-----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, SRINcq+uKJGHvPj3Jm+RzdMP0DfZ4Pg8SMvwMuext/+a4RMGr+iOYd2wc8RhUHkD 2b5Je3xI59nUYYqTPhM4uw== 0000052234-03-000040.txt : 20031114 0000052234-03-000040.hdr.sgml : 20031114 20031114152839 ACCESSION NUMBER: 0000052234-03-000040 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 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: 031004047 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 sept-10qsb.txt 2003 3RD QUARTER REPORT As filed with the Securities and Exchange Commission on November 14, 2003 ------------------------------------------------------------------------- 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, 2003 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, 2003 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, 2003 were as follows: Class A Common Stock non-voting, par value $.01 per share - 1,567,216 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, 2003 INDEX Page Number -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheet -(Unaudited) September 30, 2003 3 Condensed Consolidated Statements of Income (Loss) -(Unaudited) Nine Months Ended September 30, 2003 and September 30, 2002 4 Condensed Consolidated Statements of Cash Flows -(Unaudited) Nine Months Ended September 30, 2003 and September 30, 2002 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 13 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, 2003 15 Item 5. None Item 6. Exhibits and Reports on Form 8-K 16 CERTIFICATION SIGNATURES 19 2 WINMILL & CO. INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEET September 30, 2003 (Unaudited) ASSETS Current Assets: Cash and cash equivalent $ 1,419,377 Marketable securities (Note 2) 6,389,835 Other receivables 181,536 Prepaid expenses and other assets 71,352 Refundable income tax 7,370 --------- Total Current Assets 8,069,470 --------- Equipment, furniture and fixtures, net 58,545 Intangible assets, net 595,295 Other 360,330 --------- 1,014,170 Total Assets $ 9,083,640 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 239,274 --------- Total Current Liabilities 239,274 --------- Deferred tax credit 400,000 --------- Total Liabilities 639,274 --------- Shareholders' Equity: (Notes 2, 4, 5, and 6) Common Stock, $0.1 par value Class A, 10,000,000 shares authorized 1,645,187 shares issued and outstanding 16,452 Class B, 20,000 shares authorized; 20,000 shares issued and outstanding 200 Additional paid-in capital 6,838,849 Retained earnings 2,307,355 Treasury Stock (214,858) Notes receivable for common stock issued (503,632) --------- Total Shareholders' Equity 8,444,366 --------- Total Liabilities and Shareholders' Equity $ 9,083,640 =========== See accompanying notes to the condensed consolidated financial statements. 3 WINMILL & CO. INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)
Three Months Nine Months Ended September 30, Ended September 30, --------------------------- --------------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Revenues: Management, distribution and other fees $ 359,221 $ 357,762 $ 1,029,741 $ 1,069,135 Dividends, interest and other 39,093 58,219 118,479 180,624 Net unrealized appreciation (depreciation) of publicly held affiliates and unrealized and realized gains (losses) on proprietary trading 414,635 (411,281) 1,063,266 (72,099) ------------- ------------- ------------- ------------- 812,949 4,700 2,211,486 1,177,660 ------------- ------------- ------------- ------------- Expenses: General and administrative 220,277 232,775 571,686 692,696 Marketing 124,895 118,390 327,326 365,572 Expense reimbursements to the Funds (Note 9) 39,378 43,371 116,465 139,100 Professional fees 5,000 39,020 39,000 111,100 Amortization and depreciation 17,800 17,138 51,988 32,301 ------------- ------------- -------------- ------------ 407,350 450,694 1,106,465 1,340,769 ------------- ------------- -------------- ------------ Income (loss) before income taxes 405,599 (445,994) 1,105,021 (163,109) Income taxes (credit) provision (Note 8) 167,946 (173,386) 447,546 (66,086) ------------- ------------- -------------- ------------ Net income (loss) $ 237,653 $ (272,608) $ 657,475 $ (97,023) ============= ============= ============== ============ Per share net income (loss): Basic $ 0.15 $ (0.17) $ 0.41 $ (0.06) Diluted $ 0.14 $ (0.17) $ 0.39 $ (0.06) Average shares outstanding: Basic 1,607,848 1,628,320 1,608,251 1,655,017 Diluted 1,710,287 1,628,320 1,668,106 1,660,836
