FRMO Corporation (FRMO) Earnings Call Transcript & Summary

Good day, and welcome to the FRMO Corp. quarterly conference call. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Thérèse Byars. Ma'am, please go ahead.

Thank you, Chelsea. Good afternoon, everyone. This is Thérèse Byars 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 investments. 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 Steven Bregman, President and Chief Financial Officer. They will review key points related to the 2022 first quarter earnings. A summary transcript of this call will be posted on the FRMO website in the coming weeks. A replay of this call will be available for 1 month, beginning at 7:15 this evening. To listen to the replay, the toll-free domestic number is (888) 203-1112. The international toll number is 1 (719) 457-0820. When prompted, key in the pass code 8000388. These dial-in numbers are noted in the FRMO press release dated October 14, 2021, which may be found on the FRMO website by clicking the link called information, statements and announcements. The press release can also be viewed on the OTC market's website by typing in the ticker symbol FRMO and clicking on the news link. And now I'll turn the discussion over to Mr. Stahl.

Okay. Thanks, Thérèse. Thanks, everybody, for joining us today. We actually have a fairly large number of things going on, FRMO. So normally, I go through the balance sheet. I'm going to do that in cursory-fashion lead time because there's interesting stuff going on as you can see from the balance sheet. Just to start, the cash is where we're trying to keep it at around $35 million or so. We're trying to keep it that way. We're not really spending a lot of cash. As you can see what happened in the quarter, basically, our 2 largest holdings, TPL went down, Bitcoin went up. And the consequence of that, it's arithmetically, it's actually very intriguing because if you look at the income statement, you see all these figures of net losses. And so that has to do with the investment portfolio. But some of those losses are referred to HK hard assets. The Bitcoin is somewhere else. So when you do all this accounting, it ends up being a $960,000 profit. And it ends up being record shareholders' equity of a little bit more than $179 million. And so I think it's fair to say we've come a very long way in a very short period of time. And that seems interesting, but there's a lot going on that is interesting. So I'll just cover it as in some reasonable fashion. One of the things have been happening year-to-date that you really can't see from the financial statements is in Horizon itself. Horizon actually had an investment management success. Horizon on January 12 of this year, 2021, started the Horizon Kinetics, inflation beneficiaries ETF. And as of a day or so ago, we had assets under management of well over $800 million. So that's a big success. Fund also has, in my humble opinion, pretty good performance. And the idea of the fund, obviously, is to protect people against the ravages of inflation as that accelerates, which I personally think it's going to happen. Another thing, I think it's a success that you really can't see from the financial statements is what's going on with our investment in MIAX. Basically, we're carrying our investments in MIAX at the valuation that was established for the shares we got exchanging our ownership in the Minneapolis Grain Exchange for MIAX. MIAX Grain Exchange is now a wholly owned subsidiary of MIAX. So I can't say enough wonderful things about MIAX. If you are interested, if you just go on the Minneapolis Grain Exchange website and you look at volume, I think you'll be astonished at how well everything is going. Putting together a great technology and great licenses, which is what Minneapolis had, I think is a perfect combination. Same thing has to be said, you might recall from previous conference calls that our ownership in Bermuda's Stock Exchange was traded for MIAX shares. That's why we have a fairly large position in MIAX. And the same thing, great licenses, excellent regulatory environment. And it's all coming together in really great ways. And still a private company, but you'll see just marvelous things now. You can tell a lot about the profitability change by how much the volume is going up. Basically what happens in the exchanges, the marginal cost of handling additional increments of volume are really very small. So the marginal revenue, for the most part goes to the bottom line. That's why it's so extraordinarily profitable. I might say the same thing for our investment in what we call the Canadian security exchange, which on the financial statements in the appropriate section, it's called CNSX. So the idea behind the Canadian security change was to set up a small cap market for raising capital for Canadian natural resource companies. And this would be small gold companies, small oil and gas companies because obviously, natural resources is so important to Canada. We did -- and that happened a number of years ago. We invested in and then came a number of years of just horrendous bare market in commodities. I personally think that's turning around right now, but CNSX actually sailed through it. All sorts of interesting things are happening, not the least, which is the myopia, the renaissance of commodities markets in general that we've lived in the world of commodities, probably 12 years within my view, a deficiency of investment in capital. That's got to be remedied, and there is no way can be remedied without taking years to do it. And it might not be remedied anyway. And the reason is a lot of big institutional firms are divesting commodities, particularly energy but not just energy. And the theory is that it's a passe industry, and it creates -- it emits various forms of greenhouse gases. And that might be true. It doesn't mean we still don't need commodities. And these are unbelievably capital-intensive industries, probably the most capital-intensive industries you're going to see of everything that's listed. It requires an investment that's continual and is massive. It's