-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NpdUngrUstQ2uwIKV6yT4TiNHmTNuoRcaphKEf/P715aBnRY0bcv6gxOOidp/KBv 41yBTklLHD5J7VcFwAAttQ== 0000052234-02-000015.txt : 20021114 0000052234-02-000015.hdr.sgml : 20021114 20021114164559 ACCESSION NUMBER: 0000052234-02-000015 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINMILL & CO INC CENTRAL INDEX KEY: 0000052234 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 131897916 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09667 FILM NUMBER: 02825615 BUSINESS ADDRESS: STREET 1: 11 HANOVER SQ CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 2127850900 MAIL ADDRESS: STREET 1: 11 HANOVER SQ CITY: NEW YORK STATE: NY ZIP: 10005 FORMER COMPANY: FORMER CONFORMED NAME: BULL & BEAR GROUP INC DATE OF NAME CHANGE: 19920703 10QSB 1 september-10q.txt WINMILL & CO. INCORPORATED 3RD QUARTER REPORT As filed with the Securities and Exchange Commission on November 14, 2002 SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 September 30, 2002 or _____ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From _____________ to ____________ For Quarter Ended September 30, 2002 Commission File Number 0-9667 WINMILL & CO. INCORPORATED - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-1897916 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11 Hanover Square, New York, New York 10005 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 212-785-0900 - -------------------------------------------------------------------------------- (Company's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes__X__ No_____ The number of shares outstanding of each of the registrant's classes of common stock, as of October 31, 2002, were as follows: Class A Common Stock non-voting, par value $.01 per share - 1,628,320 shares Class B Common Stock voting, par value $.01 per share - 20,000 shares WINMILL & CO. INCORPORATED FORM 10-QSB FOR THE QUARTER ENDED September 30, 2002 INDEX Page Number PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements Condensed Consolidated Balance Sheet - (Unaudited) September 30, 2002 3 Condensed Consolidated Statements of Income (Loss) - (Unaudited) Nine Months Ended September 30, 2002 and September 30, 2001 4 Condensed Consolidated Statements of Cash Flows - (Unaudited) Nine months Ended September 30, 2002 and September 30, 2001 5 Notes to Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Controls and Procedures 15 PART II. OTHER INFORMATION Item 4. Submission of Matters to a vote of Security Holders During Third Quarter of the Year ended December 31, 2002 15 Item 6. Exhibits and Report on Form 8-K 15 MANAGEMENT'S REPRESENTATION 16 2 WINMILL & CO. INCORPORATED CONSOLIDATED BALANCE SHEET September 30, 2002 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,567,627 Marketable securities (Note 2) 4,784,518 Other receivables 166,038 Prepaid expenses and other assets 287,298 ------------- Total Current Assets 6,805,481 ------------- Equipment, furniture and fixtures, net 59,695 Excess of cost over net book value of subsidiaries, net 634,213 Deferred income taxes (Note 8) 120,100 Other 372,042 ------------- 1,186,050 Total Assets $ 7,991,531 ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accrued liabilities $ 278,560 ------------ Total Current Liabilities 278,560 ------------ Shareholders' Equity: (Notes 2, 5, 6 and 7) Common Stock, $.01 par value Class A, 10,000,000 shares authorized; 1,628,320 shares issued and outstanding 16,283 Class B, 20,000 shares authorized; 20,000 shares issued and outstanding 200 Additional paid-in capital 6,807,986 Retained earnings 1,415,528 Notes receivable for common stock issued (527,041) Accumulated other comprehensive income 15 ------------ Total Shareholders' Equity 7,712,971 ------------ Total Liabilities and Shareholders' Equity $ 7,991,531 ============ See accompanying notes to consolidated financial statements. 3 WINMILL & CO. INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)
Three Months Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 ---- ---- ---- ---- Revenues: Management, distribution and other fees $ 357,762 $ 366,694 $ 1,069,135 $ 1,409,463 Consulting fee - - - 246,923 Dividends, interest and other 58,219 70,290 180,624 213,082 --------- -------- --------- --------- Revenue before net realized and unrealized (losses)on investments 415,981 437,484 1,249,759 1,869,468 Net realized and unrealized (losses) from investments (411,281) (145,236) (72,099) (110,320) --------- -------- --------- --------- 4,700 292,248 1,177,660 1,759,148 --------- -------- --------- --------- Expenses: General and administrative 232,775 208,262 692,696 705,630 Marketing 118,390 138,670 365,572 562,456 Expense reimbursements to the Funds (Note 9) 43,371 65,150 139,100 228,690 