FRMO Corp. (the “Company” or “FRMO”) (OTC Pink: FRMO) today
reported its financial results for the 2019 third quarter, which
ended February 28, 2019 (May Fiscal Year).
Financial Highlights
FRMO’s book value as of February 28, 2019 was $171.0 million
($3.89 per share on a fully diluted basis), including $46.8 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 $115.8 million as of February 28, 2019, and
$93.2 million as of May 31, 2018. Total liabilities were $14.6
million as of February 28, 2019, compared to $13.5 million as of
May 31, 2018, the majority of each being deferred taxes.
FRMO’s net (loss) income attributable to the Company for the
three months ended February 28, 2019 was $(686,989) ($(0.02) per
share basic and diluted) compared to $13,053,961 ($0.30 per share)
for the quarter ended February 28, 2018. For the nine months ended
February 28, 2019, net income attributable to the company was
$3,108,131 ($0.07 per share basic and diluted) compared to
$18,317,781 ($0.42 per share) for the same period in the prior
year.
For the third quarter of fiscal 2019, comprehensive (loss)
income attributable to the Company was $(686,989) compared to
$12,743,418 in the prior year. For the nine months ended February
28, 2019, comprehensive income attributable to the Company was
$3,108,131 and for the prior year it was $18,220,191.
FRMO’s net income attributable to the Company excluding the
effect of unrealized gain (loss) from equity securities net of
taxes for the three months ended February 28, 2019 was $587,901
($0.01 per diluted share) compared to $13,053,961 ($0.30 per share)
for the three months ended February 28, 2018. For the nine months
ended February 28, 2019, the amount was $5,628,657 ($0.13 per
share) compared to $18,317,781 ($0.42 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 February, 28, 2019 and May 31, 2018, investments in
limited partnerships and limited liability companies are valued
using data inputs from December 31, 2018 and March 31, 2018,
respectively, the dates of the most currently available
information. Management reviews relevant market and related data to
reconcile for the period from January 1 through February 28.
Because of its significance, subsequent market volatility has been
reflected in these condensed consolidated financial statements.
FRMO’s Board of Directors approved a 2019 Stock Repurchase Plan
whereby the company will buy back up to 360,000 shares of its
common stock in the open market, from time to time during 2019, as
it sees fit.
Further details are available in the Quarterly Report of the
Company’s Interim Condensed Consolidated Financial Statements for
the quarter ended February 28, 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, April 25, 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 877-260-1479 (domestic toll free) or +1
334-323-0522 (international toll) and entering the following
conference ID: 8638052. A replay will be available from 7:15
p.m. on the day of the teleconference until Saturday, May 25, 2019.
To listen to the archived call, dial 888-203-1112 (US/Canada) or +1
719-457-0820 (International Toll) and enter conference ID number
8638052.
Condensed Consolidated Balance Sheets (in
thousands)
February 28, May 31, 2019
2018 (unaudited) Assets Current Assets: Cash
and cash equivalents $ 52,823 $ 53,617 Equity securities, at fair
value 61,501 38,522 Other current assets 1,506 1,095
Total Current Assets 115,830 93,234 Computer equipment, net of
accumulated depreciation 96 76
Investment in limited partnerships and
otherequity investments, at fair value
44,166 41,407 Investments in stock exchanges 3,647 3,709 Other
investments 314 189 Investment in Horizon Kinetics LLC 11,348
11,624 Participation in Horizon Kinetics LLC revenue stream
10,200 10,200
Total Assets $ 185,601 $ 160,439
Liabilities and Stockholders' Equity Current Liabilities:
Securities sold, not yet purchased $ 7,000 $ 5,495 Other current
liabilities 172 193 Total Current Liabilities 7,172
5,688 Deferred Tax Liability 7,403 7,757 Total
Liabilities 14,575 13,445 Stockholders'
Equity: Stockholders' Equity Attributable to the Company 124,166
119,411 Noncontrolling interests 46,860 27,583 Total
Stockholders' Equity 171,026 146,994
Total
Liabilities and Stockholders' Equity $ 185,601 $ 160,439
Condensed Consolidated Statements of
Operations (amounts in thousands, except share data)
Three
Months Ended Nine Months Ended February 28,
February 28, February 28, February 28,
2019 2018 2019
2018 (Unaudited) (Unaudited) Revenue:
Consultancy and advisory fees $ 462 $ 1,782 $ 1,505 $ 2,746
Equity earnings (losses) from
partnershipsand limited liability companies
(1,463 ) 1,901 200 3,465 Unrealized gains (losses) from investments
subject to fair value valuation (2,658 ) 8,923 2,556 14,859 Equity
earnings (loss) from investment in The Bermuda Stock Exchange 70 (3
) 187 14 Other 3,186 175
3,364 363 Total revenue before
unrealized gains (losses) from equity securities (403 ) 12,778
7,812 21,447 Unrealized gains (losses) from equity securities
(7,228 ) - 10,101
- Total Revenue (7,631 ) 12,778 17,913 21,447
Total Expenses 282 198
987 610 Income (Loss)
from Operations (7,913 ) 12,580 16,926 20,837 Provision for
(Benefit from) Income Taxes (1,254 ) (465 )
365 2,554
Net Income
(Loss) (6,659 ) 13,045 16,561 18,283 Less net income (loss)
attributable to noncontrolling interests (5,972 )
(9 ) 13,453 (35 )
Net Income
(Loss) Attributable to FRMO Corporation $ (687 ) $
13,054 $ 3,108 $ 18,318 Diluted
Net Income (Loss) per Common Share $ (0.02 ) $ 0.30 $ 0.07 $ 0.42
Weighted Average Common Shares Outstanding Basic 43,975,414
43,956,155 43,974,319 43,954,759 Diluted 43,975,414 44,015,852
43,974,319 44,002,613
About FRMO Corp.
FRMO Corp. invests in and receives revenues based upon
consulting and advisory fee interests in the asset management
sector.
FRMO had 43,976,781 shares of common stock outstanding as of
February 28, 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 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 Nine Months Ended
Nine Months Ended February 28, 2019 February 28,
2018 February 28, 2019 February 28, 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Amount
Dilutedearningspercommonshare
Amount
Dilutedearningspercommonshare
Amount
Dilutedearningspercommonshare
Amount
Dilutedearningspercommonshare
(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 (loss) attributable to the Company
$ (687 ) $ (0.02 )
$ 13,054 $ 0.30 $ 3,108
$ 0.07 $ 18,318 $
0.42 Unrealized gains (losses) from equity securities
(7,228 ) - 10,101 -
Unrealized gains (losses) from equity
securities attributable tononcontrolling interests
(5,969 ) - 13,454 -
Unrealized gain (loss) from equity
securities attributable to theCompany
(1,259 ) - (3,353 ) -
Tax benefit on unrealized gain (loss) from
equity securitiesattributable to the company
(16 ) - 832 -
Unrealized gain (loss) from equity
securities attributable to theCompany, net of taxes
(1,275 )
$ (0.03 ) -
$
0.00 (2,521 )
$ (0.06 ) -
$ 0.00
Net income attributable to the Company
excluding the effect of unrealized gain (loss) from equity
securities
$ 588 $ 0.01 $
13,054 $ 0.30 $ 5,629
$ 0.13 $ 18,318 $ 0.42
Weighted average diluted shares outstanding
43,975,414 44,015,852 43,974,319
44,002,613
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version on businesswire.com: https://www.businesswire.com/news/home/20190415005914/en/
Thérèse ByarsCorporate SecretaryEmail:
tbyars@frmocorp.comTelephone: 646-495-7337www.frmocorp.com