -

Non-deductible travel
 and entertainment      18,000   (1.4)      8,600    .2      4,000    .4

Non-deductible loss
 of majority-owned
 subsidiary              6,000    (.5)     41,200   1.0     40,500   4.1

Additional provision
 for current and
 deferred taxes         32,500   (2.4)      8,800    .9        -      -

Penalties                   -       -      45,100    .5        -      -

Other, net               9,800    (.8)     22,500    .6      6,100    .6
                      --------   -----   --------   ----   -------  ----

  Net amounts       $ (174,100)  13.3  $1,536,200  38.9   $406,200  40.9
                     =========   ====   =========  ====    =======  ====
</TABLE> 

     Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 - Accounting for Income Taxes. Under this standard,
deferred tax is recognized using the liability method, whereby tax rates are
applied to cumulative temporary differences based on when and how they are
expected to

                                     -57-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996

NOTE 12 - INCOME TAXES (Continued)

affect the tax return.  Deferred tax assets and liabilities are
adjusted for tax rate changes.  The primary components of the Company's deferred
tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
 
                                            June 30,        June 30,
                                             1996            1995    
                                           --------        --------          
Deferred income tax assets:
 
<S>                                        <C>            <C>           
  Bad debt reserve                         $ 38,600          66,100     
  Book and tax depreciation                                             
    difference                              235,800          67,500     
  Commission accrual                         37,500               -     
  Bonus accrual                               4,400          65,400     
  Accrued legal expense                           -          40,800     
                                           --------       ---------     
                                                                        
    Total deferred tax assets              $316,300       $ 239,800     
                                           --------       ---------     
                                                                        
Deferred income tax liabilities:                                        
                                                                        
  Unrealized gain on U.S.                                               
    Government obligations                 $ (4,500)      $(135,900)    
  Partnership income                        (34,900)        (26,200)    
  Prepaid rent                               (4,900)        (18,100)    
  1987-1989 audit adjustment                      -         (61,300)    
  Other, net                                 (2,800)         (1,400)    
                                           --------       ---------     
                                                                        
    Total deferred tax liabilities         $(47,100)      $(242,900)    
                                           --------       ---------     
    Net deferred tax assets                                             
      (liabilities)                        $269,200       $  (3,100)    
                                           ========       =========      
</TABLE>
     No valuation allowance has been provided as management believes deferred
tax assets are realizable.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

     The Company has a noncancellable lease for office space which expires in
the year 2002. Minimum annual rentals, excluding escalations and increases in
operating expenses and taxes, are as follows:

<TABLE> 
<CAPTION> 

          Year Ending June 30,            Amount
          --------------------          ---------
            <S>                        <C> 
            1997                       $  283,900
            1998                          350,500
            1999                          362,300
            2000                          374,000
            2001 and thereafter           849,900
                                        ---------

                  Total                $2,220,600
                                        =========
</TABLE> 

                                     -58-

<PAGE>
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996

NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued)

     Other office space leases the Company had at June 30, 1996 were transferred
to MINC, effective July 1, 1996, and have not been included in the above
amounts.
    
     The Company has entered into employment agreements which expire at varying 
dates through fiscal 1998 with certain of its employees, providing for aggregate
minimum annual payments for the years ending June 30, 1997 and 1998 of 
approximately $336,400 and $204,500, respectively.     

     As a result of the Sale of Assets, if certain conditions occur over the
next two years, the Company may be subject to additional severance payments of
up to $517,400.

     The Company has guaranteed performance under the Commodity Exchange Act of
certain introducing brokers with respect to their customer accounts. These
introducing broker guarantees were transferred to MINC effective July 1, 1996.

     Index and BRC issued a limited indemnification agreement to the purchaser
of the BRC business (see Note 11). This agreement covers potential customer
claims arising from activity prior to the sale. No such claims are currently
outstanding.

     A similar limited indemnification agreement was issued to MINC related to
the Sale of Assets. No claims are currently pending. See Note 19.

NOTE 14 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK AND
          CONCENTRATION OF CREDIT RISK

     Prior to the Sale of Assets, the Company, through Index, was in the
business of clearing and executing futures contracts and options on futures
contracts for the accounts of its customers. As such, Index guaranteed to the
respective clearinghouses its customers' performance under these contracts. To
reduce its risk, Index required its customers to meet, at a minimum, the margin
requirement established by each of the exchanges at which the contract was
traded. This margin was a good faith deposit from the customer which reduced the
risk to Index of failure on behalf of the customer to fulfill any obligation
under the contract. To minimize its exposure to risk of loss due to market
variation, Index adjusted these margin requirements, as needed, due to daily
fluctuations in the values of the underlying positions. If necessary, certain
positions may have been liquidated to satisfy resulting changes in margin
requirements. Management believes that the margin deposits held at June 30,
1996, were adequate to minimize the risk of material loss which could be created
by the positions held at that time.

     To facilitate small orders from customers, the Company entered into
proprietary positions at the MidAmerica Commodity Exchange and offsets these
positions at the Chicago Board of Trade and the Chicago Mercantile Exchange,
thereby assuming no market risk. At June 30, 1996, Index held proprietary long
financial futures positions with an aggregate notional value of $165,130,900 and
proprietary short financial futures positions with an aggregate notional value
of $165,130,900. At June 30, 1995, Index held proprietary long financial futures
positions and

                                     -59-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 14 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK AND
          CONCENTRATION OF CREDIT RISK (Continued)

foreign currency forward contracts with an aggregate notional value of
$223,616,200 and proprietary short financial futures positions and foreign
currency forward contracts with an aggregate notional value of $243,566,100.

     The exchange upon which financial futures and options on futures contracts
are traded acts as the counterparty and, accordingly, bears the risk of
performance. At June 30, 1996 Index's open financial contracts were transacted
at the Chicago Mercantile Exchange, Chicago Board of Trade, and MidAmerican
Commodity Exchange. At June 30, 1996, Index held no foreign currency forward
contracts. At June 30, 1995, Index's open financial contracts were transacted at
the Chicago Mercantile Exchange, Chicago Board of Trade, Commodity Exchange,
Inc. and MidAmerican Commodity Exchange. At June 30, 1995, foreign currency
forward contracts were transacted at DAIWA Securities America, Inc. and Refco,
Inc.

     Index FX conducts business for its customers in foreign currencies on the
spot market in which trades generally settle on the next business day. Index FX
offsets its customer positions to manage its currency risk. It also requires
certain customers to post margin deposits. Management believes that with the
trades settling the next business day and the margin policy it employs, its
credit risk is reduced substantially. At June 30, 1996, Index FX held long
foreign currency positions with an aggregate notional value of $2,101,661,100
and short foreign currency positions with an aggregate notional value of
$2,101,662,400.

     At June 30, 1996, the Index FX foreign currency business was transacted
with several international financial institutions.

NOTE 15 - LITIGATION

     The Company is a defendant in, and may be threatened with, various legal
proceedings arising from its regular business activities. Management, after
consultation with legal counsel, is of the opinion that the ultimate liability,
if any, resulting from any pending or threatened action or proceedings will not
have a material effect on the financial position or results of operations of the
Company.

                                     -60-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996

NOTE 15 - LITIGATION (Continued)

     The Company, in October, 1994 settled an Internal Revenue Service
assessment which resulted from the review of its calendar year 1990 customer
income tax withholding filings. The settlement did not materially affect the
financial position or the operations of the Company.

     The Company was defending against an arbitration filed by a former client
to recover damages of $1,000,000 alleging misrepresentation of risk and
unauthorized trading. The client's actual losses were approximately $850,000. In
July, 1996, an arbitration panel entered an award of no damages for the
claimant.

     In April, 1994, Index without admitting or denying the allegations, paid
$100,000 to the CFTC, settling an administrative action filed on September 29,
1992.  In a related action, the equity receiver of an alleged commodity pool
operator brought an action to recover losses of approximately $600,000, alleging
various theories such as constructive trust, negligence, breach of fiduciary
duty and conversion.  On May 29, 1996, the district judge dismissed the
complaint in its entirety.  Supplemental Plaintiff filed a Notice of Appeal with
the U.S. Court of Appeals for the Seventh Circuit on June 28, 1996.  The Seventh
Circuit has yet to rule on whether this case may be appealed.

