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
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(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
=================== ====================
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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)
========= ==========
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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-