FRMO Corp. Announces Fiscal 2024 Results and Annual Meeting

Business Wire

Thu, Aug 15, 2024, 1:46 PM 10 min read

FRMO’s total book value as of May 31, 2024 was $403.3 million ($9.16 per share on a fully diluted basis), including $161.1 million of non-controlling interests. Excluding the non-controlling interests, book value was $242.1 million ($5.50 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, equity securities, and digital assets, amounted to $276.1 million as of May 31, 2024, and $201.3 million as of May 31, 2023. Total liabilities were $35.9 million as of May 31, 2024, and $19.4 million as of May 31, 2023, comprised primarily of securities sold, not yet purchased, and deferred taxes.

Annual net income (loss) attributable to the Company in the fiscal year ended May 31, 2024 was $72,558,671 ($1.65 per diluted share) compared to $(12,603,972 ($(0.29) per diluted share) in 2023.

For the three months ended May 31, 2024, FRMO’s net income (loss) attributable to the Company was $22,537,547 ($0.51 per diluted share), compared to $(20,050,797) ($(0.46) per diluted share) a year earlier. Net income for the quarter is attributable to unrealized gains identified as Investment A in Note 4 of the Consolidated Financial Statements under Investment Concentration included in unrealized gains from equity securities and unrealized gains from investments. Investment A is an equity security held directly and indirectly, through the Company’s various investments in managed funds

Net income (loss) attributable to the Company excluding the effect of unrealized gain (loss) from equity securities and digital assets net of taxes for the three months ended May 31, 2024 was $12,459,787 ($0.28 per diluted share) compared to $(7,197,926) ($(0.16) per diluted share) for the same period in 2023. For the year ended May 31, 2024, this figure was $48,940,292 ($1.11 per diluted share) and $(6,382,222) ($(0.14) per diluted share) in the previous year.

Net income (loss) attributable to the Company excluding the effect of unrealized gain (loss) from equity securities and digital assets 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 digital assets are subject to change after May 31, 2024. The market value of several securities and digital assets might have changed substantially since that date. We look forward to finding new ways to expand our digital asset mining operations.

As of May 31, 2024 and 2023, the Company held a 21.84% and 21.80% equity interest, respectively, 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 78.16% and 78.20% in HKHA has been eliminated from results of operations for the years ended May 31, 2024 and 2023.

Further details are available in the Company’s Consolidated Financial Statements for the fiscal year ended May 31, 2024. 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.

Annual Meeting

Murray Stahl, Chairman and CEO, and Steven Bregman, President and CFO, will host the 2024 Annual Meeting of Shareholders ("Meeting") on Thursday, September 5, 2024, at 2:30 p.m. Eastern Time, to be held at

The Harvard Club of New York City, 35 West 44^th Street, New York, NY 10036 (The West Room) and online via live webcast at https://www.virtualshareholdermeeting.com/FRMO2024.

For admission to the physical Annual Meeting at The Harvard Club, please see the FRMO representative in the lobby who will provide the necessary code for access.

No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting. Dress code for the Harvard Club is business casual (no jeans, sneakers, or athletic wear permitted).

Condensed Consolidated Balance Sheets
(in thousands)
	May 31,		May 31,
	2024		2023

Assets
Current Assets:
Cash and cash equivalents	$	39,190	$	38,077
Equity securities, at fair value		221,682		155,512
Digital assets, at fair value		10,979		4,217
Other current assets		4,252		3,539
Total Current Assets		276,102		201,346
Investment in limited partnerships and other
equity investments, at fair value		127,579		70,656
Investments in securities exchanges		6,463		4,869
Other assets		1,609		1,815
Investment in Horizon Kinetics LLC		17,205		14,608
Participation in Horizon Kinetics LLC revenue stream		10,200		10,200
Total Assets	$	439,159	$	303,494

Liabilities and Stockholders' Equity
Current Liabilities:
Securities sold, not yet purchased	$	951	$	2,353
Other current liabilities		1,258		354
Total Current Liabilities		2,209		2,707
Deferred Tax Liability		33,668		16,004
Mortgage payable		-		669
Total Liabilities		35,877		19,379

