As filed with the Securities and Exchange Commission on March 30, 2000
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1999
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the Transition Period From __________ to __________
Commission File Number 0-9667
WINMILL & CO. INCORPORATED,
(Exact name of registrant as specified in its charter)
Delaware 13-1897916
(State of incorporation) (I.R.S. Employer Identification No.)
11 Hanover Square, New York, New York 10005
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 785-0900
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, Par Value $.01 Per Share
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No__ .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
No voting stock was held by non-affiliates of the registrant as of March 15,
2000.
The number of shares outstanding of each of the registrant's classes of common
stock, as of March 15, 2000:
Class A Non-Voting Common Stock, par value $.01 per share - 1,635,017 shares
Class B Voting Common Stock, par value $.01 per share - 20,000
PART I
ITEM PAGE
1. Business 2
2. Properties 5
3. Legal Proceedings 6
PART II
4. Submission of Matters to a Vote of Security Holder 7
5. Market for Company's Common Equity and Related Stockholder Matters 7
6. Selected Financial Data 7
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
8. Financial Statements and Supplementary Data 12
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 29
PART III
10. Directors and Executive Officers 30
11. Executive Compensation 32
12. Security Ownership of Certain Beneficial Owners and Management 39
13. Certain Relationships and Related Transactions 39
PART IV
14. Exhibits, Consolidated Financial Statements and Schedules,
and Reports on Form 8-K 40
PART I
Item 1. Business
Winmill & Co. Incorporated, formerly Bull & Bear Group, Inc., a Delaware
corporation (the "Company"), is a holding company with five principal
subsidiaries: CEF Advisers, Inc., formerly Bull & Bear Advisers, Inc. ("CEF"),
Investor Service Center, Inc. ("ISC"), Midas Management Corporation ("MMC"),
Performance Properties, Inc. ("Performance Properties") and Hanover Direct
Advertising Company, Inc. ("Hanover Direct"). On April 1, 1999, the Company
changed its name to Winmill & Co. Incorporated and Bull & Bear Advisers, Inc.
changed its name to CEF Advisers, Inc.
On March 31, 1999, the Company sold the outstanding stock of Bull & Bear
Securities, Inc. ("BBSI"), to a wholly-owned subsidiary of Royal Bank of Canada.
In connection with the sale, the rights to the name "Bull & Bear" were
transferred to Royal Bank of Canada, and the Company and certain of its
subsidiaries agreed to change their names. In connection with the BBSI Sale,
Royal Bank has agreed that it will cause, for the three-year period following
the closing, BBSI to offer exclusively Dollar Reserves to its customers as the
sole money market fund into which cash balances held by BBSI's customers may be
swept on a daily basis for so long as certain conditions are met, including
certain performance rankings by the Fund, in consideration of a monthly fee
equal to one-twelfth of 0.25% of the aggregate average daily amount of such
balances. Further, the Company has agreed to provide, or to cause its
subsidiaries to provide, to BBSI for a period of three years following the
closing, certain services with respect to the operation of a securities
brokerage business for a monthly administrative fee of $16,666.67, subject to
certain conditions.
MMC and CEF act as investment managers to open-end and closed-end management
investment companies (the "Funds") registered under the Investment Company Act
of 1940 (the "Act"). The open-end Funds are: Dollar Reserves, Inc., Midas Fund,
Inc.; Midas Investors Ltd.; Midas Magic, Inc., Midas Special Equities Fund, Inc.
and Midas U.S. and Overseas Ltd. The closed-end funds are: Bexil Corporation,
Global Income Fund, Inc. and Tuxis Corporation.
ISC was organized in 1985 and is registered with the SEC as a broker/dealer and
is a member of the NASD. ISC acts as the principal distributor for the open-end
Funds.
Performance Properties was organized in 1994 to purchase and renovate suburban
office buildings.
Hanover Direct was organized in 1988 and acts as an advertising agency, which
places advertising for ISC on behalf of the Funds. Currently, the commission
revenue generated by Hanover Direct from ISC represents a recapture of sums paid
for advertising and, rather than additional income, represents a reduction in
advertising expense of ISC. Hanover Direct has not performed any work for
unaffiliated clients.
The Company has granted the Funds and its subsidiaries a non-exclusive license
to use certain service marks owned by the Company, under certain terms and
conditions on a royalty free basis. Such license may be withdrawn from a Fund in
the event the investment manager of the Fund is not a subsidiary of the Company
or in other cases, at the discretion of the Company.
<PAGE>
2
Investment Management Business
The Company is engaged, through its subsidiaries, in the business of managing
investment companies registered under the Act. The Funds and their respective
net assets as of December 31, 1999 were as follows:
Bexil Corporation $ 9,771,000
Dollar Reserves, Inc. 64,250,000
Global Income Fund, Inc. 29,060,000
Midas Fund, Inc. 71,820,000
Midas Investors Ltd. 5,045,000
Midas Magic, Inc. 857,000
Midas Special Equities Fund, Inc. 41,629,000
Midas U.S. and Overseas Ltd. 9,881,000
Tuxis Corporation 12,142,000
Total Net Assets $ 244,455,000
The fund management industry along with the entire financial services sector of
the economy has been rapidly changing to meet the increasing needs of investors.
Competition for management of financial resources has increased as banks,
insurance companies and broker/dealers have introduced products and services
traditionally offered by independent fund management companies. There are also
many fund management groups with substantially more resources than the Company.
While the Company's business is not seasonal, it is affected by the financial
markets, which in turn, are dependent upon current and future economic
conditions.
Drastic material declines in the securities markets can have a significant
effect on the Company's business. Volatile stock markets may affect management
and distribution fees earned by the Company's subsidiaries. If the market value
of securities owned by the Funds declines, assets under management will decline
and shareholder redemptions may occur, either by transfer out of the equity
Funds and into the money market Fund, Dollar Reserves, which has lower
management and distribution fee rates than the equity Funds, or by redemptions
out of the Funds entirely. Lower asset levels in the Funds may also cause or
increase reimbursements to the Funds pursuant to the expense limitations
described below.
In general, investment management services are rendered to the Funds pursuant to
written contractual agreements. Such agreements relate to the general management
of the affairs of each Fund, in addition to supervising the acquisition and sale
of each Fund's portfolio investments. As provided in the agreements, CEF and MMC
may receive management fees ranging from 0.4% to 1.0% per annum of the Funds'
average daily net assets. The Act requires that such contractual agreements be
initially approved by the Funds' Board of Directors, including a majority of all
of the directors who are not "interested persons" (as defined in the Act), and
by the vote of a majority of the outstanding shares of the Fund (as defined in
the Act). Agreements, if approved, may be for a term of up to two years, and
thereafter their continuance must be approved at least annually by a majority of
the directors of the Fund, including a majority of those directors of the Fund
who are not "interested persons", or by such a vote of "disinterested" directors
and the vote of a majority of the outstanding shares of the Fund. In addition,
all such agreements are subject to termination on 60 days' notice by majority
vote of the Board of Directors or the shareholders and are subject to automatic
termination in the event of assignment. Depending on the assets of the Fund
involved and other factors, the termination of any of the agreements for
investment management services between any of the Funds, CEF, and MMC may have a
serious adverse impact upon the Company.
3
Pursuant to contracts with these Funds, CEF and MMC are entitled to management
fees, which are received monthly and are based on annual percentages of the
average daily or average weekly net assets of the Funds. Under the contracts,
CEF and MMC are required to reimburse the Funds for certain expenses to the
extent that such expenses exceed limitations prescribed by any state in which
shares of the Funds are qualified for sale, although currently the Funds are not
subject to any such limits. In addition, from time to time CEF and MMC may waive
or reimburse management fees to increase a Fund's performance. MMC had entered
into a subadvisory agreement with respect to Midas Fund, Inc. MMC, not the
respective Fund, paid the Subadviser, Lion Resource Management Limited, based
upon the net fees, performance and net assets of the Fund. The subadvisory
agreement was terminated on November 30, 1999.
Each of the open-end Funds has adopted a plan of distribution pursuant to Rule
12b-1 under the Act (the "Plan"). Pursuant to the Plans, ISC may receive as
compensation amounts ranging from one-quarter of one percent to one percent per
annum of the Funds' average daily net assets for distribution and service
activities. The service fee portion is intended to cover services provided to
shareholders in the Funds and the maintenance of shareholder accounts. The
distribution fee portion is to cover all other activities and expenses primarily
intended to result in the sale of the Funds' shares.
Bexil Corporation, Global Income Fund and Tuxis Corporation each converted from
an open-end investment company to a closed-end investment company in October
1996, November 1996, and February 1997, respectively, pursuant to the vote of
the Fund's shareowners. As a consequence, their shares now trade on the American
Stock Exchange under the symbols BXL, GIF and TUX, respectively. Upon
conversion, the Distribution, 12b-1 Plan, and Shareholder Administration
Agreements between the respective Fund and ISC were terminated and substantially
similar Investment Management Agreements between CEF and each Fund were
approved.
The Act requires that a plan of distribution be initially approved by the Fund's
Board of Directors, including a majority of the directors who are not
"interested persons" and who have no financial interest in the Plan, and by the
vote of a majority of the outstanding shares of the Fund. If approved, a plan of
distribution may be for a term of one year, and thereafter it must be approved
at least annually by the entire Board of Directors and by a majority of the
"disinterested" directors. In addition, all plans of distribution are subject to
termination at any time by majority vote of the disinterested directors or
shareholders.
CEF and MMC are registered with the SEC as investment advisers under the
Investment Advisers Act of 1940. ISC is registered with the SEC as a
broker/dealer under the Securities Exchange Act of 1934 and is a member of the
NASD. The Funds are registered with the SEC under the Act. The activities of CEF
and MMC and of the Funds are subject to regulation under Federal and state
securities laws. The provisions of these laws, including those relating to the
contractual arrangements between the Funds and their investment manager, are
primarily designed to protect the shareholders of the Funds and not the
shareholders of the Company.
Forward-Looking Information
Information or statements provided by or on behalf of the Company from time to
time, including those within this Form 10-K Annual Report, may contain certain
"forward-looking information", including information relating to anticipated
growth in revenues or earnings per share, anticipated changes in the amount and
composition of assets under management, anticipated expense levels, and
expectations regarding financial market conditions. The Company cautions readers
that any forward-looking information provided by or on behalf of the Company is
not a guarantee of future performance and that actual results may differ
materially from those in forward-looking information as a result of various
factors, including but not limited to those discussed below. Further, such
forward-looking statements speak only as of the date on which such statements
are made, and the Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events.
4
The Company's future revenues may fluctuate due to factors such as: the total
value and composition of assets under management and related cash inflows or
outflows in mutual funds; fluctuations in the financial markets resulting in
appreciation or depreciation of assets under management; the relative investment
performance of the Company's sponsored investment products as compared to
competing products and market indices; the expense ratios and fees of the
Company's sponsored products and services; investor sentiment and investor
confidence in mutual funds; the ability of the Company to maintain investment
management fees at current levels; competitive conditions in the mutual funds
industry; the introduction of new mutual funds and investment products; the
ability of the Company to contract with the Funds for payment for administrative
services offered to the Funds and Fund shareholders; the continuation of trends
in the retirement plan marketplace favoring defined contribution plans and
participant-directed investments; and the amount and timing of income from the
Company's investment 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; variations in the level of compensation expense
incurred by the Company, including performance-based compensation based on the
Company's financial results, as well as changes in response to the size of the
total employee population, competitive factors, or other reasons; expenses and
capital costs, including depreciation, amortization and other non-cash charges,
incurred by the Company to maintain its administrative and service
infrastructure; and unanticipated costs that may be incurred by the Company from
time to time to protect investor accounts and client goodwill.
The Company's revenues are substantially dependent on revenues from the Funds,
which could be adversely affected if the independent directors of one or more of
the Funds determined to terminate or renegotiate the terms of one or more
investment management agreements.
The Company's business is also subject to substantial governmental regulation,
and changes in legal, regulatory, accounting, tax, and compliance requirements
may have a substantial effect on the Company's business and results of
operations, including but not limited to effects on the level of costs incurred
by the Company and effects on investor interest in mutual funds in general or in
particular classes of mutual funds.
Item 2. Properties
The principal office of the Company is located at 11 Hanover Square, New York,
New York 10005. The approximate area of the office is 3,800 square feet. The
rent is approximately $92,000 per annum plus $11,400 per annum for electricity.
The lease expires on December 31, 2001 and is cancelable at the option of the
Company on three months' notice.
Performance Properties purchased land and a two story office building located in
Red Bank, New Jersey in 1994. The building consists of approximately 13,000
square feet. The building was purchased for cash, has no mortgage. The first
floor of the building is currently being rented under a ten-year lease to a
tenant. The current rent is approximately $90,000 per annum and increases each
year over the life of the lease. Portions of the second floor of the building
are currently being rented under a five-year and three-year lease to two
tenants. The current rents are approximately $33,000 and $29,000 per annum,
respectively, and increase each year over the life of the leases.
5
Item 3. Legal Proceedings
A group called Karpus Investment Management ("KIM") at the 1997 annual meeting
of Bull & Bear U.S. Government Securities Fund, Inc. ("BBG") sought to elect its
slate of nominees in opposition to management and at the 1998 annual meeting of
BBG made a counter-solicitation on all management proposals and a solicitation
to terminate the investment management agreement. On February 19, 1998, KIM
filed a lawsuit against BBG in the Circuit Court for Baltimore City, Maryland,
Case No. 9805005, which was dismissed with prejudice on October 1, 1998. On
February 19, 1998, BBG filed a lawsuit against KIM in the United States District
Court for the Southern District of New York, 98 Civ. 1190. On December 22, 1998,
KIM filed a lawsuit against BBG in the United States District Court for the
District of Maryland Court, 98-CV-4161 and BBG made counterclaims. On May 25,
1999, BBG and KIM announced that they had entered into a settlement of all
litigation in the United States District Court for the Southern District of New
York and in the United States District Court for the District of Maryland. In
connection with the settlement, KIM sold its 12.7% share in the Fund of 95,175
shares to ISC for $12-7/8 per share in July and August 1999.