not being made. Sooner or later, you get shortages, and that's what happens there. Another thing that we're doing that I think is interesting. You'll note in our financial statements, this is in Note -- I think it's Note 4. You'll see we have these investments in the various cryptocurrency mining companies. And I'm pleased to report that we are -- we're bringing those investments, we're consolidating those LLCs, and we're bringing it public. So there's going to be a public listing, a direct listing for what we call or what we will call consensus mining, which is going to be a publicly traded mining company that's going to own a fair amount of cryptocurrency, largely Bitcoin, but not exclusively Bitcoin. And secondly, we'll get to our holdings in a little a while. I haven't forgotten that we wanted data, but I just want to cover these points first. The -- we're taking advantage of direct listing to actually raise some capital. So when this comes public, it's going to be a fairly well-capitalized company, I dare say. And a lot is possible in terms of expanding the mining business. Another thing that you shouldn't forget about, and I'm trying to make sure you don't forget about is our investment in the digital currency group, which we carry at a value of $76,000 as some people remarked is probably worth more money. And all you need to do is look at the assets under management there and we own its 353 shares out of a total of roughly 700-odd thousand, maybe it's a little bit more than 700,000. So now you know what we -- what percent of the company we have. And I leave it to your analysis to figure out what digital currency group is worth, and then you can figure out if this value of $76,000 is appropriate or not. With regard to Winland, we're now up to a 29% ownership of Winland during the most recent time period. We bought some Winland shares in the open market and we actually did another deal Winland from mining equipment. What that means is we bought some mining equipment. We basically turned it over to Winland for shares in Winland, thereby expanding Winland's Mining Group. When we come to it, I'll give you the ownerships of what we have in crypto in Winland. It's actually been only about -- since we did the first mining deal, it's been only about, I guess, 14 months or so. And Winland has actually accumulated a reasonable manocrypto. I also want to call attention to the fact that Winland owns some Mt. Gox bankruptcy claims and the Japanese bankruptcy courts have more or less finalized the distributions. So the Winland investment in Mt. Gox claims, you'll recall, Mt. Gox was a brokerage firm. It did trade in crypto and it got hacked and some of the Bitcoin was stolen. As a consequence, the company went bankrupt, and the bankruptcy judgment was to socialize the losses, meaning the losses weren't held to the accounts that got hacked, but were basically distributed evenly among all people who are there. And the bankruptcy process in Japan is necessarily slow. So some people didn't want to wait for a bankruptcy resolution. So the bankruptcy claim, that's the claim by a head with the bankruptcy court, they're willing to sell it and Winland bought those claims. And now where it's finally adjudicated and we'll get paid I hope in short order, and that's another positive there. Also call your attention to our investment in HMTech, which actually a 7.1% ownership of HMTech. And HMTech is in the process, can't be sure it's going to be completed, but it's actually in the process of raising some equity capital. And the valuation chosen for the company, this is its valuations for purposes of doing a deal is $6 million valuation. So we own 7.1% of that and can guarantee it will close, but pretty confident it's going to close. And that business is flourishing as well. So in addition to the hosting business, also repairs equipment. That strategically is very important to us. Number one, we host equipment there. The idea was in our cryptocurrency mining ventures, you always want to be in a position where you could go somewhere which you're hosting if you needed it. And it was important to that point. And then secondarily, you're buying these the servers. And sometimes, they have mechanical problems or I should say, electronic problems that require repair. We needed a place to go to, and we also wanted to learn about the machinery itself and how it gets repaired and how valuable it really is, and how to build them. We want to learn everything you possibly could. There was no way to do it other than just doing it. We did that -- I wasn't with that it's -- learning curve, also had some difficulties. But it worked out reasonably well. So I'll cover 2 more things, and then I'll give you these numbers, and then we'll go to questions and answers. I think they're saying things. One, we made an investment. It's so small. It's not even -- they didn't even put it on the financial statements, but we made an investment, I want to call your attention to. It's small. A company called Diamond Standard. And what they're literally doing is they're standardizing diamonds. So diamonds are a heterogeneous investment. Every diamond is unique. So it's not a commodity like gold or silver or platinum. But what can be done and what is being done in Diamond Standard is you can take groupings of diamonds. And based on the aggregate characteristics of that grouping, meaning the aggregate clarity, the number of carats, the color and so forth. You can create packets of diamonds that have equivalent valuations that statistically are all the same in terms of valuation, even though geologically or from a crystallography point of view, these are actually different structures. So the company actually decided they wanted to take these packets of diamonds and make coins out of them, coins to be listed on various cryptocurrency exchanges an example of which is Binance. So the first offering occurred in late January or early February. The idea was to do a $25 million offering. It exceeded that by a lot. It was very successful. And the company is interested in doing other offerings. We ourselves