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Thérèse Byars: Good afternoon, everyone. This is Thérèse Byars speaking, and I'm the Corporate Secretary of FRMO Corp. Thank you for joining us today. 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 to be -- 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 Steven Bregman, President and Chief Financial Officer. They will review key points related to the fiscal 2026 second quarter earnings. And now I'll turn the discussion over to Mr. Stahl.
Murray Stahl: Okay. Thank you, Thérèse, and thank you, everybody, for joining us today. First, let me apologize for our delayed filing and therefore, delayed meeting. You may be aware we had to we had a little dispute about what our tax liability might be, if we were to sell certain securities that required a recalculation. And we're in a not-too-distant future because we're now past the February quarter end, we're going to have another meeting in about 6 weeks to discuss the February results. And you know what, we're going to have a different tax number as well for the simple reason that the market value of the assets have changed. But we'll talk about that then. So my apologies, but such is life. In any event, I'll do some key points right now, just tell you some things that are happening or happened very recently, and then we can go to questions. So one thing that I think is important, you might recall, we have an interest in a company called HashMaster. And we owned the building where we owned the building in which HashMaster was located. We sold that recently. And part of the proceeds were used to prepay the mortgage or I should say, the buyer was a company called Synteq, repaid our mortgage to 0. So now we are once again debt-free. And the rest of the proceeds we took in Synteq stock. So we're now a proud owner of a small interest in this company, Synteq, which is involved in all things supporting, a, the cryptocurrency industry; and b, the emerging data center industry. So we are a proud owner of that. Now, we should point out that, that doesn't mean we're getting out of mining, quite the contrary. We have, in the last year or so, preferred to do our mining through a publicly traded company called Winland. So you might have observed, we made a number of investments in Winland. And the moment we own approximately 45% of Winland, if and when we cross the 50% barrier, we'll be consolidating Winland. So our financial statements will have a different look and character. However, you can tell a few things right now. We have not bought mining rigs in a little while. So if you look at the line on the balance sheet, digital mining assets and depreciation, you'll see a de minimis about $31,000. I think you'll find this rather interesting. If you go to digital assets, digital assets, we didn't buy any digital assets during the quarter as such. We, however, in the half month period of time, if you were to look on our balance sheet, you compare the digital assets cost basis on May -- in May versus the cost basis in December, in round numbers, the cost basis is higher by $36,000. That $36,000 are the digital assets that we mined during this 6-month reporting period. We mine those digital assets with $31,000 worth of equipment. There is significance of that. Now, before I go into the significance, I just want to point out, we say the cost of the digital asset of $36,000. The cost of digital assets are the market value that existed on the day we mine them. That doesn't mean it actually cost us $36,000 to mine the assets or create the assets, if you like. That's just what the value would be if we were to sell those assets. So $36,000 of assets on $31,000 of value should tell you something. It tells you that one of the important variables in mining are the longevity of your assets. So it's not something that people talk about a lot. Longevity assets is not the exact same thing as the life in the depreciation sense. We depreciate the assets generally over 3 years. That doesn't mean they last 3 years. Lately, the last 1.5 years or 2, we've combined our mining interests in terms of newly purchased equipment to a so-called Scrypt mining. Scrypt mining is spelled with a Y. So it's S-C-R-Y-P-T. And the idea is that we make a higher return Scrypt mining and using some of the revenues to buy Bitcoin than you would, if we actually mine the Bitcoin itself. And the more important point is that Scrypt mining, since most of the revenues come from Dogecoin has unique features. Scrypt mining has no halving. It does have a halving in relation to the Litecoin assets that are mined. Scrypt mining, for those who aren't familiar with the term, Scrypt mining is basically merged mining. You can mine 2 coins with one electric current. That's what makes it interesting. So we mine Litecoin and Dogecoin. We keep Litecoin, we sell Dogecoin. We use some of Dogecoin to pay our electricity charges, and we use some of Dogecoin to actually buy some Bitcoin. That's how we increase our Bitcoin. Because Dogecoin represents the bulk of the assets, there