Professional fees 39,020 13,611 111,100 155,332 Amortization and depreciation 17,138 11,085 32,301 35,621 Write-down of intangible assets - 51,674 - 51,674 ---------- ------- --------- --------- 450,694 488,452 1,340,769 1,739,403 ---------- ------- --------- --------- Income (loss) before income taxes (445,994) (196,204) (163,109) 19,745 Income taxes provision (credit)(Note 8) (173,386) (68,055) (66,086) 18,700 --------- -------- --------- --------- Net Income (loss) $ (272,608) (128,149) $ (97,023) $ 1,045 ========== ======== ========= ========== Per share data: Basic Net income (loss) $ (0.17) $ (0.08) $ (0.06) $ 0.00 Diluted Net income (loss) $ (0.17) $ (0.08) $ (0.06) $ 0.00 Average Shares Outstanding: Basic 1,628,320 1,655,017 1,628,320 1,655,017 Diluted 1,628,320 1,655,017 1,628,320 1,660,836
See accompanying notes to the consolidated financial statements. 4 WINMILL & CO. INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2002 Cash Flows from Operating Activities: Net income (loss) $ (97,023) ----------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 34,171 Net realized and unrealized gains from investments 240,853 Cash value of life insurance (24,750) Other (1,559) (Increase) decrease in: Management, distribution and other fees receivable (36,075) Prepaid expenses and other assets 105,686 Deferred tax credits (29,100) Increase (decrease) in: Accrued income taxes (20,702) Accounts payable (13,425) Accrued professional fees 12,814 Accrued payroll and other related costs 8,915 Accrued other expenses 3,019 ----------- Total adjustments 279,847 ----------- Net cash provided by operating activities 182,824 ----------- Cash Flows from Investing Activities: Proceeds from sales of investments 21,380 Purchases of investments (600,863) Intangible assets (479,407) ----------- Net cash used in investing activities (1,058,890) ----------- Net decrease in cash and cash equivalents (876,066) Cash and Cash Equivalents: At beginning of period 2,443,693 ----------- At end of period $ 1,567,627 =========== Supplemental disclosure: The Company paid $0 and $172,000 in Federal income taxes during the nine months ended September 30, 2002 and 2001. See accompanying notes to the consolidated financial statements. 5 WINMILL & CO. INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 and 2001 (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS Winmill & Co. Incorporated ("Company") is a holding company. Its subsidiaries' business consists of providing investment management and distribution services for the Midas Funds (open-end funds) and two closed-end funds and proprietary securities trading. BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries. Substantially all inter-company accounts and transactions have been eliminated. ACCOUNTING ESTIMATES In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses and other liabilities approximate fair value because of the short maturity of these items. Marketable securities are recorded at market value, which represents the fair value of the securities. CASH AND CASH EQUIVALENTS Investments in money market funds are considered to be cash equivalents. At September 30, 2002, the Company and subsidiaries had invested approximately $1,275,000 in an affiliated money market fund. MARKETABLE SECURITIES Marketable securities held by the Company and its non-broker/dealer subsidiaries are considered to be "available-for-sale" and are marked to market, with the unrealized gain or loss included in stockholders' equity. Marketable securities held by the broker/dealer subsidiary are marked to market with unrealized gains and losses included in earnings. 6 WINMILL & CO. INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 and 2001 (Unaudited) INCOME TAXES The Company and its wholly owned subsidiaries file consolidated income tax returns. The Company's method of accounting for income taxes conforms to Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". This method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. EQUIPMENT, FURNITURE AND FIXTURES Equipment, furniture and fixtures are recorded at cost and are depreciated on the straight-line basis over their estimated lives, 3 to 10 years. At September 30, 2002 accumulated depreciation amounted to approximately $822,500. EXCESS OF COST OVER NET BOOK VALUE OF SUBSIDIARIES The excess of cost over net book value of subsidiaries is capitalized and amortized over fifteen years using the straight-line method. In accordance with Statement of Accounting Standards No. 142 "Goodwill and Other Intangible Assets", the Company periodically reassesses the useful life of the previously recognized intangible assets and adjusts the remaining amortization periods accordingly. At September 30, 2002, accumulated amortization amounted to approximately $160,500. COMPREHENSIVE INCOME The Company discloses comprehensive income in the financial statements. Total comprehensive income includes net income and unrealized gains and losses on marketable securities, which is reported as other comprehensive income in shareholders' equity. SEGMENT INFORMATION The Company's operating segment is organized around services provided and classified into one group - investment management. 