##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT UNDER SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007oro

TRANSITION REPORT UNDER SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number 0-25679
      BROOKE CAPITAL
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Kansas(State or other jurisdiction
    of
    incorporation or organization)

48-1187574(I.R.S. Employer
    Identification No.)       8500 College Boulevard,
 Overland Park, Kansas 66210
 (Address of principal executive
    offices) (Zip Code)
      Registrants telephone number:
    (913) 661-0123
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of each exchange on which registeredCommon Stock, Par Value $.01 per share

American Stock Exchange   Securities registered under Section 12(g) of the Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer þ
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
        DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
  Page No.FORWARD-LOOKING AND CAUTIONARY STATEMENTS

4PART I

5ITEM 1.

BUSINESS

5ITEM 1A.

RISK FACTORS

17ITEM 2.

PROPERTIES

31ITEM 3.

LEGAL PROCEEDINGS

31ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS

31PART II

32ITEM 5.

MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES

32ITEM 6.

SELECTED FINANCIAL DATA

34ITEM 7.

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

36ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

56ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

57ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE

92ITEM 9A(T).

CONTROLS AND PROCEDURES

92ITEM 9B.

OTHER INFORMATION

93PART III

93ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

93ITEM 11.

EXECUTIVE COMPENSATION

95ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    AND RELATED STOCKHOLDER MATTERS

95ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE

95ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

96PART IV

96ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

962007 Equity Incentive PlanTermination AgreementRestricted Shares Agreement - Michael HessRestricted Shares Agreement - Paul E. Burke, Jr.Restricted Shares Agreement - Keith E. BoucheyRestricted Shares Agreement - Richard E. GillRestricted Shares Agreement -  William R. Morton, Jr.Amendment to Restricted Shares Agreement - William R. Morton, Jr.Commercial Loan AgreementStock Pledge and Security AgreementSubsidiariesCertificationCertificationCertificationCertification   3




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FORWARD-LOOKING
    AND CAUTIONARY STATEMENTS  Form 10-K
    
    A significant part of our business strategy involves adding new
    franchise locations, and our failure to grow may adversely
    affect our business, prospects, results of operations and
    financial condition;
    Our franchisees financial performance may adversely affect
    their ability to repay amounts due to us;
    Carrier override and contingent or profit sharing commissions
    are difficult to predict, and any decrease in our receipt of
    such payments will adversely affect us;
    Potential litigation and regulatory proceedings regarding
    commissions, fees, contingency payments, profit sharing and
    other compensation paid to brokers or agents could materially
    adversely affect our financial condition;
    Our business is impacted by the cyclical pricing of property and
    casualty insurance, which may adversely affect our
    franchisees performance and, thus, our financial
    performance;
    A soft market in the insurance industry may affect
    our financial performance;
    We may not be able to successfully convert existing agencies
    into new franchises;
    Fluctuation in experience regarding current mortality,
    morbidity, persistency and interest rates relative to expected
    amounts used in pricing life insurance could adversely affect
    our life insurance business;
    Our business, results of operations, financial condition or
    liquidity may be materially adversely affected by errors and
    omissions;
    We are dependent on key personnel;
    Termination of our professional liability insurance policy would
    adversely impact our financial prospects and our ability to
    continue our relationships with insurance companies;
    Adverse conditions in credit markets or changes in access to
    credit may adversely affect our ability to add new franchise
    locations;
    Because a significant part of our insurance-related revenues and
    loans derive from operations located in five states, our
    business may be adversely affected by conditions in these states;
    We may not be able to accurately report our financial results or
    prevent fraud if we fail to maintain an effective system of
    internal controls over financial reporting;
    We compete in a highly regulated industry, which may result in
    increased expenses or restrictions in our operations; 4




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
    Our pending transaction to acquire a non-standard automobile
    insurance company may not close or close when expected; and
    Changes in economic, political and regulatory environments,
    governmental policies, laws and regulations, including changes
    in accounting policies and standards and taxation requirements
    (such as new tax laws and new or revised tax law
    interpretations) could materially adversely affect our
    operations and financial condition.    EXPLANATORY
    NOTE
       PART I  ITEM 1.
    BUSINESS.    General
     5




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Insurance
    Company Operations
  Life
    Insurance and Annuity Product Sales.
    Products of First Life.
  Golden Eagle Final Expense
  First Whole Life
  First Term 30-year
  Value Builder
 6




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First Step
  First Flex I
  First Max I
  First Max III
  Easy Pack
  Product Marketing and Sales.
    Insurance Inforce.
    7




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(Shown in Thousands)2007


2006


2005Beginning of the year

$
154,674


$
163,353


$
160,123Issued during year


9,922



9,937



26,306Reinsurance assumed


4,991



4,651



1,096Revived during year


2,240



2,168



2,147Lapse, surrender and decreased


(18,013
)


(25,435
)


(26,319
)In-force end of year

$
153,814


$
154,674


$
163,353     (1)
    
    Excludes accidental death benefits (shown in thousands) of
    $29,594, $31,184 and $33,235 in 2007, 2006, and 2005,
    respectively.    (Number of Policies)2007


2006


2005Beginning of the year


9,974



9,856



8,318Issued during year


1,101



1,137



2,516Reinsurance assumed


142



135



55Revived during year


125



143



110Lapse, surrender and decreased


(1,010
)


(1,297
)


(1,143
)In-force end of year


10,332



9,974



9,856     Reinsurance.
    Underwriting.
  Actuarial Services.
 8




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Investments.
  Financial Information. Form 10-K
  Contemplated
    Non-Standard Automobile Insurance
    Overview.
      Insurance Company Activities of
    TIC.
     9




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Managing General Agency Activities of
    Connection.
    Managing General Agency Activities of
    PCI.
 10




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Insurance
    Agency Operations
  Franchise
    Operations.
        Franchisees.
 11




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Number of


Property and








CompanyState

Franchise Locations


Casualty Insurance


Conversions


Start Up


DevelopedTexas


152



151



73



73



6California


123



123



77



46



0Florida


90



90



62



27



1Kansas


79



78



66



13



0Missouri


67



66



41



22



4Georgia


61



61



4



57



0Virginia


39



39



28



11



0Illinois


38



36



22



16



0North Carolina


35



35



4



31



0Colorado


28



27



18



7



3Arizona


27



27



10



10



7Michigan


23



23



7



16



0Ohio


23



23



2



21



0Oklahoma


23



23



20



3



0     Dependence on the Availability of Funding for Acquisition
    and Operating Needs of our Franchisees.
    start-up
    Support for our franchisees.
  Access to the products of leading insurance
    carriers.
 12




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Professional marketing. e-mail
  Facilities support.
  Business administration. 30-day
  Financial discipline. 120-day
   13




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Business model.
  Share of ongoing revenues.
  Franchise fees.
  
    Initial Basic services fees.  In exchange for a
    initial basic franchise fee of $165,000 per location, we provide
    our conversion and start up franchisees with a business model,
    use of a registered trade name, access to the products of our
    insurance company suppliers, access to the advertising center,
    facility support and processing center, and use of our
    Internet-based information system.
    Start up assistance program.  In 2004, we began
    recruiting experienced insurance professionals to start up new
    franchise locations, opening 41 new start up locations that
    year, 106 new start up locations in 2005, 152 new start up
    locations in 2006, and 94 new start up locations in 2007. We did
    not charge any additional initial franchise fees for start up
    services provided to these franchisees other than our fee for
    basic services.  Seller consulting fees.
    Year Ended December 31,2007


2006


2005Share of Ongoing Revenues(1)

$
25,573


$
20,872


$
16,257Initial Franchise FeesBasic Services


32,505



31,770



19,375Buyers Assistance


455



3,137



10,133Seller Consulting Fees


1,590



2,731



4,916     (1)
    
    Share of ongoing revenues represents insurance commissions less
    commission expense.  Loan
    Consulting Fees.
   14




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and/or
    Financial
    Information.
  Form 10-K
  Competition
  Insurance Company Operations.
  Insurance Agency Operations.
      Service
    Marks, Trademarks and Patents
   15




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Employees
    Suppliers
    Government
    Regulation
  Insurance Agency Operations.
  and/or and/or and/or
         16




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Insurance Company Operations.
    Other Regulations. and/or
    ITEM 1A.
    RISK
    FACTORS.  Risks
    Related to Our Business Operations
  A significant part of our business strategy involves
    adding new franchise locations and our failure to grow may
    adversely affect our business, prospects, results of operations
    and financial condition.
    Our franchisees financial performance may adversely
    affect their ability to repay amounts due to us.
   17