are interested in creating a trust, whole diamonds. Now that you know it can be held as homogeneous packets, not heterogeneous individual instances of diamonds, this would be a grantor trust, not that different from -- to Bitcoin Investment Trust, GBTC, with a salient difference it holds diamonds and not Bitcoin, an actual hard asset. And I personally think there's a lot of demand for it. And we hope to be partnering with them and moving forward with that project. So I hope and I think you'll find that interesting. And last but not least, we're in the process of doing a rights offering for the RENN fund. I should also tell you that the RENN fund, if you look, you'll see the RENN fund owns an investment in Diamond Standard. And it's one of the reasons that we went into RENN fund. This is a closed-end fund. Occasionally we encounter is something very interesting. You can't put it into an ETF obviously, it's a private investment. You can't put it into an open-end mutual fund, but you can put it into a closed-end fund. That's what was done with Diamond Standard. So at a very low valuation, these things can really grow into enormous investments. In any event, we're doing the rights offering. So a little bit unusual rights offering because it's a $3 million rights offering, but you are permitted under the terms of this rights offering to contribute securities instead of cash, if you have a mind to, of course, you're welcome to consume cash as well. We'd like to get a bigger management to this fund. We are -- our various entities are backstopping the offering, and we are not small owners of rent funds. So we're obviously going to participate in the rights. And it's all very exciting and the SEC gave us clearance to move forward. So we're going to move forward on that. So one other nail for the numbers. So I'll read these in the order they were given to me. This is becoming a tradition in every conference call. So I apologize, for length of this exposition, but we own a lot of different things. So to start with, these -- the first category I'm going to read is the cryptocurrency investments that are owned via our investment funds, our pro rata ownership in other words. So we have 576 stenos and 388 shares in direct ownership of the Bitcoin Investment Trust and 5,847 shares of the Bitcoin tracker. And we have 93 Bitcoin SV, the actual coins. We have 4,119 of the Grayscale Ethereum Classic Trust, symbol ETCG. We have some restricted shares in the Grayscale Bitcoin Cash Trust. That equals 24,761 shares. Then we have some unrestricted shares in the same thing, Bitcoin Cash Trust. That symbol is BCHG for those who are interested. It equals 1,375 shares. Then we own some also restricted shares in the Grayscale Litecoin Trust, that's 5,744 shares. And some equally restricted shares in the Grayscale Zcash Trust, 590 shares to be exact. Then we own 220 shares or 220 coins of Bitcoin Gold. And you can look those up, and you can get the market value of those, so you can value those. And here's what we own directly without being in the funds. We own 110.4 Bitcoin, real Bitcoin. It comes from our mining ownership. Basically, we're always mining, so we're always increasing that. We own [ 11,644 ] GBTC Grayscale Bitcoin Trust shares. We own 18 Grayscale Ethereum Classic shares, that's ETCG. We have mined, and we continue to hold, 1,060 Litecoin. We have mined and continue to hold 35 Ethereum. And we have mined and continue to hold 661.7 Ethereum Classic, and we have mined and continue to hold 58.9 Zcash. And we also directly and indirectly will give you figures specific land trust, largely owned through our investment in HK hard assets. But anyway, directly, we own 7,307 explicitly interest shares and indirectly, this is implied through our share ownership. We own 49,893 shares. Obviously, you have to add those numbers together. And then Winland Holdings. So we own -- we mined this quantity, 39.1% Bitcoin itself. And then there's a separate, we acquired through that through buying up a partnership, we acquired 7.4 Bitcoin. That's why there's a sanction there. So you have to add together 39.1 and 7.4 to get our whole Bitcoin exposure. We own 14.9 shares of Litecoins, I should say, of Litecoin. We own 53.5 coins Zcash. We own 1 Bitcoin cash coin. We own 8.7 Bitcoin Gold coins, and we own 9.4 Ethereum Classic funds. And as I said, the area is the Mt. Gox claims that are being adjudicated and I think we're going to get a payment shortly. And we get that payment, we'll release what the value is. So those are our holdings. That's what we're up to. I hope you find it interesting. There's a lot going on. And I know there's questions, and I'm going to actually -- normally, it's Therese that reads the questions. I'm going to -- I normally look at the questions, but there was one question I anticipated. So I'm going to just -- without reading it, I'm just going to tell you what I thought the question was going to be, and I know someone is interested in this. So if you turn in our financial statements to Note 1, you'll see where it talks about Horizon Kinetics hard assets, LLC that at the end of the time period, we held a 21.98% interest in it. And at the beginning of time period, we held a 22.02% interest, and I know someone's going to wonder why it went down a little bit from what it was. Did we actually redeem or sell in HK hard assets? The answer is no, we didn't. We actually -- during the quarter, we actually bought more HK hard assets. It just the proportionate ownership drops because someone, a contributor, of money to HK hard assets bought actually more of it than FRMO did. Who is that contributor? Who is that investor? That is yours truly at the moment. So I just happened to buy proportionally more of HK hard assets than FRMO. And therefore, my ownership rose proportionately over FRMO's most ownership. And that's why FRMO's ownership drops because some of the parts must equal the whole, and that's how that works. So I hope that's a good answer. And for the rest of the questions, Therese, if you would be so kind as to read them, I will endeavor to answer everyone.