     Index defended a complaint filed by former partners of a general
partnership which cleared its trades at Index. The plaintiff alleged that the
general partner, a co-defendant, defrauded them by failing to disclose risks and
misrepresenting account performance. The Plaintiffs' actual losses were
approximately $157,000. The case was settled in November, 1995 for $25,000.

     A former officer of Index whose employment was terminated as a result of
the Sale of Assets has rejected Index's severance payment offer. The officer has
made a demand for $500,000, and has threatened litigation, if a satisfactory
offer of settlement is not made. The Company believes that its original
severance offer was reasonable and the officer's claims are without merit.

NOTE 16 - CAPITAL REQUIREMENTS

     Index is subject to the minimum capital requirements adopted and
administered by the CFTC and by certain exchanges of which Index is a member. As
of June 30, 1996, adjusted net capital, as

                                     -61-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 16 - CAPITAL REQUIREMENTS (Continued)

defined, of approximately $12,038,300 is approximately $5,216,200 in excess of
the minimum required under the regulations of the CFTC and exchanges. The net
capital requirements may effectively restrict the payment of cash dividends and
the repayment of subordinated borrowings.

     At the request of certain of its non-regulated customers trading in the
cash markets, Index transferred funds to its affiliate Index FX. Upon
clarification of the net capital rules, it was determined that the receivable
from Index FX could not accurately be classified as a current asset. As a
result, Index was under early warning and minimum capital requirements and as of
March 31, 1996 it had an adjusted net capital, as defined, of $4,406,800 which
was $11,272,800 less than the minimum required under the regulations of the CFTC
and exchanges. Index informed the Chicago Mercantile Exchange and the CFTC of
the capital deficiency. Index took immediate action to correct the deficiency
and as of April 23, 1996, was fully in compliance with minimum capital
requirements.

     A subsidiary of JC/312 is subject to the Uniform Net Capital Rule adopted
and administered by the Securities and Exchange Commission. At June 30, 1996,
the subsidiary is in compliance with those requirements.

NOTE 17 - NASDAQ LISTING

     On August 17, 1994, the Company was advised by NASDAQ that the securities
of the Company were delisted from the NASDAQ SmallCap Market effective August
18, 1994. The Company appealed NASDAQ's decision and secured additional market
makers. On December 7, 1994, the Company's common stock resumed trading on the
NASDAQ SmallCap Market.

NOTE 18 - CASH FLOWS

     For purposes of reporting cash flows, cash does not include segregated or
secured cash, as defined in the Commodity Exchange Act. Interest paid during the
years ended June 30, 1996, 1995 and 1994 amounted to $4,043,800, $3,194,300 and
$1,706,300, respectively. The Company made income tax payments in the amount of
$1,100,000, $444,600 and $185,000 during the years ended June 30, 1996, 1995 and
1994, respectively.

NOTE 19 - SUBSEQUENT EVENT - SALE OF ASSETS

     On May 31, 1996, an agreement was reached to sell, transfer and assign to
MINC substantially all of the brokerage accounts maintained by Index,

                                     -62-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 19 - SUBSEQUENT EVENT - SALE OF ASSETS (Continued)

together with all positions, securities and other assets held in or for such
accounts and other agreed-upon assets used in the conduct of the brokerage
activities. MINC is a unit of E.D.& F. Man Group, plc, a London-based
international trading and finance conglomerate. This sale was completed as of
July 1, 1996. Shortly thereafter, Index ceased being a clearing member at all
exchanges, though it remains a registered futures commission merchant.

     The purchase price payable by MINC in connection with this transaction is
based on a percentage of the net income (as defined in the sales agreement) of
the transferred activities during the sixty-six month period following the sale.
As the purchase price is contingent upon the future earnings of the customer
accounts sold, none of which is guaranteed, no gain on the sale was reflected in
the financial statements for the year ended June 30, 1996. Rather, income will
be recognized as earned over the next five and one-half years. A condition of
the sales agreement required the principal shareholder to sign a non-competition
agreement. As compensation for providing such an agreement, a portion of the
purchase price will be allocated to the principal shareholder and recorded by
the Company concurrently with its recognition of income as described above.
Management does not believe this amount will be significant.

     A net pre-tax, restructuring charge of $1,556,500, related to the sale, was
reflected in the income statement for fiscal year 1996. Additionally, a
restructuring gain of $664,000 will be reflected in income in fiscal 1997. These
amounts consisted of the following:
<TABLE>
<CAPTION>
 
<S>                                             <C>
Write-off of remaining goodwill                 $  (488,400)
Accrue employee benefits related to
  terminated and transferred employees             (643,700)
Revalue of furniture, fixtures and equipment       (373,100)
Accrue lease obligation                            (154,600)
Accrue legal expenses related to the sale          (110,000)
Write-off printing stock                            (97,100)
Reduce bonus accrual, related to terminated
  and transferred employees                         195,000
Write-off deferred rent for assumed lease            65,200
Reduce business promotion accruals                   50,200
                                                -----------
 
Total restructuring charge in fiscal 1996       $(1,556,500)
                                                ===========
Gain on sale of Board of Trade Clearing
  Corporation stock, July, 1996                 $   664,000
                                                ===========
</TABLE>

                                     -63-
<PAGE>
 
 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1996


NOTE 19 - SUBSEQUENT EVENT - SALE OF ASSETS (Continued)

     It is anticipated that the exchange memberships Index currently holds will
be liquidated in fiscal 1997 at close to their current market value, which would
result in a pre-tax gain of approximately $149,000.

     In addition, in conjunction with the sale, the Company issued a limited
indemnification agreement to MINC. The agreement covers potential customer
claims arising from activity prior to the sale.


                                     -64-
<PAGE>

 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
            PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                                 JUNE 30, 1996

                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                                                         Pro Forma
                                                                                        Adjustments
                                                                               ------------------------------
                                                                 1996          E.D. & F. Man                           1996
                                                              Historical           Sale              Other           Pro Forma
                                                             ------------      -------------      -----------       -----------
                        ASSETS
<S>                                                          <C>               <C>                <C>               <C> 
Cash                                                         $  1,587,300      $      77,000      $  (900,000)      $   764,300(8)
Cash segregated or secured under Commodity Exchange Act         2,009,500         (2,009,500)              -                 -
U.S. Government obligations                                   144,328,800       (132,815,300)      (1,952,600)        9,560,900(8)
Other short term investments                                   28,856,100                 -                -         28,856,100
Deposits with clearing organizations                           43,488,500        (43,488,500)(3)           -                 -
Warehouse receipts                                                959,500           (959,500)              -                 -
Receivables:
  Brokers and Dealers                                           2,291,900         (2,291,900)              -                 -
  Clearing organizations                                       12,383,200        (12,383,200)              -                 -
  Customers                                                     1,138,400           (598,900)              -            539,500
  Affliliates                                                       1,000                 -                -              1,000
  Other                                                         1,061,800           (177,600)         705,600 (2)     1,589,800
  Less - Allowance for doubtful accounts                         (409,300)                -                -           (409,300)
Notes receivable                                                  627,200                 -                -            627,200
Exchange memberships, at cost (market value of $960,400)          781,300                 -          (781,300)(4)            -
Furniture, equipment, and leasehold improvements, net of
  accumulated depreciation and amortization of $2,213,400         279,500            (77,000)              -            202,500
Other assets                                                      503,000                 -          (134,800)          368,200
                                                             ------------      -------------      -----------       -----------
          Total                                              $239,887,700      $(194,724,400)     $(3,063,100)      $42,100,200
                                                             ============      =============      ===========       ===========

