10QSB/A 1 march04-10qsba.txt AMENDED 2004 FIRST QUARTER REPORT As filed with the Securities and Exchange Commission on June 29, 2004 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB/A (Mark One) __X__ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2004 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 March 31, 2004 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 April 30, 2004 were as follows: Class A Common Stock non-voting, par value $.01 per share - 1,510,867 shares Class B Common Stock voting, par value $.01 per share - 20,000 shares -1- WINMILL & CO. INCORPORATED FORM 10-QSB/A For the Quarter Ended March 31, 2004 INDEX Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheet -(Unaudited) March 31, 2004 3 Condensed Consolidated Statements of Income (Loss) -(Unaudited) Three Months Ended March 31, 2004 and March 31, 2003 4 Condensed Consolidated Statements of Cash Flows -(Unaudited) Three Months Ended March 31, 2004 and March 31, 2003 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 12 Item 3. Controls and Procedures 14 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders During the Period Covered by This Report 14 Item 5. None Item 6. Exhibits and Reports on Form 8-K 14 CERTIFICATION SIGNATURES 17 -2- WINMILL & CO. INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEET March 31, 2004 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,174,258 Marketable securities (Note 2) 1,186,835 Securities - restricted (Note 2) 2,134,161 Management, distribution and other fees receivable 118,506 Other receivables 120,856 Prepaid expenses and other current assets 88,969 ------------ Total Current Assets 4,823,585 ------------ Securities - restricted (Note 2) 4,967,652 Equipment, furniture and fixtures, net 66,855 Intangible assets, net 568,296 Other assets (Note 9) 327,791 ------------ 5,930,594 Total Assets $ 10,754,179 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accrued professional fees $ 49,735 Accrued payroll and other related costs 125,125 Accrued other expenses 99,301 Other current liabilites 1,568 Deferred income tax 434,600 ------------ Total Current Liabilities 710,329 ------------ Deferred income tax 743,400 ------------ Shareholders' Equity: (Notes 4, 5, and 6) Common Stock, $0.1 par value Class A, 10,000,000 shares authorized; 1,510,867 shares issued and outstanding 15,108 Class B, 20,000 shares authorized; 20,000 shares issued and outstanding 200 Additional paid-in capital 5,815,564 Retained earnings 3,469,578 ------------ Total Shareholders' Equity 9,300,450 ------------ Total Liabilities and Shareholders' Equity $ 10,754,179 ============ See accompanying notes to the condensed consolidated financial statements. -3- WINMILL & CO. INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)
Three Months Ended March 31, ------------------------------- ------------------------------- 2004 2003 ---- ---- Revenues: Management, distribution, and other fees $ 402,705 $ 336,882 Dividends, interest and other 2,448 38,647 Net unrealized appreciation (depreciation) of publicly held affiliates and unrealized and realized gains (losses) on proprietary trading 1,800,433 (223,406) ------------ ------------ 2,205,586 152,123 ------------ ------------ Expenses: General and administrative 191,170 181,763 Marketing 118,068 99,633 Expense reimbursements to the Funds (Note 9) 39,223 38,538 Professional fees 21,000 17,000 Amortization and depreciation 18,642 17,059 ------------ ------------ 388,103 353,993 ------------ ------------ Income (loss) before income taxes 1,817,483 (201,870) Income taxes (credit) provision (Note 8) 728,400 (89,800) ------------ ------------ Net income (loss) $ 1,089,083 $ (112,070) ============ ============ Per share net income (loss): Basic $0.73 $(0.07) Diluted $0.72 $(0.07) Average shares outstanding: Basic 1,499,136 1,588,820 Diluted 1,517,577 1,588,820
See accompanying notes to the condensed consolidated financial statements. -4- WINMILL & CO. INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, 2004 2003 Cash Flows from Operating Activites Net income $ 1,089,083 $ (112,070) ------------ ---------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 18,642 16,690 Increase (decrease) in deferred income taxes 718,800 (94,500) Increase in cash value of life insurance (8,250) (8,234) Net unrealized (appreciation) depreciation of publicly held affiliates and on proprietary securities trading (1,800,433) 223,743 (Increase) decrease in: Management, distribution and other fees receivable 3,307 51,372 Dividends, interest and other receivables 16,009 (579) Prepaid expenses and other current assets 47,858 8,731 Other assets 14,807 (493) Increase (decrease) in: Accounts payable - (10,987) Accrued professional fees (47,339) (3,550) Accrued payroll and other related costs 100,125 (25,000) Accrued other expenses 22,949 1,956 ----------- ----------- Total adjustments (913,525) 159,149 ----------- ----------- Net cash provided by operating activities 175,558 47,079 ----------- ----------- Cash Flows from Investing Activites: Proprietary securities trading sales 5,327 864 Proprietary securities trading purchases (40,339) (34,603) Capital expenditures (6,039) (2,949) ----------- ----------- Net cash used for investing activities (41,051) (36,688) ----------- ----------- Cash Flows from Financing Activities: Issuance of stock 70,263 - Purchase of treasury stock (138,938) - Repayment of notes receivable - 5,431 ----------- ----------- Net cash provided by (used for) financing activities (68,675) 5,431 ----------- ----------- Net increase in cash and cash equivalents 65,832 15,822 Cash and Cash Equivalents At beginning of period 1,108,426 1,254,528 ----------- ----------- At end of period $ 1,174,258 $ 1,270,350 =========== ===========
