FRMO Corp. Announces Fiscal 2023 First Quarter Results and Conference Call

FRMO Corp. (the “Company” or “FRMO”) (OTC Pink: FRMO) today reported its financial results for the 2023 first quarter ended August 31, 2022.

Financial Highlights

FRMO’s total book value as of August 31, 2022 was $345.9 million ($7.86 per share on a fully diluted basis), including $157.0 million of non-controlling interests. Book value for the same period, excluding the non-controlling interests was $188.9 million ($4.29 per share). This compares with total book value at the prior fiscal year end on May 31, 2022 of $314.3 million ($7.14 per share), including $132.9 million of non-controlling interests. Book value for the same period, excluding the non-controlling interests was $181.4 million ($4.12 per share). Current assets, comprised primarily of cash and equivalents and equity securities, amounted to $255.4 million as of August 31, 2022, and $223.8 million as of May 31, 2022. Total liabilities were $25.3 million as of August 31, 2022, and $23.9 million as of May 31, 2022, comprised primarily of securities sold, not yet purchased and deferred taxes.

FRMO’s net income attributable to the Company for the quarter ended August 31, 2022 rose to $7,478,672, or $0.17 per share, compared to $960,717, or $0.02 per share, a year earlier.

FRMO’s net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities net of taxes for the three months ended August 31, 2022 was $97,166 ($0.00 per diluted share) compared to $1,303,002 ($0.03 per diluted share) for the three months ended August 31, 2021.

Net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities net of taxes is a measure not based on GAAP and is defined and reconciled to the most directly comparable GAAP measures in “Information Regarding Non-GAAP Measures” at the end of this release.

Valuation of securities and cryptocurrencies are subject to change after August 31, 2022. The market value of several securities and cryptocurrencies might have changed substantially since that date. We look forward to finding new ways to expand our cryptocurrency mining operations.

As of August 31, 2022 and May 31, 2022, the Company held a 21.85% and 21.88% equity interest in Horizon Kinetics Hard Assets LLC (“HKHA”), a company formed by Horizon Kinetics LLC and certain officers, principal stockholders, and directors of FRMO Corp. (“the Company”). Due to the common control and ownership between HKHA and the Company’s principal stockholders and directors, HKHA has been consolidated within the Company’s financial statements. The noncontrolling interest of 78.15% and 78.12% in HKHA has been eliminated from results of operations for the periods ended August 31, 2022 and May 31, 2022.

Further details are available in the Company’s Consolidated Financial Statements for the quarter ended August 31, 2022. These statements have been filed on the OTC Markets Group Disclosure and News Services, which may be accessed at www.otcmarkets.com/stock/FRMO/filings. These documents are also available on the FRMO website at www.frmocorp.com.

Conference Call

Murray Stahl, Chairman and CEO, and Steven Bregman, President and CFO, will host a conference call on Tuesday, October 18, 2022 at 4:15 p.m. ET. Only questions submitted to info@frmocorp.com before 1:oo p.m. on the day of the call will be considered. The call can be accessed by dialing 877-502-9276 (domestic toll free), or +1-313-209-4906 (international toll) and entering the following Confirmation Code: 9128763. A replay will be available from 7:15 P.M. on the day of the teleconference until November 18, 2022. To listen to the archived call, use the following link: https://event.webcasts.com/starthere.jsp?ei=1576797&tp_key=8dfa0cc6b2

The replay passcode is 9128763.

Condensed Consolidated Balance Sheets
(in thousands)

August 31,

May 31,

2022

2022

(Unaudited)
Assets
Current Assets:
Cash and cash equivalents

$

36,022

$

33,289

Equity securities, at fair value

 

217,031

 

187,386

Other current assets

 

2,384

 

3,083

Total Current Assets

 

255,437

 

223,758

Investment in limited partnerships and other equity investments, at fair value

84,836

82,630

Investments in securities exchanges

 

4,815

 

4,815

Other assets

 

2,076

 

2,177

Investment in Horizon Kinetics LLC

 

13,898

 

14,702

Participation in Horizon Kinetics LLC revenue stream

 

10,200

 

10,200

Total Assets

$

371,262

$

338,282

 
Liabilities and Stockholders' Equity
Current Liabilities:
Securities sold, not yet purchased

$

2,068

$

2,573

Other current liabilities

 

183

 

212

Total Current Liabilities

 

2,251

 

2,785

Deferred Tax Liability

 