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
December 31, 1999, neither the Company nor any of its subsidiaries was involved
in any other litigation that, in the opinion of management, would have a
material adverse impact on the consolidated financial statements.
6
PART II
Item 4. Submission of Matters to a Vote of Security Holders During Fourth
Quarter of the Year Ended December 31, 1999
NONE
Item 5. Market for the Company's Common Equity and Related Stockholder Matters
The Company's Class A Common Stock trades on the Nasdaq SmallCap Market tier of
the Nasdaq Stock Market under the symbol WNMLA. The Company's Class B Common
Stock has no public trading market. There are approximately 250 holders of
record of Class A Common Stock and 1 holder of Class B Common Stock as of
December 31, 1999. In addition, there are an indeterminate number of beneficial
owners of Class A Common Stock that are held in "street name". No dividends have
been paid on either class of Common Stock in the past five years and the Company
does not expect to pay any such dividends in the foreseeable future. The high
and low sales prices of the Class A Common Stock during each quarterly period
over the last two years were as follows:
1999 1998
High Low High Low
First Quarter $15-1/4 $2-5/8 $3-1/8 $2-1/8
Second Quarter $4-1/16 $2-5/8 $3-1/4 $2-3/16
Third Quarter $2-3/4 $2 $3-1/2 $1-13/16
Fourth Quarter $2-5/16 $1-7/8 $3-1/8 $1-5/8
Item 6. Selected Financial Data
The selected financial data for the five years ended December 31, 1999 is
presented on the following pages.
7
WINMILL & CO. INCORPORATED
CONSOLIDATED SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
Revenues:
Management, distribution and administration fees $2,855,637 $3,554,725 $4,377,653 $4,922,945 $3,322,348
Real estate rental income 216,271 43,878 - - -
Consulting fee 150,000 - - - -
Realized and unrealized gains (losses) from investments (250,893) 62,783 83,608 31,216 (3,092)
Dividends, interest and other 929,905 58,966 99,149 73,646 101,250
3,300,920 3,720,352 4,560,410 5,027,807 3,420,506
Expenses:
General and administrative 2,287,472 2,093,323 2,559,080 2,744,021 2,205,725
Marketing 466,024 531,228 772,201 1,191,639 496,910
Subadvisory fees 147,157 230,954 387,593 705,248 22,496
Professional fees 159,537 177,376 186,320 290,098 413,594
Amortization and depreciation 153,702 118,186 106,871 116,151 65,545
3,213,892 3,151,067 4,012,065 5,047,157 3,204,270
Income (loss) from continuing operations before
provision for income taxes 87,028 569,285 548,345 (19,350) 216,236
Income taxes 38,252 (82,544) (5,196) 91,248 42,588
Income (loss) from continuing operations 48,776 651,829 553,541 (110,598) 173,648
Discontinued operations
Income (loss) from discontinued operations
(net of income taxes) 2,479,865 (140,414) 72,184 (209,927) (16,272)
Net income (loss) $2,528,641 $511,415 $625,725 $(320,525) $157,376
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net income (loss) per share of weighted average
Common Stock outstanding:
Basic
Income (loss) from continuing operations $.03 $.4 $.41 $(.08) $.11
Income (loss) from discontinued operations 1.50 (.10) .05 (.15) (.01)
Net income $1.53 $.37 $.46 $(.23) $.10
Diluted
Income (loss) from continuing operations $.03 $.45 $.38 $(.08) $.11
Income (loss) from discontinued operations 1.48 (.10) .05 (.15) (.01)
Net income $1.51 $.35 $.43 $(.23) $.10
Weighted average shares of Common Stock outstanding:
Basic 1,655,017 1,391,940 1,370,017 1,369,555 1,499,516
Diluted 1,680,757 1,453,472 1,468,252 1,369,555 1,549,815
Total assets $10,090,029 $5,315,147 $4,827,074 $4,273,110 $4,963,792
Long-term obligations $ - $ - $7,460 $22,093 $ -
</TABLE>
8
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
1999 Compared to 1998
On December 17, 1998, the Company signed an agreement to sell the outstanding
stock of BBSI, the discount brokerage business, to a subsidiary of Royal Bank of
Canada. The transaction, which was approved by the regulatory authorities in
Canada and the United States, closed on March 31, 1999. The Company received $6
million in proceeds from the sale. At the time of the sale, BBSI had net equity
of $500,000. In connection with the sale, the rights to the name "Bull & Bear"
were transferred to Royal Bank of Canada, and the Company and certain of its
subsidiaries changed their names. The Company recorded a gain from the sale of
$2,479,865, net of related expenses including professional fees, closing
bonuses, and income tax expense.
Total revenues from continuing operations for the year decreased $419,432 or
11.3%. Management and distribution fees decreased $298,721 or 13.5% and $114,688
or 13.6%, respectively. The decrease in management and distribution fees was due
to an overall decrease in the net asset levels of the Funds. Shareholder
administration fees decreased $314,111 or 100.0% because the Company
discontinued providing shareholder administration services to the Funds
effective January 1999. Net assets under management were approximately $258
million at December 31, 1998, $248 million at March 31, 1999, $242 million at
June 30, 1999, $249 million at September 30, 1999 and $244 million at December
31, 1999.
Rental income increased $172,393 or 393%. The increase was attributable to
additional tenants in 1999 and the commencement of rentals in May 1998. In 1999,
the Company earned $150,000 in consulting fees from BBSI in connection with the
sale. Dividends, interest and other income increased $270,939 or 459% due to
higher earnings from the Company's investments which increased as a result of
the proceeds from the sale of BBSI. The Company had net realized and unrealized
losses of $250,893 from the Company's marketable securities which included
certain investments in Funds managed by the Company. The losses included
$413,369 from the decline in market value of the Company's 20% interest in Bexil
Corporation, the closed end fund managed by the Company.
Total expenses increased $62,825 or 2%. General and administrative expenses
increased $45,709 or 2%. Marketing expenses decreased $65,204 or 12% due to
lower payments to other brokers for distributing the Company's open-end funds.
Expense reimbursements to the Funds increased $148,440 or 82% due to higher
waivers of management and distribution fees in certain Funds. Subadvisory fees
decreased $83,797 or 36% because net assets were lower in Midas Fund and the
subadvisory agreement with Lion Resources was terminated in November 1999.
Professional fees decreased $17,839 or 10%. Depreciation and amortization
expense increased $35,516 or 30% due to higher depreciation expense from the
rental property.
Net income from continuing operations for the period was $48,776 or $.03 per
share on a diluted basis as compared to net income of $651,829 or $.45 per share
on a diluted basis for 1998. Net gain from discontinued operations for the
period was $2,479,865, which included income from operations of $15,249, or
$1.48 per share on a diluted basis as compared to a net loss from discontinued
operations of $140,414 or $.10 per share on a diluted basis for 1998.
Net income for the period was $2,528,641 or $1.51 per share on a diluted basis
for the period as compared to net income of $511,415 or $.35 per share on a
diluted basis for 1998.
9
1998 Compared to 1997 Total revenues for the year decreased $840,058 or 18.4%.
Management and distribution fees decreased $669,517 or 23.2% and $299,372 or
26.2%, respectively, and shareholder administration fees increased $27,988 or
9.8%. The decrease in management and distribution fees was due to an overall
decrease in the net asset levels of the Funds from which these revenues are
generated. Shareholder administration fees represent reimbursement for actual
expenses incurred. Such fees increased as the costs for providing these services
increased. The Funds paid $210,111 to the Company for recordkeeping services,
which paid such amounts to certain brokers for performing such services. Net
assets under management were approximately $274 million at December 31, 1997,
$301 million at March 31, 1998, $278 million at June 30, 1998, $261 million at
September 30, 1998 and $258 million at December 31, 1998. Dividends, interest
and other income decreased $17,130 or 9.4%, primarily due to lower earnings on
the Company's investments.
Total expenses, including income taxes decreased $938,346 or 23.4% for the year.
General and administrative expenses decreased $30,410 or 1.6%. Marketing
expenses decreased $240,973 or 31.2% due to lower marketing costs for Midas
Fund. Expense reimbursements to the Funds decreased $435,347 or 70.7% due to the
expiration of the contractual expense reimbursement on August 29, 1997 for Midas
Fund. Subadvisory fees decreased $156,639 or 40.4% because of lower net assets
in Midas Fund. Professional fees decreased $8,944 or 4.8%. Amortization and
depreciation increased $11,315 or 10.6% for the year. Income taxes decreased
$77,348 or 1,488.6% due to the reversal of the deferred tax asset valuation
allowance account.
Loss from discontinued operations (net of income taxes) for 1998 was $140,414 as
compared to income from discontinued operations (net of income taxes) for 1997
of $72,184. While customer trading activity increased during the year,
commissions and related fees decreased as a result of an increase in Internet
trading. In addition, due to the increase in customer trading activity, clearing
and brokerage charges increased in 1998.
Net income for 1998 was $511,415 or $.37 per share as compared to net income of
$625,725 or $.46 per share in 1997.
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.
December 31,
1999 1998 1997
Working Capital $ 5,354,818 $2,371,234 $2,662,917
Total Assets $ 10,090,029 $5,315,147 $4,827,074
Long-Term Debt $ - $ - $ 7,460
Shareholders' Equity $ 7,838,635 $4,959,016 $4,455,111
For the year ended 1999, working capital, total assets and shareholders' equity
increased $2,983,584, $4,774,882 and $2,879,619, respectively.
Working capital and total assets increased primarily due to the income from the
sale of BBSI. The increase in shareholders' equity was primarily the result of
the net income for 1999 of $2,528,641 and the increase in unrealized capital
gains on marketable securities of $350,978.
For the year ended 1998, total assets and shareholders' equity increased
$488,073 and $503,905, respectively. Working capital and long-term debt
decreased $291,683 and $7,460, respectively. 10 Working capital decreased due to
expenditures in capital improvements on the real estate held for investment. The
increase in shareholders' equity was primarily the result of the net income for
1998 of $511,415 and the exercise of the stock options for $639,227 offset by
the decrease in unrealized capital gains on marketable securities of $43,062 and
the issuance of the notes receivable for common stock issued for $603,675. There
were $71,267 of realized capital gains during 1998, which were included in net
income of $511,415. Total assets increased primarily as a result of the net
income for the year offset by the decrease in unrealized capital gains on
marketable securities of $43,062. Long-term debt decreased due to payments on
the capitalized lease obligations.
For the year ended 1997, working capital, total assets and shareholders' equity
increased $369,717, $553,964 and $537,225, respectively. Long-term debt
decreased $14,633.
Working capital increased primarily as a result of the net income and the
non-cash items of depreciation and amortization for 1997 offset by improvements
to real estate held for investment, purchases of equipment and the decrease in
unrealized capital gains on marketable securities. The increase in shareholders'
equity was primarily the result of the net income for 1997 of $625,725 offset by
the decrease in unrealized capital gains on marketable securities of $88,500.
Total assets increased primarily as a result of the net income for 1997 offset
by the decrease in unrealized capital gains on marketable securities of $88,500.
Long-term debt decreased due to payments on the capitalized lease obligations.
Management knows of no contingencies that are reasonably likely to result in a
material decrease in the Company's liquidity or that are likely to adversely
affect the Company's capital resources. This includes the restrictions placed on
the transfer of funds to the Company ISC as a result of its regulatory net
capital requirements. At December 31, 1999, the amount subject to these
restrictions was $58,300 or 0.6% of total assets.
Effects of Inflation and Changing Prices
Since the Company derives revenue from investment management, distribution and
shareholder administration services from the Funds and from discount brokerage
services, it is not possible for it to discuss or predict with accuracy the
impact of inflation and changing prices on its revenues from continuing
operations.
11
Item 8. Financial Statements and Supplementary Data
Financial Statements required by Regulation S-X and Supplementary Financial
Information required by Regulation S-K are presented herein.
FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants 13
Consolidated Balance Sheets,
December 31, 1999 and 1998 14
Consolidated Statements of Income,
Years ended December 31, 1999, 1998 and 1997 15
Consolidated Statements of Changes in Shareholders' Equity,
Years ended December 31, 1999, 1998 and 1997 16
Consolidated Statements of Cash Flows,
Years ended December 31, 1999, 1998 and 1997 17
Notes to Consolidated Financial Statements 19
<PAGE>
12
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders of
Winmill & Co. Incorporated
We have audited the accompanying consolidated balance sheets of Winmill & Co.
Incorporated and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Winmill & Co.
Incorporated and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1999, in conformity
with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 11, 2000
13
<PAGE>
WINMILL & CO. INCORPORATED
CONSOLIDATED BALANCE SHEETS
December 31,
1999 1998
ASSETS
Current Assets:
Cash and cash equivalents $2,560,093 $1,403,931
Marketable securities (Note 3) 4,600,928 353,385
Management, distribution and other fees receivable 272,800 257,313
Interest, dividends and other receivables 43,429 205,786
Prepaid expenses and other current assets 128,962 506,950
Total Current Assets 7,606,212 2,727,365
Real estate, net 1,325,693 1,198,173
Equipment, furniture and fixtures, net 102,702 209,339
Excess of cost over net book value of subsidiaries, net 650,001 688,687
Deferred income taxes (Note 10) 140,000 215,400
Other assets 265,421 276,183
2,483,817 2,587,782
Total Assets $10,090,029 $5,315,147
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Accounts payable $ 201,926 $ 104,934
Accrued professional fees 75,055 143,025
Accrued payroll and other related costs 72,049 64,667
Accrued income taxes 1,866,600 -
Accrued other expenses 25,928 28,920
Current portion of capitalized lease obligation - 4,749
Other current liabilities 9,836 9,836
Total Current Liabilities 2,251,394 356,131
Contingencies (Note 11) - -
Shareholders' Equity (Notes 3, 6, 7, and 8)
Common Stock, $.01 par value
Class A, 10,000,000 shares authorized;
1,635,017 shares issued and outstanding 16,351 16,351
Class B, 20,000 shares authorized;
20,000 shares issued and outstanding 200 200
Additional paid-in capital 6,872,454 6,872,454
Retained earnings (deficit) 1,203,303 (1,325,338)
Notes receivable for common stock issued (603,675) (603,675)
Accumulated other comprehensive income 350,002 (976)
Total Shareholders' Equity 7,838,635 4,959,016
Total Liabilities and Shareholders' Equity $10,090,029 $5,315,147
See accompanying notes to consolidated financial statements.