7 WINMILL & CO. INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 and 2001 (Unaudited) EARNINGS PER SHARE Basic earnings per share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock. The following table sets forth the computation of basic and diluted earnings per share:
Three Months Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 ---- ---- ---- ---- Numerator for basic and diluted earnings per share: Net (loss) income $ (272,608) $ (128,149) $ (97,023) $ 1,045 ========== ========== ========== ======= Denominator: Denominator for basic earnings per share weighted-average shares 1,628,320 1,655,017 1,628,320 1,655,017 Effect of dilutive securities: Employee Stock Options - - - 5,839 ---------- ---------- ---------- ---------- Denominator for diluted earnings per share adjusted weighted-average shares and assumed conversions 1,628,320 1,655,017 1,628,320 1,660,836 ========== ========== ========== ==========
2. MARKETABLE SECURITIES At September 30, 2002, marketable securities, at market, consisted of: Broker/dealer subsidiary Affiliated investment companies $3,865,940 Equity securities 915,896 ---------- Total broker/dealer securities (cost $5,006,342) 4,781,836 ---------- Other subsidiaries' available-for-sale securities Unaffiliated investment companies 2,682 Equity securities - ---------- Total available-for-sale securities (cost $2,682) 2,682 ---------- $4,784,518 ========== At September 30, 2002, the Company had $0, net of deferred income taxes, of unrealized gains on "available-for-sale securities" which is reported as a separate component of consolidated shareholders' equity. Included in the investments in affiliated investment companies are investments of $2,113,797 or approximately 23% of the outstanding shares of Bexil Corporation and $1,741,983 or approximately 19% of the outstanding shares of Tuxis Corporation, both of which have received shareholder approval to change from registered investment companies to operating companies, but have not yet received SEC approval. 3. LEASE COMMITMENTS The Company leases office space under a lease that expires December 31, 2003. The rent is approximately $109,000 per annum including electricity. 8 WINMILL & CO. INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 and 2001 (Unaudited) 4. SHAREHOLDERS' EQUITY The Class A and Class B Common Stock are identical in all respects except for voting rights, which are vested solely in the Class B Common Stock. The Company also has 1,000,000 shares of Preferred Stock, $.01 par value, authorized. As of September 30, 2002, none of the Preferred Stock was issued. 5. NET CAPITAL REQUIREMENTS The Company's broker/dealer subsidiary is a member firm of the National Association of Securities Dealers, Inc. ("NASD") and is registered with the Securities and Exchange Commission as a broker/dealer. Under its membership agreement with the NASD, the broker/dealer must maintain minimum net capital, as defined, of not less than $100,000, or 6-2/3% of aggregate indebtedness, whichever is greater; and a ratio of aggregate indebtedness to net capital, as defined, of not more than 15 to 1. At September 30, 2002, the subsidiary had net capital of approximately $4,506,800; net capital requirements of $100,000; excess net capital of approximately $4,406,800; and the ratio of aggregate indebtedness to net capital was approximately 0.03 to 1. 6. STOCK OPTIONS On December 6, 1995, the Company adopted a Long-Term Incentive Plan which, as amended, provides for the granting of a maximum of 600,000 options to purchase Class A Common Stock to directors, officers and key employees of the Company or its subsidiaries. With respect to non-employee directors, only grants of non-qualified stock options and awards of restricted shares are available. The three non-employee directors were granted 15,000 options each on December 12, 2000 and all previously issued options were cancelled. The option price per share may not be less than the fair value of such shares on the date the option is granted, and the maximum term of an option may not exceed ten years except as to non-employee directors for which the maximum term is five years. The Company applies APB Opinion 25 and related interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for its stock option plans. Pro forma