FRMO Corp. Announces Fiscal 2024 Second Quarter Results and Conference Call

WHITE PLAINS, N.Y.--(BUSINESS WIRE)--FRMO Corp. (the “Company” or “FRMO”) (OTC Pink: FRMO) today reported its financial results for the 2024 second quarter ended November 30, 2023.

Financial Highlights

FRMO’s total book value as of November 30, 2023 was $352.2 million ($8.00 per share on a fully diluted basis), including $145.8 million of non-controlling interests. Excluding the non-controlling interests, book value was $206.4 million ($4.69 per share). This compares with total book value at the prior fiscal year end on May 31, 2023 of $284.1 million ($6.45 per share), including $114.8 million of non-controlling interests. Excluding the non-controlling interests, book value was $169.2 million ($3.85 per share).

Current assets, comprised primarily of cash and equivalents and equity securities, amounted to $247.6 million as of November 30, 2023, and $201.3 million as of May 31, 2023. Total liabilities were $27.5 million as of November 30, 2023, and $19.4 million as of May 31, 2023, comprised primarily of securities sold, not yet purchased, and deferred taxes.

For the three months ended November 30, 2023, FRMO’s net income attributable to the Company was $4,702,229 ($0.11 per diluted share), compared to $34,869,175 ($0.79 per diluted share) a year earlier. The equity security investment that accounts for the significant net income increase is identified as Investment A in Note 4 of the Interim Condensed Consolidated Financial Statements under Investment Concentration. The equity security investment that accounts for the significant component of unrealized (losses) gains from equity securities is identified as Investment A in Note 4 of the Interim Condensed Consolidated Financial Statements under Investment Concentration.

For the six months ended November 30, 2023, net income attributable to the Company was $37,032,214 ($0.84 per diluted share), compared to $42,347,847 ($0.96 per diluted share) for the six months ended November 30, 2023.

Net income attributable to the Company excluding the effect of unrealized gain from equity securities net of taxes for the three months ended November 30, 2023 was $7,587,540 ($0.17 per diluted share) compared to $12,839,570 ($0.29 per diluted share) for the three months ended November 30, 2022. The six-month figures, as of the same end dates, are $21,827,222 ($0.50 per diluted share) and $12,936,735 ($0.29 per diluted share), respectively.

Net income attributable to the Company excluding the effect of unrealized gain 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 November 30, 2023. 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 November 30, 2023 and May 31, 2023, the Company held a 21.80% equity interest in Horizon Kinetics Hard Assets LLC (“HKHA”), a company formed by Horizon Kinetics LLC (“Horizon”) and certain officers, principal stockholders and directors of the Company. The Company also holds a 4.95% interest in Horizon and earns substantially all of its advisory fees from Horizon. 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 78.20% in HKHA has been eliminated from results of operations for the periods ended November 30, 2023 and May 31, 2023.

Further details are available in the Company’s Consolidated Financial Statements for the quarter ended November 30, 2023. 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, January 16, 2024, at 4:15 p.m. Eastern Time. Only questions submitted to info@frmocorp.com before 1:00 p.m. will be considered. You may register for the conference call by clicking on the following link:

Please register for FRMO 2Q2024 Quarterly Conference Call on Jan 16, 2024 4:15 PM EST at:

https://attendee.gotowebinar.com/register/6532945585429041240

After registering, you will receive a confirmation email containing information about joining the webinar. An audio replay link will be available for 30 days from January 17 on the FRMO website (https://frmocorp.com/q_transcripts.html) until the summary transcript is posted.


