BEXIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business and Organization

Bexil Corporation (the “Company”), a Maryland corporation, is a holding company. From 2002 until April 28, 2006, the Company’s primary holding was a fifty percent interest in York Insurance Services Group, Inc. (“York”), an insurance services company. On April 28, 2006, the Company consummated the sale of its fifty percent interest in York to a newly formed entity controlled by a private equity fund and certain other investors for approximately $39 million in cash. The Company has 11 employees, none of whom are full-time.

The Company was incorporated in 1996 under the laws of the State of Maryland as Bull & Bear U.S. Government Securities Fund, Inc., a non-diversified closed end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). In October 1996, the Company’s predecessor, a series of shares of Bull & Bear Funds II, Inc., an open end management investment company, transferred its net assets to the Company in exchange for shares of the Company. The Company changed its name to Bexil Corporation in 1999. In 2002, the Company filed an application with the Securities and Exchange Commission (the “SEC”) to terminate its registration as an investment company registered under the 1940 Act.

On January 6, 2004, the Company’s application with the SEC to terminate its registration as an investment company was granted. As a result, the Company is subject to the reporting and other requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is no longer subject to regulation under the 1940 Act. The Company’s shares are listed on the American Stock Exchange.

The information furnished in this report reflects all adjustments which are, in the opinion of management, necessary to a fair statement of the results of the period.

Basis of Presentation

The condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Specialty Hospital of Northeast Mississippi, Inc. (“Specialty”). Specialty, from inception on November 27, 2006 to June 30, 2007, was inactive and had no assets, liabilities, shareholders equity, revenues, or expenses. In 2006 and prior to the consummation of the sale of York, the Company accounted for its fifty percent interest in York using the equity method and, therefore, our financial results were not consolidated with York’s.

The unaudited interim financial information contained in these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2006, included in our Annual Report on Form 10-KSB filed with the SEC.

Cash and Cash Equivalents

Investments in money market funds and short term investments and other marketable securities maturing in 90 days or less are considered to be cash equivalents. At June 30, 2007, the Company held approximately $620,000 in money market fund investments.

Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares used in the basic earnings per share calculation plus the dilutive effect of stock options. The dilutive effect of stock options is determined using the treasury stock method, whereby exercise is assumed at the beginning of the reporting period, the proceeds from such exercise are assumed to be used to purchase common stock at the average market price during the period, and the incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) are included in the denominator of the diluted earnings per share calculation.

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The following table sets forth the computation of basic and diluted earnings per:

Stock options will have a dilutive effect under the treasury method only when the average market price of the common stock during the period exceeds the exercise price of the option.

Stock options outstanding with an exercise price higher than the average stock price for the periods presented are excluded from the calculation of diluted net income per share since the effect would have been anti-dilutive under the treasury stock method.

There were no potentially dilutive stock options excluded from the computation of diluted earnings per share for the three and six month periods ended June 30, 2007 and 2006, respectively.

The Company's method of accounting for income taxes conforms to the Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). 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.

Investment Securities, Available-for-Sale

Investment securities, available-for-sale are carried at fair value. Realized gains and losses are included in investment income based on specific identification. Unrealized gains and losses are recorded net of tax as part of accumulated other comprehensive income until realized. We regularly review investment securities for other-than-temporary impairment based on both quantitative and qualitative criteria that include the extent to which cost exceeds market value, the duration of that market decline, our intent and ability to hold to maturity or until forecasted recovery, and the financial health of and specific prospects for the issuer. Unrealized losses that are other-than-temporary are recognized in earnings. At June 30, 2007, substantially all of the value of the securities are invested in a US Treasury Note.

Reclassifications

Certain comparative amounts for the prior period have been reclassified to conform to the current period condensed consolidated financial statement presentation. Such reclassifications affected income before income taxes and equity in earnings of York.

