8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): September 2, 2008

Dolan Media Company

(Exact Name of Registrant as Specified in Charter)

Delaware	001-33603	43-2004527
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

706 Second Avenue South, Suite 1200, Minneapolis, Minnesota	55402
(Address of Principal Executive Offices)	(Zip Code)

(612) 317-9420

(Registrant’s telephone number, including area code)

None

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

     On September 2, 2008, we filed a current report on Form 8-K with the Securities and Exchange Commission to report our acquisition of National Default Exchange Holdings, L.P. and related entities, collectively referred to as NDEx. We are filing this Amendment No. 1 to that current report on Form 8-K to provide the financial statements and the pro forma financial information required by Item 9.01 of Form 8-K in connection with our acquisition of NDEx.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired. The consolidated financial statements of National Default Exchange Holdings, L.P. (and Predecessor) required by Item 901(a) of Form 8-K are filed as Exhibit 99.2 hereto and incorporated by reference herein.

(b)	Pro Forma Financial Information. The pro forma consolidated condensed financial information related to our acquisition of NDEx required by Item 901(b) of Form 8-K is filed as Exhibit 99.3 hereto and incorporated by reference herein.
(c)	Not applicable.
(d)	Exhibits

Exhibit
Number	Description of Exhibits
10.1*	Amended and Restated Services Agreement dated September 2, 2008 by and between National Default Exchange, LP and Barrett Daffin Frappier Turner & Engel, LLP **
10.2	Amendment No. 4 to the Amended and Restated Operating Agreement of American Processing Company, LLC **
23.1	Consent of McGladrey & Pullen, LLP
99.1	Press Release of Company dated September 2, 2008 **
99.2	Consolidated Financial Statements of National Default Exchange Holdings, L.P. (and Predecessor) for the years ended December 31, 2005, 2006 and 2007 and as of December 31, 2006 and 2007 (audited) and for the six months ended June 30, 2007 and 2008 and as of June 30, 2008 (unaudited)
99.3	Unaudited pro forma condensed consolidated financial information for the Company for the year ended December 31, 2007 and for the six months ended, and as of, June 30, 2008

*	Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been separately filed with the Securities and Exchange Commission.
**	Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on September  2, 2008.

2

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DOLAN MEDIA COMPANY
By:	/s/ Scott J. Pollei
	Name:	Scott J. Pollei
	Its: Executive Vice President and Chief Financial Officer

Dated: September 16, 2008

3

Exhibit Index

Exhibit
Number	Description of Exhibits
23.1	Consent of McGladrey & Pullen, LLP
99.2	Consolidated Financial Statements of National Default Exchange Holdings, L.P. (and Predecessor) for the years ended December 31, 2005, 2006 and 2007 and as of December 31, 2006 and 2007 (audited) and for the six months ended June 30, 2007 and 2008 and as of June 30, 2008 (unaudited)
99.3	Unaudited pro forma condensed consolidated financial information for the Company for the year ended December 31, 2007 and for the six months ended, and as of, June 30, 2008

4

EX-23.1

Exhibit 23.1

Consent of Independent Auditor

We consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333 — 145036) of Dolan Media Company of our report, dated September 2, 2008, relating to our audit of the consolidated financial statements of National Default Exchange Holdings, LP (and Predecessor) as of December 31, 2006 and 2007 and for the years ended December 31, 2005, 2006 and 2007 included in the Current Report on Form 8-K/A filed by Dolan Media Company on September 16, 2008.

/s/ McGladrey & Pullen, LLP     

Dallas, Texas
September 16, 2008

EX-99.2

Exhibit 99.2

Independent Auditor’s Report

To the Partners
National Default Exchange Holdings, LP
Addison, Texas

We have audited the accompanying consolidated balance sheets of National Default Exchange Holdings, LP (and Predecessor as more fully described in Note 1) as of December 31, 2006 and 2007, and the related consolidated statements of income, partners’ equity and cash flows for each of the years in the three year period ended December 31, 2007. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of National Default Exchange Holdings, LP as of December 31, 2006 and 2007, and the results of its operations and its cash flows for each of the years in the three year period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

As described in Note 2, the consolidated balance sheet as of December 31, 2006 has been restated to correct the calculation of revenues recognized and software development costs capitalized as of that date.

/s/ McGladrey & Pullen, LLP

Dallas, Texas
September 2, 2008

McGladrey & Pullen, LLP is a member firm of RSM International,
an affiliation of separate and independent legal entities.

1

National Default Exchange Holdings, LP (and Predecessor)

Consolidated Balance Sheets
December 31, 2006 and 2007 and June 30, 2008

	December 31,						June 30,
	2006			2007			2008
	(As Restated)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	6,895,504		$	3,499,283		$	7,244,928
Billed accounts receivable, net of allowance for doubtful accounts of $294,747, $686,223 and $877,558, respectively		2,812,816			5,687,041			6,671,213
Unbilled accounts receivable		5,742,800			12,848,067			20,422,334
Due from related parties		511,468			528,379			1,255,480
Prepaid expenses and other current assets		1,062,782			2,105,934			1,967,534
Total current assets		17,025,370			24,668,704			37,561,489
Property and equipment:
Leasehold improvements		1,822,232			2,545,590			2,713,055
Furniture, fixtures and equipment		772,492			956,015			1,007,955
Information technology equipment		3,233,934			5,116,362			6,025,122
Computer software		2,914,063			5,834,524			7,638,717
Work in progress		154,107			185,567			63,089
		8,896,828			14,638,058			17,447,938
Less accumulated depreciation		(4,635,623	)		(6,467,822	)		(7,891,962	)
Property and equipment, net		4,261,205			8,170,236			9,555,976
Investment in unconsolidated affiliate		3,162,568			3,086,107			3,115,576
Capitalized software development costs		469,597			2,663,366			3,397,803
Other assets		82,290			107,820			58,945
Total assets	$	25,001,030		$	38,696,233		$	53,689,789

2

National Default Exchange Holdings, LP (and Predecessor)

Consolidated Balance Sheets (Continued)
December 31, 2006 and 2007 and June 30, 2008

	December 31,				June 30,
	2006		2007		2008
	(As Restated)				(Unaudited)
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Line of credit	$	—	$	1,500,000	$	—
Current maturities of long-term debt		—		191,843		436,377
Accounts payable		1,559,301		4,687,852		3,374,437
Accounts payable — contracted services		744,336		8,771,127		21,074,555
Accrued compensation and benefits		1,629,858		2,593,421		2,729,740
Accrued expenses and other liabilities		1,458,203		3,610,210		3,187,092
Provision for loss		855,973		1,139,300		1,331,901
Deferred revenue		1,485,958		1,219,454		1,143,817
Due to related parties		1,080,000		350,000		350,000
Total current liabilities		8,813,629		24,063,207		33,627,919
Long-term debt, less current maturities		—		558,157		920,570
Due to related parties		670,833		320,833		145,833
Total liabilities		9,484,462		24,942,197		34,694,322
Noncontrolling interests		5,640,528		5,613,547		5,655,255
Commitments and contingencies
Partners’ equity:
General partner: no units authorized and outstanding		—		—		—
Limited partners:
Founders, 509,200 units authorized and outstanding		6,616,946		5,643,127		9,126,941
Investors, 189,432 units authorized and outstanding		3,259,094		2,497,362		4,213,271
Executives, 160,800 units authorized and outstanding		—		—		—
Total partners’ equity		9,876,040		8,140,489		13,340,212
Total liabilities and partners’ equity	$	25,001,030	$	38,696,233	$	53,689,789

See Notes to Consolidated Financial Statements.

3

National Default Exchange Holdings, LP (and Predecessor)

Consolidated Statements of Income
For the Years Ended December 31, 2005, 2006 and 2007 and Six Months Ended June 30, 2007 and 2008

	Years Ended December 31,									Six Months Ended June 30,
	2005			2006			2007			2007			2008
										(Unaudited)			(Unaudited)
Revenues:
Fee revenues	$	59,165,076		$	65,718,670		$	72,491,332		$	34,162,262		$	45,854,812
Other revenues		5,675,893			5,054,796			8,173,642			4,160,019			5,229,639
Management fees		1,524,950			851,781			—			—			—
Net revenues		66,365,919			71,625,247			80,664,974			38,322,281			51,084,451
Personnel and related costs		36,259,417			35,115,464			41,159,223			18,515,605			25,996,772
Other direct costs		13,602,916			13,391,479			15,896,045			7,933,081			7,900,043
Facilities and related costs		4,916,131			4,289,449			3,755,570			1,777,549			2,263,703
Professional services and expenses		4,815,246			6,648,481			7,038,694			2,917,306			3,841,435
Other operating expenses		3,330,581			4,981,694			7,272,987			3,429,610			4,785,812
Financial advisory fees to related parties		—			875,000			1,500,000			750,000			750,000
Termination of agreements		—			1,880,000			—			—			—
Total operating expenses		62,924,291			67,181,567			76,622,519			35,323,151			45,537,765
Operating income		3,441,628			4,443,680			4,042,455			2,999,130			5,546,686
Other income (expense):
Equity in earnings (loss) of unconsolidated affiliate		710,281			(153,087	)		(126,461	)		(93,363	)		29,470
Loss on disposal of fixed assets		(267,662	)		—			—			—			—
Interest income		47			76			93			55			17
Interest expense		(50,567	)		(16,307	)		(37,085	)		—			(49,464	)
		392,099			(169,318	)		(163,453	)		(93,308	)		(19,977	)
Income before income taxes and noncontrolling interest		3,833,727			4,274,362			3,879,002			2,905,822			5,526,709
Income taxes		—			—			(446,881	)		(210,295	)		(274,477	)
Income before noncontrolling interest		3,833,727			4,274,362			3,432,121			2,695,527			5,252,232
Noncontrolling interest in (earnings) loss of consolidated affiliates		(3,515,675	)		52,886			(111,272	)		(204,295	)		(52,509	)
Net income	$	318,052		$	4,327,248		$	3,320,849		$	2,491,232		$	5,199,723

See Notes to Consolidated Financial Statements.

