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FRMO Corp. Announces Second Quarter Results and Conference Call

·9 min read

FRMO Corp. (the "Company" or "FRMO") (OTC Pink: FRMO) today reported its financial results for the 2021 second quarter, ended November 30, 2020 (May fiscal year).

Financial Highlights

FRMO’s book value as of November 30, 2020 was $180.1 million ($4.09 per share on a fully diluted basis), including $51.6 million of non-controlling interests. This compares with book value at the prior fiscal year ended May 31, 2020 of $161.9 million ($3.68 per share), including $46.9 million of non-controlling interests. Current assets, comprised primarily of cash and equivalents and equity securities, amounted to $111.9 million as of November 30, 2020, and $104.8 million as of May 31, 2020. Total liabilities were $15.0 million as of November 30, 2020, and $11.8 million as of May 31, 2020, comprised primarily of securities sold, not yet purchased and deferred taxes.

FRMO’s net income (loss) attributable to the Company for the three months ended November 30, 2020 was $11,671,366, or $0.27 per share, compared to $(481,719), or $(0.01) per share for the three months ended November 30, 2019.

FRMO’s net income (loss) attributable to the Company for the six months ended November 30, 2020 was $11,853,607, or $0.27 per share, compared to $(700,580), or $(0.02) per share for the six months ended November 30, 2019.

FRMO’s net income (loss) attributable to the Company excluding the effect of unrealized gain (loss) from equity securities net of taxes for the three months ended November 30, 2020 was $7,795,670 ($0.18 per diluted share) compared to $(190,203) ($0.00 per diluted share) for the three months ended November 30, 2019.

For the six months ended November 30, 2020, the figure was $10,025,116 (0.23 per diluted share) compared to $(236,087) ((0.01) per share) in 2019.

Net income (loss) attributable to the Company excluding the effect of unrealized gains (losses) 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, 2020. 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, 2020 and May 31, 2020, the Company held a 21.15% and 19.23% 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 78.85% and 80.77% in HKHA has been eliminated from results of operations for the periods ended November 30, 2020 and May 31, 2020.

Further details are available in the Company’s Condensed Consolidated Financial Statements for the quarter ended November 30, 2020. 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 Thursday, January 21, 2021 at 4:15 p.m. ET. Only questions submitted to info@frmocorp.com before 1:00 p.m. on the day of the call will be considered. The call can be accessed by dialing 800-367-2403- (domestic toll free), or +1 334-777-6978 (international toll) and entering the following conference ID: 6361035. A replay will be available from 7:15 p.m. on the day of the teleconference until February 20, 2021. To listen to the archived call, dial 888-203-1112 (domestic toll free) or +1 719-457-0820 (international toll), and enter conference ID number 6361035.

Condensed Consolidated Balance Sheets

(in thousands)

November 30,

May 31,

2020

2020

(Unaudited)

Assets

Current Assets:

Cash and cash equivalents

$

36,800

$

38,443

Equity securities, at fair value

73,496

63,836

Other current assets

1,607

2,536

Total Current Assets

111,903

104,815

Investment in limited partnerships and other

equity investments, at fair value

54,829

40,898

Investments in securities exchanges

5,061

5,061

Other assets

1,824

1,807

Investment in Horizon Kinetics LLC

11,285

10,876

Participation in Horizon Kinetics LLC revenue stream

10,200

10,200

Total Assets

$

195,102

$

173,657

Liabilities and Stockholders' Equity

Current Liabilities:

Securities sold, not yet purchased

$

4,715

$

4,136

Other current liabilities

308

185

Total Current Liabilities

5,023

4,321

Deferred Tax Liability

9,259

6,701

Mortgage payable

744

751

Total Liabilities

15,026

11,773

Stockholders' Equity:

Stockholders' Equity Attributable to the Company

128,436

114,993

Noncontrolling interests

51,640

46,891

Total Stockholders' Equity

180,076

161,884

Total Liabilities and Stockholders' Equity

$

195,102

$

173,657

Condensed Consolidated Statements of Operations

(amounts in thousands, except share data)

Three Months Ended

Six Months Ended

November 30,

November 30,

November 30,

November 30,

2020

2019

2020

2019

(Unaudited)

(Unaudited)

Revenue:

Consultancy and advisory fees

$

522

$

515

$

960

$

1,047

Equity (losses) earnings from partnerships

and limited liability companies

(147

)

(223

)

505

1,093

Unrealized gains (losses) from investments recorded at fair value

10,436

(832

)

13,340

(2,212

)

Other

(342

)

1,382

(1,706

)

1,773

Total revenue before unrealized gains (losses) from equity securities

10,469

842

13,099

1,701

Unrealized gains (losses) from equity securities recorded at fair value

11,536

1,405

5,678

(3,442

)

Total Revenue

22,005

2,247

18,777

(1,741

)

Total Expenses

310

351

724

700

Income (Loss) from Operations

21,695

1,896

18,053

(2,441

)

Provision for Income Taxes

3,462

830

4,092

2,063

Net Income (Loss)

18,233

1,066

13,961

(4,504

)

Less net income (loss) attributable to noncontrolling interests

6,562

1,548

2,107

(3,803

)

Net Income (Loss) Attributable to FRMO Corporation

$

11,671

$

(482

)

$

11,854

$

(701

)

Diluted Net Income (Loss) per Common Share

$

0.27

$

(0.01

)

$

0.27

$

(0.02

)

Weighted Average Common Shares Outstanding

Basic

44,022,451

44,031,462

44,027,644

44,007,267

Diluted

44,022,451

44,031,462

44,031,319

44,007,267

About FRMO Corp.

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

FRMO had 44,012,781 shares of common stock outstanding as of November 30, 2020.

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 (loss) attributable to the Company excluding the effect of unrealized gain (loss) from equity securities is net income (loss) attributable to the Company exclusive of unrealized gains or losses from equity securities, net of tax. Net income (loss) attributable to the Company is the GAAP measure most closely comparable to net income (loss) 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 gains (losses) from equity securities, which may vary significantly between periods. Net income (loss) attributable to the Company excluding the effect of unrealized gain (loss) from equity securities are provided as supplemental information, and are not a substitute for net income (loss) attributable to the Company and do not reflect the Company’s overall profitability.

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

Three Months Ended

Three Months Ended

Six Months Ended

Six Months Ended

November 30, 2020

November 30, 2019

November 30, 2020

November 30, 2019

(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 (Loss) Attributable to the Company Excluding the Effect of Unrealized Gain (Loss) from Equity Securities and Diluted Earnings per Common Share Reconciliation:

Net income (loss) attributable to the Company

$

11,671

$

0.27

$

(482

)

$

(0.01

)

$

11,854

$

0.27

$

(701

)

$

(0.02

)

Unrealized gain (loss) from equity securities

11,536

1,405

5,678

(3,442

)

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

6,558

1,546

2,648

(3,802

)

Unrealized gain (loss) from equity securities attributable to the Company

4,978

(141

)

3,030

360

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

(1,102

)

(150

)

(1,201

)

(825

)

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

3,876

$

0.09

(291

)

$

(0.01

)

1,829

$

0.04

(465

)

$

(0.01

)

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

$

7,795

$

0.18

$

(191

)

$

0.00

$

10,025

$

0.23

$

(236

)

$

(0.01

)

Weighted average diluted shares outstanding

44,022,451

44,031,462

44,031,319

44,007,267

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210114005991/en/

Contacts

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