8-K/A 1 g74819e8-ka.txt INTREPID CAPITAL CORPORATION AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 18, 2002 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): December 31, 2001 Intrepid Capital Corporation (Exact name of registrant as specified in its charter) Delaware 333-66859 59-3546446 (State or other (Commission File Number) (IRS Employer jurisdiction of Identification incorporation) Number) 3652 South Third Street, Suite 200, Jacksonville Beach, Florida 32250 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (904) 246-3433 NOT APPLICABLE (Former name or former address, if changed since last report) This Amendment No. 1 amends and supplements the Current Report on Form 8-K filed on January 15, 2002 (the "Original 8-K") by Intrepid Capital Corporation (the "Company"). Capitalized terms used herein which are not otherwise defined herein are used with the respective meanings ascribed to them in the Original 8-K. As previously reported, on December 31, 2001, the Company acquired all of the outstanding capital stock of ICC Investment Advisors, Inc. ("ICC"). As of the date of the filing of the Original 8-K, it was impractical for the Company to provide the financial statements required by Form 8-K. In accordance with General Instruction C. and Item 7 of Form 8-K, such financial statements are being filed with this Amendment No.1. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Business Acquired. Included in this Current Report are the balance sheets, statements of operations, stockholders' deficit and cash flows of ICC for the years ended December 31, 2000 and December 31, 1999, together with the notes thereto, which have been audited by the independent accounting firm of Babione, Kuehler & Caslow, whose opinion thereon is included herein. (b) Pro Forma Financial Information. Included in this Current Report are the following unaudited pro forma financial statements, together with the notes thereto (the "Unaudited Pro Forma Consolidated Financial Statements"): (i) Unaudited pro forma consolidated balance sheet as of September 30, 2001. (ii) Unaudited pro forma consolidated condensed statement of operations for the nine months ended September 30, 2001. (iii) Unaudited pro forma consolidated condensed statement of operations for the year ended December 31, 2000. (c) Exhibits. The following is a list of the Exhibits attached hereto: Exhibit 2.1 Share Purchase Agreement* Exhibit 4.1 Form of Warrant Agreement* Exhibit 4.2 Option Agreement* Exhibit 4.3 Convertible Note* Exhibit 10.1 Non-Competition and Confidentiality Agreement* Exhibit 10.2 Form of Registration Rights Agreement* Exhibit 10.3 Investment Agreement* Exhibit 10.4 Convertible Note Agreement* Exhibit 10.5 Registration Rights Agreement* Exhibit 10.6 Standstill Agreement*

-------------------------- * - Previously filed. [Signature Page Follows] 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Intrepid Capital Corporation has duly 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: March 18, 2002 3 INDEX TO FINANCIAL STATEMENTS

[BKC LOGO] ------------------------------ BABIONE, KUEHLER & CASLOW ------------------------------ CERTIFIED PUBLIC ACCOUNTANTS Marcia S. Babione, CPA 4060 Edgewater Drive Members: Mark A. Kuehler, CPA Orlando, FL 3280 American Institute of Sharon Caslow, CPA (407) 291-6400 Certified Public Accountants Fax (407) 291-6416 Florida Institute of Certified Public Accounts A Partnership Including Professional Associations

Independent Auditors' Report Board of Directors The Investment Counsel Company of the Southeast Orlando, Florida We have audited the accompanying balance sheet of The Investment Counsel Company of the Southeast as of December 31, 2000, and the related statements of operations, stockholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Investment Counsel Company of the Southeast as of December 31, 2000, and the results of its operations and its cash flows for the period then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of general and administrative expenses is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. January 17, 2002 F-1 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Balance Sheet December 31, 2000 ASSETS Current assets: Cash $119,469 Accounts receivable 40,048 Prepaid expenses and other current assets 8,196 -------- Total current assets 167,713 Property and equipment, net 115,105 Other assets: Deposits and other assets 13,592 Deferred income taxes 72,634 -------- Total other assets 86,226 -------- Total assets $369,044 --------

