FRMO Corp. Announces Third Quarter Results and Conference Call | Business & Finance

WHITE PLAINS, N.Y.–(BUSINESS WIRE)–Apr 14, 2021–

FRMO Corp. (the “Company” or “FRMO”) (OTC Pink: FRMO) today reported its financial results for the 2021 third quarter, ended February 28, 2021 (May fiscal year).

FRMO’s book value as of February 28, 2021 was $257.9 million ($5.86 per share on a fully diluted basis), including $94.5 million of non-controlling interests. This compares with book value at the prior fiscal year ended May 31, 2020 of $161.9 million ($3.68 per share), including $46.9 million of non-controlling interests. Current assets, comprised primarily of cash and equivalents and equity securities, amounted to $173.1 million as of February 28, 2021, and $104.8 million as of May 31, 2020. Total liabilities were $28.9 million as of February 28, 2021, and $11.8 million as of May 31, 2020, comprised primarily of securities sold, not yet purchased and deferred taxes.

FRMO’s net income (loss) attributable to the Company for the three months ended February 28, 2021 was $34,336,936, or $0.78 per share, compared to $(4,532,007), or $(0.10) per share for the three months ended February 29, 2020.

FRMO’s net income (loss) attributable to the Company for the nine months ended February 28, 2021 was $46,190,543, or $1.05 per share, compared to $(5,232,587), or $(0.12) per share for the nine months ended February 29, 2020.

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 February 28, 2021 was $20,859,722 ($0.47 per diluted share) compared to $(1,156,465) (($0.03) per diluted share) for the three months ended February 29, 2020.

For the nine months ended February 28, 2021, the figure was $30,884,839 (0.70 per diluted share) compared to $(1,392,553) ((0.03) per share) for the nine months ended February 29, 2020.

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.

Valuation of securities and cryptocurrencies are subject to change after February 28, 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 February 28, 2021 and May 31, 2020, the Company held a 21.83% and 19.23% 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 78.17% and 80.77% in HKHA has been eliminated from results of operations for the periods ended February 28, 2021 and May 31, 2020.

Further details are available in the Company’s Condensed Consolidated Financial Statements for the quarter ended February 28, 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.

Murray Stahl, Chairman and CEO, and Steven Bregman, President and CFO, will host a conference call on Thursday, April 22, 2021 at 4:15 p.m. ET. Only questions submitted to [email protected] before 1:00 p.m. on the day of the call will be considered. The call can be accessed by dialing 800-363-2106 (domestic toll free), or +1 334-323-0505 (international toll) and entering the following conference ID: 7275594. A replay will be available from 7:15 p.m. on the day of the teleconference until May 22, 2021. 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 7275594.

Condensed Consolidated Balance Sheets
(in thousands)
February 28, May 31,

2021

2020

(Unaudited)
Assets
Current Assets:
Cash and cash equivalents

$

36,738

$

38,443

Equity securities, at fair value

 

134,970

 

63,836

Other current assets

 

1,394

 

2,536

Total Current Assets

 

173,102

 

104,815

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

 

83,685

 

40,898

Investments in securities exchanges

 

5,061

 

5,061

Other assets

 

1,769

 

1,807

Investment in Horizon Kinetics LLC

 

12,965

 

10,876

Participation in Horizon Kinetics LLC revenue stream

 

10,200

 

10,200

Total Assets

$

286,782

$

173,657

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

$

6,231

$

4,136

Other current liabilities

 

3,888

 

185

Total Current Liabilities

 

10,119

 

4,321

Deferred Tax Liability

 

18,041

 

6,701

Mortgage payable

 

737

 

751

Total Liabilities

 

28,897

 

11,773

 
Stockholders’ Equity:
Stockholders’ Equity Attributable to the Company

 

163,392

 

114,993

Noncontrolling interests

 

94,493

 

46,891

Total Stockholders’ Equity

 

257,885

 

161,884

 
Total Liabilities and Stockholders’ Equity

$

286,782

$

173,657

 
 
Condensed Consolidated Statements of Operations
(amounts in thousands, except share data)
Three Months Ended Nine Months Ended
February 28, February 29, February 28, February 29,

2021

 

2020

 

2021

 

2020

(Unaudited) (Unaudited)
Revenue:
Consultancy and advisory fees

$ 1,409

$ 650

$ 2,369

$ 1,697

Equity earnings from partnerships
and limited liability companies

1,789

777

2,294

1,870

Unrealized gains (losses) from investments recorded at fair value

28,995

(249)

42,334

#

(2,462)

Other

944

5

(760)

1,780

Total revenue before unrealized gains (losses) from equity securities

33,137

1,183

46,237

#

2,885

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

56,344

(2,907)

62,022

(6,349)

Total Revenue

89,481

(1,724)

108,259

(3,464)

Total Expenses

328

314

1,052

1,014

 
Income (Loss) from Operations

89,153

(2,038)

107,207

(4,478)

Provision for Income Taxes

12,799

1,204

16,892

3,267

Net Income (Loss)

76,354

(3,242)

90,315

(7,745)

Less net income (loss) attributable to noncontrolling interests

42,017

1,290

44,125

(2,513)

Net Income (Loss) Attributable to FRMO Corporation

$ 34,337

$ (4,532)

$ 46,190

$ (5,232)

 
Diluted Net Income (Loss) per Common Share

$ 0.78

$ (0.10)

$ 1.05

$ (0.12)

 
Weighted Average Common Shares Outstanding
Basic

44,032,781

44,032,781

44,022,744

44,015,741

Diluted

44,055,150

44,032,781

44,038,347

44,015,741

 

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 February 28, 2021.

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.

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 Nine Months Ended Nine Months Ended
February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
(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 (Loss) 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

$ 34,337

$ 0.78

$ (4,532)

$ (0.10)

$ 46,190

$ 1.05

$ (5,232)

$ (0.12)

 
Unrealized gain (loss) from equity securities

56,344

(2,907)

62,022

(6,349)

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

41,235

1,283

43,884

(2,519)

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

15,109

(4,190)

18,138

(3,830)

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

(1,632)

814

(2,833)

(11)

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

13,477

$ 0.31

(3,376)

$ (0.08)

15,305

$ 0.35

(3,841)

$ (0.09)

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

$ 20,860

$ 0.47

$ (1,156)

$ (0.03)

$ 30,885

$ 0.70

$ (1,391)

$ (0.03)

 
Weighted average diluted shares outstanding

44,055,150

44,032,781

44,038,347

44,015,741

 
(Earnings per share components may not sum to totals due to rounding)

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: PROFESSIONAL SERVICES FINANCE

Copyright Business Wire 2021.

PUB: 04/14/2021 08:45 PM/DISC: 04/14/2021 08:45 PM

Copyright Business Wire 2021.

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