FRMO Corp. (the “Company” or “FRMO”) (OTC Pink: FRMO) today
reported its financial results for the 2020 first quarter, which
ended August 31, 2019 (May fiscal year).
Financial Highlights
FRMO’s book value as of August 31, 2019 was $172.5 million
($3.92 per share on a fully diluted basis), including $45.2 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 $115.9 million as of August 31, 2019, and
$118.3 million as of May 31, 2019. Total liabilities were $16.7
million as of August 31, 2019, unchanged from $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 August 31, 2019 was $(218,862) (($0.00) per
share basic and diluted) compared to $3,211,123 ($0.07 per share)
for the quarter ended August 31, 2018.
For the first quarter of 2020, comprehensive (loss) income
attributable to the Company was $(218,862) compared to $3,211,123
in the prior year.
FRMO’s net (loss) income attributable to the Company excluding
the effect of unrealized gain (loss) from equity securities net of
taxes for the three months ended August 31, 2019 was $(45,884)
(($0.00) per diluted share) compared to $3,215,997 ($0.07 per
share) for the three months ended August 31, 2018. Net (loss)
income 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 August 31, 2019 and May 31, 2019, the Company held a
17.34% 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 82.66% and 84.51% in HKHA has been
eliminated from results of operations for the periods ended August
31, 2019 and May 31, 2019.
Further details are available in the Company’s Condensed
Consolidated Financial Statements for the quarter ended August 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.
Conference Call
Murray Stahl, Chairman and CEO, and Steven Bregman, President
and CFO, will host a conference call on Thursday, October 17, 2019
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 800-353-6461 (domestic toll free)
or +1 334-323-0501 (international toll) and entering the following
conference ID: 6101786. A replay will be available from 7:15 p.m.
on the day of the teleconference until Saturday, November 16, 2019.
To listen to the archived call, dial 888-203-1112 (domestic toll
free) or +1 719-457-0820 (international toll), and enter conference
ID number 6101786.
Condensed Consolidated Balance Sheets (in thousands)
August 31, 2019
May 31, 2019
(Unaudited) Assets Current Assets: Cash and cash
equivalents
$
54,409
$
53,081
Equity securities, at fair value
60,313
63,565
Other current assets
1,168
1,639
Total Current Assets
115,890
118,285
Investment in limited partnerships and other equity investments, at
fair value
46,674
47,513
Investments in securities exchanges
3,682
3,641
Other assets
569
547
Investment in Horizon Kinetics LLC
12,204
11,488
Participation in Horizon Kinetics LLC revenue stream
10,200
10,200
Total Assets
$
189,219
$
191,674
Liabilities and Stockholders' Equity Current
Liabilities: Securities sold, not yet purchased
$
7,674
$
8,133
Other current liabilities
1,196
161
Total Current Liabilities
8,870
8,294
Deferred Tax Liability
7,816
8,383
Total Liabilities
16,686
16,677
Stockholders' Equity: Stockholders' Equity Attributable to
the Company
127,316
126,384
Noncontrolling interests
45,217
48,613
Total Stockholders' Equity
172,533
174,997
Total Liabilities and Stockholders' Equity
$
189,219
$
191,674
Condensed Consolidated Statements of
Operations (amounts in thousands, except share
data)
Three Months Ended August 31,
August 31,
2019
2018
(Unaudited) Revenue: Consultancy and
advisory fees
$
532
$
542
Equity earnings from partnerships and limited
liability companies
1,316
713
Unrealized (losses) gains from investments recorded at fair value
(1,381
)
3,517
Other
392
316
Total revenue before unrealized (losses) gains from equity
securities
859
5,088
Unrealized (losses) gains from equity securities recorded at fair
value
(4,847
)
9,783
Total Revenue
(3,988
)
14,871
Total Expenses
350
298
(Loss) Income from Operations
(4,338
)
14,573
Provision for Income Taxes
1,233
1,289
Net (Loss) Income
(5,571
)
13,284
Less net (loss) income attributable to noncontrolling interests
(5,352
)
10,073
Net (Loss) Income Attributable to FRMO Corporation
$
(219
)
$
3,211
Diluted Net (Loss) Income per Common Share
$
(0.00
)
$
0.07
Weighted Average Common Shares Outstanding
Basic
43,983,335
43,973,781
Diluted
43,983,335
44,023,435
About FRMO Corp.
FRMO Corp. invests in and receives revenues based upon
consulting and advisory fee interests in the asset management
sector.
FRMO had 44,029,781 shares of common stock outstanding as of
August 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 (loss) income attributable to the Company excluding the
effect of unrealized gain (loss) from equity securities is net
(loss) income attributable to the Company exclusive of unrealized
gains or losses from equity securities, net of tax. Net (loss)
income attributable to the Company is the GAAP measure most closely
comparable to net (loss) 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
(losses) gains from equity securities, which may vary significantly
between periods. Net (loss) 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 (loss) income attributable to the Company and do
not reflect the Company’s overall profitability.
The following table reconciles the net (loss) income
attributable to the Company excluding the effect of unrealized gain
(loss) from equity securities to net (loss) income attributable to
the Company for the periods indicated:
Three Months Ended
Three Months Ended August 31, 2019
August 31, 2018 (Unaudited) (Unaudited)
Amount
Dilutedearningspercommonshare Amount
Dilutedearningspercommonshare (000’s except per common share
amounts and percentages)
Net (Loss)
Income Attributable to the Company Excluding the Effect of
Unrealized Gain (Loss) from Equity Securities and Diluted Earnings
per Common Share Reconciliation:
Net (loss) income
attributable to the Company
$
(219
)
$
(0.00
)
$
3,211
$
0.07
Unrealized (loss) gain from
equity securities
(4,847
)
9,783
Unrealized (loss) gain from equity securities attributable
to noncontrolling interests
(5,348
)
10,071
Unrealized gain (loss) from equity securities attributable
to the Company
501
(288
)
Tax (provision)/benefit on unrealized gain (loss) from
equity securities attributable to the company
(675
)
283
Unrealized (loss) from equity securities attributable to the
Company, net of taxes
(174
)
$
(0.00
)
(5
)
$
0.00
Net (loss) income
attributable to the Company excluding the effect of unrealized gain
(loss) from equity securities
$
(45
)
$
(0.00
)
$
3,216
$
0.07
Weighted average diluted shares
outstanding
43,983,335
44,023,435
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version on businesswire.com: https://www.businesswire.com/news/home/20191015006179/en/
Thérèse Byars Corporate Secretary Email: tbyars@frmocorp.com
Telephone: 646-495-7337 www.frmocorp.com