# EQUITY SERVICES, INC. X-17A-5 (2024-02-23) — Broker-dealer annual report

- Company: EQUITY SERVICES, INC.
- Form: X-17A-5
- Filed: 2024-02-23
- Period: 2023-12-31
- Accession: 0000033350-24-000002
- CIK: 33350
- File #: 8-14286
- Type: Broker-dealer
- Material weakness: No
- Auditor: PricewaterhouseCoopers, LLP
- Auditor location: Boston, MA
- Contact: Eric Kucinskas
- Phone: 8022297306
- Email: ekucinskas@nationallife.com
- Website: nationallife.com
- Signed by: Eric Kucinskas (Head of Finance)

Original filing: https://www.sec.gov/Archives/edgar/data/33350/000003335024000002/2023public.pdf

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# Equity Services, Inc.

(A wholly-owned subsidiary of NLV Financial Corporation) Financial Statements with Supplementary Information As of and for the Year Ended December 31, 2023

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

> ANNUAL REPORTS FORM X-17A-5

OMB APPROVAL OMB Number: 3235-0123 Expires: Nov. 30, 2026 Estimated average burden hours per response: 12

SEC FILE NUMBER

8-14286

# PART III

FACING PAGE

Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934

| FILING FOR THE PERIOD BEGINNING 01/01/23 |          | AND ENDING 12/31/23 |
|------------------------------------------|----------|---------------------|
|                                          | MM/DD/YY | MM/DD/YY            |

A. REGISTRANT IDENTIFICATION

# NAME OF FIRM: Equity Services, Inc.

TYPE OF REGISTRANT (check all applicable boxes):

@ Broker-dealer □ Check here if respondent is also an OTC derivatives dealer

ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.)

## One National Life Drive

displays a currently valid OMB control number.

| 05604<br>(Zip Code)<br>ekucinskas@nationallife.com<br>(Email Address)<br>B. ACCOUNTANT IDENTIFICATION<br>INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* |
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| (Name - if individual, state last, first, and middle name)<br>02210<br>MA                                                                                                          |
| (State)<br>(Zip Code)                                                                                                                                                              |
| (PCAOB Registration Number, if applicable)                                                                                                                                         |
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CFR 240.17a-5(e)(1)(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not required to respond unless the form

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#### OATH OR AFFIRMATION

1. Eric Kucinskas

\_\_\_\_\_\_ swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of Equity, Services, Inc. as of

12/31 2023 \_\_ is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer.

Signature: Title:

Head of Finance

This filing \*\* contains (check all applicable boxes):

- (a} Statement of financial condition.
- O (b) Notes to consolidated statement of financial condition.
- | (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X).
- (d) Statement of cash flows.
- = {e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
- [ {f) Statement of changes in liabilities subordinated to claims of creditors.
- (g) Notes to consolidated financial statements.
- (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable.
- [ {i) Computation of tangible net worth under 17 CFR 240.18a-2.
- □ {j} Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.
- [ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable.
- [ (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3.
- [ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
- | (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable.
- | | | Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist.
- | (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- @ (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
- [ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- | (t) Independent public accountant's report based on an examination of the statement of financial condition.
- = (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable.
- | (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- @ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- | (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.17a-12, as applicable.
- □ (y) Report describing any material inadequacies found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k).
- □ (z) Other:
- \*\* To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18c-7(d)(2), as applicable.

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| <br><br><br><br>!<br>"<br>#<br>\$                                                            |  |
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| <br>%<br><br>&		'<br>()*+*(<br>                                                             |  |
| <br>.	"<br>"		.	-<br>,-<br>'                                                              |  |
| <br>'                                                                                        |  |
| <br>0121343516789525:92;<65=91965                                                            |  |
| <br>01213435167<64?@3A35B9C3D5:643                                                           |  |
| <br>01213435167<A25F3B95016:GA6;=3@HBIJK91L                                                  |  |
| <br>01213435167<2BA8;6NB                                                                     |  |
| <br>P613B1689525:92;012134351B                                                               |  |
| <br>""	'                                                                                     |  |
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![](_page_4_Picture_0.jpeg)

### Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of Equity Services, Inc.