The accompanying notes are an integral part of these financial statements. F-2 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Balance Sheet (Continued) December 31, 2000 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Line of credit $ 75,000 Accounts payable 62,550 Accrued expenses 39,008 Income tax payable 10,346 Current portion of long-term debt 19,550 Current portion of capital lease obligations 10,938 Current portion of pension plan obligation 1,552 --------- Total current liabilities 218,944 Long-term liabilities: Long-term debt, less current portion 17,802 Capital lease obligations, less current portion 9,206 Pension plan obligations, less current portion 214,938 --------- Total long-term liabilities 241,946 --------- Total liabilities 460,890 Stockholders' deficit: Common stock 1,200 Additional paid-in capital 63,233 Accumulated deficit (19,184) Excess cost of corporate split-off (133,895) Treasury stock, 200 shares at cost (3,200) --------- Total stockholders' deficit (91,846) --------- Total liabilities and stockholders' deficit $ 369,044 ---------

The accompanying notes are an integral part of these financial statements. F-3 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Statement of Operations For the year ended December 31, 2000 Revenue: Investment advisory fees $ 2,332,556 Interest and other income 691 ----------- Total revenue 2,333,247 Expenses: General and administrative 2,288,446 Interest 26,569 ----------- Total expenses 2,315,015 ----------- Income from operations before income taxes 18,232 Income tax expense (11,576) ----------- Net income $ 6,656 -----------

The accompanying notes are an integral part of these financial statements. F-4 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Statement of Stockholders' Deficit For the year ended December 31, 2000

(1) Common stock, $1 par value, 10,000 shares authorized: 1,200 shares issued, 1,000 shares outstanding The accompanying notes are an integral part of these financial statements. F-5 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Statement of Cash Flows For the year ended December 31, 2000 Cash flows from operating activities: Net Income $ 6,656 Adjustments to reconcile net income to net cash provided by Operating activities: Depreciation and amortization 37,519 Deferred income taxes 1,230 (Increase) decrease in accounts receivable 323 (Increase) decrease in prepaid expenses 23,341 Increase (decrease) in accounts payable (25,347) Increase (decrease) in accrued expenses (39,830) Increase (decrease) in income tax payable 10,346 --------- Total adjustments 7,582 --------- Net cash provided by operating activities 14,238 --------- Cash flows from investing activities: Cash payments for the purchase of property (4,424) --------- Net cash used by investing activities (4,424) --------- Cash flows from financing activities: Principle payments on long-term debt (18,124) Repayments on capital lease obligations (9,582) Decrease in unfunded pension obligation (997) --------- Net cash used by financing activities (28,703) --------- Net decease in cash and equivalents (18,889) Cash and equivalents, beginning of year 138,358 --------- Cash and equivalents, end of year $ 119,469 ---------

The accompanying notes are an integral part of these financial statements. F-6 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Statement of Cash Flows (Continued) For the year ended December 31, 2000 Supplemental disclosures of cash flows information: Cash paid during the period for: Interest $ 26,678 -------- Property acquisitions: Cost of property and equipment acquired $ 7,898 Capital lease obligations incurred (3,474) -------- Cash paid to acquire property and equipment $ 4,424 --------

The accompanying notes are an integral part of these financial statements. F-7 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Notes to Financial Statements December 31, 2000 NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of The Business The Investment Counsel Company of the Southeast (the "Company") is a wholly owned subsidiary of ICC Investment Advisors, Inc. (the "Parent"). The Company manages investments for individuals, profit sharing plans, and municipalities. The Company's clients are located across the country with a concentration in Florida. The main office of the Company is located in Orlando, Florida. The Company was formally a wholly owned subsidiary of ICC Capital, Inc. On April 30, 1998, the Company separated from ICC Capital, Inc. through a corporate split-off. Revenue Recognition The Company charges fees, principally in advance, based on the market value of assets managed. These amounts are recorded ratably over the service period. Accounts Receivable The Company's management believes that all accounts receivable are collectible; therefore, no allowance for doubtful accounts has been established. In the normal course of business, the Company extends unsecured credit to its customers. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Property and Equipment Property and equipment is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful life of the asset, as follows: ~~Automobiles 5 years Office equipment and furniture 5-7 years~~