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Carrier override and contingent or profit sharing
    commissions are difficult to predict, and any decrease in our
    receipt of such payments will adversely affect us.
      Potential litigation and regulatory proceedings regarding
    commissions, fees, contingency payments, profit sharing and
    other compensation paid to brokers or agents could materially
    adversely affect our financial condition.
     18




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Our business is impacted by the cyclical pricing of
    property and casualty insurance, which may adversely affect our
    franchisees performance and, thus, our financial
    performance.
  and/or
  We may not be able to successfully convert existing
    agencies into new franchises.
    We are dependent on key personnel.
    Our business, results of operations, financial condition
    or liquidity may be materially adversely affected by errors and
    omissions.
   19




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Termination of our professional liability insurance policy
    would adversely impact our financial prospects and our ability
    to continue our relationships with insurance companies.
    If we fail to maintain an effective system of internal
    controls, including those internal controls impacted by the
    upgrade of our information technology, we may not be able to
    accurately report our financial results or prevent fraud. As a
    result, current and potential stockholders could lose confidence
    in our financial reporting, which could harm our business and
    the trading price of our stock.
    Our dependence on initial franchise fees creates an
    incentive for us to extend credit to borrowers that may not meet
    our underwriting guidelines.
    Because a significant part of our insurance-related
    revenues and loans derive from operations located in five
    states, our business may be adversely affected by conditions in
    these states.
   20




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If we fail to effectively manage our growth, our financial
    results could be adversely affected.
    We may not achieve the same levels of growth in revenues
    and profits in the future as we have in the past.
    Our reliance on the Internet could have a material adverse
    effect on our operations and our ability to meet customer
    expectations.
    Our network may be vulnerable to security breaches and
    inappropriate use by Internet users, which could disrupt or
    deter future use of our services.
   21




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We are in highly competitive markets, which could result
    in reduced profitability.
      Our management, facilities and labor force may be
    insufficient to accommodate expected growth.
  back-up
  We compete in highly regulated industries, which may
    result in increased expenses or restrictions in our
    operations.
       22




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We are subject to franchise law and regulations that
    govern our status as a franchisor and regulate some aspects of
    our franchise relationships. Our ability to develop new
    franchise locations and to enforce contractual rights against
    franchisees may be adversely affected by these laws and
    regulations, which could cause our franchise revenues to decline
    and adversely affect our growth strategy.
    A significant factor of our business strategy involves the
    ability and willingness of our affiliate, Aleritas, in funding
    loans to our franchisees.
    We share brand name identity with Brooke Corporation and
    other affiliates.
    Most of the advances we make are to privately owned small
    and medium-sized companies which present a greater risk of loss
    than advances to larger companies.
    The expansion of our insurance company operations will be
    dependent upon the availability of outside financing.
   23




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Insurance company operations could be disrupted by the
    failure of their information technology and telecommunications
    systems because they are dependent on these systems.
  and/or
  Our insurance companys ability to earn profits may
    be restricted by comprehensive regulation.
      Insurance company operations could be adversely affected
    if regulation becomes more extensive in the future.
   24




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Insurance company operations failure to meet minimum
    capital and surplus requirements could subject them to
    regulatory action.
    and/or and/or
  Insurance company operations profitability could be
    adversely affected by negative developments and cyclical changes
    in the non-standard personal automobile industry because it has
    a concentration in this industry.
      Our insurance company operations profitability could
    be adversely affected by competition.
   25




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Insurance company operational success depends on their
    abilities to price accurately the risks they underwrite.
    Insurance company operations could incur additional
    charges to earnings if its actual losses and loss adjustment
    expenses exceed loss and loss adjustment expense
    reserves.
      Insurance company operations, financial condition and
    results of operations could be adversely affected if they are
    not successful in reducing risk and increasing underwriting
    capacity through reinsurance arrangements.
     26




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Insurance company revenues and business operations could
    be adversely affected by new pricing, claim and coverage issues
    emerging in the automobile insurance industry.
    Insurance company operations, financial results and
    capital requirements could be adversely affected if they fail to
    pay claims accurately.
    Our ability to implement our business strategy could be
    adversely affected by our insurance company subsidiaries
    inability to retain and recruit qualified personnel.
    Insurance company operations financial results could
    be adversely affected by litigation.
      Insurance company operations investment portfolios
    could be adversely affected by adverse securities market
    conditions.
   27




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Severe weather conditions and other catastrophes may
    result in an increase in the number and amount of claims filed
    against insurance company operations.
    Policy lapses in excess of those actuarially anticipated
    would have a negative impact on our financial
    performance.
    Sales of our products may be reduced if we are unable to
    attract and retain marketing representatives or develop and
    maintain distribution sources.
    We may be required to accelerate the amortization of
    deferred acquisition costs which would increase our expenses and
    reduce profitability.
     28




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Failure to protect confidential information and privacy
    could result in the loss of customers and reductions in our
    profitability and subject us to fines and penalties.
        General economic, financial market and political
    conditions may adversely affect our results of operations and
    financial condition.
    
    insurance industry cycles;
    levels of employment;
    levels of consumer spending;
    levels of inflation; and
    movements of the financial markets.    Our debt instruments contain restrictive covenants and
    other requirements that may limit business flexibility by
    imposing operating and financial restrictions on
    operations.
   29




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Risks
    Related to Our Common Stock
  Brooke Corporation is able to exert significant control
    over us and may act in a manner that is adverse to our other
    stockholders interests.
    
    the nomination, election and removal of our board of directors;
    the adoption of amendments to our charter documents;
    our management and policies; and
    the outcome of any corporate transaction or other matter
    submitted to our stockholders for approval, including mergers,
    consolidations and the sale of all or substantially all of our
    assets.    Our relatively low trading volume may limit
    stockholders ability to sell their shares.
    The price of our common stock may fluctuate significantly,
    which may make it difficult for stockholders to resell common
    stock when they want or at a price they find attractive.
    
    actual or anticipated variations in our quarterly operating
    results;
    failure to meet expectations of analysts or investors;
    adverse conditions in the securities or credit markets;
    any claims, litigation or regulatory proceedings that may be
    brought against us;
    recommendations by securities analysts;
    changes in interest rates and other general economic conditions;
    significant acquisitions, divestitures or business combinations,
    strategic partnerships, joint ventures or capital commitments by
    or involving us or our competitors;
    operating and stock price performance of other companies that
    investors deem comparable to us;
    news reports relating to trends, concerns, litigation,
    regulatory changes and other issues in our industry; 30




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
    geopolitical conditions such as acts or threats of terrorism or
    military conflicts; and
    relatively low trading volume.  Kansas law and our articles of incorporation and bylaws
    contain anti-takeover provisions that could delay or discourage
    takeover attempts that stockholders may consider
    favorable.
    ITEM 2.
    PROPERTIES.  (913) 661-0123.
        ITEM 3.
    LEGAL
    PROCEEDINGS.    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.   31




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BROKERFOR

AGAINST


ABSTAIN


NO VOTE2,165,467


-0-



-0-



-0-       BROKERFOR

AGAINST


ABSTAIN


NO VOTE2,165,467


-0-



-0-



-0-     BROKERFOR

AGAINST


ABSTAIN


NO VOTE2,165,467


-0-



-0-



-0-    PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES.  Market
    Information.
      Quarter

Ending


High Bid/Sale


Low Bid/SaleThird


September 30, 2007


$
6.85


$
5.00Fourth


December 31, 2007


$
7.20


$
3.50     Holders
    of Common Stock.
    Dividends.
   32




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Securities
    Authorized for Issuance under Equity Compensation
    Plans.
    Equity
    Compensation Plan Information
  Number of SecuritiesNumber of Securities





Remaining Available forto be Issued upon


Weighted Average


Future Issuance UnderExercise of


Exercise Price of


Equity CompensationOutstanding Options,


Outstanding Options,


Plans (Excluding SecuritiesPlan Category

Warrants and Rights


Warrants and Rights


Reflected in First Column)Equity compensation plans approved by security holders










2,010,000
(1)Equity compensation plans not approved by security holders










Total










2,010,000     (1)
    
    A total of 2,400,000 shares are authorized for issuance
    pursuant to the Brooke Capital Corporation 2007 Equity Incentive
    Plan, which became effective on June 7, 2007, upon approval
    by our stockholders. On August 15, 2007, 390,000 restricted
    share awards were granted under such plan.  Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers.
   33




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ITEM 6.
    SELECTED
    FINANCIAL DATA.  SELECTED
    COMBINED FINANCIAL DATA
      Year Ended December 31,(Restated)


(Restated)


(Restated)


