FRMO Corp. Announces Results for Fiscal 2019

WHITE PLAINS, N.Y.--()--FRMO Corp. (the “Company” or “FRMO”) (OTC Pink: FRMO) today reported its financial results for the fiscal year 2019, which ended May 31, 2019.

Financial Highlights

FRMO’s book value as of May 31, 2019 was $174.9 million ($3.98 per share on a fully diluted basis), including $48.6 million of non-controlling interests. The figure from the prior fiscal year-end as of May 31, 2018 was $146.9 million ($3.34 per share), including $27.6 million of non-controlling interests. Current assets, comprised primarily of cash and equivalents and equity securities, amounted to $118.3 million as of May 31, 2019, and $93.2 million as of May 31, 2018. Total liabilities were $16.7 million as of May 31, 2019, compared to $13.5 million as of May 31, 2018, primarily securities sold, not yet purchased and deferred taxes.

FRMO’s net income attributable to the Company for the fiscal year ended May 31, 2019 was $4,709,662 ($0.11 per share basic and diluted) compared to $14,052,518 ($0.32 per share) for the fiscal year ended May 31, 2018.

For the fiscal year 2019, comprehensive income attributable to the Company was $4,709,662 compared to $14,835,607 in the prior year.

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 May 31, 2019 was $3,398,500 ($0.08 per diluted share) compared to $(4,265,263) ($(0.10) per share) for the three months ended May 31, 2018. For the year ended May 31, 2019, the amount was $9,027,157 ($0.21 per share) compared to $14,052,518 ($0.32 per share) for the same period in the prior year. 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.

As of May 31, 2019 and May 31, 2018, the Company held a 15.49% and 12.92% 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 84.51% and 87.08% in HKHA has been eliminated from results of operations for the periods ended May 31, 2019 and May 31, 2018.

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

Annual Meeting Information

The Chairman, President, and Board of Directors of FRMO Corp. cordially invite shareholders to attend the Company’s Annual Meeting of Shareholders at which the Chairman and President will review the Fiscal 2019 financial results and the outlook for the future. Board members will be available to answer questions.

Date:
Tuesday, September 10, 2019 at 3PM.

Location:
The Harvard Club of New York City
35 West 44th Street
New York, NY 10036

Admission to the FRMO Annual Meeting is limited to stockholders who owned Common Stock as of the close of business on July 26, 2019, the record date, or their duly appointed proxies, and one guest. Proof of ownership of FRMO stock and valid government-issued photo identification must be presented in order to be admitted to the Annual Meeting. Each guest must also present valid government-issued photo identification. If your shares are held in the name of a bank, broker, or other holder of record, you must bring a brokerage statement or other proof of ownership (or the equivalent proof of ownership as of the close of business on the record date of the stockholder who granted you the Proxy). If your shares are held in certificate form, ownership will be verified by consulting the list of Registered Shareholders as of the record date. Registration will begin at 2:00 p.m. 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,

2019

 

2018

 
Assets
Current Assets:
Cash and cash equivalents

$ 53,081

$ 53,617

Equity securities, at fair value

63,565

38,522

Other current assets

1,639

1,095

Total Current Assets

118,285

93,234

Computer equipment, net of accumulated depreciation

95

76

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

47,513

41,407

Investments in securities exchanges

3,641

3,709

Other investments

452

189

Investment in Horizon Kinetics LLC

11,488

11,624

Participation in Horizon Kinetics LLC revenue stream

10,200

10,200

Total Assets

$ 191,674

$ 160,439

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

$ 8,133

$ 5,495

Other current liabilities

161

193

Total Current Liabilities

8,294

5,688

Deferred Tax Liability

8,383

7,757

Total Liabilities

16,677

13,445

 
Stockholders' Equity:
Stockholders' Equity Attributable to the Company

126,384

119,411

Noncontrolling interests

48,613

27,583

Total Stockholders' Equity

174,997

146,994

 
Total Liabilities and Stockholders' Equity

$ 191,674

$ 160,439

 
 
Condensed Consolidated Statements of Operations
(amounts in thousands, except share data)
Three Months Ended Year Ended
May 31, May 31, May 31, May 31,

2019

 

2018

 

2019

 

2018

(Unaudited)
Revenue:
Consultancy and advisory fees

$ 522

$ 511

$ 2,027

$ 3,257

Equity earnings from partnerships
and limited liability companies

2,360

318

2,560

3,782

Unrealized gains (losses) from investments recorded at fair value

1,283

(6,508)

3,839

8,351

Equity earnings (loss) from investment in The Bermuda Stock Exchange

(5)

3

181

17

Other

869

643

4,233

1,006

Total revenue before unrealized gains (losses) from equity securities

5,028

(5,033)

12,840

16,413

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

(3,376)

-

6,725

-

Total Revenue

1,652

(5,033)

19,565

16,413

Total Expenses

345

198

1,332

808

 
Income (Loss) from Operations

1,307

(5,231)

18,233

15,605

Provision for (Benefit from) Income Taxes

661

(1,171)

1,026

1,382

Net Income (Loss)

646

(4,060)

17,207

14,223

Less net income (loss) attributable to noncontrolling interests

(955)

205

12,498

171

Net Income (Loss) Attributable to FRMO Corporation

$ 1,601

$ (4,265)

$ 4,709

$ 14,052

 
Diluted Net Income (Loss) per Common Share

$ 0.04

$ (0.10)

$ 0.11

$ 0.32

 
Weighted Average Common Shares Outstanding
Basic

43,976,781

43,973,781

43,974,940

43,959,554

Diluted

44,015,088

43,973,781

44,016,535

44,007,828

 

About FRMO Corp.

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

FRMO had 43,976,781 shares of common stock outstanding as of May 31, 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 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 or 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 gains 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 are provided as supplemental information, and are not a substitute for net income attributable to the Company and do 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   Year Ended   Year Ended
May 31, 2019   May 31, 2018   May 31, 2019   May 31, 2018
(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

$

1,601

 

$

0.04

 

$

(4,265)

 

$

(0.10)

 

$

4,709

 

$

0.11

 

$

14,053

 

$

0.32

               
Unrealized gain (loss) from equity securities

 

(3,376)

   

 

-

   

 

6,725

   

 

-

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

 

(1,319)

   

 

-

   

 

12,135

   

 

-

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

 

(2,057)

   

 

-

   

 

(5,410)

   

 

-

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

 

260

   

 

-

   

 

1,092

   

 

-

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

 

(1,797)

 

$

(0.04)

 

 

-

 

$

0.00

 

 

(4,318)

 

$

(0.10)

 

 

-

 

$

0.00

         

 

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

$

3,398

 

$

0.08

 

$

(4,265)

 

$

(0.10)

 

$

9,027

 

$

0.21

 

$

14,053

 

$

0.32

               
Weighted average diluted shares outstanding

 

44,015,088

   

 

43,973,781

   

 

44,016,535

   

 

44,007,828

 
               

 

Contacts

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

Release Summary

FRMO Corp. reported its financial results today for the 2019 fiscal year ended May 31, 2019. The Annual Meeting is scheduled for Sept. 10, 2019.

Contacts

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