4

National Default Exchange Holdings, LP (and Predecessor)

Consolidated Statements of Partners’ Equity
For the Years Ended December 31, 2005, 2006 and 2007 and Six Months Ended June 30, 2008

	General		Limited Partners								Total Partners’
	Partner		Founders			Investors			Executives		Equity
Balance, December 31, 2004	$	—	$	1,079,163		$	531,529		$	—	$	1,610,692
Distributions		—		(452,250	)		(222,750	)		—		(675,000	)
Net income		—		213,095			104,957			—		318,052
Balance, December 31, 2005		—		840,008			413,736			—		1,253,744
Transfer of assets and liabilities		—		2,877,682			1,417,366			—		4,295,048
Net income		—		2,899,256			1,427,992			—		4,327,248
Balance, December 31, 2006 (as restated — see Note 2)		—		6,616,946			3,259,094			—		9,876,040
Distributions		—		(3,198,788	)		(1,857,612	)		—		(5,056,400	)
Net income		—		2,224,969			1,095,880			—		3,320,849
Balance, December 31, 2007		—		5,643,127			2,497,362			—		8,140,489
Net income (unaudited)		—		3,483,814			1,715,909			—		5,199,723
Balance, June 30, 2008 (unaudited)	$	—	$	9,126,941		$	4,213,271		$	—	$	13,340,212

See Notes to Consolidated Financial Statements.

5

National Default Exchange Holdings, LP (and Predecessor)

Consolidated Statements of Cash Flows
For the Years Ended December 31, 2005, 2006 and 2007 and Six Months Ended June 30, 2007 and 2008

	Years Ended December 31,									Six Months Ended June 30,
	2005			2006			2007			2007			2008
										(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	318,052		$	4,327,248		$	3,320,849		$	2,491,232		$	5,199,723
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,859,166			1,629,560			1,832,197			800,416			1,533,808
Loss on disposal of property and equipment		267,662			—			—			—			—
Termination of agreements		—			1,880,000			—			—			—
Equity in loss (earnings) of unconsolidated affiliate		(710,281	)		153,087			126,461			93,363			(29,470	)
Distributions received from equity method investment		820,000			375,000			—			—			—
Noncontrolling interest in earnings (loss) of consolidated affiliates		3,515,675			(52,886	)		111,272			204,295			52,509
Change in operating assets and liabilities:
Billed accounts receivable		550,368			1,709,627			(2,874,225	)		(562,306	)		(984,172	)
Unbilled accounts receivable		1,461,765			(1,658,807	)		(7,105,267	)		(497,871	)		(7,574,267	)
Due to/from related parties		(338,753	)		(87,603	)		(1,096,910	)		(706,015	)		(902,102	)
Prepaid expenses and other assets		50,362			11,938			(1,068,683	)		(563,154	)		187,276
Accounts payable		(1,371,535	)		520,054			3,128,551			635,707			(1,313,415	)
Accounts payable — contracted services		(389,886	)		(36,223	)		8,026,791			2,069,988			12,303,428
Accrued compensation and benefits		(400,605	)		291,611			963,563			453,360			136,319
Accrued expenses and other liabilities		(266,167	)		(6,535	)		2,152,007			777,390			(423,118	)
Provision for loss		(88,492	)		349,394			283,327			42,355			192,601
Deferred revenue		356,450			408,805			(266,504	)		(56,914	)		(75,637	)
Net cash provided by operating activities		5,633,781			9,814,270			7,533,429			5,181,846			8,303,483
Cash flows from investing activities:
Investment in unconsolidated affiliate		—			—			(50,000	)		(50,000	)		—
Purchases of property and equipment		(846,204	)		(1,272,066	)		(3,496,539	)		(1,186,097	)		(1,153,051	)
Capitalized internal use software development costs		(1,185,894	)		(444,622	)		(2,244,689	)		(1,067,039	)		(1,656,829	)
Other capitalized software development costs		—			(469,598	)		(2,193,768	)		(802,372	)		(844,105	)
Net cash used in investing activities		(2,032,098	)		(2,186,286	)		(7,984,996	)		(3,105,508	)		(3,653,985	)
Cash flows from financing activities:
Net borrowings (repayments) under line of credit		—			—			1,500,000			—			(1,500,000	)
Borrowings on long-term debt		—			—			750,000			—			750,000
Repayments on long-term debt and capital lease obligations		(196,763	)		(293,895	)		—			—			(143,053	)
Repayments on related party note payable		—			(375,000	)		—			—			—
Distributions to partners		(675,000	)		—			(5,056,400	)		(5,056,400	)		—
Distributions to noncontrolling interest holders		(2,172,540	)		(3,042,940	)		(138,254	)		(136,779	)		(10,800	)
Net cash used in financing activities		(3,044,303	)		(3,711,835	)		(2,944,654	)		(5,193,179	)		(903,853	)
Net increase (decrease) in cash and cash equivalents		557,380			3,916,149			(3,396,221	)		(3,116,841	)		3,745,645
Cash and cash equivalents, beginning of period		2,421,975			2,979,355			6,895,504			6,895,504			3,499,283
Cash and cash equivalents, end of period	$	2,979,355		$	6,895,504		$	3,499,283		$	3,778,663		$	7,244,928
Supplemental cash flow information:
Cash paid during the period for interest	$	46,560		$	20,314		$	32,939		$	—		$	53,610
Noncash investing and financing activities:
Transfer of assets and liabilities from noncontrolling interests	$	—		$	4,295,048		$	—		$	—		$	—
Sale of vehicles to partners	$	—		$	403,032		$	—		$	—		$	—

See Notes to Consolidated Financial Statements.

6

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Note 1. Description of Business and Summary of Significant Accounting Policies

Description of Business

National Default Exchange Holdings, LP (“Holdings”), through its consolidated subsidiaries and affiliated entities (collectively referred to as the “Partnership”), provides default services including foreclosure processing, bankruptcy case management, title, conveyance/closing, litigation and eviction services, among others on properties located in the States of Texas and California. The Partnership services all of the major national mortgage servicers and is the leading provider of default services within Texas. The Partnership is headquartered in Dallas and has an office in Houston. The Partnership is currently expanding its operations into Georgia.

Merger with Entities under Common Control — Pooling of Interests

Effective June 1, 2006, Dallas Union Services, Ltd. (“DUS”), an entity with prior operations, was merged into Holdings, a newly formed entity with no prior operations. Both entities were controlled by common owners. Because Holdings and DUS were entities under common control, the merger of these two entities is not a business combination. However, the transaction is accounted for in a manner similar to a pooling of interests. Under the pooling of interests method, the results of operations are reported as through the separate entities had been combined since the inception of each of them. Additionally, under the pooling of interests method, balance sheets and other information are presented as though the separate entities had been combined as of the beginning of the earliest period presented. The assets and liabilities of DUS were transferred to Holdings at their historical carrying amounts. DUS (the “Predecessor”) is considered to be the parent entity with respect to the consolidated financial statements presented for the year ended December 31, 2005 and in 2006 prior to the above transfer of ownership interests to Holdings.

Effective June 1, 2006, the common owners of Holdings and DUS contributed their controlling ownership interests in certain other entities with prior operations, including AllStar Capital, LLC (“AllStar”), Addison Mortgage Technologies, LLC (“AMT”) and ProRem, LLC (“ProRem”) to Holdings. Because these entities were under common control with Holdings and DUS, these entities have been consolidated in the financial statements of the Partnership or the Predecessor for all periods presented, in a manner similar to a pooling of interests, with their assets and liabilities being carried at historical amounts. AllStar is engaged in the business of providing industry specialized office supplies, AMT provides consulting services, and ProRem provides post foreclosure property services.