(Restated)2007


2006


2005


2004


2003(In thousands, except share data)Statement of Operations Data:Operating RevenuesInsurance commissions

$
114,588



99,190



80,490



57,619



40,111Interest income


1,925



340



139



39



9Consulting fees


10,423



3,928



4,916



5,236



4,109Gain on sale of businesses


2,057



3,059



3,091



5,261



388Initial franchise fees for basic services


32,505



31,770



19,375



8,795



425Initial franchise fees for buyer assistance plans


455



3,137



10,133



8,122



8,147Insurance premiums earned


3,710



108











Other income


5,987



2,200



874



211



2Total Operating Revenues


171,650



143,732



119,018



85,283



53,191Operating ExpensesCommissions expense


89,182



78,342



64,233



46,725



33,689Payroll expense


24,900



23,153



19,620



11,262



5,433Depreciation and amortization


1,749



89



(14
)


429



38Other operating expense


49,321



35,447



25,978



15,929



10,271Total Operating Expenses


165,152



137,031



109,817



74,345



49,431Income from Operations


6,498



6,701



9,201



10,938



3,760Other ExpensesInterest expense


3,066



1,700



1,515



1,344



179Total Other Expenses


3,066



1,700



1,515



1,344



179Income Before Income Taxes


3,432



5,001



7,686



9,594



3,581Income tax expense


1,094



1,497



2,920



3,262



1,218Net Income

$
2,338



3,504



4,766



6,332



2,363 34




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Year Ended December 31,(Restated)


(Restated)


(Restated)


(Restated)2007


2006


2005


2004


2003(In thousands, except share data)Net Income per ShareBasic net income per share(1)

$
0.29



0.54



0.74



0.96



0.36Diluted net income per share(2)

$
0.28



0.50



0.74



0.96



0.36Weighted average of shares  basic outstanding(3)


8,201,026



6,497,638



6,437,925



6,562,359



6,562,359Weighted average of shares  diluted outstanding(3)


8,208,026



6,958,672



6,437,925



6,562,359



6,562,359   As of December 31,(Restated)


(Restated)


(Restated)


(Restated)2007


2006


2005


2004


2003(In thousands, except number of franchises)Balance Sheet and Other DataTotal current assets

$
79,124



83,266



52,150



45,179



24,615Cash and cash equivalents


2,633



14,344



5,406



6,721



9,576Accounts and notes receivable, net


30,567



20,700



9,590



4,545



2,505Investments


18,867



12,582











Total assets


110,205



94,300



58,141



47,300



25,277Total liabilities


97,458



64,062



40,583



37,508



21,817Total debt(4)


50,491



28,337



27,167



25,773



13,365Total stockholders equity

$
12,747



30,238



17,558



9,792



3,460Number of franchise locations


882



737



552



370



234     (1)
    
    Basic net income per share is calculated by dividing net income
    (loss) by the weighted average number of shares of the
    Companys common stock outstanding.(2)
    
    Diluted net income (loss) per share is calculated by including
    the weighted average effect of dilutive warrants outstanding
    during the periods.(3)
    
    The weighted average number of shares outstanding has been
    adjusted to reflect a
    1-for-3
    reverse stock split in 2007 and the issuance of
    5,000,000 shares of stock in connection with the
    November 15, 2007 merger of Brooke Franchise Corporation
    with and into Brooke Capital Corporation.(4)
    
    Includes short-term and long-term debt. 35




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.  MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.
  Amounts in this section have been rounded to the nearest
    thousand, except percentages, ratios, per share data, numbers of
    franchise locations and numbers of businesses. Unless otherwise
    indicated, or unless the context otherwise requires, references
    to years in this section mean our fiscal years ended
    December 31.
  General
      Results
    of Operation
     36




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##### Table of Contents



2007





2006%Year Ended


% Increase


Year Ended


Increase


Year EndedDecember 31,


(decrease)


December 31,


(decrease)


December 31,2007


over 2006


2006


over 2005


2005REVENUESInsurance commissions

$
114,588



16
%

$
99,190



23
%

$
80,490Consulting fees


10,423



165



3,928



(20
)


4,916Gain on sale of businesses


2,057



(33
)


3,059



(1
)


3,091Initial franchise fees for basic services


32,505



2



31,770



64



19,375Initial franchise fees for buyers assistance plans


455



(85
)


3,137



(69
)


10,133Insurance premiums earned


3,710



3,335



108







Interest income


1,925



466



340



145



139Other income


5,987



172



2,200



152



874Total operating revenues


171,650



19



143,732



21



119,018EXPENSESCommission expense


89,182



14



78,342



22



64,233Payroll expense


24,900



8



23,153



18



19,620Depreciation and amortization


1,749



1,865



89







(14
)Other operating expenses


49,321



39



35,447



36



25,978Total operating expenses


165,152



21



137,031



25



109,817Income from operations


6,498



(3
)


6,701



(27
)


9,201Interest expense


3,066



80



1,700



12



1,515Income before income taxes

$
3,432



(31
)%

$
5,001



(35
)%

$
7,686Total assets (at period end)

$
110,205



17
%

$
94,300



62
%

$
58,141   (See Insurance Agency
    Operation Segment)
 37




---



##### Table of Contents



2007





2006% Increase





% IncreaseAs of


(decrease)


As of


(decrease)


As ofDecember 31, 2007


over 2006


December 31, 2006


over 2005


December 31, 2005Investments

$
18,867



50
%

$
12,582






$
Accounts and notes receivable


30,567



48



20,700



116



9,590Other receivables


2,443



52



1,604



45



1,106Property and equipment


15,709



446



2,878



1,051



250Deferred charges


5,406



4



5,209







Accounts payable


7,353



318



1,759



40



1,252Policy and contract liabilities


25,996



29



20,184







Premiums payable


5,322



(11
)


5,956



49



4,003Debt


50,491



78



28,337



4



27,167     Insurance Agency Operation
    Segment, below
                Analysis
    by Segment
     38




---



##### Table of Contents



Insurance
    Company Operations
  2007





2006Year Ended


% Increase


23 Days Ended


% Increase


Year EndedDecember 31,


(decrease)


December 31,


(decrease)


December 31,2007


over 2006


2006


over 2005


2005REVENUESInsurance premiums earned


3,710



3,335
%


108







Interest income


1,410



2,069



65







Other income


248



1,671



14







Total operating revenues


5,368



2,771



187







EXPENSESCommission expense


167



596



24







Payroll expense


474



1,115



39







Depreciation and amortization


805



3,733



21







Other operating expenses


3,791



3,976



93







Total operating expenses


5,237



2,859



177







Income from operations


131



1,210



10







Interest expense


















Income before income taxes

$
131



1,210


$
10






$
Total assets (at period end)

$
33,190



16
%

$
28570




%

$
      39




---



##### Table of Contents



40




---



##### Table of Contents



Insurance
    Agency Operations
  2007





2006Year Ended


% Increase


Year Ended


% Increase


Year EndedDecember 31,


(decrease)


December 31,


(decrease)


December 31,2007


over 2006


2006


over 2005


2005REVENUESInsurance commissions

$
114,588



16
%

$
99,190



23
%

$
80,490Consulting fees


10,423



282



2,731



(44
)


4,916Gain on sale of businesses


2,057



(33
)


3,059



(1
)


3,091Initial franchise fees for basic services


32,505



2



31,770



64



19,375Initial franchise fees for buyers assistance plans


455



(85
)


3,137



(69
)


10,133Interest income


408



48



275



97



139Other income


5,744



163



2,186



150



874Total operating revenues


166,180



17



142,348



20



119,018EXPENSESCommission expense


89,015



14



78,318



22



64,233Payroll expense


23,827



3



23,114



18



19,620Depreciation and amortization


891



1,210



68







(14
)Other operating expenses


44,281



26



35,241



36



25,978Total operating expenses


158,014



16



136,741



25



109,817Income from operations


8,166



46



5,607



(39
)


9,201Interest expense


3,066



80



1,700



12



1,515Income before income taxes

$
5,100



31
%

$
3,907



(49
)%

$
7,686Total assets (at period end)

$
66,204



5
%

$
63,043



8
%

$
58,141          41




---



##### Table of Contents



Comparison
    of Net Commissions Breakdown to Corresponding Expenses Breakdown
    (in thousands)
  Recurring