### Opinion on the Financial Statements

We have audited the accompanying statement of financial condition of Equity Services, Inc. (the "Company") as of December 31, 2023, and the related statements of comprehensive income, of changes in stockholder's equity and of cash flows for the year then ended, including the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

### Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

#### Supplemental Information

The accompanying Schedule I - Computation of Net Capital under Rule 15c3-1 of the Securities and Exchange Commission and Schedule II - Statement Regarding Rule 15c3-3 of the Securities and Exchange Commission as of December 31, 2023 (collectively, the "supplemental information") has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with Rule 17a-5 under the Securities Exchange Act of 1934. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

..............................................................................................................................................................................

 PricewaterhouseCoopers LLP, 101 Seaport Boulevard, Boston, MA 02210 T: (617) 530 5000, F: (617) 530 5001, www.pwc.com/us

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![](_page_5_Picture_0.jpeg)

PricenteRouse Coopers LLCP

Boston, Massachusetts February 22, 2024

We have served as the Company's auditor since at least 1993. We have not been able to determine the specific year we began serving as auditor of the Company.

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| '&()*+*(                                                                   |          |                 |
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| ,-./-012-./34567-8309.                                                      | :        | ;<;=><>?        |
| @073.9A309-176.BCD33.C32367-E83                                             |          | <br><FGH<H;>    |
| IC3J-613KJ30.3.-01B9/3C-39.                                                 |          | ?GH<=GH         |
| L9/3CC32367-E83.                                                            |          | G<<br><br>G<H=M |
| N53DCBA-DD686-93.                                                           |          | ;><             |
| @02BA39-K3.C32B73C-E83DCBA-DD686-93                                         |          | <br>;H<;;O      |
| N3D3CC319-K-39                                                              |          | HH;<F           |
| PB9-8-39.                                                                   | :        | H><<br>?><H=F   |
| <br>                                                                        | <br>     |                 |
| @073.9A309-176.BCD33.J-Q-E83                                                | :        | =<G;H<FFH       |
| R22B509.J-Q-E83-01-22C5313KJ30.3.                                           |          | H<<br>H<br><=   |
| N539BJ-C309-01-DD686-93.                                                    |          | H<GO<br><       |
| ,BAA66B0.J-Q-E83                                                            |          | =<GFG<FOH       |
| S03-C031C373053                                                             |          | <br>F;<=GO      |
| PB9-886-E686963.                                                            |          | M<OMM<O         |
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| TU<br>,BAAB0.9B2V<:HJ-C7-853H<FFF<FFF./-C3.-59/BC6W31XHOM<FF?./-C3.6531-01 |          |                 |
| B59.9-0160Y                                                                 |          | HOM<FF?         |
| R11696B0-8J-61602-J69-8                                                     |          | >;<GF=<         |
| R225A58-93113D6269                                                          |          | ZGO<HO=<HMO[    |
| PB9-8.9B2V/B813C\.34569Q                                                    |          | M<GFM<H?M       |
| PB9-886-E686963.-01.9B2V/B813C\.34569Q                                      | :        | H><<br>?><H=F   |

P/3-22BAJ-0Q60Y0B93.-C3-06093YC-8J-C9BD9/3.3D60-026-8.9-93A309.]

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### Equity Services, Inc. (A wholly-owned subsidiary of NLV Financial Corporation) Statement of Comprehensive Income For the Year Ended December 31, 2023

|                                                      |      | 2023        |
|------------------------------------------------------|------|-------------|
| Revenues                                             |      |             |
| Commissions                                          | ക്ക  | 44,940,505  |
| Investment advisor fees                              |      | 25,160,928  |
| Marketing support, revenue sharing and other revenue |      | 7,913,619   |
| Total revenues                                       |      | 78,015,052  |
| Operating expenses                                   |      |             |
| Commissions                                          |      | 39,863,046  |
| Investment advisor fees                              |      | 22,328,964  |
| Intercompany charges                                 |      | 4,570,611   |
| General and administrative expenses                  |      | 4,537,540   |
| Salaries and benefits                                |      | 9,516,282   |
| Clearing agent fees                                  |      | 1,533,498   |
| Marketing support charges                            |      | 804,020     |
| Total operating expenses                             |      | 83,153,961  |
| Loss before income taxes                             |      | (5,138,909) |
| Income tax benefit                                   |      | 1,033,814   |
| Net loss                                             |      | (4,105,095) |
| Comprehensive loss                                   | ಕ್ಕಾ | (4,105,095) |

