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 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 website at frmocorp.com. Today's discussion will be led by Murray Stahl, Chief Executive Officer, and Stephen Bregman, President and Chief Financial Officer. They will review key points related to the fiscal 2026 first quarter earnings. And now I'll turn the discussion over to Mr. Stahl.

Okay. Thank you, Therese. Thank you, everybody, for joining us. So I thought what I'd do today is I'd make a couple of general points. variety of general points related to what the quarter was like and talk about in the context of what we've been trying to accomplish for the last couple of years. Then we'll turn it over to questions. So the first part of earnings themselves, the most salient event, at least arithmetically, is decline of our shares of Texas Pacific Land Trust. So it's a decline in price. We didn't sell any shares. um and i'll just contextualize it um year-to-date oil is down on the order of 12 natural gas is down on the order of 20 and its earnings are to a large degree depend upon oil and natural gas so there's nothing unusual in that what you might find unusual um that you don't see too often in companies so Technically, we reported a loss, even though it's just a mark-to-market loss. I want to minimize that, but it's not a cash loss. And I say that because our cash actually increased, as you can see from our balance sheet, up to $25 million. And we haven't spent very much of that. So I would say in a balance sheet sense, not a record shareholder's equity level, but in terms of liquidity, Most of what we have is liquid. We can produce a lot of liquidity real fast if we had to. We just don't want to. And the reason we don't want to is because we're moving in a certain direction to create an operating company out of cryptocurrency. So apart from the robust character of Bitcoin, the other cryptocurrencies, it's well worth observing that We own now on the order of 44% of Winland. If we pass 50%, we're going to have to consolidate Winland. If we consolidate Winland, the financial statement is going to look different than it looks right now. Even we get to over 50% of WinLend, we'd like to keep building the WinLend cryptocurrency effort. The reason we like to do it is it's an extremely high return on capital. Now we engage in something called Scripps mining. Scripps mining is spelled with a Y instead of an I. So Scripps mining, what you basically do is you mine two cryptocurrencies with the same electric current you ordinarily use to mine one. So in our case, we are mining Dogecoin and Litecoin. Dogecoin as a coin doesn't intrigue us greatly, and even though it might appreciate over time, the reason is Dogecoin has a monetary policy that calls for issuance without end, which is not the same as infinite issuance. In other words, there's a constant issuance each and every year. And in percent terms, that issuance lessens every year because the numerator is number of coins issued, denominator is number of coins outstanding, and number of coins being issued is constant. Number of coins outstanding keeps increasing. Therefore, the rate of increase will diminish every year. So it has some interesting long-term properties. Basically, We mine for cash, we keep the Litecoin, and I'll talk about Litecoin in a second, and we basically use the cash to buy Bitcoin. That's the alternative to mining Bitcoin. So just a couple of points to understand why we do this. From a mining point of view, which is the same as saying from a return on capital, For a use of capital point of view, one of the problems of Bitcoin, not that it's not a wonderful cryptocurrency, but it has something called a havoc. And what that means is that every four years, the block reward number of coins you get for mining is cut in half. Ergo, it's called a havoc. so if you're not able to improve your mining operations in terms of their efficiency every four years you're going to have a problem your return on capital is going to be not very alluring so it's extremely hard work and yet be very careful about the equipment you're buying because the equipment you're buying could be easily obsoleted dogecoin in conscious distinction does not have a having. And therefore, the equipment that we buy to mine Dogecoin, which also mines Litecoin, as a practical matter, has a longer, useful life. So I gave an example in the annual shareholder letter. When you mine this, what your return on capital really is for a quarter. It's extremely robust. When you start mining, it's not quite as robust. Like anything in the world of business, you have to achieve a certain economy of scale. So buying one mining device or two mining devices or three mining devices is not going to do it. But once you get beyond a certain critical scale, you've covered your fixed expenses largely. A lot of it, not all of it, but a lot of it goes to the bottom line. That's where we are with Winland. So we like to build that. and build the economy of scale. It's also worth noting that Consensus Mining, a related company, employs the same strategy. Consensus Mining began being traded about six to eight weeks ago, and we bought some Consensus Mining shares as well. FMO at the moment owns 11,950, a little less than 12,000 consensus mining shares. There are 2.2 million consensus mining shares. So we're really, really enthusiastic over the mining operations. If and when we cross the 50% barrier and we consolidate, the information you provide is going to be a lot more detailed. And you're going to see a lot more interesting things in terms of what we're doing in cryptocurrency. At the moment, they're separate companies. And Winland is not a reporting company, even though it really trades. And we'll see what happens if we cross that threshold. One of the points I'd like to make, it's really in relation to cash balance, but it's also in relation to our short sale position. So you'll observe that security sold, not just purchased, our short sale position now on a cost basis. exceeds $11 million, and you can look at the balance sheet and see the market value. So that's basically, we're not shorting securities on fundamentals. We are only shorting path-dependent ETFs. So those are ETFs, despite what might happen, the profit-loss sense, in any given day. In the fullness of time, those securities are going to decay. It's an element of wonder to me how that being known by all the market participants is the case and we still have the trading volume we have and the assets and the management we have and those ETFs, but that's the way it is. And a not small proportion, as you can see by just doing the relevant arithmetic, a not small proportion of the cash we have in the balance sheet actually came from shorting those securities, and ultimately those securities become either worthless or next to worthless, and the cash is effectively ours to keep without, in many cases, even a relevant tax consequence. So it's a really good policy. We've been doing it for years, and we intend to continue it as long as it's possible to continue that sort of thing. So I just call your attention to it. because it's not quite a business, but it's almost a business. So those are the salient points I wanted to bring up, and maybe now's a good time to open up. If there are any questions, I'll be delighted to address them. So, Therese, do you have some questions?

Yes, we received several questions in advance. This one is, I am trying to understand how MIAC shares How many MyEx shares FRMO currently owns post-IPO? According to this table, as of May 31st, 2025, the company directly and indirectly held 1,870,601 shares. Afterward, there was a one-for-two reverse split, which should have reduced the holdings to approximately 935,300 shares. Is this figure correct, or am I missing something?