Leasehold improvements are amortized over the shorter of the lease term or the useful life of the asset. Cash Equivalents For purposes of the statements of cash flows, the Company considers cash investments purchased with a maturity of three months or less to be cash equivalents. F-8 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Notes to Financial Statements (Continued) December 31, 2000 NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes The Company follows FASB Statement No. 109, "Accounting for Income Taxes," which requires an asset and liability approach to financial accounting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable during the period plus or minus the changes during the period in deferred tax assets and liabilities. The Company files consolidated income tax returns with the Parent. The Company's policy is to apply inter-corporate tax allocations using the "separate return method". Liabilities and assets that result from this allocation are included in the accompanying balance sheets. NOTE 2 -- PROPERTY AND EQUIPMENT Property and equipment consists of the following at December 31, 2000: Office equipment $ 79,582 Furniture and fixtures 26,073 Automobiles 86,557 Capital lease assets 96,399 Leasehold improvements 10,901 -------- 299,512 Less: Accumulated deprecation (184,407) -------- Property and equipment, net $115,105 ========

Depreciation expense includes the amortization of capital lease assets. For the year ended December 31, 2000, depreciation expense was $37,519. NOTE 3 -- EMPLOYEE PROFIT SHARING PLAN The Company has a defined contribution employee profit sharing plan with a 401(k) plan feature, which covers substantially all employees. The Company's Board of Directors may elect to make contributions to a trust on behalf of the Plan. Contributions for the year ended December 31, 2000, were $24,347. NOTE 4 -- PENSION PLAN OBLIGATION The Company has a non-qualified defined benefit pension plan covering a former employee/stockholder. The benefit is adjusted annually by the percentage increase in the Consumer Price Index - All Urban Consumers (CPI) and is paid on a quarterly basis. The adjusted annual benefit is not to exceed $25,000. The Company has no current funding for this obligation. F-9 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Notes to Financial Statements (Continued) December 31, 2000 NOTE 4 -- PENSION PLAN OBLIGATION (Continued)

The assumptions used to determine the actuarial present value of the projected benefit obligation are as follows: ~~Average annual increase in CPI percentage 2.58% Discount rate 8.00%~~

NOTE 5 -- LINE OF CREDIT The Company has a $75,000 line of credit, which is personally guaranteed by the shareholders of the Company. The total outstanding balance on this line of credit was $75,000 at December 31, 2000. The line of credit is collateralized by the accounts receivable of the Company, interest is due monthly at 1% over the bank's prime lending rate. Originally due February 2000, the line of credit was refinanced and is due February 2002. NOTE 6 -- LONG-TERM DEBT

F-10 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Notes to Financial Statements (Continued) December 31, 2000 NOTE 6 -- LONG-TERM DEBT (Continued) Maturities of long-term debt for the years following December 31, 2000, are as follows: 2001 $19,550 2002 10,638 2003 7,164 ------- $37,352 =======

NOTE 7 -- LEASES The Company is obligated under capital lease agreements for office furniture and equipment. These leases expire through 2003. As of December 31, 2000, the total amount of furniture and equipment recorded under capital leases is $96,399, and the related accumulated amortization is $69,774. Future minimum lease payments as of December 31, 2000, are as follows: 2001 $ 13,308 2002 9,126 2003 805 -------- Total future minimum lease payments 23,239 Amount representing interest (3,095) -------- Present value of minimum lease payments 20,144 Less current portion (10,938) -------- Long term portion $ 9,206 ========