Okay. I did have one clarification, maybe. I have a question. When you're reading the crypto that Winland owns, the numbers you gave us were how much Winland owns in total, but not the implied quantity for FRMO itself?

Yes. I didn't read the implied quantities. This is what I just read what Winland owns itself.

Right. Okay. Okay. So it's...

But all you have to do... that's right. All you have to do is take every number, multiple it by 0.29 and you'll get the implied quantity. So I thought what actually owned was a more intriguing number.

I agree. All right. So here's your first question. It's a little bit lengthy, but here we go. On Monday, October 18, Bitcoin closed up about 3% to $61,350. At the same time, GBTC closed down over 3%. Can you explain the discrepancy or what you feel happened to the pricing of GBTC on that day? That's -- there are several parts but I'll let you go answer if you want.

Okay. Do you want me to just do it part by part or -- should I do a part by part, do that part first and go back to...

Well maybe I should continue. And that way, you can -- it is a mystery why the performance of GBTC has drastically underperformed the price of Bitcoin in the past number of years. It appears that in approximately 2 years, GBTC quadrupled and Bitcoin is up almost 8x. We realized that GBTC as a trust sells at either a premium or a discount to net NAV, net asset value. But that doesn't account for the large difference. Can you explain, please? And the last part is, what do you see happening with the price of GBTC in the event it gets approved to become an ETF? Will the discount close up? And will there be any tax issues?

Okay. So to begin with, on that given day, the discount widened, meaning it's a bigger discount to NAV than it was the day before. There's nothing in GBTC other than Bitcoin. It's just -- it's Bitcoin Investment Trust, totally transparent. That's all that's there. So there can be no other explanation than just what the discount is order premium. Now at the start of the time period, related to in the question, GBTC was at a considerable premium to net asset value, and it went to a discount for the simple reason that even though we don't yet have a Bitcoin ETF, we're moving towards a Bitcoin ETF. So we're moving towards a Bitcoin ETF, that's going to trade at an asset value. And it's going to be able to take money and redeem money during the day. So that's basically competition for Bitcoin Investment Trust. The Bitcoin Investment Trust has a big implied gain hit. So if it actually ends up converting, as many people believe it will, to an ETF, if that ends up happening, well, what's going to end up happening is it's going to incur probably some taxable event. And there's always a danger depending on how one configures the Bitcoin Investment Trust in ETF incarnation, there's always a danger that some tax liability can be passed out. We don't know what form it would take. No one knows what form that would take. Or even no one knows it even actually will ultimately happen. Nobody even knows, to be perfectly frank. And the SEC believe and eventually license a Bitcoin ETF, although most people think it's bound to happen. But in any event, there's always the danger of a tax liability coming out in one form or another, and that's the reason for the discount. And that's the reason for the performance differential. Going forward, it's actually an interesting security because the discount more or less accounts for whatever tax liability you're going to get anyway. So if it were to convert to an ETF, it's going to trade at exactly NAV. Why will we trade exactly NAV? Because every ETF has a market maker, an arbitrage as it -- minute by minute. And if you look at the 2,000 or so ETFs that exist, if you look at their premium discount to net asset value, it's always very, very close to net asset value. And the Bitcoin Investment Trust would it be ETF, I totally suspect that's going to happen as well.

Murray?

Yes, Steven?

I may just add something. I had occasion to answer a similar question recently. And I just decided to take the premium to NAV at which GBTC sold at June 30 of each of the last 4 or 5 years, just to see what it was. So if we go back to June 30, 2017, when GBTC was about $4 a share, FRMO bought earlier than that. FRMO might have paid $1 a share for it. But at that time, the premium was 69%. And next year, in June of 2018, it was 45%. The next year, June '19, it was 36%. Then June '20, it was 9% because by that point, you had other Bitcoin funds of various sorts becoming available and had lower fees. And then on October 19, 17% discount. But the price during those periods went up from $40 to $48 or $49 now. So it's up 1,000% just about exactly. And so yes, in a strange sense, you lost 86% in your investment through the premium. On the other hand, you made 10x your money and 11x your money. And I know we got -- we used to get lots and lots of questions. Why would you pay a 50% premium, 60% premium or something? Well, you're paying for the access, for the ease of access, for the custody, for the trading liquidity, and for the time that you would buy then. Anyhow, we actually did buy a...

I was going to comment on your comments. So about -- you may recall this about 5 or 6 years ago in our very offices, the first day, I personally decided I was going to buy GBTC. This is before we even figured out how to even custody Bitcoin. I just want to buy it. So I wanted to buy the Bitcoin Investment Trust. On that day, more than half a decade ago, the Bitcoin Investment Trust traded at a 36% premium to net asset value. And someone asked me the same question, but phrased it differently. Why would you ever buy a fund that trades at a 36% premium to net asset value. And you should wait until it's a discount. So I thought -- I just thought it was extraordinary. Had i waited to -- obviously, had I, arithmetically, had I waited until there's a discount, it would have got a discount, but I would have missed a lot of performance. But that's there. The basic idea was, at that time, whatever I was putting into it, I was risking 100% of the capital investment because the possibility and it might still happen. Bitcoin might be worthless. So if it's going to be worthless, at the end of the day, what difference does it make if I pay a premium or a discount? I'm undertaking the risk of complete dissipation of the capital I put into it because I expect a very high rate of return. The higher rate of return would -- the theory was, and it turned out it was right, would overwhelm whatever negative consequences going from a premium to a discount in asset value. That was the theory that proved to be correct. So I just thought the fact that it could trade at a discount at a time was just not pertinent to what I was interested in accomplishing. So that's the way I handle it at that time.

It's interesting, you could set to tell somebody that people aren't necessarily -- we're not accustomed in our ordinary lives to thinking of proportionality in terms of something that could be an entirely new asset class. But it's not yet. It could be orders of magnitude. So you'd say that it's a large premium, 69%. You also say it was actually de minimis because we invested what was actually a de minimis amount. So you lose 69% of the de minimis amount or in our case, 36%.