14
WINMILL & CO. INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Revenues:
Management, distribution, service, and
administrative fees $2,855,637 $3,554,725 $4,377,653
Real estate rental income 216,271 43,878 -
Consulting fee 150,000 - -
Realized and unrealized gains (losses)
from investments (250,893) 62,783 83,608
Dividends, interest and other 329,905 58,966 99,149
3,300,920 3,720,352 4,560,410
Expenses:
General and administrative 1,958,636 1,912,927 1,943,337
Marketing 466,024 531,228 772,201
Expense reimbursements to the Funds (Note 11) 328,836 180,396 615,743
Subadvisory fees 147,157 230,954 387,593
Professional fees 159,537 177,376 186,320
Amortization and depreciation 153,702 118,186 106,871
3,213,892 3,151,067 4,012,065
Income from continuing operations
before income taxes 87,028 569,285 548,345
Income taxes (benefit) (Note 10) 38,252 (82,544) (5,196)
Income from continuing operations 48,776 651,829 553,541
Discontinued Operations:
Income (loss) from discontinued operations
(net of income taxes) (Note 2) 2,479,865 (140,414) 72,184
Net Income $ 2,528,641 $511,415 $625,725
Per Share Data:
Basic
Income from continuing operations $ .03 $ .47 $ .41
Income (loss) from discontinued operations 1.50 (.10) .05
Net income $1.53 $ .37 $ .46
Diluted
Income from continuing operations $ .03 $ .45 $ .38
Income (loss) from discontinued operations 1.48 (.10) .05
Net income $1.51 $ .35 $ .43
Average Shares Outstanding:
Basic 1,655,017 1,391,940 1,370,017
Diluted 1,680,757 1,453,472 1,468,252
See accompanying notes to consolidated financial statements.
</TABLE>
15
WINMILL & CO. INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Number of Shares Amount
Notes
Receivable
For
Additional Common Retained
Class A Class B Class A Class B Paid-In Stock Earnings
Common Common Common Common Capital Issued (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 1,350,017 20,000 $ 13,501 $ 200 $6,236,077 $- $(2,462,478)
Net income
Other comprehensive income - - - - - - 625,725
Unrealized losses on
marketable securities - - - - - - -
Comprehensive income
Balance, December 31, 1997 1,350,017 20,000 13,501 200 6,236,077 - (1,836,753)
Net income
Other comprehensive income - - - - - - 511,415
Unrealized losses on
marketable securities - - - - - -
Comprehensive income
Issuance of Class A common stock
on exercise of stock options 285,000 - 2,850 - 636,377 - -
Issuance of notes receivable (Note 8) - - - - - (603,675) -
Balance, December 31, 1998 1,635,017 20,000 16,351 200 6,872,454 (603,675) (1,325,338)
Net income - - - - - - 2,528,641
Other comprehensive income
Unrealized gains on investments - - - - - - -
Comprehensive income
Balance, December 31, 1999 1,635,017 20,000 $ 16,351 $ 200 $6,872,454 $(603,675) $1,203,303
</TABLE>
Accumulated
Other Total
Comprehensive Shareholders'
Income Equity
Balance, December 31, 1996 $ 130,586 $3,917,886
Net income
Other comprehensive income - 625,725
Unrealized losses on
marketable securities (88,500) (88,500)
Comprehensive income 537,225
Balance, December 31, 1997 42,086 4,455,111
Net income
Other comprehensive income - 511,415
Unrealized losses on
marketable securities (43,062) (43,062)
Comprehensive income 468,353
Issuance of Class A common stock
on exercise of stock options - 639,227
Issuance of notes receivable (Note 8) - (603,675)
Balance, December 31, 1998 (976) 4,959,016
Net income - 2,528,641
Other comprehensive income
Unrealized gains on investments 350,978 350,978
Comprehensive income 2,879,619
Balance, December 31, 1999 $ 350,002 $7,838,635
See accompanying notes to consolidated financial statements.
16
WINMILL & CO. INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
1999 1998 1997
Cash Flows from Operating Activities:
Net income $2,528,641 $511,415 $625,725
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 153,702 169,008 131,992
Deferred income taxes 75,400 (215,400) -
Increase in cash value of life insurance (33,000) (33,000) (32,333)
Realized/unrealized (gain) loss on investments 260,014 (40,330) (83,608)
Gain on sale of discontinued operations (2,464,616) - -
(Increase) decrease in, net of effects from
sale of discontinued operations:
Management, distribution and shareholder
administration fees receivable (15,487) 11,671 (61,040)
Interest, dividends and other receivables (28,712) (17,832) 16,730
Prepaid expenses and other current assets 277,625 (95,129) (122,109)
Other assets 43,762 - (5,774)
Increase (decrease) in, net of effects from
sale of discontinued operations:
Accounts payable 193,369 (55,915) 26,305
Accrued expenses (48,580) 57,010 4,917
Accrued income taxes 1,866,600 - -
Other current liabilities - (572) (1,212)
Total adjustments 280,077 (220,489) (126,132)
Net cash provided by Operating Activities 2,808,718 290,926 499,593
17
WINMILL & CO. INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
Years Ended December 31,
1999 1998 1997
Cash Flows from Investing Activities:
Improvement to real estate $(201,237) $(606,296) $(218,956)
Capital expenditures (7,617) (102,440) (27,804)
Proceeds from sale of discontinued operations
net of discontinued operations cash and
current expenses and taxes 2,717,626 - -
Proceeds from sales of investments 810,528 1,748,467 556,831
Purchases of investments (4,967,107) (258,556) (1,231,204)
Net cash provided by (used in)
Investing Activities (1,647,807) 781,175 (921,133)
Cash Flows from Financing Activities:
Issuance collection of note receivable - (603,675) -
Repayments of capitalized lease obligation (4,749) (16,355) (13,271)
Proceeds from issuance of Class A Common Stock - 639,227 -
Net cash provided by (used in)
Financing Activities (4,749) 19,197 (13,271)
Net increase (decrease) in cash
and cash equivalents 1,156,162 1,091,298 (434,811)
Cash and cash equivalents:
Beginning of year 1,403,931 312,633 747,444
End of year $2,560,093 $1,403,931 $312,633
SUPPLEMENTAL DISCLOSURE:
The Company paid $9,346 in Federal income taxes in 1998.
The Company did not pay any Federal income taxes in 1999 or 1997.
The Company paid $864, $916 and $1,309 in interest in 1999, 1998 and 1997,
respectively.
See accompanying notes to consolidated financial statements.
18
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Winmill & Co., Incorporated ("formerly Bull & Bear Group, Inc.")
("Company") is a holding company. Its subsidiaries' business consists
of providing investment management and distribution services for the
Midas Funds (six open-end funds) and three closed-end funds as well as
real estate investment and operations.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
Company and all of its subsidiaries. Substantially all intercompany
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 reported 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 December 31, 1999 and 1998, the Company and
subsidiaries had invested approximately $2,199,800 and $1,378,700,
respectively, in an affiliated money market fund.
MARKETABLE SECURITIES
The Company and its non-broker/dealer subsidiaries' marketable
securities are considered to be "available-for-sale" and recorded at
market value, with the unrealized gain or loss included in
stockholders' equity as "accumulated other comprehensive income".
Marketable securities for the broker/dealer subsidiary is valued at
market with unrealized gains and losses included in earnings.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, the Company's customer activities
involve the execution and settlement of customer transactions. These
activities may expose the Company to risk of loss in the event the
customer is unable to fulfill its contracted obligations, in which
case the Company may have to purchase or sell financial instruments at
prevailing market prices. Any loss from such transactions is not
expected to have a material effect on the Company's financial
statements.
19
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
INCOME TAXES
The Company and its wholly-owned subsidiaries file consolidated income
tax returns. The Company's method of accounting for income taxes
conforms to Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes." This method requires the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the financial reporting
basis and the tax basis of assets and liabilities.
REAL ESTATE HELD FOR INVESTMENT AND EQUIPMENT
Real estate held for investment is recorded at cost and is depreciated
on the straight-line basis over its estimated useful life. At December
31, 1999 and 1998, accumulated depreciation amounted to approximately
$166,100 and $92,400, respectively. Equipment, furniture and fixtures
are recorded at cost and are depreciated on the straight-line basis
over their estimated useful lives, 3 to 10 years. At December 31, 1999
and 1998, accumulated depreciation amounted to approximately $796,900
and $908,400, respectively.
EXCESS OF COST OVER NET BOOK VALUE OF SUBSIDIARIES
The excess of cost over net book value of subsidiaries is capitalized
and amortized over fifteen and forty years using the straight-line
method. At December 31, 1999 and 1998, accumulated amortization
amounted to approximately $550,800 and $662,100, respectively.
Periodically, the Company reviews its intangible assets for events or
changes in circumstances that may indicate that the carrying amounts
of the assets are not recoverable.
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 stockholders' equity.
SEGMENT INFORMATION
The Company's operating segments were organized around services
provided and classified into three groups - investment management,
real estate operations and discount brokerage. Due to the sale of the
discount brokerage business, the discount brokerage business is
classified as "income from discontinued operations" on the financial
statements (See Note 2). The Company's remaining business is in two
industry segments.
EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number
of shares outstanding. Diluted earnings per share is computed using
the weighted average number of shares outstanding adjusted for the
incremental shares attributed to outstanding options to purchase
common stock.
20
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
The following table sets forth the computation of basic and diluted earnings per
share:
1999 1998 1997
Numerator for basic and diluted
earnings per share:
Net income $ 2,528,641 $511,415 $625,725
Denominator:
Denominator for basic earnings per share
weighted-average shares 1,655,017 1,391,940 1,370,017
Effect of dilutive securities:
Employee Stock Options 25,740 61,532 98,235
Denominator for diluted earnings per share
adjusted weighted - average shares and
assumed conversions 1,680,757 1,453,472 1,468,252
RECLASSIFICATIONS
Certain reclassifications of the 1998 and 1997 financial statements have
been made to conform to the 1999 presentation.
2. DISCONTINUED OPERATIONS
On December 17, 1998, the Company signed an agreement to sell the
outstanding stock of the discount brokerage business, to a subsidiary of
Royal Bank of Canada for $6 million. The sale closed on March 31, 1999. In
connection with the sale, the rights to the name "Bull & Bear" was
transferred to Royal Bank of Canada. In addition, Royal Bank has agreed
that it will cause, for the three-year period following the closing, BBSI
to offer exclusively Dollar Reserves to its customers as the sole money
market fund into which cash balances held by BBSI's customers may be swept
on a daily basis for so long as certain conditions are met, including
certain performance rankings by the Fund, in consideration of a monthly fee
equal to one-twelfth of 0.25% of the aggregate average daily amount of such
balances. At December 31, 1999, the value invested in Dollar Reserves by
BBSI's customers was approximately $33,861,000. Further, the Company has
agreed to provide or to cause its subsidiaries to provide to BBSI for a
period of three years following the closing certain services with respect
to the operation of a securities brokerage business for a monthly
administrative fee of $16,666.67, subject to certain conditions.
21
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
Accordingly, results from the discount brokerage segment are shown as
discontinued operations. Summarized financial information for the discontinued
operations was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Revenues $ 748,786* $2,379,506 $2,490,713
Expenses 733,537* 2,614,920 2,378,629
Income (loss) before income taxes 15,249 (235,414) 112,084
Income taxes - 95,000 (39,900)
Income (loss) 15,249 (140,414) 72,184
Gain on sale of discontinued operations:
Proceeds, net of basis 5,500,000 - -
Professional fees (222,021) - -
Closing bonuses (868,586) - -
Gain on sale before income taxes 4,409,393 - -
Income taxes (1,944,777) - -
Gain on sale 2,464,616 - -
Income (loss) from discontinued operations $ 2,479,865 $(140,414) $72,184
</TABLE>
* Represents revenues and expenses for the 3 months ended March 31, 1999.
3. MARKETABLE SECURITIES
At December 31, 1999, marketable securities consisted of:
Broker/dealer securities - at market
Affiliated funds $ 2,063,205
Equity securities 435,875
Total broker/dealer securities (cost $2,861,134) 2,499,080
Other companies
Available-for-sale securities - at market
Unaffiliated mutual funds 23,622
Affiliated mutual funds 2,046,439
Equity securities 31,787
Total available-for-sale securities (cost - $1,751,846) 2,101,848
$ 4,600,928
22
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
At December 31, 1998, marketable securities consisted of:
Broker/dealer securities - at market
Affiliated mutual funds (cost $159,882) $128,945
Other companies
Available-for-sale securities - at market
Unaffiliated mutual funds 38,820
Affiliated mutual funds 2,268
Equity securities 183,352
Total available-for-sale securities (cost - $225,416) 224,440
$353,385
At December 31, 1999 and 1998, the Company had $350,002 and $(976),
respectively, of unrealized gains (losses) on "available-for-sale securities"
which is reported as a separate component of consolidated shareholders' equity.
4. LEASE COMMITMENTS
AS LESSEE
The Company leases office space under a lease which expires December 31,
2001 and is cancelable at the option of the Company on three month's
notice. The rent is approximately $103,000 per annum including electricity.
5. REAL ESTATE OPERATIONS
The Company owns an office building which is approximately 90% leased to
various tenants. Future minimum lease payment receivables under
noncancellable leasing arrangements as of December 31, 1999 are as follows:
Year ending December 31,
2000 $175,500
2001 189,500
2002 176,100
2003 154,900
2004 159,400
2005 - 2008 611,000
Net minimum future lease receipts $1,466,400
23
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
6. SHAREHOLDERS' EQUITY
The Class A and Class B Common Stock are identical in all respects except
for voting rights, which are vested solely in the Class B Common Stock. The
Company also has 1,000,000 shares of Preferred Stock, $.01 par value,
authorized. As of December 31, 1999 and 1998, none of the Preferred Stock
was issued.