Reporting Segment

The Company accounts for its operations in accordance with FASB Statement of Financial Accounting Standard No. 131, “Disclosures about Segments of an Enterprise and Related Information.” No segment disclosures have been made as the Company considers its business activities as a single segment.

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Stock-based Compensation

The Company accounts for stock based compensation in accordance with FASB Statement of Financial Accounting Standards No. 123R “Share-Based Payment” (“SFAS 123R”). Under SFAS 123R, stock based compensation expense reflects the fair value of stock based awards measured at grant date, is recognized over the relevant service period, and is adjusted each period for anticipated forfeitures. The compensation cost recorded for stock based compensation, which includes stock options, is based on the grant date fair value as required by SFAS 123R.

The Company has issued stock options in accordance with its 2004 Incentive Compensation Plan. All stock options granted have exercise prices equal to the market value of stock on the date of grant. Accordingly, the Company records compensation expense based on the fair value of the stock options using a Black-Scholes option pricing model. The Black-Scholes option pricing model takes into account variables such as volatility, dividend yield, and the risk-free interest rate. Although the initial fair value of stock options is not adjusted after the grant date, changes in the Company’s assumptions may change the value and, therefore, the expense related to future stock options.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain items, including the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are primarily used in the determination of equity method goodwill, investment impairment, valuation of stock-based compensation, and expenses allocation. Actual results may differ from those estimates.

Recent Accounting Pronouncements

In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement 109” (“FIN 48”) which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS 109. FIN 48 requires the Company to recognize in the financial statements, the impact of a tax position, if that position is more likely than not to be sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of our 2007 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The effect of FIN 48 had no impact on the Company’s retained earnings or 2007 income from operations.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”) to address inconsistencies in the definition and determination of fair value pursuant to generally accepted accounting principals (“GAAP”). SFAS 157 provides a single definition of fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements in an effort to increase comparability related to the recognition of market-based assets and liabilities and their impact on earnings. SFAS 157 is effective for interim financial statements issued during the fiscal year beginning after November 15, 2007.

2. SALE OF YORK INSURANCE SERVICES GROUP, INC.

On April 27, 2006, the Company’s stockholders voted to approve the sale of its fifty percent interest in York to a newly formed entity controlled by a private equity fund and certain other investors; the sale was consummated on April 28, 2006. The Company recognized a gain from the sale of $37,471,143 before taxes consisting of the cash proceeds paid by the buyer of $38,864,121 plus a consulting fee and expense reimbursement received from York of $138,500 less the Company’s carrying value in York of $1,131,478 and closing costs of $400,000. Included in compensation and benefits were bonus award payments of $1,909,228 paid to the Chief Executive Officer, Executive Chairman, and other employees upon the consumation of the sale of York in 2006. Prior to the sale, the Company’s fifty percent interest in York was accounted for using the equity method and, therefore, York’s financial results were not consolidated with ours. Summarized unaudited condensed financial information for York for the period January 1, 2006 to April 28, 2006 are as follows:

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The Company earned fees of $3,000 from York for service on York’s board of directors for the period January 1, 2006 to April 28, 2006.

In December 2005, the Company entered into an expense sharing agreement among York and the other fifty percent stockholder of York for interest and other expenses related to a bank loan obtained by and for use by York. The expense sharing agreement was limited in duration and ended in April 2006. The Company incurred expenses of approximately $168,000 and 281,000 related to the expense sharing agreement for the three and six month periods ended June 30, 2006.

3. RELATED PARTIES

Certain officers of the Company also serve as officers and/or directors of Winmill & Co. Incorporated (“Winco”), Tuxis Corporation (“Tuxis”), and their affiliates (collectively with Bexil, the “Affiliates”). At June 30, 2007, Winco’s wholly owned subsidiary, Investor Service Center, Inc., owned 222,644 shares of the Company and 234,665 shares of Tuxis, or 25% and 24%, respectively, of the outstanding common stock. Winco’s wholly owned subsidiary, Midas Management Corporation (“MMC”), acts as “master” payer of compensation and benefits of Affiliate employees. At June 30, 2007, the Company had a reimbursement payable to MMC relating to compensation and benefit expenses of $1,062.

