14.01.2019 23:24:00

FRMO Corp. Announces Second Quarter 2019 Financial Results and Conference Call

FRMO Corp. (the "Company” or "FRMO”) (OTC Pink:FRMO) today reported its financial results for the 2019 second quarter, which ended November 30, 2018 (May Fiscal Year).

Financial Highlights

FRMO’s book value as of November 30, 2018 was $175.5 million ($3.99 per share on a fully diluted basis), including $51.3 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 $118.0 million as of November 30, 2018, and $93.2 million as of May 31, 2018. Total liabilities were $16.5 million as of November 30, 2018, compared to $13.5 million as of May 31, 2018, the majority of each being deferred taxes.

FRMO’s net income attributable to the Company for the three months ended November 30, 2018 was $583,997 ($0.01 per share basic and diluted) compared to $3,076,381 ($0.07 per share) for the quarter ended November 30, 2017. For the six months ended November 30, 2018, net income was $3,795,120 ($0.09 per share basic and diluted) compared to $5,263,820 ($0.12 per share) for the same period in the prior year.

Income from operations was $10,266,021 for the second quarter of fiscal 2019, compared to $5,041,929 for the same period in the prior year. For the six months ended November 30, 2018, income from operations was $24,839,530 compared to $8,257,412 in the prior year. For the second quarter of fiscal 2019, comprehensive income attributable to the Company was $583,997 compared to $3,489,279 in the prior year. For the six months ended November 30, 2018, comprehensive income attributable to the Company was $3,795,120 and for the prior year it was $5,476,773.

FRMO’s net income attributable to the Company excluding the effect of unrealized gains from equity securities net of taxes for the three months ended November 30, 2018 was $1,824,760 ($0.04 per diluted share) compared to $3,076,381 ($0.07 per share) for the three months ended November 30, 2017. For the six months ended November 30, 2018, the amount was $5,040,756 ($0.11 per share) compared to $5,263,820 ($0.12 per share) for the same period in the prior year. Net income attributable to the Company excluding the effect of unrealized 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 November 30, 2018 and May 31, 2018, investments in limited partnerships and limited liability companies are valued using data inputs from September 30, 2018 and March 31, 2018, respectively, the dates of the most currently available information.

Further details are available in the Quarterly Report of the Company’s Interim Condensed Consolidated Financial Statements for the quarter ended November 30, 2018. 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, January 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 1-855-710-4181 (domestic toll free) or 334-323-0516 (international toll) and entering the following conference ID: 5792922. A replay will be available from 7:15 p.m. on the day of the teleconference until Thursday, November 15, 2018. To listen to the archived call, dial 1-888-203-1112 (domestic toll free) or 719-457-0820 (international toll) and enter conference ID number 5792922.

_________________________________________________________________________________

         
Condensed Consolidated Balance Sheets
(in thousands)
November 30, May 31,
2018 2018
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 51,384 $ 53,617
Equity securities, at fair value 65,667 38,522
Other current assets   960   1,095
Total Current Assets 118,011 93,234
Computer equipment, net of accumulated depreciation 102 76
Investment in limited partnerships and other
equity investments, at fair value 47,613 41,407
Investments in stock exchanges 3,577 3,709
Other investments 321 189
Investment in Horizon Kinetics LLC 12,138 11,624
Participation in Horizon Kinetics LLC revenue stream   10,200   10,200
Total Assets $ 191,962 $ 160,439
 
Liabilities and Stockholders' Equity
Current Liabilities:
Securities sold, not yet purchased $ 7,619 $ 5,495
Other current liabilities   214   193
Total Current Liabilities 7,833 5,688
Deferred Tax Liability   8,613   7,757
Total Liabilities   16,446   13,445
 
Stockholders' Equity:
Stockholders' Equity Attributable to the Company 124,237 119,411
Noncontrolling interests   51,279   27,583
Total Stockholders' Equity   175,516   146,994
 
Total Liabilities and Stockholders' Equity $ 191,962 $ 160,439
 
                 
Condensed Consolidated Statements of Operations
(amounts in thousands, except share data)
Three Months Ended Six Months Ended
November 30, November 30, November 30, November 30,
2018     2017     2018     2017
(Unaudited) (Unaudited)
Revenue:
Consultancy and advisory fees $ 500 $ 525 $ 1,042 $ 964
Equity earnings from partnerships
and limited liability companies 950 515 1,663 1,564
Unrealized gains from investments subject to fair value valuation 1,697 4,173 5,214 5,937
Equity earnings from investment in The Bermuda Stock Exchange 54 5 117 17
Other   (75)       50       179       187
Total revenue before unrealized gains from equity securities 3,126 5,268 8,215 8,669
Unrealized gains from equity securities   7,546       -       17,329       -
Total Revenue 10,672 5,268 25,544 8,669
Total Expenses   406       226       705       412
 
Income from Operations 10,266 5,042 24,839 8,257
Provision for Income Taxes   330       1,978       1,619       3,019
Net Income 9,936 3,064 23,220 5,238
Less net income (loss) attributable to noncontrolling interests   9,352       (12)       19,425       (26)
Net Income Attributable to FRMO Corporation $ 584     $ 3,076     $ 3,795     $ 5,264
 
Diluted Net Income per Common Share $ 0.01 $ 0.07 $ 0.09 $ 0.12
 
Weighted Average Common Shares Outstanding
Basic 43,973,781 43,955,001 43,973,781 43,954,073
Diluted 44,021,101 43,955,001 44,022,432 44,005,034
 

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

FRMO had 43,973,781 shares of common stock outstanding as of November 30, 2018.

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     Six Months Ended     Six Months Ended
November 30, 2018 November 30, 2017 November 30, 2018 November 30, 2017
(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 Attributable to the Company
Excluding the Effect of Unrealized Gain (Loss)
from Equity Securities and Diluted Earnings
per Common Share Reconciliation:

 
Net income attributable to the Company $ 584 $ 0.01 $ 3,076 $ 0.07 $ 3,795 $ 0.09 $ 5,264 $ 0.12
 
Unrealized gains from equity securities 7,546 - 17,329 -

Unrealized gains from equity securities attributable
to noncontrolling interests

  9,352   -   19,422   -

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

(1,806) - (2,093) -

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

  565   -   848   -

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

  (1,241) $ (0.03)   - $ 0.00   (1,245) $ (0.03)   - $ 0.00
 

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

$ 1,825 $ 0.04 $ 3,076 $ 0.07 $ 5,040 $ 0.11 $ 5,264 $ 0.12
 
Weighted average diluted shares outstanding   44,021,101   43,955,001   44,022,432   44,005,034
 

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