7. NET CAPITAL REQUIREMENTS
The Company's broker/dealer subsidiary is a member firm of the National
Association of Securities Dealers, Inc. and are registered with the
Securities and Exchange Commission as broker/dealers. Under the Uniform Net
Capital Rule (Rule 15c3-1 under the Securities Exchange Act of 1934), a
broker/dealer must maintain minimum net capital, as defined, of not less
than (a) $250,000 or, when engaged solely in the sale of redeemable shares
of registered investment companies, $25,000, or (b) 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 December 31, 1999,
the subsidiary had net capital of approximately $1,075,700; net capital
requirements of $58,300; excess net capital of approximately $1,017,400;
and the ratios of aggregate indebtedness to net capital was approximately
.81 to 1.
8. STOCK OPTIONS
On December 6, 1995, the Company adopted a Long-Term Incentive Plan which
provides for the granting of a maximum of 300,000 options to purchase Class
A Common Stock to directors, officers and key employees of the Company or
its subsidiaries. The plan was amended on February 5, 1996, on October 29,
1997 increasing the maximum number of options to 450,000, and in March 1999
increasing the maximum number of options to 600,000. With respect to
non-employee directors, only grants of non-qualified stock options and
awards of restricted shares are available. Two of the non-employee
directors were granted 10,000 options each on December 6, 1995 and 5,000
options each on October 29, 1997. The new non-employee director was granted
10,000 options on September 8, 1998. In September 1999, the three
non-employee directors were granted 10,000 options each. 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.
24
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
The Company applied APB Opinion 25 and related interpretations in
accounting for its stock option plans. Accordingly, no compensation cost
has been recognized for its stock option plans. Proforma compensation cost
for the Company's plans is required by Financial Accounting Standards No.
123 "Accounting for Stock-Based Compensation (SFAS 123)" and has been
determined based on the fair value at the grant dates for awards under
these plans consistent with the method of SFAS 123. For purposes of
proforma disclosure, the estimated fair value of the options is amortized
to expense over the options' vesting period. The Company's proforma
information follows:
Years Ended December 31,
1999 1998 1997
Net income As Reported $2,528,641 $511,415 $625,725
Proforma $2,285,639 $465,641 $246,394
Earnings per share
Basic As Reported $1.53 $.37 $.46
Proforma $1.38 $.33 $.18
Diluted As Reported $1.51 $.35 $.43
Proforma $1.36 $.32 $.17
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1999, 1998 and 1997, respectively: expected
volatility of 83.09%, 73.95% and 92.83%, risk-free interest rate of 5.78%,
5.11% and 5.85% and expected life of three years for each year.
A summary of the status of the Company's stock option plans as of December
31, 1999, 1998 and 1997, and changes during the years ending on those dates
is presented below:
Weighted
Number Average
of Exercise
Stock Options Shares Price
Outstanding at December 31, 1996 269,000 $1.98
Granted 177,000 $2.52
Canceled (34,000) $1.97
Outstanding at December 31, 1997 412,000 $2.21
Granted 12,000 $1.81
Exercised (285,000) $2.25
Canceled (20,000) $2.64
Outstanding at December 31, 1998 119,000 $2.05
Granted 280,000 $2.98
Canceled (160,000) $3.28
Outstanding at December 31, 1999 239,000 $2.32
25
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
There were 64,000, 97,000 and 176,000 options exercisable at December 31,
1999, 1998 and 1997 with a weighted-average exercise price of $1.84, $1.99
and $2.29, respectively. The weighted-average fair value of options granted
was $1.18, $.94 and $1.41 for the years ended December 31, 1999, 1998 and
1997, respectively.
In September 1999, the Company canceled 125,000 previously issued stock
options. The exercise prices of the canceled stock options were $3.36 to
$3.69. In September 1999, the Company granted 155,000 stock options with
exercise prices of $2.38 to $2.61.
The following table summarizes information about stock options outstanding
at December 31, 1999:
Options Outstanding
Weighted-Average
Range of Number Remaining Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price
$1.75 - $2.375 152,000 3.2 years $2.14
$2.6125 - $3.00 87,000 4.4 years $2.63
In connection with the exercise of the options, the Company received from
certain officers notes with an interest rate of 4.47% per annum payable
December 15, 2003. The balance of the notes at December 31, 1999 was
$603,675, which was classified as "notes receivable for common stock
issued."
9. PENSION PLAN
The Company has a 401(k) retirement plan for substantially all of its
qualified employees. Contributions to this are based upon a percentage of
earnings of eligible employees and are accrued and funded on a current
basis. Total pension expense for the years ended December 31, 1999, 1998
and 1997 was approximately $31,600, $44,700 and $44,800, respectively.
10. INCOME TAXES
The provision for income taxes charged to operations was as follows:
1999 1998 1997
Current
State and local $595,629 $28,510 $ 34,704
Federal 1,312,000 (206,054) -
1,907,629 (177,544) 34,704
Deferred 75,400 - -
$ 1,983,029 $(177,544) $ 34,704
26
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
Deferred tax assets (liabilities) are comprised of the following at
December 31, 1999 and 1998:
1999 1998
Unrealized (appreciation) depreciation on investments $140,000 $ 12,400
Accrued expenses - 40,000
Depreciation - 10,000
Net operating loss carryforwards - 153,000
Net deferred tax assets $140,000 $ 215,400
For the year ended December 31, 1998, the provision for income taxes
differs from the amount of income taxes determined by applying the
applicable U.S. statutory federal tax rates to pre-tax income as a result
of utilization of net operating loss carryforwards and the reversal of the
valuation allowance account.
11. 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. Shareholder
administration fees represented reimbursement of costs incurred by
subsidiaries of the Company on behalf of the open-end Funds. Such
reimbursement amounted to approximately $314,100 and $286,100 for the years
ended December 31, 1998 and 1997. The Company outsourced its shareholder
administration in 1999. During the years ended December 31, 1999, 1998 and
1997, the Funds paid approximately $210,000, $182,000 and $63,700,
respectively, for recordkeeping services to ISC, which paid such amounts to
certain brokers for performing such services. These reimbursements for
recordkeeping services were recorded in management, distribution, service
and administrative fees.
In connection with investment management services, the Company's investment
managers and distributor waived management and distribution fees from the
Funds in the amount of approximately $328,800, $180,400 and $615,700 for
the years ended December 31, 1999, 1998 and 1997, respectively.
Certain officers of the Company also serve as officers and/or directors of
the Funds.
Commencing August 1992, the Company has 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 December 31, 1999, the
policy had a cash surrender value of approximately $175,000 and is included
in other assets in the balance sheet.
27
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1999, 1998 and 1997
12. FINANCIAL INFORMATION BY BUSINESS SEGMENT
The following details selected financial information by business segment.
Investment Real Estate
Management Operations Total
1999
Revenues $3,005,636 $ 216,272 $3,221,908
Investment income 78,165 847 79,012
Income (loss) from operations 109,733 (22,705) 87,028
Depreciation and amortization 78,316 75,386 153,702
Capital expenditures 7,617 201,237 208,854
Gross identifiable assets 8,620,008 1,470,021 10,090,029
1998
Revenues $3,554,725 $ 43,878 $3,598,603
Investment income 121,709 40 121,749
Income (loss) from operations 676,781 (107,496) 569,285
Depreciation and amortization 76,467 41,719 118,186
Capital expenditures 67,232 641,504 708,736
Gross identifiable assets 4,029,992 1,285,155 5,315,147
13. CONTINGENCIES
A group called Karpus Investment Management ("KIM") at the 1997 annual
meeting of Bull & Bear U.S. Government Securities Fund, Inc. ("BBG") sought
to elect its slate of nominees in opposition to management and at the 1998
annual meeting of BBG made a counter-solicitation on all management
proposals and a solicitation to terminate the investment management
agreement. On February 19, 1998, KIM filed a lawsuit against BBG in the
Circuit Court for Baltimore City, Maryland, Case No. 9805005, which was
dismissed with prejudice on October 1, 1998. On February 19, 1998, BBG
filed a lawsuit against KIM in the United States District Court for the
Southern District of New York, 98 Civ. 1190. On December 22, 1998, KIM
filed a lawsuit against BBG in the United States District Court for the
District of Maryland Court, 98-CV-4161 and BBG has made counterclaims. On
May 25, 1999, BBG and KIM announced that they had entered into a settlement
of all litigation in the United States District Court for the Southern
District of New York and in the United States District Court for the
District of Maryland. In connection with the settlement, KIM sold its 12.7%
share in the Fund of 95,175 shares to ISC for $12-7/8 per share in July and
August 1999.
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 December 31, 1999, neither the Company nor any of its subsidiaries
was involved in any other litigation that, in the opinion of management,
would have a material adverse impact on the consolidated financial
statements.
In July 1994, the Company entered into a Death Benefit Agreement
("Agreement") with the Company's Chairman. Following his death, the
Agreement provides for annual payments, equal to 80% of his average annual
salary 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. 28 Selected Quarterly Financial Data
(Unaudited)
The following sets forth the selected quarterly financial information for
the years ended December 31, 1999 and 1998. The information presented has
been restated to reflect BBSI as discontinued operations (See Note 2 to the
consolidated financial statements).
<TABLE>
<CAPTION>
Three Months Ended
March 31, June 30, Sept. 30, Dec. 31,
1999
<S> <C> <C> <C> <C>
Revenues $ 774,806 $992,676 $565,857 $967,581
Income from continuing operations $(143,754) $63,786 $(139,147) $267,891
Income from discontinued operations $2,479,865 $ - $ - $ -
Net income $2,336,111 $63,786 $(139,147) $267,891
Income (loss) per share
Basic
Income from continuing operations $(.09) $.04 $(.08) $.16
Income (loss) from discontinued operations $1.50 $ - $ - $ -
Net Income $1.41 $.04 $(.08) $.16
Diluted $1.38 $.04 $(.08) $.16
1998
Revenues $ 901,689 $996,530 $822,880 $817,574
Income (loss) from continuing operations $206,529 $155,539 $(14,572) $304,333
Income (loss) from discontinued operations $(71,350) $(14,232) $(42,793) $(12,039)
Net income (loss) $135,179 $141,307 $(57,365) $292,294
Income (loss) per share
Basic
Income (loss) from continuing operations $.15 $ .11 $(.01) $.21
Income (loss) from discontinued operations $(.05) $(.01) $(.03) $(.01)
Net income (loss) $.10 $ .10 $(.04) $.20
Diluted $.09 $ .10 $(.04) $.20
</TABLE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
There were no changes in or disagreements with the Company's accountants on
accounting and financial disclosure matters during the two years ended
December 31, 1999. 29 PART III
Item 10. Directors and Executive Officers
The following list contains the names, ages, positions and lengths of
service of all directors and executive officers of the Company.
Name Position Years of Service Age
Director Officer
Bassett S. Winmill Chairman of the Board 23 23 70
Robert D. Anderson Vice Chairman of the Board 23 23 70
Thomas B. Winmill, President, 11 12 40
Esquire General Counsel, Director
Edward G. Webb, Jr. Director 14* 12** 60
Charles A. Carroll Director 8 - 69
Mark C. Jones Director 2 - 64
Steven A. Landis Senior Vice President - 5 44
Joseph Leung Treasurer, - 5 34
Chief Accounting Officer
Deborah Ann Sullivan, Vice President,Secretary,
Esquire Associate General Counsel - 3 30
*1985 to 1990 and 1992 to present.
**1979 to 1990
30
Set forth below is a description of the business experience of the directors and
executive officers of the Company during the past five years.
BASSETT S. WINMILL - Chairman of the Board of Directors. He is also Chairman of
certain investment companies managed by Company subsidiaries. He is a member of
the New York Society of Security Analysts, the Association for Investment
Management and Research, and the International Society of Financial Analysts. He
is the father of Thomas B. Winmill and the brother-in-law of Mark C. Jones.
ROBERT D. ANDERSON - Vice Chairman of the Board of Directors. He is also Vice
Chairman of certain investment companies managed by Company subsidiaries and of
the subsidiaries of the Company.
THOMAS B. WINMILL, ESQ. - President, General Counsel and Director. He is also
President of the investment companies managed by Company subsidiaries and of
certain other subsidiaries of the Company. He is a member of the New York State
Bar. He is a son of Bassett S. Winmill and a nephew of Mark C. Jones.
EDWARD G. WEBB, JR. - Director. He has been President of Webb Associates, Ltd.
since 1996. From 1990 to 1996, he was Investment Director for Home Insurance
Company. Prior to that, he served as a Senior Vice President and Director of the
Company.
CHARLES A. CARROLL - Director. From 1989 to the present, he has been affiliated
with Kalin Associates, Inc., a member firm of the New York Stock Exchange.
MARK C. JONES - Director. Since 1993, he has served as Managing Director of
Western Javelin LC, a general consulting firm. He is the brother-in-law of
Bassett S. Winmill and uncle of Thomas B. Winmill.
STEVEN A. LANDIS - Senior Vice President. He is also Senior Vice President of
the investment companies managed by Company subsidiaries. From 1993 to 1995 he
was Associate Director of Proprietary Trading at Barclays De Zoete Wedd
Securities, Inc., from 1992 to 1993 he was Director, Bond Arbitrage at WG
Trading Company, and from 1989 to 1992 he was Vice President of Wilkinson Boyd
Capital Markets.
JOSEPH LEUNG, CPA - Treasurer and Chief Accounting Officer. He is also Treasurer
and Chief Accounting Officer of the investment companies managed by Company
subsidiaries. From 1992 to 1995 he held various positions with Coopers & Lybrand
L.L.P., a public accounting firm. From 1991 to 1992 he was the accounting
supervisor at Retirement Systems Group, a mutual fund company.