7

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Consolidation of Variable Interest Entities

Effective June 1, 2006, substantially all of the non-legal assets and liabilities (i.e., those not related to the business of providing attorney services) of the law firm Barrett Burke Wilson Castle Daffin & Frappier, LLP (“BBWCDF”), an entity with prior operations, were transferred to the Partnership. The Partnership and BBWCDF concurrently entered into a services agreement. Under the services agreement, the Partnership performs non-legal services for BBWCDF’s clients and provides certain administrative services to BBWCDF. In exchange for these services and at its discretion, the Partnership charges fees to BBWCDF such that all of BBWCDF’s profits are transferred to the Partnership. Starting June 1, 2006 and as of December 31, 2007, BBWCDF held a 54.9% ownership interest in the Partnership. However, because of the impact of the terms of this services agreement, BBWCDF was determined to be a variable interest entity and the Partnership was determined to be its primary beneficiary as defined by Financial Accounting Standards Board Interpretation No. 46(R), “Consolidation of Variable Interest Entities — An Interpretation of ARB No. 51,” as amended. Therefore, BBWCDF is included in the consolidated financial statements of the Partnership or the Predecessor for all periods presented. Because the Partnership and BBWCDF are under common control the assets and liabilities of BBWCDF are presented at their historical carrying amounts. BBWCDF is engaged in the practice of law, specializing in default services. BBWCDF’s total assets were $8,735,070, $7,122,399 and $6,374,442 as of December 31, 2006 and 2007 and June 30, 2008, respectively, and total revenues were $63,814,636, $71,669,780, $70,030,395, $35,936,904 and $41,451,212 for the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2007 and 2008, respectively.

On March 5, 2008, BBWCDF distributed its ownership interest in Holdings to the individual partners of BBWCDF, after which BBWCDF does not hold any ownership interest in Holdings. Effective May 1, 2008, BBWCDF changed its name to Barrett Daffin Frappier Turner & Engel, LLP.

The Partnership is also the primary beneficiary of Frappier Daffin & Barrett, LLP (“FDB”). The Partnership and FDB are controlled by common owners. FDB is included in the consolidated financial statements of the Partnership or the Predecessor for all periods presented and the assets and liabilities of FDB are presented at their historical carrying amounts. FDB holds an investment in the law firm Brown & Shapiro, LLP, which it accounts for under the equity method, as further described below. FDB’s total assets were $3,180,056, $3,091,116 and $3,119,774 as of December 31, 2006 and 2007 and June 30, 2008, respectively, and equity in earnings (loss) of unconsolidated affiliate associated with FDB’s investment was $710,281, $(153,087), $(126,461), $(93,363) and $29,470 for the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2007 and 2008, respectively.

Sale of 33% Equity Interest to Investor Group

On June 1, 2006, after the consummation of the above transactions, affiliates of the private equity group, Trinity Hunt Partners, acquired 33% of the equity interests in Holdings.

8

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

A summary of the Partnership’s significant accounting policies follows:

Principles of Consolidation

The consolidated financial statements include all subsidiaries and affiliated entities that are wholly or majority owned by the Partnership (Predecessor) and/or over which the Partnership (Predecessor) exercises substantive control, including variable interest entities in which the Partnership (Predecessor) is the primary beneficiary because it absorbs the majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. All intercompany accounts and transactions have been eliminated in consolidation. The Partnership (Predecessor) uses the equity method of accounting for entities in which it holds less than a 50% interest and for which it does not exercise substantive control and is not the primary beneficiary.

Unaudited Interim Financial Information

The interim financial information of the Partnership for the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited. The unaudited interim financial information has been prepared on the same basis as the annual financial statements and in the opinion of management, reflects all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results of operations and cash flows of the Partnership for the six months ended June 30, 2007 and 2008 and the financial position of the Partnership as of June 30, 2008.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Revenues and Revenue Recognition

The Partnership recognizes revenues when persuasive evidence of an arrangement exists, services have been rendered, the amount is fixed or determinable and collectability is reasonably assured. For multiple element arrangements, revenue is only recognized when all of the above criteria have been met for the delivered elements and there is also sufficient evidence to support the fair value of any undelivered elements. In the event fair value cannot be determined, revenue recognition is deferred for the entire arrangement until the earlier to occur of the determination of fair value for the undelivered elements or the delivery of all of the elements. Depending on the nature of the specific services performed, the Partnership generally recognizes revenues using either the proportional performance or completed performance method.

Prior to December 1, 2006, the Partnership received management fees from a third party in connection with the provision of certain advisory services. The arrangement was terminated effective December 1, 2006 (see Note 6).

Deferred revenues represent amounts billed to or payments received from clients for which the related service has not yet been performed.

9

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Cash and Cash Equivalents

At times, bank deposits may be in excess of federally insured limits. The Partnership has not experienced any losses in such accounts and believes it is not exposed to any significant credit risks on such accounts. Cash equivalents consist of money market accounts.

Accounts Receivable

Revenue of the Partnership is dependent upon real estate foreclosures and levels of defaulted residential mortgage loans in the United States and primarily in Texas and California. As such, local area economic cycles impact the level of activity and collectibility of client accounts. The Partnership considers this when evaluating the allowance for doubtful accounts.

The Partnership grants credit terms in the normal course of business to its clients. The Partnership does not normally require collateral or other security from its clients. The Partnership performs on-going credit evaluations of its clients and adjusts credit limits based upon the clients’ payment history and current credit worthiness, as determined through review of their current credit information. The Partnership continuously monitors collections and payments from clients and maintains allowances for doubtful accounts for estimated losses resulting from the inability of its clients to make required payments. Estimated losses are based on historical experience and any specific client collections issues identified. Delinquency of past due receivables is determined based on contractual terms and receivables are charged off when it appears collection efforts will not be successful.

Unbilled accounts receivable represent revenues from services rendered which were not invoiced to clients as of the end of the period.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the various asset classes as follows:

Furniture, fixtures and equipment	7 years
Information technology equipment	3 – 5 years
Computer software	3 – 5 years

Leasehold improvements are amortized over the shorter of their estimated remaining lives or lease terms. Significant improvements are capitalized while maintenance and repairs are expensed as incurred.

Internal and external costs incurred in developing or obtaining computer software for internal use are capitalized in property and equipment in accordance with Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” and related guidance and are amortized on a straight-line basis over the estimated useful life of the software. General and administrative costs related to developing or obtaining such software are expensed as incurred.

Depreciation and amortization expense related to property and equipment was $1,859,166, $1,629,560, $1,832,197, $800,416 and $1,424,140 for the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2007 and 2008, respectively.

10

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Impairment of Long-Lived Assets

The Partnership evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the sum of the undiscounted future cash flows is less than the carrying amount of the asset, in which case, a write-down would be recorded to reduce the related asset to its estimated fair value. There was no such impairment during the years ended December 31, 2005, 2006 or 2007 and the six months ended June 30, 2008.

Investment in Unconsolidated Affiliate

The Partnership uses the equity method to report investments in businesses where it holds a 20% to 50% voting interest, giving it the ability to exercise significant influence, but not control, over operating and financial policies. Under the equity method, the Partnership reports its:

• Interest in the entity as an investment on the consolidated balance sheets; and

• Percentage share of the earnings (losses) in the consolidated statements of income.

The Partnership considers whether the fair values of its equity method investments have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Partnership considered any such decline to be other than temporary (based on various factors, including historical financial results and the overall health of the affiliate’s industry), then a write-down would be recorded to the estimated fair value.

The Partnership currently owns a 50% noncontrolling equity interest in Brown & Shapiro, LLP (“B&S”). Summarized financial information is as follows:

	Years Ended December 31,								Six Months Ended June 30,
	2005		2006			2007			2007			2008
									(Unaudited)			(Unaudited)
Current assets	$	2,953,343	$	1,493,310		$	2,085,188		$	1,461,326		$	1,756,733
Noncurrent assets		70,182		49,045			64,656			40,169			54,177
Current liabilities		1,403,887		902,199			1,486,958			934,728			932,923
Equity		1,619,639		640,155			652,103			566,767			877,987
Revenues		5,829,290		4,070,593			3,846,273			1,769,591			2,464,129
Net income (loss)		1,420,564		(306,126	)		(252,922	)		(186,726	)		58,939

The Partnership’s equity in the earnings (loss) of B&S was $710,281, $(153,087), $(126,461), $(93,363) and $29,470 for the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2007 and 2008, respectively.

11

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Capitalized Software Development Costs

The Partnership capitalizes software development costs related to software to be sold in accordance with Statement of Financial Accounting Standards No. 86, “Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise Marketed,” under which certain software costs incurred subsequent to the establishment of technological feasibility may be capitalized and amortized over the estimated lives of the related products. There was no related amortization expense for the years ended December 31, 2005, 2006 or 2007 because the software was still being developed and had not been released. Amortization expense was $109,668 for the six months ended June 30, 2008.

Accounts Payable — Contracted Services

In the course of providing services to its clients, the Partnership contracts with external service providers. Such services are generally incurred in connection with providing title insurance products or legal services in certain geographic locations where it is not cost effective or beneficial for BBWCDF to perform these services itself. The Partnership bills clients for these costs and pays the providers upon collection from the clients. Expenses associated with such services are recorded in the period the related revenue is recognized.