See accompanying notes to the condensed consolidated financial statements. 4 WINMILL & CO. INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, ------------------------- 2003 2002 ---- ---- Cash Flows from Operating Activites Net income $ 657,475 $ (97,023) --------- --------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 51,989 34,171 Net unrealized (appreciation) depreciation of publicly held affiliates and on proprietary securities trading (1,063,266) 240,853 Cash value of life insurance (24,780) (24,750) Other (4,381) (1,559) (Increase) decrease in: Management, distribution and other fees receivable (11,396) (36,075) Interest, dividends and other receivables 10,845 - Prepaid expenses and other assets 15,072 105,686 Refundable income tax 165,924 - Deferred tax credits 422,000 (29,100) Increase (decrease) in: Accounts payable (740) (13,425) Accrued professional fees (14,209) 12,814 Accrued payroll and other related costs 17,250 8,915 Accrued other expenses 19,558 (17,683) --------- --------- Total adjustments (416,134) 279,847 --------- --------- Net cash from operating activities 241,341 182,824 --------- --------- Cash Flows from Investing Activites: Proprietary securities trading sales 65,103 21,380 Proprietary securities trading purchases (104,681) (600,863) Intangible assets - (460,532) Capital expenditures (10,323) (18,875) --------- --------- Net decrease in cash from investing activities (49,901) 1,058,890 --------- --------- Cash Flows from Financing Activities: Purchase of treasury stock (50,000) - Repayment of notes receivable 23,409 - --------- --------- Net cash provided by financing activities (26,591) - --------- --------- Net increase(decrease) in cash and cash equivalents 164,849 (876,066) Cash and Cash Equivalents At beginning of period $ 1,254,528 2,443,693 ----------- --------- At end of period $ 1,419,377 1,567,627 =========== =========
Supplemental disclosure: The Company paid no Federal income tax during the nine months ended September 30, 2003 and 2002. Non Cash Item include 45,542 shares of common stock received in exchange for the exercise of 56,666 shares of common stock under outstanding stock options and the repayment of notes receivable shown under other assets. See accompany notes to the condensed consolidated financial statements. 5 WINMILL & CO. INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Nine Months Ended September 30, 2003 and 2002 (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS Winmill & Co. Incorporated ("Company") is a holding company. Its subsidiaries' businesses consist of providing investment management and distribution services for the Midas Funds (three open-end funds), two closed-end funds, and proprietary securities trading. Its publicly held affiliates' are Bexil Corporation (Amex Symbol: BXL); Tuxis Corporation (Amex Symbol: TUX); and Foxby Corporation (Amex Symbol: FXX); and Global Income Fund (Amex Symbol: GIF). Their businesses of Bexil and Tuxis are, respectively, insurance services and real estate, and Global Income Fund and Foxby are closed end funds. 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 generally accepted accounting principles, 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, 2003, the Company and subsidiaries had invested approximately $975,000 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 unrealized gains or losses 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 INCOME TAXES 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. The Company and its wholly owned subsidiaries file consolidated income tax returns. EQUIPMENT, FURNITURE AND FIXTURES Equipment, furniture and fixtures are recorded at cost and are depreciated on the straight-line basis over their estimated lives of 3 to 10 years. At September 30, 2003 accumulated depreciation amounted to approximately $833,700. INTANGIBLE ASSETS The Company adopted Statements of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142") in 2002. In accordance with SFAS 142, intangible assets with a finite useful life are amortized over the useful life. In addition, intangible assets are reviewed for impairment and the remaining useful life evaluated at least annually to determine whether events and circumstances warrant a revision to the remaining period of amortization. As such, the Company has amortized its intangible assets over 15 years using the straight-line method. At September 30, 2003, accumulated amortization on intangible assets amounted to approximately $215,400. 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 segments are classified into three groups - fund services, publicly held affiliates, and proprietary trading. 7 EARNING 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 earning per share:
Three Months Nine Months Ended September 30, Ended September 30, --------------------------- --------------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Numerator for basic and diluted earnings per share: Net income $ 237,653 $ (272,608) $ 657,475 $ (97,023) Denominator: Denominator for basic earning per share: Weighted-average shares 1,607,848 1,628,320 1,608,251 1,628,320 Effect of dilutive securities: - Employee stock options 102,439 - 59,855 - --------- --------- --------- --------- Denominator for diluted earnings per share: adjusted weighted-average shares and assumed conversion 1,710,287 1,628,320 1,668,106 1,628,320 ========= ========= ========= =========