is no halving in Dogecoin. And halving, H-A-L-V-I-N-G is central to understanding a Bitcoin. Every 4 years, the block reward is reduced in half or by 50%. That's why they call it the halving. So one of the most important things, arguably the most important thing you can do in cryptocurrency mining is to prepare for the halving. So it's my personal observation that, a, very few people prepare for the halving; and b, very few people even talk about the halving; and c, many people are unaware that there is such a thing as a halving. And when we get close enough to the halving and various participants become aware there is such a thing as a halving and preparations have to be made for the halving, well, it has a tendency for reasons maybe I'll get some questions, have an opportunity to expand on this at length, has a tendency to be very disruptive to the Bitcoin markets. In principle, everything in cryptocurrency, everything in Bitcoin should be completely and totally transparent to everybody. Why? Because everything one needs to know is contained in the original working paper of the protocol. There should be no surprises. However, very, very few people are aware of the protocol and are aware of the halving. And therefore, there are surprises. And surprises typically tend to happen about more or less about 2 years before the next halving. The next halving is going to occur in approximately April 18, 2028. This is March 2026. So let's say, crudely speaking, we're about 2 years away from the halving. So disruption is right on schedule. Ultimately, the market will sort out and Bitcoin will continue as it always has. So it won't be a big issue. But until such time, it's an issue. Essentially, what people have to do is there has to be a changeover in equipment. So the equipment you have today, unless you're doing scrip mining equipment where there's no halving, you're going to have to get new equipment. So you're going to have to get new equipment, how are you going to pay for the equipment? So the practice of many people is to sell some of, and in some cases, a lot of the Bitcoin they accumulated during the prior period. And everybody has to prepare for the halving more or less simultaneously, that cryptocurrency comes on the market. And it's a seasonal phenomenon, so to speak. Eventually, I think people will master the reality and prepare gradually or prepare to do something else where there is not a halving. So eventually, it will work its way out. In the meantime, it's just something we have to live with it. Some other points of interest. Liquidity. You will observe the liquidity, not just the cash on the balance sheet, but the fact that we have no debt. I believe this is the most liquid we've ever been on the balance sheet. And we have a lot of borrowing power that we really have never used. We could use it if we have to. But it's worthwhile reflecting on how much liquidity we really have if we choose to use it. So it's the best position we have ever had in our history. Another one point that I'd like to make that's not germane to the subject of crypto is exchanges. It's another big focus of ours. You might have noticed that in the summer, MIAX came public. So MIAX is a private investment. MIAX for those that are new to FRMO, its origin is we were at one time, the largest holder of 2 exchanges, one being the Minneapolis Green Exchange, the other being the Bermuda Stock Exchange, and we merged those in exchange for an interest in MIAX. MIAX is not our only exchange investment. We have some other small exchange investment, but largely, we're in MIAX. So the IPO was, I think, extremely successful, and that required a markup in value. And I commend MIAX for your attention. I think it's well worthwhile following. They're doing a lot of interesting things, but rather than go into what they're doing, I'll let the company speak for itself and just relate to you, I couldn't be more pleased with what's going on at MIAX. And I'm really proud of everybody and the team and all they've been able to accomplish in what is really a short period of time. So that's what I had in terms of general remarks. And now I think it would be great if we could take some questions. So Thérèse, you'd be so kind as to read them, I'd be delighted to respond.
Thérèse Byars: Happy to do so. The first is, first of all, congratulations on your call regarding ZCash, which has performed exceptionally well in 2025. As you previously explained, a key driver of its success has been its monetary policy, which is similar to Bitcoins. Could you share your thoughts on Litecoin, particularly in light of the recent launch of the first Litecoin ETF? What potential trigger points do you see for Litecoin that could lead to a similar performance pattern as ZCash? While Litecoin has the privacy upgrade MWEB, it seems that ZCash may have an edge in certain aspects. Additionally, Ethereum appears to be attempting to capitalize on the same anonymity trend. Could you elaborate on FRMO's broader Altcoin strategy and what shareholders might expect in this regard?