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

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### Equity Services, Inc. (A wholly-owned Subsidiary of NLV Financial Corporation) Statement of Changes in Stockholder's Equity For the Year Ended December 31, 2023

|                                                       | Common<br>Stock |    | Additional Paid-<br>In Capital | Accumulated<br>Deficit         |    | Accumulated<br>Other<br>Comprehensive<br>Income (Loss) |     | Total<br>Stockholder's<br>Equity |
|-------------------------------------------------------|-----------------|----|--------------------------------|--------------------------------|----|--------------------------------------------------------|-----|----------------------------------|
| January 1, 2023                                       |                 |    |                                |                                |    |                                                        |     |                                  |
| Stockholder's Equity<br>Net income (loss)<br>Other    | \$ 197,008      | ಕೆ | 50,902,358                     | \$ (45,087,084)<br>(4,105,095) | ಕಾ |                                                        | ಿ   | 6,012,282<br>(4,105,095)         |
| comprehensive<br>income (loss)<br>Total comprehensive |                 |    |                                |                                |    |                                                        |     |                                  |
| income (loss)<br>Capital                              |                 |    |                                | (4,105,095)                    |    |                                                        |     | (4,105,095)                      |
| contributions                                         |                 |    | 5,500,000                      |                                |    |                                                        |     | 5,500,000                        |
| December 31, 2023<br>Stockholder's Equity             | \$ 197,008      | ಕಾ | 56,402,358                     | \$ (49,192,179)                | ക  |                                                        | ಲ್ಲ | 7,407,187                        |

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

{9}------------------------------------------------

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| "'(&)*+,+)                                                                |               |             |
| <br>                                                                         | <br><br><br>  | +,+)        |
| #&\$-                                                                      |               |             |
| ./012345/674889                                                              | : 6;<=>?<>@?9 |             |
| ABCD805/20804E/342317/2/07488042/03F8G6D8/B129HE4I1B/BJK4H/EF012LF301I101/8M |               |             |
| N/HE/31F0142                                                                 |               |             |
| N/O/EE/B0FPJ/2/O10                                                           |               |             |
| RGF2L/812F88/08F2B71FJ17101/8M                                               |               |             |
| S2I/805/20FBI184EO//8E/3/1IFJ7/                                              |               |             |
| UE/HF1B/PH/28/8F2B40G/EF88/08                                                |               | 6=>=<>      |
| V0G/EE/3/1IFJ7/8                                                             |               | 6=<;>><WTT9 |
| ND/04XOE45FOO171F0/8<br>S2345/0FP/8E/34I/EFJ7/OE45FOO171F0/                  | <br>          | 6=>W<QW     |
| S2I/805/20FBI184EO//8HFKFJ7/                                                 |               |             |
| A334D208HFKFJ7/F2BF33ED/B/PH/28/8                                            |               |             |
| R4551881428HFKFJ7/                                                           |               |             |
| Z2/FE2/BE/I/2D/                                                              |               |             |
| ./03F8GD8/B124H/EF012LF301I101/8                                             |               | 6;<TQ><Q>W9 |
| <br>#& -                                                                    | <br>          |             |
| UDE3GF8/4OHE4H/E0KF2B/[D1H5/20                                               |               |             |
| ./03F8GD8/B1212I/8012LF301I101/8                                             |               |             |
| <br>#&-                                                                     | <br>          |             |
| RFH10F73420E1JD01428                                                         |               | ?<?>><>>>   |
| ./03F8GHE4I1B/BJKO12F2312LF301I101/8                                         |               | ?<?>><>>>   |
| <br>#                                                                        | <br>          |             |
| ./0123E/F8/123F8GF2B3F8G/[D1IF7/208                                          |               |             |
| <br>]/L12212L4OK/FE                                                          | <br>          | ?<W;?<T@=   |
| <br>^2B4OK/FE                                                                | <br>:         |             |

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{12}------------------------------------------------

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{13}------------------------------------------------

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{14}------------------------------------------------

### Note 3 - Revenue from Contracts with Customers (continued)

The Company typically receives payment on either a monthly or quarterly basis for Service Fees received directly from sponsors and the Company receives payment in the following month for Service Fees paid by the clearing firm. Historically, the obligation for refunds or returns on Service Fees have been limited in nature. The receivable balances for Service Fees earned but not yet received as of December 31, 2023 and January 1, 2023 were \$2,093,095 and \$2,031,851, respectively.