         LIABILITIES AND STOCKHOLDERS' EQUITY

Payables:
  Clearing organizations                                     $    165,900      $    (165,900)     $        -        $        -
  Customers                                                   216,705,300       (189,884,000)              -         26,821,300
  Officers and employees                                        2,865,000         (1,514,300)              -          1,350,700
Accounts payable and accrued expenses                           3,545,000         (2,132,800)          49,500 (5)     1,461,700
Notes payable                                                   6,390,000                 -          (900,000)(6)     5,490,000
                                                             ------------      -------------      -----------       -----------
     Total                                                    229,671,200       (193,697,000)        (850,500)       35,123,700
                                                             ------------      -------------      -----------       -----------
Liabilities subordinated to claims of general creditors         4,000,000                 -        (4,000,000)(7)            -
                                                             ------------      -------------      -----------       -----------
Stockholders' equity
  Class A preferred stock, $1 par value;  10% cumulative,
    redeemable, 400,000 shares authorized and outstanding         400,000                 -                -            400,000
  Common stock, $.004 par value; 150,000,000 shares
    authorized, 33,624,530 shares issued and outstanding          134,500                 -                -            134,500
  Paid-in capital                                               8,395,300                 -                -          8,395,300
  Retained deficit                                             (2,698,800)        (1,027,400)(1)    1,787,400(2,3,4) (1,938,800)
  Cumulative translation adjustment                               (14,500)                -                -            (14,500)
                                                             ------------      -------------      -----------       -----------
     Total stockholders' equity                                 6,216,500         (1,027,400)       1,787,400         6,976,500
                                                             ------------      -------------      -----------       -----------
          Total                                              $239,887,700      $(194,724,400)     $(3,063,100)      $42,100,200
                                                             ============      =============      ===========       ===========
</TABLE> 

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

(1) 1996 restructuring charge, net of tax, was adjusted to retained earnings as
    of the end of fiscal 1995.

(2) $1,612,800 of other income is the estimated pre-tax revenue from the Sale of
    Assets to MINC, which was based upon 1996 actual trading levels, commission
    revenue, commission expense, brokerage and clearing costs and production
    expenses. The general administrative expenses used in this calculation were
    based on the highest level permitted under the sales agreement and 1996
    actual trading levels. Actual results may be significantly higher or lower
    if these assumptions do not hold true. The $705,600 other receivable is the
    Company's estimated receivable from the Sale of Assets to MINC.

(3) $664,000 of other income is the assumed pre-tax gain on the sale of clearing
    corporation stock in July, 1995. The proceeds were assumed to have been
    reinvested. (Actual sale occurred in July, 1996.)

(4) $179,100 of other income is the assumed pre-tax gain on the sale of all
    exchange memberships in November, 1995. The proceeds were assumed to have
    been reinvested. (The sale prices were assumed to be the market values at
    the end of June, 1996. The actual gain may be higher or lower if the market
    values increase or decrease.)

(5) Restructuring charge liabilities were assumed to have been paid in 1996.

(6) $900,000 of notes payable were assumed repaid in September, 1995. (Actual
    repayment was September, 1996.)

(7) $4,000,000 of subordinated loans were assumed repaid at the beginning of
    August, 1995. (Actual repayment was the beginning of August, 1996.)

(8) The statement of financial condition assumes that most cash generated by the
    Sale of Assets was reinvested in U.S. Government obligations, with a nominal
    level of cash for operating expenses. Other such balances reflect the on-
    going balances of Index FX.

                                     -65-
<PAGE>

 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       FOR THE YEAR ENDED JUNE 30, 1996

                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                                                  Pro Forma
                                                                                 Adjustments
                                                                        -----------------------------
                                                          1996          E.D.& F. Man                             1996
                                                       Historical           Sale             Other              Pro Forma
                                                       -----------      ------------      -----------          -----------
<S>                                                    <C>              <C>               <C>                  <C> 
Revenues:
  Commissions                                          $30,606,500      $(30,606,500)     $        -           $        -
  Interest                                               7,920,800        (6,751,300)        (156,100)(2)        1,013,400
  Trading gains, net                                     2,411,400          (352,600)              -             2,058,800(10)
  Other                                                    196,200          (196,200)       2,455,900 (3,4,5)    2,455,900
                                                       -----------      ------------      -----------          -----------
    Total revenues                                      41,134,900       (37,906,600)       2,299,800            5,528,100
                                                       -----------      ------------      -----------          -----------
Expenses:
  Commissions, floor brokerage and clearing costs       16,825,600       (16,704,800)              -               120,800
  Compensation and related benefits                     10,536,500        (9,297,800)              -             1,238,700(8)
  Interest                                               4,238,900        (2,559,400)        (408,400)(6,7)      1,271,100
  Communications                                         2,066,800        (1,753,500)              -               313,300
  Business promotion                                     2,173,900        (1,949,700)              -               224,200
  Rent and other occupancy costs                         1,546,300        (1,132,400)              -               413,900
  Professional and consulting fees                         670,400          (380,900)              -               289,500
  Depreciation                                             320,800          (256,100)              -                64,700
  Amortization of goodwill                                  53,600           (53,600)              -                    -
  Doubtful accounts expense (benefit)                      140,600           (96,300)              -                44,300
  Other                                                  2,312,200        (2,165,500)              -               146,700
  Restructuring charge, net                              1,556,500        (1,556,500)(1)           -                    -
                                                       -----------      ------------      -----------          -----------
    Total expenses                                      42,442,100       (37,906,500)        (408,400)           4,127,200(9)
                                                       -----------      ------------      -----------          -----------
Income (loss) before income taxes                       (1,307,200)             (100)       2,708,200            1,400,900
Income tax expense (benefit)                              (174,100)         (166,100)         920,800              580,600
                                                       -----------      ------------      -----------          -----------
Net income (loss)                                       (1,133,100)          166,000        1,787,400              820,300

Assumed cumulative dividend on Class A
  preferred stock                                          (40,000)               -                -               (40,000)
                                                       -----------      ------------      -----------          -----------

Net income (loss) applicable to common stock           $(1,173,100)     $    166,000      $ 1,787,400          $   780,300
                                                       ===========      ============      ===========          ===========

Primary earnings (loss) per share, restated
  for reverse split:

  Net income (loss)                                    $      (.03)     $        .00      $       .05          $       .02
                                                       ===========      ============      ===========          ===========

  Weighted average number of shares outstanding         33,721,179        33,721,179       33,721,179           33,721,179
                                                       ===========      ============      ===========          ===========

Fully diluted earnings (loss) per share, restated
  for reverse split:

  Net income (loss)                                    $      (.03)     $        .00      $       .05          $       .02
                                                       ===========      ============      ===========          ===========

  Weighted average number of shares outstanding         33,721,179        33,721,179       33,721,179           33,721,179
                                                       ===========      ============      ===========          ===========
</TABLE> 

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

(1)  1996 restructuring charge was adjusted to retained earnings as of the end
     of fiscal 1995.

(2)  A 5.25% interest rate was assumed for interest income on liquidated assets.

(3)  $1,612,800 of other income is the estimated pre-tax revenue from the Sale
     of Assets to MINC, which was based upon 1996 actual trading levels,
     commission revenue, commission expense, brokerage and clearing costs and
     production expenses. The general administrative expenses used in this
     calculation were based on the highest level permitted under the sales
     agreement and 1996 actual trading levels. Actual results may be
     significantly higher or lower if these assumptions do not hold true.

(4)  $664,000 of other income is the assumed pre-tax gain on the sale of
     clearing corporation stock in July, 1995. The proceeds were assumed to have
     been reinvested. (Actual sale occurred in July, 1996.)

(5)  $179,100 of other income is the assumed pre-tax gain on the sale of all
     exchange memberships in November, 1995. The proceeds were assumed to have
     been reinvested. (The sale prices were assumed to be the market values at
     the end of June, 1996. The actual gain may be higher or lower if the
     market values increase or decrease.)

(6)  $900,000 of notes payable were assumed repaid in September, 1995. (Actual
     repayment was September, 1996.)

(7)  $4,000,000 of subordinated loans were assumed repaid at the beginning of
     August, 1995. (Actual repayment was the beginning of August, 1996.)

