FRMO Corporation ($FRMO)

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 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 Steven Bregman and Peter Doyle, Co-Chief Executive Officers. We're also joined by Jay Kesslen, General Counsel; and David Arnt, Chief Financial Officer. They will review key points related to the fiscal 20,263rd quarter earnings. And now I'll turn the discussion over to Peter Doyle.

Thank you, Thérèse. Good afternoon, everyone. So 2 weeks ago, I never dreamed that I would be kicking off this call. And it's obviously with great sadness that that's the case. I'm going to give a little bit of background and tell you how I was introduced to Murray Stahl. I had the good fortune in my senior year of college of having a professor who was in the same graduate program is it's Warren Buffett at Columbia, and they learned under Ben Graham. And Ben Graham is considered to be the parter of security analysis, he his the legend in the industry. And first of all, anyone that's in finance has read his books. And essentially, it was the professor would say trying to buy $1 worth of value for something less than $1. And I had read the Intelligent Investor, which was penned by Ben Graham prior to joining Bank Trust Company where Murray was working. And I had no real business with Murray when I first started. It just so happened that I -- this is 1985, so 41 years ago. I happened to sit outside of his office. And he used to work late, and I was a young person trying to get ahead in the world, and I work late. So probably within the first week, maybe the second week at most, I wandered into his office just to introduce myself. And I very quickly realized that he was the smartest person I was ever speaking to, had ever spoken to in 41 years later, that was still true. And I didn't realize at the time, although I figured it out fairly soon, that I had bumped into the equivalent of Ben Graham. And frankly, I think he rivals Ben Graham in professional and as a person, I think he far exceeded Ben Graham. So I know a lot of you feel like you know Murray from the calls. I know some of you met him in real life. He was an intellectual giant, he was generous beyond belief. He was empathetic and all of the good things that you think about him, you can multiply it by 1,000, 10,000, and it's still true. So it's hard breaking for us. And I can tell you that we're grieving here at in Kinetics FRMO, and we're managing. But that said, Murray laid the foundations for us as investors, and he laid the foundations for the companies that we're involved with, and they're in great shape. So today, we're going to touch on all the things that Murray would have touched on today. The 4 works in progress the Cryptocurrency business, the exchange space, Horizon Kinetics itself and then the various inflation hedges. We'll touch on them to varying degrees. So feel free if you want to share personal things and if we open it up to questions or you want to speak to us in person. I know you feel like you had -- you lost a loved one, and that's really what happened. Murray was the colleague, the works ballast, if you will, of both Steven and myself for 41 years, and it's not an easy time for us. So with that, I will turn it over to Steven and see if he wants to add anything or to jump in with the presentation.

Sure. Well, I guess what I'll say is part of the presentation. You might appreciate that so we've been a couple of days -- well, it's been more in a week now. So it's as timing. .

Steve, it's 2 weeks at 4:33 today.

Okay. So people would ask us questions what are we doing and what we thinking and depending on who the counterparty or client was, are we okay? Is Horizon okay? Employees might ask question I kind of look -- we're just in hours now. We can't even measure in days. We can measure in hours. They've been movies made call 24 hours or 48 hours. And as you might appreciate, in the first days, among the many things we do is preparing for Memorial and making sure certain clients could come if they're flying at the town and you couldn't turn them away and limit the number of employees were can we gather afterwards. And then all the steps you have to take to reshuffle rationalize different reporting structures and responsibilities. So there'll be new role of this. And the first thing I'll say about it is that Horizon, which also ends up for force being impacting cheaper. Everyone who's raised their hand or they can help without even leasing is doing it. And all of the original partners are gathered together and we're here, people who've worked with Murray since 1984, '85 in one case earlier. And we're rearranging our brain trust in a way. No 1 of us could be Murray Stahl and probably not 3 or 4 of us can be Murray Stahl, but we are all thinking were of a like mind at least as far as the goals and investment philosophy and values -- business values and approaches. So in terms of what I might say to Peter and I both to employees, first of all, because our employees, by the way, they speak to clients and clients have the same questions and that the employees don't feel comfortable answering the questions to clients. And the clients can't feel comfortable. So one of the first things is that tell the employees don't worry. We're not closing our doors. We're telling that to everybody. We're not selling ourselves because one of the things we've done over time and got the strategic architect menu is we've created both at Horizon Kinetics and [indiscernible] the state people term fortress balance sheet. That's true. And absolutely fortress balance sheet. And we're not in a hurry to do anything. What we're going to do is do things in the right way. So and that was by design. I want to talk a bit more about that actually, so you understand it. Because if you understand something, it's not something you have to try to remember because you know it, it's not normalized. But -- so balance sheet basis, I'll talk about why we did what we did because a very mutual were solid. It means we have time to do things as we judge them to be the right way and take 1 from the other and not step without meeting or no drastic changes under pressure. The other thing is we're different in many ways, is that our portfolios, whether it's the FRMO portfolio, whether it's Horizon Kinetics corporate portfolio, whether it's our client portfolios. They are in a much better position, same as the balance sheet and very different qualitatively than they were, let's say, 10 years ago. The 10 years ago, we have good years and bad years as investment advisers. Not every security is the best security. But we might have some really excellent, excellent investment securities. But they weren't strategic. Years ago, we weren't in a position decades ago to own strategic assets. And what is strategic asset mean. Now let me give you like one example just to differentiate. So a very large position just in investment portfolios you might be making. At Horizon is Hawaiian Electric Power. It's a classic recovering utility. In this case, it didn't happen to be a failed utility, but sometimes they're APL first and come out of bankruptcy and then there recovering utilization restructure. But we've invested in utility stocks when they are in this position for decades. In fact, Murray and I worked on and patiently worked with them an independent way banks trust company was creating a utility portfolio as an element of a bond substitute strategy since bonds are wasting assets after inflation -- we've been thinking and working with them for a long, long time. Now the nice thing about a recovering utility is that you have a very high degree of confidence in what it will be earning, let's say, 4 years down the road or 5 years down the road? And what the payout ratio will be what the dividend will be. And it's extremely unusual, but it's a regulated utility. And it's actually a very easy calculation. That's challenging. You have a certain rate base. You announced that the regulators doing tallow to charge turn on. And likely, it's maybe in the 10% or 11% range for utility company. And therefore, you can multiply the allowed return by the rate base and know what they'll learn once they recover. So you can readily see that for Hawaii Electric Power, you might make 2 or 3 or more times your money over seeing period of time. It will be a great investment. But once it is fairly valued, there's no more reason to own it. There's just that much facility. So it's a fine investment. It's not a strategic investment. I think we were doing because TPL actually as a strategic investment is a reason for it to be able to compound the value generation as it has been. Right? And it's actually in a sense sits actually has more future value potential perhaps now than it did years ago, 7 years ago, it was primarily in terms of revenue generation is the oil and gas. Now it's a portfolio of different sorts of revenue. So in our accounts now, we have strategic holdings, not just one but many. And it could be Miami National Holdings could be other securities, whether it's lab-grade permeation trust and private ones and public ones. Peter kind of joked while not so long ago. There's not really a joke. He said, our investment portfolios would probably be better off in the next 5 years that we just kind of shut the door on them and walk away and didn't touch them. And they probably would be. But we have clients and realities of people who just take money out to motivations or are they just aren't comfortable with PPL having gotten to a certain high level and they want to put back. So we have the benefit of time and stability and strategic flexibility to look at the balance sheet by the way, with the origin story of how it is that investment adviser like Horizon Kinetics and have a $100 million plus balance sheet or even loan. And it actually started with an idea before Horizon originally even formed before we even had a name Murray like to real people with a story about how -- once we determine that leaving bankers trust and setting up under the Aegis or umbrella of some existing investment advisory from was just too risky because we actually had to go out and create our own company. And our first strategic planning meeting was at a is Burger King story. He and I said at the Burger King down the block or around the corner from our employer Angus Trust Company at BT Plaza across from where the trade center stood. And we mapped out what kind of structure do we wonder for the future of our business. We understood it was going to be an investment advisory business. We would try to be honest about it, [indiscernible] will be legally within proper regulatory legal framework with clients of the private bank is somehow associated more strongly with us than with the institution. And at a certain point, Peter and Murray and everybody would collect a certain simple full of investment advisory accounts and then what? So what are we actually doing? So strategically, well, we're going to be in an inherently volatile business, right? And you might do well for some period of time and then the stock bikegoes down because it will -- and then our revenues will go down because prices of securities go down and people would draw money, they need money or they take in account away. So we want to do everything we can, recognizing what we're doing. -- to immunize ourselves from that volatility. What can we do to do that? And we had a few ideas, and then we develop really long-term plans, especially considering that we didn't even have the business yet, and we didn't even have the capital between us to raise the money to start a