FRMO Corp. Announces Fiscal 2023 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 2023 second quarter ended November 30, 2022 and the resignation of director Allan Kornfeld effective December 31, 2022.

Financial Highlights

FRMO’s total book value as of November 30, 2022 was $443.4 million ($10.07 per share on a fully diluted basis), including $219.4 million of non-controlling interests. Book value for the same period, excluding the non-controlling interests was $224.1 million ($5.09 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 $341.0 million as of November 30, 2022, and $223.8 million as of May 31, 2022. Total liabilities were $34.1 million as of November 30, 2022, and $23.9 million as of May 31, 2022, comprised primarily of securities sold, not yet purchased and deferred taxes.

For the three months ended November 30, 2022, FRMO’s net income attributable to the Company rose to $34,869,175, or $0.79 per share, compared to $(350,323) or $(0.01) per share, a year earlier.

For the six months ended November 30, 2022, the net income was $42,347,847 ($0.96 per diluted share) compared to $610,394 ($0.01 per diluted share) in 2021.

For the three months ended November 30, 2022, FRMO’s net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities net of taxes was $12,839,570 ($0.29 per diluted share) compared to $2,911,793 ($0.07 per diluted share) for the three months ended November 30, 2021.

For the six months ended November 30, 2022, FRMO’s net income attributable to the Company excluding the effect of unrealized gain (loss) from equity securities net of taxes was $12,936,735 ($0.29 per diluted share) compared to $4,214,794 ($0.10 per diluted share) for the six months ended November 30, 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 November 30, 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 November 30, 2022 and May 31, 2022, the Company held a 21.83% 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 78.17% and 78.12% in HKHA has been eliminated from results of operations for the periods ended November 30, 2022 and May 31, 2022.

Further details are available in the Company’s Consolidated Financial Statements for the three months and six months ended November 30, 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.

Recognition and Appreciation of Distinguished Service by Allan Kornfeld

The FRMO Board of Directors formally acknowledges and extends its profound appreciation to Allan Kornfeld and thanks him for his judgement, wise counsel, and insight that have greatly contributed to the ongoing success of FRMO. Mr. Kornfeld’s resignation was effective December 31, 2022.

Conference Call

Murray Stahl, Chairman and CEO, and Steven Bregman, President and CFO, will host a webinar on Tuesday, January 17, 2023 at 4:15 p.m. ET.

Please join us for the FRMO 2023 Second Quarter Conference Call on Jan 17, 2023 4:15 PM EST at:

https://attendee.gotowebinar.com/register/2241268020166198622

After registering, you will receive a confirmation email containing information about joining the webinar. Replay information will be available the following day on our website. Only questions submitted to [email protected] before 1:00 p.m. on the day of the webinar will be considered.

Condensed Consolidated Balance Sheets  
(in thousands)  
 

November 30,

 

May 31,

 

2022

 

2022

  (Unaudited)
Assets  
Current Assets:  
Cash and cash equivalents  

$

36,105

$

33,289

Equity securities, at fair value  

 

302,092

 

187,386

Other current assets  

 

2,771

 

3,083

Total Current Assets  

 

340,969

 

223,758

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

 

104,960

 

82,630

Investments in securities exchanges  

 

4,815

 

4,815

Other assets  

 

2,021

 

2,177

Investment in Horizon Kinetics LLC  

 

14,563

 

14,702

Participation in Horizon Kinetics LLC revenue stream  

 

10,200

 

10,200

Total Assets  

$

477,528

$

338,282

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

$

1,751

$

2,573

Other current liabilities  

 

225

 

212

Total Current Liabilities  

 

1,976

 

2,785

Deferred Tax Liability  

 

31,457

 

20,470

Mortgage payable  

 

684

 

700

Total Liabilities  

 

34,117

 

23,955

   
Stockholders’ Equity:  
Stockholders’ Equity Attributable to the Company  

 

224,063

 

181,409

Noncontrolling interests  

 

219,348

 

132,919

Total Stockholders’ Equity  

 