DEBORAH ANN SULLIVAN, ESQ. - Vice President, Secretary and Associate General
Counsel. She is also Vice President, Secretary and Associate General Counsel of
the investment companies managed by Company subsidiaries. From 1993 to 1994 she
was a Blue Sky Paralegal for SunAmerica Asset Management Corporation and from
1992 through 1993 she was Compliance Administrator and Blue Sky Administrator
with Prudential Inc. and Prudential Fund Management, Inc. She is a member of the
New York State Bar.
31
Each director is elected by the vote or written consent of the holder of a
majority of the Class B Common Stock and holds office until the next meeting of
the Class B common stockholder and until his successor is elected and qualified,
or until his earlier death, resignation or removal.
Based solely on the information from Forms 3, 4, and 5 furnished to it, the
Company believes that the directors, officers, and owners of more than 10
percent of the Class A Common Stock of the Company have filed on a timely basis
reports required by Section 16(a) of the Securities Exchange Act of 1934 during
the most recent fiscal year or prior fiscal years.
Item 11. Executive Compensation
The following information and tables set forth the information required under
the Securities and Exchange Commission's executive compensation rules. Any
information not presented is omitted because the item is not applicable or not
required since the Company qualifies as a small business issuer.
Summary Compensation Table
The following table sets forth, for the three years ended December 31, 1999, the
compensation paid to the chief executive officers and the other executive
officers whose total annual salary and bonus exceeded $100,000 in 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Securities All Other
Name And Salary Bonus Other Annual Underlying Compensation
Principal Position Year ($) ($) Compensation* Options** (a) (b)
<S> <C> <C> <C> <C> <C> <C> <C>
Bassett S. Winmill 1999 $237,500 $215,625 - 80,000 $6,572 $5,000
Chairman 1998 $175,000 $ 10,937 - - $5,355 $4,999
1997 $170,000 $ 17,708 - - $5,166 $4,750
Robert D. Anderson 1999 $ 90,000 $ 9,375 - 20,000 $2,968 $3,413
Vice Chairman 1998 $ 90,000 $ 5,625 - - $2,142 $3,347
1997 $ 90,000 $ 9,375 - - $2,142 $2,925
Thomas B. Winmill 1999 $187,500 $212,500 - 80,000 $ 255 $5,000
President 1998 $140,000 $ 28,750 - - $ 211 $4,478
1997 $122,500 $ 13,021 - - $ 177 $4,272
Steven A. Landis 1999 $135,000 $ 14,063 - 10,000 $ 247 $5,000
Senior Vice President 1998 $128,625 $ 12,764 - - $ 296 $3,420
1997 $120,667 $ 7,542 - - $ 267 $2,564
Joseph Leung 1999 $ 99,500 $ 10,208 - 20,000 $ 105 $4,063
Treasurer and 1998 $ 85,542 $ 5,333 - - $ 87 $3,391
Chief Accounting Officer 1997 $ 80,000 $ 8,333 - - $ 76 $2,957
</TABLE>
*Information omitted as perquisites do not exceed the lesser of $50,000 or 10%
of the total annual salary and bonus for the year for the named executive
officers.
** Includes options granted to reprice previously issued stock options in 1999
which were then cancelled.
(a) Represents term life insurance
(b) Represents Company's matching contributions to 401(k) Plan.
32
Option Grants Table
The following table sets forth, for the year ended December 31, 1999,
information regarding the options granted for each of the executive officers
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Potential Realizable Value At
Assumed Annual Rates Of
Stock Price Appreciation For
Individual Grants Option Term
Number Of % of Total
Securities Options
Underlying Granted To
Options Employees In Exercise Expiration
Name Granted Fiscal Year Price Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Bassett S. Winmill 40,000 16 2.6125 9/07/04 $28,870 $63,800
40,000* 16 3.6949 3/02/04 $40,830 $90,230
Thomas B. Winmill 40,000 16 2.6125 9/07/04 $28,870 $63,800
40,000* 16 3.6949 3/02/04 $40,830 $90,230
Robert D. Anderson 10,000 4 2.375 9/07/04 $6,560 $14,500
10,000* 4 3.3594 3/02/04 $9,280 $40,500
Steven A. Landis 5,000 2 2.375 9/07/04 $3,280 $ 7,250
5,000* 2 3.3594 3/02/04 $4,640 $10,250
Joseph Leung 10,000 4 2.375 9/07/04 $6,560 $14,500
10,000* 4 3.3594 3/02/04 $9,280 $20,500
</TABLE>
All of the above options are exercisable as of December 31, 1999.
* Stock options cancelled in connection with repricing of stock options granted
9/7/99.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table sets forth, for the year ended December 31, 1999,
information regarding the outstanding options for each of the executive officers
named in the Summary Compensation Table.
Number of
Securities Value of
Underlying Unexercised
Number of Unexercised In-The-Money
Shares Options at Options at
Acquired Dollar 12-31-99 (#) 12-31-99 ($)
On Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
Bassett S. Winmill 0 $0 40,000 / 0 $0 / $0
Thomas B. Winmill 0 $0 40,000 / 0 $0 / $0
Robert D. Anderson 0 $0 35,000 / 0 $1,876 / $0
Steven A. Landis 0 $0 25,000 / 0 $1,876 / $0
Joseph Leung 0 $0 20,000 / 0 $0 / $0
33
Option Repricings
On September 7, 1999, the Board of Directors reviewed the stock options issued
on March 2, 1999 to employees of the Company under the Plan which had an
exercise price higher than the market price of the Common Stock. The Board
concluded that in light of the disparity between the exercise price of such
options and the then current market price of the Common Stock, the options no
longer provided the desired incentive to option holders. The Board of Directors
unanimously approved the grant of replacement stock options for those issued on
March 2, 1999 and additionally the grant of options under the Plan to
non-employee directors.
The following table sets forth, for the year ended December 31, 1999,
information regarding the repricing on options for each of the executive
officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Length Of
Number Of Original
Securities Market Price Exercise Option Term
Underlying Of Stock At Price At New Remaining
Options Time Of Time Of Exercise At Date Of
Name Date Repriced Repricing Repricing Price Repricing
<S> <C> <C> <C> <C> <C> <C>
Bassett S. Winmill 9/07/99 40,000 2.375 3.6949 2.6125 4.5 years
Thomas B. Winmill 9/07/99 40,000 2.375 3.6949 2.6125 4.5 years
Robert D. Anderson 9/07/99 10,000 2.375 3.3594 2.375 4.5 years
Steven A. Landis 9/07/99 5,000 2.375 3.3594 2.375 4.5 years
Joseph Leung 9/07/99 10,000 2.375 3.3594 2.375 4.5 years
</TABLE>
Long-Term Incentive Plan Awards Table
There were no long-term incentive plan awards made during the year ended
December 31, 1999 to the executive officers named in the Summary Compensation
Table.
Compensation of Directors
Edward G. Webb, Jr., Charles A. Carroll and Mark C. Jones were the only
individuals who received compensation for their service as directors of the
Company in 1999. They were each paid $500 per quarter as a retainer and $2,000
per quarterly meeting attended plus expenses. For the year ended December 31,
1999, Mr. Webb was paid $10,000 for attending three regular meetings and one
special meeting, and Mr. Carroll and Mr. Jones were paid $12,000 each for
attending all four regular meetings and one special meeting. Mr. Webb, Mr.
Carroll and Mr. Jones each received an option to purchase 10,000 shares of Class
A Common Stock at an exercise price of $2.375 per share in September 1999.
Employment Contracts
The Company has no employment or termination contracts with any of its employees
except to the extent of the agreement described in Note 13 to the financial
statements.
1995 Long-Term Incentive Plan
On December 6, 1995, the Board of Directors of the Company ("Board") and the
Class B voting common stockholder adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan ("Plan"), under which options and stock-based awards
(collectively, "Awards") may be made to directors, officers and employees of the
Company or its subsidiaries. The Plan was amended by the Board and the Class B
voting common stockholder on February 5, 1996, October 29, 1997 and in March
1999. The amended Plan is described below.
34
The purpose of the Plan is to assist the Company and its subsidiaries in
attracting and retaining highly competent officers and directors and otherwise
on behalf of the Company. The Plan also acts as an incentive in motivating
selected officers and key employees to achieve long-term objectives of the
Company, which will inure to the benefit of all stockholders of the Company. Any
proceeds raised by the Company under the Plan will be used for working capital
purposes.
General Provisions
Duration of the Plan; Share Authorization. The Plan will terminate on December
6, 2005, unless terminated earlier by the Board.
Six hundred thousand (600,000) shares of the Company's Class A Common Stock
("Shares") are available for Awards under the Plan. The Shares to be offered
under the Plan are authorized and unissued Shares, or issued Shares that have
been reacquired by the Company and held in its treasury. Holders of Shares do
not have voting rights except as specifically provided by the Delaware General
Corporation Law.
Shares covered by any unexercised portions of terminated options, Shares
forfeited by Participants, and Shares subject to any Awards that are otherwise
surrendered by a Participant without receiving any payment or other benefit with
respect thereto may again be subject to new Awards under the Plan. In the event
the purchase price of an option or tax withholding relating to an Award is paid
in whole or in part through the delivery of Shares, the number of Shares
issuable in connection with the exercise of the option may not again be
available for the grant of Awards under the Plan.
Plan Administration. The Plan is administered by the Board or Stock Option
Committee ("Committee") of the Board. The Committee is composed of at least two
directors of the Company, each of whom is a "Non-Employee Director" as defined
in Rule 16b-3 promulgated by the SEC ("Rule 16b-3") under Section 16 of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). When the Committee
is administering the Plan, the Committee will determine the officers and other
key employees who will be eligible for and granted Awards, determine the amount
and type of Awards, establish and modify administrative rules relating to the
Plan, impose such conditions and restrictions on Awards as it determines
appropriate and take such other action as may be necessary or advisable for the
proper administration of the Plan. The Committee may, with respect to
Participants who are not subject to Section 16 of the Exchange Act, delegate
such of its powers and authority under the Plan as it deems appropriate to
certain officers or employees of the Company.
Plan Participants. Any employee of the Company or its subsidiaries, whether or
not a director of the Company, may be selected by the Committee to receive an
Award under the Plan. Non-Employee Directors shall receive such Awards (other
than Incentive Stock Options) as the Board in its discretion may designate.
Awards Available Under the Plan
Awards to employees under the Plan may take the form of stock options or
Restricted Share Awards. Awards under the Plan may be granted alone or in
combination with other Awards. The consideration for issuance of Awards under
the Plan is the continued services of the employees and non-employee directors
to the Company and its subsidiaries.
Stock Options Granted to Employees. Stock options ("Incentive Stock Options")
meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto ("Code"), and stock options
that do not meet such requirements ("Non-Qualified Stock Options") are both
available for grant to employees under the Plan.
35
The term of each option will be determined by the Committee, but no option will
be exercisable more than ten years after the date of grant. If, however, an
Incentive Stock Option is granted to a Participant who, at the time of grant of
the option, owns (or is deemed to own under Section 424(d) of the Code) more
than 10% (a "Ten Percent Shareholder") of the Company's Class B common stock,
par value $0.01 per share ("Company Voting Securities"), the option is not
exercisable more than five years after the date of grant. Options may also be
subject to restrictions on exercise, such as exercise in periodic installments,
performance targets and waiting periods, as determined by the Committee.
The exercise price of each option is determined by the Committee; however, the
per share exercise price of an option must be at least equal to 100% of the Fair
Market Value (as defined below) of a Share on the date of grant of such option.
If, however, an Incentive Stock Option is granted to a Ten Percent Shareholder,
the per share exercise price of the option must be at least equal to 110% of the
Fair Market Value of a Share on the date of grant of such option. Fair Market
Value of a Share means, as of any given date, the most recently reported sale
price of a Share on such date as of the time when Fair Market Value is being
determined on the principal national securities exchange on which the Shares are
then traded or, if the Shares are not then traded on a national securities
exchange, the most recently reported sale price of the Shares on such date as of
the time when Fair Market Value is being determined on Nasdaq; provided,
however, that, if there were no sales reported as of such date, Fair Market
Value is the last sale price previously reported. In the event the Shares are
not admitted to trade on a securities exchange or quoted on Nasdaq, the Fair
Market Value of a Share as of any given date is as determined in good faith by
the Committee. Notwithstanding the foregoing, the Fair Market Value of a Share
will never be less than par value per share.
Subject to whatever installment exercise and waiting period provisions the
Committee may impose, options may be exercised in whole or in part at any time
prior to expiration of the option by giving written notice of exercise to the
Company specifying the number of Shares to be purchased. Such notice must be
accompanied by payment in full of the purchase price in such form as the
Committee may accept (including payment in accordance with a cashless exercise
program under which, if so instructed by the Participant, Shares may be issued
directly to the Participant's broker or dealer upon receipt of the purchase
price in cash from the broker or dealer). If and to the extent determined by the
Committee in its discretion at or after grant, payment in full or in part may
also be made in the form of Shares duly owned by the Participant (and for which
the Participant has good title, free and clear of any liens and encumbrances) or
by reduction in the number of Shares issuable upon such exercise based, in each
case, on the Fair Market Value of the Shares on the date the option is
exercised. In the case of an Incentive Stock Option, however, the right to make
payment of the purchase price in the form of Shares may be authorized only at
the time of grant. Stock options granted under the Plan are not transferable
except by will or the laws of descent and distribution and may be exercised,
during the Participant's lifetime, only by the Participant.
Unless the Committee provides for a shorter period of time, upon a Participant's
termination of employment other than by reason of death or disability, the
Participant may, within three months from the date of such termination of
employment, exercise all or any part of his or her options as were exercisable
at the date of termination of employment but only if (x) the Participant resigns
or retires and the Committee consents to such resignation or retirement and (y)
such termination of employment is not for cause. In no event, however, may any
option be exercised after the time when it would otherwise expire. If such
termination of employment is for cause or the Committee does not so consent, the
right of such Participant to exercise such options will terminate at the date of
termination of employment.
Further, unless the Committee provides for a shorter period of time, upon a
Participant's becoming disabled (such date being the "Disability Date"), the
Participant may, within one year after the Disability Date, exercise all or a
part of his or her options that were exercisable upon such Disability Date. In
no event, however, may any option be exercised after the time when it would
otherwise expire.
