WHITE PLAINS, N.Y.--(BUSINESS WIRE)--FRMO Corp. (the “Company” or “FRMO”) (OTC Pink: FRMO) today reported its financial results for the 2022 first quarter ended August 31, 2021.
Financial Highlights
FRMO’s book value as of August 31, 2021 was $293.5 million ($6.67 per share on a fully diluted basis), including $114.4 million of non-controlling interests. This compares with book value at the prior fiscal year ended May 31, 2021 of $298.9 million ($6.79 per share), including $121.0 million of non-controlling interests. Current assets, comprised primarily of cash and equivalents and equity securities, amounted to $202.1 million as of August 31, 2021, and $208.9 million as of May 31, 2021. Total liabilities were $29.6 million as of August 31, 2021, and $29.9 million as of May 31, 2021, 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, 2021 rose to $960,717, or $0.02 per share, compared to $182,241, or $0.00 per share, a year earlier.
FRMO’s net income attributable to the Company excluding the effect of unrealized gain from equity securities net of taxes for the three months ended August 31, 2021 was $1,303,002 ($0.03 per diluted share) compared to $2,229,447 (0.05 per diluted share) for the three months ended August 31, 2020.
Net income attributable to the Company excluding the effect of unrealized 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 August 31, 2021. 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 August 31, 2021 and May 31, 2021, the Company held a 21.98% and 22.02% 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 78.02% and 77.98% in HKHA has been eliminated from results of operations for the periods ended August 31, 2021 and May 31, 2021.
Further details are available in the Company’s Consolidated Financial Statements for the quarter ended August 31, 2021. 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, October 21, 2021 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 800-367-2403 (domestic toll free), or +1-334-777-6978 (international toll) and entering the following Confirmation Code: 8000388. A replay will be available from 7:15 P.M. on the day of the teleconference until November 20, 2021. To listen to the archived call, dial 888-203-1112 (domestic toll free) or +1 719-457-0820 (international toll), and enter the Replay Passcode: 8000388.
| Condensed Consolidated Balance Sheets | ||||||
| (in thousands) | ||||||
August, |
|
May 31, |
||||
2021 |
|
2021 |
||||
(Unaudited) |
|
|
||||
| Assets | ||||||
| Current Assets: | ||||||
| Cash and cash equivalents | $ |
35,329 |
$ |
34,971 |
||
| Equity securities, at fair value |
|
164,893 |
|
171,733 |
||
| Other current assets |
|
1,845 |
|
2,148 |
||
| Total Current Assets |
|
202,067 |
|
208,852 |
||
| Investment in limited partnerships and other | ||||||
| equity investments, at fair value |
|
89,372 |
|
86,854 |
||
| Investments in securities exchanges |
|
4,815 |
|
4,815 |
||
| Other assets |
|
1,747 |
|
1,698 |
||
| Investment in Horizon Kinetics LLC |
|
14,913 |
|
16,366 |
||
| Participation in Horizon Kinetics LLC revenue stream |
|
10,200 |
|
10,200 |
||
| Total Assets | $ |
323,114 |
$ |
328,785 |
||
| Liabilities and Stockholders' Equity | ||||||
| Current Liabilities: | ||||||
| Securities sold, not yet purchased | $ |
4,173 |
$ |
6,118 |
||
| Other current liabilities |
|
3,389 |
|
2,249 |
||
| Total Current Liabilities |
|
7,562 |
|
8,367 |
||
| Deferred Tax Liability |
|
21,352 |
|
20,774 |
||
| Mortgage payable |
|
722 |
|
730 |
||
| Total Liabilities |
|
29,636 |
|
29,871 |
||
| Stockholders' Equity: | ||||||
| Stockholders' Equity Attributable to the Company |
|
179,056 |
|
177,905 |
||
| Noncontrolling interests |
|
114,421 |
|
121,009 |
||
| Total Stockholders' Equity |
|
293,478 |
|
298,914 |
||
| Total Liabilities and Stockholders' Equity | $ |
323,114 |
$ |
328,785 |
||
(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, |
||||||
2021 |
|
2020 |
||||||
(Unaudited) |
||||||||
| Revenue: | ||||||||
| Fees | $ |
1,117 |
|
$ |
438 |
|
||
| Equity (loss) earnings from partnerships and limited liability companies |
|
(963 |
) |
|
651 |
|
||
| Unrealized gains from investments subject to fair value |
|
2,542 |
|
|
2,903 |
|
||
| Other |
|
216 |
|
|
(1,362 |
) |
||
| Total revenue before unrealized gains from equity securities |
|
2,912 |
|
|
2,630 |
|
||
| Unrealized losses from equity securities |
|
(7,078 |
) |
|
(5,858 |
) |
||
| Total Revenue |
|
(4,166 |
) |
|
(3,228 |
) |
||
| Total Expenses |
|
308 |
|
|
414 |
|
||
| Loss from Operations before Provision for Income Taxes |
|
(4,475 |
) |
|
(3,642 |
) |
||
| Provision for Income Taxes |
|
1,819 |
|
|
630 |
|
||
| Net Loss |
|
(6,294 |
) |
|
(4,272 |
) |
||
| Less net loss attributable to noncontrolling interests |
|
(7,255 |
) |
|
(4,454 |
) |
||
| Net Income Attributable to FRMO Corporation | $ |
961 |
|
$ |
182 |
|
||
| Diluted Net Earnings per Common Share | $ |
0.02 |
|
$ |
0.00 |
|
||
| Weighted Average Common Shares Outstanding | ||||||||
| Basic |
|
44,012,781 |
|
|
44,032,781 |
|
||
| Diluted |
|
44,031,575 |
|
|
44,033,825 |
|
||
| (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 44,012,781 shares of common stock outstanding as of August 31, 2021.
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 loss from equity securities is net income attributable to the Company exclusive of unrealized 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 loss from equity securities.
Management uses net income attributable to the Company excluding the effect of unrealized loss from equity securities, along with other measures, to gauge the Company’s performance and evaluate results, which can be skewed when including unrealized loss from equity securities, which may vary significantly between periods. Net income attributable to the Company excluding the effect of unrealized 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 loss from equity securities to net income attributable to the Company for the periods indicated:
Three Months Ended |
|
Three Months Ended |
||||||||||||||
August 31, 2021 |
|
August 31, 2020 |
||||||||||||||
(Unaudited) |
|
(Unaudited) |
||||||||||||||
|
|
|
|
|
|
|
||||||||||
Amount |
|
Diluted
|
|
Amount |
|
Diluted
|
||||||||||
| (000’s except per common share amounts and percentages) | ||||||||||||||||
| Net Income Attributable to the Company Excluding the Effect of Unrealized Loss from Equity Securities and Diluted Earnings per Common Share Reconciliation: | ||||||||||||||||
| Net income attributable to the Company | $ |
961 |
|
$ |
0.02 |
|
$ |
182 |
|
$ |
0.00 |
|
||||
| Unrealized loss from equity securities |
|
(7,078 |
) |
|
(5,858 |
) |
||||||||||
| Unrealized loss from equity securities attributable to noncontrolling interests |
|
(7,475 |
) |
|
(3,910 |
) |
||||||||||
| Unrealized gain (loss) from equity securities attributable to the Company |
|
397 |
|
|
(1,948 |
) |
||||||||||
| Tax on unrealized gain (loss) from equity securities attributable to the company |
|
(739 |
) |
|
(99 |
) |
||||||||||
| Unrealized loss from equity securities attributable to the Company, net of taxes |
|
(342 |
) |
$ |
(0.01 |
) |
|
(2,047 |
) |
$ |
(0.05 |
) |
||||
| Net income attributable to the Company excluding the effect of unrealized loss from equity securities | $ |
1,303 |
|
$ |
0.03 |
|
$ |
2,229 |
|
$ |
0.05 |
|
||||
| Weighted average diluted shares outstanding |
|
44,031,575 |
|
|
44,033,825 |
|
||||||||||