ExpensesFranchise


Incurred forRoyalties


Operation of


Service Center


Expenses


Profit Sharing


ExpensesCollected from


Phillipsburg


Fees Collected from


Incurred for


Commissions


Incurred forFranchisees for


Support Services


Franchisees for


Operation of


Collected from


Mass Media &Support Services


Campus


Service Centers


Service Centers


Insurance Cos


Logo AdvertisingYear Ended December 31, 2007

$
11,453


$
13,078


$
3,208


$
6,697


$
5,343


$
8,276Year Ended December 31, 2006

$
6,155


$
5,815


$
10,293


$
12,804


$
5,646


$
8,305  42




---



##### Table of Contents



Initial
    Franchise Fee Revenue
  Basic Services
        Summary
    of Initial Franchise Fees for Basic Services
    and the Corresponding Number of Locations
  Start-up





CompanyRelated Initial


Conversion


Developed Initial


Total InitialFranchise Fees


Related Initial


Franchise Fees


Franchise Feesfor Basic


Franchise Fees


for Basic


for BasicServices


for Basic Services


Services


Services(Locations)


(Locations)


(Locations)


(Locations)(In thousands, except number of locations)Year Ended December 31, 2007

$
15,510



94


$
14,355



126


$
2,640



14


$
32,505



234Year Ended December 31, 2006


23,820



168



7,215



55



735



4



31,770



227Year Ended December 31, 2005


12,375



108



7,000



102



0



0



19,375



210   Buyers Assistance Plan Services
       43




---



##### Table of Contents



Seller and Borrower-Related Revenues
  Consulting fees.
  Gains on Sale of Businesses from Deferred
    Payments.
   44




---



##### Table of Contents



Calculation
    of Seller Discounts Based On Reduced Carrying Values
    (in thousands, except percentages and number of days)
  Interest RateBeginning


Weighted


Weighted


Used for





Reduced


Gain on SalePrincipal


Average


Average


Net Present


Full Nominal


Carrying


from DeferredBalance


Rate


Maturity


Value


Purchase Price


Value


Payments2007

$
16,345



9.75
%


330 days



9.75
%

$
42,604


$
41,155


$
1,4492006


8,047



9.41
%


691 days



9.00-9.75
%


23,625



22,295



1,3302005


10,397



7.72
%


651 days



6.75-8.75
%


25,746



24,561



1,185   Gains on Sale of Businesses  Company-owned
    Stores.
  Gains on Sale of Businesses  Inventoried
    Stores.
  Franchise Collateral Preservation (CPA)
    Expenses
    Franchise Recruitment Expenses
  Income Before Income Taxes
 45




---



##### Table of Contents



Company-Owned Stores
    inventoried,
    franchisor-developed auto insurance stores Inventoried stores Franchisor-developed stores managed, pending or franchisee-developed Pending stores Franchisee-developed stores start-up
  Inventoried Stores
    Managed Stores
 46




---



##### Table of Contents



Pending Stores
  Franshisor-Developed Stores
  Franchisee-Developed Stores start-up
  start-up start-up start-up start-up start-up start-up start-up start-up start-up start-up
  Franchise Relocations
  Same Store Sales
 47




---



##### Table of Contents



Franchise Balances
  Statement Balances 30-day
    As of


As ofDecember 31,


December 31,2007


2006Total Statement Balances

$
9,662


$
6,214Uncollected Accounts* (Included in Above Total Statement
    Balances)

$
3,688


$
3,778Watch Statement Balances (Included in Above Total Statement
    Balances)

$
9,077


$
5,476Watch Statement Uncollected Accounts**

$
1,657


$
1,804     *
    
    These amounts are limited to uncollected balances for
    franchisees with unpaid statement balances as of December 2007
    and 2006.**
    
    These amounts are limited to uncollected balances for
    franchisees with watch statement balances as of December 2007
    and 2006.  Non-statement Balances
  Reserve for Doubtful Accounts
 48




---



##### Table of Contents



Valuation
    and Qualifying Accounts
  Balance at





Write Off


Write Off


Balance atBeginning


Charges to


Statement


Non-Statement


End ofof Year


Expenses


Balances


Balances


YearAllowance for Doubtful AccountsYear ended December 31, 2005

$
575


$
2,974


$
1,336


$
1,497


$
716Year ended December 31, 2006


716



4,313



3,026



537



1,466Year ended December 31, 2007

$
1,466


$
4,276


$
961


$
3,667


$
1,114   Insurance
    Agency Consulting Activities
     49




---



##### Table of Contents



Corporate
    Activities
  2007





2006Year Ended


% Increase


23 Days Ended


% Increase


Year EndedDecember 31,


(Decrease)


December 31,


(Decrease)


December 31,2007


Over 2006


2006


Over 2005


2005REVENUESInterest income


112















Other income


















Total operating revenues


112















EXPENSESPayroll expense


599















Depreciation and amortization


53















Other operating expenses


1,254















Total operating expenses


1,906















Income from operations


(1,794
)














Interest expense


5















Income before income taxes

$
(1,799
)



%

$







$
Total assets (at period end)

$
10,811




%

$





%

$
     1-for-3
       50




---



##### Table of Contents



and/or
    Liquidity
    and Capital Resources
        Insurance Company Operations
    Insurance Agency Operations
 51




---



##### Table of Contents



Capital
    Commitments
    Payments Due by PeriodLess Than


1 to 3


3 to 5


More ThanContractual Obligations

Total


1 Year


Years


Years


5 YearsShort-term borrowings

$
5,056


$
5,056


$



$



$
Long-term debt


45,435



27,066



5,657



9,234



3,478Interest payments*


11,082



3,935



3,449



2,640



1,058Operating leases (facilities)


31,100



13,427



15,018



2,543



112Total

$
92,673


$
49,484


$
24,124


$
14,417


$
4,648           Critical
    Accounting Policies
       52




---



##### Table of Contents



Franchisees Share of Undistributed Commissions
    Reserve for Doubtful Accounts
  Amortization and Useful Lives 15-year
  Deferred Policy Acquisition Costs
 53




---



##### Table of Contents



Future Policy Benefits
  Future Annuity Benefits
  Reinsurance
  Investments
  Income Tax Expense
  Revenue Recognition Policies
    Recently
    Issued Accounting Pronouncements
    Contractual
    Obligations
    Related
    Party Transactions
   54




---



##### Table of Contents



Impact
    of Inflation and General Economic Conditions
               55




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.       56




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA.  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
   BROOKE CAPITAL CORPORATION AND AFFILIATES
            57




---



##### Table of Contents



Brooke
    Capital Corporation
    Combined Balance Sheets
    DECEMBER 31, 2007 AND 2006
  ASSETS
  (Restated)2007


2006(In thousands, except share amounts)Current AssetsCash

$
2,633


$
14,344Restricted cash


171



615Investment securities available-for-sale


18,867



12,582Accounts and notes receivable, net


30,567



20,700Receivables from Parent and affiliates


18,441



29,122Other receivables


2,443



1,604Income taxes receivable


1,094



Other current assets


3,979



3,837Advertising supply inventory


929



462Total Current Assets


79,124



83,266Investment in Businesses


9,413



2,333Property and EquipmentCost


20,951



3,823Less: Accumulated depreciation


(5,242
)


(945
)Net Property and Equipment


15,709



2,878Other AssetsDeferred charges, net


5,406



5,209Amortizable intangible assets, net


553



614Net Other Assets


5,959



5,823Total Assets

$
110,205


$
94,300LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesFuture annuity benefits

$
18,735


$
13,658Future policy benefits


7,261



6,526Total Policy and Contract Liabilities


25,996



20,184Accounts payable


7,353



1,759Premiums payable to insurance companies


5,322



5,956Producer payable


4,500



4,234Interest payable


1,314



757Income tax payable






1,485Other current liabilities


2,144



842Short-term debt


5,056



10,208Current maturities of long-term debt


27,066



10,798Total Current Liabilities


78,751



56,223Non-current LiabilitiesDeferred income tax payable


338



508Long-term debt less current maturities


18,369



7,331Total Liabilities


97,458



64,062Stockholders EquityCommon stock, $.01 par value, 25,000,000 shares
    authorized, 8,475,817 and 2,666,666 shares issued and
    outstanding


85



27Additional paid-in capital


14,372



20,459(Accumulated deficit) retained earnings


(1,232
)


9,919Accumulated other comprehensive loss


(478
)


(167
)Total Stockholders Equity


12,747



30,238Total Liabilities and Stockholders Equity

$
110,205


$
94,300    58




---



##### Table of Contents



Brooke
    Capital Corporation
    Combined Statements of Operations
    YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
  (Restated)