(8)  Compensation and related benefits reflects three months of transitional
     costs, followed by nine months of on-going, reduced expenditures.

(9)  Other expenses reflect nominal estimated on-going expenses of Index as well
     as actual 1996 expenditures for Index FX.

(10) Trading gains reflect the revenue generated by Index FX.

                                     -66-
<PAGE>

 
                 JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
            NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF
                      FINANCIAL CONDITION AND OPERATIONS

                                 JUNE 30, 1996


(1)  The pro forma statement of financial condition represents the unaudited
financial position of Jack Carl/312-Futures, Inc. and Subsidiaries at June 30,
1996 adjusted as if the agreement to sell, transfer and assign to E.D.& F. Man
International Inc. substantially all of the brokerage accounts mantained by
Index, together with all positions, securities, and other assets held in or for
such accounts and other agreed-upon assets used in the conduct of the brokerage
activities ("Sale of Assets") had taken place on July 1, 1995. The pro forma
statement of operations represents the unaudited results of operations for the
year ended June 30, 1996, adjusted as if the Sale of Assets had taken place on
July 1, 1995. These statements have been prepared from the historical financial
statements of the Company.

(2)  The pro forma statement of financial condition includes adjustments of the
historical financial information to reflect (1) the reclassification of the 1996
restructuring charge to retained earnings as of the end of fiscal 1995; (2)
recording an estimated $1,612,800 from the Sale of Assets, $664,000 from the
sale of clearing corporation stock and an estimated $179,100 from the sale of
exchange memberships; (3) the assumption that the restructuring charge
liabilities were paid in 1996; (4) the assumed repayment of $900,000 of notes
payable and $4,000,000 of subordinated debt; (5) the assumption that most cash
generated by the Sale of Assets, and the sale of clearing corporation stock and
exchange memberships was invested in U.S. Government obligations, with a nominal
level of cash for operating expenses; (6) the assumption that the payment of
liabilities were made from cash or the liquidation of U.S. Government
obligations, and (7) the reclassification of certain assets and liabilities to
conform with the Company's accounting policy.

(3)  The pro forma statement of operations includes adjustments of the
historical financial information to reflect (1) the reclassification of the 1996
restructuring charge to retained earnings as of the end of fiscal 1995; (2)
recording, as other income, of an estimated $1,612,800 from the Sale of Assets,
$664,000 from the sale of clearing corporation stock and an estimated $179,100
from the sale of exchange memberships; (3) the assumption of a 5.25% interest
rate for interest income; (4) the assumed repayment of $900,000 of notes payable
and $4,000,000 of subordinated debt; (5) compensation and related benefits
reflects three months of transitional costs, followed by nine months of on-going
reduced expenditures; (6) other expenses reflect nominal estimated on-going
expenses of Index as well as actual expenditures for Index FX, and (7) income
taxes or benefits that would have occurred.

(4)  In the opinion of management, all material adjustments necessary for a fair
presentation of the pro forma results of operations for the year ended June 30,
1996 have been reflected. The pro forma results of operations are not
necessarily indicative of the results of operations that would have occurred had
the Sale of Assets actually taken place on July 1, 1995.

                                     -67-
<PAGE>

                       CONSOLIDATED FINANCIAL STATEMENTS
                         AND SUPPLEMENTAL INFORMATION
                         ----------------------------

                        E. D. & F. MAN INTERNATIONAL INC.
                        --------------------------------

                           YEAR ENDED MARCH 31, 1996
                           -------------------------
                      (Confidential Treatment Requested)
 
                                        
                                     -68-
                                        
<PAGE>
 
                       Report of Independent Accountants
                       ---------------------------------

May 30, 1996

Board of Directors
E. D. & F. Man International Inc.
(a wholly owned subsidiary of E. D. & F. Man Inc.)

In our opinion, the accompanying consolidated statement of financial condition
and the related consolidated statements of operations, of changes in
subordinated liabilities, of changes in stockholder's equity and of cash flows
present fairly, in all material respects, the financial position of E. D. & F.
Man International Inc. and its subsidiaries at March 31, 1996, and the results
of their operations and their cash flows for the year in conformity with
generally accepted accounting principles.  These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit.  We conducted our
audit of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We believe that our
audit provides a reasonable basis for the opinion expressed above.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The information contained in
Supplemental Information is presented for purposes of additional analysis and is
not a required part of the basic financial statements, but is supplementary
information required by Regulation 1.10 of the Commodity Exchange Act and Rule
17a-5 under the Securities Exchange Act of 1934. Such information has been
subjected to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, the information is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

                                     -69-
<PAGE>
 
                       E. D. & F. MAN INTERNATIONAL INC.
                       ---------------------------------

                 CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                 ---------------------------------------------

                                MARCH 31, 1996
                                --------------
                                (in thousands)

<TABLE>
<CAPTION>

Assets
------
<S>                                                                  <C> 
Cash                                                                  $  7,142
Cash segregated under federal regulation                                 2,371
Due from brokers, dealers and clearing organizations                   131,745
Due from customers and noncustomers                                     28,614
Due from affiliates                                                      3,353
Securities purchased under agreements to resell                        715,742
Securities owned                                             
  U.S. Government securities                                            31,098
  Other marketable securities                                            6,132
  Not readily marketable, at estimated fair value                          421
Memberships in exchanges, at cost                            
 (market value of $14,724)                                              10,040
Furniture, equipment, and leasehold improvements,            
 net of accumulated depreciation of $2,929                               2,893
Other assets                                                             4,038
                                                                      --------
Total assets                                                          $943,589
                                                                      ========
                                                             
Liabilities and stockholder's equity                         
------------------------------------                         
                                                             
Liabilities:                                                 
Due to brokers, dealers and clearing organizations                    $ 17,003
Due to customers and noncustomers                                      758,922
Due to affiliates                                                        8,224
Accounts payable and accrued liabilities                                29,932
                                                                      --------
                                                                       814,081
Subordinated debt                                                      123,000
                                                                      --------
Total liabilities                                                      937,081
                                                                      --------
Stockholder's equity:                                        
Common stock                                                               350
Additional paid-in capital                                               4,900
Retained earnings                                                        1,258
                                                                      --------
Total stockholder's equity                                               6,508
                                                                      --------
Total liabilities and stockholder's equity                            $943,589
                                                                      ========
</TABLE> 
 
   The accompanying notes are an integral part of these statements.

                                     -70-
<PAGE>
 
                       E. D. & F. MAN INTERNATIONAL INC.
                       ---------------------------------


                     CONSOLIDATED STATEMENT OF OPERATIONS
                     ------------------------------------ 


                           YEAR ENDED MARCH 31, 1996
                           -------------------------

                                (in thousands)
<TABLE> 
<CAPTION> 
 
Revenues
--------
<S>                                                                    <C> 
Commissions                                                            $103,244
Interest                                                                 16,380
Other                                                                     8,044
                                                                       --------
                                                                        127,668
                                                                       --------
Expenses                                                
--------                                                
Sales commissions                                                        14,252
Floor brokerage, clearing and exchange fees                              51,267
Employee compensation and benefits                                       24,846
Occupancy and equipment costs                                             3,472
Depreciation and amortization                                             1,215
Communications                                                            6,431
Office and data processing                                                3,303
Professional services                                                     2,019
Interest                                                                 12,690
Other                                                                     9,030
                                                                       --------
                                                                        128,525
                                                                       --------
Loss before taxes                                                          (857)
Income tax expense                                                          198
                                                                       --------
Net loss                                                               $ (1,055)
                                                                       ========
</TABLE>

                                     -71-
<PAGE>
 
                       E. D. & F. MAN INTERNATIONAL INC.
                       ---------------------------------

         CONSOLIDATED STATEMENT OF CHANGES IN SUBORDINATED LIABILITIES
         -------------------------------------------------------------

                           YEAR ENDED MARCH 31, 1996
                           -------------------------
                                (in thousands)

<TABLE> 
<CAPTION> 

<S>                                                                  <C> 
Subordinated debt at April 1, 1995                                   $112,500

  Borrowings                                                           28,500
  Repayments                                                          (18,000)
                                                                     --------

Subordinated debt at March 31, 1996                                  $123,000
                                                                     ========
</TABLE> 
       The accompanying notes are an integral part of these statements.

