<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
--------- ----------
Commission file number 333-66859
INTREPID CAPITAL CORPORATION
(Exact name of Registrant as specified in its Charter)
DELAWARE 59-3546446
(State of Incorporation) (I.R.S. Employer Identification No.)
3652 SOUTH THIRD STREET, SUITE 200, JACKSONVILLE BEACH, FLORIDA 32250
(Address of principal executive offices) (Zip Code)
(904) 246-3433
(Registrant's telephone number)
50 NORTH LAURA STREET, SUITE 3550, JACKSONVILLE, FLORIDA 32202
(Former address of principal executive offices) (Zip Code)
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES [ X ] NO [ ]
As of July 31, 2000, there were 2,214,525 shares of Common Stock, $0.01
par value per share, outstanding, and 1,000 shares of Common Stock issued and
held in treasury.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE> 2
INTREPID CAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 2000
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C>
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheets of Intrepid Capital Corporation and
Subsidiaries as of June 30, 2000 and December 31, 1999...................................... 3
Consolidated Statements of Operations of Intrepid Capital Corporation
and Subsidiaries for the Three and Six Month Periods Ended June 30,
2000 and 1999............................................................................... 4
Consolidated Statements of Cash Flows of Intrepid Capital Corporation
and Subsidiaries for the Six Months Ended June 30, 2000 and 1999............................ 5
Notes to Consolidated Financial Statements.................................................. 6-8
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources............................................................. 9
Results of Operations....................................................................... 10-13
PART II - OTHER INFORMATION
ITEM 1 AND ITEM 6. OTHER INFORMATION
Other Information........................................................................... 13
SIGNATURES....................................................................................... 14
</TABLE>
2
<PAGE> 3
INTREPID CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2000 and December 31, 1999
(unaudited)
<TABLE>
<CAPTION>
ASSETS 2000 1999
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 615,010 1,094,700
Investments, at fair value 239,270 461,210
Accounts receivable, net of allowance
for doubtful accounts of $58,074 in 2000 and 1999 268,068 246,702
Inventories 75,526 107,860
Prepaid and other assets 279,160 142,848
----------- ----------
Total current assets 1,477,034 2,053,320
Property, plant, and equipment, net of accumulated
depreciation of $123,705 in 2000 and $111,122 in 1999 411,737 388,222
Goodwill, less accumulated amortization of $108,788
in 2000 and $71,622 in 1999 1,006,211 1,043,377
Deferred tax assets -- 40,674
Other assets 8,804 5,299
----------- ----------
Total assets $ 2,903,786 3,530,892
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 121,195 149,442
Accrued expenses 283,465 388,956
Securities sold, not yet purchased -- 2,555
Current portion of notes payable 203,333 133,333
Other 142,294 123,978
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Total current liabilities 750,287 798,264
Notes payable, less current portion 846,667 916,667
----------- ----------
Total liabilities 1,596,954 1,714,931
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Stockholders' equity:
Common stock, $.01 par value. Authorized 15,000,000 shares;
issued 2,215,525 shares at June 30, 2000
and December 31, 1999 22,155 22,155
Treasury stock, at cost - 1,000 shares held (3,669) (3,669)
Additional paid-in capital 2,481,320 2,481,320
Accumulated deficit (1,192,974) (683,845)
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Total stockholders' equity 1,306,832 1,815,961
----------- ----------
$ 2,903,786 3,530,892
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
INTREPID CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Six month periods ended June 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
2000 1999 2000 1999
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 430,825 447,180 1,025,763 833,110
Asset management fees 164,239 209,025 348,126 434,040
Investment banking revenues 45,910 -- 66,291 --
Net trading profits 53,061 65,736 109,223 40,599
Resinous material sales 260,079 732,281 485,266 1,129,127
Dividend and interest income 15,678 13,257 38,936 16,704
Other 18,271 21,043 24,466 25,448
----------- --------- ---------- ----------
Total revenues 988,063 1,488,522 2,098,071 2,479,028
----------- --------- ---------- ----------
Expenses:
Salaries and employee benefits 649,237 602,441 1,416,827 1,107,873
Brokerage and clearing 94,914 123,628 222,022 241,797
Cost of resinous material sales 136,445 299,871 251,596 553,469
Advertising and marketing 46,295 81,383 128,243 142,244
Professional and regulatory fees 93,018 82,445 183,049 158,924
Occupancy and maintenance 108,966 48,837 222,800 91,965
Depreciation and amortization 50,484 23,237 101,754 58,575
Interest expense 19,381 8,739 38,241 13,590
Other 94,322 92,630 195,444 154,224
----------- --------- ---------- ----------
Total expenses 1,293,062 1,363,211 2,759,976 2,522,661
----------- --------- ---------- ----------
(Loss) income before income taxes (304,999) 125,311 (661,905) (43,633)
Income tax benefit (18,472) -- (152,776) --
----------- --------- ---------- ----------
Net (loss) income $ (286,527) 125,311 (509,129) (43,633)
=========== ========= ========== ==========
Basic net (loss) income per share $ (0.13) 0.06 (0.23) (0.02)
=========== ========= ========== ==========
Diluted net (loss) income per share $ (0.13) 0.05 (0.23) (0.02)
=========== ========= ========== ==========
Basic weighted average shares outstanding 2,214,525 2,214,525 2,214,525 2,214,647
=========== ========= ========== ==========
Diluted weighted average shares outstanding 2,214,525 2,315,561 2,214,525 2,214,647
=========== ========= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
INTREPID CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended June 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ (509,129) $ (43,633)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 101,754 58,575
Sales (purchases) of investments and securities
sold, not yet purchased, net 328,608 (1,099,766)
Net trading profits (109,223) (40,599)
Change in assets and liabilities:
Accounts receivable (21,366) (103,100)
Inventories 32,334 37,166
Prepaid and other assets (99,143) (27,690)
Accounts payable and accrued expenses (133,738) (669,696)
Other liabilities 18,316 (47,848)
----------- -----------
Net cash used in operating activities $ (391,587) $(1,936,591)
----------- -----------
Cash flows from investing activities:
Purchase of property, plant, and equipment (88,103) (31,497)
Proceeds from sale of land -- 1,800,000
----------- ----------
Net cash (used in) provided by investing activities (88,103) 1,768,503
----------- ----------
Cash flows from financing activities:
Principal payments on notes payable -- (245,749)
Purchase of treasury stock -- (3,669)
----------- ----------
Net cash used in financing activities -- (249,418)
----------- ----------
Net decrease in cash and cash equivalents (479,690) (417,506)
Cash and cash equivalents at beginning of period 1,094,700 928,186
----------- ----------
Cash and cash equivalents at end of period $ 615,010 $ 510,680
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 42,691 $ 13,590
=========== ==========
Supplemental disclosure of non-cash transactions:
Investment purchased with margin loan $ -- $ 836,622
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
INTREPID CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OPERATIONS
(A) ORGANIZATION AND BASIS OF PRESENTATION
Intrepid Capital Corporation (the "Company") was formed on April
3, 1998 for the purpose of becoming a full service investment
management and consulting business. On December 16, 1998, as part
of a simultaneous merger and reorganization, the Company acquired
all of the outstanding shares of Enviroq Corporation ("Enviroq"),
Intrepid Capital Management, Inc. ("ICM") and Capital Research
Corporation ("CRC") through a series of stock-for-stock and
stock-for-cash exchanges with the former shareholders of each
entity. The Company is located in Jacksonville Beach, Florida and
conducts its business through its three wholly-owned
subsidiaries.
ICM provides investment consulting and investment management
services to individuals and corporations. ICM has received
authority to act as an investment manager in several states to
meet the needs of its customers, the majority of which are
located in the southeastern United States.
CRC was a registered broker/dealer with the Securities and
Exchange Commission (the "SEC") and a member of the National
Association of Securities Dealers, Inc. (the "NASD") and the
Securities Investor Protection Corporation (the "SIPC"). In a
transaction effective on August 1, 1999, the Company acquired all
the outstanding shares of Allen C. Ewing Financial Services, Inc.
("ACEFS"). Primarily all of ACEFS' operations were conducted
through its wholly owned subsidiary, Allen C. Ewing & Co., a
registered broker/dealer with the SEC and a member of the NASD
and the SIPC. Concurrent with that transaction, the Company
contributed all of the assets and liabilities of ACEFS to CRC.
Subsequent to the acquisition, the operations of CRC and ACEFS
were conducted through the merged entity under the name Allen C.
Ewing & Co. ("Ewing"), which retained its broker/dealer
registration. Effective December 31, 1999, CRC is no longer a
registered broker/dealer. Ewing conducts a general securities
business on a fully-disclosed basis through a clearing
broker/dealer that carries all accounts and prepares and
maintains all books and records for Ewing's customers.
Enviroq conducts its operations through Sprayroq, Inc.
("Sprayroq"), a 50% owned subsidiary. Sprayroq is engaged in the
development, commercialization, manufacture and marketing of
spray-applied resinous materials and in the treatment of
municipal wastewater.
6
<PAGE> 7
INTREPID CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2000
The interim financial information included herein is unaudited.
Certain information and footnote disclosures normally included in
the financial statements have been condensed or omitted pursuant
to the rules and regulations of the SEC. The Company believes
that the disclosures made herein are adequate to make the
information presented not misleading. These financial statements
should be read in conjunction with the financial statements and
related notes contained in the Company's Annual Report on Form
10-KSB filed with the SEC on March 28, 2000. Except as indicated
herein, there have been no significant changes from the financial
data published in the Company's Annual Report. In the opinion of
management, such unaudited information reflects all adjustments,
consisting of normal recurring accruals necessary for fair
presentation of the unaudited information. The results of
operations for the three and six month periods ended June 30,
2000 and 1999 are not necessarily indicative of the results that
may be expected for the full year.
(B) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of the Company and its subsidiaries ICM, Ewing, and
Enviroq.
All significant intercompany balances and transactions have been
eliminated in consolidation. The Company, through its ownership
in Enviroq, controls the operations and activities of Sprayroq.
There is no recognition of minority interest in this subsidiary
because of its accumulated deficit position.
(C) EARNINGS PER SHARE
Net income per share of common stock is computed based upon the
weighted average number of common shares and share equivalents
outstanding during the period. Stock warrants and convertible
instruments, when dilutive, are included as share equivalents.
Diluted EPS for the three month period ended June 30, 1999
assumes warrants to purchase 150,000 shares of common stock have
been exercised using the treasury stock method. For the three and
six month periods ended June 30, 2000 and the six month period
ended June 30, 1999, the Company had no dilutive common stock
equivalents.
(D) COMPREHENSIVE INCOME
No differences between total comprehensive (loss) income and net
(loss) income existed in the financial statements reported for
the three and six month periods ended June 30, 2000 and 1999.
(2) RELATED PARTY TRANSACTION
The Company performs certain asset management functions for
Intrepid Capital, L.P., an investment limited partnership of
which the Company is general partner and a 3.77% equity interest
owner as of June 30, 2000. For the six months ended June 30, 2000
and 1999, the Company received $18,047 and $30,942, respectively,
for such services.
7
<PAGE> 8
INTREPID CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2000
(3) SEGMENTS
During 2000 and 1999, the Company operated in two principal
segments, investment advisory services and broker/dealer
services, which includes investment banking revenues. Enviroq
constitutes a separate segment. The Company assesses and measures
operating performance based upon the net (loss) income derived
from each of its operating segments exclusive of the impact of
corporate expenses. The revenues and net (loss) income for each
of the reportable segments are summarized as follows for the six
months ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
----------- ----------
<S> <C> <C>
Revenues:
Investment advisory services segment $ 356,971 420,483
Broker/dealer services segment 1,235,827 848,299
Enviroq 487,960 1,141,942
Corporate 180,583 315,071
Intersegment revenues (163,270) (246,767)
----------- ----------
$ 2,098,071 2,479,028
=========== ==========
Net (loss) income:
Investment advisory services segment $ (143,157) (64,828)
Broker/dealer services segment (37,129) 80,617
Enviroq (165,375) 137,442
Corporate (163,468) (196,864)
----------- ----------
$ (509,129) (43,633)
=========== ==========
</TABLE>
The total assets for each of the reportable segments are
summarized as follows as of June 30, 2000 and December 31, 1999.
Non-segment assets consist primarily of cash, investments and
other assets, which are recorded at the parent company level.