Murray Stahl: Okay. First of all, the idea of operating completely anonymously, that idea is diametrically opposed the idea of having broad-based global usage of a given cryptocurrency. So if a given cryptocurrency is given cryptocurrency community, I should say, is interested in maximizing anonymity, it's just not going to be one of the leading coins. And the reason for that is it's just too dangerous to allow a complete anonymity for a lot of reasons. One obvious reason is just taxation. The governments have to be able to collect taxation. So you couldn't have a situation in which people can escape taxation by anonymity. So you could have a small community that's able to do it. But government is going to make rules about whether or not you can use a given currency, that's the thrust of the currency. So it's interesting, but it's only interesting for small community users that governments in the world, they say governments in the plural. I don't mean any particular government. It's -- you're not going to create the next Bitcoin if you're going to create a wholly anonymous currency. So that's one thing. With Litecoin, you will observe if you go to a website called BitInfoCharts, which I'm actually going to do it just so I can speak intelligently. So give me just 1 second, and I'm going to get there, and I'm going to show you something. So the thing about Litecoin that's intriguing is the amount of measured in dollars, of course, so it's comparable. The amount of dollars or amount of coins measured in dollars that traded in the last 24 hours. So this is off this website, BitInfoCharts, which is reading it off the blockchain. So it's accurate. In Bitcoin, I'm going to round. In the last 24 hours, the Bitcoin volume, so to speak, is $18.7 billion. It's billion with a B. Litecoin volume in the same period of time, last 24 hours is round numbers, $10 billion. I should point out to you the market capitalization of Litecoin is only $4.2 billion. There's a lot of trading volume in Litecoin. So you can do a lot with Litecoin. Litecoin has more or less the same monetary policy as Bitcoin. Litecoin is not really anonymous. It may have a small subset of it that's going to become anonymous or that is -- currently has the faculty of being anonymous. But you can do a lot with it. Among the things you might be able to do with it, you might be able to use it if it has these liquidity characteristics for instantaneous settlement of certain types of securities. So you might be aware that the world is moving to instantaneous settlement. So one of the reasons the world is moving to instantaneous settlement is because markets globally, as they connected as they get connected, are moving to 24/7 trading. Now if we're going to have 24/7 trading, one of the problems in 24/7 trading is the banks. The banks aren't open 24/7. So what happened if it were, as an example, Sunday, and you saw in a market that has to be -- it happens to be open on Sunday, you saw enormous opportunity to buy something and you have no access to your cash. So the market has created a solution for that or at least an interim solution called stablecoins. Stablecoins trade 24/7. The stablecoin market is now approaching in terms of the assets of stablecoins, $0.5 trillion. Stablecoin market is largely dollar-based. So if this continues, and I personally think it will, its way of bypassing banks as payment modalities. As a matter of fact, if it were Sunday and you want to buy something, speaking purely theoretically, you could give someone X dollars’ worth of your money market fund if your money market fund were shares and were transferable. Just your money market fund is not transferable. What is transfer is you can draw money from your money market fund and transfer the money, but you only withdraw the money during banking hours. So stablecoin, if you want to analogize it to something, make it easy to understand, it's like being able to trade on a 24/7 basis or being able to use on a 24/7 basis, your money market fund. Okay. So if you can do that and you're able to pay for things every 24 hours, then 7 days a week, 24 hours a day, then you might want to settle them. And the new trend to settle them either instantaneously or virtually instantaneously. We don't have that yet in the United States, but we're moving to that. So we're going to have an instantaneous settlement system and you want to track things, a pretty good redundant device is to use a mined cryptocurrency. It might be Litecoin. So in theory, you could divide Litecoin into enough pieces that each individual share could be tracked by a fraction of a Litecoin. It's possible. So if it's going to have $10 billion of volume a day, if you divide it up into small enough pieces, you could use Litecoin for instantaneous settlement. You could, in theory, use Dogecoin for instantaneous settlement, but Litecoin has much more volume than Dogecoin. Dogecoin, just as a matter of interest, is only $161 million of volume versus $10 billion. So the only cryptocurrency that I'm aware that has that type of volume during the day is Litecoin. Incidentally, the Litecoin volume is in round numbers, almost 3x the Ethereum volume. So I can see a possible use case. Whether that's going to happen or not, time will tell, but that's my simplistic view of Litecoin.
