FRMO Corporation (OTC:FRMO) Q2 2023 Earnings Call Transcript

FRMO Corporation (OTC:FRMO) Q2 2023 Earnings Call Transcript January 17, 2023

Operator: The broadcast is now starting. All attendees are in listen-only mode.

Photo by Nicholas Cappello on Unsplash

Thérèse Byars: Good afternoon everyone. This is Therese Byars speaking and I’m the Corporate Secretary of FRMO Corp. Thank you for joining us today for the Company’s 2023 second quarter earnings conference call. The statements made on this call apply only as of today. The information on this call should not be construed to be a recommendation to purchase or sell any particular security or investment funds. The opinions referenced on this call today are not intended to be a forecast of future events or a guarantee of future results. It should not be assumed that any of the security transactions referenced today have been or will prove to be profitable or that future investment decisions will be profitable or will equal or exceed the past performance of the investments.

For additional information, you may visit the FRMO Corp.’s website at frmocorp.com. Today’s discussion will be led by Murray Stahl, Chairman and Chief Executive Officer and Steven Bregman, President and Chief Financial Officer. They will review key points related to the 2023 second quarter earnings. A replay of this call will be available on the FRMO Corp.’s website until the summary transcript is posted. And now I’ll turn the discussion over to Mr. Stahl.

Murray Stahl: Okay. Thanks Therese, and thanks, everybody, for joining us today. Before I start talking about FRMO I just wanted to acknowledge the ultimate founder of FRMO was an attorney called Lester Tanner and he passed away a couple of days ago and Sunday was his funeral. I just want to acknowledge him. He was just an incredible unbelievably brilliant and warm human being and we probably wouldn’t have even have an FRMO Corporation, and in fact I should say probably we definitely wouldn’t have an FRMO Corporation were it not for his leadership and insight, and if we had more time I would tell you about his just amazing wife which he did amazing things even in retirement. So I just wanted to acknowledge him as a human being. He will be sorely missed. He was a great guy. He is one-of-a-kind and we’re going to miss him dearly.

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de minimis: The thing I want to focus on for the quarter is the development of our strategy in currency. I’ll first touch on Horizon. So Horizon itself has done pretty well. Horizon is for the year closing December 31, 2022 we collected a number of performance fees and a fair amount of net income, therefore that’s going to spillover in the revenue in next quarter FRMO because you will recall we have our revenue share. And there’s also some investments in FRMO and there are very comparable investments in Horizon, so they are going to have very similar kinds performance so expect some good news over there. And you’ll recall that everything is reported with regard to Horizon with a lag. So in our next quarter which for us is the calendar ending February 28, the Horizon information is going to be included as of December 31, just to your edification, and I know we’ve said this many times before, but just to bear that in mind, so there’s always a lag.

So right now from a Horizon point of view, we’re reporting things that are really September 30, as if they happened on December 31, because this was a bit of information we had at the time we did these financial statements. And the financial statements for us let’s not forget, as of November 30. Now our cryptocurrency strategy you will recall we entered cryptocurrency you might say gingerly and we were particular in maintaining that posture in the past year. In the past year other than may be the last week or so, cryptocurrency led by Bitcoin, basically declined endlessly. The cryptocurrency mining machinery declined even more and the cryptocurrencies declined more than Bitcoin. The reason for that is, and we’ll cover it later, there are three vectors that really govern the price of cryptocurrency particularly Bitcoin.

And you can bid cryptocurrency up, but you have to be very cognizant that’s a function of the always upcoming halving, the halving, that we’re to have halving basically means that the block award for mining Bitcoin is going to be cut in half, that’s why they call it halving and that’s cutting about 470 days.

de minimis: The thing I want to focus on for the quarter is the development of our strategy in currency. I’ll first touch on Horizon. So Horizon itself has done pretty well. Horizon is for the year closing December 31, 2022 we collected a number of performance fees and a fair amount of net income, therefore that’s going to spillover in the revenue in next quarter FRMO because you will recall we have our revenue share. And there’s also some investments in FRMO and there are very comparable investments in Horizon, so they are going to have very similar kinds performance so expect some good news over there. And you’ll recall that everything is reported with regard to Horizon with a lag. So in our next quarter which for us is the calendar ending February 28, the Horizon information is going to be included as of December 31, just to your edification, and I know we’ve said this many times before, but just to bear that in mind, so there’s always a lag.