                                     -72-
<PAGE>
 
                       E. D. & F. MAN INTERNATIONAL INC.
                       ---------------------------------

           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
           ---------------------------------------------------------

                           YEAR ENDED MARCH 31, 1996
                           -------------------------
                                (in thousands)



<TABLE>
<CAPTION>
 
 
                                             Additional
                                     Common    Paid-in  Retained
                                     Stock     Capital  Earnings    Total
                                   ----------  -------  ---------  --------
<S>                                <C>         <C>      <C>        <C>
 
Balance at April 1, 1995            $     350   $4,900   $ 4,331   $ 9,581
    Net loss                                -        -    (1,055)   (1,055)
    Dividend paid to E. D. & F.
      Man, Inc.                             -        -    (2,018)   (2,018)
                                   ----------  -------   -------   -------
Balance at March 31, 1996           $     350   $4,900   $ 1,258   $ 6,508
                                   ==========  =======   =======   =======
 
</TABLE>



       The accompanying notes are an integral part of these statements.

                                     -73-

<PAGE>
 
                       E. D. & F. MAN INTERNATIONAL INC.
                       ---------------------------------

                     CONSOLIDATED STATEMENT OF CASH FLOWS
                     ------------------------------------
<TABLE>
<CAPTION>
 
                              YEAR ENDED MARCH 31, 1996
                              -------------------------
                                   (in thousands)

Cash flows from operating activities
------------------------------------
<S>                                                                       <C> 
Net loss                                                                  $  (1,055)
Adjustments to reconcile net loss to net cash used in
 operating activities:
  Depreciation and amortization                                               1,093
  Gain on sale of exchange memberships and stock                               (308)
  Deferred tax benefit                                                         (122)
  Other                                                                         799
  Decrease in cash segregated under federal regulation                        6,475
  Increase in due from brokers, dealers and
   clearing organizations                                                   (66,271)
  Decrease in due from customers                                             24,106
  Decrease in due from affiliates                                            45,912
  Increase in securities purchased under
   agreements to resell                                                    (124,543)
  Decrease in securities owned                                               54,997
  Decrease in other assets                                                    6,275
  Decrease in due to brokers, dealers and
   clearing organizations                                                   (24,998)
  Decrease in due to affiliates                                             (77,564)
  Increase in due to customers                                              142,686
  Decrease in accounts payable and accrued liabilities                       (3,930)
                                                                          ---------
Net cash used in operating activities                                       (16,448)
                                                                          ---------
Cash flows from investing activities
------------------------------------
  Proceeds from sales of exchange memberships                                 4,234
  Dividend paid                                                              (2,018)
  Purchase of fixed assets, net of disposals                                 (1,847)
                                                                          ---------
Net cash provided by investing activities                                       369
                                                                          ---------
 
Cash flows provided by financing activities
-------------------------------------------
  Proceeds from subordinated borrowings                                      28,500
  Repayments of subordinated debt                                           (18,000)
                                                                          ---------
Net cash provided by financing activities                                    10,500
                                                                          ---------
Net decrease in cash                                                         (5,579)
Cash at beginning of year                                                    12,721
                                                                          ---------
Cash at end of year                                                       $   7,142
                                                                          =========
 
Supplemental disclosure of cash flow information
Cash paid during the year:
  Interest                                                                $  12,027
  Income taxes                                                            $     126
</TABLE>
  
  The accompanying notes are an integral part of these financial statements.


                                     -74-
<PAGE>
 
                       E. D. & F. MAN INTERNATIONAL INC.
                       ---------------------------------

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------

                                MARCH 31, 1996
                                --------------


NOTE 1 - ORGANIZATION:
----------------------

E. D. & F. Man International Inc, ("MINC") is a wholly owned subsidiary of E. D.
& F. Man Inc., a United States corporation, whose ultimate parent is E. D. & F.
Man Group plc, a United Kingdom corporation.

MINC is registered with the Commodity Futures Trading Commission ("CFTC") as a
futures commission merchant and is a member of the National Futures Association,
an industry self regulatory agency. MINC is also registered with the Securities
and Exchange Commission ("SEC") and the National Association of Securities
Dealers ("NASD") as a broker-dealer.  MINC provides brokerage services to
customers and affiliates on United States securities and commodities exchanges
and on overseas exchanges through affiliates.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
-----------------------------------------

Consolidation Policy
--------------------

The consolidated financial statements include the accounts of MINC and
Geldermann, Inc. ("Geldermann"), a wholly owned subsidiary (collectively, the
"Company").  All material intercompany balances and transactions have been
eliminated.

Revenue Recognition
-------------------

Commission income and the associated direct costs related to customer futures
transactions are recognized on a half-turn basis.  Customers' securities
transactions, and the related revenues and expenses thereon, are recorded on a
settlement date basis which does not differ from that which would have been
recorded on a trade date basis.

Interest income on U.S. Government securities and securities purchased under
agreements to resell is presented net of interest expense related to customers
and affiliates of $39,548,300 in the consolidated statement of operations.

U. S. Government Securities
---------------------------

U. S. Government securities are carried at cost plus accrued interest, which
approximates market value.  Approximately $7,293,900 of these securities
represent guarantee deposits maintained at clearing organizations.


                                     -75-
<PAGE>
 
Securities Purchased Under Agreements to Resell
-----------------------------------------------

Securities purchased under agreements to resell are carried at the amounts at
which the securities will be subsequently resold plus accrued interest, which
approximates market value.  The securities purchased under agreements to resell
are restricted due to segregation requirements of the CFTC.  Such reverse
repurchase agreements are with several U. S. banking institutions and are
collateralized by U. S. Government securities.  It is the Company's policy to
obtain possession or control of the underlying collateral.  The Company monitors
the fair value of the securities purchased under these agreements on a daily
basis and obtains additional collateral from counterparties as necessary.

Property, Plant and Equipment
-----------------------------

Fixed assets consist of furniture, equipment and leasehold improvements.
Furniture and equipment is depreciated over their estimated useful lives using
the straight-line method.  Leasehold improvements are amortized over the lease
term using the straight-line method.

Benefit Plans
-------------

Eligible employees of MINC are covered by E. D. & F. Man Inc.'s non-contributory
defined benefit pension plan.  During the year ended March 31, 1996, MINC's
allocated pension expense amounted to approximately $1,101,400 which was
recognized in the consolidated statement of operations.

Income Taxes
------------

The Company is included in the consolidated federal income tax return of E. D. &
F. Man Inc.  Federal income taxes are determined on a separate return basis
pursuant to a tax sharing agreement with its parent.  The Company accounts for
income taxes under the liability method.  Under this method, deferred taxes are
provided for differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates that will be in effect
when these differences are expected to reverse.

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 those estimates.

                                     -76-
<PAGE>
 
Goodwill
--------

Goodwill is amortized over 15 years on a straight line basis. Included within 
goodwill is the excess of the fixed consideration paid or accrued over the 
estimated fair value of the net assets acquired of Geldermann as well as the 
capitalization of direct costs associated with the purchase, including severance
and lease termination payments and accruals for rental costs related to 
redundant space and equipment.

Fair Value of Financial Instruments
-----------------------------------

The carrying value of financial instruments approximates fair value except for 
subordinated debt. Based on the related party nature of the subordinated debt, 
the fair value of such debt is not considered to be readily determinable.

NOTE 3 - COMMON STOCK
---------------------

At March 31, 1996, the Company's capital shares consist of the following 
classes:

Class A (Voting), $10 par value; 25,000 shares authorized;
 20,000 shares issued and outstanding                                   $200,000

Class B (Non-Voting), $10 par value; 25,000 shares
 authorized; 15,000 shares issued and outstanding                       $150,000


NOTE 4 - CAPITAL REQUIREMENTS:
------------------------------

MINC is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1), which 
requires a broker-dealer that is also registered as a futures commission
merchant to maintain adjusted net capital equal to or above the greater of its
requirement under paragraph (a)(1)(ii) of Rule 15c3-1, or 4 percent of the funds
required to be segregated pursuant to the Commodity Exchange Act and the
regulations thereunder. At March 31, 1996, MINC had adjusted net capital, as
defined, of approximately $66,191,900, which was approximately $34,933,000 in
excess of the minimum required to be maintained.