### Investment Advisor Fees

The Company receives Investment Advisor Fees from third-party asset managers for investment advisory and portfolio management services, as well as fees from individual customers for financial planning services provided by the Company's investment advisor representatives. These fees are based on a percentage of

assets under management ("AUM") for applicable accounts and earned over time. The Company accounts for these fees as a single performance obligation because the Company is providing a series of distinct services that are substantially the same and have the same pattern of transfer. There is an inherent uncertainty in estimating the amount of Investment Advisor Fees revenue the Company could earn on these accounts as the fees are dependent on the value of the accounts as well as the length of time the accounts remain open, both of which are highly susceptible to factors outside the Company's influence. Therefore, Investment Advisor Fees revenue is deemed constrained until it is probable that a significant reversal will not occur. As Investment Advisor Fees are considered to have a single performance obligation, revenue is allocated to the period in which the services have been provided in an amount that depicts the consideration the Company expects to receive. The Company estimates the expected value of Investment Advisor Fee revenue earned but not yet received based on the most recent information available, which includes, among others, frequency of payments and historical cash receipts.

For Investment Advisor Fees paid to the Company in advance of the performance obligation, the Company defers recognition of the Investment Advisor Fees until the performance obligation is satisfied. For Investment Advisor Fees paid in advance, the Company is obligated to return these fees if an investment advisor terminates their relationship with the Company and subsequently converts applicable account(s) to their new investment advisor firm prior to the satisfaction of the performance obligation. However, as Investment Advisor Fees paid in advance are recorded as unearned revenue until satisfaction of the performance obligation is complete, returns of these fees have not historically had a significant impact on the Company's recognition of revenue. For Investment Advisor Fees that the Company receives in arrears, the Company typically receives payment on either a monthly or quarterly basis. Historically, the obligation for refurns on Investment Advisor Fees paid in arrears have been limited in nature. The receivable balances for Investment Advisor Fees earned but not yet received as of December 31, 2023 and January 1, 2023 were \$2,606,233 and \$2,683,292, respectively.

#### Marketing Support, Revenue Sharing and Other Revenue from Customers

#### Fees from Sales

The Company has marketing support, revenue sharing and other arrangements with certain affiliated entities (NLIC and LSW) and sponsors in which the Company receives fees based on sales of certain indexed annuities, variable annuities and mutual funds. The Company's performance obligation is satisfied on the trade date when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to the customer.

{15}------------------------------------------------

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{16}------------------------------------------------

### Note 3 - Revenue from Contracts with Customers (continued)

#### Disaggregated Revenue from Contracts with Customers

The following table presents revenue by major source for the year ended December 31, 2023:

|                                                                         |   | 2023       |
|-------------------------------------------------------------------------|---|------------|
| Commission Revenue                                                      |   |            |
| Point of Sale Commissions                                               | S | 30,283,100 |
| Service Fees                                                            |   | 14.657.405 |
| Total Commissions                                                       |   | 44,940,505 |
| Investment Advisor Fees                                                 |   | 25,160,928 |
| Marketing Support, Revenue Sharing & Other Revenue from Customers       |   |            |
| Fees from Sales                                                         |   | 2,350.713  |
| Fees from Services                                                      |   | 4,081,980  |
| Affiliation Fees                                                        |   | 832,223    |
| Total Marketing Support, Revenue Sharing & Other Revenue from Customers |   | 7,264,916  |
| Total Revenue from Contracts with Customers                             |   | 77,366,349 |

#### Note 4 - Measurement of Credit Losses

Assets subject to Financial Instruments - Credit Losses (ASC 326) primarily include forgivable loan and trade receivables. The measurement and recognition of credit losses is based upon risk characteristics, historical loss information and various qualitative factors.