compensation cost for the Company's plans is required by Financial Accounting Standards No.123 "Accounting for Stock-Based Compensation (SFAS 123)" and has been determined based on the fair value at the grant dates for awards under these plans consistent with the method of SFAS 123. For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows: Three Months Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 ---- ---- ---- ---- Net income(loss)As Reported $ (272,608) $ (128,149) $ (97,023) $ 1,045 Pro forma $ (274,671) $ (132,336) $ (104,687) $ (8,703) Earning per share Basic As Reported $ (.17) $ (.08) $ (.06) $ 0.00 Pro forma $ (.17) $ (.08) $ (.06) $ (0.01) Diluted As Reported $ (.17) $ (.08) $ (.06) $ 0.00 Pro forma $ (.17) $ (.08) $ (.06) $ (0.01) The fair value of each option grant is estimated as of the date of grant using the Black-Scholes option-pricing model. 9 WINMILL & CO. INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 and 2001 (Unaudited) A summary of the status of the Company's stock option plans as of September 30,2001 and changes during the period ending on that date is presented below: Number of Weighted-Average Stock Options Shares Exercise Price Outstanding at December 31, 2001 221,000 $1.60 Outstanding at September 30, 2002 221,000 $1.60 There were 194,000 options exercisable at September 30, 2002 with a weighted-average exercise price of $1.59. There were no options granted during the three months ended September 30, 2002. The following table summarizes information about stock options outstanding at September 30, 2002: Options Outstanding --------------------------------------------------- Weighted-Average Range of Number Remaining Weighted-Average Exercise Prices Outstanding Contractual Life Exercise Price $1.50 - $1.65 206,000 3.18 years $1.58 $1.70 - $1.80 15,000 3.70 years $1.80 In connection with the exercise of the options, the Company received from certain officers notes with an interest rates ranging from 2.45% to 2.48% per annum payable December 15, 2004. The balance of the notes at September 30, 2002 was $527,041, which was classified as "notes receivable for common stock issued." 7. PENSION PLAN The Company has a 401(k) retirement plan for substantially all of its qualified employees. Contributions to this are based upon a percentage of salaries of eligible employees and are accrued and funded on a current basis. Total pension expense for the nine months ended September 30, 2002 and September 30, 2001 were $36,969 and $24,257, respectively. 8. INCOME TAXES The provision (benefit) for income taxes for the nine months ended September 30, 2002 and 2001 are as follows: 2002 2001 ---- ---- Current Federal $ (31,686) $ (14,900) State and local (5,300) (49,400) ---------- ---------- (36,986) (64,300) Deferred (29,100) 83,000 ---------- ----------- $ (66,086) $ 18,700 ========== ============ Deferred tax asset are comprised primarily of unrealized losses on investments at September 30, 2002. 10 WINMILL & CO. INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 (Unaudited) 9. RELATED PARTIES All management and distribution fees are a result of services provided to the Funds. All such services are provided pursuant to agreements that set forth the fees to be charged for these services. These agreements are subject to annual review and approval by each Fund's Board of Directors and a majority of the Fund's non-interested directors. During the nine months ended September 30, 2002 and 2001, the Funds paid approximately $33,000 and $66,200 respectively, for record keeping services to ISC, which paid such amounts to certain brokers for performing such services. These reimbursements for record keeping services are included in management, distribution and other fees on the income statement. In connection with investment management services, the Company's investment managers and distributor waived management and distribution fees and reimbursed expenses to the Funds in the amount of approximately $139,100 and $228,690 for the quarter ended September 30, 2002 and 2001, respectively. Certain officers of the Company also serve as officers and/or directors of the Funds. Commencing August 1992, the Company obtained a key man life insurance policy on the life of the Company's Chairman, which provides for the payment of $1,000,000 to the Company upon his death. As of September 30, 2002, the policy had a cash surrender value of approximately $266,800 and is included in other assets in the balance sheet. 