36
Further, unless the Committee provides for a shorter period of time, in the
event of the death of a Participant while employed by the Company or prior to
the expiration of the option as provided for in the event of disability, to the
extent all or any part of the option was exercisable as of the date of death of
the Participant, the right of the Participant's beneficiary to exercise the
option will expire upon the expiration of one year from the date of the
Participant's death (but in no event more than one year from the Participant's
Disability Date) or on the stated termination date of the option, whichever is
earlier. In the event of the Participant's death, the Committee may, in its sole
discretion, accelerate the right to exercise all or any part of an Option that
would not otherwise be exercisable.
To the extent all or any part of an option was not exercisable as of the date of
a Participant's termination of employment, such right will expire at the date of
such termination of employment. Notwithstanding the foregoing, the Committee, in
its sole discretion and under such terms as it deems appropriate, may permit a
Participant who will continue to render significant services to the Company
after his or her termination of employment to continue to accrue service with
respect to the right to exercise his or her options during the period in which
the individual continues to render such services.
Restricted Shares. The Committee may award restricted Shares ("Restricted
Shares") to a Participant. Such a grant gives a Participant the right to receive
Shares subject to a risk of forfeiture based upon certain conditions. The
forfeiture restrictions on the Restricted Shares may be based upon performance
standards, length of service or other criteria as the Committee may determine.
Until all restrictions are satisfied, lapsed or waived, the Company will
maintain control over the Restricted Shares but the Participant will be entitled
to receive dividends on the Restricted Shares; provided, however, that any
Shares distributed as a dividend or otherwise with respect to any Restricted
Shares as to which the restrictions have not yet lapsed will be subject to the
same restrictions as such Restricted Shares. When all restrictions have been
satisfied and/or waived or have lapsed, the Company will deliver to the
Participant or, in the case of the Participant's death, his or her beneficiary,
stock certificates for the appropriate number of Shares, free of all
restrictions (except those imposed by law). None of the Restricted Shares may be
assigned or transferred (other than by will or the laws of descent and
distribution), pledged or sold prior to lapse or release of the applicable
restrictions.
All of a Participant's Restricted Shares and rights thereto are forfeited to the
Company unless the Participant continues in the service of the Company or any
parent or subsidiary of the Company as an employee until the expiration of the
forfeiture period, and all other applicable restrictions of the Restricted
Shares. Notwithstanding the foregoing, the Committee may, in its sole
discretion, waive the forfeiture period and any other applicable restrictions on
a Participant's Restricted Share Award, provided that the Participant must at
that time have completed at least one year of employment after the date of
grant.
Awards Granted to Non-Employee Directors. Non-Employee Directors are eligible
only to receive Non-Qualified Stock Options and Awards of Restricted Shares. All
such grants may be made only by the Board. The terms and conditions applicable
to grants of such Awards to Non-Employee Directors (except where specifically
stated herein to the contrary) are the same as those applicable to grants of
Non-Qualified Options and Restricted Shares to employees, except that references
to (a) the Committee shall be deemed to refer to the Board (b) employees shall
be deemed to refer to Non-Employee Directors and (c) termination of employment
shall be deemed to refer to termination of service.
Termination and Amendment
The Board may amend or terminate the Plan at any time it is deemed necessary or
appropriate; provided, however, that no amendment may be made, without the
affirmative approval of the holder of Company Voting Securities, that would
require stockholder approval under Rule 16b-3, the Code or other applicable law
unless the Board determines that compliance with Rule 16b-3 and/or the Code is
no longer desired.
37 Except as provided by the Committee, in its sole discretion, at the time of
an Award or pursuant to certain antidilution provisions (as discussed below), no
Award granted under the Plan to a Participant may be modified (unless such
modification does not materially decrease the value of the Award) after the date
of grant except by express written agreement between the Company and the
Participant, provided that any such change (a) may not be inconsistent with the
terms of the Plan, and (b) must be approved by the Committee.
The Board has the right and the power to terminate the Plan at any time. No
Award may be granted under the Plan after the termination of the Plan, but the
termination of the Plan will not have any other effect and any Award outstanding
at the time of the termination of the Plan may be exercised after termination of
the Plan at any time prior to the expiration date of such Award to the same
extent such Award would have been exercisable had the Plan not terminated.
Antidilution Provisions
Recapitalization. The number and kind of shares subject
to outstanding Awards, the purchase price or exercise price of such Awards, and
the number and kind of shares available for Awards subsequently granted under
the Plan will be appropriately adjusted to reflect any stock dividend, stock
split, combination or exchange of shares, merger, consolidation or other change
in capitalization with a similar substantive effect upon the Plan or the Awards
granted under the Plan. The Committee has the power and sole discretion to
determine the nature and amount of the adjustment to be made in each case.
However, in no event will any adjustment be made in accordance with the Plan's
antidilution provisions to any previous grant of Restricted Shares if an
adjustment has been or will be made to the Shares awarded to a Participant in
such person's capacity as a stockholder.
Sale or Reorganization. After any reorganization, merger or consolidation in
which the Company is the surviving entity, each Participant will, at no
additional cost, be entitled upon the exercise of an Award outstanding prior to
such event, and in connection with the payout after such event of any Award
outstanding at the time of such event, to receive (subject to any required
action by stockholders), in lieu of the number of Shares receivable or
exercisable pursuant to such option, the number and class of shares of stock or
other securities to which such Participant would have been entitled pursuant to
the terms of the reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Participant had been the holder of
record of a number of Shares equal to the number of Shares receivable or
exercisable pursuant to such Award. Comparable rights will accrue to each
Participant in the event of successive reorganizations, mergers or
consolidations of the character described above.
Options to Purchase Stock of Acquired Companies. After any reorganization,
merger or consolidation in which the Company is a surviving entity, the
Committee may grant substituted options under the provisions of the Plan,
pursuant to Section 424 of the Code, replacing old options granted under a plan
of another party to the reorganization, merger or consolidation whose stock
subject to the old options may no longer be issued following such merger or
consolidation. The foregoing adjustments and manner of application of the
foregoing provisions will be determined by the Committee in its sole discretion.
Any such adjustments may provide for the elimination of any fractional Shares
that might otherwise become subject to any options.
Loans
The Company is entitled, if the Committee in its sole discretion deems it
necessary or desirable, to lend money to a Participant for purposes of (a)
exercising his or her rights under an Award hereunder or (b) paying any income
tax liability related to an Award; provided, however, that Non-Employee
Directors are not eligible to receive such loans and provided, further, that the
portion of the per share exercise price of an option equal to the par value per
Share may not be paid by means of a promissory note. Such a loan must be
evidenced by a recourse promissory note payable to the order of the Company
executed by the Participant and containing such other terms and conditions as
the Committee may deem desirable. The interest rate on such loans must be
sufficient to avoid imputed interest under the Code.
38
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Bassett S. Winmill, Chairman of the Board of Directors, owns all of the
issued and outstanding shares of the Company's Class B Common Stock, which
represents 100% of the Company's voting securities.
(b) The following table sets forth, as of December 31, 1999, information
relating to beneficial ownership by individual directors of the Company,
executive officers named in the Summary Compensation Table and by directors
and executive officers of the Company as a group, of the currently issued
and outstanding Class A Common Stock of the Company.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership (7) of Class
Bassett S. Winmill 316,104 (1) 18.9%
Thomas B. Winmill 162,520 (2) 9.7%
Robert D. Anderson 104,414 (3) 6.3%
Edward G. Webb, Jr. 28,664 (4) 1.7%
Charles A. Carroll 25,000 (5) 1.5%
Steven A. Landis 25,000 (4) 1.5%
Joseph Leung 20,000 (6) 1.2%
All directors and executive 691,702 40.8%
officers as a group (8 persons)
(1) Includes options exercisable to purchase 40,000 shares at December 31,
1999.
(2) Includes 5,000 and 5,000 shares held by Thomas B. Winmill's wife and sons,
respectively of which he disclaims beneficial ownership and options
exercisable to purchase 40,000 shares.
(3) Includes options exercisable to purchase 35,000 shares.
(4) Includes options exercisable to purchase 25,000 shares.
(5) Includes options exercisable to purchase 10,000 shares.
(6) Includes options exercisable to purchase 20,000 shares.
(7) The nature of the beneficial ownership for all the Class A Common Stock is
investment power.
Item 13. Certain Relationships and Related Transactions
The following sets forth the reportable items regarding indebtedness of
management in excess of $60,000. In connection with the exercise of stock
options and related tax expense, the Company received notes with an interest
rate of 4.47% per annum payable on December 15, 2003.
Largest Amount
Amount of Outstanding at
Name and Relationship Indebtedness December 31, 1999
Bassett S. Winmill, Chairman $297,996 $297,996
Thomas B. Winmill, President $201,225 $201,225
39
PART IV
Item 14. Exhibits, Consolidated Financial Statements and Schedules, and Reports
on Form 8-K
(a) (1) Financial Statements
See Item 8 for a list of the financial statements filed as part of
this report.
(2) Financial Statement Schedules by Regulation S-X are not required under
the related instructions or are inapplicable, and therefore have been
omitted.
(3) Exhibits
(2) Not applicable
(3) Certificate of Incorporation as amended October 24, 1989 as filed
as an exhibit to Form 10-K for the year ended December 31, 1992
and incorporated herein by reference; Certificate of
Incorporation as amended April 1, 1999 as filed as an exhibit to
Form 10-K/A for the year ended December 31, 1998 and incorporated
herein by reference; By-Laws amended as of October 1, 1993 as
filed as an exhibit to Form 10-K for the year ended December 31,
1993 and incorporated herein by reference, and By-Laws amended as
of April 1, 1999 as filed as an exhibit to Form 10-K/A for the
year ended December 31, 1998 and incorporated herein by
reference.
(4) Instruments defining the rights of security holders, including
indentures (see Article Four of Certificate of Incorporation).
(9) Not applicable.
(10) Material Contracts
(a) Investment Management Agreements, Distribution Agreements,
Plans of Distribution ("12b-1 Plans") and Shareholder
Administration Agreements between subsidiaries of the
Company and the Funds and Non-Exclusive License Agreements
between the Company and the Funds:
<TABLE>
<CAPTION>
Shareholder Non-Exclusive
Management Distribution 12b-1 Administration License
Fund Agreement Agreement Plan Agreement Agreement
<S> <C> <C> <C> <C> <C>
(i) Dollar Reserves, Inc. (1) (1) (1) (2) (5)
(ii) Midas Investors Ltd. (1) (1) (1) (2) (5)
(iii) Global Income Fund, Inc. (6) - - - (5)
(iv) Midas U.S. and Overseas Fund, Ltd. (1) (1) (1) (2) (5)
(v) Midas Special Equities Fund, Inc. (1) (1) (1) (2) (5)
(vi) Tuxis Corporation (6) - - - (5)
(vii) Bexil Corporation (6) - - - (5)
(viii) Midas Fund, Inc. (3) (3) (3) (3) (5)
(ix) Midas Magic, Inc. (4) (4) (4) (4) (5)
</TABLE>
(1) Filed as exhibits to Form 10-K for the year ended
December 31, 1993 and incorporated herein by reference.
(2) Filed as exhibits to Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference.
(3) Filed as exhibits to Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference.
(4) Filed as exhibits to Form 10-K for the year ended
December 31, 1996 and incorporated herein by reference.
40
(5) Filed as exhibits to Form 10-K for the year ended
December 31, 1997 and incorporated herein by reference.
(6) Filed as exhibits to Form 10-K for the year ended
December 31, 1999 and filed herein.
(b) Bull & Bear Group, Inc. 1995 Long-Term Incentive Plan, as
adopted December 6, 1995 and amended February 6, 1996, filed
as exhibit to Form 10-K for the year ended December 31, 1995
and incorporated herein by reference.
(c) Section 422A Incentive Stock Option Plan, as adopted
December 5, 1990, filed as exhibit to Form 10-K for the year
ended December 31, 1990 and incorporated herein by
reference.
(d) Investment Management Transfer Agreements between the
investment management subsidiaries of the Company and filed
as exhibit to Form 10-K for the year ended December 31, 1992
and incorporated herein by reference.
(e) Bull & Bear Investment Plan, filed as an exhibit to Form
10-K for the year ended December 31, 1993 and incorporated
herein by reference.
(f) Death Benefit Agreement dated July 22, 1994 and filed as
exhibit to Form 10-K for the year ended December 31, 1994
and incorporated herein by reference.
(g) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees- Bassett S. Winmill filed as an exhibit to Form
10-K for the year ended December 31, 1995 and incorporated
herein by reference.
(h) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees- Robert D. Anderson filed as an exhibit to Form
10-K for the year ended December 31, 1995 and incorporated
herein by reference.
(i) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees- Mark C. Winmill filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and incorporated herein
by reference.
(j) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees- Thomas B. Winmill filed as an exhibit to Form
10-K for the year ended December 31, 1995 and incorporated
herein by reference.
(k) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees- Steven A. Landis filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and incorporated herein
by reference.
(l) Bull & Bear Group, Inc. Stock Option Agreement - Edward G.
Webb, Jr. filed as an exhibit to Form 10-K for the year
ended December 31, 1995 and incorporated herein by
reference.
(m) Bull & Bear Group, Inc. Stock Option Agreement - Charles A.
Carroll filed as an exhibit to Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference.
41
(n) Bull & Bear Group, Inc. 1995 Long-Term Incentive Plan, (as
Amended and Restated as of October 29, 1997), filed as
exhibit to Form 10-K for the year ended December 31, 1997
and incorporated herein by reference.
(o) Option Certificate for Bassett S. Winmill filed as an
exhibit to Form 10-K for the year ended December 31, 1997
and incorporated herein by reference.
(p) Option Certificate for Edward G. Webb, Jr. filed as an
exhibit to Form 10-K for the year ended December 31, 1997
and incorporated herein by reference.
(q) Option Certificate for Charles A. Carroll filed as an
exhibit to Form 10-K for the year ended December 31, 1997
and incorporated herein by reference.
