Frmo Corp

point directly, not least to which actually most important remark, that despite all of that, the investing, and you can see how much money we spent, we increased our cash balance, not decreased our cash balance relative to fiscal year end. So, and our own shareholder equity, not the consolidated shareholder equity, where we consolidate our non-controlling interest in the HK hard assets, but our own equity interest now exceeds $206 million. So there's a substantial investment here with substantial liquidity and we expand in crypto little by little every quarter. So maybe the first thing I should tell you is why do we expand little by little every quarter when no one else seems to do that. And I know it might be excruciating to watch, but it's necessary to do it that way. The reason it's necessary to do it that way is because of two factors in the world of mining. One is that no matter what point in the cycle you are, this is a cycle of course relative to the halving in Bitcoin, you're always, every passing day, you're approaching yet another halving. So I would look at the halving or I would encourage you to look at the halving the following way. The block reward is cut in half. So another way of saying if you want to get the same block reward for your mining activity, essentially you have to have twice as many machines. Now in practice, you have to have many more than twice as many machines. Why do you need many more than twice as many machines? If the block reward is cut in half because the aggregate hash rate, meaning the number of machines you're competing with, in the entire Bitcoin system is ever growing. So if you want, even if it wasn't halving, you have to grow your equipment. That's the first problem. So you have to have twice as many machines to get the same number of coins. It's another way of saying it's mathematically the same as if the cost of mining just went up. And that's, by the way, one of the reasons that Bitcoin goes up over time. So halving plays a very important role. And it would be ever cognizant of that. So with the having, if everything else was stable, which it never is, but if it was, it would be a predictable, very high return security. Probably no security is as predictable or as high return as you're ever going to encounter. So the second factor is because you can think of it as if You need twice as many machines to get the same amount of Bitcoin. Therefore, your costs are rising. You have to be very, very cognizant of your usage of electric power. So you have to have machines that will be ever more economical in electric power usage. So no one seems to believe me when I say this, but I'll repeat yes again and yet again in the last seven or eight years. The electric power usage per transaction is down 96%. Doesn't mean the electric power usage of the entire system is down at all. Electric power usage of the system is up. Electric power usage per transaction is down 96%. And it has to continue, and it probably will continue. And the reason that's relevant for going slow in terms of buying equipment is when that happens, your equipment could be obsoleted. So what you'd like to do is you'd like to constantly be growing the amount of crypto you have, which I think we've done, if you look at all the quarterly statements, and you'd like to be doing it in such a way that you're always in a position to buy the most up-to-date equipment and you bought small enough equipment so that you've managed to use it completely and thoroughly during the cycle. So we've been very careful buying equipment One of the things you'll see in our cryptocurrency mining operations, we're now operating fully depreciated equipment. How long we'll be operating that is a question that I don't know the answer to, but the goal was to get to the point where we can operate properly fully depreciated equipment. Our policy is to depreciate new equipment over a two-year cycle and used equipment over a year or sometimes a year and a half. So we're very conservative of our depreciation. In consensus mining, I believe in round numbers, we're up to 266 roughly. I'll look this up for you in a second because I wrote it down. I beg your pardon. We're up to 265 bitcoins in consensus mining. We also, in consensus mining, as the most recent reckoning, this is data as of several days ago, but I think it'll be relevant. We have 6,618 Litecoin. Litecoin, you might be aware, is basically the same monetary policy as Bitcoin. It just started later. So at the moment, it has a wonderfully higher inflation rate, but it'll end up at the same point as Bitcoin. It's actually a lot more profitable. to mine Litecoin than mine Bitcoin. And you can make an argument for Litecoin. If Litecoin ever were to have the kind of use cases that Bitcoin is going to have, or at least some of it, the Litecoin aggregate hash rate would grow in relation to Bitcoin aggregate hash rate. And you'd make a lot of money out of that. And also, we own, as of several days ago, with other words, most recent reckoning, we own... 265, no, excuse me, 38.9, I beg your pardon, 38.9 Bitcoin cash. Now, Bitcoin cash is an interesting sort of animal because Bitcoin cash has the exact same monetary policy as Bitcoin itself. It's just that the Bitcoin hash