The Company also has several noncancellable operating leases for office facilities and office equipment that expire over the next five years and generally provide for purchase or renewal options. Future minimum lease payments under noncancellable operating leases at December 31, 2000, are: 2001 $131,803 2002 86,561 2003 16,198 2004 16,198 2005 8,946 -------- Total minimum lease payments $259,706 ========

Total rent expense under these operating lease obligations was $152,056 for the year ended December 31, 2000. F-11 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Notes to Financial Statements (Continued) December 31, 2000 NOTE 8 -- INCOME TAXES For the year ended December 31, 2000, income tax expense consists of the following: Current income tax expense Federal $ 9,120 State 1,226 ------- 10,346 Deferred income tax expense Federal 676 State 554 ------- 1,230 ------- Total income tax expense $11,576 =======

Income tax expense attributable to income was $11,576 for the year ended December 31, 2000, and differed from the amounts computed by applying the U.S. federal income tax rate of 35% to income before income taxes primarily due to the deductible payments made on the non-qualified pension plan obligation, accelerated depreciation methods for tax purposes, deductible state income taxes and non-deductible entertainment and meals. The tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities at December 31, 2000, are presented below: Deferred tax liability (asset): Property and equipment $ 10,919 Non-qualified defined benefit pension obligation (83,553) -------- $(72,634) ========

NOTE 9 -- FINANCIAL INSTRUMENTS The Company maintains its cash at financial institutions. The balance, at times, may exceed federally insured limits. At December 31, 2000, the Company exceeded the insured limit by approximately $10,500. NOTE 10 -- SUBSEQUENT EVENTS Subsequent to the balance sheet date, in December 2001, the stockholders of the Parent entered into an agreement to sell all of their capital stock to Intrepid Capital Corporation. F-12 SUPPLEMENTARY INFORMATION F-13 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Schedule of General and Administrative Expenses For the year ended December 31, 2000 Salaries $ 1,445,900 Travel and entertainment 63,396 Payroll taxes and employee benefits 184,655 Professional fees 17,297 Data processing 10,128 Office supplies and expenses 60,635 Office rent 145,654 Telephone 39,601 Depreciation and amortization 37,519 Insurance 27,013 Profit sharing contribution 24,347 Consulting 53,870 Marketing and promotion 40,799 Equipment rental 32,894 Dues and subscriptions 25,788 Repairs and maintenance 15,993 Taxes and licenses 15,469 Parking 21,554 Bad debt expense 1,890 Contributions 900 Postage and shipping 20,264 Miscellaneous 2,880 ------------- Total general and administrative expenses $ 2,288,446 =============

See Auditors' Report F-14 [BKC LOGO] ---------------------------- BABIONE, KUEHLER & CASLOW ---------------------------- CERTIFIED PUBLIC ACCOUNTANTS Marcia S. Babione, CPA 4060 Edgewater Drive Members: Mark A. Kuehler, CPA Orlando, FL 3280 American Institute of Sharon Caslow, CPA (407) 291-6400 Certified Public Accountants Fax (407) 291-6416 Florida Institute of Certified Public Accounts A Partnership Including Professional Associations Independent Auditors' Report

Board of Directors The Investment Counsel Company of the Southeast Orlando, Florida We have audited the accompanying balance sheet of The Investment Counsel Company of the Southeast as of December 31, 1999, and the related statements of operations, stockholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Investment Counsel Company of the Southeast as of December 31, 1999, and the results of its operations and its cash flows for the period then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of general and administrative expenses is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. January 17, 2002 F-15 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Balance Sheet December 31, 1999 ASSETS Current assets: Cash $ 138,358 Accounts receivable 40,372 Prepaid expenses and other current assets 31,989 -------- Total current assets 210,719 Property and equipment, net 144,726 Other assets: Deposits and other assets 13,139 Deferred income taxes 73,864 -------- Total other assets 87,003 -------- Total assets $442,448 ========

The accompanying notes are an integral part of these financial statements. F-16 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Balance Sheet (Continued) December 31, 1999 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Line of credit $ 75,000 Accounts payable 87,898 Accrued expenses 78,838 Current portion of long-term debt 18,124 Current portion of capital lease obligations 8,555 Current portion of pension plan obligation 997 --------- Total current liabilities 269,412 Long-term liabilities: Long-term debt, less current portion 37,352 Capital lease obligations, less current portion 17,696 Pension plan obligations, less current portion 216,490 --------- Total long-term liabilities 271,538 --------- Total liabilities 540,950 Stockholders' deficit: Common stock 1,200 Additional paid-in capital 63,233 Accumulated deficit (25,840) Excess cost of corporate split-off (133,895) Treasury stock, 200 shares at cost (3,200) --------- Total stockholders' deficit (98,502) --------- Total liabilities and stockholders' deficit $ 442,448 ---------

The accompanying notes are an integral part of these financial statements. F-17 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Statement of Operations For the year ended December 31, 1999 Revenue: Investment advisory fees $ 2,726,345 Interest and other income 4,963 ----------- Total revenue 2,731,308 Expenses: General and administrative 2,721,888 Interest 24,351 Loss on disposal of assets 15,629 ----------- Total expenses 2,761,868 ----------- Loss from operations before income taxes (30,560) Income tax benefit 3,391 ----------- Net loss $ (27,169) -----------

The accompanying notes are an integral part of these financial statements. F-18 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Statement of Stockholders' Equity For the year ended December 31, 1999

(1) Common stock, $1 par value, 10,000 shares authorized: 1,200 shares issued, 1,000 shares outstanding The accompanying notes are an integral part of these financial statements. F-19 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Statement of Cash Flows For the year ended December 31, 2000 Cash flows from operating activities: Net Loss $ (27,169) Adjustments to reconcile net income to net cash provided by Operating activities: Depreciation and amortization 36,944 Deferred income taxes (2,541) Loss on disposal of property 15,629 (Increase) decrease in accounts receivable (4,712) (Increase) decrease in prepaid expenses (5,721) (Increase) decrease in other assets (8,491) Increase (decrease) in accounts payable 57,655 Increase (decrease) in accrued expenses 4,460 Increase (decrease) in income tax payable (10,168) --------- Total adjustments 83,055 --------- Net cash provided by operating activities 55,886 --------- Cash flows from investing activities: Cash payments for the purchase of property (19,347) --------- Net cash used by investing activities (19,347) --------- Cash flows from financing activities: Principle payments on long-term debt (17,907) Repayments on capital lease obligations (16,099) Decrease in unfunded pension obligation (494) --------- Net cash used by financing activities (34,500) --------- Net increase in cash and equivalents 2,039 Cash and equivalents, beginning of year 136,319 --------- Cash and equivalents, end of year $ 138,358 ---------

The accompanying notes are an integral part of these financial statements. F-20 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Statement of Cash Flows (Continued) For the year ended December 31, 1999 Supplemental disclosures of cash flows information: Cash paid during the period for: Interest $ 24,021 -------- Supplemental disclosures of non-cash activities: Property acquisitions: Cost of property and equipment acquired $ 66,220 Capital lease obligations incurred (20,361) Note payable (26,512) -------- Cash paid to acquire property and equipment $ 19,347 --------

The accompanying notes are an integral part of these financial statements. F-21 The Investment Counsel Company of the Southeast Notes to Financial Statements December 31, 1999 NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of The Business The Investment Counsel Company of the Southeast (the "Company") was a wholly owned subsidiary of ICC Capital, Inc. On April 30, 1998, the Company was separated from ICC Capital, Inc. through a corporate split-off. Subsequent to the split-off, the Company became a wholly owned subsidiary of ICC Investment Advisors, Inc. (the "Parent") The Company manages investments for individuals, profit sharing plans, and municipalities. The Company's clients are located across the country with a concentration in Florida. The main office of the Company is located in Orlando, Florida. Revenue Recognition The Company charges fees, principally in advance, based on the market value of assets managed. These amounts are recorded ratably over the service period. Accounts Receivable The Company's management believes that all accounts receivable are collectible; therefore, no allowance for doubtful accounts has been established. In the normal course of business, the Company extends unsecured credit to its customers. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Property and Equipment Property and equipment is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful life of the asset, as follows: Automobiles 5 years Office equipment and furniture 5-7 years Leasehold improvements are amortized over the shorter of the lease term or the useful life of the asset. Cash Equivalents For purposes of the statements of cash flows, the Company considers cash investments purchased with a maturity of three months or less to be cash equivalents. F-22 The Investment Counsel Company of the Southeast Notes to Financial Statements (Continued) December 31, 1999 NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes The Company follows FASB Statement No. 109, "Accounting for Income Taxes," which requires an asset and liability approach to financial accounting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable during the period plus or minus the changes during the period in deferred tax assets and liabilities. The Company files consolidated income tax returns with the Parent. The Company's policy is to apply inter-corporate tax allocations using the "separate return method". Liabilities and assets that result from this allocation are included in the accompanying balance sheets. NOTE 2 -- PROPERTY AND EQUIPMENT Property and equipment consists of the following at December 31, 1999: Office equipment $ 75,158 Furniture and fixtures 26,073 Automobiles 86,557 Capital lease assets 92,925 Leasehold improvements 10,901 -------- 291,614 Less: Accumulated deprecation (146,888) -------- Property and equipment, net $144,726 ========

Depreciation expense includes the amortization of capital lease assets. For the year ended December 31, 1999, depreciation expense was $36,944. NOTE 3 -- EMPLOYEE PROFIT SHARING PLAN The Company has a defined contribution employee profit sharing plan with a 401(k) plan feature, which covers substantially all employees. The Company's Board of Directors may elect to make contributions to a trust on behalf of the Plan. Contributions for the year ended December 31, 1999, were $62,374. NOTE 4 -- PENSION PLAN OBLIGATION The Company has a non-qualified defined benefit pension plan covering a former employee/stockholder. The benefit is adjusted annually by the percentage increase in the Consumer Price Index - All Urban Consumers (CPI) and is paid on a quarterly basis. The adjusted annual benefit is not to exceed $25,000. The Company has no current funding for this obligation. F-23 The Investment Counsel Company of the Southeast Notes to Financial Statements (Continued) December 31, 1999 NOTE 4 -- PENSION PLAN OBLIGATION (Continued)

The assumptions used to determine the actuarial present value of the projected benefit obligation are as follows: ~~Average annual increase in CPI percentage 2.58% Discount rate 8.00%~~

NOTE 5 -- LINE OF CREDIT The Company has a $75,000 line of credit, which is personally guaranteed by the shareholders of the Company. The total outstanding balance on this line of credit was $75,000 at December 31, 1999. The line of credit is collateralized by the accounts receivable of the Company, interest is due monthly at 1% over the bank's prime lending rate. Originally due February 2000, the line of credit was refinanced and is due February 2002. NOTE 6 -- LONG-TERM DEBT

F-24 The Investment Counsel Company of the Southeast Notes to Financial Statements (Continued) December 31, 1999 NOTE 6 -- LONG-TERM DEBT (Continued) Maturities of long-term debt for the years following December 31, 2000, are as follows: 2000 $18,124 2001 19,550 2002 10,638 2003 7,164 ------- $55,476 =======

NOTE 7 -- LEASES The Company is obligated under capital lease agreements for office furniture and equipment. These leases expire through 2003. As of December 31, 1999, the total amount of furniture and equipment recorded under capital leases is $92,925, and the related accumulated amortization is $59,710. Future minimum lease payments as of December 31, 1999, are as follows: 2000 $11,787 2001 11,787 2002 7,604 2004 806 ------- Total future minimum lease payments 31,984 Amount representing interest (5,733) ------- Present value of minimum lease payments 26,251 Less current portion (8,555) ------- Long term portion $17,696 =======