(r) Option Certificate for Thomas B. Winmill filed as an exhibit
to Form 10-K for the year ended December 31, 1997 and
incorporated herein by reference.
(s) Option Certificate for Robert D. Anderson filed as an
exhibit to Form 10-K for the year ended December 31, 1997
and incorporated herein by reference.
(t) Purchase Agreement, dated as of December 17, 1998, by and
among Bull & Bear Group, Inc., Bull & Bear Securities, Inc.
and RBC Holdings (USA) Inc., with all exhibits thereto filed
as an exhibit to Form 8-K on December 18, 1998 and
incorporated herein by reference.
(11) Statement Regarding Computation of Per Share Earnings
(12) Not applicable.
(13) Not applicable.
(16) Not applicable.
(18) Not applicable.
(21) Wholly-Owned Subsidiaries of the Company
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Not applicable.
(28) Not applicable.
(99) Not applicable.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the last
quarter of the period covered by this report.
42
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
Formerly BULL & BEAR GROUP, INC.
March 30, 2000 By: /s/ Joseph Leung
Joseph Leung
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.
March 30, 2000 By: /s/ Bassett S. Winmill
Bassett S. Winmill,
Chairman of the Board, Director
March 30, 2000 By: /s/ Robert D. Anderson
Robert D. Anderson,
Vice Chairman, Director
March 30, 2000 By: /s/ Thomas B. Winmill
Thomas B. Winmill, Esq.
President, General Counsel,
Director
March 30, 2000 By: /s/ Edward G. Webb, Jr.
Edward G. Webb, Jr.
Director
March 30, 2000 By:
Charles A. Carroll,
Director
March 30, 2000 By: /s/ Mark C. Jones
Mark C. Jones,
Director
43
INDEX TO EXHIBITS
(3) Exhibits
(10) Material Contracts
(a) Investment Management Agreement between Bexil Corporation
and CEF Advisers, Inc.
(b) Investment Management Agreement between Global Income Fund,
Inc. and CEF Advisers, Inc.
(c) Investment Management Agreement between Tuxis Corporation
and CEF Advisers, Inc.
(11) Statement Regarding Computation of Per Share Earnings
(21) Wholly-Owned Subsidiaries of the Company
44
EXHIBIT 10(a)
ITEM 1 OF 1
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made on March 8, 2000, by and between BEXIL CORPORATION, a Maryland
corporation (the "Fund") and CEF ADVISERS, INC., a Delaware corporation (the
"Investment Manager").
WHEREAS the Fund intends to register under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closed-end management investment company; and
WHEREAS, the Fund desires to retain the Investment Manager to furnish certain
investment advisory and portfolio management services to the Fund, and the
Investment Manager desires to furnish such services;
NOW THEREFORE, in consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is hereby agreed between the parties hereto as follows:
1. The Fund hereby employs the Investment Manager to manage the investment and
reinvestment of its assets, including the regular furnishing of advice with
respect to the Fund's portfolio transactions subject at all times to the
control and oversight of the Fund's Board of Directors, for the period and
on the terms set forth in this Agreement. The Investment Manager hereby
accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth, for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Fund in any way, or otherwise be deemed an agent of the Fund.
2. The Fund assumes and shall pay all the expenses required for the conduct of
its business including, but not limited to, salaries of administrative and
clerical personnel, brokerage commissions, taxes, insurance, fees of the
transfer agent, custodian, legal counsel and auditors, association fees,
costs of filing, printing and mailing proxies, reports and notices to
shareholders, preparing, filing and printing the prospectus and statement
of additional information, payment of dividends, costs of stock
certificates, costs of shareholders meetings, fees of the independent
directors, necessary office space rental, all expenses relating to the
registration or qualification of shares of the Fund under applicable Blue
Sky laws and reasonable fees and expenses of counsel in connection with
such registration and qualification and such non-recurring expenses as may
arise, including, without limitation, actions, suits or proceedings
affecting the Fund and the legal obligation which the Fund may have to
indemnify its officers and directors with respect thereto.
3. If requested by the Fund's Board of Directors, the Investment Manager may
provide other services to the Fund such as, without limitation, the
functions of billing, accounting, certain shareholder communications and
services, administering state and Federal registrations, filings and
controls and other administrative services. Any services so requested and
performed will be for the account of the Fund and the costs of the
Investment Manager in rendering such services shall be reimbursed by the
Fund, subject to examination by those directors of the Fund who are not
interested persons of the Investment Manager or any affiliate thereof. 4.
The services of the Investment Manager are not to be deemed exclusive, and
the Investment Manager shall be free to render similar services to others
in addition to the Fund so long as its services hereunder are not impaired
thereby.
45
5. The Investment Manager shall create and maintain all necessary books and
records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940
Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the investment management services performed by it hereunder
and not otherwise created and maintained by another party pursuant to a
written contract with the Fund. Where applicable, such records shall be
maintained by the Investment Manager for the periods and in the places
required by Rule 31a-2 under the 1940 Act. The books and records pertaining
to the Fund which are in the possession of the Investment Manager shall be
the property of the Fund. The Fund, or the Fund's authorized
representatives, shall have access to such books and records at all times
during the Investment Manager's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided
by the Investment Manager to the Fund or the Fund's authorized
representatives.
6. As compensation for its services provided pursuant to this Agreement, the
Fund will pay to the Investment Manager a fee from its assets, such fee to
be computed weekly and paid monthly in arrears at the annual rate of 0.70%
of the first $250 million, 0.625% from $250 million to $500 million, and
0.50% over $500 million of the Fund's net assets. If this Agreement becomes
effective or terminates before the end of any month, the fee for the period
from the effective date to the end of the month or from the beginning of
such month to the date of termination, as the case may be, shall be
protected according to the proportion which such period bears to the full
month in which such effectiveness or termination occurs.
7. The Investment Manager shall direct portfolio transactions to
broker/dealers for execution on terms and at rates which it believes, in
good faith, to be reasonable in view of the overall nature and quality of
services provided by a particular broker/dealer, including brokerage and
research services and sales of shares of the Fund and shares of the other
funds in the Midas fund complex. The Investment Manager may also allocate
portfolio transactions to broker/dealers that remit a portion of their
commissions as a credit against Fund expenses. With respect to brokerage
and research services, the Investment Manager may consider in the selection
of broker/dealers brokerage or research provided and payment may be made of
a fee higher than that charged by another broker/dealer which does not
furnish brokerage or research services or which furnishes brokerage or
research services deemed to be of lesser value, so long as the criteria of
Section 28(e) of the Securities Exchange Act of 1934, as amended, or other
applicable laws are met. Although the Investment Manager may direct
portfolio transactions without necessarily obtaining the lowest price at
which such broker/dealer, or another, may be willing to do business, the
Investment Manager shall seek the best value for the Fund on each trade
that circumstances in the market place permit, including the value inherent
in on-going relationships with quality brokers. To the extent any such
brokerage or research services may be deemed to be additional compensation
to the Investment Manager from the Fund, it is authorized by this
Agreement. The Investment Manager may place brokerage for the Fund through
an affiliate of the Investment Manager, provided that: the Fund not deal
with such affiliate in any transaction in which such affiliate acts as
principal; the commissions, fees or other remuneration received by such
affiliate be reasonable and fair compared to the commissions, fees or other
remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time; and such brokerage
be undertaken in compliance with applicable law. The Investment Manager's
fees under this Agreement shall not be reduced by reason of any
commissions, fees or other remuneration received by such affiliate from the
Fund.
8. The Investment Manager shall waive all or part of its fee or reimburse the
Fund monthly if and to the extent the aggregate operating expenses of the
Fund exceed the most restrictive limit imposed by any state in which shares
of the Fund are qualified for sale. In calculating the limit of operating
expenses, all expenses excludable under state regulation or otherwise shall
be excluded. If this Agreement is in effect for less than all of a fiscal
year, any such limit will be applied proportionately.
46
9. Subject to and in accordance with the Articles of Incorporation and By-laws
of the Fund and of the Investment Manager, it is understood that directors,
officers, agents and shareholders of the Fund are or may be interested in
the Fund as directors, officers, shareholders and otherwise, that the
Investment Manager is or may be interested in the Fund as a shareholder or
otherwise and that the effect and nature of any such interests shall be
governed by law and by the provisions, if any, of said Articles of
Incorporation or By-laws.
10. A. This Agreement shall become effective upon the date hereinabove written
provided that this Agreement shall not take effect unless it has first been
approved (i) by a vote of a majority of the Directors of the Fund who are
not parties to this Agreement, or interested persons of any such party and
(ii) by vote of the holders of a majority of the Fund's outstanding voting
securities.
B. Unless sooner terminated as provided herein, this Agreement shall
continue in effect for one year from the above written date.
Thereafter, if not terminated, this Agreement shall continue
automatically for successive periods of twelve months each, provided
that such continuance is specifically approved at least annually (i)
by a vote of a majority of the Directors of the Fund who are not
parties to this Agreement, or interested persons of any such party and
(ii) by the Board of Directors of the Fund by the vote of the holders
of a majority of the outstanding voting securities of the Fund.
C. This Agreement may be terminated without penalty at any time either by
vote of the Board of Directors of the Fund or by vote of the holders
of a majority of the Fund's outstanding voting securities on 60 days'
written notice to the Investment Manager, or by the Investment Manager
on 60 days' written notice to the Fund. This Agreement shall
immediately terminate in the event of its assignment.
11. The Investment Manager shall not be liable to the Fund or any shareholder
of the Fund for any error of judgment or mistake of law or for any loss
suffered by the Fund or the Fund's shareholders in connection with the
matters to which this Agreement relates, but nothing herein contained shall
be construed to protect the Investment Manager against any liability to the
Fund or the Fund's shareholders by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties or by reason of
its reckless disregard of obligations and duties under this Agreement.
12. As used in this Agreement, the terms "interested person," "assignment," and
"majority of the outstanding voting securities" shall have the meanings
provided therefor in the 1940 Act, and the rules and regulations
thereunder.
13. This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement, with respect to the subject hereof
whether oral or written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency, decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
14. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, provided, however, that nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or
regulation promulgated thereunder.
47
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
ATTEST: BEXIL CORPORATION
_/s/Cory McClure By:/s/Thomas Winmill
ATTEST: CEF ADVISERS, INC.
_/s/Cory McClure By:/s/Joe Leung
48
EXHIBIT 10(b)
ITEM 1 OF 1
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 8th day of March, 2000, by and between GLOBAL INCOME
FUND, INC. a Maryland corporation (the "Fund") and CEF ADVISERS, INC., a
Delaware corporation (the "Investment Manager").
WHEREAS the Fund intends to register under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closedend management investment company; and
WHEREAS, the Fund desires to retain the Investment Manager to furnish certain
investment advisory and portfolio management services to the Fund, and the
Investment Manager desires to furnish such services;
NOW THEREFORE, in consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is hereby agreed between the parties hereto as
follows:
1. TheFund hereby employs the Investment Manager to manage the investment and
reinvestment of its assets, including the regular furnishing of advice with
respect to the Fund's portfolio transactions subject at all times to the
control and oversight of the Fund's Board of Directors, for the period and
on the terms set forth in this Agreement. The Investment Manager hereby
accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth, for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Fund in any way, or otherwise be deemed an agent of the Fund.
2. The Fund assumes and shall pay all the expenses required for the conduct of
its business including, but not limited to, salaries of administrative and
clerical personnel, brokerage commissions, taxes, insurance, fees of the
transfer agent, custodian, legal counsel and auditors, association fees,
costs of filing, printing and mailing proxies, reports and notices to
shareholders, preparing, filing and printing the prospectus and statement
of additional information, payment of dividends, costs of stock
certificates, costs of shareholders meetings, fees of the independent
directors, necessary office space rental, all expenses relating to the
registration or qualification of shares of the Fund under applicable Blue
Sky laws and reasonable fees and expenses of counsel in connection with
such registration and qualification and such nonrecurring expenses as may
arise, including, without limitation, actions, suits or proceedings
affecting the Fund and the legal obligation which the Fund may have to
indemnify its officers and directors with respect thereto.
3. If requested by the Fund's Board of Directors, the Investment Manager may
provide other services to the Fund such as, without limitation, the
functions of billing, accounting, certain shareholder communications and
services, administering state and Federal registrations, filings and
controls and other administrative services. Any services so requested and
performed will be for the account of the Fund and the costs of the
Investment Manager in rendering such services shall be reimbursed by the
Fund, subject to examination by those directors of the Fund who are not
interested persons of the Investment Manager or any affiliate thereof.
4. The services of the Investment Manager are not to be deemed exclusive, and
the Investment Manager shall be free to render similar services to others
in addition to the Fund so long as its services hereunder are not impaired
thereby.
49
5. The Investment Manager shall create and maintain all necessary books and
records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940
Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the investment management services performed by it hereunder
and not otherwise created and maintained by another party pursuant to a
written contract with the Fund. Where applicable, such records shall be
maintained by the Investment Manager for the periods and in the places
required by Rule 31a2 under the 1940 Act. The books and records pertaining
to the Fund which are in the possession of the Investment Manager shall be
the property of the Fund. The Fund, or the Fund's authorized
representatives, shall have access to such books and records at all times
during the Investment Manager's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided
by the Investment Manager to the Fund or the Fund's authorized
representatives.
6. As compensation for its services, with respect to the Fund the Investment
Manager will be paid by the Fund a fee payable monthly, based on the
average weekly net assets of the Fund, and computed at the annual rate of
7/10 of 1% of the first $250 million, 5/8 of 1% of from $250 million to
$500 million, and of 1% over $500 million. The aggregate net assets for
each day shall be computed by subtracting the liabilities of the Fund from
the value of its assets, such amount to be computed as of the calculation
of the net asset values per share on each business day.