Thérèse Byars: The next question, if you're ready for it, is also related to tokenization. Would you please comment on how the tokenization and movement on chain of financial assets will affect the securities exchanges held by FRMO and various HK Funds. What are your thoughts about the school of thought circulating recently -- this is kind of related recently that Bitcoin is no longer a fixed asset due to the ability of the markets to create synthetic supply. Those are 2 separate questions, which can we read the second one later.
Murray Stahl: Okay. So well, I'll do them both. Let's do the first part first. So I'm going to interpret the first part this way. So is tokenization a threat to exchanges? Not at all. Tokenization is one of the greatest things that could ever happen to exchanges. So the reason you need an exchange is because no one, including the securities participants want to have what's called naked access. So how do you guarantee that your counterparty is legitimate? That's why you need intermediaries. Much, much more important than that. In electronic trading, there are all sorts of things people can do to disturb the market. Here's an obvious thing, what's called spoofing. Spoofing involves you put bids and offers out there, you being some person out there in cyberspace. They're putting bids and offers for a given security and you'll say, okay, so trader A and trader B can come together and agree on a price. What do you need a security exchange for? Well, how do you -- if you happen to be either trader A or trader B, not your counterparty is even giving you proper information. So your counterparty will say, I'm willing to -- I'm offering so many shares of something or other at a given price. Of course, it's all electronic and you or maybe your computer becomes aware of it and says, yes, I would like to buy some or all those securities at that price, except it's not a real offer or it might not be a real bid. And now the other side has gotten information about what your buy point is. And there's no intermediary. That's the way securities markets would evolve. So just as a matter of historical interest, the London Stock Exchange was originally a coffee house in London. People met there. So they didn't call the London Stock Exchange. And people would say all kinds of things in negotiating securities transactions, much of which was false. So even with the technology of the 18th century, everyone realized need an intermediary to enforce some rules. Similarly, New York Stock Exchange, originally, it was the buttonwood agreement where people who met under a tree. With the view to exchanging securities, why did they all need to get together and have a certain rules-based system. Of course, they had no computers and not the technology we have today, but they needed a rules-based system. They need it and it had to be enforced. So if someone did something, that person could be banned from trading, and the person will be identified as such. And it happened in many, many instances. So of course, you can move to the world of tokenization, and that will lead to either or virtually instantaneous or maybe instantaneous settlement. But you're not going to eliminate the need for exchanges. And then some entity has to collect the data, meaning the aggregate data. There are people very interested in how many shares traded, what shares traded, et cetera, et cetera, et cetera. Somebody has to pull that. And there has to be an interconnect point where everyone's trades are going to be monitored, not for tax purposes or anything, just to keep everybody honest. That's why trading floor has evolved. Everybody is going to be on the same floor. So you could have said 150 years ago when they had the first trading floors, why do we need a trading floor? Why does trader A and trader -- why do trader A and trader B need to transact on this floor? Why can't they be half a mile away and transact? Because they're half a mile away, they're not subject to scrutiny. And we don't know if one of the counterparties is being honest. And it takes a few people that are not honest and you destroy the confidence. Everyone has securities markets, and you can really hurt possibly even destroying the economy. And there are all sorts of other things. I won't go into it, but you get the idea of how important it is. So why don't you repeat the second part, so I make sure I get this question right, Thérèse, what's the second part of the question? I just want to get it right. I think I know what it is.
Thérèse Byars: The second part is, what are your thoughts about the school of thought circulating recently that Bitcoin is no longer a fixed unit asset due to the ability of the markets to create synthetic supply?