#### Forgivable Loan Receivables

The Company issues loans to certain registered representatives of the Company. The loans are paid back by the representatives or considered forgiven and thus amortized based on the representatives' sales and investment advisory production. The measurement of credit allowances on forgivable has been recognized based on the historical default rates experienced through the life of the program over the weighted average principal of all issued loans. A prospective adjustment rate is included within this measurement based on historical recognition of losses, financial condition of participant, terms of the specific loan agreement, and other forecasted expectations related to the performance of the outstanding loan balances. The change in the credit loss allowance recognized with "Loan Amortization, Loss Allowance and Bad Debt" in Note 5 - General and Administrative Expenses was \$14,773.

#### Trade Receivables

The Company recognizes receivable balances for service fees and investment advisor fees as discussed in Note - 4 Revenue from Contracts with Customers. The Company has determined that there is no expectation of non-payment due to the following factors: 1) the customers' NAV and AUM, from which the fees are derived, are held by third-party custodians (similarity to a securitized asset), 2) the frequency of third party sponsors payments are either monthly or quarterly, 3) historically low instances of non-payment, and 4) exposure to credit risk relating to these balances is offset by the associated accrued trailing commission and advisory fee expense.

{17}------------------------------------------------

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{18}------------------------------------------------

### Equity Services, Inc. (A wholly-owned Subsidiary of NLV Financial Corporation) Notes to Financial Statements As of and for the Year Ended December 31, 2023

### Note 6 - Net Capital and Reserve Information (continued)

Company do not include directly receiving, holding, or otherwise owing funds or securities for or to customers; other than money or other consideration received and promptly transmitted in compliance with Rule 15c2-4(a) or (b)(2). Accordingly, the Company claims that the reserve provisions of Rule 15c3-3 of the Act do not apply under the exemption allowed by paragraph (k)(2)(ii) of such rule for brokerage business activities and under the exemption allowed by Footnote 74 of the SEC Release No. 34-70073 for subscription way business activities. As such, the Company has not included the schedules "Computation for Determination of Reserve Requirement under Rule 15c3-3" or "Information relating to Possession or Control Requirements under Rule 15c3-3."

### Note 7 - Property and Equipment

Property and equipment owned by the Company as of December 31, 2023:

| 2023         |
|--------------|
| \$ 1.776,521 |
| (1,776,521)  |
|              |
|              |

Depreciation expense incurred for the year ended December 31, 2023 was \$10,695.

### Note 8 - Income Taxes

The Company participates in the consolidated federal income tax return of NLHC. The Company recognized a current federal income tax benefit of \$1,014,192 for the year ended December 31, 2023. The Company also recorded a current state income tax expense of \$470 for the year ended December 31, 2023. The components of current and deferred income tax are shown below:

|                          |    | 2023      |
|--------------------------|----|-----------|
| Current                  | ಕಾ | 1,013,722 |
| Deferred                 |    | 20,092    |
| Total income tax benetit |    | 1.033.814 |

Income tax receivable from NLHC was \$361,669 as of December 31, 2023. In 2023, total taxes are approximately 20% of the total computed using the statutory federal income tax rate of 21%. The Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2017. The Company's consolidated federal income tax return examination by the IRS for the 2017 through 2020 tax years are concluding. The examination results are not expected to have a material impact to the Company's financial statements. The Company net settled \$915,853 of its income taxes recoverable from NLHC for the year ended December 31, 2023. In addition, the Company did not pay state taxes for the year ended December 31, 2023. There were no amounts accrued for unrecognized tax benefits or related interest and penalties as of December 31, 2023.

{19}------------------------------------------------

### Note 9 - Related Party Transactions

It is possible that the terms of the transactions mentioned below are not the same as those that would result from transactions among unrelated parties.

### Commissions and Revenue Sharing

The Company is the distributor of variable universal life products issued by NLIC and offers indexed annuity products issued by LSW. In connection with the distribution of these products, the Company records commission expense equivalent to 100% of commission revenue recognized. Commission revenue and expense recorded in accordance with the sale of NLIC variable universal life and LSW indexed annuity products was \$6,438,963 for the year ended December 31, 2023. The Company recognized combined revenue sharing on the sale of NLIC and LSW products of \$511,383 for the year ended December 31, 2023. As of December 31, 2023, accounts receivables related to intercompany revenue sharing arrangements were \$52,206.