So right now from a Horizon point of view, we’re reporting things that are really September 30, as if they happened on December 31, because this was a bit of information we had at the time we did these financial statements. And the financial statements for us let’s not forget, as of November 30. Now our cryptocurrency strategy you will recall we entered cryptocurrency you might say gingerly and we were particular in maintaining that posture in the past year. In the past year other than may be the last week or so, cryptocurrency led by Bitcoin, basically declined endlessly. The cryptocurrency mining machinery declined even more and the cryptocurrencies declined more than Bitcoin. The reason for that is, and we’ll cover it later, there are three vectors that really govern the price of cryptocurrency particularly Bitcoin.

And you can bid cryptocurrency up, but you have to be very cognizant that’s a function of the always upcoming halving, the halving, that we’re to have halving basically means that the block award for mining Bitcoin is going to be cut in half, that’s why they call it halving and that’s cutting about 470 days.

Q&A Session

HashMaster: The thing I want to focus on for the quarter is the development of our strategy in currency. I’ll first touch on Horizon. So Horizon itself has done pretty well. Horizon is for the year closing December 31, 2022 we collected a number of performance fees and a fair amount of net income, therefore that’s going to spillover in the revenue in next quarter FRMO because you will recall we have our revenue share. And there’s also some investments in FRMO and there are very comparable investments in Horizon, so they are going to have very similar kinds performance so expect some good news over there. And you’ll recall that everything is reported with regard to Horizon with a lag. So in our next quarter which for us is the calendar ending February 28, the Horizon information is going to be included as of December 31, just to your edification, and I know we’ve said this many times before, but just to bear that in mind, so there’s always a lag.

So right now from a Horizon point of view, we’re reporting things that are really September 30, as if they happened on December 31, because this was a bit of information we had at the time we did these financial statements. And the financial statements for us let’s not forget, as of November 30. Now our cryptocurrency strategy you will recall we entered cryptocurrency you might say gingerly and we were particular in maintaining that posture in the past year. In the past year other than may be the last week or so, cryptocurrency led by Bitcoin, basically declined endlessly. The cryptocurrency mining machinery declined even more and the cryptocurrencies declined more than Bitcoin. The reason for that is, and we’ll cover it later, there are three vectors that really govern the price of cryptocurrency particularly Bitcoin.

And you can bid cryptocurrency up, but you have to be very cognizant that’s a function of the always upcoming halving, the halving, that we’re to have halving basically means that the block award for mining Bitcoin is going to be cut in half, that’s why they call it halving and that’s cutting about 470 days.

Litecoin: Now you can say more or less the market is properly discounting the halving. So we’re much, much more favorably inclined to crypto. Now in our cryptocurrency exposure, apart from the crypto we own directly and indirectly in the funds, we have four cryptocurrency investments. I’m going to just mention them, because we don’t really highlight these things in the financial statements. One is called consensus mining, that is the merger and the capital raise of the original HK cryptocurrency mining partnerships and we did an offering. That offering is going to be listed in tradable and not in the distant future I’m guessing, but I’m thinking 60 to 75 days from now, maybe sooner.

Winland, which we used to call Winland Electronics, now it’s called Winland Holding because it’s holding a variety of:

HashMaster. HashMaster:

HashMaster is a:

HashMaster. We’ve done that more than once when we couldn’t get terms that we need and of:

HashMaster:

Digital Currency:

Bitcoin Investment Trust:

Ethereum:

ETCG:

Grayscale Zcash Investment Trust, ZCSH is the symbol and we own 6:

Ethereum Classic Investment Trust. We own:

Ethereum that we mine. You can’t mine Ethereum anymore because it went to proof of stake, for proof of work. We own:

Ethereum:

Ethereum:

Polestar: