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FRMO Corp. Announces Fiscal 2025 First Quarter Results and Conference Call

FRMO | October 15, 2024

FRMO Corp. (the “Company” or “FRMO”) (OTC Pink: FRMO) today reported its financial results for the 2025 first quarter ended August 31, 2024.

Financial Highlights

FRMO’s total book value as of August 31, 2024 was $503.1 million ($11.43 per share on a fully diluted basis), including $226.6 million of non-controlling interests. Excluding the non-controlling interests, book value was $276.6 million ($6.28 per share). This compares with total book value at the prior fiscal year end on May 31, 2024 of $403.3 million ($9.16 per share), including $161.1 million of non-controlling interests. Excluding the non-controlling interests, book value was $242.1 million ($5.50 per share).

Current assets, comprised primarily of cash and equivalents and equity securities, amounted to $366.0 million as of August 31, 2024, and $276.1 million as of May 31, 2024. Total liabilities were $45.2 million as of August 31, 2024, and $35.9 million as of May 31, 2024, 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, 2024 rose to $34,486,751 ($0.78 per diluted share) compared to $32,329,985 ($0.73 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.

Net income attributable to the Company excluding the effect of unrealized gain from equity securities and digital assets net of taxes for the three months ended August 31, 2024 was $11,579,966 ($0.26 per diluted share) compared to $14,239,683 ($0.32 per diluted share) for the three months ended August 31, 2023.

Net income attributable to the Company excluding the effect of unrealized gain 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 August 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 assets mining operations.

The interim condensed consolidated financial statements include the accounts of FRMO Corporation and its controlled subsidiaries (collectively referred to as the "Company"). As of August 31, 2024 and May 31, 2024, the Company held a 21.86% and 21.84% 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 (see Note 4 – Investments, Investments under the Equity Method of Accounting). 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 78.14% and 78.16% in HKHA has been eliminated from results of operations for the periods ended August 31, 2024 and May 31, 2024.

Further details are available in the Company’s Consolidated Financial Statements for the three months ended August 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.

Conference Call

Murray Stahl, Chairman and CEO, and Steven Bregman, President and CFO, will host a conference call on Tuesday, October 22, 2024, at 4:15 p.m. Eastern Time. Only questions submitted to info@frmocorp.com before 1:00 p.m. on the day of the call will be considered. You may register for the conference call by clicking on the following link:

https://register.gotowebinar.com/register/3564518183719162720

An audio replay link will be available for 30 days from October 23 through November 22, 2024 on the FRMO website (https://frmocorp.com/q_transcripts.html) until the summary transcript is posted.

Condensed Consolidated Balance Sheets
(in thousands)
	August 31,		May 31,
	2024		2024
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	42,472	$	39,190
Equity securities, at fair value		310,345		221,682
Digital assets, at fair value		9,588		10,979
Other current assets		3,642		4,252
Total Current Assets		366,047		276,102
Investment in limited partnerships and other equity investments, at fair value		146,109		127,579
Investments in securities exchanges		6,509		6,463
Other assets		1,541		1,609
Investment in Horizon Kinetics LLC		17,936		17,205
Participation in Horizon Kinetics LLC revenue stream		10,200		10,200
Total Assets	$	548,342	$	439,159

Liabilities and Stockholders' Equity
Current Liabilities:
Securities sold, not yet purchased	$	991	$	951
Other current liabilities		1,874		1,258
Total Current Liabilities		2,865		2,209
Deferred Tax Liability		42,330		33,668
Total Liabilities		45,195		35,877

Stockholders' Equity:
Stockholders' Equity Attributable to the Company		276,568		242,137
Noncontrolling interests		226,579		161,145
Total Stockholders' Equity		503,146		403,282

Total Liabilities and Stockholders' Equity	$	548,342	$	439,159

(Components may not sum to totals due to rounding)

Condensed Consolidated Statements of Income
(amounts in thousands, except share data)
	Three Months Ended
	August 31,			August 31,
		2024			2023
	(Unaudited)
Revenue:
Fees	$	737		$	701
Equity earnings from limited partnerships and limited liability companies		2,556			769
Unrealized gains from investments		16,399			19,207
Other		4,457			1,353
Total revenue before unrealized gains (losses) from equity securities and digital assets		24,150			22,030
Unrealized gains from equity securities		88,435			67,312
Unrealized losses from digital assets		(1,422	)		(216	)
Total Revenue		111,162			89,125
Total Expenses		418			362

Income from Operations before Provision for (Benefit from) Income Taxes		110,744			88,763
Provision for Income Taxes		10,489			8,294
Net Income		100,255			80,469
Less net income attributable to noncontrolling interests		65,769			48,139
Net Income Attributable to FRMO Corporation	$	34,487		$	32,330

Diluted Net Income per Common Share	$	0.78		$	0.73

Weighted Average Common Shares Outstanding
Basic		44,022,781			44,022,781
Diluted		44,027,112			44,030,469

(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 August 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 attributable to the Company excluding the effect of unrealized gain from equity securities and digital assets is net income attributable to the Company exclusive of unrealized gains from equity securities and digital assets, 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 from equity securities and digital assets.

Management uses net income attributable to the Company excluding the effect of unrealized gain from equity securities and digital assets, along with other measures, to gauge the Company’s performance and evaluate results, which can be skewed when including unrealized gain from equity securities and digital assets, which may vary significantly between periods. Net income attributable to the Company excluding the effect of unrealized gain 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 from equity securities and digital assets to net income attributable to the Company for the periods indicated:

	Three Months Ended					Three Months Ended
	August 31, 2024					August 31, 2023
	(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 from Equity Securities and Digital Assets, and Diluted Earnings per Common Share Reconciliation:

Net income attributable to the Company	$	34,487		$	0.78	$	32,330		$	0.73

Unrealized gain from equity securities and digital assets		87,013					67,095
Unrealized gain from equity securities and digital assets attributable to noncontrolling interests		62,929					47,797
Unrealized gain from equity securities and digital assets attributable to the Company		24,084					19,298
Tax provision on unrealized gain from equity securities and digital assets attributable to the company		(1,177	)				(1,208	)
Unrealized gain from equity securities and digital assets attributable to the Company, net of taxes		22,907		$	0.52		18,090		$	0.41

Net income attributable to the Company excluding the effect of unrealized gain from equity securities and digital assets	$	11,580		$	0.26	$	14,240		$	0.32

Weighted average diluted shares outstanding		44,027,112					44,030,469

(Components may not sum to totals due to rounding)