Supplemental disclosure: The Company paid no Federal income tax during the three months ended March 31, 2004 and 2003. See accompany notes to the condensed consolidated financial statements. -5- WINMILL & CO. INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended March 31, 2004 and 2003 (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS Winmill & Co. Incorporated ("Company") is a holding company with subsidiaries operating in three segments: | Fund services consisting primarily of investment management and distribution for the three open-end funds in the Midas Funds family and two closed-end funds, Foxby Corp. and Global Income Fund, Inc.; | Proprietary securities trading by the Company's broker/dealer subsidiary; | Publicly held affiliates, including Bexil Corporation (Amex Symbol: BXL); Tuxis Corporation (Amex Symbol: TUX); Foxby Corp. (Amex Symbol: FXX); and, Global Income Fund, Inc. (Amex Symbol: GIF). The marketable securities of these affiliates are held by the Company's broker/dealer subsidiary. As with marketable securities held by broker/dealers generally, these securities are valued at market with unrealized gains and losses included in earnings. The businesses of Bexil and Tuxis are, respectively, insurance services and real estate. 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 March 31, 2004, the Company and subsidiaries had invested approximately $695,500 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 March 31, 2004 accumulated depreciation amounted to approximately $841,900. INTANGIBLE ASSETS As of March 31, 2004, the Company's carrying value of intangible assets was approximately $810,700 with accumulated amortization of approximately $242,400. These intangible assets are being amortized over their useful lives, which is fifteen years. 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. SEGMENT INFORMATION The Company's operations are classified into three segments - fund services, publicly held affiliates, and proprietary trading. 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 Ended March 31, -------------------------------------------- -------------------------------------------- 2004 2003 ---- ---- Numerator for basic and diluted earnings per share: Net income (loss) $1,089,083 $ (112,070) =================== ==================== Denominator: Denominator for basic earning per share: Weighted-average shares 1,499,136 1,588,820 Effect of dilutive securities: Employee stock options 18,441 - ------------------- -------------------- Denominator for diluted earnings per share: adjusted weighted-average shares and assumed conversion 1,517,577 1,588,820 =================== ====================
-7- 2. MARKETABLE SECURITIES At March 31, 2004 marketable securities and marketable securities subject to restrictions held by the Company's broker/dealer subsidiary, valued at market, consisted of: Marketable securities Proprietary trading - equities and mutual funds (cost $839,209) $1,186,835 ========== Securities-subject to restrictions Publicly-held affiliates (cost $4,437,568) $7,101,813 Less: current portion 2,134,161 --------- Non - current portion $4,967,652 ========== Included as the Company's publicly held affiliates are Bexil Corporation (AMEX symbol: BXL) and Tuxis Corporation (AMEX symbol: TUX). The Company's wholly owned broker/dealer is owner of 222,672 shares (with a market value at March 31, 2004 of $4,898,176) of common stock of Bexil, or approximately 25.3% of Bexil's 879,591 outstanding shares and 199,865 shares (with a market value at March 31, 2004 of $1,898,722) of common stock of Tuxis, or approximately 20.3% of Tuxis' 983,776 outstanding shares. Bexil's registration as an investment company ceased on January 6, 2004. Tuxis is currently an investment company, although it has received board and shareholder approval to deregister and filed an application with the Securities and Exchange Commission to deregister on May 3, 2004. The other publicly held affiliates of the Company whose shares are held by its broker/dealer subsidiary are Global Income Fund, Inc. (AMEX symbol: GIF) and Foxby Corp. (AMEX symbol: FXX). Restricted securities are shares of publicly held affiliates whose public sale is subject to a trading volume formula pursuant to Rule 144 of The Securities Act of 1933. The trading volume formula limits the sale of such shares in any three month period to the greater of (a) 1% of the outstanding shares of the same class being sold by the affiliates or (b) the average weekly reported trading volume during the four calendar weeks preceding the sale. Shares which would be salable under this formula in the next 12 month period are classified as current assets in the consolidated balance sheet and shares in excess of this formula are classified as non-current restricted securities. 3. LEASE COMMITMENTS The Company leases office space under a lease agreement which 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 ----------------- $468,700 ================= 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 March 31, 2004, none of the Preferred Stock was issued. -8- 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 March 31, 2004, the subsidiary had: net capital of approximately $2,269,900; net capital requirements of $100,000; excess net capital of approximately $2,169,900; 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 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 plan. Accordingly, no compensation cost has been recognized for its stock option plan. 