The Company also has several noncancellable operating leases for office facilities and office equipment that expire over the next five years and generally provide for purchase or renewal options. Future minimum lease payments under noncancellable operating leases at December 31, 1999, are: 2000 $147,646 2001 112,332 2002 67,839 -------- Total minimum lease payments $327,817 ========

Total rent expense under these operating lease obligations was $168,852 for the year ended December 31, 1999. F-25 The Investment Counsel Company of the Southeast Notes to Financial Statements (Continued) December 31, 1999 NOTE 8 -- INCOME TAXES For the year ended December 31, 1999, income tax expense consists of the following: Current income tax expense (benefit) Federal $ (849) State 0 -- -------- (849) Deferred income tax expense (benefit) Federal (1,801) State (741) -------- (2,542) -------- Total income tax expense (benefit) $ (3,391) ========

Income tax expense attributable to income was $3,391 for the year ended December 31, 1999, and differed from the amounts computed by applying the U.S. federal income tax rate of 35% to income before income taxes primarily due to the deductible payments made on the non-qualified pension plan obligation, accelerated depreciation methods for tax purposes, deductible state income taxes and non-deductible entertainment and meals. The tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities at December 31, 1999, are presented below: Deferred tax liability (asset): Property and equipment $ 8,110 Non-qualified defined benefit pension obligation (81,974) -- --------- $ (73,864) =========

NOTE 9 -- FINANCIAL INSTRUMENTS The Company maintains its cash at financial institutions. The balance, at times, may exceed federally insured limits. At December 31, 1999, the Company exceeded the insured limit by approximately $20,900. F-26 The Investment Counsel Company of the Southeast Notes to Financial Statements (Continued) December 31, 1999 NOTE 10 -- PRIOR PERIOD ADJUSTMENT Subsequent to the issuance of the Company's financial statements as of December 31, 1998 and dated September 30, 1999, management discovered that the non-qualified defined benefit pension plan obligation (See Note 4) assumed in connection with the corporate split-off from the former parent was not recorded. The present value of the obligation as of April 30, 1998 was $217,981. Accrual of non-qualified pension plan benefits are not deductible for tax purposes until paid. Therefore a deferred tax asset of $84,086 has been recorded. Upon reevaluation of the reorganization, the effect of including this obligation, net of the deferred tax asset, resulted in an excess cost of the corporate split-off totaling $133,895. During the year ended December 31, 1999, a change was made to the Company's retained earnings to properly account for the balance of the stock subscription receivable. This adjustment decreased retained earnings by $10,723 and decreased stock subscription receivable by $10,723. NOTE 11 -- SUBSEQUENT EVENTS Subsequent to the balance sheet date, in December 2001, the stockholders of the Parent entered into an agreement to sell all of their capital stock to Intrepid Capital Corporation. F-27 SUPPLEMENTARY INFORMATION F-28 THE INVESTMENT COUNSEL COMPANY OF THE SOUTHEAST Schedule of General and Administrative Expenses For the year ended December 31, 1999 Salaries $ 1,827,093 Travel and entertainment 77,087 Payroll taxes and employee benefits 168,207 Professional fees 17,580 Data processing 20,113 Office supplies and expenses 71,741 Office rent 140,794 Telephone 37,786 Depreciation and amortization 36,944 Insurance 20,526 Profit sharing contribution 62,374 Consulting 52,109 Marketing and promotion 43,050 Equipment rental 33,737 Dues and subscriptions 30,698 Repairs and maintenance 16,305 Taxes and licenses 16,252 Parking 19,044 Contributions 2,105 Postage and shipping 26,240 Miscellaneous 2,103 ------------- Total general and administrative expenses $ 2,721,888 =============

See Auditors' Report F-29 INTREPID CAPITAL CORPORATION AND SUBSIDIARIES Pro Forma Consolidated Balance Sheet September 30, 2001 (unaudited)

See accompanying notes to pro forma consolidated financial statements. F-30 INTREPID CAPITAL CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statements of Operations Nine month period ended September 30, 2001 (unaudited)