Provision for Loss

The Partnership accrues for customer reimbursements, primarily for matters in which issues arise related to the quality of services provided. The accrual is determined based on management’s knowledge of specific matters and historical experience.

Income Taxes

The income or loss of the Partnership is includable in the taxable income of the respective partners. Therefore, no provision for federal income taxes has been included in the accompanying financial statements. The Partnership distributes funds to assist the partners in paying their taxes related to Partnership income.

Effective for the year ended December 31, 2007 and during 2008, the Partnership was subject to the Texas margin tax law, which causes the Partnership to be subject to an entity-level tax on the portion of its income that is generated in Texas. The Texas margin tax is imposed at a maximum effective rate of 1.0%.

Noncontrolling Interests in Consolidated Entities

The consolidated financial statements include all assets, liabilities, revenues and expenses of less than 100% owned entities that are controlled by the Partnership, including variable interest entities in which the Partnership is the primary beneficiary. Accordingly, the Partnership has recorded noncontrolling interest in the earnings and equity of such entities.

12

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Concentration of Risk

The Partnership has customers which accounted for the following percentages of revenue:

	Years Ended December 31,									Six Months Ended June 30,
Customer	2005			2006			2007			2007			2008
										(Unaudited)			(Unaudited)
Customer A		18	%		18	%		19	%		22	%		13	%
Customer B		14	%		13	%		17	%		16	%		21	%
Customer C		23	%		21	%		16	%		23	%		17	%
Customer D		4	%		4	%		11	%		7	%		12	%

The Partnership had net receivables (as a percentage of total receivables) from the above customers, as follows:

	December 31,						June 30,
Customer	2006			2007			2008
							(Unaudited)
Customer A		13	%		8	%		6	%
Customer B		20	%		22	%		15	%
Customer C		11	%		6	%		9	%
Customer D		4	%		12	%		14	%

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements”. This statement defines fair value, establishes a framework for measuring fair value in accordance with United States generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy with the highest priority being quoted prices in active markets. Under SFAS No. 157, fair value measurements will be disclosed by level within that hierarchy. SFAS No. 157 was effective for the Partnership’s fiscal year that began after November 15, 2007, except for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis for which delayed application is permitted until fiscal years beginning after November 15, 2008. The implementation of SFAS No. 157, effective January 1, 2008, did not have a significant impact on the Partnership’s consolidated financial position and results of operations. Management is currently assessing the impact of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities on its consolidated financial position and results of operations.

13

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”, which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 also includes an amendment to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, which applies to all entities with available-for-sale and trading securities. This statement was effective as of the beginning of the Partnership’s fiscal year that began after November 15, 2007. SFAS No. 159 was effective for the Partnership beginning on January 1, 2008. The Partnership has not elected the fair value option for items that existed as of January 1, 2008.

The FASB has issued SFAS No. 141 (revised 2007) (“SFAS No. 141R”), “Business Combinations”. In SFAS No. 141R, the FASB retained the fundamental requirements of SFAS No. 141 to account for all business combinations using the acquisition method (formerly the purchase method) and for an acquiring entity to be identified in all business combinations. However, the fair value principles in the revised SFAS are a major change from SFAS No. 141’s cost allocation process, together with other revisions from past practice. SFAS No. 141R is effective for annual periods beginning on or after December 15, 2008, and will be applied on a prospective basis. Early adoption is not permitted.

The FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS No. 160 applies to all entities that prepare consolidated financial statements. Under SFAS No. 160, noncontrolling interests must be separately reflected in the equity section of the balance sheet. In addition, the net income attributable to noncontrolling interests will no longer be reflected as a reduction of consolidated net income. Instead, consolidated income is arrived at and then allocated to controlling and noncontrolling interests on the face of the income statement. SFAS No. 160 also: (a) eliminates the limitation of losses attributable to the minority interest to its carrying amount (i.e., the carrying amount can now go negative) and (b) changes the way in which increases or decreases in the parent’s ownership interest are accounted for in the consolidated financial statements. SFAS No. 160 is effective for annual periods beginning on or after December 15, 2008 and should be applied on a prospective basis, except for the presentation and disclosure requirements, which must be applied retrospectively. Early adoption is prohibited. Currently, management is evaluating the impact that this new standard will have on the Partnership’s financial position, results of operations or cash flows. Noncontrolling interests will be presented as a component of partners’ equity beginning January 1, 2009.

In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). This interpretation clarifies the accounting and financial statement reporting for uncertainty in income taxes recognized by prescribing a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. In February 2008, the FASB announced that the effective date of FIN 48 was deferred for nonpublic enterprises that have not issued a full set of annual financial statements incorporating the recognition, measurement, and disclosure requirements of FIN 48. Additionally, the effective date was changed so that it applies to annual periods beginning after December 15, 2007. The implementation of FIN 48, effective for the Partnership’s fiscal year ending December 31, 2008, is not expected to have a significant impact on the Partnership’s consolidated financial position and results of operations.

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. These reclassifications had no effect on reported net income or partners’ equity.

14

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Note 2. Restatement

As a result of a comprehensive review of the Partnership’s revenue recognition policies and procedures, errors in the Partnership’s revenue recognition methodology were detected. The Partnership had not applied the appropriate methods for recognizing revenue for foreclosure, title, bankruptcy and attorney’s title opinion/conveyance revenues and, as a result, certain revenue transactions were not recorded in the correct periods. As a result, the Partnership has corrected its calculation of revenues and the previously issued consolidated balance sheet as of December 31, 2006 has been restated.

Also included in the restatement is the correction of certain errors related to the capitalization of internal use software. Incorrect amounts had been capitalized due to errors in labor rates used in the underlying calculations.

The adjustments to restate the previously issued consolidated balance sheet as of December 31, 2006 were as follows:

	As Previously
	Reported		Adjustments			As Restated
Billed accounts receivable	$	2,867,087	$	(54,271	)	$	2,812,816
Unbilled accounts receivable		3,924,869		1,817,931			5,742,800
Property and equipment, net		4,403,572		(142,367	)		4,261,205
Accounts payable - contracted services		909,188		(164,852	)		744,336
Accrued expenses and other liabilities		1,399,314		58,889			1,458,203
Deferred revenue		440,534		1,045,424			1,485,958
Non-controlling interests		5,468,759		171,769			5,640,528
Partners’ equity		9,373,639		502,401			9,876,040

The consolidated statements of income, partners’ equity and cash flows for the years ended December 31, 2005 and 2006 had not been issued previously.

Note 3. Long-Term Debt

At December 31, 2006, the Partnership had a $5,000,000 revolving line of credit with a financial institution and no outstanding borrowings under this facility. During 2007, the Partnership increased the line of credit to $7,500,000 subject to certain borrowing base limitations. The credit facility bears interest at the 3-month London Interbank Offered Rate (“LIBOR”) as quoted in the most recent Wall Street Journal, plus 1.4% per annum (4.1% at June 30, 2008), payable monthly. All borrowings plus any accrued interest is payable on the maturity date of May 5, 2009. Outstanding borrowings are collateralized by substantially all of the Partnership’s assets and the Partnership is required to maintain certain financial covenants.

15

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

During 2007, the Partnership entered into two term loan agreements to borrow a total of $1,500,000 ($750,000 per loan) with the same financial institution. The first term loan was executed and funded in October 2007 and bears interest at LIBOR plus 1.5% per annum (4.2% at June 30, 2008) for the first two months, and at LIBOR for the remaining period. Interest-only payments are due for the first two months, and principal and interest are due for the remaining period. The maturity date of this loan is June 11, 2011. The second term loan bears interest at LIBOR plus 1.5% per annum. Interest-only payments are due for the first three months, and principal and interest are due for the remaining period. The maturity of this loan is September 30, 2011. This term loan was executed in December 2007 and funded in January 2008. The term loans are secured by all of the equipment of the Partnership.

As of June 30, 2008, future maturities of long-term debt for the period from July 1, 2008 through December 31, 2008 and calendar years 2009, 2010, and 2011 are as follows:

2008	$	220,551
2009		436,265
2010		455,117
2011		245,014
	$	1,356,947

Note 4. Partners’ Equity

As of December 31, 2007 and in accordance with the Second Amended and Restated Agreement of Limited Partnership of National Default Exchange Holdings, LP (the “Partnership Agreement”), the Partnership had issued three classes of ownership units (the “Founder Units”, the “Investor Units”, and the “Executive Units”). All of the Founder Units and Investor Units were issued on June 1, 2006, and all of the Executive Units were issued on August 23, 2007.

The profits and losses of the Partnership are allocated to the Founder Units and Investor Units in accordance with the terms of the Partnership Agreement, which includes a preferred return, as defined. With respect to the distribution of Net Cash Flow, as defined in the Partnership Agreement, the Investor Units have preferences over all other classes of ownership units. With respect to the distribution of Net Cash Proceeds, as defined, the Investor Units have preferences over all other classes of ownership units and the Founder Units have preferences over all classes of ownership units other than the Investor Units. Executive Units are nonvoting. Executive Units do not receive distributions of Net Cash Flow, but may receive distributions of Net Cash Proceeds in the event certain contingent requirements are met.