Condensed Consolidated Balance Sheets
(in thousands)
	November 30,		May 31,
	2023		2023
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	39,127	$	38,077
Equity securities, at fair value		204,985		159,729
Other current assets		3,444		3,539
Total Current Assets		247,557		201,346
Investment in limited partnerships and other equity investments, at fair value		97,957		70,656
Investments in securities exchanges		7,208		4,869
Other assets		1,739		1,815
Investment in Horizon Kinetics LLC		15,080		14,608
Participation in Horizon Kinetics LLC revenue stream		10,200		10,200
Total Assets	$	379,740	$	303,494

Liabilities and Stockholders' Equity
Current Liabilities:
Securities sold, not yet purchased	$	1,291	$	2,353
Other current liabilities		939		354
Total Current Liabilities		2,230		2,707
Deferred Tax Liability		25,304		16,004
Mortgage payable		-		669
Total Liabilities		27,534		19,379

Stockholders' Equity:
Stockholders' Equity Attributable to the Company		206,438		169,283
Noncontrolling interests		145,769		114,832
Total Stockholders' Equity		352,206		284,114

Total Liabilities and Stockholders' Equity	$	379,740	$	303,494


(Components may not sum to totals due to rounding)


Condensed Consolidated Statements of Income
(amounts in thousands, except share data)
	Three Months Ended					Six Months Ended
	November 30,			November 30,		November 30,		November 30,
	2023			2022		2023		2022
	(Unaudited)					(Unaudited)
Revenue:
Fees	$	682		$	796	$	1,384	$	1,557
Equity earnings from limited partnerships and limited liability companies		1,574			904		2,343		808
Unrealized gains from investments		6,053			19,937		25,260		21,424
Other		801			483		2,154		2,899
Total revenue before unrealized (losses) gains from equity securities		9,110			22,120		31,140		26,688
Unrealized (losses) gains from equity securities		(19,645	)		84,759		47,450		114,430
Total Revenue		(10,535	)		106,880		78,590		141,118
Total Expenses		399			707		762		1,172

(Loss) Income from Operations before Provision for Income Taxes		(10,935	)		106,173		77,828		139,946
Provision for Income Taxes		1,642			9,484		9,935		11,744
Net (Loss) Income		(12,576	)		96,689		67,893		128,202
Less net (loss) income attributable to noncontrolling interests		(17,279	)		61,820		30,861		85,854
Net Income Attributable to FRMO Corporation	$	4,702		$	34,869	$	37,032	$	42,348

Diluted Net Income per Common Share	$	0.11		$	0.79	$	0.84	$	0.96

Weighted Average Common Shares Outstanding
Basic		44,022,781			44,020,968		44,022,781		44,019,366
Diluted		44,022,781			44,020,968		44,027,069		44,031,771


(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 44,022,781 shares of common stock outstanding as of November 30, 2023.

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					Six Months Ended					Six Months Ended
	November 30, 2023						November 30, 2022					November 30, 2023					November 30, 2022
	(Unaudited)						(Unaudited)					(Unaudited)					(Unaudited)

	Amount			Diluted earnings per common share			Amount			Diluted earnings per common share		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 (Loss) Gain from Equity Securities and Diluted Earnings per Common Share Reconciliation:

Net income attributable to the Company	$	4,702		$	0.11		$	34,869		$	0.79	$	37,032		$	0.84	$	42,348		$	0.96

Unrealized (loss) gain from equity securities		(19,645	)					84,759					47,450					114,430
Unrealized (loss) gain from equity securities attributable to noncontrolling interests		(17,605	)					61,571					30,193					83,732
Unrealized (loss) gain from equity securities attributable to the Company		(2,040	)					23,188					17,257					30,698
Tax benefit on unrealized (loss) gain from equity securities attributable to the company		(844	)					(1,158	)				(2,052	)				(1,287	)
Unrealized (loss) gain from equity securities attributable to the Company, net of taxes		(2,885	)	$	(0.07	)		22,030		$	0.50		15,205		$	0.35		29,411		$	0.67

Net income attributable to the Company excluding the effect of unrealized (loss) gain from equity securities	$	7,587		$	0.17		$	12,839		$	0.29	$	21,827		$	0.50	$	12,937		$	0.29

Weighted average diluted shares outstanding		44,022,781						44,020,968					44,027,069					44,031,771

	(Components may not sum to totals due to rounding)

Contacts

Thérèse Byars
Corporate Secretary
Email: tbyars@frmocorp.com
Telephone: 646-495-7337
www.frmocorp.com