<TABLE>
<CAPTION>
2000 1999
---------- ---------
<S> <C> <C>
Assets:
Investment advisory services segment $ 251,478 256,129
Broker/dealer services segment 1,168,116 1,340,988
Enviroq 1,276,062 1,511,440
Other 208,130 422,335
---------- ---------
$2,903,786 3,530,892
========== =========
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements contained in this Quarterly Report on Form 10-QSB
are "forward-looking statements," within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective in nature. Such
forward-looking statements reflect management's beliefs and assumptions and are
based on information currently available to management. The forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of Intrepid Capital
Corporation to differ materially from those expressed or implied in such
statements. There can be no assurance that such factors or other factors will
not affect the accuracy of such forward-looking statements
Liquidity and Capital Resources
The Company's current assets consist generally of cash, money market
funds and trading securities. Trading securities represent a portfolio of
individual securities and an investment in Intrepid Capital, L.P, an investment
limited partnership to which the Company is general partner. The Company has
financed its operations with funds generated from stockholder capital and
long-term loans. The Company has developed a growth strategy plan that includes
both internal growth and external growth through acquisitions.
For the three and six month periods ended June 30, 2000, the Company
incurred significant operating losses and negative cash flows. Based on its
current financial position, historical trend, and estimated projections, the
Company's future operations are uncertain. Management estimates that additional
capital is required prior to the first quarter of 2001 to maintain the
Company's ability to operate as a going concern. The Company is presently
evaluating several options to raise the necessary capital, which include 1)
enhance the operations, or the complete disposal of, Sprayroq, Inc. (Enviroq's
50% owned subsidiary), 2) issuing equity securities in a private placement, or
3) other financing strategies. In addition, the Company believes that its
broker/dealer services segment will generate substantial high-margin investment
banking revenues during the next six month period. Also, the operating results
of Sprayroq, Inc., subsequent to June 30, 2000, have yielded significant
increase in revenues, which the Company anticipates will continue through the
next six month period. The Company believes it can reduce costs through
operating efficiencies and cutbacks in overhead expenses in order to continue
its operations. While management believes it will be able to meet its capital
needs through several of the above alternatives, there can be no assurances
that such transactions will take place on terms favorable to the Company, if at
all.
For the six months ended June 30, 2000, net cash used in operating
activities of $391,587 was primarily attributable to the net loss. Net cash
used in investing activities was $88,103 due to the purchase of property,
plant, and equipment. There were no financing activities for the period.
The Company, through its wholly-owned subsidiary, Ewing, is subject to
the net capital requirements of the SEC, the NASD and other regulatory
authorities. At June 30, 2000, Ewing's regulatory net capital was $529,573,
which is $279,573 in excess of its minimum net capital requirement of $250,000.
Since its acquisition of Enviroq in December 1998, the Company has
been evaluating alternatives for the future of this business because of its
inconsistency with the Company's primary mission. The Company is currently
pursuing several alternatives for this business, including a possible sale of
Sprayroq, Enviroq's 50% owned subsidiary that conducts primarily all of
Enviroq's operations.
9
<PAGE> 10
Results of Operations
Three Months Ended June 30, 2000 Compared to the Three Months Ended
June 30, 1999
Total revenues were $988,063 for the three months ended June 30, 2000,
compared to $1,488,522 for the three months ended June 30, 1999, representing a
33.6% decrease. The decrease is primarily attributable to decreased resinous
material sales.
Commissions decreased $16,355, or 3.7%, to $430,825. Commissions
represent revenue earned from securities transactions conducted on behalf of
customers, including transactions with mutual funds and variable annuities. The
decrease in commissions is primarily attributable to the sell-off during the
three month period ended June 30, 2000; in a down market, transactions decrease
and investors are less active.
Asset management fees decreased $44,786, or 21.4%, to $164,239. Asset
management fees represent revenue earned by ICM for investment advisory
services. The fees earned are generally a function of the overall fee rate
charged to each account and the level of Assets Under Management ("AUM").
Quarterly management fees are billed on the first day of each quarter based on
each account value at the market close of the prior quarter. AUM was $84.5
million at March 31, 2000, compared to $89.3 million at March 31, 1999. The
decrease in asset management fees for the three months ended June 30, 2000
relates directly to the net decrease in AUM at the market close of the prior
quarter. The net decrease in AUM was the net result of investment performance
and the net change in client assets. The negative net change in client assets
is primarily attributable to the Company's "value investment style", which has
not performed at historical levels over the past two years, and has resulted in
client movement. AUM was $76.8 million at June 30, 2000, compared to $101.4
million at June 30, 1999.