rate, Bitcoin cash hash rate, is maybe a half of 1% the size of the Bitcoin hash rate. Therefore, the market capitalization Bitcoin Cash is something like one half of 1% of the Bitcoin hash rate and the Bitcoin mark capitalization. And as I said, if there was ever a use case for a bigger block size that one day there might be, you can make a lot of money in Bitcoin Cash. So it's kind of interesting. One of the reasons going back to Litecoin, that Litecoin is more profitable than Bitcoin is Litecoin engages in merge mining. It's both good and bad. So in other words, with the same mining rig, you can mine two coins. You can mine Litecoin, and you can buy Dogecoin. Dogecoin has a very profligate monetary policy, so I personally don't find it all that interesting. So we get paid entirely in Litecoin. We take our block reward entirely in Litecoin. Now, the more expensive Dogecoin is, the more of your electric bills you can pay with Dogecoin, and therefore... the less money it costs to mine Litecoin. Therefore, the less valuable Litecoin is. So theoretically, since I would assert Dogecoin has a profligate monetary policy, Dogecoin is going to underperform Litecoin. Dogecoin might even go down in value if it gets diluted enough. And to the degree Dogecoin underperforms Litecoin, Litecoin is worth more money. And just for that reason, you might make money off it. Anyway, We are in the process of buying some L7 miners, which is what mines Litecoin for Winland. So Winland, before very many weeks are out, will be mining Litecoin as well as Bitcoin. I think we're the first of the publicly traded miners to mine material amounts of Litecoin. I don't think any of the publicly traded miners do that. Now, Winland is public. Consensus is going to be public, hopefully not too distant future, so you'll be able to see their financial statements. And I hope you'll be impressed with the degree of liquidity we maintain. And I hope you'll be impressed with the degree to which we consistently increase the crypto holdings, which is very different than what other companies do. And we intend to increase our exposure. in this field. So, um, the crypto business is alive, it's healthy and it's growing. And, um, we didn't know seven or eight years ago when we started this venture, if crypto was a viable business or not, we just thought we knew enough about it to be able to make some reasonable assertions about it and, um, make some money at it. So that's what we ended up doing. And, um, So far, it's working out well. So a couple of other things I'll point you to in the balance sheet that I personally find intriguing. You can see why we're a long-term investor if you look at our balance sheet, November 30th, and you look at deferred tax liability of $25 million. The longer we hang on to what we have, the more money we're making off this, which is essentially an interest-free loan. So you really want to be long-term investors. That's not a small amount of money, even to our now expanded shareholder's equity. I'll also point you in the direction of the liability side of balance sheet. And securities sold short. These are largely the dysfunctional ETFs, the path-dependent ones. We keep selling short. And you'll observe, as of the most recent reckoning, $10,683,000 in short sale proceeds and a market value of $1,291,000. So it's a not insignificant part of our cash generation. And we continue to do it and we're likely to expand it when opportunities present themselves. One other thing I'll point you to, investments in securities exchanges. Our biggest holding in security exchanges, the Miami Options Holdings, which is colloquially known as MYEX, has come public yet, but it might come public one day. And I would pay attention to that valuation. That's a current valuation as a private company. You could look at their website. You can see how well the company is doing here. And I expect that to continue. So we're very, very excited and pleased what's going on at MyEx. So in summary, we have our crypto businesses. We have our exchanges businesses. We have our own investments. And last but not least, we have Horizon Canix. So Horizon Canix is in the process of doing a reverse merger into a company known as Scott's Liquid Gold, and it's publicly traded. So there's going to be, when this deal closes, I guess theoretically there's one now, a publicly traded valuation on Horizon Chemex. So we won't need to guess or estimate what the value of our investment in Horizon Chemex is. We'll be able to see it realized So I would pay attention to that. I'm expecting, but don't hold me to it, this deal to close sometime around the end of April. So let's say with good fortune, April 30th. And we maintain our proportionate interest in Horizon Mechanics. So that's a lot of activity, a lot of public trade securities, so consensus coming public, Horizon. Kennex is coming public. A lot of interesting things going on. I could probably continue, but I've given you a little tour of what's happening. We've been very busy. So I think the best thing to do is maybe invite whatever questions you have to fill in the gaps of what I didn't mention. And maybe you could kick it off, Therese, and just tell me what the questions are, and I'll be more than delighted to address them.

