DALTON KENT SECURITIES GROUP, INC.
EXHIBIT 99.2
<TABLE>
<CAPTION>
Statement of Financial Condition (Unaudited)
June 30, 2000
<S> <C>
ASSETS
Cash and cash equivalents $ 674,019
Cash - restricted 228,099
Due from clearing broker 777,392
Securities owned, at market value 642,692
Prepaid expenses 228,492
Furniture and equipment, net of $210,603 of accumulated depreciation 130,058
Other assets 87,100
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$ 2,767,852
===========
LIABILITIES
Accounts payable and accrued expenses $ 661,062
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Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock - $.98 par value; 105 shares authorized, issued and outstanding 103
Additional paid-in capital 533,406
Retained earnings 1,573,281
-----------
2,106,790
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$ 2,767,852
===========
</TABLE>
See notes to interim financial statements.
<PAGE>
DALTON KENT SECURITIES GROUP, INC.
<TABLE>
<CAPTION>
Statement of Income (Unaudited)
Six Months Ended June 30, 2000
<S> <C>
Revenues:
Commissions $10,063,859
Net gain on principal transactions 5,413,248
Interest income 327,844
Dividend income 5,186
-----------
15,810,137
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Expenses:
Commissions 8,955,739
Clearing charges 526,794
Floor brokerage fees 467,035
Order execution charges 563,797
Employment costs 1,837,314
Depreciation and amortization 33,666
Other expenses 1,964,903
-----------
14,349,248
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Net income $ 1,460,889
===========
</TABLE>
See notes to interim financial statements.
<PAGE>
DALTON KENT SECURITIES GROUP, INC.
<TABLE>
<CAPTION>
Statement of Changes in Stockholders' Equity (Unaudited)
Common Stock Additional
------------------ Paid-in Treasury Retained
Shares Amount Capital Stock Earnings Total
------- -------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1999 105 $ 103 $ 533,406 $ 0 $ 1,312,416 $ 1,845,925
Distributions to stockholders (1,200,024) (1,200,024)
Net income 1,460,889 1,460,889
------- -------- ------------ ------------ -------------- -------------
Balance - June 30, 2000 105 $ 103 $ 533,406 $ 0 $ 1,573,281 $ 2,106,790
======= ====== ============ ============ ============== =============
</TABLE>
See notes to interim financial statements.
<PAGE>
DALTON KENT SECURITIES GROUP, INC.
<TABLE>
<CAPTION>
Statement of Cash Flows (Unaudited)
Six Months Ended June 30, 2000
<S> <C>
Cash flows from operating activities:
Net income $ 1,460,889
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 33,666
Changes in:
Cash - restricted (5,047)
Due from clearing broker 764,026
Securities owned, at market value 684,759
Prepaid expenses (15,783)
Other assets 77,110
Securities sold, not yet purchased (183,538)
Accounts payable and accrued expenses (2,002,207)
-----------
Net cash provided by operating activities 813,875
-----------
Cash flows from investing activities:
Purchase of furniture and equipment (27,468)
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Cash flows from financing activities:
Distributions to stockholders (1,200,024)
Principal payments on notes payable (100,000)
-----------
Net cash used in financing activities (1,300,024)
-----------
Net decrease in cash and cash equivalents (513,617)
Cash and cash equivalents - December 31, 1999 1,187,636
-----------
Cash and cash equivalents - June 30, 2000 $ 674,019
===========
Supplemental disclosures of cash flows:
Interest expense $ 7,933
</TABLE>
See notes to interim financial statements.
<PAGE>
DALTON KENT SECURITIES GROUP, INC.
Notes to Financial Statements (Unaudited)
Six Months Ended June 30, 2000
NOTE A - ORGANIZATION AND BASIS OF PRESENTATION
Dalton Kent Securities Group, Inc. (the "Company") is a nonclearing
broker-dealer in securities. The unaudited financial statements of the Company
have been prepared in accordance with generally accepted accounting principles
for interim financial information and, in the opinion of management, reflect all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the results of operations for the interim period presented.
Certain information and footnote disclosures normally included in financial
statements, prepared in accordance with generally accepted accounting
principles, have been condensed or omitted. However, management believes that
the disclosures are adequate to make the information presented not misleading.
Operating results for the six months ended June 30, 2000 are not necessarily
indicative of the results for the full fiscal year.
NOTE B - NET CAPITAL REQUIREMENTS
The Company's minimum net capital requirement under Rule 15c3-1 of the
Securities Exchange Act of 1934, as amended is the greater of 6 2/3% of
aggregate indebtedness ($163,254 at June 30, 2000) or $100,000. At June 30,
2000, the net capital, as computed, was $1,321,248. Consequently, the Company
had excess net capital of $1,157,994.
At June 30, 2000, the ratio of aggregate indebtedness to net capital was 185%
versus an allowable percentage of 1,500%.
NOTE C - COMMITMENTS AND CONTINGENCIES
The Company is required to deposit cash or securities with a value of at least
$250,000 with its clearing broker (clearing deposit). The deposit of $250,000 is
included in securities owned at June 30, 2000. The agreement is cancelable upon
60 days written notice from either party.
At June 30, 2000, the Company has an available letter of credit for
approximately $200,000 with a financial institution. The letter of credit is
collateralized by a certificate of deposit and is included in cash-restricted.
The Company is a party to certain claims, suits and complaints arising in the
ordinary course of business. In the opinion of management, all such claims,
suits and complaints are without merit, or involve amounts which would not have
a significant adverse effect on the financial position of the Company.
NOTE D - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION OF
CREDIT RISK
Retail customer transactions are cleared through Wexford on a fully disclosed
basis. In the event that customers default in payment of funds or delivery of
securities, Wexford may charge the Company for any loss incurred in satisfying
customer obligations. Additional credit risk occurs
<PAGE>
DALTON KENT SECURITIES GROUP, INC.
if Wexford or counterparties do not fulfill their obligations. The Company
regularly monitors the activity in its customer accounts for compliance with
margin requirements.
Substantially all of the Company's cash equivalents, securities owned, and
amounts due from broker are held in custodial accounts by its custodian broker.
The Company's custodian broker is highly capitalized and a member of major
securities exchanges.
