Frmo Corp

Good afternoon, everyone. This is Therese Beyer speaking, and I'm the Corporate Secretary of FRMO Corp. Thank you for joining us on this 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 fund. 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 investment. For additional information, you may visit the FRMO Corp website at www.frmocorp.com Today's discussion will be led by Murray Stahl, Chairman and Chief Executive Officer, and Stephen Bredman, President and Chief Financial Officer. They will review key points related to the 2024 first quarter earnings. And a replay for this call will be available on the FRMO website until the summary transcript is posted. And now I'll turn the discussion over to Mr. Stahl.

Okay, thanks, Therese, and thanks, everybody, for joining us today. I was going to start with some general remarks, but I'm going to, like I always do, but I'm going to add some general remarks to my general remarks. And my first general remark to my general remarks is that we always try to do this real time. that there's not a lot of tremendous preparation that goes into this. We're just taking questions and whatever's happening right now is what we end up talking about. It's very, very real time. And you might be aware, or perhaps you're not aware, that the conference call format is slightly different. Ordinarily, we actually have a conference call company that prepares the meeting for us and invites all the attendees And now we're doing it ourselves. We're doing the technology ourselves. The reason for that is that the prices, and I was just informed of this literally about when this call was starting. So if we're starting two or three minutes late, those two or three minutes were extended entirely on informing yours truly that the prices for the conference call companies, such as it is, went so high that we thought we'd rather just do it ourselves and save the money. So in light of one of the things that we almost always talk about is inflation, there is an example of inflation that I personally wasn't aware of because I never really thought about. And I guess it inculcated in everyone an awareness of inflation. The prices went up a lot, meaning they went up a lot more than the generalized rate of inflation that you'll see published as the CPI. And at some point, we're just going to do it ourselves. Now, the reason that's so interesting, apart from the fact that It's one microcosmic example of inflation. One of the reasons, and this actually fits in perfectly, because one of the reasons that the inflation rate is what it actually is, is that the inflation calculation assumes substitution. So the price of a given commodity rises. The way the inflation rate was calculated in the prior modality was Well, there's a basket of things, and if a given item increases 10%, you multiply 10% by its weight and do that for every item in the basket. That's the inflation rate. That's not the way the rate is calculated right now. So the way the rate is calculated is it's assumed that if something rises by significantly more than the rate of inflation, that the way people cope with inflation is, and there's some actually truth in it, but it also distorts the numbers, they'll substitute something else, just like we did right now. So rather than pay the extra price for the conference call, we eliminated that cost by doing it ourselves. Now, obviously, there's a limitation on how far you can do it. So I'll just give you an arithmetical example and to show you how inflation is prevalent in our circumstances and how you can't rely on inflation number. Let's assume for the purposes of this discussion only, because we're doing it over the phone and we want to keep it as simple as possible, and obviously the world is much more complex than I'm going to hypothesize here, a human being could live by buying only two commodities for a given year, chicken and beef. And what you need to survive is you need for the year three pounds of chicken. You don't have to buy it all at once. You can buy it in gradual increments. But at the end of the year, you will have consumed three pounds of chicken, and that chicken will cost you $3 a pound for $9. You also require two pounds of beef. That's $4 a pound, and that'll be $8, obviously. So when you sum those two expenditures, you got $17 of annual expenditures per year. So that's your inflation base. Let's assume the price of chicken doesn't go up, but the price of beef goes to $5 a pound. Now, the way the inflation rate is calculated until a number of years ago was thusly. You're now consuming three pounds of chicken as before, and it costs $3 a piece, so it's still $9. And you're still consuming two pounds of beef because the basket remains constant. But now it's $5 a pound instead of $4 a pound instead of paying $8 for the course of the year. You would have paid $9 and $10 is $19. and compared to the prior number of 17, obviously a double-digit inflation. That's how the inflation was calculated for most of the history of the inflation numbers, until I think the watershed event, meaning the change in calculation, came about 20 years ago. Subsequent to that, we have what's called the chain-link method, which would be better named if they called it the substitution method, because that's really what it is. So here's how the substitution method works. We're going to assume, and there's no empirical data on this, you have to make an assumption, that the average person in this limited example is going to consume four pounds of chicken because it's cheaper than beef. You consume four pounds of chicken, even if it happens to have less nutritional value, you'll make that sacrifice, but the price is the same. So it's four pounds of chicken, and it's three dollars a pound still well three times four is twelve that's your chicken expenses but your beef consumption reduced to one pound as opposed to two it's now five dollars a pound so obviously that adds another five dollars to your expense which 12 and 5 is 17. there is no rate of inflation so when you look at the published inflation numbers it's very very important that you take that into account So when we're looking at things, and people, of course, are very influenced by the published number, which is fine, but I think it's worthwhile knowing how the published number comes about. In other words, how that published number is calculated. So important to us is building inflation into our investments, because I think we're going to have a lot of inflation. And maybe in a Q&A, someone will ask me about that, but The inflation thesis, I think it's worthwhile focusing on, that it's difficult to express in the published numbers. Now, that's why we own Texas Pacific and some other things. We can get into that later, if you like. And for the business that we're developing, we're developing a cryptocurrency business. So cryptocurrency, in principle, should be a beneficiary of inflation, but what it is, no inflation. Cryptocurrency, in my humble opinion, will work even if there's no inflation. So we have various investments in crypto. I'll just touch on a few, and you'll see we expanded our crypto business gradually. So we have our own servers. We accumulate some crypto, and on our website, we now put a table so you don't have to read all these crypto numbers. You can look at it yourself, and you can see what it is. gradually increasing our exposure to crypto. Why gradually? Because as a function of the economics of crypto, the purchasing power of crypto in relation to the equipment you have to buy to mine crypto is constantly getting cheaper.

So in round numbers, years ago when we started, you could have bought