The fair value of the Executive Units was approximately $2.3 million at the date of grant. Expense will be recognized in the event the contingent requirements are met during such period.

16

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Note 5. Commitments and Contingencies

Operating Leases

The Partnership leases its facilities, an airplane, and various equipment under noncancelable operating leases with terms expiring between 2008 and 2013. The Partnership leases the airplane from BDF AirGroup, LLC (“BDF Air”), an entity affiliated with the Partnership through common ownership interests. As of June 30, 2008, the leases require future annual minimum rentals in the following amounts (for the period from July 1, 2008 through December 31, 2008 and subsequent calendar years):

2008	$	778,521
2009		1,435,876
2010		1,282,210
2011		1,054,583
2012		1,055,557
Thereafter		618,991
	$	6,225,738

Rent and lease expense was $2,445,760, $1,939,578, $1,478,167, $725,071 and $867,957 for the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2007 and 2008, respectively, of which $1,010,447, $627,855, $142,890, $71,445 and $71,445, respectively, related to the lease with BDF Air.

Litigation

The Partnership is involved in pending or threatened litigation in the ordinary course of its business. Management does not expect the ultimate resolution of these matters to have a material adverse effect on the Partnership’s consolidated financial statements.

Note 6. Related Party Transactions

Financial Advisory Fees

During the years ended December 31, 2006 and 2007 and the six months ended June 30, 2007 and 2008, the Partnership incurred financial advisory fees of $875,000, $1,500,000, $750,000 and $750,000, respectively, payable to certain limited partners in the Partnership. These fees are pursuant to financial advisory agreements with terms ending on June 1, 2014 and which automatically terminate upon the sale of the Partnership or in the event the limited partner ceases to own an equity interest in the Partnership.

17

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Termination of Agreements

Effective December 1, 2006, the Partnership and an unrelated third party terminated a management agreement whereby the Partnership ceased to receive related fees. Concurrently, a non-compete agreement between the parties was terminated, allowing the Partnership to pursue certain business opportunities, including foreclosure trustee services, in the Western United States. Arrangements involving certain individuals, including certain individual limited partners in the Partnership, were also concurrently terminated causing these individuals to forego future earnings. The Partnership agreed to compensate these partners a total of $1,880,000, which was reflected as an expense during the year ended December 31, 2006. As of December 31, 2006, amounts owed to the partners of $1,080,000 and $670,833 were included in due to related parties — current and due to related parties — noncurrent, respectively. As of December 31, 2007, amounts owed to the partners of $350,000 and $320,833 were included in due to related parties — current and due to related parties — noncurrent, respectively. As of June 30, 2008, amounts owed to the partners of $350,000 and $145,833 were included in due to related parties — current and due to related parties — noncurrent, respectively.

Due from Partners

As of December 31, 2006 and 2007 and June 30, 2008, the Partnership had advances receivable from certain of its limited partners totaling $312,065, $507,430 and $918,921, respectively, which are included in due from related parties in the consolidated balance sheets.

Due to Charles Brown

In connection with the B&S investment, the Partnership entered into a $1,500,000 note with Charles Brown to purchase his 50% ownership interest. The note bears interest at 5%, and all borrowings and accrued interest were due on July 1, 2006. During the year ended December 31, 2006, the Partnership paid the remaining balance of $375,000.

Barrett Daffin & Frappier, LLP

Prior to June 1, 2006, the Partnership provided certain general and administrative services and office supplies to Barrett Daffin & Frappier, LLP (“BDF”), a Texas law firm providing default services affiliated with the Partnership through common ownership interests. As of December 31, 2006 and 2007 and June 30, 2008, receivables from BDF of $156,245, $0 and $325,373, respectively, were included in due from related parties in the consolidated balance sheets.

BDF Air

In addition to the lease arrangement (see Note 5), the Partnership provides certain general and administrative services to BDF Air, resulting in income for the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2007 and 2008 of $36,000, $12,000, $18,254, $8,341 and $9,000, respectively. As of December 31, 2006 and 2007 and June 30, 2008, receivables from BDF Air of $43,158, $12,933 and $11,186, respectively, were included in due from related parties in the consolidated balance sheets.

18

National Default Exchange Holdings, LP (and Predecessor)

Notes to Consolidated Financial Statements
(Information with respect to the six months ended June 30, 2007 and 2008 and as of June 30, 2008 is unaudited)

Brown & Shapiro, LLP

The Partnership performs title services for B&S. For the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2007 and 2008, the Partnership recognized related revenues of $353,341, $371,140, $93,080, $81,644 and $105,366, respectively. As of December 31, 2006 and 2007 and June 30, 2008, the Partnership had accounts receivable of $25,825, $467 and $27,752, respectively, from B&S, which are included in billed accounts receivable in the consolidated balance sheets.

Note 7. Employee Benefit Plan

The Partnership sponsors a 401(k) defined contribution retirement plan which covers all employees meeting minimum eligibility requirements as allowed by law. Participants may contribute to the plan and the Partnership makes matching contributions equal to 50% of participant contributions up to 6% of eligible compensation. The Partnership’s matching contributions for the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2007 and 2008, totaled $350,636, $342,747, $270,752, $162,205 and $283,556, respectively.

Note 8. Subsequent Event

On September 2, 2008, the partners in Holdings sold all outstanding ownership units in Holdings to American Processing Company, a majority owned subsidiary of Dolan Media Company.

19

EX-99.3

Exhibit 99.3

Dolan Media Company
Unaudited Pro Forma Consolidated Condensed Financial Information

     We have prepared the following unaudited pro forma consolidated condensed financial statements to illustrate the effect of the following transactions:

1.	Our majority owned subsidiary’s, American Processing Company, LLC, or APC, acquisition of National Default Exchange Holdings, L.P. and affiliated entities, which we refer to collectively as NDEx, on September 2, 2008;
2.	The private placement of 4,000,000 shares of our common stock on July 30, 2008, to 24 accredited investors, which we refer to as the PIPE, the net proceeds of which we used to fund, in part, APC’s acquisition of NDEx; and
3.	The 25 year services agreement NDEx entered with Barrett Daffin Frappier Turner & Engel, LLP, or the Barrett Law Firm, on September 2, 2008, for the referral of residential mortgage files to NDEx for servicing.

     We initially reported the closing of the acquisition of NDEx and the entering of the services agreement with the Barrett Law Firm in a current report on Form 8-K filed with the SEC on September 2, 2008, which we are amending to include the financial information, including this unaudited pro forma consolidated condensed financial information, required by Item 9.01 of Form 8-K. As described in the current report, APC acquired all of the equity interests of NDEx for a total of $167.5 million in cash, of which $151.0 million was paid to or on behalf of the sellers of NDEx, $15.0 million was placed in escrow to secure payment of indemnification claims and an additional $1.5 million was held back pending working capital adjustments. In addition to the cash payments, APC also issued to the sellers of NDEx an aggregate 6.1% interest in APC, or the APC Interests, which had an estimated fair market value of approximately $11.6 million on July 28, 2008, the date the parties signed the equity purchase agreement. We also issued to the sellers of NDEx 825,528 shares of our common stock, which have a fair market value of $16.5 million based upon the average of the daily last reported closing price for a share of our common stock on the five consecutive trading days beginning on and including July 24, 2008, two trading days prior to the date we announced this acquisition. We based the number of shares issued to the sellers of NDEx on $15.9 million divided by the average of our daily last reported closing price for a share of our common stock on the 20 consecutive trading days immediately preceding the signing of the equity purchase agreement through and including July 25, 2008. We incurred transaction costs of approximately $1.0 million in connection with the acquisition. In addition to the payments and issuance of APC Interests and common stock described above, we may be obligated to pay the sellers of NDEx up to an additional $13.0 million in cash based upon the adjusted EBITDA for NDEx during the first twelve months following the closing of the acquisition. If the adjusted EBITDA for NDEx equals or exceeds $28.0 million during such twelve-month period, we will pay the sellers the maximum $13.0 million earnout payment. We used the net proceeds from the sale of the shares in the PIPE, along with approximately $99.0 million in debt from our credit facility and $6.5 million in cash from existing resources, to finance the cash purchase price for NDEx. In addition, we have recorded a preliminary estimated deferred tax liability of $13.0 million related to the difference between the tax basis and book basis of the assets acquired.