Right. That was really, frankly, the start of the whole inflation thesis because they were -- we weren't the first people to see it. We just observed that if you looked at the money creation and our fiat currencies. When I say our fiat currencies, I don't mean the United States dollar. United States dollars is one of many. I mean, our fiat currencies globally, all of them are in the process of being debased. And it just wasn't a good alternative to fiat currency. There was nothing in the world of bonds. There was nothing in the world of currencies that was going to be much better than the United States dollar. They're all more or less the same. They're all more or less the same because the central banks were following more or less the same policy. Bitcoin was the only thing that believed in fixed issuance. So that had to be the investment. Now the theory at the time was, if that proves to be viable operationally and they get some network effect, and the protocol -- the original protocol is adhered to, the theory, which we keep repeating is it's going to be some extraordinarily large investment. So it can't be worth a lower amount of money, a lesser amount of money than the sum of all the money that's out there in the world, which is a very big number and is increasing enormously by the day. And I think the rate of money creation has even been to accelerate, but that's just an opinion. Anyway, maybe more answer than you wanted, but that's the answer.

Ready for the next question?

Yes, I am.

Okay. Could you comment about the recently approved Bitcoin ETF and any implications? Do you have any insights on a spot Bitcoin ETF?

Well, I'll just tell you this. The -- if I were the SEC, I would have done something very similar to what they did. They didn't approve a Bitcoin ETF. They approved the Bitcoin's future ETF. Why did they do that? Because for ETF purposes, there really is no regulated market that trades Bitcoin per se. So when companies call themselves exchanges, they might use that word because they're outside of the United States jurisdiction. But within SEC parlance, exchange has a certain precise meaning. It means self-regulatory organization. So it's an organization that has a certain amount of enforcement and regulatory power that these various exchanges clearly do not have. And even in jurisdictions where you have a number of exchanges, they operate under a uniformity of regulation, which clearly doesn't exist in the Bitcoin exchanges. So things like spoofing, things like not standing behind bid offers, wash sales where people -- to people just trade the same instrumentality back and forth and establish a price that's called [ pending ] the tape. There's no organized mechanism to, a, detect it; and b, punish those people who are doing it. So you can see it from the SEC point of view. But in the world of futures, you're going to have a cash-settled feature like you have in the Chicago Mercantile Exchange, and that's a regulated environment. So the ETF that actually got approval was the pro shares Bitcoin futures ETF, symbol BITO, that I believe is up to $1 billion in assets under management right now. So that's a lot of money to raise, and I think a couple of days in operation. So it gives you an idea that this is the beginning to institutionalizing it. Now once you have futures trade, and you can have a regulated, observable reference price, you're probably going to get Bitcoin ETFs as well. But until the regulator is satisfied that we have that a certain amount of time, in my view, is going to lapse. So that's where we stand on that front.

Okay. The next one is what revenue account contains the dividends received from Texas Pacific Land Trust stock?

Okay. Well, we have something -- we have a regular account called dividends, and that's where it is.

Okay. The next question you answered, which was about HK hard assets and why it dropped from 22.02% to 21.98%. Asked and answered. Okay. Next one. RENN fund has an upcoming rights offering, will FRMO purchase its allotment and any additional shares?

The answer very simply is yes, FRMO will purchase its allotment. And if there are additional shares on subscribed, all of us together, this includes myself personally, we're going to take up the -- and exercise rights.

Okay. Now the next questions have to do with Winland and its Mt. Gox trade claims. In September -- well, no, the first part is something you mentioned in your remarks. In September, FRMO sold Winland Holdings, 32 miners and received shares, increasing its total number of shares owned to 4,600,783 and its ownership percentage of Winland to 29%. In the 2020 FRMO shareholder letter, you stated in it, meaning Winland managed to purchase Mt. Gox trade claims during the Bitcoin bear market. It will be recalled that Mt. Gox, once the world's largest Bitcoin exchange, is a bankrupt entity. The trade claims are claims to restore to creditors Bitcoin that is now held with the Japanese bankruptcy trustee. The value of Winland's Mt. Gox trade claims is currently about $600,000 on a conservative basis. That's the end of the quote. As Bitcoin traded at $480 million on the day that Mt. Gox filed for bankruptcy, was that valuation based upon the number of Bitcoin that Winland had claimed to? Can you discuss the approximate amount that Mt. Gox claims might be valued to Winland and what the see-through amount would be owed to FRMO? Can you discuss where in the process the bankruptcy proceedings are currently?

Okay. So to start the easy part. Yes, we're at the end of them. So we're going to get an amount shortly, whether you -- shortly. It's not a long period of time, but I don't know how many weeks or even months it's going to be. We're at the end of the process. Everything is being finalized. Now when we bought these claims, Winland, so I can tell you this. Some of them are just the bankruptcy claims. So you can look though -- you can say this bankrupt claim, we'll have a proportional interest in this Bitcoin. But there are -- coming out of that are the expenses of the bankruptcy trust, which is not great, but there are expenses. So we have to account for that. And then secondarily, some of the claims when we -- it seems like such a good deal. We couldn't get everybody -- we couldn't get very many people to agree to sell us to claims. So some people said, I will sell you the claim. But on a contingent basis, I want some proportion, however small, of the upside potential. So in some of the bankruptcy claims, we agreed to share the reward if there was a profit, if there was a profit with the original owner of the claim. So that's why -- I just don't have those numbers in front of me. It's -- I can tell you, we're going to get a nice amount of money. And generally speaking, we got the appreciation that Bitcoin got. In some cases, we did a little bit better. In some cases, for the reasons I just mentioned because we had to share the upside, we did a little worse. But basically, that's what's happening. So between the expenses, the trust and deals we made, it's not easy to figure out exactly to a penny what we got. We're in the process of evaluating it. And when we have a number, we are definitely going to share wherever money. But when you hear the number, everyone's going to be very happy. We just don't know to the penny yet for the reasons I mentioned.