Geldermann, Inc. is subject to the net capital requirements of the CFTC. At
March 31, 1996 Geldermann, Inc.'s regulatory net capital of approximately
$17,603,100 exceeded the minimum net capital requirement by approximately
$17,271,500.

MINC and its regulated subsidiaries are subject to certain notification and 
other provisions of the net capital rules of the SEC and CFTC regarding advances
to affiliates, repayments of subordinated liabilities, dividend payments and 
other equity withdrawals.

                                     -77-
<PAGE>
 
NOTE 5 - SEGREGATION OF FUNDS
-----------------------------

The Company is required under the Commodity Exchange Act and the Securities 
Exchange Act of 1934 to segregate assets at least equivalent to balances due to 
customers trading in regulated futures and options on futures contracts and U.S.
domiciliaries trading on foreign futures markets and trading in securities and 
options on securities markets, respectively. At March 31, 1996, the Company 
maintained segregated assets and foreign secured assets, including customer 
owned securities, as follows:

<TABLE> 
<CAPTION>  
<S>                                                                  <C> 
Pursuant to Commodity Exchange Act:
     Cash                                                            $  2,229,200   
     Firm owned securities                                              5,375,300
     Customer owned securities                                        226,296,000
     Securities purchased under agreements to resell                  574,800,200
     Receivables from exchanges and clearing organizations             49,091,700
     Net equities with other futures commission merchants               4,184,000
                                                                     ------------
     Total                                                           $861,976,400
                                                                     ============

Foreign Secured Assets Relating to Foreign Futures Activities:
     Cash                                                            $ 49,706,600
     Firm owned securities                                              1,075,900
     Customer owned securities                                         14,155,400
     Securities purchased under agreements to resell                   70,032,400
     Receivables from exchanges and clearing organizations                 19,300
     Net equities with other futures commission merchants              (2,660,000)
                                                                     ------------
     Total                                                           $132,329,600
                                                                     ============

Pursuant to Securities Exchange Act Requirements:
     Securities purchased under agreements to resell                 $ 23,406,800
                                                                     ============ 
</TABLE> 

At March 31, 1996, the Company was in compliance with these segregation 
requirements.

NOTE 6 - INCOME TAXES:
----------------------

The Company files consolidated Federal, and New York state and City income tax 
returns with its parent, E. D. & F. Man Inc. The Company also files income tax 
returns in Illinois and certain other states.

                                     -78-
<PAGE>

The provision (benefit) for income taxes includes the following:

Current:
 Federal        $ 622,400
 State           (143,100)
 Local           (159,300)
Deferred:
 Federal         (118,000)
 State             (5,700)
 Local              2,100
                --------- 
Total           $ 198,400  
                =========

The tax benefits relating to state and local income taxes result from the 
Company's participation in the consolidated returns of its parent.

The difference between the Company's effective tax rate and the statutory 
federal tax rate principally relates to state and local taxes, certain 
non-deductible expenses and adjustment to the prior year tax payable amount due 
to the disallowance of a deduction.

NOTE 7 - RELATED PARTY TRANSACTIONS:
------------------------------------

E. D. & F. Man Inc. provides certain administrative services to the Company. 
These services include payment of the Company's payroll costs, occupancy costs, 
equipment rentals, communication costs as well as various other operating 
expenses. The Company reimburses E. D. & F. Man Inc. for these expenditures.

During the year ended March 31, 1996, the Company was charged $1,992,300 by 
E. D. & F. Man Inc. in connection with computer systems, personnel support 
services, legal, occupancy and other overhead expenses.

The Company enters into various execution and brokerage activities with 
affiliates on bases determined by management. For the year ended March 31, 1996,
the Company earned from affiliates approximately $10,053,900 in commission 
revenue and was charged by affiliates commission expense of approximately 
$6,205,500.

The Company paid commitment fees of approximately $1,073,400 to an affiliate for
committed bank and credit facilities during the year ended March 31, 1996.

The Company recognized approximately $17,698,000 (including $12,027,000 related 
to subordinated debt) of interest expense and approximately $6,290,000 in 
interest income arising from transactions with affiliates during the year ended 
March 31, 1996.

At March 31, 1996, subordinated borrowings from E. D. & F. Man Group plc total 
$37,500,000 expiring January 31, 1997, and from E. D. & F. Man Inc. total 
$85,500,000 expiring as follows:

                                     -79-
<PAGE>
 
$5,000,000 on May 31, 1996, $57,000,000 on June 15, 1997, and $23,500,000 on 
June 2, 1996.  Such borrowings are subordinated to the claims of all present and
future creditors and bear interest at prime plus 1%.

The Company has an agreement with the E.D. & F. Man International Ltd. ("MIL")
to introduce customers to MIL who desire to purchase or sell London Metals
Exchange futures and options contracts. For such contracts, the counterparties
are customers of MIL with no obligation of performance by the Company.  The
Company is reimbursed by MIL for its expenses related to such transactions.  The
Company also receives a service fee equal to a share of the Net Profits, as
defined in the agreement, from such transactions.  For the year ended March 31,
1996, the Company received approximately $2,338,000 and approximately $614,000,
respectively, for reimbursement of expenses incurred and the service fee.

NOTE 8 - LEASES:

The Company leases certain office premises, equipment and computer hardware for 
its own use.  At March 31, 1996, the minimum annual rental commitment under 
non-cancelable leases was:

               1997             $ 927,500
               1998             $ 713,900
               1999             $ 733,400
                                ---------
                                                         Total  $2,374,800
                                                                ==========

Rent expenses and sublease rental income for the year ended March 31, 1996, were
approximately $1,741,500 and $86,800, respectively.


NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF
         CREDIT RISK:

Off-balance sheet market risk or futures and options positions undertaken by the
Company's customers and affiliates is borne by such entities.  The Company's 
operational credit risk is primarily limited to amounts due from brokers, 
dealers, exchanges, clearing organizations, customers and affiliates.  
Transactions in future contracts are conducted through regulated exchanges for 
which the Company, its customers and other counterparties are subject to margin 
requirements and are settled in cash on a daily basis, thereby minimizing credit
risk.  Credit losses could arise should counterparties fail to perform and the 
value of any collateral proves inadequate.  The Company manages credit risk by 
monitoring net exposure to individual counterparties on a daily basis, 
monitoring credit limits and requiring additional collateral where appropriate.
Securities trades are recorded on a settlement date basis.  Should either the 
customer or broker fail to perform, the Company may be required to complete the 
transaction at prevailing market prices resulting in a credit risk.  Trades 
pending at March 31, 1996 were settled without adverse effect on the Company's 
consolidated financial statements.

In the normal course of business, the Company invests in U.S. government 
obligations and other
 

                                     -80-
<PAGE>

short-term instruments with U.S.financial institutions or U.S. branches of major
foreign banks.  Management does not anticipate that losses, if any, as a result 
of credit risk would materially affect the Company's financial position.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Various legal actions are pending against the Company.  Any legal actions 
involving significant damage claims relate to activities of Geldermann prior to 
acquisition by MINC.  As part of the acquisition agreement, the seller has 
agreed to indemnify the Company and its officers against any liabilities up to 
$63,000,000 in respect to known or unknown claims, as of the acquisition date, 
including any pending or threatened litigation against Geldermann.

As of March 31, 1996, a non-guaranteed subsidiary (which has been liquidated) of
Geldermann had an outstanding judgment against it of approximately $2,000,000, 
which has been accrued in the consolidated statement of financial condition.  
Additional amounts, which have not been accrued, for interest and attorneys 
costs may also become payable.  In addition to the seller's indemnification, any
liability related to this litigation matter has also been indemnified by the 
previous corporate owner of such subsidiary.  The accrued liability of 
$2,000,000 has therefore been fully offset by recording a corresponding 
receivable due from the parties issuing the indemnifications.  The accrued 
liability and corresponding receivable are reflected in the consolidated 
statement of financial condition in accounts payable and accrued liabilities and
other assets, respectively.