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 the plan 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 Ended March 31, 2004 2003 ---- ---- Net income (loss) As reported $ 1,089,083 $ (112,070) Pro forma $ 1,089,083 $ (112,070) Earning per share Basic As reported $ 0.73 $ (0.07) Pro forma $ 0.73 $ (0.07) Diluted As reported $ 0.72 $ (0.07) Pro forma $ 0.72 $ (0.07) 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 plan as of March 31, 2004 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, 2003 74,000 $1.50 Exercised (46,750) $1.50 ---------------- Outstanding at March 31, 2004 27,250 $1.50 ================ ================= There were 27,250 options exercisable at March 31, 2004 with a weighted-average exercise price of $1.50. There were no options granted during the three months ended March 31, 2004. The following table summarized information about stock options outstanding at March 31, 2004: Weighted-Average Range of Number Remaining Weighted-Average Exercise Prices Outstanding Contractual Life Exercise Price $1.50 - $1.51 27,250 2.16 years $1.50 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 three months ended March 31, 2004 and March 31, 2003 were $14,811 and $11,565 respectively. 8. INCOME TAXES The provision (benefit) for income taxes for the three months ended March 31, 2004 and 2003 is as follows: 2004 2003 ---- ---- Current Federal $ 8,300 $ 4,000 State and local 1,500 700 ----- --- 9,800 4,700 Deferred 718,600 (94,500) ------- -------- $ 728,400 $ (89,800) ========= ========== -10- 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 March 31, 2004 and 2003, the Funds paid approximately $16,000 and $9,900 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 $39,224 and $38,538 for the quarters ended March 31, 2004 and 2003, respectively. Certain officers of the Company also serve as officers and/or directors of the Funds and its publicly held affiliates. 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 three months ending March 31, 2004, the Company has recorded a receivable of approximately $29,000. 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 March 31, 2004, the policy had a cash surrender value of approximately $314,600 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.
March 31, 2004 Fund Publicly Held Proprietary Services Affiliates Trading Total ----------- ------------- ------------- ---------- Revenues $402,724 $ 1,720,587 $ 82,275 $ 2,205,586 Income from operations 193,442 1,568,146 55,866 1,817,454 Depreciation and amortization 4,198 12,311 2,133 18,642 Capital expenditures 6,039 - - 6,039 Gross identifiable assets 2,422,035 7,101,813 1,230,331 10,754,179 March 31, 2003 Fund Publicly Held Proprietary Services Affiliates Trading Total ----------- ------------- ------------- ---------- Revenues $350,768 $(132,966) $(65,679) $ 152,123 Income from operations 134,996 (248,345) (88,521) (201,870) Depreciation and amortization 6,135 8,750 1,805 16,690 Capital expenditures 2,949 - - 2,949 Gross identifiable assets 2,862,786 4,256,590 842,685 7,962,061
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 March 31, 2004, 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. -11- 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. 12. RESTATEMENT The Company separated and reclassified securities subject to restrictions and reclassified related deferred income taxes from current assets and liabilities to non-current assets and liabilities on the consolidated balance sheet (see Notes 2 and 8). Additionally, the amount of the net capital and the ratio of aggregate indebtedness to net capital of the Company's broker dealer subsidiary was restated as a result of the classification of certain securities subject to restrictions (see Note 5). The consolidated financial statements have been restated to reflect this reclassification. This restatement did not change net income, earnings per share, or total shareholders' equity. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003 Declines in the securities markets can have a significant effec on theCompany'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. The Company's publicly held affiliates include Bexil Corporation (AMEX symbol: BXL) and Tuxis Corporation (AMEX symbol: TUX). The Company's wholly owned broker/dealer is the owner of 222,672 shares (with a market value at March 31, 2004 of $4,868,176) of common stock of Bexil, or approximately 25.3% of Bexil's 879,591 outstanding shares and 199,865 shares (with a market value at March 31, 2004 of $1,898,722) of common stock of Tuxis, or approximately 20.3% of Tuxis' 983,776 outstanding shares. As with marketable securities of the broker/dealer subsidiary generally, the shares of Bexil and Tuxis are valued at market with unrealized gains and losses included in earnings. Accordingly, each dollar change in the market value of a share of Bexil and Tuxis affects revenue and pre-tax income of the Company by approximately $222,672 and $199,865, respectively. Total revenues of $2,205,586 increased $2,053,463 from $152,123, primarily due to net unrealized appreciation of publicly held affiliates and unrealized and realized gains on proprietary trading revenue of $1,800,433 compared to a loss of $223,406 in the prior period. Offsetting this was a decrease in dividends, interest and other of $36,199 or 93.67%. Management, distribution and other fees increased $65,823 due to higher average net assets in the Funds. Average net assets under management for the three months ended March 31, 2004 was $135.6 million versus $121.6 million for the same period for 2003. -12- Total expenses increased $34,110 or 9.64% versus the period last year. General and administrative expenses increased $9,407 or 5.18% due to higher employee costs. Marketing expense increased $18,435 or 18.50% due to increased marketing activity. Professional fees increased $4,000 or 23.53%. Amortization and depreciation expense increased $1,583 or 9.28%. Net income for the period was $1,089,083 or $.72 per share on a diluted basis as compared to net loss of $112,070 or $.07 per share on a diluted basis for the quarter ended March 31, 2003. Forward-Looking Information Certain written and oral statements made or incorporated by reference from time to time by the Company in this report, other reports, filings with the Securities and Exchange Commission, press releases, conferences, or otherwise, are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements. Forward-looking statements may be identified, without limitation, by the use of such words as "anticipates", "estimates", "expects", "intends", "plans", "predicts", "projects", "believes", or words or phrases of similar meaning. Forward-looking statements include risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. In addition to other factors and matters discussed elsewhere herein, some of the important facts that could cause actual results to differ materially from those discussed in the forward-looking statements include the following: 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 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 -13- 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. 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 the Period Covered by This Report 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: 8-K March 31, 2004 - Financial Results for the Year Ended December 31, 2003. 8-K/A April 5, 2004 - Financial Results for the Year Ended December 31, 2003. -14- 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 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 June 29, 2004 By: /s/ William G. Vohrer -------------------------------------------------------- William G. Vohrer Chief Financial Officer, Treasurer, Chief Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Company and in the capacities and on the dates indicated. June 29, 2004 By: /s/Thomas B. Winmill -------------------------------------------------------- Bassett S. Winmill, Chairman of the Board, Director Thomas B. Winmill on behalf of Bassett S. Winmill by Power of Attorney signed 12/11/01 June 29, 2004 By: /s/Thomas B. Winmill -------------------------------------------------------- Robert D. Anderson, Vice Chairman, Director Thomas B. Winmill on behalf of Robert D. Anderson by Power of Attorney signed 12/11/01 June 29, 2004 By: /s/Thomas B. Winmill -------------------------------------------------------- Thomas B. Winmill, Esq., President Chief Executive Office, General Counsel, Director June 29, 2004 By: /s/Thomas B. Winmill -------------------------------------------------------- Edward G. Webb, Jr., Director Thomas B. Winmill on behalf of Edward G. Webb, Jr. by Power of Attorney signed 12/11/01 June 29, 2004 By: /s/Thomas B. Winmill -------------------------------------------------------- Charles A. Carroll, Director Thomas B. Winmill on behalf of Charles A. Carroll by Power of Attorney signed 12/11/01 June 29, 2004 By: /s/Thomas B. Winmill -------------------------------------------------------- Mark C. Winmill, Director Thomas B. Winmill on behalf of Mark C. Winmill by Power of Attorney signed 12/11/01 -15- 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 March 31, 2004 and for the three-month period ended March 31, 2004. 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. As discussed in Note 12 to the financial statements, the Company separated and reclassified securities subject to restrictions and reclassified related deferred income taxes from current assets and liabilities to non-current assets and liabilities on the consolidated balance sheet and restated the net capital and the ratio of aggregate indebtedness to net capital of the Company's broker/dealer subsidiary as a result of the securities subject to restrictions. The consolidated financial statements have been restated to reflect this reclassification. This restatement did not change net income, earnings per share, or total shareholders' equity. Tait, Weller & Baker Philadelphia, Pennsylvania May 13, 2004, except for Note 12, as to which the date is June 17, 2004 -16- 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 as amended by Form 10- QSB/A 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: June 29, 2004 /s/ Thomas B. Winmill Chief Executive Officer -17- 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 as amended by Form 10-QSB/A 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: June 29, 2004 /s/ William G. Vohrer Chief Financial Officer -18- 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 as amended by Form 10-QSB/A for the period ending March 31, 2004 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 June 29, 2004 -19- 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 as amended by Form 10-QSB/A for the period ending March 31, 2004 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 June 29, 2004 -20-