### Allocated Expenses

NLIC provides the Company with occupancy, information technology, administrative services and access to its distribution network. The charges for these services and other shared services are allocated based on the terms of the expense sharing agreements with NLIC and NLVF. The allocation methodologies employed are applied uniformly across National Life Group and are based on direct charges and other factors (e.g., square footage, number of employees, compensation levels, et. al.). Charges for costs allocated to the Company for the year ended December 31, 2023 were \$4,570,611.

As of December 31, 2023, accounts receivable) balances from, NLVF and affiliates related to expense sharing agreements were \$13,099 and (\$1,493,357), respectively. The accounts receivable/(payable) balances related to NLVF and affiliates are settled in the normal course of business and are included in the Due to/from affiliates in the Statement of Financial Condition.

### Capital Contributions

The Company has historically experienced losses from operations and has an accumulated deficit of \$49,192,179 as of December 31, 2023. The Company has historically received sufficient equity contributions from its parent, NLVF, which has enabled it to exceed its regulatory requirements over net capital. Throughout the fiscal year ended December 31, 2023, the Company had sufficient net capital in excess of the regulatory requirement and did receive \$5,500,000 in capital contributions from NLVF.

### Note 10 - Commitments and Contingencies

The Company clears all of its securities transactions through a clearing firm on a fully disclosed basis. Pursuant to the terms of the agreement between the Company and the clearing firm has the right to charge the Company for losses that result from a counterparty's failure to fulfill its contractual obligations. As the right to charge the Company has no maximum amount and applies to all trades executed through the clearing firm, the Company believes there is no maximum amount assignable to this right. As of December 31, 2023, the Company has no indication that it has not fulfilled its contractual obligations and has not recorded a liability with regard to the right of the clearing firm.

{20}------------------------------------------------

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{21}------------------------------------------------

### Equity Services, Inc. (A wholly-owned Subsidiary of NLV Financial Corporation) Supplemental Schedule I Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission December 31, 2023

|                                                                                                                                                                                                                                              | 2023                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|
| Computation of net capital<br>Total ownership equity from Statement of Financial Condition<br>Deduct ownership equity not allowable for net capital                                                                                          | 7,407,187           |
| Total ownership equity qualified for net capital                                                                                                                                                                                             | 7,407,187           |
| Deductions                                                                                                                                                                                                                                   |                     |
| Receivables from non-customers, in excess of payable<br>Investment in and receivables from affiliates, subsidiaries and associated partnerships<br>Property, furniture, equipment, leasehold improvements and rights under lease agreements, | 3,415,945<br>65,305 |
| at cost-net of accumulated depreciation                                                                                                                                                                                                      |                     |
| Other assets                                                                                                                                                                                                                                 | 980,892             |
| Total non-allowable assets                                                                                                                                                                                                                   | 4,462,142           |
| Net capital before haircuts on securities position and other deductions                                                                                                                                                                      | 2,945,045           |
| Haircut on securities                                                                                                                                                                                                                        | (30,000)            |
| Other deductions                                                                                                                                                                                                                             |                     |
| Net capital                                                                                                                                                                                                                                  | 2,915,045<br>ಕ      |
| Computation of aggregate indebtedness                                                                                                                                                                                                        |                     |
| Payable to non-customers                                                                                                                                                                                                                     | લ્ત્વ<br>5,171,342  |
| Accounts payable, accrued liabilities, accrued expenses and other                                                                                                                                                                            | 2,806,591           |
| Total aggregate indebtedness                                                                                                                                                                                                                 | લ્ત્વ<br>7,977,933  |
| Computation of basic net capital requirement                                                                                                                                                                                                 |                     |
| Minimum net capital requirement (greater of \$100,000 or 6 2/3% of aggregate indebtedness)                                                                                                                                                   | ಕ್ಕಾ<br>531,862     |
| Excess net capital                                                                                                                                                                                                                           | ಕ್ಕಿ<br>2,383,183   |
| Net capital less 10% of aggregate indebtedness                                                                                                                                                                                               | ಕ್ಕಿ<br>2,117,252   |
| Percentage of aggregate indebtedness to net capital                                                                                                                                                                                          | 274%                |

There were no material differences between the amounts presented above and the amounts reported on the Company's unaudited FOCUS Report as of December 31, 2023.

{22}------------------------------------------------

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Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.