At March 31, 1996, outstanding letters of credit aggregated approximately 
$41,000,000.  Such letters of credit were used principally in lieu of original 
margin deposits with various clearing associations and in lieu of capital 
deposits with various exchanges.

The Company guarantees certain third party loans on a collateralized basis.  
Guarantees at March 31, 1996, amounted to approximately $1,948,500 and the 
market value of the collateral, consisting of exchange memberships, was 
approximately $6,162,000.

In the opinion of management, these matters will be resolved with no material 
adverse effect on the Company's consolidated financial position or results of 
operations.

NOTE 11 - DISPOSITIONS OF SUBSIDIARIES

On March 29, 1996, the Company sold its interest in Greystone International 
Limited, a wholly owned subsidiary of Gotham Asset Management, Inc. ("GAMI").  
The Company also sold its interest in Greystone Partners, a partnership interest
of GAMI.  GAMI is a wholly owned subsidiary of Heinhold Asset Management, Inc. 
("HAMI"), formerly a wholly owned subsidiary of Geldermann.  The Company 
recognized a loss of $619,000 on the sale of these interests.

Subsequent to the above sales, the Company dividended its remaining interest in 
HAMI on March 31, 1996, for its net book value of $2,018,200 to E.D. & F. Man 
Inc.  The effects of this disposition are disclosed within the changes in assets
and liabilities in the statement of cash flows.

                                     -81-
<PAGE>
 
              Supplementary Report of Independent Accountants on
                          Internal Control Structure 



      May 30, 1996

      The Board of Directors
      E. D.& F. Man International Inc.
      (a wholly owned subsidiary of E. D. & F. Man Inc.)

      In planning and performing our audit of the financial statements of E. D.
      & F. Man International Inc. for the year ended March 31, 1996, we
      considered its internal control structure, including procedures for
      safeguarding customer and firm assets, in order to determine our auditing
      procedures for the purpose of expressing our opinion on the financial
      statements and not to provide assurance on the internal control structure.

      Also, as required by Rule 17a-5(g)(1) of the Securities and Exchange
      Commission ("SEC") and Regulation 1.16 of the Commodities Futures Trading
      Commission ("CFTC"), we have made a study of the practices and procedures
      followed by the Company including tests of such practices and procedures
      that we considered relevant to the objectives stated in Rule 17a-5(g) and
      Regulation 1.16 in making: (I) the periodic computations of aggregate
      debit items and net capital under Rule 17a-3(a)(11) and the reserve
      required by Rule 15c3-3(e) of the SEC; (ii) the daily computations of the
      foreign futures and foreign options secured amount requirements pursuant
      to Regulation 30.7 of the CFTC; (iii) the daily computations of the
      segregation requirements of Section 4d(2) of the Commodity Exchange Act
      ("CEA") and the regulations thereunder, and the segregation of funds based
      upon such computations; (iv) the periodic computations of the minimum
      financial requirements pursuant to Regulation 1.17; (v) the quarterly
      securities examinations, counts, verifications and comparisons, and the
      recordation of differences required by Rule 17a-13; (vi) in complying with
      the requirements for prompt payment of securities under section 8 of
      Regulation T of the Board of Governors of the Federal Reserve system; and
      (vii) in obtaining and maintaining physical possession or control of all
      fully paid and excess margin securities of customers as required by Rule
      15c3-3.

      The management of the Company is responsible for establishing and
      maintaining an internal control structure and the practices and procedures
      referred to in the preceding paragraph. In fulfilling this responsibility,
      estimates and judgments by management are

                                     -82-
<PAGE>
 
     The Board of Directors
     E. D. & F. Man International Inc.
     Page -2- 

     required to assess the expected benefits and related costs of internal
     control structure policies and procedures and of the practices and
     procedures referred to in the preceding paragraph and to assess whether
     those practices and procedures can be expected to achieve the SEC's and
     CFTC's above mentioned objectives.  Two of the objectives of an internal
     control structure and the practices and procedures are to provide
     management with reasonable, but not absolute, assurance that assets for
     which the Company has responsibility are safeguarded against loss from
     unauthorized use or disposition and that transactions are executed in
     accordance with management's authorization and recorded properly to permit
     preparation of financial statements in conformity with generally accepted
     accounting principles.  Rule 17a-5(g) and Regulation 1.16 list additional
     objectives of the practices and procedures referred to in the preceding
     paragraph.

     Because of inherent limitations in any internal control structure or the
     practices and procedures referred to above, errors or irregularities may
     occur and not be detected.  Also, projection of any evaluation of them to
     future periods is subject to the risk that they may become inadequate
     because of changes in conditions or that the effectiveness of their design
     and operation may deteriorate.

     Our consideration of the internal control structure would not necessarily
     disclose all matters in the internal control structure that might be
     material weaknesses under standards established by the American Institute
     of Certified Public Accountants.  A material weakness is a condition in
     which the design or operation of the specific internal control structure
     elements does not reduce to a relatively low level the risk that errors or
     irregularities in amounts that would be material in relation to the
     financial statements being audited may occur and not be detected within a
     timely period by employees in the normal course of performing their
     assigned functions.  However, we noted no matters involving the internal
     control structure, including procedures for safeguarding customer and firm
     assets, that we consider to be material weaknesses as defined above.

     We understand that practices and procedures that accomplish the objectives
     referred to in the second paragraph of this report are considered by the
     SEC and CFTC to be adequate for their purposes in accordance with the
     Securities Exchange Act of 1934 and the CEA and related regulations, and
     that practices and procedures that do not accomplish such objectives in
     all material respects indicate a material inadequacy for such purposes.
     Based on this understanding and on our study, we believe that the
     Company's practices and procedures were adequate at March 31, 1996, to
     meet the SEC's and CFTC's objectives.

                                     -83-
<PAGE>
 
     The Board of Directors
     E. D. & F. Man International Inc.
     Page -3-

     This report is intended solely for the information and use of the Board of
     Directors, management, the SEC, the CFTC and other regulatory agencies that
     rely on Rule 17a-5(g) under the Securities Exchange Act of 1934 or CFTC
     Regulation 1.16, and should not be used for any other purposes.

                                     -84-
<PAGE>
 
                       E. D. & F. Man International Inc.
                       Analysis of Non-allowable Assets
                                March 31, 1996

<TABLE>
<CAPTION>
 
<S>                                                     <C>
Investments in and receivables from affiliates          $26,206,722
Receivables from customers                                  884,800
Receivables from broker/dealers                           3,418,361
Memberships in exchanges - at cost                        8,615,723
Other assets                                              1,550,519
Furniture, equipment and leasehold improvements           2,029,679
Securities owned, not readily marketable                     15,000
Loans and advances                                           42,316
                                                        -----------
 
Total Non-allowable Assets                              $42,763,120
                                                        ===========
</TABLE>

                                     -85-
<PAGE>
 
              SUPPLEMENTARY REPORT OF INDEPENDENT AUDITORS ON THE
                             SIC ANNUAL ASSESSMENT
                        REQUIRED BY THE SEC RULE 17a-5


The Board of Directors
E. D. & F. Man International Inc.

We have performed the procedures enumerated below, which are in accordance with
Rule 17a-5(e)(4) of the Securities and Exchange Commission, solely to assist you
with respect to the accompanying schedule (Form SIC-7) of the Securities
Investor Protection Corporation on assessments and payments of E. D. & F. Man
International Inc. for the year ended March 31, 1996. This engagement to apply
agreed-upon procedures was performed in accordance with standards established by
the American Institute of Certified Public Accountants. The sufficiency of the
procedures is solely the responsibility of the specified users of the report.
Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been
requested or for any other purpose.