7.The Investment Manager shall direct portfolio transactions
to broker/dealers for execution on terms and at rates which it believes, in
good faith, to be reasonable in view of the overall nature and quality of
services provided by a particular broker/dealer, including brokerage and
research services and sales of shares of the Fund and shares of the other
funds in the Midas fund complex. The Investment Manager may also allocate
portfolio transactions to broker/dealers that remit a portion of their
commissions as a credit against Fund expenses. With respect to brokerage
and research services, the Investment Manager may consider in the selection
of broker/dealers brokerage or research provided and payment may be made of
a fee higher than that charged by another broker/dealer which does not
furnish brokerage or research services or which furnishes brokerage or
research services deemed to be of lesser value, so long as the criteria of
Section 28(e) of the Securities Exchange Act of 1934, as amended, or other
applicable laws are met. Although the Investment Manager may direct
portfolio transactions without necessarily obtaining the lowest price at
which such broker/dealer, or another, may be willing to do business, the
Investment Manager shall seek the best value for the Fund on each trade
that circumstances in the market place permit, including the value inherent
in ongoing relationships with quality brokers. To the extent any such
brokerage or research services may be deemed to be additional compensation
to the Investment Manager from the Fund, it is authorized by this
Agreement. The Investment Manager may place brokerage for the Fund through
an affiliate of the Investment Manager, provided that: the Fund not deal
with such affiliate in any transaction in which such affiliate acts as
principal; the commissions, fees or other remuneration received by such
affiliate be reasonable and fair compared to the commissions, fees or other
remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time; and such brokerage
be undertaken in compliance with applicable law. The Investment Manager's
fees under this Agreement shall not be reduced by reason of any
commissions, fees or other remuneration received by such affiliate from the
Fund.
8. The Investment Manager shall waive all or part of its fee or reimburse the
Fund monthly if and to the extent the aggregate operating expenses of the
Fund exceed the most restrictive limit imposed by any state in which shares
of the Fund are qualified for sale. In calculating the limit of operating
expenses, all expenses excludable under state regulation or otherwise shall
be excluded. If this Agreement is in effect for less than all of a fiscal
year, any such limit will be applied proportionately.
50
9. Subject to and in accordance with the Articles of Incorporation and Bylaws
of the Fund and of the Investment Manager, it is understood that directors,
officers, agents and shareholders of the Fund are or may be interested in
the Fund as directors, officers, shareholders and otherwise, that the
Investment Manager is or may be interested in the Fund as a shareholder or
otherwise and that the effect and nature of any such interests shall be
governed by law and by the provisions, if any, of said Articles of
Incorporation or Bylaws.
10. A.This Agreement shall become effective upon the date hereinabove written
and, unless sooner terminated as provided herein, this Agreement shall
continue in effect for one year from the above written date. Thereafter, if
not terminated, this Agreement shall continue automatically for successive
periods of twelve months each, provided that such continuance is
specifically approved at least annually (a) by a vote of a majority of the
Directors of the Fund or by vote of the holders of a majority of the Fund's
outstanding voting securities of the Fund as defined in the 1940 Act and
(b) by a vote of a majority of the Directors of the Fund who are not
parties to this Agreement, or interested persons of such party. This
Agreement may be terminated without penalty at any time either by vote of
the Board of Directors of the Fund or by a vote of the holders of a
majority of the outstanding voting securities of the Fund on 60 days
written notice to the Investment Manager, or by the Investment Manager on
60 days written notice to the Fund. This Agreement shall immediately
terminate in the event of its assignment.
11. The Investment Manager shall not be liable to the Fund or any shareholder
of the Fund for any error of judgment or mistake of law or for any loss
suffered by the Fund or the Fund's shareholders in connection with the
matters to which this Agreement relates, but nothing herein contained shall
be construed to protect the Investment Manager against any liability to the
Fund or the Fund's shareholders by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties or by reason of
its reckless disregard of obligations and duties under this Agreement.
12. As used in this Agreement, the terms "interested person," "assignment," and
"majority of the outstanding voting securities" shall have the meanings
provided therefor in the 1940 Act, and the rules and regulations
thereunder.
13. This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement, with respect to the subject hereof
whether oral or written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency, decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
14. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, provided, however, that nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or
regulation promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
ATTEST: GLOBAL INCOME FUND, INC.
_/s/Cory McClure By:/s/Thomas Winmil
ATTEST: CEF ADVISERS, INC.
_/s/Cory McClure By:/s/Joe Leung
51
EXHIBIT 10(c)
ITEM 1 OF 1
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made on March 8, 2000, by and between TUXIS CORPORATION, a Maryland
corporation (the "Fund") and CEF ADVISERS, INC., a Delaware corporation (the
"Investment Manager")
WHEREAS the Fund intends to register under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closedend management investment company; and
WHEREAS, the Fund desires to retain the Investment Manager to furnish certain
investment advisory and portfolio management services to the Fund, and the
Investment Manager desires to furnish such services;
NOW THEREFORE, in consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is hereby agreed between the parties hereto as follows:
1. The Fund hereby employs the Investment Manager to manage the investment and
reinvestment of its assets, including the regular furnishing of advice with
respect to the Fund's portfolio transactions subject at all times to the
control and oversight of the Fund's Board of Directors, for the period and
on the terms set forth in this Agreement. The Investment Manager hereby
accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth, for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Fund in any way, or otherwise be deemed an agent of the Fund.
2. The Fund assumes and shall pay all the expenses required for the conduct of
its business including, but not limited to, salaries of administrative and
clerical personnel, brokerage commissions, taxes, insurance, fees of the
transfer agent, custodian, legal counsel and auditors, association fees,
costs of filing, printing and mailing proxies, reports and notices to
shareholders, preparing, filing and printing the prospectus and statement
of additional information, payment of dividends, costs of stock
certificates, costs of shareholders meetings, fees of the independent
directors, necessary office space rental, all expenses relating to the
registration or qualification of shares of the Fund under applicable Blue
Sky laws and reasonable fees and expenses of counsel in connection with
such registration and qualification and such nonrecurring expenses as may
arise, including, without limitation, actions, suits or proceedings
affecting the Fund and the legal obligation which the Fund may have to
indemnify its officers and directors with respect thereto.
3. If requested by the Fund's Board of Directors, the Investment Manager may
provide other services to the Fund such as, without limitation, the
functions of billing, accounting, certain shareholder communications and
services, administering state and Federal registrations, filings and
controls and other administrative services. Any services so requested and
performed will be for the account of the Fund and the costs of the
Investment Manager in rendering such services shall be reimbursed by the
Fund, subject to examination by those directors of the Fund who are not
interested persons of the Investment Manager or any affiliate thereof.
4. The services of the Investment Manager are not to be deemed exclusive, and
the Investment Manager shall be free to render similar services to others
in addition to the Fund so long as its services hereunder are not impaired
thereby.
52
5. The Investment Manager shall create and maintain all necessary books and
records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940
Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the investment management services performed by it hereunder
and not otherwise created and maintained by another party pursuant to a
written contract with the Fund. Where applicable, such records shall be
maintained by the Investment Manager for the periods and in the places
required by Rule 31a2 under the 1940 Act. The books and records pertaining
to the Fund which are in the possession of the Investment Manager shall be
the property of the Fund. The Fund, or the Fund's authorized
representatives, shall have access to such books and records at all times
during the Investment Manager's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided
by the Investment Manager to the Fund or the Fund's authorized
representatives.
6. As compensation for its services provided pursuant to this Agreement, the
Fund will pay to the Investment Manager a fee from its assets, such fee to
be computed weekly and paid monthly in arrears at the annual rate of 0.60%
of the first $500 million and 0.50% over $500 million of the Fund's net
assets. If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as
the case may be, shall be protected according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
7. The Investment Manager shall direct portfolio transactions to
broker/dealers for execution on terms and at rates which it believes, in
good faith, to be reasonable in view of the overall nature and quality of
services provided by a particular broker/dealer, including brokerage and
research services and sales of shares of the Fund and shares of the other
funds in the Midas fund complex. The Investment Manager may also allocate
portfolio transactions to broker/dealers that remit a portion of their
commissions as a credit against Fund expenses. With respect to brokerage
and research services, the Investment Manager may consider in the selection
of broker/dealers brokerage or research provided and payment may be made of
a fee higher than that charged by another broker/dealer which does not
furnish brokerage or research services or which furnishes brokerage or
research services deemed to be of lesser value, so long as the criteria of
Section 28(e) of the Securities Exchange Act of 1934, as amended, or other
applicable laws are met. Although the Investment Manager may direct
portfolio transactions without necessarily obtaining the lowest price at
which such broker/dealer, or another, may be willing to do business, the
Investment Manager shall seek the best value for the Fund on each trade
that circumstances in the market place permit, including the value inherent
in ongoing relationships with quality brokers. To the extent any such
brokerage or research services may be deemed to be additional compensation
to the Investment Manager from the Fund, it is authorized by this
Agreement. The Investment Manager may place brokerage for the Fund through
an affiliate of the Investment Manager, provided that: the Fund not deal
with such affiliate in any transaction in which such affiliate acts as
principal; the commissions, fees or other remuneration received by such
affiliate be reasonable and fair compared to the commissions, fees or other
remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time; and such brokerage
be undertaken in compliance with applicable law. The Investment Manager's
fees under this Agreement shall not be reduced by reason of any
commissions, fees or other remuneration received by such affiliate from the
Fund.
8. The Investment Manager shall waive all or part of its fee or reimburse the
Fund monthly if and to the extent the aggregate operating expenses of the
Fund exceed the most restrictive limit imposed by any state in which shares
of the Fund are qualified for sale. In calculating the limit of operating
expenses, all expenses excludable under state regulation or otherwise shall
be excluded. If this Agreement is in effect for less than all of a fiscal
year, any such limit will be applied proportionately.
53
9. Subject to and in accordance with the Articles of Incorporation and Bylaws
of the Fund and of the Investment Manager, it is understood that directors,
officers, agents and shareholders of the Fund are or may be interested in
the Fund as directors, officers, shareholders and otherwise, that the
Investment Manager is or may be interested in the Fund as a shareholder or
otherwise and that the effect and nature of any such interests shall be
governed by law and by the provisions, if any, of said Articles of
Incorporation or Bylaws.
10. A.This Agreement shall become effective upon the date hereinabove written
provided that this Agreement shall not take effect unless it has first been
approved (i) by a vote of a majority of the Directors of the Fund who are
not parties to this Agreement, or interested persons of any such party and
(ii) by vote of the holders of a majority of the Fund's outstanding voting
securities.
B. Unless sooner terminated as provided herein, this Agreement shall
continue in effect for one year from the above written date.
Thereafter, if not terminated, this Agreement shall continue
automatically for successive periods of twelve months each, provided
that such continuance is specifically approved at least annually (i)
by a vote of a majority of the Directors of the Fund who are not
parties to this Agreement, or interested persons of any such party and
(ii) by the Board of Directors of the Fund by the vote of the holders
of a majority of the outstanding voting securities of the Fund.
C. This Agreement may be terminated without penalty at any time either by
vote of the Board of Directors of the Fund or by vote of the holders
of a majority of the Fund's outstanding voting securities on 60 days'
written notice to the Investment Manager, or by the Investment Manager
on 60 days' written notice to the Fund. This Agreement shall
immediately terminate in the event of its assignment.
11. The Investment Manager shall not be liable to the Fund or any shareholder
of the Fund for any error of judgment or mistake of law or for any loss
suffered by the Fund or the Fund's shareholders in connection with the
matters to which this Agreement relates, but nothing herein contained shall
be construed to protect the Investment Manager against any liability to the
Fund or the Fund's shareholders by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties or by reason of
its reckless disregard of obligations and duties under this Agreement.
12. As used in this Agreement, the terms "interested person," "assignment," and
"majority of the outstanding voting securities" shall have the meanings
provided therefor in the 1940 Act, and the rules and regulations
thereunder.
13. This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement, with respect to the subject hereof
whether oral or written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency, decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
14. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, provided, however, that nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or
regulation promulgated thereunder.
54
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
ATTEST: TUXIS CORPORATION
_/s/Cory McClure By:/s/Thomas Winmill
ATTEST: CEF ADVISERS, INC.
_/s/Cory McClure By:/s/Joe Leung
55
Exhibit 11 -Statement Regarding Computation of Per Share Earnings
<TABLE>
<CAPTION>
1999 1998 1997
Basic Diluted Basic Diluted Basic Diluted
<S> <C> <C> <C> <C> <C> <C>
Weighted average common
shares outstanding 1,655,017 1,655,017 1,391,940 1,391,940 1,370,017 1,370,017
Weighted average common
shares issuable upon
exercise of stock options
under the treasury stock
method - 25,740 - 61,532 - 98,235
Weighted average common
shares issuable upon
exercise of warrants under
the treasury stock method - - - - - -
Weighted average common
shares and common share
equivalents utilized for
earnings per share
computation 1,655,017 1,680,757 1,391,940 1,453,472 1,370,017 1,468,252
</TABLE>
56
Exhibit 21 - Wholly-Owned Subsidiaries of the Company
CEF Advisers, Inc.,
a Delaware corporation
Hanover Direct Advertising Company, Inc.,
a Delaware corporation
Investor Service Center, Inc.,
a Delaware corporation
Midas Management Corporation,
a Delaware corporation
Performance Properties, Inc.,
a Delaware corporation
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Winmill & Co. Incorporated Form 10-K and is qualified in its entirety by
references to such form 10-K.
</LEGEND>
<CIK> 0000052234
<NAME> Winmill & Co. Incorporated
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Dec-31-1999
<CASH> 2,560,093
<SECURITIES> 4,600,928
<RECEIVABLES> 316,229
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,606,212
<PP&E> 899,602
<DEPRECIATION> 796,900
<TOTAL-ASSETS> 10,090,029
<CURRENT-LIABILITIES> 2,251,394
<BONDS> 0
0
0
<COMMON> 16,551
<OTHER-SE> 7,822,084
<TOTAL-LIABILITY-AND-EQUITY> 10,090,029
<SALES> 0
<TOTAL-REVENUES> 3,300,920
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,213,892
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 87,028
<INCOME-TAX> 38,252
<INCOME-CONTINUING> 48,776
<DISCONTINUED> 2,479,865
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,528,641
<EPS-BASIC> 1.53
<EPS-DILUTED> 1.51
</TABLE>