10. CONTINGENCIES From time to time, the Company and/or its subsidiaries are threatened or named as defendants in litigation arising in the normal course of business. As of September 30, 2002, neither the Company nor any of its subsidiaries was involved in any litigation that, in the opinion of management, would have a material adverse impact on the consolidated financial statements. In April 2002, the Company entered into a Death Benefit Agreement ("Agreement") with the Company's Chairman. Following his death, the Agreement provides for annual payments equal to 80% of his average annual salary received from the Company, its affiliates, subsidiaries, and other related entities for the three year period prior to his death subject to certain adjustments to his wife until her death. The Company's obligations under the Agreement are not secured and will terminate if he leaves the Company's employ under certain conditions. 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three Months Ended September 30, 2002 compared to Three Months Ended September 30, 2001 - -------------------------------------------------------------------------------- Declines in the securities markets can have a significant effect on the Company's business. Volatile stock markets may affect management and distribution fees earned by the Company's subsidiaries. If the market value of securities owned by the Funds declines, shareholder redemptions may occur, either by transfer out of the equity Funds and into the money market fund, which has lower management and distribution fee rates than the equity Funds, or by transfer out of the Funds entirely. Lower net asset levels in the Funds may also cause or increase reimbursements to the Funds pursuant to expense limitations as described in Note 9 of the financial statements. Total revenue before the net realized and unrealized loss on investments decreased $21,504 or 29%, which was primarily due to lower management, distribution and other fees and consulting fees. The Company had net realized and unrealized losses of $411,281 on the Company's investments. Management, distribution and other fees decreased $8,932 or 2% due to lower net assets in the Funds, the termination of the investment management agreement with Bexil and Tuxis upon their adoption of an internal management structure and the assumption of Bexil and Tuxis of certain expenses, effective July 31, 2001 and November 30, 2001, respectively. Dividends, interest and other decreased $12,572 due to lower earnings on investments. On July 12, 2002 CEF Advisers, Inc.(a unit of the Company) became the new investment manager of the closed-end fund Internet Growth Fund, Inc. Total expenses decreased $37,758 or 8% as a result of decreases in marketing expenses of $20,280 or 15% and during the third quarter of 2001 a charge was taken for the write-down of intangible asset of $51,674. Offsetting this was an increase in general and administrative, professional fees and amortization and depreciation. Marketing expenses decreased due to lower fulfillment and printing expenses. Expense reimbursement to the Funds decreased $21,779 or 33% primarily due to the liquidation or merger of certain Funds being reimbursed. Net loss for the period was $272,608 or $.17 per share on a diluted basis as compared to net loss of $128,149 or $.08 loss per share on a diluted basis for period ended. Nine Months Ended September 30, 2002 compared to Nine Months Ended September 30, 2001 - -------------------------------------------------------------------------------- Total revenues decreased $581,488 or 33% which was primarily due to the decrease in management, distribution and other fee income, consulting fees and dividends, interest and other income. Partially offsetting this were lower net realized and unrealized losses on investments. Management, distribution and other fees decreased $340,328 or 24% due to lower net assets in the Funds, the termination of the investment management agreement with Bexil and Tuxis upon their adoption of an internal management structure and the assumption of Bexil and Tuxis of certain expenses, effective July 31, 2001 and November 30, 2001 respectively. Average net assets under management were less in the nine months ended September 30, 2002 versus September 30, 2001. Net assets were approximately $128 million at September 30, 2001, $116 million at December 31, 2001, and $125 million at March 31, 2002, $123 million at June 30, 2002 and $129 at September 30, 2002. Dividends, interest and other decreased $32,459 due to lower earnings on the Company's investments. Net realized and unrealized gains resulted in a loss in of $72,099 on investments. Also for the nine months ended September 30, 2001, the Company earned $246,923 in consulting fees through an agreement that was terminated during the second quarter of 2001. Total expenses decreased $398,634 or 23% over this period of last year, as a result of decreases in marketing expenses of $196,884 or 35%, general and administrative expenses of $12,934 or 2%, and amortization and depreciation expenses of $3,320 or 9%. Marketing expenses decreased due to lower fulfillment and printing expenses. General and administrative expenses decreased due to lower employee costs and the assumption of Bexil and Tuxis of certain expenses. Expense reimbursements to the Funds decreased $89,590 or 39%. Professional fees decreased $44,232 or 28%. Net results for the period was a loss of $97,023 or $.06 per share on a diluted basis as compared to net income of $1,045 or $.00 per share on a diluted basis for the nine months ended September 30, 2001. 