2. MARKETABLE SECURITIES At September 30, 2003, marketable securities, at market, consisted of: Broker/dealer subsidiary Publicly held affiliates $5,417,379 Proprietary trading 972,456 ---------- Total marketable securities (cost $5,323,428) $6,389,835 ---------- Included in the broker/dealer's holding of publicly held affiliates are $3,528,426 of (approximately 25% of outstanding) shares of Bexil Corporation (Amex Symbol: BXL) and $1,602,465 of (approximately 20% of outstanding) shares of Tuxis Corporation (Amex Symbol: TUX), each of which has received approved from its board of directors and shareholders to change from registered investment companies to operating companies. In 2002 Bexil filed an application to deregister with the Securities and Exchange Commission. 3. LEASE COMMITMENTS The Company leases office space under a lease agreement, which was renegotiated effective October 1, 2003. The lease expires September 30, 2008. The future minimum rental amounts for the five year period, including electricity, are as follows: Year Amount ---- ------- 2004 $97,100 2005 97,100 2006 97,700 2007 100,200 2008 76,600 8 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, $0.1 par value, authorized. As of September 30, 2003, none of the Preferred Stock was issued. 5. NET CAPTIAL 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, 2003, the subsidiary had: net capital of approximately $5,128,500; net capital requirements of $100,000; excess net capital of approximately $5,028,500; and the ratio of aggregate indebtedness to net capital was approximately 0.11 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 2,500 options each on December 10, 2002. 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 according 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 plan 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, ------------------- ------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Net income (loss) As Reported $237,653 $(272,608) $657,475 $ (97,023) Pro forma $237,653 $(274,671) $657,475 $(104,687) Earning per share Basic As Reported $ 0.15 $ (0.17) $ 0.41 $ (0.06) Pro forma $ 0.15 $ (0.17) $ 0.41 $ (0.06) Diluted As Reported $ 0.14 $ (0.17) $ 0.39 $ (0.06) Pro forma $ 0.14 $ (0.17) $ 0.39 $ (0.06)
The fair value of each option grant is estimated as of the date of grant using the Black-Scholes option-pricing model. 9 A summary of the status of the Company's stock option plans as of September 30, 2003 and changes during the period ending on that date are presented below: Weighted Number Average Of Exercise Stock Options Shares Price ------------- -------------- Outstanding at Decemeber 31, 2002 281,500 $ 1.59 Exercised (56,666) $(1.51) ------------- -------------- Outstanding at September 30, 2003 224,834 $ 1.59 There were 224,834 options exercisable at September 30, 2003 with a weighted-average exercise price of $1.59. There were no options granted during the three months ended September 30, 2003. There were 59,354 treasury shares purchased for $214,858 of which 24,625 shares were used to exercise outstanding stock options. The following table summarized information about stock options outstanding at September 30, 2003: Weighted-Average Range of Number Remaining Weighted-Average Exercise Prices Outstanding Contractual Life Exercise Price - --------------- ----------- ---------------- ---------------- $1.50 - $1.60 91,500 2.69 years $1.50 $1.60 - $1.66 133,334 2.82 years $1.65 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, 2003 was $503,632, 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 plan 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, 2003 and September 30, 2002 were $34,695 and $36,969 respectively. 8. Income Taxes The provision (benefit) for income taxes for the nine months ended September 30, 2003 and 2002 is as follows: 2003 2002 ---- ---- Current Federal $ 21,885 $(31,686) State and local 3,661 (5,300) ------- -------- 25,546 (36,986) Deferred 422,000 (29,100) ------- -------- $447,546 $(66,086) ======== ======== 10 Deferred tax credits of $422,000 are derived primarily from net unrealized appreciation of publicly held affiliates and proprietary trading at September 30, 2003. 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 quarters ended September 30, 2003 and 2002, the Funds paid approximately $16,800 and $22,200 respectively, for record keeping services to the Company's broker/dealer subsidiary, 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. The Company's investment managers and distributor waived management and distribution fees and reimbursed expenses to the Funds in the amounts of $39,378 and $43,371 for the quarters ended September 30, 2003 and 2002, respectively. Certain officers of the Company also serve as officers and/or directors of the Funds. Bexil shares common office space and various general and administrative expenses with the Company. The Company is expected to be reimbursed by Bexil for these expenses and for the nine months ending September 30, 2003, the Company has recorded a receivable of approximately $72,000. 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, 2003, the policy had a cash surrender value of approximately $299,000 and is included in other assets in the balance sheet. 10. FINANCIAL INFORMATION BY BUSINESS SEGEMENT The following details selected financial information by business segment.