I'll be happy to, Murray. The first question is, My impression is that most of the total FRMO assets on the balance sheet are valued using market prices. How much and what assets are not valued in that way? What is the best way for an investor to value FRMO? More specifically, given its assets, especially the increased attention to cryptocurrency, why should it be priced slash traded for more than that asset value?

Okay, there's a lot of questions there. So let's say everything we can take in market, we take in market. So what's easier to talk about what's not in market? What's not in market is our investment in MyEx. Our holding is it's a little bit above cost. The reason it's a little bit, not greatly above cost, the reason it's a little bit above cost is because MyEx did some deals, equity deals subsequent to our transaction, which is using that value. It's not a market price, negotiated price. There's that. We also have on the books at cost holdings of digital currency group, which are people on Grayscale, which among other things are the people who operate the Bitcoin Investment Trust that's now in the process of becoming an ETF. And that's at cost. And then, last but certainly not least, is Horizon, which you see on the balance sheet. It's not at cost. It's cost plus whatever accumulated earnings have been retained in the business. Horizon Kinetics has a pretty big dividend payout ratio. FOMO doesn't pay a dividend. Horizon Kinetics pays, I think, pretty robust dividend. We received that dividend. So whatever is left over after the dividend gets put back and retained earnings. So you're not seeing a market net. However, you will see a market net if you figure out what, um, what our proportion interest is in, um, Scott's liquid gold. So to answer partially the question, I'll come back to it in a second. Why shouldn't it trade at, um, its market value, well, we don't really know what the appropriate valuation should be of MyEx. We don't know what the appropriate valuation should be of Digital Currency Group. We will know, but we do not know at the moment what is the appropriate valuation of Scott Sugar Gold, which is really going to be Horizon Kennex. The market will tell us that. Right under the Horizon Kennex notation on the balance sheet, you will see this revenue share. So we have a revenue share. In other words, we get a little bit less than 5% revenues of Horizon Mechanics. So the question is, what is that worth? And I guess it depends on what the revenue of Horizon Mechanics is. I guess it depends on how much it can grow or fail to grow. Weasel mines may differ about what it's worth. So we have it on, we created a number years ago, which I don't know how relevant it is. It's never been changed. With a public valuation, people have more insight into it. That might change as well. So I guess the trading price of Horizon Canada, trading price of FOMO, if you like, reflects what some people believe is might be the valuation of all the entities I talk about. And I left out one, which I'm going to add in right now, consensus mining. It's not a big deal, but we still own it. It's not public yet. It will be public, and that'll have to have a valuation put on it. And then you'll observe the real estate owned. That's on the books at cost. And the question is, what's that worth? And it might be worth, some would argue it's worth more than what it's on the balance sheet for. So differential between those publicly, the most publicly traded entities that we can value and the ones we don't are what people assume should be the value. Whether that's right or wrong, we're gonna find out in the not too distant future. So we'll have to see what happens. So I hope I addressed everything, hope I did. I think I covered all the main points in that. Anyway, Scott's Liquid Gold, if you're interested, is SLGD. And you know what we're going to do on Verizon Kennex. You could look at the mark capitalization of Scott's Liquid Gold, and you can figure out what its mark capitalization is going to be when the deal closes, and you can draw some conclusions, I think. but you'll have to draw those conclusions on your own. So I think that's a thorough answer. I hope it's a thorough answer. So maybe we can proceed to the next question, Therese.