(Restated)2007


2006


2005(In thousands, except per share data)Operating RevenuesInsurance commissions

$
114,588


$
99,190


$
80,490Consulting fees


10,423



3,928



4,916Gain on sale of businesses


2,057



3,059



3,091Initial franchise fees for basic services


32,505



31,770



19,375Initial franchise fees for buyer assistance plans


455



3,137



10,133Interest income


1,925



340



139Insurance premiums earned


3,710



108



Other income


5,987



2,200



874Total Operating Revenues


171,650



143,732



119,018Operating ExpensesCommissions expense


89,182



78,342



64,233Payroll expense


24,900



23,153



19,620Depreciation and amortization


1,749



89



(14
)Other operating expenses


49,321



35,447



25,978Total Operating Expenses


165,152



137,031



109,817Income from Operations


6,498



6,701



9,201Other ExpensesInterest expense


3,066



1,700



1,515Total Other Expenses


3,066



1,700



1,515Income Before Income Taxes


3,432



5,001



7,686Income tax expense


1,094



1,497



2,920Net income

$
2,338


$
3,504


$
4,766Net Income per Share:Basic

$
0.29


$
0.54


$
0.74Diluted

$
0.28


$
0.50


$
0.74    59




---



##### Table of Contents



Brooke
    Capital Corporation
  Combined
    Statements of Changes in Stockholders Equity
 YEARS
    ENDED DECEMBER 31, 2007, 2006 AND 2005
  Retained


AccumulatedAdditional


Earnings


OtherCommon


Common


Paid-In


(Accumulated


Comprehensive


TreasuryShares


Stock


Capital


Deficit)


Loss


Stock


Total(In thousands, except common shares)Balances, December 31, 2004 (Restated)


8,600


$
17


$
1,026


$
8,864


$



$
(115
)

$
9,792Dividends














(2,000
)










(2,000
)Equity contribution










5,000















5,000Net income














4,766











4,766Balances, December 31, 2005 (Restated)


8,600



17



6,026



11,630







(115
)


17,558Effects of merger of Brooke Franchise with and into Brooke
    Capital Corporation


2,666,666



27



14,531



(5,215
)


(167
)






9,176(8,600
)


(17
)


(98
)










115



Net income














3,504











3,504Balances, December 31, 2006 (Restated)


2,666,666



27



20,459



9,919



(167
)






30,238Exercise of warrant, net of related costs


547,820



5



388















393Purchase and retirement of common stock


(128,669
)


(1
)


(737
)














(738
)Restricted stock awards


390,000



4



(4
)














Equity compensation costs










244















244Issuance of stock in connection with merger


5,000,000



50



(50
)














Dividend to Parent prior to consummation of merger










(5,928
)


(13,489
)










(19,417
)Comprehensive income:


























Net income














2,338











2,338Changes in net unrealized gain (loss) on securities
    available-for-sale, net of reclassification adjustment and tax
    effects


















(311
)






(311
)Total comprehensive income


























2,027Balances, December 31, 2007


8,475,817


$
85


$
14,372


$
(1,232
)

$
(478
)

$



$
12,747      60




---



##### Table of Contents



Brooke
    Capital Corporation
  Combined
    Statements of Cash Flows
 YEARS
    ENDED DECEMBER 31, 2007, 2006 AND 2005
  (Restated)


(Restated)2007


2006


2005(In thousands)Cash flows from operating activities:Net income

$
2,338


$
3,504


$
4,766Adjustments to reconcile net income to net cash flows from
    operating activities:Depreciation and amortization


1,749



89



(14
)Gain on sale of businesses


(2,057
)


(1,370
)


(3,091
)(Increase) decrease in assets:Accounts and notes receivable


(10,881
)


(8,519
)


(5,045
)Other receivables


(839
)


(1,309
)


(247
)Other current assets


(1,259
)


(663
)


(282
)Business inventory


(7,080
)


2,725



(4,036
)Purchase of business inventory provided by sellers


12,926



12,221



14,318Payments on seller notes for business inventory


(12,541
)


(16,211
)


(11,526
)Increase (decrease) in liabilities:Policy and contract liabilities


5,812



331



Accounts and expenses payable


5,594



364



2,120Other liabilities


6



803



(439
)Net cash used in operating activities


(6,232
)


(8,035
)


(3,476
)Cash flows from investing activities:Cash payments for securities


(6,285
)


(219
)


Cash payments for property and equipment


(14,580
)






Purchase of subsidiary and business assets


(663
)






(2,054
)Sale of subsidiary and business assets










3,949Net cash received in merger






1,162



Net cash provided by (used in) investing activities


(21,528
)


943



1,895Cash flows from financing activities:Dividends paid


(13,489
)






(2,000
)Capital contribution










5,000Issuance of stock and warrants






2,260



Loan proceeds on debt


22,528



8,500



10,194Advances (payments) with Parent and Affiliates


11,695



7,239



(2,574
)Payments on short-term borrowing


(4,145
)






Payments on debt


(540
)


(1,969
)


(10,354
)Net cash provided by financing activities


16,049



16,030



266Net increase (decrease) in cash and cash equivalents


(11,711
)


8,938



(1,315
)Cash and cash equivalents, beginning of period


14,344



5,406



6,721Cash and cash equivalents, end of period

$
2,633


$
14,344


$
5,406    61




---



##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
 YEARS
    ENDED DECEMBER 31, 2007, 2006 AND 2005
  1.
    Summary
    of Significant Accounting Policies  (a)
    Organization          First Life America Corporation
  Brooke Capital Advisors, Inc.
  First Capital Venture, Inc.
  Brooke Investments, Inc.
  Brooke Agency, Inc.
  Brooke Life and Health, Inc.
  The American Heritage, Inc.,
  First Brooke Insurance and Financial Services,
    Inc.
 62




---



##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
  The American Agency, Inc.,
  Brooke Funeral Services Company, LLC, and/or and/or
    Brooke Agency Services Company LLC and/or and/or
  Brooke Agency Services Company of Nevada, LLC,
  (b)
    Basis
    of Presentation  Business Combinations
         63




---



##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    (c)
    Use of
    Accounting Estimates    
    Amount of future policy cancellations which may result in
    commission refunds and a corresponding reserve
    Share of future policy cancellations due from franchisees
    Amount of allowance for doubtful accounts
    Share of policy commissions due to franchisees for commissions
    received by the Company but not yet distributed to franchisees
    Useful lives of assets
    Changes in assumptions related to policy and contract
    liabilities and related deferred acquisition costs
    Amount of future insurance claim losses, loss expense and earned
    premium percentages
    Future interest spreads, mortality margins, expense margins and
    premium persistency experience
    Amortization
    Amount of current and deferred income tax expense and payable    (d)
    Cash
    Equivalents    (e)
    Allowance
    for Doubtful Accounts     64




---



##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    Valuation
    and Qualifying Accounts
  Balance atBeginning of


Charges to





Balance at EndYear


Expenses


Write Offs


of Year(In thousands)Allowance for Doubtful AccountsYear ended December 31, 2005

$
575


$
2,974


$
2,833


$
716Year ended December 31, 2006


716



4,313



3,563



1,466Year ended December 31, 2007


1,466



4,276



4,628



1,114     (f)
    Revenue
    Recognition  Commissions.
    Policy fees.
  Interest income, net.
  Initial franchise fees.
   65




---



##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
        Consulting fees.
    Gain on sale of businesses.
    Premiums.
  Reinsurance.
 66




---



##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
  Accounting and Reporting for Reinsurance of
    Short-Duration and Long-Duration Contracts.
  (g)
    Property
    and Equipment    Buildings and leasehold improvements


39 yearsLand improvements


15 yearsFurniture and equipment


3 to 10 yearsAutomobiles


5 years   (h)
    Amortizable
    Intangible Assets  15-year
      (i)
    Income
    Taxes    (j)
    Investment
    in Businesses   67




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    (k)
    Gain
    or Loss on Sale of Businesses    (l)
    Deferred
    Policy Acquisition Costs    2007


2006Deferred policy acquisition costs

$
10,579


$
9,653Accumulated amortization


(5,173
)


(4,444
)Net

$
5,406


$
5,209     (m)
    Net
    Earnings Per Share Data  1-for-3
 68




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    Years Ended December 31,2007


2006


2005(In thousands, except share data)Numerator:Net income  numerator for basic earnings per share

$
2,338


$
3,504


$
4,766Effect of dilutive securities










Numerator for diluted earnings per share

$
2,338


$
3,504


$
4,766Denominator:Average common shares outstanding (after the effect of
    1-for-3
    reverse stock split and issuance of 5,000,000 shares to
    effect merger) used for basic earnings per share


8,201,026



6,497,638



6,437,925Dilutive effect of assumed exercise of outstanding warrants, net
    of adjustment to reflect purchase of treasury shares with
    proceeds