1. Compared listed assessment payments with respective disbursement record
   entries:

2. Compared amounts reported on the audited Forms X-17A-5 for the year ended
   March 31, 1996 with the amounts reported in the General Assessment
   Reconciliation (Form SIC-7).

3. Compared any adjustments reported in Form SIC-7 with supporting schedules and
   working papers;

4. Proved the arithmetic accuracy of the calculations reflected in Form SIC-7
   and in the related schedules and working papers supporting adjustments; and

5. Compared the amount of any overpayment applied with the Form SIC-7 on which
   it was computed.

We were not engaged to, and did not, perform an audit, the objective of which
would be the expression of an opinion on the specified elements, accounts, or
items.  Accordingly, we do not express such an opinion.  Had we performed
additional procedures, other matters might have come to our attention that would
have been reported to you.

This report is intended solely for the use of the specified users listed above
and should not be used by those who have not agreed to the procedures and taken
responsibility for the sufficiency of the procedures for their purposes.

                                     -86-


 
<PAGE>
 
<TABLE> 
<CAPTION> 

                                                 E. D. & F. Man International Inc.
                                              Reconciliation from Unaudited FOCUS to
                                           Consolidated Statement of Financial Condition
                                                          March 31, 1996

                                                     MINC
                                                   Unaudited
                                                 Unconsolidated                                       Consolidation
                                                     FOCUS        Geldermann, Inc.   Reclassification  Eliminations   Consolidated
                                                 --------------   ----------------   ----------------  ------------   ------------
Assets                                                                                               
------                                                                                               
<S>                                              <C>              <C>                <C>              <C>             <C>  
Cash                                             $   7,048,800    $      93,400      $                $               $   7,142,200
Cash segregated under federal regulations            2,054,800          315,800                                           2,370,600
Due from brokers, dealers and clearing                                                                      
  organizations                                     96,753,800       31,033,400         3,957,200                       131,744,400
Due from customers                                  25,596,100        3,836,700          (840,900)                       28,591,900
Due from non customers                                  22,100                                                               22,100
Due from affiliates                                 26,206,700        5,062,000               400      (27,916,300)       3,352,800
Securities purchased under agreements                                                                
  to resell                                        663,119,300       52,622,900                                         715,742,200
Securities owned                                                                                     
  U.S. government securities                        21,173,300        9,676,000           248,500                        31,097,800
  Other marketable securities                        6,132,200                                                            6,132,200
  Not readily marketable, at fair value                 15,000                            406,000                           421,000
Memberships in exchanges                             8,615,700        1,424,600                                          10,040,300
Furniture, equipment, and leasehold                                                                  
  improvements                                       2,029,700          863,600                                           2,893,300
Other assets                                         4,665,400        3,925,800        (4,553,000)                        4,038,200
                                                 -------------    -------------      ------------     ------------    -------------
Total assets                                     $ 863,432,900    $ 108,854,200      $   (781,800)    $(27,916,300)   $ 943,589,000
                                                 =============    =============      ============     ============    =============
                                                                                                     
                                                                                                     
Liabilities and stockholder's equity                                                                 
------------------------------------                                                                 
                                                                                                     
Due to brokers, dealers and clearing                                                                 
  organizations                                  $  (8,977,800)   $  (8,024,100)     $                $               $ (17,001,900)
Due to customers                                  (663,170,900)     (57,543,100)                                       (720,714,000)
Due to non customers                               (38,207,600)                                                         (38,207,600)
Due to affiliates                                  (12,608,400)        (607,000)           (2,700)       4,994,500       (8,223,600)
Accounts payable and accrued liabilities           (25,438,300)      (5,280,100)          784,500                       (29,933,900)
                                                 -------------    -------------      ------------     ------------    -------------
Total liabilities                                 (748,403,000)     (71,454,300)          781,800        4,994,500     (814,081,000)
                                                                                                     
Subordinated debt                                 (110,000,000)     (13,000,000)                                       (123,000,000)
                                                                                                     
Common Stock                                          (350,000)          (1,000)                             1,000         (350,000)
Additional paid in capital                          (4,900,000)     (24,398,900)                        24,398,900       (4,900,000)
Retained earnings                                      220,100                                          (1,478,100)      (1,258,000)
                                                 -------------    -------------      ------------     ------------    -------------
Total stockholder's equity                          (5,029,000)     (24,399,900)                        22,921,800       (6,508,000)
                                                                                                     
                                                                                                     
Total liabilities and stockholder's equity       $(863,432,900)   $(108,854,200)     $    781,800     $ 27,916,300    $(943,589,000)
                                                 =============    =============      ============     ============    =============
</TABLE> 

                                     -87-
<PAGE>
 
 
                                                     SCHEDULE II


               JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
                     Valuation and Qualifying Accounts



<TABLE>
<CAPTION>
 
 
                                 Additions
                           ----------------------
 
                           Charged to
                           (Benefits   Charged
               Balance at  Against)    to Other                   Balance
               Beginning   Costs and   Accounts    Deductions    at End of
Description    of Period   Expenses    (Describe)  (Describe)     Period
-------------  ----------  ---------   ----------  ------------   ---------
<S>            <C>         <C>         <C>         <C>            <C>
Allowance for
doubtful
accounts


For the year
ended June 30,
1996:            $191,900   $140,600   $144,800(b) $ (68,000)(a)   $409,300



For the year
ended June 30,
1995:            $506,600  $(586,000)  $323,900(b) $ (52,600)(a)   $191,900



For the year
ended June 30,
1994:            $613,200  $  49,100   $    -      $(155,700)(a)   $506,600
</TABLE> 





(a)   Uncollected receivables written off.

(b)   Collection of receivables previously written off.

                                     -88-
<PAGE>
 
 
                                 Exhibit Index
                                 -------------


Certain exhibits to this report on Form 10-K have been incorporated by
reference.  For a list of these exhibits, see Item 14 hereof.
<TABLE>
<CAPTION>
 
                                                                 Page In
                                                               Sequentially
                                                              Numbered System
                                                                Where Found
                                                             -----------------
 
Exhibit No.        Description
-----------        -----------
    
<S>                <C>                                       <C> 
                   The following exhibits are filed herewith:
 
 10.42             Employment agreement, dated December 31,
                   1995, between Jack Carl/312-Futures,
                   Inc. and Philip A. Tanzar                             93
 
 10.43             Heads of Agreement, dated July 19, 1995
                   between Jack Carl/312-Futures, Inc.,
                   Simon Drabble, Graham Wellesley and
                   Lorenzo Naldini                                      101
 
 10.44             Service Agreement, dated July 19, 1995
                   between Index Forex Limited and
                   Simon Drabble, Graham Wellesley and
                   Lorenzo Naldini                                      105

 10.45             Service Agreement dated September 1, 1995 
                   between Index FX Limited and Simon Drabble           116

 10.46             Service Agreement dated November 13, 1995 
                   between Index FX Limited and Graham Wellesley        128

 10.47             Service Agreement dated November 13, 1995 
                   between Index Forex Limited and Lorenzo Naldini.     139

 10.48             Letter containing terms of employment dated 
                   October 12, 1995 and October 27, 1995               
                   between Index FX Limited and Barrie J. Swift         150

 10.49             Letter containing terms of employment dated 
                   February 6, 1996 between Index FX Ltd. and 
                   Figen Yardimci                                       155     
                
 10.50             Letter containing terms of employment 
                   dated March 19, 1996 between Index FX 
                   Limited and Charles Owens                            159

 11.1              Computation of Earnings
                   Per Common Share                                      90
 
 17.1              Letter confirming resignation, dated September
                   26, 1996, from Burton J. Meyer                       163
 
 17.2              Letter of resignation, dated September
                   24, 1996, from Philip A. Tanzar                      164
 
 21.1              Subsidiaries of the Registrant                        92
 
 24.1              Power of Attorney                                     40

 27                Financial Data Schedule (Edgar Version Only)

 99.1              Report on Form 8-K for the Registrant
                   as filed on June 14, 1996 with the
                   Securities and Exchange Commission                   165
</TABLE> 
     

                                     -89-