Bexil Corporation (“Bexil” or the “Company”), a Maryland corporation, is a holding company primarily engaged through a wholly owned subsidiary, Bexil Advisers LLC, in investment management. Although the Company’s shares are quoted in the over-the-counter market, neither the shares nor the Company is registered or makes filings with the Securities and Exchange Commission (“SEC”) and, as a private company, Bexil is not obligated to provide information on its activities or financial results to the public. Pursuant to Maryland law, a full and complete statement of the affairs of the Company, including a balance sheet and a financial statement of operations for the most recent year ended December 31, is normally submitted at the annual meeting of stockholders, if any, and within 20 days after such meeting placed on file at the Company’s principal office.
The Company’s subsidiaries include Bexil Advisers LLC, a 100% owned investment adviser registered under the Investment Advisers Act, and Bexil Securities LLC, a 100% owned limited liability company. Bexil Advisers acts as investment manager to Dividend and Income Fund (DNIF), a closed end investment company (Stock Symbol: DNIF). DNIF is registered with the SEC under the Investment Company Act, as amended (the “Act”).
Investors are cautioned that the fund 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 companies. There are also many fund 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.
Declines in the securities markets can have a significant effect on the Company's business. Volatile stock markets may affect fees earned and/or the securities held by the Company's subsidiaries. If the market values of securities owned by DNIF or a subsidiary of the Company decline, the Company’s results will be negatively affected.
In general, investment management services are rendered to DNIF pursuant to a written contractual agreement. Such agreement relates to the general management of the affairs of DNIF, supervising the acquisition and sale of the Fund's portfolio investments and other matters. The Act requires that many important contractual agreements be initially approved by a fund's board, 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). Such agreements, if approved, typically 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, such agreements normally are subject to termination by majority vote of the board or the shareholders and are subject to automatic termination in some events. The termination of the investment management agreement between DNIF and a subsidiary of the Company may have a serious adverse impact upon the Company.
The activities of the Company’s subsidiaries and of DNIF are subject to regulation under Federal and state laws. The provisions of these laws, including those relating to the contractual arrangement with DNIF, are primarily designed to protect the shareholders of DNIF, and not the shareholders of the Company.
Moreover, the Company faces many risks, several of which are inherent in the financial services industry and the investment advisory business, and many which are specific to the Company. Investors should carefully consider the risks described below, together with all of the other information available and similar information in evaluating the Company and its common stock. If any of the risks described below actually occur, our business, results of operations, financial condition, and stock price could be materially adversely affected.We face intense competition in attracting investors and assets to manage.Investor behavior is influenced by short term investment performance of investment funds.Volatility in and disruption of the capital markets and changes in the economy may significantly affect our revenues.DNIF is subject to risks of investing in financial markets, event risk, equity and fixed income securities risks, leverage risk, economic uncertainties, and other risks described in its filings with the SEC.The historical performance of DNIF should not be considered indicative of the future results of DNIF or of any returns expected on our common stock.The investment management agreement between Bexil Advisers and DNIF can be terminated on short notice, is not freely assignable, and must be renewed annually; the loss of such agreement would reduce our revenues.The investment management agreement contains contractual requirements, and any failure to comply with such requirements could result in claims, losses, or regulatory sanctions.Industry trends and market pressure to lower our investment management agreement fees could reduce our profit margin.We depend upon key personnel to manage our business and the loss of any of their services could materially adversely affect us. Additionally, the cost to retain our key personnel could put pressure on our operating margins.We are highly dependent on various software applications and other technologies, as well as on third parties who utilize various software applications and other technologies, for our business to function properly and to safeguard confidential information; any significant limitation, failure or security breach could constrain our operations.We are exposed to legal risk and litigation, which could increase our expenses and reduce our profitability.Our business is extensively regulated and our failure to comply with regulatory requirements may harm our financial condition.Employee misconduct could harm us by impairing our ability to attract and retain investors in DNIF and by subjecting us to significant legal liability, regulatory scrutiny and reputational harmEquity markets and our common stock have historically been volatile.Our common stock has relatively limited trading volume, and ownership of a large percentage is concentrated with a small number of shareholders, which could increase the volatility in our stock trading and significantly affect our share price.Our common stock has paid no dividend recently.The Company does not make filings of its financial results with the SEC and is not obligated to make disclosures of its financial results or condition except as required by state law.The Company has sought to qualify for the OTC Pink Current Information Tier market so that its common stock is eligible for public quotations in the OTC market pursuant to Exchange Act Rule 15c2-11. There is no assurance, however, that the Company will continue to seek to so qualify or that its common stock will be eligible for public quotations in the OTC market or otherwise.Non-GAAP Financial Measures: From time to time the Company may provide investors with non-GAAP financial information, such as book value per share (collectively the "non-GAAP financial measures"). These non-GAAP financial measures are measurements of financial performance that are not prepared in accordance with U.S. generally accepted accounting principles and computational methods may differ from those used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. Management uses both GAAP and non-GAAP measures when planning, monitoring and evaluating the Company's performance. The primary purpose of using non-GAAP measures is to provide supplemental information that may prove useful to investors and to enable investors to evaluate the Company's results in the same way management does. Management believes that supplementing GAAP disclosure with non-GAAP disclosure provides investors with a more complete view of the Company's operational performance and allows for meaningful period-to-period comparisons and analysis of trends in the Company's business. Further to the extent that other companies use similar methods in calculating non-GAAP measures, the provision of supplemental non-GAAP information can allow for a comparison of the Company's relative performance against other companies that also report non-GAAP operating results.