7,000



461,034



Shares used for diluted earnings per share


8,208,026



6,958,672



6,437,925Earnings per share:Basic

$
0.29


$
0.54


$
0.74Diluted

$
0.28


$
0.50


$
0.74   (n)
    Buyers
    Assistance Plans    (o)
    Accounts
    and Notes Receivable, Net    (p)
    Other
    Receivables    (q)
    Other
    Current Assets   69




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    (r)
    Advertising    (s)
    Restricted
    Cash  Brooke Acceptance Company, LLC, Brooke Captive
    Credit Company 2003, LLC, Brooke Securitization Company 2004A,
    LLC, Brooke Capital Company, LLC, Brooke Securitization
    Company V, LLC Brooke Securitization Company
    2006-1,
    LLC
  (t)
    Stock-Based
    Compensation    (u)
    Investments    (v)
    Policy
    and Contract Liabilities         70




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    (w)
    Advertising
    Supply Inventory    (x)
    Comprehensive
    Income  Reporting Comprehensive
    Income
  2.
    Transactions
    with Parent Company             71




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    3.
    Investments    Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueDecember 31, 2007:U.S. Government Agency

$
2,132


$
21


$



$
2,153Corporate bonds


17,094



129



700



16,523Total


19,226



150



700



18,676Equity securities


239



7



55



191$
19,465


$
157


$
755


$
18,867December 31, 2006:U.S. Government Agency

$
1,559


$
10


$
18


$
1,551Corporate bonds


10,973



75



300



10,748Total


12,532



85



318



12,299Equity securities


258



29



4



283$
12,790


$
114


$
322


$
12,582     Amortized Cost


Fair ValueDue in one year or less

$
799


$
794Due after one year through five years


4,165



4,100Due after five years through ten years


7,996



7,703Due after ten years


5,898



5,708Mortgage-backed securities


368



371$
19,226


$
18,676        72




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    Years Ended December 31,2007


2006


2005Investments:Fixed maturities

$
959


$
62


$
Equity securities


19



3



Other, net


947



275



139Total interest income

$
1,925


$
340


$
139         Less than 12 months


12 months or longer


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Losses


Value


Losses


Value


LossesDecember 31, 2007:Corporate bonds

$
4,180


$
180


$
5,610


$
520


$
9,790


$
700Equity securities

$
52


$
38


$
83


$
17


$
135


$
55   73




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
  Less than 12 months


12 months or longer


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Losses


Value


Losses


Value


LossesDecember 31, 2006:U.S. Government Agency

$



$



$
695


$
18


$
695


$
18Corporate bonds


4,360



78



4,743



222



9,103



300Total

$
4,360


$
78


$
5,438


$
240


$
9,798


$
318Equity securities

$



$



$
96


$
4


$
96


$
4     AmountUnrealized holding losses on available-for-sale securities:Unrealized holding losses during the period

$
(305
)Less: Reclassification adjustment for gains included in net
    income


84Tax benefit


78Other comprehensive loss

$
(311
)   4.
    Accounts
    and Notes Receivable, net    2007


2006(In thousands)Business loans

$
6,763


$
Less: Business loans sold


(1,662
)


Plus: loan participation classified as secured borrowing


1,662



Total notes receivable, net


6,763



Interest earned no collected on notes


322



233Customer receivables


24,596



21,933Allowance for doubtful accounts


(1,114
)


(1,466
)Total accounts and notes receivable, net

$
30,567


$
20,700   Accounting for Transfers and Servicing of Financial
    Assets and Extinguishments of Liabilities Accounting for
    Transfers and Servicing of Financial Assets and Extinguishments
    of Liabilities
 74




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
  5.
    Property
    and Equipment    2007


2006Land

$
559


$
358Buildings and leasehold improvements


9,482



2,855Furniture and equipment


5,844



144Computer Equipment


4,015



357Automobiles


1,051



109Total property and equipment


20,951



3,823Accumulated depreciation and amortization


(5,242
)


(945
)Net property and equipment

$
15,709


$
2,878      75




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
  6.
    Bank
    Loans, Notes Payable, and Other Long-Term Obligations    2007


2006Seller notes payable. These notes are payable to the
    sellers of businesses that the Company has purchased and are
    collateralized by assets of the businesses purchased. Some of
    these notes have an interest rate of 0% and have been discounted
    at a rate of 5.50% to 9.75% and maturities range from January
    2008 to January 2011. A particular seller note payable has an
    interest rate of 7.00% and matures September 2015.

$
19,123


$
18,738Columbian Bank and Trust Company, due January 2008.
    Interest rate is variable and was 8.25% at December 31,
    2007. Interest and principal are due in one payment at maturity.
    Collateralized by accounts receivable.


4,355



8,500Citizens Bank and Trust Company, due February 2009.
    Interest rate is variable and is due quarterly with principal
    due at maturity. Interest rate was 7.25% at December 31,
    2007. Parent Company has pledged stock it owns in Brooke Credit
    Corporation and the Company.


9,000



Brooke Holdings, Inc., due December 2011. Interest rate
    is variable and was 10.5% at December 31, 2007. Principal
    payments of $1,265,000; $1,404,000; $1,559,000 and $8,154,000
    are due in 2008, 2009, 2010 and 2011, respectively.
    Collateralized by stock in subsidiary and other assets.


12,382



Brooke Credit Corporation, due September, 2015. Interest
    rate is variable and was 10.75% at December 31, 2007.
    Interest and principal are payable in 120 monthly payments
    of $16,080. Collateralized by various assets of the
    Company.


1,022



1,099First National Bank of Phillipsburg, variable interest
    rate (7.75% at December 31, 2007) with scheduled
    principal payments through maturity at August 2017.
    Collateralized by real estate.


728



Brooke Credit Corporation, various notes with variable
    interest rates from 10.75% to 11.25% at December 31, 2007,
    with maturities ranging from October 2011 to January 2021.
    Principal payments are scheduled on each note through its
    respective maturity date. Collateralized by real estate.


1,891



Fidelity Bank, variable interest rate (7.75% at
    December 31, 2007) with scheduled principal payments
    through maturity at September 2021. Collateralized by real
    estate.


1,990



Total bank loans and notes payable


50,491



28,337Less: Current maturities and short-term debt


(32,122
)


(21,006
)Total long-term debt

$
18,369


$
7,331     and/or
 76




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
            Years Ending December 31,

Amount2008

$
32,1222009


3,0182010


2,6392011


8,6972012


537Thereafter


3,478$
50,491   7.
    Leases        Years EndingDecember 31,

Amount2008

$
2402009


2402010


2222011


187Total

$
889  77




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    Years EndingDecember 31,

Amount2008

$
13,4272009


10,1272010


4,8912011


2,0952012


4482103 and thereafter


112$
31,100   8.
    Income
    Taxes    2007


2006


2005(In thousands)Current

$
1,185


$
1,497


$
2,920Deferred


(91
)






$
1,094


$
1,497


$
2,920     2007


2006


2005U.S. Federal statutory tax rate


35
%


35
%


35
%State statutory rate


4
%


4
%


4
%Increase (decrease) in valuation allowance


(7
)%


(6
)%


Miscellaneous






(3
)%


(1
)%32
%


30
%


38
%    78




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    December 31,2007


2006(In thousands)Deferred tax liability:Deferred policy acquisition costs

$
903


$
874Other


38



31Total deferred tax liability


941



905Deferred tax asset:Net operating loss carryforward

$
1,806


$
2,020Net unrealized investment loss


120



41Other


111



24Total deferred tax asset


2,037



2,085Valuation allowance


(1,434
)


(1,688
)Net deferred tax asset


603



397Net deferred tax liability

$
338


$
508       9.
    Employee
    Benefit Plans   79




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
  10.
    Concentration
    of Credit Risk    11.
    Segment
    and Related Information       80




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    Insurance


Insurance





Elimination ofAgency


Company





Intersegment


ConsolidatedOperations


Operations


Corporate


Activity


Totals(In thousands)2007Insurance commissions

$
114,588


$



$



$



$
114,588Insurance premiums earned






3,710











3,710Interest income


408



1,410



112



(5
)


1,925Consulting fees


10,423















10,423Initial franchise fees for basic services


32,505















32,505Initial franchise fees for buyers assistance plans


455















455Gain on sale of businesses


2,057















2,057Other income


5,744



248







(5
)


5,987Total Operating Revenues


166,180



5,368



112



(10
)


171,650Interest expense


3,066







5



(5
)