The next question also has to do with Winland and Mt. Gox. So I'll just read all of it and you can take it. All right. In previous calls, you mentioned at some point, Winland could pay dividends. What needs to happen before they would think about that? Since there were...

You have more? No, go ahead. Read the whole thing. Read the whole thing.

Okay. Since there was Mt. Gox news yesterday, what would the Mt. Gox claims be worth at $60,000 Bitcoin price? Process of receiving the liquidation, what will be the composition of the payout? Recent Winland equipment purchased from FRMO different from the previous types of equipment. Curious if the FRMO team has a view on mining equipment. Is there any -- this has -- okay. Is there any reason why the RENN fund can't acquire Winland shares? That's a lot of different questions.

A lot of questions. Okay. So let's try to -- you have to remind me if I miss any parts. Let's do the last part first because it's easier. So for RENN to acquire Winland shares, many people would say, there's an inherent conflict of interest there, and I don't think we're going to be acquiring any Winland shares and RENN. I think a lot of people would find that apparent. So I don't think we can do that. So that's out. With regard to the payment, as I said earlier, we're in the process of calculating that amount. We don't have exactly for the reasons I mentioned, but we're at the end of the bankruptcy process. We're definitely going to get paid. One of the things that the Mt. Gox bankruptcy trustee is doing is, it actually is going to sell the Bitcoin and give everybody cash. That's just the way they do it in Japan. So I personally would rather get the Bitcoin. But operationally, I'm sure you can appreciate the point of view of the Japanese bankruptcy trustees. They don't want to be trading -- not trading. You don't want to be sending Bitcoin over the world to people who have these claims just easier for them to operate in cash. So that's what's going to happen. With regard to the equipment. So 2 points there to make. Number one, we buy equipment opportunistically. But opportunistically, there's 2 dimensions to opportunistic. One is just sometimes there's some equipment that somebody needs to sell for liquidity reasons and there is just a great price. We're buying that equipment that may not have been the equipment that we would have bought had it been brand new equipment. But this, in some cases, we're actually buying slightly used equipment. Another thing to understand is sometimes, we'll have these deals where the equipment is at a hosting facility or even at our own hosting facility. So the equipment is at a hosting facility. We know that hosting facility. It might be our facility. It might be somebody else's facility, but there are people that we know, and therefore, we can get operating statistics on that equipment. How that equipment is performing. So what's happening is we'll buy it, that's because the price is good, because the equipment is on site. It doesn't have to be shipped, so there's no shipping cost. There's no relocation cost and there's no downtime from plugging it, sending it across the country to another facility, reinstalling it. And there's a lot to be said for that. So those are the factors, or at least some of the factors, that we go ahead and we buy equipment. In some cases, equipment was leased equipment. In some cases, it was leased equipment that was leased from either manufacturer or [ Finland fear ]. And the people leasing it, whatever their reason is, they didn't want to pay the lease rate or maybe they couldn't pay the lease rate. And the recourses that the manufacturer or the lessor takes back the equipment and they don't want equipment. They actually just want to lease it. We really had no interest in leasing it, but we would buy it. And the price was good, and we had all the operating statistics on the equipment. So -- and opportunistically, we have the operating systems. We know we're buying good equipment. Sometimes, and I think I've said this in prior calls, sometimes we'll buy brand-new equipment, and we have issues with it. It's brand new, right out of the box. Sometimes, we buy used equipment, we have all the operating metrics for several months. We know it's operating very, very well. We'll buy that equipment. Sometimes, when you buy new equipment, now this is my personal theory, so take it as such. It's -- but I believe to be true, but I can't demonstrate to be true. I personally believe and a lot of times, when you buy a brand new equipment, it's not new, it only looks new. That the manufacturer has been using it for a certain period of time. And it comes sometimes with imperfections because of that. You think you're buying new equipment and it says new equipment on a box, there's no new equipment. So we -- over -- in the fluence of time, we frankly gotten better deals when we bought used equipment. That's why you'll see these kind of equipment deals happening. We buy it. If it's good, we'll know very quickly if it's good or not. We'll make a deal with Winland, in those instances when we made a deal with Winland because we were interested in increasing our ownership. So I hope that takes care of all the elements that I miss anything Thérèse?

I think you covered it all. The next question has to do with energy. With coal being an ostracized commodity asset due to climate change and ESG concerns, does FRMOC investment opportunities similar to other royalty type investments or securities?

Okay. So I think -- the question is, are there investment opportunities in the world of coal? Well, coal is so ostracized that there's almost nothing left that's publicly traded in coal. So there's really not a lot to choose from in coal. My own personal view coal is -- I don't think it's going away. What went away, what went bankrupt are coal companies that had legacy liabilities, black lung disease, pension liabilities, post-retirement health care liabilities, that sort of thing, those companies went away. But demand for coal globally, as you can probably tell, is exceedingly robust. And there's a lot of profitable coal companies. Unfortunately, they're not publicly traded. And it's not easy to find ways to invest in coal, but we are looking.