443,410

 

314,327

   
Total Liabilities and Stockholders’ Equity  

$

477,528

$

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

 

Six Months Ended

 

November 30,

 

November 30,

 

November 30,

 

November 30,

 

2022

 

2021

 

2022

 

2021

  (Unaudited)   (Unaudited)
Revenue:        
Fees  

$

796

 

$

1,192

 

 

$

1,557

 

$

2,309

 

Equity earnings (loss) from limited partnerships        
and limited liability companies  

 

904

 

 

47

 

 

 

808

 

 

(916

)

Unrealized gains from investments  

 

19,937

 

 

1,810

 

 

 

21,424

 

 

4,352

 

Other  

 

483

 

 

216

 

 

 

2,899

 

 

432

 

Total revenue before unrealized gains (losses) from equity securities  

 

22,120

 

 

3,265

 

 

 

26,688

 

 

6,177

 

Unrealized gains (losses) from equity securities  

 

84,759

 

 

(15,100

)

 

 

114,430

 

 

(22,178

)

Total Revenue  

 

106,880

 

 

(11,834

)

 

 

141,118

 

 

(16,001

)

Total Expenses  

 

707

 

 

391

 

 

 

1,172

 

 

699

 

       
Income (loss) from Operations before Provision for Income Taxes  

 

106,173

 

 

(12,225

)

 

 

139,946

 

 

(16,700

)

Provision for Income Taxes  

 

9,484

 

 

64

 

 

 

11,744

 

 

1,883

 

Net Income (Loss)  

 

96,689

 

 

(12,289

)

 

 

128,202

 

 

(18,583

)

Less net income (loss) attributable to noncontrolling interests  

 

61,820

 

 

(11,939

)

 

 

85,854

 

 

(19,193

)

Net Income (Loss) Attributable to FRMO Corporation  

$

34,869

 

$

(350

)

 

$

42,348

 

$

610

 

       
Diluted Net Income (Loss) per Common Share  

$

0.79

 

$

(0.01

)

 

$

0.96

 

$

0.01

 

       
Weighted Average Common Shares Outstanding        
Basic  

 

44,020,968

 

 

44,015,748

 

 

 

44,019,366

 

 

44,014,256

 

Diluted  

 

44,020,968

 

 

44,015,748

 

 

 

44,031,771

 

 

44,033,213

 

       
       

(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, 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   Six Months Ended   Six Months Ended
  November 30, 2022   November 30, 2021   November 30, 2022   November 30, 2021
  (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 Gain (Loss) from Equity Securities and Diluted Earnings per Common Share Reconciliation:                
                 
Net income (loss) attributable to the Company  

$

34,869

 

 

$

0.79

 

$

(350

)

 

$

(0.01

)

 

$

42,348

 

 

$

0.96

 

$

610

 

 

$

0.01

 

                 
Unrealized gain (loss) from equity securities  

 

84,759

 

   

 

(15,100

)

   

 

114,430

 

   

 

(22,178

)

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

 

61,571

 

   

 

(12,168

)

   

 

83,732

 

   

 

(19,643

)

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

 

23,188

 

   

 

(2,932

)

   

 

30,698

 

   

 

(2,535

)

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

 

(1,158

)

   

 

(330

)

   

 

(1,287

)

   

 

(1,069

)

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

 

22,030

 

 

$

0.50

 

 

(3,262

)

 

$

(0.07

)

 

 

29,411

 

 

$

0.67

 

 

(3,604

)

 

$

(0.08

)

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

$

12,839

 

 

$

0.29

 

$

2,912

 

 

$

0.07

 

 

$

12,937

 

 

$

0.29

 

$

4,214

 

 

$

0.10

 

                 
Weighted average diluted shares outstanding  

 

44,020,968

 

   

 

44,015,748

 

   

 

44,031,771

 

   

 

44,033,213

 

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

 

Contacts

Thérèse Byars

Corporate Secretary

[email protected]
646-495-7337

www.frmocorp.com

error: Content is protected !!