Murray Stahl: Okay. I think it's ridiculous. And the reason it's ridiculous is there is no such thing as synthetic supply other than the word synthetic supply. So you could talk about synthetic supply, it could be a derivative or an option. All those things are, is a bet on what the future price of Bitcoin is going to be? It's not Bitcoin. So I could buy or sell a future on Bitcoin, and I could do it in any amount. So if the market capitalization of Bitcoin were as it is now, somewhere between $1.3 trillion and $1.4 trillion, could you create in principle, $2 trillion or $3 trillion or $4 trillion worth of futures? Yes, you can. But all it is, is people who are making a bet with you on the future price of Bitcoin. It's not Bitcoin. Supply of Bitcoin is fixed. It doesn't matter how many options you have, how many futures you have, how many other types of exotic derivative of contracts you have. There is right now almost 20 million Bitcoin is only going to be $21 million, and that's it. So there is no such thing as synthetic supply. It doesn't exist other than in the vocabulary of people wish to make an assertion that is not correct.
Thérèse Byars: The next question has to do with on the Q2 2025 conference call, Abaxx Technologies, A-B-A-X-X was mentioned in the Q&A and Murray was not familiar with it. He said he wasn't familiar with it, but would look into it for future discussions. So I'm curious if you looked into it and what his thoughts are.
Murray Stahl: Okay. So what -- just so you know what it is. Abaxx is speaking loosely, the commodities exchange or a commodity exchange based in Singapore and spent a lot of their time developing the trading systems. And not that many months ago, I remember how many months ago, but not that many months ago, it commenced trading, obviously, from a very low level. As far as I can tell, recently, from a very low level, their volume is up a lot. They're trading gold, they're trading natural gas. There are some other commodities. The volume is up a lot. So it could possibly emerge as a rival to the multi-commodity exchange of India. It's possible. Just too early to tell. It trades and as far as I can determine, it seems to have a market capitalization already of $1.4 billion. I have to verify that, but I think I tried the day to verify it, and it looked like it was $1.4 billion. I want to check the number of shares outstanding and make sure I didn't make a mistake, but that's what it looks like in any event. That's a lot of market value for the level of trading they have. But on the other hand, I don't want to say it's outlandish because their growth rate, albeit from a very low base, is not far from 100%. So there's a lot of -- in the Far East, a lot of underlying demand for commodity futures, particularly in natural gas and particularly in gold. So it's an interesting company to follow, but I haven't bought any.
Thérèse Byars: Next is, why do the condensed consolidated statements of income have the 3 months ending November 30, 2024, and the 6 months ending November 30, 2024, have different amounts for the diluted shares. It just seemed to me that if it's the same date, the number of shares should be the same.
Murray Stahl: Well, it seems that we -- you said and I don't want to cut the question off, I can answer it, but...
Thérèse Byars: No, that's it. That's it.
Murray Stahl: That's it? Okay. Well, it seems that way to me too, but there's -- like there isn't everything in accounting, a little bit of a wrinkle. I'll explain the wrinkle. So our directors are paid a certain number of options instead of cash. And -- we have -- or they were paid that. So those options are still outstanding. If the stock price rises and those options are in the money, well, they make it to fully diluted shares outstanding because they can in theory be exercised. If the stock price goes down, well, then they're out of money and no reasonable human is exercised them and the shares outstanding go down. It's not a big amount, and it's not going to change the valuation of the company, but that's why we have that fluctuation. A good argument for paying directors in cash, not options.
Thérèse Byars: Next, please provide an update on direct and indirect holdings of MIAX, including warrants.
Murray Stahl: I think we have the quarterly statement holdings. Does it include MIAX in there? Do you know, Thérèse?
Thérèse Byars: I'm not 100% sure.
Murray Stahl: In that table.
Thérèse Byars: In the table, that's on the website.
