WHITE PLAINS, N.Y.–(BUSINESS WIRE)–FRMO Corp. (the “Company” or “FRMO”) (OTC Pink:FRMO) today reported its financial results for the fiscal year 2020, ended May 31, 2020.

Financial Highlights

FRMO’s book value as of May 31, 2020 was $161.9 million ($3.68 per share on a fully diluted basis), including $46.9 million of non-controlling interests. This compares with book value at the prior fiscal year ended May 31, 2019 of $174.9 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 $104.8 million as of May 31, 2020, and $118.3 million as of May 31, 2019. Total liabilities were $11.8 million as of May 31, 2020, and $16.7 million as of May 31, 2019, comprised primarily of securities sold, not yet purchased and deferred taxes.

Annual net (loss) income attributable to the Company in the fiscal year ended May 31, 2020 fell to $(14.6) million, or $(0.33) per share, from $4.7 Million, or $0.11 per share, a year earlier.

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 May 31, 2020 was $(7,811,801) ($(0.18) per diluted share) compared to $3,398,500 ($0.08 per diluted share) for the three months ended May 31, 2019. For the year ended May 31, 2020, the amount was $(9,204,355) ($(0.21) per share) compared to $9,027,157 ($0.21 per share) for the same period in the prior 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 May 31, 2020 and May 31, 2019, the Company held a 19.23% 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 80.77% and 84.51% in HKHA has been eliminated from results of operations for the periods ended May 31, 2020 and May 31, 2019.

Further details are available in the Company’s Consolidated Financial Statements for the fiscal year ended May 31, 2020. 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

Murray Stahl, Chairman and CEO, and Steven Bregman, President and CFO, will host the 2020 Annual Meeting of Shareholders (“Meeting”) at 3 p.m. EDT on Thursday, September 10, 2020, which will be held online via live webcast only at www.virtualshareholdermeeting.com/FRMO2020.

Admission to the FRMO virtual Annual Meeting is limited to stockholders who owned Common Stock as of the close of business on July 27, 2020, the record date, or their duly appointed proxies or properly registered guests. Guests may register for the webcast by entering their first and last names and a valid email address. Only shareholders with valid control numbers will be able to vote and ask questions at the Annual Meeting. Shareholders and guests may submit questions in advance to info@frmocorp.com by 11:59 P.M. Eastern Time on Wednesday, September 9, 2020 (the day before the Annual Meeting).

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

2020

 

2019

     
Assets    
Current Assets:    
Cash and cash equivalents  

$

38,443

 

$

53,081

Equity securities, at fair value  

 

63,836

 

 

63,565

Other current assets  

 

2,536

 

 

1,639

Total Current Assets  

 

104,815

 

 

118,285

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

 

40,898

 

 

47,513

Investments in securities exchanges  

 

5,061

 

 

3,641

Other assets  

 

1,807

 

 

547

Investment in Horizon Kinetics LLC  

 

10,876

 

 

11,488

Participation in Horizon Kinetics LLC revenue stream  

 

10,200

 

 

10,200

Total Assets  

$

173,657

 

$

191,674

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

$

4,136

 

$

8,133

Other current liabilities  

 

185

 

 

161

Total Current Liabilities  

 

4,321

 

 

8,294

Deferred Tax Liability  

 

6,701

 

 

8,383

Mortgage payable  

 

751

 

 

Total Liabilities  

 

11,773

 

 

16,677

     
Stockholders’ Equity:    
Stockholders’ Equity Attributable to the Company  

 

114,993

 

 

126,384

Noncontrolling interests  

 

46,891

 

 

48,613

Total Stockholders’ Equity  

 

161,884

 

 

174,997

     
Total Liabilities and Stockholders’ Equity  

$

173,657

 

$

191,674

Condensed Consolidated Statements of Income (Loss)        
(amounts in thousands, except share data)        
 

Three Months Ended

 

Years Ended

 

May 31,

 

May 31,

 

May 31,

 