Okay. The next question is about inflation. Would you clarify the relationship between inflation and interest rates, both short term and long-term rates? FRMO has long predicted a rise in inflation, which is now prevalent and the market expects interest rates to rise. However, Murray has quantified that the economy cannot withstand a 1% to 2% interest rate rise. It appears that the market expects interest rates and inflation to rise hand-in-hand. Does this correlation break down due to the overall debt load? And it is possible that long-term rates increase and the Fed maintains the short-term rates at current levels?

Well, my own view is I don't think rates are going up anything other than maybe a nominal amount. And I think the central banks will do literally everything in their power to prevent rates from rising. If they rose by anything other than really nominal rounding error amounts, it would be calamitous for the global economy, given the degree of leverage, which, by the way, increases literally every single day. I just can't -- it's inconceivable to me, I just can't see it happening. And so far, if you go back 6 years or so, you might recall when the Fed talked about tapering the liquidity programs, which still go on to this very day. And there was much to do about that for a month or so. I didn't take it seriously because I just didn't think it was possible to really disengage from those programs other than for several weeks. So I think the central bankers around the world have satisfied themselves that there really is no possibility raising rates. Historically, what would happen is we had credit cycles because the Federal Reserve would lower rates, the Federal Reserve would raise rates. Same is true with central banks around the world. And this time, which really means this last quarter century, we really haven't done it. The last time we tried it as a global community was prior to the 2008 calamity. And I don't think anybody wants to repeat that, and I just don't think it's going to happen. So we might have a world when we're -- if rates don't go up, the inflation manifests for everybody you see and the central banks are going to have to buy a lot of bonds. If central banks buy a lot of bonds, that's putting a lot of money into the marketplace. And it's going to be even worse inflation, which is why I think the inflation that's coming is going to be the worst inflation we've seen as a global society in maybe 200 years. I know that's an extreme statement to make, but I keep making it, and I don't see any reason to walk away from it. I'll tell you furthermore, I really hope I'm wrong. I really do because it's not going to be pleasant if I'm right. It'll be a lot better for the planet if I'm very, very wrong. I just, with every passing day, I reevaluate that. I don't think I'm wrong, but we'll see what happens.

Okay. Does FRMO generate any revenue from the ETF INFL management fees? And are there any updates on new ETF products following the success of INFL?

Okay. Well, our revenue -- the revenue we get from INFL comes through the revenue share that you'll see in the balance sheet. So we get a little bit less than 5% of Horizon's revenue whatever products we also own a little less than 5% of Horizon itself. But anyway, the revenue, we get that. And to the extent there's a lot of revenue in INFL, then we get 5% of it. But we get 5% of everything. So in terms of new products, I mentioned, obviously, the inflation ETF. And I mentioned the Diamond Trust we want to do. I got an idea that I think is pretty good in the world of crypto, but I don't want to discuss it in public because you got to get SEC approval, and people might copy it. So I don't want to spell out what it is other than to say, I think I got a pretty good idea of something to do in crypto that's interesting. And we have 1 or 2 other things in the works. But if everything goes well, there will be follow-on ETFs. I wish I could give you the exact specifications. But then there aren't that many great ideas in the world of ETF. And there are companies with much greater resources than we have, and I hate to announce it and have someone beat us to the regulatory table before we get there. So I'm going to stop it there if it's okay with everybody.

Okay. The next question is in the 2012 Annual Meeting, Mr. Stahl stated, "for me, the ultimate destiny of FRMO is that I don't intend to sell my stock. I intend to build up the market value and place either all my shares or close to my demise. Hopefully, I won't do it on the day of my demise. Hopefully, I'll prepare for my demise a little bit. I want to set up a family foundation, and I want my kids to basically run the family foundation and give money to charity because I want them to think that their home and their world is not a place that you can just eat and sleep in, that you do things with that." That's a very thoughtful comment, and I'm pleased to be a shareholder. You have been extremely successful in creating value. Stockholder holder equity on the 2021 annual report was just under $300 million. And 5 years ago, it was just under $100 million. You have added 3 directors to help grow the company. My question is that FRMO currently has a market cap of around $400 million, making it among the most valuable U.S. companies traded on the pink sheets. The stock is not very liquid with around 6,000 shares trading daily out of 44 million shares, which is roughly $60,000 daily trading volume. Last year, the stock traded around $6 per share at this time and no significant share repurchases were made likely in part because repurchase would just further reduce the liquidity. In prior conference calls, you have been asked about uplifting, but that won't solve the liquidity restraints. So wouldn't this be a difficult stock for institutional buyers and ETFs to purchase with such a small float? That's one part of the question. The question for Mr. Stahl and Mr. Bregman is, do you feel that uplisting would remove an impediment to further growing the FRMO market cap? Or would having the small float remain a significant impediment other than a potential uplifting and continuing to grow the company without uplifting? What are the potential strategies for increasing market -- the market cap?