3,066Commissions expense


89,015



167











89,182Payroll expense


23,827



474



599







24,900Depreciation and amortization


891



805



53







1,749Other operating expenses


44,281



3,791



1,254



(5
)


49,321Income Before Income Taxes


5,100



131



(1,799
)






3,432Segment assets


66,204



33,190



10,811







110,205Expenditures for segment assets


14,540



40











14,580     12.
    Related
    Party Information       81




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
                   82




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
        13.
    Acquisitions
    and Divestitures            14.
    Stockholders
    Equity Transactions  1-for-3
 83




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
      1-for-3 Share-Based
    Payment
    1-for-3
 84




---



##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
          Nine Months EndedSeptember 30, 2007Brooke Capital


Brooke Franchise(In thousands)Total operating revenues

$
11,675


$
119,906Net income


2,502



2,164      85




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    Year Ended December 31, 2006

Operating Revenues


Net Income (Loss)Brooke Franchise12 Months Ended December 31, 2006

$
142,348


$
2,422Brooke Capital23 Days Ended December 31, 2006


1,384



1,082On a combined basis

$
143,732


$
3,504As previously reported by Brooke Capital
    Year Ended December 31, 2006

$
6,162


$
756Year Ended December 31,
    2005Brooke Franchise

$
119,018


$
4,766As previously reported by Brooke Capital

$
4,861


$
(701
)     15.
    Stock-Based
    Compensation           86




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    16.
    Amortizable
    Intangible Assets      17.
    Supplemental
    Cash Flow Disclosures  Supplemental disclosures:

2007


2006


2005(In thousands)Cash paid for interest

$
2,510


$
1,640


$
1,229Cash paid for income tax

$
1,410


$



$
     2007


2006


2005(In thousands)Purchase of business inventory

$
(32,400
)

$
(25,254
)

$
(27,536
)Sale of business inventory


37,946



39,225



37,818Net cash provided from sale of business inventory


5,546



13,971



10,282Cash provided by sellers of business inventory


(12,926
)


(12,221
)


(14,318
)Write down to realizable value of inventory


300



975



(Increase) decrease in inventory on balance sheet

$
(7,080
)

$
2,725


$
(4,036
)   18.
    Statutory
    Requirements   87




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    December 31,2007


2006Capital and SurplusGAAP

$
7,480


$
7,659SAP


3,801



3,966         19.
    Reinsurance    Accounting and Reporting for Reinsurance of
    Short-Duration and Long-Duration Contracts
 88




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    20.
    Contingencies        Year EndedDecember 31,2007(In thousands)Total operating revenuesAs reported by Brooke Capital Corporation in these financial
    statements

$
171,650As reported by Delta Plus


9,164On a combined basis

$
180,814Net incomeAs reported by Brooke Capital Corporation in these financial
    statements

$
2,338As reported by Delta Plus


327On a combined basis

$
2,665     21.
    Other
    Regulatory Matters     89




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
    22.
    New
    Accounting Standards  Fair
    Value Measurements
  The Fair Value Option for Financial Assets and
    Financial Liabilities  Including an Amendment of
    SFAS No. 115 Accounting for Certain
    Investments in Debt and Equity Securities
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements
  23.
    Reclassifications   90




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##### Table of Contents



Brooke
    Capital Corporation
  Notes to
    Combined Financial Statements
  24.
    Quarterly
    Operating Results (unaudited)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In thousands, except per share data)2007Total revenues

$
48,685


$
43,164


$
39,732


$
40,069Total expenses


44,255



41,150



38,957



43,856Income before income taxes


4,430



2,014



775



(3,787
)Net income per share:Basic


0.34



0.17



0.07



(0.27
)Diluted


0.34



0.17



0.07



(0.27
)2006Total revenues

$
35,285


$
38,328


$
34,876


$
35,243Total expenses


31,699



36,248



36,450



34,334Income before income taxes


3,586



2,080



(1,574
)


909Net income per share:Basic


0.35



0.20



(0.15
)


0.14Diluted


0.35



0.20



(0.17
)


0.13   1-for-3
    25.
    Subsequent
    Events   91




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.      Regulation S-B
  Form 8-K/A
  Regulation S-K Regulation S-K, Regulation S-K.
  ITEM 9A(T).
    CONTROLS
    AND PROCEDURES.  Rules 13a-15(e) 15d-15(e)
   92




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##### Table of Contents



Rule 13a-15(f) 15d-15(f)
                ITEM 9B.
    OTHER
    INFORMATION.   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.    Robert D. Orr
 93




---



##### Table of Contents



Death of an Insurance Salesman?
  Kyle L. Garst
  Leland G. Orr
  Michael Hess
  Dane S. Devlin
 94




---



##### Table of Contents



James Zuhlke
      ITEM 11.
    EXECUTIVE
    COMPENSATION.    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS.  Form 10-K
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.   95




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##### Table of Contents



ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES.   PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES.        Form 10-K. Rule 12b-22
  Exhibit No.

Description2
.1

Agreement and Plan of Merger by and between Brooke Corporation,
    the Registrant and Brooke Franchise Corporation, dated
    August 31, 2007, incorporated herein by reference to
    Annex A of the Registrants Definitive Information
    Statement on Schedule 14C filed on October 16, 2007
    (the Definitive Information Statement).2
.2

Agreement and Plan of Merger by and between Brooke Corporation,
    the Registrant and Brooke Franchise Corporation, as amended
    September 24, 2007, incorporated herein by reference to
    Annex A of the Definitive Information Statement.2
.3

Exchange Agreement by and between Brooke Corporation, the
    Registrant and Delta Plus Holdings, Inc., dated August 31,
    2007, incorporated herein by reference to Annex B of the
    Definitive Information Statement.2
.4

Exchange Agreement by and between Brooke Corporation, the
    Registrant, and Delta Plus Holdings, Inc., as amended
    September 24, 2007.3
.1

Articles of Incorporation of First American Capital Corporation
    (Incorporated by reference from Exhibit 2.1 to the
    Registrants amended
    Form 10-SB
    filed August 13, 1999)3
.2

Certificate of Amendment of Articles of Incorporation of First
    American Capital Corporation adopted January 31, 2007
    (Incorporated by reference from Exhibit 3.1 to the
    Registrants S-K filed on February 2, 2007)3
.3

Certificate of Amendment of Articles of Incorporation of First
    American Capital Corporation adopted June 7, 2007,
    incorporated by reference to Exhibit 3.3 of the
    Registrants
    Form 10-QSB
    filed on July 27, 2007.3
.4

Copy of the Articles of Incorporation of First American Capital
    Corporation, as amended by the Certificate of Amendment adopted
    January 31, 2007 and the Certificate of Amendment adopted
    June 7, 2007, incorporated by reference to Exhibit 3.4
    of the Registrants
    Form 10-QSB
    filed on July 27, 2007.3
.5

Amended and Restated Bylaws of First American Capital
    Corporation adopted April 7, 2005 (Incorporated by
    reference from Exhibit 3.2 to the Registrants
    Form 8-K
    filed April 11, 2005).3
.6

Amendment to Amended and Restated Bylaws dated April 7,
    2005 (Adopted June 7, 2007) (Incorporated by reference from
    Exhibit 3.1 to the Registrants
    Form 8-K
    filed June 12, 2007).3
.7

Copy of Amended and Restated Bylaws of First American Capital
    Corporation, as amended by the Board of Directors on
    June 7, 2007, incorporated by reference to Exhibit 3.7
    to the Registrants
    Form 10-QSB
    filed on July 27, 2007. 96




---



##### Table of Contents



Exhibit No.