12 Liquidity and Capital Resources - -------------------------------------------------------------------------------- The following table reflects the Company's consolidated working capital, total assets, long term debt and shareholders' equity as of the dates indicated: September 30, 2002 December 31, 2001 ------------------ ----------------- Working Capital $ 6,526,921 $ 7,063,441 Total Assets $ 7,991,531 $ 8,036,785 Long-Term Debt - - Shareholders' Equity $ 7,712,971 $ 7,748,846 Working capital, total assets and shareholders' equity decreased $536,520, $45,254 and $35,875, respectively for the nine months ended September 30, 2002. Working capital, total assets and shareholders' equity decreased primarily due to net loss for the first nine months of 2002. As discussed previously, significant changes in the securities markets can have a dramatic effect on the Company's results of operations. Based on current information available, management believes that current resources are sufficient to meet its liquidity needs. 13 Effects of Inflation and Changing Prices - -------------------------------------------------------------------------------- Since the Company derives most of its revenues from acting as the manager and distributor of investment companies, it is not possible for it to discuss or predict with accuracy the impact of inflation and changing prices on its revenue from continuing operations. Forward-Looking Information - -------------------------------------------------------------------------------- Information or statements provided by or on behalf of the Company from time to time, including those within this Form 10-QSB Quarterly Report, may contain certain "forward-looking information", including information relating to anticipated growth in revenues or earnings per share, anticipated changes in the amount and composition of assets under management, anticipated expense levels, and expectations regarding financial market conditions. The Company cautions readers that any forward-looking information provided by or on behalf of the Company is not a guarantee of future performance and that actual results may differ materially from those in forward-looking information as a result of various factors, including but not limited to those discussed below. Further, such forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The Company's future revenues may fluctuate due to factors such as: the total value and composition of assets under management and related cash inflows or outflows in mutual funds; fluctuations in the financial markets resulting in appreciation or depreciation of assets under management; the relative investment performance of the Company's sponsored investment products as compared to competing products and market indices; the expense ratios and fees of the Company's sponsored products and services; investor sentiment and investor confidence in mutual funds; the ability of the Company to maintain investment management fees at current levels; competitive conditions in the mutual funds industry; the introduction of new mutual funds and investment products; the ability of the Company to contract with the Funds for payment for services offered to the Funds and Fund shareholders; the continuation of trends in the retirement plan marketplace favoring defined contribution plans and participant-directed investments; and the amount and timing of income from the Company's proprietary securities trading portfolio. The Company's future operating results are also dependent upon the level of operating expenses, which are subject to fluctuation for the following or other reasons: changes in the level of advertising expenses in response to market conditions or other factors; the level of expenses assumed by the Company for the Funds as a result of expense reimbursement plan or waiver of expenses to increase a Fund's performance; variations in the level of compensation expense incurred by the Company, including performance-based compensation based on the Company's financial results, as well as changes in response to the size of the total employee population, competitive factors, or other