Investment banking revenues of $45,910 represent fees earned by Ewing
for providing investment banking services to clients on corporate finance
matters, including mergers and acquisitions and the issuance of capital stock
to the public.
Net trading profits decreased $12,675, or 19.3%, to $53,061. There
were $106,439 of realized gains and $53,378 of unrealized losses in the
Company's investment in trading securities and Intrepid Capital, L.P.
Resinous material sales decreased $472,202, or 64.5%, to $260,079. The
decrease is primarily attributable to a decrease in resin demand from
licensees.
Total expenses were $1,293,062 for the three months ended June 30,
2000, compared to $1,363,211 for the three months ended June 30, 1999,
representing a 5.1% decrease. The decrease is primarily attributable to a
decrease in cost of resinous material sales, which is directly related to the
decrease in resinous material sales.
Salaries and employee benefits increased $46,796, or 7.8%, to
$649,237. The increase is primarily attributable to the acquisition of Ewing in
August 1999.
Brokerage and clearing expenses decreased $28,714, or 23.2%, to
$94,914. Brokerage and clearing expenses represent the securities transaction
costs paid to the clearing broker/dealer, and are directly related to
commission revenue earned by Ewing. During the quarter ended March 31, 2000,
the Company re-negotiated its clearing agreement, resulting in reduced
transactional costs and decreased brokerage and clearing expenses per trade.
The net decrease reflects decreased costs as a result of the re-negotiated
clearing agreement and reduced transaction volume.
10
<PAGE> 11
Cost of resinous material sales decreased $163,426, or 54.5%, to
$136,445. The decrease is primarily attributable to a decrease in resin demand
from licensees.
Advertising and marketing expenses decreased $35,088, or 43.1%, to
$46,295. The decrease can be attributed to decreased travel and entertainment
costs and to decreased advertising costs resulting from a one-time advertising
campaign for Sprayroq conducted during the three months ended June 30, 1999.
Professional and regulatory expenses increased $10,573, or 12.8%, to
$93,018. The increase is primarily attributable to the acquisition of Ewing in
August 1999.
Occupancy and maintenance expenses increased $60,129, or 123.1%, to
$108,966 as a result of the acquisition of Ewing in August 1999 and the
relocation of the Company's headquarters in January 2000.
Depreciation and amortization expenses increased $27,247, or 117.3%,
to $50,484 due to the amortization of goodwill incurred as a result of the
acquisition of Ewing in August 1999 and to depreciation of acquired assets.
Depreciation costs incurred on leasehold improvements for the Company's new
headquarters also contributed.
Interest expense increased $10,642, or 121.8%, to $19,381 due to
interest costs associated with the debt incurred as a result of the acquisition
of Ewing in August 1999.
Six Months Ended June 30, 2000 Compared to the Six Months Ended
June 30, 1999
Total revenues were $2,098,071 for the six months ended June 30, 2000,
compared to $2,479,028 for the six months ended June 30, 1999, representing a
15.4% decrease. The decrease is primarily attributable to decreased resinous
material sales, offset by increases in commissions and net trading profits.
Commissions increased $192,653, or 23.1%, to $1,025,763. Commissions
represent revenue earned from securities transactions conducted on behalf of
customers, including transactions with mutual funds and variable annuities. The
increase primarily represents increased transaction volume as a result of the
acquisition of Ewing in August 1999.
Asset management fees decreased $85,914, or 19.8%, to $348,126. Asset
management fees represent revenue earned by ICM for investment advisory
services. The fees earned are generally a function of the overall fee rate
charged to each account and the level of AUM. Quarterly management fees are
billed on the first day of each quarter based on each account value at the
market close of the prior quarter. AUM was $92.5 million and $84.5 million at
December 31, 1999 and March 31, 2000, respectively, compared to $101.0 million
and $89.3 million at December 31, 1998 and March 31, 1999, respectively. The
decrease in asset management fees for the six months ended June 30, 2000
relates directly to the net decreases in AUM at the market close prior to each
quarter in the six month period. The net decrease in AUM was the net result of
investment performance and the net change in client assets. The negative net
change in client assets is primarily attributable to the Company's "value
investment style", which has not performed at historical levels over the past
two years, and has resulted in client movement. AUM was $76.8 million at June
30, 2000, compared to $101.4 million at June 30, 1999.