Okay. We have a lot of questions there, so let me just tell you this. So when the window is open, yours truly buy small numbers of shares. I actually bought some FRMO today. It's not a lot because it's not very liquid, and I don't want to be accused of moving the price, but I actually bought some. And so I guess you can say to the extent that I bought some, I made it even less liquid. I don't think liquidity is going to be a problem ultimately. And I think uplisting is going to do a lot of good for FRMO when we get around and do it. By the way, it's just not uplifting. We would have done it already. It's just that we've got so much going on. If you want to blame somebody, you really should blame me because there's just so much -- there are only so many hours in a day, and we just didn't get to it. So mea culpa is all I can say, and we'll try to get to it and try to get that done for everybody. If you look at the Russell 2000 ETF, obviously 2,000 companies or very close to 2,000 companies, you go to the bottom, Holdings, let's say, the smallest 10 or smallest 20, you'll be amazed at how illiquid they are, how small the companies are, much smaller than FRMO. If you go to the micro cap ETF, believe it or not, there's a microcap ETF, you'd be amazed how much money is in the microcap ETF. There's a lot of microcap illiquid companies in the microcap ETF. So the way the ETF world is evolving, companies with micro capitalizations or micro liquidity, they're part of the stock market. The original idea of indexation, I was right about this. So forgive me for repeating it. it got perverted along the way. So the original idea was there's going to be one index, let's call it the S&P 500. Everybody's going to buy that. And it wasn't more capitalization weighted, float adjusted. It was just more capitalization weighted. And the reason for that is because there are some companies that they're just not liquid. And if you buy or sell them, the liquidity, that's part of the risk you take, that it's not as liquid as you would like it to be. That was the idea. So because indexation became a business, not merely indexation, it got weighted towards the most liquid names. Okay. But now that's done, there a whole series of not very liquid names. And I would say trade, and I'm sure people would agree with this, in a very idiosyncratic manner. And we could use the word idiosyncratic manner. But to somebody else to a mathematician, they would say low correlation and therefore, covariants. There's a movement to bring in the less liquid companies into the institutional indexation family. And I believe that's how it's going to go. And that's why I think uplisting is going to help. And I just got to get to it. So you're going to have to blame somebody, so I would suggest you just blame me. I'll get to it eventually, but forgive me for being busy with other things.

What about increasing the flow? Is there any way to do that without diluting people?

Yes. There is a way to do it without because -- so -- there were certain foundational holders of FRMO, meaning they were there at the -- they were present at the creation, so to speak. And from time to time, they have some liquidity needs. And for them, they -- every now and then, they sell some stock in the open market. And eventually, you'll see more of it. They're going to be owners of FRMO. They can give the money to charity and the charity is going to need the money and they're going to sell some shares. So I think in the fullness of time, you'll see more liquidity in FRMO. It's going to happen inevitably. As to what day is going to happen, I don't ask people what their plans are. I don't know if it's proper. I don't require it. But in general terms, I'm aware that they're going to need some liquidity for their planning purposes. And you'll see shares come out. But I don't think you're going to see any share by yours truly. I think you're going to see the opposite for yours truly, but we'll see how that goes.

Okay. Thank you. Then the last question. FRMO has so many activities going on and so much hidden value. It's appreciated that FRMO is run on a shoe string budget. Isn't it time to start spending more on promoting its value by hiring PR or investor relation companies or personnel to make investors aware of FRMO's activities and value, which in turn will show results in its shares value increase, benefiting the shareholders?

Well, I obviously haven't done that yet. I'm personally kind of disinclined to do a thing like that. It's not the money. We have plenty of money. That's not the issue. And my personal experience is when you hire people to promote the shares, they get a little carried away and take things to extremes. They basically -- you're hiring people to say good things about you. So there's also the issue of modesty. We're just not that kind of people. But in a more substantive sense, they come up with all sorts of reasons why people should buy your shares and they say all sorts of good things. And it's very hard. Once people start talking about to control it, and I wouldn't want it to trade at some huge premium to its net assess value and people wouldn't realize that. So it puts extra burdens on the management that it may be better if we didn't have that burden. So that's the best answer I can give you at the moment.

I think there might also, in that question, which was not articulated, but be some concern that you are so busy that there hasn't been time to consider -- deeply consider uplisting and other things that why can't we relieve some of that burden for you by -- why wouldn't you release some of that by hiring people? And -- well, just adding on some questions.

Well, just -- well, okay. Well, that's a good question. So we just put 3 people on the Board, and I can assure you that's one of the things we're going to be discussing. So believe me, I wouldn't mind a little time off. I got other interests. I'm sorry to say, I really do. And if there are people who can and will help me, I welcome it. So all to the better. I don't want to work...

I would just add if -- although like I can hardly imagine that the people on this call haven't done so. But if you could actually read the curricula vitae of the 3 people who joined the Board, they're really pretty impressive. They've had a lot of experience and a lot of skills. They -- I have no doubt they will be of great assistance.

Well, that's all -- those are all the questions that we have. Okay, anything you like to add?

No. I think I hope anyway, we gave you a thorough overview of everything we're doing and we try to be as transparent as possible. And thanks for the questions. They're really great questions. If there were things that we didn't address and you want to address, don't hesitate to send us a message and we'll get some information. If there is things that you want to suggest in future conference calls or conduct this meeting in different ways, we're open to that. So thank you for attending today's call, and we will reprise this in, of course, in 90 days approximately. And thanks so much for your support, and we're going to sign off now. And we'll join you again shortly. Thanks, everybody.

Thank you, ladies and gentlemen. This concludes today's teleconference call. You may now disconnect.