Murray Stahl: Yes. Is it not there? Is it not there? I believe it says I'm reading from the table. I didn't want to just quote a number. So in reading from the table, this is as of November 30, calculated by people other than myself. I'll read from the table, I'll just give these numbers. Restricted shares, 935,202. And these are publicly available shares, 11,441 for a grand total of round numbers, 946,000 and some hundreds of shares. That's reading from the table.
Thérèse Byars: I'll have to review how that's calculated if they include warrants were not...
Murray Stahl: I don't remember if they include warrants or not. But the warrants are in the money, sort of warrants in the money, you know what we're going to do.
Thérèse Byars: Okay. And our last question is, what are Mr. Stahl and Mr. Bregman's biggest regrets after 25 years of managing FRMO?
Murray Stahl: You want to talk about your biggest regret, Steve? I guess he isn’t happy.
Steven Bregman: [indiscernible].
Murray Stahl: Okay. I know you had regrets. I don't know you had regret.
Steven Bregman: For some reason, shares came to mind. I don't know how relevant it is to the intent of the question. But what came to mind was anybody has seen a movie that's beloved by some called Peggy Sue Got Married, which probably came out a few years before [indiscernible]. If you don't know the story, the basic concept of it is that, there is a growing woman, she's a mother and somehow she wakes up and she's a teenager again. She's got her own memory [indiscernible] top of her head. But somehow she went back to her high school years, and she's lost and the only person she can really trust when she sees there, she wakes up and [indiscernible] her grandfather. And at a certain point, she's asking him, you kind of feel them out. They're about to go outside, it's fall, it's cold. He's adjusting his [indiscernible]. And I think she asked him something like, grandpa, do you had a chance to go back and do it differently, what would be the change? He said, well, I would have taken better care of my children. And my teeth are more or less okay. But there might have been other things I wish they would have better. But with respect to managing [indiscernible] I think personally that we've done a marvel job over a very changeable environment, a number of environments. Of course, that's the way the market is always are. And in one sense, I think it's been kind of an experiment and a method of investing consistent with our investment philosophy, which Murray has queued to with great consistency and [indiscernible], anyway, that's mine.
Murray Stahl: Well, here's mine. If you see in the beginning all the way at the top of the entire earnings release, the so-called quarterly report, and you'll see that I personally own a little bit over 8 million shares. My great regret is, I should have bought more during the windows. Of course, I can only buy during an open window. I should have bought more, and I didn't. And I regret that because the way FRMO and Winland and Consensus Mining and Horizon Kinetics, the way they're positioned. And I'm not saying this because you know I don't say things to be boastful or be promoting the companies. We've never been as well positioned as we are now. I'm more confident in it than I've ever been. I've always been confident. We're just extremely well positioned for the future. And I think a lot of great things are about to happen. A lot of great things are actually happening as we speak. Some of them are obvious. And when you look back, some people say, well, did you think it would take a long time to happen? It actually didn't. And if you look back, it actually in the scheme of things, when you look at the magnitude of some of the achievements, it didn't even take that long. It obviously couldn't happen a day or a week. So my big regret should have bought more stock, and I didn't. But I did buy some, and now I have over 8 million shares. I wish I would have bought more. But I just -- and I'm not saying it just to promote the stock or anything. I really -- that is my regret. I should have bought more, should have been more aggressive at and I just wasn't for whatever the reason was. That's my regret.
Thérèse Byars: Well, that was our last question, so I will let you wrap it up.
Murray Stahl: I'll wrap it up by saying thanks so much for joining us, and thanks for your support. And normally, I say we're going to reprise this in 90 days. But now I can't say that because we're going to reprise this in, I think, about 6 weeks, maybe a little bit less than 6 weeks. So you have about that period of time to present more questions, and I will be delighted to answer. And if in the interim, things occur to you that you didn't pose right now, don't hesitate to give us a call, and we'll get you an answer. So thanks again for joining us, and I'll just say good afternoon and signing off. Thanks so much.
Thérèse Byars: The conference has now ended. You may disconnect.