See accompanying notes to pro forma consolidated financial statements. F-31 INTREPID CAPITAL CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statements of Operations Year ended December 31, 2000 (unaudited)

See accompanying notes to pro forma consolidated financial statements. F-32 INTREPID CAPITAL CORPORATION AND SUBSIDIARIES Notes to Pro Forma Consolidated Financial Statements The Unaudited Pro Forma Consolidated Financial Statements of the Company give effect to the consummation of the acquisition of ICC. The pro forma adjustments are based upon currently available information and upon certain assumptions that the Company's management believes are reasonable. The acquisition has been accounted for using the purchase method of accounting. The adjustments recorded in the Unaudited Pro Forma Consolidated Financial Statements represent the Company's preliminary determination of these adjustments based upon available information. There can be no assurance that the actual adjustments will not differ significantly from the pro forma adjustments reflected in the Unaudited Pro Forma Consolidated Financial Statements. The Unaudited Pro Forma Consolidated Financial Statements should be read in conjunction with the historical consolidated financial statements of the Company and the related notes thereto. (1) The Unaudited Pro Forma Consolidated Financial Statements set forth the pro forma balance sheet at September 30, 2001 and the pro forma statements of operations for the nine month period ended September 30, 2001 and the year ended December 31, 2000. The statements of operations reflect the effects of the acquisition as though the transactions had occurred at the beginning of the periods presented, and the balance sheet assumes the acquisition occurred at the balance sheet date presented. On December 31, 2001, the Company acquired all of the outstanding capital stock of ICC Investment Advisors, Inc ("ICC"). The purchase price consists of (i) cash of $2,835,365, (ii) 1,000,000 shares of the Company's common stock valued at the bid price on the date of acquisition, less a discount for certain restrictions on the shares issued, (iii) warrants to purchase up to an aggregate of 100,000 shares of the Company's common stock, (iv) direct costs of $307,684 and (v) the value of net liabilities assumed. The Company financed the purchase by borrowing $3,500,000 from AJG Financial Services, Inc. ("AJG"). The acquisition will be accounted for under the purchase method of accounting. The unaudited pro forma consolidated financial statements do not reflect any cost savings or increased revenues anticipated as a result of the acquisition. (2) The Company is still identifying and measuring goodwill and identifiable intangible assets. Goodwill and identifiable intangible assets have been reflected for the excess of the estimated purchase price over the fair value of the tangible assets acquired, as follows: Cash paid $ 2,835,365 Stock and stock warrants issued 940,000 Direct costs 307,684 Fair value of liabilities assumed 455,650 ------------- Total purchase price 4,538,699 Less fair value of tangible assets acquired (190,854) ------------- Goodwill and identifiable intangibles $ 4,347,845 =============

Identifiable intangible assets, subject to final identification and measurement, are $869,569 and represent the estimated portion of the purchase price attributable to net investment management fees arising under contractual arrangements with ICC clients. Amortization is on a straight line basis over 10 years, based on the estimated useful life of the identifiable tangible assets. Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), is effective for all business combinations accounted for under the purchase method and for which the date of acquisition is July 1, 2001, or later. Under SFAS 142, goodwill related to such acquisitions shall not be amortized. Therefore, no adjustment has been made to reflect the amortization of goodwill in the Pro Forma Condensed Consolidated Statements of Operations. F-33 INTREPID CAPITAL CORPORATION AND SUBSIDIARIES Notes to Pro Forma Consolidated Financial Statements (3) Adjust prepaid and other assets to their fair values. (4) Eliminate the equity of ICC for consolidation of the Company and increase equity of the Company by value of common stock and stock warrants issued, or $940,000. (5) Interest expense has been increased to reflect the effect of financing the purchase with the debt borrowed from AJG at 5.00%. (6) Eliminate income tax expense (benefit) of ICC for consolidation of the Company. F-34

INTREPID CAPITAL CORP 8-K/A