Rent expense of jointly used office space and overhead expense for various jointly used administrative and support functions incurred by Winco are allocated to the Company and the Affiliates. The Company incurred allocated rent and overhead costs of $22,053 and $24,999 for the three months ended June 30, 2007 and 2006, respectively, and $43,471 and $49,998 for the six months ended June 30, 2007 and 2006, respectively. At June 30, 2007, the Company had a payable to Winco related to these costs of $6,724.

The Company participates in a 401(k) retirement plan for substantially all of its qualified employees. Company matching expense is based upon a percentage of contributions to the plan by eligible employees and are accrued and funded on a current basis. In 2006 and through January 31, 2007, the plan was sponsored by Winco. Matching expense to the Winco plan for the three months ended June 30, 2007 and 2006 was $0 and $2,733, respectively, and $12,218 and $12,782 for the six months ended June 30, 2007 and 2006, respectively. Effective February 1, 2007, the Company began participating in a non-affiliated 401(k) plan and matching expense to the non-affiliated 401(k) plan for the three months ended June 30, 2007 and 2006 was $4,524 and $0, respectively, and $8,523 and $0, for the six months ended June 30, 2007 and 2006, respectively.

At June 30, 2007, the Company had $103,292 invested in Midas Dollar Reserves, Inc. (“MDR”), a money market fund advised by MMC and $1,605 invested in Global Income Fund, Inc. (“GIF”), a closed end investment company advised by CEF Advisers, Inc., a wholly owned subsidiary of Winco. The Company earned dividends from MDR and GIF in the aggregate of $1,049 and $25 for the three months ended June 30, 2007 and 2006, respectively, and $2,109 and $50 for the six months ended June 30, 2007 and 2006, respectively. Certain officers and directors of the Company are officers and/or directors of MDR and GIF.

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4. INVESTMENT IN SECURITIES

Investment securities at June 30, 2007, consisted of the following:

5. INCENTIVE COMPENSATION PLAN

In 2004, the Company’s shareholders approved the adoption of the 2004 Incentive Compensation Plan (the “Plan”), which provides for the granting of a maximum of 175,918 options to purchase common stock to directors, officers and key employees of the Company or its affiliates. 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 5 years. The vesting period is three years of service. Under certain conditions participants have 3 months after the employment relationship ends to exercise all vested options.

The Company accounts for the cost of its stock options under SFAS No. 123R and began recognizing compensation expense for its share-based payments based on the fair value of the awards. Share-based payments include stock option grants under the Plan. SFAS 123R requires share-based compensation expense recognized since January 1, 2006, to be based on the following: a) grant date fair value estimated in accordance with the original provisions of SFAS 123 for unvested options granted prior to the adoption date; and b) grant date fair value estimated in accordance with the provisions of SFAS 123R for unvested options granted subsequent to the adoption date. Under SFAS 123R forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate. SFAS 123R’s fair value method has resulted in additional share-based expense (affecting compensation expenses and taxes) in the amount of $44,481 and $28,540 related to stock options for the three months ended June 30, 2007 and 2006, respectively, and $75,161 and $67,144 for the six months ended June 30, 2007 and 2006, respectively. For the three months ended June 30, 2007 and 2006, this additional share-based expense lowered pre-tax earnings by $44,481 and $28,540, respectively, lowered net income by $28,468 and $15,697, respectively, and lowered basic earnings per share by $0.03 and $0.02, respectively. For the six months ended June 30, 2007 and 2006, this additional share-based expense lowered pre-tax earnings by $75,161 and $67,144, respectively, lowered net income by $48,103 and $36,929, respectively, and lowered basic earnings per share by $0.05 and $0.04, respectively.

The following schedule shows all options granted, exercised, expired, and exchanged under the Plan as of December 31, 2006.