September 30, 2003 Fund Publicly Held Proprietary Services Affiliates Trading Total -------------- -------------- -------------- -------------- Revenues $1,074,508 $ 1,027,698 $109,280 $2,211,486 Income from operations 407,710 657,749 39,562 1,105,021 Depreciation and amortization 43,869 6,832 1,287 51,988 Capital expenditures 10,323 - - 10,323 Gross identifiable assets 2,645,367 5,417,379 1,020,894 9,083,640 September 30, 2002 Fund Publicly Held Proprietary Services Affiliates Trading Total -------------- -------------- -------------- -------------- Revenues $1,131,911 $ 318,927 $ (273,178) $1,177,660 Income from operations 287,233 (109,951) (340,391) (163,109) Depreciation and amortization 19,928 12,313 1,930 34,171 Capital expenditures 18,875 - - 18,875 Gross identifiable assets 3,200,880 4,141,585 649,066 7,991,531
11 11. 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, 2003, 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. The Company has a Death Benefit's Agreement ("Agreement") with the Company's Chairman, which was entered into in 1994 and amended in 2002. Following his death, the Agreement provides for annual payments, equal to 80% of his average annual compensation 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. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three Months Ended September 30, 2003 Compared to Three Months Ended September - ------------------------------------------------------------------------------ 30, 2002 - -------- Declines in the securities markets can have a significant effect on the Company's business. Poor absolute or relative performance by the Funds may cause shareholder redemptions to occur. Volatile stock markets may affect management and distribution fees earned by the Company's subsidiaries, causing either 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 transfer out of the Funds entirely. Lower net asset levels in the Funds may also cause or increase fee waivers or expense reimbursements to the Funds as described in Note 9 of the financial statements. Total revenues of $812,949 increased $808,249 from $4,700, primarily due to net unrealized appreciation of publicly held affiliates and unrealized and realized gains on proprietary trading revenue of $414,635 compared to $(411,281) in the prior period. Offsetting this was a decrease in dividends, interest and other of $19,126 or 33%. Management, distribution and other fees increased $1,459 due to higher average net assets in the Funds. Total expenses decreased $43,344 or 10% versus the period last year. General and administrative expenses decreased $12,498 or 5% due to lower employee costs. Marketing expense increased $6,505 or 5% due to increased marketing activity. Expense reimbursement to the Funds decreased $3,993 or 9%. Professional fees decreased $34,020 or 87%. Amortization and depreciation expense increased $662. Net income for the period was $237,653 or $.14 per share on a diluted basis as compared to net loss of $272,608 or $.17 per share on a diluted basis for the quarter ended September 30, 2002. Nine Months Ended September 30, 2003 compared to Nine Months Ended September 30, - -------------------------------------------------------------------------------- 2002 - ---- Total revenues increased $1,033,826 or 88% primarily due to net unrealized appreciation of publicly held affiliates and unrealized and realized gains on proprietary trading. Net unrealized appreciation of publicly held affiliates and unrealized and realized gains on proprietary securities trading for the nine months ended September 30, 2003 resulted in revenue of $1,063,266 as compared to 12 $(72,099) in the same period for 2002. Partially offsetting this were lower management, distributions and other fees of $39,394 or 4% due to lower average net assets under management. Average net assets under management were $122.3 million and $127.7 for the nine month period ended September 30, 2003 and 2002, respectively. Dividends, interest and other decreased $62,145 due to lower earnings on the Company's investments. Total expenses decreased $234,304 or 17% over this period of last year, as a result of decreases in general and administrative expenses of $121,010 or 17% and marketing expenses of $38,246 or 10%. General and administrative expenses decreased due to lower employee costs and the assumption of certain expenses by Bexil and Tuxis. Marketing expenses decreased due to lower fulfillment and printing expenses. Professional fees decreased $72,100 or 65%. Amortization and depreciation expenses increased by $19,687. Expense reimbursements to the Funds decreased $22,635 or 16%. Net income for the period was $657,475 or $.39 per share on a diluted basis, as compared to net loss of $97,023 or $.06 per share on a diluted basis for the nine months ended September 30, 2002. 