Description4
.0

Certificate of Designations, Preferences and Relative,
    Participating, Optional and Other Special Rights of Preferred
    Stock and Qualifications, Limitations, and Restrictions Thereof
    of 6% Non-Cumulative, Convertible, Callable Preferred Stock
    (Incorporated by reference from Exhibit 3 to the
    Registrants amended
    Form 10-SB
    filed August 13, 1999)10
.1

Service Agreement amended and restated effective January 1,
    2002 between First American Capital Corporation and First Life
    America Corporation (Incorporated by reference from
    Exhibit 10.3 to the Registrants
    Form 10-KSB
    filed March 31, 2003)10
.2

Automatic Umbrella and Bulk ADB Reinsurance Agreements effective
    September 1, 1998 between First Life America Corporation
    and Business Mens Assurance Company of America
    (Incorporated by reference from Exhibit 6.8 to the
    Registrants
    Form 10-SB
    filed August 13, 1999)10
.3

Intercompany Tax Sharing Agreement dated December 31, 2003
    between First American Capital Corporation and First Life
    America Corporation (Incorporated by reference from
    Exhibit 10.6 to the Registrants
    Form 10-KSB
    filed March 29, 2004)10
.4

Automatic Reinsurance Agreement between First Life America
    Corporation and Wilton Reassurance Company effective
    January 1, 2005 (Incorporated by reference from
    Exhibit 10.13 to the Registrants
    Form 10-KSB
    filed March 31, 2006)10
.5

Stock Purchase and Sale Agreement between First American Capital
    Corporation and Brooke Corporation dated October 6, 2006
    (Incorporated by reference from Exhibit 7a to the
    Registrants Schedule 13 D/A filed December 19,
    2006)10
.6

Brokerage Agreement between First Life Brokerage, Inc. and
    CJD & Associates, L.L.C. dated December 8, 2006
    (Incorporated by reference from Exhibit 10.7 to the
    Registrants
    Form 10-KSB
    filed on March 1, 2007.)10
.7

Servicing Agreement between First American Capital Corporation
    and Brooke Corporation dated December 8, 2006 (Incorporated
    by reference from Exhibit 10.8 to the Registrants
    Form 10-KSB
    filed on March 1, 2007.)10
.8

Employment Agreement dated December 8, 2006 between First
    American Capital Corporation and Michael S. Hess (Incorporated
    by reference from Exhibit 10.10 to the Registrants
    Form 10-KSB
    filed on March 1, 2007.)10
.9

Warrant for 50,000 shares of First American Capital
    Corporation common stock for $1.72 per share issued on
    October 5, 2006 to John F. Van Engelen. (Incorporated by
    reference from Exhibit 10.11 to the Registrants
    Form 10-KSB
    filed on March 1, 2007.)10
.10

Warrant for 100,000 shares of First American Capital
    Corporation common stock for $1.72 per share issued on
    October 5, 2006 to Thomas M. Fogt. (Incorporated by
    reference from Exhibit 10.12 to the Registrants
    Form 10-KSB
    filed on March 1, 2007.)10
.11

Warrant for 1,643,460 shares of First American Capital
    Corporation common stock for an aggregate exercise price of
    $447,818.00 issued December 8, 2006 to Brooke Corporation.
    (Incorporated by reference from Exhibit 10.13 to the
    Registrants
    Form 10-KSB
    filed on March 1, 2007.)10
.12

Commercial Lease Agreement between First Life America
    Corporation and First American Capital Corporation dated
    May 1, 2006 (Incorporated by reference from
    Exhibit 10.14 to the Registrants
    Form 10-KSB
    filed on March 1, 2007.)10
.13

Brooke Capital Corporation 2007 Equity Incentive Plan, as
    amended by Stockholder vote on November 5, 2007.(*)10
.14

Servicing Agreement between Brooke Corporation and Brooke
    Capital Advisors, Inc. dated March 21, 2007 (Incorporated
    by reference from the Registrants
    Form 10-QSB
    filed as Exhibit 10.1 on April 25, 2007.10
.15

Executive Employment Agreement between Brooke Franchise
    Corporation and Kyle L. Garst filed as Exhibit 10.1 to
    Brooke Corporations current report on
    Form 8-K
    filed on March 30, 2005.10
.16

Tax Sharing Agreement dated as of November 15, 2007 by and
    between the Registrant and Brooke Corporation. (Incorporated by
    reference from the Registrants
    Form 8-K
    filed on November 19, 2007) 97




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##### Table of Contents



Exhibit No.

Description10
.17

Trademark Licensing Agreement dated as of November 15, 2007
    by and between the Registrant and Brooke Corporation.
    (Incorporated by reference from the Registrants
    Form 8-K
    filed on November 19, 2007)10
.18

Amended and Restated Servicing and Tax Allocation Agreement
    dated as of November 15, 2007 by and between the Registrant
    and Brooke Corporation. (Incorporated by reference from the
    Registrants
    Form 8-K
    filed on November 19, 2007)10
.19

Promissory Note payable to Citizens Bank & Trust dated
    December 31, 2007. (Incorporated by reference from the
    Registrants
    Form 8-K
    filed as Exhibit 10.1 on January 4, 2008)10
.20

Pledge Agreement between Brooke Corporation and Citizens
    Bank & Trust dated December 31, 2007.
    (Incorporated by reference from the Registrants
    Form 8-K
    filed as Exhibit 10.2 on January 4, 2008)10
.21

Termination Agreement between Registrant and Brooke Brokerage
    Corporation dated December 12, 2007(*)10
.22

Restricted Shares Agreement with Michael Hess dated
    August 15, 2007.(*)10
.23

Restricted Shares Agreement with Paul E. Burke, Jr. dated
    August 15, 2007.(*)10
.24

Restricted Shares Agreement with Keith E. Bouchey dated
    August 15, 2007.(*)10
.25

Restricted Shares Agreement with Richard E. Gill dated
    August 15, 2007.(*)10
.26

Restricted Shares Agreement with William R. Morton, Jr. dated
    August 15, 2007.(*)10
.27

Amendment to Restricted Shares Agreement with William R. Morton,
    Jr. dated August 15, 2007.(*)10
.28

Commercial Loan Agreement dated December 31, 2007 between
    Brooke Capital Corporation and Brooke Capital Advisors, Inc.(*)10
.29

Stock Pledge and Security Agreement dated December 31, 2007
    granted by Brooke Capital Corporation for the benefit of Brooke
    Capital Advisors, Inc.(*)16
.1

Letter on Change in Certifying Accountant (Incorporated by
    reference from Exhibit 16.1 to the Registrants
    Form 8-KA
    filed November 15, 2006)21
.01

Subsidiaries of Brooke Capital Corporation(*)31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.(*)31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.(*)32
.1

Certificate of Chief Executive Officer pursuant to
    Section 18 U.S.C. Section 1350.(*)32
.2

Certificate of Chief Executive Officer pursuant to
    Section 18 U.S.C. Section 1350.(*)     (*)
    
    Filed herewith. 98




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##### Table of Contents



SIGNATURES
    BROOKE CAPITAL CORPORATION
  
  Kyle L. Garst
 President and Chief Executive Officer
      Name

Title

Date/s/  Robert
    D. OrrRobert
    D. Orr

Chairman of the Board and Director

March 13, 2008/s/  Kyle
    L. GarstKyle
    L. Garst

President, Chief Executive Officer and Director

March 13, 2008/s/  Leland
    G. OrrLeland
    G. Orr

Chief Financial Officer

March 13, 2008/s/  Michael
    HessMichael
    Hess

Director and Vice Chairman of the Board

March 13, 2008/s/  Paul
    E. Burke, Jr.Paul
    E. Burke, Jr.

Director

March 13, 2008/s/  Richard
    E. GillRichard
    E. Gill

Director

March 13, 2008/s/  Dane
    S. DevlinDane
    S. Devlin

Director

March 13, 2008  99




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##### Table of Contents



INDEX TO
    EXHIBITS
  Form 10-K
  Exhibit No.

Description10
.13

Brooke Capital Corporation 2007 Equity Incentive Plan as amended
    by Stockholder vote on November 5, 2007.10
.21

Termination Agreement between Registrant and Brooke Brokerage
    Corporation dated December 12, 2007.10
.22

Restricted Shares Agreement with Michael Hess dated August 15,
    2007.10
.23

Restricted Shares Agreement with Paul E. Burke, Jr. dated August
    15, 2007.10
.24

Restricted Shares Agreement with Keith E. Bouchey dated August
    15, 2007.10
.25

Restricted Shares Agreement with Richard E. Gill dated August
    15, 2007.10
.26

Restricted Shares Agreement with William R. Morton, Jr. dated
    August 15, 2007.10
.27

Amendment to Restricted Shares Agreement with William R. Morton,
    Jr. dated August 15, 2007.10
.28

Commercial Loan Agreement dated December 31, 2007 between Brooke
    Capital Corporation and Brooke Capital Advisors, Inc.10
.29

Stock Pledge and Security Agreement dated December 31, 2007
    granted by Brooke Capital Corporation for the benefit of Brooke
    Capital Advisors, Inc.21
.01

Subsidiaries of Brooke Capital Corporation.31
.1

Certification of Chief Executive Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.32
.1

Certificate of Chief Executive Officer pursuant to Section
    18 U.S.C. Section 1350.32
.2

Certificate of Chief Executive Officer pursuant to Section
    18 U.S.C. Section 1350.     *
    
    The exhibits shown in Part IV  Item 15 of
    this Annual Report on
    Form 10-K
    as incorporated by reference are not attached hereto but are on
    file with the Securities and Exchange Commission. 100