FRMO Corp. Announces Second Quarter 2020 Financial 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 2020 second quarter, which ended November 30, 2019 (May fiscal year).

Financial Highlights

FRMO’s book value as of November 30, 2019 was $175.8 million ($3.99 per share on a fully diluted basis), including $48.2 million of non-controlling interests. The figure from the prior fiscal year-end as of May 31, 2019 was $175.0 million ($3.98 per share), including $48.6 million of non-controlling interests. Current assets, comprised primarily of cash and equivalents and equity securities, amounted to $118.9 million as of November 30, 2019, and $118.3 million as of May 31, 2019. Total liabilities were $17.9 million as of November 30, 2019, and $16.7 million as of May 31, 2019, comprised primarily of securities sold, not yet purchased and deferred taxes.

FRMO’s net (loss) income attributable to the Company for the three months ended November 30, 2019 was $(481,718) (($0.01) per share basic and diluted) compared to $583,997 ($0.01 per share) for the quarter ended November 30, 2018.

FRMO’s net (loss) income attributable to the Company for the six months ended November 30, 2019 was $(700,580) (($0.02) per share basic and diluted) compared to $3,795,120 ($0.09 per share) for the six months ended November 30, 2018.

FRMO’s net (loss) income attributable to the Company excluding the effect of unrealized (loss) gain from equity securities net of taxes for the three months ended November 30, 2019 was $(190,203) (($0.00) per diluted share) compared to $1,824,760 ($0.04 per diluted share) for the three months ended November 30, 2018. For the six months ended November 30, 2019, it was $(236,088) ((0.01) per diluted share) compared to $5,040,756 ($0.11 per share) for the same period in the previous year. Net (loss) income attributable to the Company excluding the effect of unrealized (losses) gains 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.

As of November 30, 2019 and May 31, 2019, the Company held an 18.64% and 15.49% 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 81.36% and 84.51% in HKHA has been eliminated from results of operations for the periods ended November 30, 2019 and May 31, 2019.

Further details are available in the Company’s Condensed Consolidated Financial Statements for the quarter ended November 30, 2019. 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 23, 2020 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 877-628-4685 (domestic toll free) or +1 334-323-0507 (international toll) and entering the following conference ID: 5894204. A replay will be available from 7:15 p.m. on the day of the teleconference until Saturday, February 22, 2020. To listen to the archived call, dial 888-203-1112 (domestic toll free) or +1 719-457-0820 (international toll), and enter conference ID number5894204.

Condensed Consolidated Balance Sheets

   

(in thousands)

   

November 30,

   

May 31,

2019

   

2019

(Unaudited)

   
Assets    
Current Assets:    
Cash and cash equivalents

$53,573

   

$53,081

Equity securities, at fair value

63,834

   

63,565

Other current assets

1,528

   

1,639

Total Current Assets

118,935

   

118,285

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

45,948

   

47,513

Investments in securities exchanges

5,061

   

3,641

Other assets

1,730

   

547

Investment in Horizon Kinetics LLC

11,839

   

11,488

Participation in Horizon Kinetics LLC revenue stream

10,200

   

10,200

Total Assets

$193,713

   

$191,674

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

$7,773

   

$8,133

Other current liabilities

313

   

161

Total Current Liabilities

8,086

   

8,294

Deferred Tax Liability

9,006

   

8,383

Mortgage payable

773

   

Total Liabilities

17,865

   

16,677

     
Stockholders’ Equity:    
Stockholders’ Equity Attributable to the Company

127,690

   

126,384

Noncontrolling interests

48,158

   

48,613

Total Stockholders’ Equity

175,848

   

174,997

     
Total Liabilities and Stockholders’ Equity

$193,713

   

$191,674

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,

2019

2018

2019

2018

(Unaudited)

(Unaudited)

Revenue:
Consultancy and advisory fees

$515

 

$500

 

$1,047

 

$1,042

Equity earnings (loss) from partnerships
and limited liability companies

(223

)

950

 

1,093

 

1,663

Unrealized gains (losses) from investments recorded at fair value

(832

)

1,697

 

(2,212

)

5,214

Other

1,382

 

(21

)

1,773

 

296

Total revenue before unrealized gains (losses) from equity securities

842

 

3,126

 

1,701

 

8,215

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

1,405

 

7,546

 

(3,442

)

17,329

Total Revenue

2,247

 

10,672

 

(1,741

)

25,544

Total Expenses

351

 

406

 

700

 

705

 
Income (Loss) from Operations

1,896

 

10,266

 

(2,441

)

24,839

Provision for Income Taxes

830

 

330

 

2,063

 

1,619

Net Income (Loss)

1,066

 

9,936

 

(4,504

)

23,220

Less net income (loss) attributable to noncontrolling interests

1,548

 

9,352

 

(3,803

)

19,425

Net Income (Loss) Attributable to FRMO Corporation

$(482

)

$584

 

$(701

)

$3,795

 
Diluted Net Income (Loss) per Common Share

$(0.01

)

$0.01

 

$(0.02

)

$0.09

 
Weighted Average Common Shares Outstanding
Basic

44,031,462

 

43,973,781

 

44,007,267

 

43,973,781

Diluted

44,031,462

 

44,021,101

 

44,007,267

 

44,022,432

About FRMO Corp.

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

FRMO had 44,032,781 shares of common stock outstanding as of November 30, 2019.

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, 2019

November 30, 2019

November 30, 2019

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 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

$(482

)

$(0.01

)

$584

 

$0.01

 

$(701

)

$(0.02

)

$3,795

 

$0.09

 

 
Unrealized gain (loss) from equity securities

1,405

 

7,546

 

(3,442

)

17,329

 

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

1,546

 

9,352

 

(3,802

)

19,422

 

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

(141

)

(1,806

)

360

 

(2,093

)

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

(150

)

565

 

(825

)

848

 

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

(291

)

$(0.01

)

(1,241

)

$(0.03

)

(465

)

$(0.01

)

(1,245

)

$(0.03

)

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

$(191

)

$(0.00

)

$1,825

 

$0.04

 

$(236

)

$(0.01

)

$5,040

 

$0.11

 

 
Weighted average diluted shares outstanding

44,031,462

 

44,021,101

 

44,007,267

 

44,022,432

 

 

 

(Percent 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

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