     In connection with this acquisition, NDEx amended and restated its services agreement with the Barrett Law Firm. The services agreement provides for the referral of residential mortgage default files from the Barrett Law Firm to NDEx for servicing. This agreement has an initial term of twenty-five years, which term may be automatically extended for successive five year periods unless either party elects to terminate the term then-in-effect with prior notice. Under the services agreement, NDEx is paid a fixed fee for each residential mortgage default file referred by the Barrett Law Firm to NDEx for servicing, with the amount of such fixed fee being based upon the type of file. In addition, the Barrett Law Firm pays NDEx a monthly trustee foreclosure administration fee. The amount of such fee is based upon the number of files the Barrett Law Firm has referred to NDEx for processing during the month. NDEx may amend these fees on a quarterly basis during 2009 and on an annual basis beginning in 2010 upon notice to the Barrett Law Firm. However, if the Barrett Law Firm files a timely notice of objection to the proposed amended fees, NDEx and the Barrett Law Firm have agreed to negotiate amended fees that are agreeable

1

to both parties or to retain the existing fees. In addition to the services agreement, we also entered into noncompetition agreements with the key managers of NDEx and with the Barrett Law Firm.

     We are accounting for the acquisition under the purchase method of accounting in accordance with SFAS No. 141, “Business Combinations.” Under SFAS No. 141, we are responsible for estimating the fair value of assets acquired and liabilities assumed. Of the $209 million of acquired assets, we have preliminarily allocated $2.0 million to accounts receivable, $7.0 million to property and equipment and $1.0 million to software held for sale. Of the total remaining $199.0 million, we have preliminarily allocated $154.0 million to a long term services agreement, which is being amortized over 25 years, representing its initial contractual term, $5.0 million to noncompetition agreements, which are being amortized over 5 years, representing the contract term, and $40.5 million to goodwill. Of the $199.0 million allocated to intangibles and goodwill, approximately $159.3 million is tax deductible. We allocated the goodwill to our Professional Services segment. We have engaged an independent third-party valuation firm to assist us in determining the estimated fair value of the identified intangibles and this valuation is not yet complete. Accordingly, the allocation of purchase price reflected in these unaudited pro forma consolidated condensed financial statements is preliminary. We paid a premium over the fair value of the net tangible and identified intangible assets acquired in the acquisition (i.e., goodwill) because the acquired business is a complement to APC and we anticipate cost savings and revenue synergies through combined general and administrative and corporate functions.

     In estimating the fair value of the services agreement and the noncompetition agreements, it is appropriate to use an income method based on projected earnings. This is because APC acquired NDEx and will merge it into APC’s existing operations, which we expect to create operational efficiencies. In the discounted cash flow analysis (income approach) used for estimating the fair value of the services agreement, we made certain significant assumptions regarding:

• the rate of annual revenue growth over the services agreement’s initial term;

• the rate of EBITDA and expected EBITDA margins; and

• the discount rate of 17.0%.

In the discounted cash flow analysis used for estimating the fair value of the noncompetition agreements, we made certain significant assumptions regarding:

• the rate of EBIDTA;

• the likelihood of competition with and without the noncompetition agreements; and

• the impact of any such competition on the rate of EBITDA.

     We have based this unaudited pro forma consolidated condensed financial information on our historical consolidated financial statements and the accompanying notes and the historical consolidated financial statements of NDEx filed as Exhibit 99.2 to our current report on Form 8-K/A filed on September 16, 2008. This unaudited pro forma consolidated condensed financial information is also an exhibit to that current report on Form 8-K/A. In preparing this unaudited pro forma consolidated condensed financial information, we have used information available to us and made certain assumptions that we believe are reasonable under the circumstances. We believe these assumptions are appropriate for purposes of this preliminary allocation. However, we cannot provide any assurance that the assumptions we used in preparing this unaudited pro forma consolidated condensed financial information will not change when we have completed the final appraisals. We have applied the pro forma adjustments to the respective historical statements to reflect the effect of these transactions and account for the acquisition using the purchase method of accounting.

     The unaudited pro forma consolidated condensed statement of operations for the year ended December 31, 2007, and the six months ended June 30, 2008, illustrate the effect of the acquisition of NDEx (including the services agreement) and the sale and issuance of 4,000,000 shares of our common stock in connection with the PIPE as if both events occurred on January 1, 2007 or 2008, as applicable. The unaudited pro forma consolidated condensed balance sheet as of June 30, 2008, illustrates the effect of the acquisition of NDEx and the sale and issuance of 4,000,000 shares of our common stock in the PIPE as if both events occurred on June 30, 2008.

2

     We have prepared these unaudited pro forma consolidated condensed financial statements for illustrative purposes only and they do not include any cost savings we may realize from operational efficiencies, revenue synergies or changes in operating strategies we expect to result from the acquisition. Therefore, these pro forma financial statements are not necessarily indicative of either the results of our operations or our financial condition had the acquisition been effected on January 1, 2007 or 2008, and you should not construe them as a representation of our future operating results.

     You should read the unaudited pro forma consolidated condensed financial statements and related footnotes in conjunction with the consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the year ended December 31, 2007, and our quarterly reports on Form 10-Q for the periods ended March 31, 2008 and June 30, 2008, all filed with the SEC and available on our website at www.dolanmedia.com. You should also read the unaudited pro forma consolidated condensed financial statements and related footnotes in conjunction with the consolidated financial statements of NDEx included as Exhibit 99.2 to our current report on Form 8-K/A filed with the SEC on September 16, 2008.

3

Unaudited Pro Forma Consolidated Condensed Statement of Operations
Year Ended December 31, 2007

							Increase (Decrease)
							Pro			Pro
	Historical						Forma			Forma
	Dolan Media			Historical			Acquisition			PIPE
	Company			NDEx			Adjustments			Adjustments			Pro Forma
							(unaudited)			(unaudited)			(unaudited)
	(in thousands, except share and per share data)
Revenues
Business information	$	84,974		$	—		$	—		$	—		$	84,974
Professional services		67,015			80,665			(14,658	)(1)		—			133,022
Total revenues		151,989			80,665			(14,658	)		—			217,996
Operating expenses
Direct operating: Business Information		28,388			—			—			—			28,388
Direct operating: Professional Services		21,556			41,793			(16,485	)(2)		—			46,864
Selling, general and administrative		63,886			32,959			(10,186	)(2)		—			86,659
Amortization		7,526			1,101			7,160	(3)		—			15,787
Depreciation		3,872			770			137	(3)		—			4,779
Total operating expenses		125,228			76,623			(19,374	)		—			182,477
Equity in earnings of Detroit Legal News Publishing, LLC		5,414			—			—			—			5,414
Operating income		32,175			4,042			4,716			—			40,933
Non-operating expense:
Non-cash interest expense related to preferred stock		(66,132	)		—			—			—			(66,132	)
Interest expense		(8,521	)		(37	)		(8,114	)(4)		—			(16,672	)
Other expense		(8	)		(126	)		126	(2)		—			(8	)
Total non-operating expense		(74,661	)		(163	)		(7,988	)		—			(82,812	)
(Loss) income before income taxes and minority interest		(42,486	)		3,879			(3,272	)		—			(41,879	)
Income tax expense		(7,863	)		(447	)		897	(6)		—			(7,413	)
Minority interest in net income of subsidiary		(3,685	)		(111	)		490	(5)		—			(3,306	)
Net (loss) income	$	(54,034	)	$	3,321		$	(1,885	)		—		$	(52,598	)
Net loss per share:
Basic and diluted	$	(3.41	)										$	(2.54	)
Weighted average shares outstanding:
Basic and diluted		15,868,033						825,528	(17)		4,000,000	(16)		20,693,561

See Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements

4

Unaudited Pro Forma Consolidated Condensed Statement of Operations
Six Months Ended June 30, 2008

							Increase (Decrease)
							Pro			Pro
	Historical						Forma			Forma
	Dolan Media			Historical			Acquisition			PIPE
	Company			NDEx			Adjustments			Adjustments			Pro Forma
	(unaudited)			(unaudited)			(unaudited )			(unaudited)			(unaudited)
	(in thousands, except share and per share data)
Revenues
Business information	$	46,196		$	—		$	—		$	—		$	46,196
Professional services		36,869			51,085			(10,399	)(1)		—			77,555
Total revenues		83,065			51,085			(10,399	)		—			123,751
Operating expenses
Direct operating: Business Information		15,724			—			—			—			15,724
Direct operating: Professional Services		12,747			27,036			(8,312	)(2)		—			31,471
Selling, general and administrative		32,836			16,969			(4,307	)(2)		—			45,498
Amortization		4,536			901			3,580	(3)		—			9,017
Depreciation		2,291			633			(245	)(3)		—			2,679
Total operating expenses		68,134			45,539			(9,284	)		—			104,389
Equity in earnings of Detroit Legal News Publishing, LLC		3,026			—			—			—			3,026
Operating income		17,957			5,546			(1,115	)		—			22,388
Non-operating expense:
Non-cash interest expense related to preferred stock		—			—			—			—			—
Interest expense		(2,738	)		(49	)		(2,627	)(4)		—			(5,414	)
Other expense		21			29			(29	)(2)		—			21
Total non-operating expense		(2,717	)		(20	)		(2,656	)		—			(5,393	)
Income before income taxes and minority interest		15,240			5,526			(3,771	)		—			16,995
Income tax expense		(5,786	)		(274	)		(736	)(6)		—			(6,796	)
Minority interest in net income of subsidiary		(1,050	)		(52	)		(628	)(5)		—			(1,730	)
Net income	$	8,404		$	5,200		$	(5,135	)	$	—		$	8,469
Net income per share:
Basic	$	0.34											$	0.28
Diluted	$	0.33											$	0.28
Weighted average shares outstanding:
Basic		24,936,183						825,528	(17)		4,000,000	(16)		29,761,711
Diluted		25,246,279						825,528	(17)		4,000,000	(16)		30,071,807

See Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements

5

Unaudited Pro Forma Consolidated Condensed Balance Sheet
At June 30, 2008

						Increase (Decrease)
						Pro			Pro
	Historical					Forma			Forma
	Dolan Media			Historical		Acquisition			PIPE
	Company			NDEx		Adjustments			Adjustments			Pro Forma
	(unaudited)			(unaudited)		(unaudited)			(unaudited)			(unaudited)
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	2,615		$	7,245	$	(7,599	)(7)	$	47	(16)	$	2,308
Accounts receivable		25,150			27,094		(4,729	)(8)		—			47,515
Prepaid expense and other current assets		2,214			3,223		(601	)(9)		—			4,836
Deferred income taxes		259			—		—			—			259
Total current assets		30,238			37,562		(12,929	)		47			54,918
Investments		18,005			3,116		(3,116	)(9)		—			18,005
Property and equipment, net		13,209			9,556		(2,556	)(10)		—			20,209
Finite-life intangible assets, net		100,843			—		159,000	(15)		—			259,843
Goodwill		81,543			—		40,515	(15)		—			122,058
Other assets		2,454			3,454		(2,454	)(11)		—			3,454
Total assets	$	246,292		$	53,688	$	178,460		$	47		$	478,487
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	6,526		$	436	$	3,564	(12)	$	—		$	10,526
Accounts payable		4,731			24,449		(2,022	)(9)		—			27,158
Accrued compensation		3,620			2,730		(671	)(9)		—			5,679
Accrued liabilities		1,728			4,869		(328	)(13)		—			6,269
Due to sellers of acquired business		525			—		1,500	(15)		—			2,025
Deferred revenue		11,632			1,142		(182	)(9)		—			12,592
Total current liabilities		28,762			33,626		1,861			—			64,249
Long-term debt, less current portion		67,312			921		94,079	(12)		—			162,312
Deferred income taxes		4,393			—		13,000	(15)		—			17,393
Deferred revenue and other liabilities		3,929			146		60,500	(15)		(60,500	)(16)		4,075
Total liabilities		104,396			34,693		169,440			(60,500	)		248,029
Minority interest in consolidated subsidiary		3,524			5,655		5,897			—			15,076
Commitments and contingencies
Stockholders’ equity
Common stock		25			—		1			4	(16)		30
Additional paid in capital		213,156			13,340		3,122	(14)		60,543	(16)		290,161
Accumulated deficit		(74,809	)		—		—			—			(74,809	)
Total stockholders’ equity		138,372			13,340		3,123			60,547			215,382
Total liabilities and stockholders’ equity	$	246,292		$	53,688	$	178,460		$	47		$	478,487

See Notes to Unaudited Consolidated Condensed Pro Forma Financial Statements

6

Notes to Unaudited Consolidated Pro Forma Financial Statements
Unaudited Pro Forma Adjustments

(1)

The NDEx (and Predecessor) audited financial statements on which these pro forma financial statements have been based include items of revenue and expense earned, or incurred, by the Barrett Law Firm, which we did not acquire. NDEx (and Predecessor) had historically consolidated the Barrett Law Firm because it was determined that the Barrett Law Firm was a variable interest entity and that NDEx was its primary beneficiary as defined by Financial Accounting Standards Board Interpretation No. 46(R), “Consolidation of Variable Interest Entities - - An Interpretation of ARB No. 51”, as amended. We have excluded from the unaudited pro forma consolidated condensed statement of operations the revenue that the Barrett Law Firm earned because it will no longer be considered a variable interest entity with NDEx as its primary beneficiary and, therefore, will not be consolidated with our financial statements.

Also, in connection with this acquisition, NDEx amended and restated its services agreement with the Barrett Law Firm, which changed the fees which the Barrett Law Firm pays to NDEx for mortage default processing services. Under the new services agreement, the Barrett Law Firm pays NDEx a fixed fee for each residential mortgage default file referred to NDEx. The amount of this fee is based on the type of file. In addition, the Barrett Law Firm pays NDEx a monthly trustee foreclosure administration fee, with the amount of such fee based on the number of files the Barrett Law Firm referred to NDEx for processing during that month. As a result, we have adjusted NDEx’s revenues to reflect the amended fee structure. We have calculated NDEx revenues by using the actual number of files NDEx processed for the Barrett Law Firm in 2007 and the six months ended June 30, 2008, multiplied by the respective fee per file set forth in the services agreement, with the revenue recognized ratably over the period for which the services have been provided. (in thousands):

	Year Ended			Six Months
	December 31,			Ended
	2007			June 30, 2008
Barrett Law Firm revenues	$	(19,390	)	$	(9,532	)
Increase in fees determined in accordance with new services agreement		4,732			(867	)
	$	(14,658	)	$	(10,399	)

(2) These adjustments represent the elimination of expenses the Barrett Law Firm incurred. As noted in Note 1 above, we did not acquire the Barrett Law Firm (in thousands):

	Year Ended		Six Months
	December 31,		Ended
	2007		June 30, 2008
Direct expenses of the Barrett Law Firm	$	16,485	$	8,312
Selling, general and administration expenses of the Barrett Law Firm		10,186		4,307
Other expenses of the Barrett Law Firm		126		(29	)

(3) These adjustments reflect the additional depreciation and amortization expense resulting from the preliminary allocation of the purchase price to property and equipment and identifiable finite-life intangible assets. We have computed depreciation and amortization using the straight-line method over the estimated useful lives of the assets. We are expensing the amortization of the purchase price allocated to the services agreement over 25 years, which represents the initial term of the agreement. We allocated the long-lived assets to computers, furniture and fixtures, software and work in progress and will depreciate it over 24-36 months.

7

          Property and equipment consisted of the following (in thousands):

							Year Ended December 31, 2007
							Depreciation Expense
			Estimated		Pro		Pro				Pro
	Estimated		Life		Forma		Forma		Less		Forma
	Fair Value		(Months)		(Months)		Amount		Historical		Adjustment
Computers	$	2,400		36		12	$	800	$	624	$	176
Leasehold improvements		—		n/a		—		—		309		(309	)
Furniture and fixtures		360		30		12		144		141		3
Software		3,060		36		12		1020		753		267
Work in progress		180		n/a		n/a		—		—		—
Total	$	6,000					$	1,964	$	1,827	$	137

							Six Months Ended June 30, 2008
							Depreciation Expense
			Estimated		Pro		Pro				Pro
	Estimated		Life		Forma		Forma		Less		Forma
	Fair Value		(Months)		(Months)		Amount		Historical		Adjustment
Computers	$	2,800		36		6	$	467	$	552	$	(85	)
Leasehold improvements		—		n/a		—		—		198		(198	)
Furniture and fixtures		300		30		6		60		78		(18	)
Software		3,900		36		6		650		594		56
Work in progress		—		n/a		n/a		—		—		—
Total	$	7,000					$	1,177	$	1,422	$	(245	)

The difference in the preliminary estimated fair value at year ended December 31, 2007 and June 30, 2008 is due to the additions and write-offs to property and equipment, which occurred in the six months ended June 30, 2008.

               Finite-Life intangible assets consisted of the following (in thousands):

							Year Ended December 31, 2007
							Amortization Expense
			Estimated		Pro		Pro				Pro
	Estimated		Life		Forma		Forma		Less		Forma
	Fair Value		(Months)		(Months)		Amount		Historical		Adjustment
Services agreement	$	154,000		300		12	$	6,160	$	—	$	6,160
Noncompetition agreements		5,000		60		12		1,000		—		1,000
Total	$	159,000					$	7,160	$	—	$	7,160

							Six Months Ended June 30, 2008
							Amortization Expense
			Estimated		Pro		Pro				Pro
	Estimated		Life		Forma		Forma		Less		Forma
	Fair Value		(Months)		(Months)		Amount		Historical		Adjustment
Services agreement	$	154,000		300		6	$	3,080	$	—	$	3,080
Noncompetition agreements		5,000		60		6		500		—		500
Total	$	159,000					$	3,580	$	—	$	3,580

(4) On September 2, 2008, we drew down $99.0 million in principal amount under our $200 million credit facility, which we used to fund, in part, the acquisition of NDEx. The full amount is a revolving loan under our credit facility. The terms of the credit facility require us to convert at least $25.0 million of the revolving loans outstanding under our credit facility in to term loans no later than thirty business days after September 2, 2008. We expect to convert approximately $80.0 million of this draw into an amortizing term loan. The current portion of that converted term loan is equal to 1.25% of the amount borrowed per quarter or $4.0 million per year. These adjustments represent the additional interest expense associated with borrowings on our senior credit facility to fund the purchase price (in thousands):

8

	Year Ended December 31, 2007
	Borrowings		Rate			Days		Interest Expense (Income)
Senior debt borrowed to fund acquisition of NDEx	$	99,000		8.23	%		365	$	8,151
NDEx historical interest income									(37	)
Total								$	8,114

	Six Months Ended March 31, 2008
	Borrowings		Rate			Days		Interest Expense (Income)
Senior debt borrowed to fund acquisition of NDEx	$	99,000		5.40	%		365	$	2,676
NDEx historical interest income									(49	)
Total								$	2,627

(5)	In connection with the acquisition, APC issued 84,137 common units to the sellers of NDEx. These common units represented approximately 6.1% of APC’s outstanding membership interests, immediately following the closing. We determined the value of the common units by multiplying APC’s estimated 2007 EBITDA by 6.25, and then subtracting APC’s outstanding indebtedness on July 28, 2008. The factor of 6.25 is consistent with the terms of the put rights each minority member of APC holds.
	The pro forma adjustment to the minority interest in the net income of subsidiary reflects the additional charge that resulted from the dilution caused by the issuance of those common units assuming APC had issued them on on January 1, 2007 or 2008, as applicable.
	The following table shows the minority interest percentage during 2007 and 2008.