Investment banking revenues of $66,291 represent fees earned by Ewing
for providing investment banking services to clients on corporate finance
matters, including mergers and acquisitions and the issuance of capital stock
to the public.
11
<PAGE> 12
Net trading profits increased $68,624, or 169.0%, to $109,223. There
were $181,518 of realized gains and $72,295 of unrealized losses in the
Company's investment in trading securities, which was obtained through the
acquisition of Ewing in August 1999.
Resinous material sales decreased $643,861, or 57.0%, to $485,266. The
decrease is primarily attributable to a decrease in resin demand from licensees
and to no new license sales for the six months ended June 30, 2000 compared to
two new license sales for the six months ended June 30, 1999.
Dividend and interest income increased $22,232, or 133.1%, to $38,936.
The increase is primarily attributable to an increase in interest received from
the higher average cash balances invested in money markets and to increased
margin interest earned on customer margin accounts as a result of the
acquisition of Ewing in August 1999.
Total expenses were $2,759,976 for the six months ended June 30, 2000,
compared to $2,522,661 for the six months ended June 30, 1999, representing a
9.4% increase. The increase is primarily attributable to the acquisition of
Ewing in August 1999.
Salaries and employee benefits increased $308,954, or 27.9%, to
$1,416,827. The increase is due to annual increases in salaries and the
acquisition of Ewing in August 1999, which resulted in the acquisition of
additional employees.
Brokerage and clearing expenses decreased $19,775, or 8.2%, to
$222,022. Brokerage and clearing expenses represent securities transaction
costs paid to the clearing broker/dealer, and are directly related to
commission revenue earned by Ewing. During the quarter ended March 31, 2000,
the Company re-negotiated its clearing agreement, resulting in reduced
transactional costs and decreased brokerage and clearing expenses per trade.
The net decrease reflects decreased costs as a result of the re-negotiated
clearing agreement.
Cost of resinous material sales decreased $301,873, or 54.5%, to
$251,596. The decrease is primarily attributable to a decrease in resin demand
from licensees and to no new license sales for the six months ended June 30,
2000 compared to two new license sales for the six months ended June 30, 1999.
Gross margin for license sales is approximately 15% compared to 50% for resin
sales.
Advertising and marketing expenses decreased $14,001, or 9.8%, to
$128,243. The decrease can be attributed to decreased travel and entertainment
costs and to decreased advertising costs resulting from a one-time advertising
campaign for Sprayroq conducted during the six months ended June 30, 1999.
Professional and regulatory expenses increased $24,125, or 15.2%, to
$183,049. The increase is primarily attributable to the acquisition of Ewing in
August 1999.
Occupancy and maintenance expenses increased $130,835, or 142.3%, to
$222,800 as a result of the acquisition of Ewing in August 1999 and to the
relocation of the Company's headquarters in January 2000.
Depreciation and amortization expenses increased $43,179, or 73.7%, to
$101,754 due to the amortization of goodwill incurred as a result of the
acquisition of Ewing in August 1999 and to depreciation of acquired assets.
Depreciation costs incurred on leasehold improvements for the Company's new
headquarters also contributed.
Interest expense increased $24,651, or 181.4%, to $38,241 due to
interest costs associated with the debt incurred as a result of the acquisition
of Ewing in August 1999.
12
<PAGE> 13
Other expenses increased $41,220, or 26.7%, to $195,444 due to
increased general and administrative expenses as a result of the acquisition of
Ewing in August 1999.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings pending, or to the Company's
knowledge, threatened against the Company or any of its subsidiaries.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule (for SEC use only)
</TABLE>
(b) Reports on Form 8-K:
None.
13
<PAGE> 14
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
INTREPID CAPITAL CORPORATION
By /s/ Forrest Travis
-------------------------------
Forrest Travis, President and
Chief Executive Officer
Dated: August 14, 2000
By /s/ Michael J. Wallace
-------------------------------
Michael J. Wallace, Chief
Accounting Officer
Dated: August 14, 2000
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
27 Financial Data Schedule (for SEC use only)
</TABLE>
15