22,374

 

20,470

Mortgage payable

 

692

 

700

Total Liabilities

 

25,318

 

23,955

 
Stockholders' Equity:
Stockholders' Equity Attributable to the Company

 

188,916

 

181,409

Noncontrolling interests

 

157,028

 

132,919

Total Stockholders' Equity

 

345,944

 

314,327

 
Total Liabilities and Stockholders' Equity

$

371,262

$

338,282

 
(Components may not sum to totals due to rounding)
Condensed Consolidated Statements of Income (Loss)
(amounts in thousands, except share data)
Three Months Ended

August 31,

August 31,

2022

 

2021

 

(Unaudited)
Revenue:
Fees

$

760

 

$

1,117

 

Equity losses from limited partnerships and limited liability companies

 

(97

)

 

(963

)

Unrealized gains from investments

 

1,487

 

 

2,542

 

Other

 

2,418

 

 

216

 

Total revenue before unrealized gains (losses) from equity securities

 

4,568

 

 

2,912

 

Unrealized gains (losses) from equity securities

 

29,671

 

 

(7,078

)

Total Revenue

 

34,238

 

 

(4,166

)

Total Expenses

 

466

 

 

308

 

 
Income (loss) from Operations before Provision for Income Taxes

 

33,773

 

 

(4,475

)

Provision for Income Taxes

 

2,260

 

 

1,819

 

Net Income (Loss)

 

31,513

 

 

(6,294

)

Less net income (loss) attributable to noncontrolling interests

 

24,034

 

 

(7,255

)

Net Income Attributable to FRMO Corporation

$

7,479

 

$

961

 

 
Diluted Net Income per Common Share

$

0.17

 

$

0.02

 

 
Weighted Average Common Shares Outstanding
Basic

 

44,017,781

 

 

44,012,781

 

Diluted

 

44,029,921

 

 

44,031,575

 

 
(Components may not sum to totals due to rounding)

About FRMO Corp.

FRMO Corp. invests in and receives revenues based upon consulting and advisory fee interests in the asset management sector.

FRMO had 44,017,781 shares of common stock outstanding as of August 31, 2022.

For more information, visit our website at www.frmocorp.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 – With the exception of historical information, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, the general economics of the financial industry, our ability to finance growth, our ability to identify and close acquisitions on terms favorable to the Company, and a sustainable market.

Further information on our risk factors is contained in our quarterly and annual reports as filed on our website www.frmocorp.com and on www.otcmarkets.com/stock/FRMO/filings.

Information Regarding Non-GAAP Measures

Net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities is net income attributable to the Company exclusive of unrealized gains (losses) from equity securities, net of tax. Net income attributable to the Company is the GAAP measure most closely comparable to net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities.

Management uses net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities, along with other measures, to gauge the Company’s performance and evaluate results, which can be skewed when including unrealized gain (loss) from equity securities, which may vary significantly between periods. Net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities is provided as supplemental information, and is not a substitute for net income attributable to the Company and does not reflect the Company’s overall profitability.

The following table reconciles the net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities to net income attributable to the Company for the periods indicated:

Three Months Ended Three Months Ended
August 31, 2022 August 31, 2021
(Unaudited) (Unaudited)
 
Amount Diluted

earnings

per

common share
Amount Diluted

earnings

per

common

share
(000’s except per common share amounts and percentages)
Net Income Attributable to the Company Excluding the Effect of Unrealized Gain (Loss) from Equity Securities and Diluted Earnings per Common Share Reconciliation:
 
Net income attributable to the Company

$

7,479

 

$

0.17

$

961

 

$

0.02

 

 
Unrealized gain (loss) from equity securities

 

29,671

 

 

(7,078

)

Unrealized gain (loss) from equity securities attributable to noncontrolling interests

 

22,160

 

 

(7,475

)

Unrealized gain from equity securities attributable to the Company

 

7,511

 

 

397

 

Tax benefit on unrealized gain (loss) from equity securities attributable to the company

 

(129

)

 

(739

)

Unrealized gain (loss) from equity securities attributable to the Company, net of taxes

 

7,382

 

$

0.17

 

(342

)

$

(0.01

)

 
Net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities

$

97

 

$

0.00

$

1,303

 

$

0.03

 

 
Weighted average diluted shares outstanding

 

44,029,921

 

 

44,031,575

 

 
(Earnings per share components may not sum to totals due to rounding)

 

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