	Actual			Dilution			Pro Forma
Minority interest from January 2007 to November 2007		22.6	%		2.5	%		25.1	%
Minority interest during December 2007		11.3	%		4.6	%		15.9	%
Minority interest from January 2007 to February 2008		11.3	%		4.6	%		15.9	%
Minority interest from March 2008 to June 2008		11.1	%		4.2	%		15.3	%

The weighted average minority interest percentage was 24.7% for the year ended December 31, 2007 and 15.5 % for the six months ended June 30, 2008.

The minority interest adjustment for 2007 and 2008 is determined by (i) calculating the increased minority interest charge related to the APC income, (ii) calculating the increased (decreased) minority interest charge related to NDEx and (iii) eliminating the minority interest related to a subsidiary of NDEx that we did not acquire (in thousands):

	Year Ended			Six Months
	December 31,			Ended
	2007			June 30, 2008
(i) Calculation of increased minority interest charge related to APC income:
Historical APC net income before minority interest	$	16,758		$	9,393
Weighted average pro forma minority interest percentage		24.7	%		15.5	%
Pro forma minority interest		4,136			1,458
Historical minority interest		3,685			1,050
Additional minority interest		451			408
(ii) Calculation of increased (decreased) minority interest charge related to NDEx:
Historical NDEx net income	$	3,321		$	5,200
Pro forma adjustments		(2,714	)		(3,445	)

9

	Year Ended			Six Months
	December 31,			Ended
	2007			June 30, 2008
		607			1,755
Weighted average pro forma minority interest percentage		24.7	%		15.5	%
Addition to minority interest		150			272
(iii) Elimination of minority interest on historical NDEx financial statements related to subsidiary retained by law firm*
Minority interest of subsidiary not acquired		(111	)		(52	)
Total adjustment	$	490		$	628

* The NDEx financial statements include a minority interest charge for a subsidiary that we did not acquire.

(6) This adjustment provides for the tax effect of pro forma adjustments using an estimated effective tax rate of 41% and to record pro forma tax expense on earnings of NDEx as if it had been a taxable organization (in thousands).

	Year Ended
	December 31, 2007
				Pro Forma Tax Expense
	Amount			(Benefit) at 41%
Tax effect pro forma adjustments	$	(3,272	)	$	(1,341	)
Tax expense related to historical income		3,879			1,590
Tax effect minority interest adjustment		490			201
Less historical tax on NDEx income					447
Total income tax expense				$	897

	Six Months Ended
	June 30, 2008
				Pro Forma Tax Expense
	Amount			(Benefit) at 41%
Tax effect pro forma adjustments	$	(3,771	)	$	(1,546	)
Tax expense related to historical income		5,526			2,266
Tax effect minority interest adjustment		(628	)		(258	)
Less historical tax on NDEx income					274
Total income tax expense				$	736

(7) This adjustment represents the elimination of the cash retained by the Barrett Law Firm which we did not acquire and the cash we used to fund the acquisition (in thousands):

Cash retained by the Barrett Law Firm	$	(1,099	)
Cash we used to acquire NDEx		(6,500	)
Total	$	(7,599	)

(8) These adjustments represent the elimination of accounts receivable of the Barrett Law Firm, which we did not acquire, and represent the estimated amount the Barrett Law Firm owes to NDEx in order to meet the minimum working capital requirements under the equity purchase agreement (in thousands):

10

Accounts receivable of the Barrett Law Firm	$	(7,596	)
Amount due from Barrett Law Firm under the new services agreement		867
Subtotal		(6,729	)
Amount due from Barrett Law Firm to meet minimum working capital requirement (see Note 15)		2,000
Total	$	(4,729	)

(9) These adjustments represent the elimination of prepaid expenses, investments, accounts payable, accrued compensation and deferred revenue of the Barrett Law Firm, which we did not acquire (in thousands):

Prepaid expenses and other current assets of the Barrett Law Firm	$	(601	)
Investments of the Barrett Law Firm	$	(3,116	)
Accounts payable	$	(2,022	)
Accrued compensation	$	(671	)
Deferred revenue	$	(182	)

(10) This adjustment represent the preliminary estimated fair value of the property and equipment we acquired:

NDEx historical cost of property and equipment	$	(9,556	)
Estimated fair value of property and equipment		7,000
Total	$	(2,556	)

	Our preliminary estimated fair value of the property and equipment assumes that we will replace part of the document management software that NDEx developed.
(11)	This adjustment represent the elimination of other assets of the Barrett Law Firm, which we did not acquire, and the preliminary estimated fair value of the capitalized software development costs (in thousands):

Other assets of the Barrett Law Firm	$	(3,454	)
Capitalized software development costs at estimated fair value (see Note 15)		1,000
Total	$	(2,454	)

(12) These adjustments reflect the elimination of the long-term debt retained by the Barrett Law Firm and the additional long-term debt incurred to fund the acquisition (in thousands):

Current portion of long-term debt retained by the Barrett Law Firm	$	(436	)
Current portion of long-term debt borrowed to fund the acquisition (see Note 15)		4,000
Total	$	3,564
Long-term debt, net of current portion, retained by the Barrett Law Firm	$	(921	)
Long-term debt, net of current portion, borrowed to fund the acquisition (see Note 15)		95,000
Total	$	94,079

11

(13) These adjustments reflect the elimination of the accrued liabilities of the Barrett Law Firm, which we did not acquire, and the estimated costs we incurred in connection with the acquisition (in thousands):

Accrued liabilities of the Barrett Law Firm	$	(1,328	)
Estimated accrued acquisition costs (see note 15)		1,000
Total	$	(328	)

(14) These adjustments reflect the elimination of the NDEx historical equity and the addition of the value of our common stock that we issued to the sellers of NDEx, or their designees, at the closing of the acquisition: (in thousands):

Additional paid in capital of the Barrett Law Firm	$	(13,340	)
Additional paid in capital issued to the sellers of NDEx (see Note 15)		16,462
Total	$	3,122

(15) These adjustments represent the preliminary purchase accounting adjustment (in thousands):

Cash			$	(6,500	)
Accounts receivable				2,000
Property and equipment (estimated fair market value)				7,000
Finite-life intangible: services agreement	$	154,000
Finite-life intangible: noncompete agreements		5,000
Total finite-live intangibles				159,000
Goodwill from acquisition of NDEx				40,515
Other assets: software held for sale				1,000
Total assets			$	203,015
Current portion of long-term debt	$	4,000
Long-term debt		95,000
Total long-term debt			$	99,000
Accrued liabilities				1,000
Other long-term liabilities				60,500
Due to sellers of acquired business				1,500
Minority interest				11,552
Deferred income taxes				13,000
Common stock and additional paid in capital				16,463
Total liabilities and stockholders’ equity			$	203,015

12

(16)

On July 30, 2008, we issued 4,000,000 shares of common stock to twenty-four accredited investors investors under the terms of a securities purchase agreement. This adjustment reflects the receipt by us of the net proceeds from the sale of such shares of common stock at the price of $16.00, per share after deducting the underwriting accounts and the estimated offering expenses payable by the. The net proceeds of the offering were $60.5 million, which we used to fund, in part, our acquisition of NDEx.

(17)

The following table reconciles the historical weighted average shares outstanding to the pro forma, weighted average shares outstanding (in thousands):

	Year Ended		Six Months Ended
	December 31, 2007		June 30, 2008
Weighted average shares outstanding — Historical		15,868		24,936
Add common stock issued in the private placement		4,000		4,000
Add common stock issued in connection with the NDEx acquisition		826		826
Pro forma weighted average shares outstanding, basic		20,694		29,762
Pro forma weighted average shares outstanding, diluted		20,694		30,072

13