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, 2003 December 31, 2002 ------------------ ----------------- Working capital $ 7,830,196 $ 6,768,292 Total assets $ 9,083,640 $ 8,106,436 Long term debt - - Shareholders' equity $ 8,444,366 $ 7,889,020 Working capital, total assets and shareholders' equity increased $1,061,904, $977,204 and $555,346, respectively, for the nine months ended September 30, 2003. Working capital, total assets and shareholders' equity increased primarily due to net income in the nine months ended September 30, 2003. 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. Effects of Inflation and Changing Prices - ---------------------------------------- Since the Company derives most of its revenues from fund services, publicly held affiliates, and proprietary securities trading, it is not possible to discuss or predict with accuracy the impact of inflation and changing prices on its revenue from 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, 13 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 funds; the ability of the Company to maintain investment management and distribution fees at current levels; competitive conditions in the fund services industry; the introduction of new 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 regarding 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 reimbursements or waiver of expenses to improve 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, intangibles, and client goodwill. 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 or distribution agreements. The Company's operating results will also depend on the market fluctuation in the price of shares of the Company's publicly held affiliates, particularly Bexil and Tuxis, held by the Company's broker/dealer subsidiary. Fluctuations in the values of these holdings, resulting in unrealized gains and losses, will be included in earnings. 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 funds in general or in particular types of 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 ----------------- Items 4. Submission of Matters to a Vote of Security Holders During Third - -------- ---------------------------------------------------------------- Quarter of the Year Ended December 31, 2003. - -------------------------------------------- None Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- Reports on Form 8-K were filed during the quarter covered by this reports as follows: August 18, 2003 - Regulation FD Disclosure - Financial Results for the Second Quarter and the Six Months Ended June 30, 2003. 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, 2003 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, 2003 /s/ Bassett S. Winmill ---------------------- Bassett S. Winmill Chairman of the Board, Director Dated: November 14, 2003 /s/ Robert D. Anderson ---------------------- Robert D. Anderson Vice Chairman, Director Dated: November 14, 2003 /s/ Thomas B. Winmill --------------------- Thomas B. Winmill, Esq. President, General Counsel, Director Dated: November 14, 2003 /s/ Charles A. Carroll ---------------------- Charles A Carroll, Director Dated: November 14, 2003 /s/ Edward G. Webb, Jr. ----------------------- Edward G. Webb, Jr., Director Dated: November 14, 2003 /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, 2003 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 3, 2003 17 Certification- Exchange Act Rules 13a-14 and 15d-14 I, Thomas B. Winmill, 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 periods 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, 2003 /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 periods 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, 2003 /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-QSB for the period ending September 30, 2003 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, 2003 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-QSB for the period ending September 30, 2003 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, 2003 21 -----END PRIVACY-ENHANCED MESSAGE-----