May 31,

 

2020

 

2019

 

2020

 

2019

  (Unaudited)  
Revenue:        
Consultancy and advisory fees  

$

567

 

 

$

522

 

 

$

2,264

 

 

$

2,027

Equity earnings (loss) from partnerships and limited liability companies  

 

3,649

 

 

 

2,360

 

 

 

5,519

 

 

 

2,560

Unrealized (losses) gains from investments recorded at fair value  

 

(10,097

)

 

 

1,283

 

 

 

(12,559

)

 

 

3,839

Other  

 

(3,706

)

 

 

863

 

 

 

(1,926

)

 

 

4,414

Total revenue before unrealized (losses) gains from equity securities  

 

(9,587

)

 

 

5,028

 

 

 

(6,702

)

 

 

12,840

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

 

(9,091

)

 

 

(3,376

)

 

 

(15,440

)

 

 

6,725

Total Revenue  

 

(18,678

)

 

 

1,652

 

 

 

(22,142

)

 

 

19,565

Total Expenses  

 

323

 

 

 

345

 

 

 

1,337

 

 

 

1,332

         
(Loss) Income from Operations  

 

(19,001

)

 

 

1,307

 

 

 

(23,479

)

 

 

18,233

(Benefit from) Provision for Income Taxes  

 

(3,420

)

 

 

661

 

 

 

(152

)

 

 

1,026

Net (Loss) Income  

 

(15,581

)

 

 

646

 

 

 

(23,327

)

 

 

17,207

Less net (loss) income attributable to noncontrolling interests  

 

(6,249

)

 

 

(955

)

 

 

(8,763

)

 

 

12,498

Net (Loss) Income Attributable to FRMO Corporation  

$

(9,332

)

 

$

1,601

 

 

$

(14,564

)

 

$

4,709

         
Diluted Net (Loss) Income per Common Share  

$

(0.21

)

 

$

0.04

 

 

$

(0.33

)

 

$

0.11

         
Weighted Average Common Shares Outstanding        
Basic  

 

44,032,781

 

 

 

43,976,781

 

 

 

44,020,024

 

 

 

43,974,940

Diluted  

 

44,032,781

 

 

 

44,015,088

 

 

 

44,020,024

 

 

 

44,016,535

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 May 31, 2020.

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   Year Ended   Year Ended
  May 31, 2020   May 31, 2019   May 31, 2020   May 31, 2019
  (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 (Loss) Gain from Equity Securities and Diluted Earnings per Common Share Reconciliation:                
                 
Net (loss) income attributable to the Company  

$

(9,332

)

 

$

(0.21

)

 

$

1,601

 

 

$

0.04

 

 

$

(14,564

)

 

$

(0.33

)

 

$

4,709

 

 

$

0.11

 

                 
Unrealized (loss) gain from equity securities  

 

(9,091

)

   

 

(3,376

)

   

 

(15,440

)

   

 

6,725

 

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

 

(7,766

)

   

 

(1,319

)

   

 

(10,285

)

   

 

12,135

 

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

 

(1,325

)

   

 

(2,057

)

   

 

(5,155

)

   

 

(5,410

)

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

 

(194

)

   

 

260

 

   

 

(205

)

   

 

1,092

 

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

 

(1,519

)

 

$

(0.03

)

 

 

(1,797

)

 

$

(0.04

)

 

 

(5,360

)

 

$

(0.12

)

 

 

(4,318

)

 

$

(0.10

)

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

$

(7,813

)

 

$

(0.18

)

 

$

3,398

 

 

$

0.08

 

 

$

(9,204

)

 

$

(0.21

)

 

$

9,027

 

 

$

0.21

 

                 
Weighted average diluted shares outstanding  

 

44,032,781

 

   

 

44,015,088

 

   

 

44,020,024

 

   

 

44,016,535

 

 

 

Contacts

Thérèse Byars

Corporate Secretary

tbyars@frmocorp.com
646-495-7337

www.frmocorp.com