reasons; expenses and capital costs, including depreciation, amortization and other non-cash charges, incurred by the Company to maintain its administrative and service infrastructure; and unanticipated costs that may be incurred by the Company from time to time to protect investor accounts and client goodwill. The Company's operating results will also depend on the results of its holdings in Bexil and Tuxis. The Company's revenues are substantially dependent on revenues from the Funds, which could be adversely affected if the independent directors of one or more of the Funds determined to terminate or renegotiate the terms of one or more investment management agreements. The Company's business is also subject to substantial governmental regulation, and changes in legal, regulatory, accounting, tax, and compliance requirements may have a substantial effect on the Company's business and results of operations, including but not limited to effects on the level of costs incurred by the Company and effects on investor interest in mutual funds in general or in particular classes of mutual funds. 14 Item 3. Controls and Procedures (a) Evaluation of disclosure controls and procedures. The Company's chief executive officer and chief financial officer, after evaluating the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c)) as of a date (the "Evaluation Date") within 90 days before the filing date of this quarterly report, have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were effective. (b) Changes in internal controls. There were no significant changes in the Company's internal controls or to the Company's knowledge, in other factors that could significantly affect the Company's disclosure controls and procedures subsequent to the Evaluation Date. Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders During Third Quarter of Year Ended December 31, 2002. None. Item 6. Exhibits and Reports on Form 8-K No reports on Form 8-K were filed during the quarter covered by this report. 15 MANAGEMENT'S REPRESENTATION The information furnished in this report reflects all adjustments which are, in the opinion of management, necessary to a fair statement of the results of the period. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WINMILL & CO. INCORPORATED Dated: November 14, 2002 By:/s/ William G. Vohrer --------------------- William G. Vohrer Treasurer, Chief Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated. Dated: November 14, 2002 /s/ Bassett S. Winmill ---------------------- Bassett S. Winmill Chairman of the Board, Director Dated: November 14, 2002 /s/ Robert D. Anderson ---------------------- Robert D. Anderson Vice Chairman, Director Dated: November 14, 2002 /s/ Thomas B. Winmill --------------------- Thomas B. Winmill, Esq. President, General Counsel, Director Dated: November 14, 2002 /s/ Charles A. Carroll ---------------------- Charles A. Carroll, Director Dated: November 14, 2002 /s/ Edward G. Webb, Jr. ----------------------- Edward G. Webb, Jr., Director Dated: November 14, 2002 /s/ Mark C. Winmill ------------------- Mark C. Winmill, Director 16 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors and Shareholders of Winmill & Co. Incorporated We have reviewed the accompanying balance sheet and statements of income (loss) of Winmill & Co. Incorporated and consolidated subsidiaries as of September 30, 2002 and for the nine-month period ended. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. Tait, Weller & Baker Philadelphia, Pennsylvania November 14, 2002 17 Certification- Exchange act rules 13a-14 and 15d-14 I, Thomas B. Wilmill, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Winmill & Co. Incorporated; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ Thomas B. Winmill ----------------------- Chief Executive Officer 18 Certification- Exchange act rules 13a-14 and 15d-14 I, William G. Vohrer, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Winmill & Co. Incorporated; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ William G. Vohrer ----------------------- Chief Financial Officer 19 CEO CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Winmill & Co. Incorporated (the "Company") on Form 10-Q for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas B. Winmill, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Thomas B. Winmill Thomas B. Winmill Chief Executive Officer November 14, 2002 20 CFO CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Winmill & Co. Incorporated (the "Company") on Form 10-Q for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William G. Vohrer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/William G. Vohrer William G. Vohrer Chief Financial Officer November 14, 2002 21 -----END PRIVACY-ENHANCED MESSAGE-----