Stockholders' Equity:
Stockholders' Equity Attributable to the Company		242,137		169,283
Noncontrolling interests		161,145		114,832
Total Stockholders' Equity		403,282		284,114

Total Liabilities and Stockholders' Equity	$	439,159	$	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					Years Ended
	May 31,		May 31,			May 31,			May 31,
		2024		2023			2024			2023
	(Unaudited)
Revenue:
Fees	$	709	$	737		$	2,715		$	3,222
Equity earnings (losses) from limited partnerships
and limited liability companies		2,188		(685	)		5,044			1,614
Unrealized gains (losses) from investments		12,410		(12,614	)		53,935	#		(13,661	)
Other		1,193		402			4,275			4,046
Total revenue before unrealized gains (losses) from equity securities
and digital assets		16,500		(12,159	)		65,969	#		(4,779	)
Unrealized gains (losses) from equity securities		32,655		(52,947	)		66,186			(27,918	)
Unrealized gains (losses) from digital assets		1,001		573			6,272			(450	)
Total Revenue		50,156		(64,533	)		138,427			(33,147	)
Total Expenses		332		343			1,556			1,837

Income (Loss) from Operations before Provision for (Benefit from) Income Taxes		49,824		(64,877	)		136,871			(34,984	)
Provision for (Benefit from) Income Taxes		4,742		(6,075	)		18,420			(3,222	)
Net Income (Loss)		45,082		(58,802	)		118,451			(31,762	)
Less net income (loss) attributable to noncontrolling interests		22,545		(38,751	)		45,893			(19,158	)
Net Income (Loss) Attributable to FRMO Corporation	$	22,538	$	(20,051	)	$	72,559		$	(12,604	)

Diluted Net Income (Loss) per Common Share	$	0.51	$	(0.46	)	$	1.65		$	(0.29	)

Weighted Average Common Shares Outstanding
Basic		44,022,781		44,022,781			44,022,781			44,021,069
Diluted		44,027,031		44,022,781			44,026,529			44,021,069

(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 May 31, 2024.

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, digital assets, and diluted earnings (loss) per common share is net income (loss) attributable to the Company exclusive of unrealized gains (losses) from equity securities, digital assets, and diluted earnings (loss) per common share 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 and digital assets.

Management uses net income (loss) attributable to the Company excluding the effect of unrealized gain (loss) from equity securities, digital assets, and diluted earnings (loss) per common share 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, digital assets, and diluted earnings per common share, which may vary significantly between periods. Net income (loss) attributable to the Company excluding the effect of unrealized gain (loss) from equity securities, digital assets, and diluted earnings per common share is provided as supplemental information, and is not a substitute for net income (loss) attributable to the Company and does 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						Years Ended					Years Ended
	May 31, 2024					May 31, 2023						May 31, 2024					May 31, 2023
												(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 Digital Assets, and Diluted Earnings per Common Share Reconciliation:

Net income (loss) attributable to the Company	$	22,538		$	0.51	$	(20,051	)	$	(0.46	)	$	72,559		$	1.65	$	(12,604	)	$	(0.29	)

Unrealized gain (loss) from equity securities and digital assets		33,656					(52,374	)					72,458					(28,368	)
Unrealized gain (loss) from equity securities and digital assets attributable to noncontrolling interests		22,191					(39,059	)					44,532					(21,907	)
Unrealized gain (loss) from equity securities and digital assets attributable to the Company		11,465					(13,315	)					27,926					(6,461	)
Tax (provision) benefit on unrealized gain (loss) from equity securities and digital assets attributable to the company		(1,387	)				463						(4,308	)				240
Unrealized gain (loss) from equity securities and digital assets attributable to the Company, net of taxes		10,078		$	0.23		(12,853	)	$	(0.29	)		23,618		$	0.54		(6,222	)	$	(0.14	)

Net income (loss) attributable to the Company excluding the effect of unrealized gain (loss) from equity securities and digital assets	$	12,460		$	0.28	$	(7,198	)	$	(0.16	)	$	48,940		$	1.11	$	(6,382	)	$	(0.14	)

Weighted average diluted shares outstanding		44,027,031					44,022,781						44,026,529					44,021,069