business and put a deposit down on a commercial lease. One thing we decided to do was if and when, we got enough revenue that we could pay ourselves some modest salaries. -- we would take all the excess earnings and keep it on the balance sheet. And because we want to build up a balance sheet eventually, that was big in option. -- that the interest and dividends they're upon would be able to pay not all of our expenses. [indiscernible] these aren't rent or some portion of our other operating expenses or salaries. That if there's a big [indiscernible] the market, we could tighten our belts and not have to close our doors or sell ourselves and a fire a bunch of people or more -- I should say we put, but way up here on the priority list was the idea that we don't want to under pressure at the sell stocks we want to hold on to it or buy stocks, we don't want to buy -- and if you've ever been in this business as a professional, you can imagine the excruciating pressure that was applied to us on occasion to buy technology stocks during the come because we were underperforming by over 2.5 years out like 3 for just the most enormous amount. It was like amount ever of underperformance. We at the bottom and everyone else at the top because we just refused to buy. Cisco all the rest of the crowd. And likewise, during the great financial crisis, and everything is falling. People thought they were looking into the this, we had advisers for who managed accounts for them. Creates say, "I need you to sell the stock, and that stock because I don't want to see my clients look at their monthly statements and see that. And it's a proves actually buying the security as you know what, I can just take my accounts out of yourselves myself and nobody will ever look back. So that's kind of pressures I'm talking about. We look at that would come. And we didn't realize well how ambitious it was and it seemed like a pipe dream because in order to have some millions of dollars of interest and dividend income, you have to have some tens of scores of millions of dollars of saved-up after-tax capital. But Murray is tenacious that way. If the analysis worked out and the analysis were sound, and there's no reason not to do it and you just keep at it. So there was a period of time, I don't know, Peter might live better either. We've got salaries at a certain quarter, maybe it was $60,000 just enough to live on. And then you kept them flat for years, maybe the step up. And until we figure out a more efficient way, it became a point when I get a big check at the end of the year. And I might never have seen a check that big in my like maybe is $100,000 or wherever it was $200, something like that. When I look at it, it was pleasant and I would look at it and I would say and I maybe spend 10 seconds of my area. And then I would put it down and write something on 2 pieces of paper. When does the deposit slip to put it in the bank. And the other was a new check, which I'd write to Horizon to put it -- to put back into Horizon whatever the after-tax number-wise. We gave ourselves a ratio of $100,000, $50,000 will probably go back to Horizon. And it was hard but that's how we built up the cash and security at Horizon Kinetics. And then basically, it's the same thing we did in the firm equipment. So we did that. We got there. So -- the -- another question our employees had in client tech was. Well, now that Murray has gone, what are you going to do for ideas? And I'm going to believe with the long details of different ways of generating ideas on your own, if you don't have strategic engagements, which we did, we raised to fund stocks. We have a research team and they're engaged in doing it, too. But there's something different now about us, which is our strategic engagements with some of the exchanges with companies in the energy field with the Board of Directors or you're looking with these companies, you're actually in the flow of engagement with other people. And all sorts of ones you don't know and they might appreciate knowing some of the things you do or your perspectives because they're different than theirs. And it could be very collegial and very productive. And we're being presented with also to interesting ideas, some were private to the public and you're actually in the flow. And we have analysts who are regularly out there in the oil patch, visiting not just TPOs out there. We're seeing other business people and companies and that are doing deals and interesting things and the same with the exchanges. So at our Investment Committee meeting at Horizon just this Monday. One of our analysts, James told us about just 2 or 3 coming public businesses or just in public businesses or private that we want to be aware of that we might be working with people on because he's out there interacting with them. One of our other analysts who actually listen Texas and has been oriented generally speaking to the exchange groups is quite familiar with the people at MIAX, and I want to envision with him to visit Greg Gurjit, the head of the man stock can we took a trip there because some people from representatives of an Indian securities exchange, wanted to talk to my actual introduced them to that idea about some product. So when you're in that -- once you're strategically associated with people like that, and by the way, the story of how we got there is another intent worry with all of that. You got there through a process. So -- that is a foot. And in fact, we're now maybe step 8.5% of 10 through having nothing to do but the fact is that we're down there in Texas. And there's someone who specializes in buying a certain kind of land, having nothing to do with miners, nothing to do with [indiscernible] And there is a way of lending, secured lending by land for development at a certain level, with a certain type, which is a persistent. A very persistent market advantage that if this works out, when we do a diligence, you might be able to offer in a private fund clients a proper kind of bond substitute investment of let's say a 10% yield. Maybe that's something if I can being involved, I'm not so sure it's appropriate. But ideas. We're not short of. In fact, lending we're short of is some research -- active research processing capacity, and we're actively discussing investing further in our research staff. So I just wanted to give you that to understand that we're fine -- there's a lot of blocking and tackling and the organization to do to make sure that we're on top of things. But it was worth giving you that sense of things. So that may even be weak. Now today, for instance, I can contest you upfront. And I've learned in my life, particularly in more in the last 20 years than the 20 years prior. I learned to not be so embarrassed or saying some of my deficits or failings. We have been as busy -- I use this expression offhandedly with 1 of our only young to me, not on to the people who are in his own design but she was a couple of generations behind me. And I offhandedly mentioned to where that we're as busy as an arms paper hangers and I got the blankest there, and I realize, okay, use more in temporary metaphor and ag. So we've been quite busy and in good ways, good busy. But for instance, I can tell you that I'm very glad we have, for instance, David Art, who is a properly trained and highly qualified and component CFO whereas I was not. My role as CFO, you know how that happened? It happened because when FRMO was created, that was one of my proudest professional achievements. We created a publicly traded company or $450. I can tell you the story in every time. And we did it because we located actually thanks to 1 of our Board members and extremely able to invest it. We were introduced to one small public company. had the idea that since we waited about spin-offs, it's been on ports actually spinoff. We thought what if we can get some small public traded company controlled by someone who we could induced with the wisdom of the idea of just as a paper transaction, creating subsidiary, spinning it off, we had an idea for building a business from that and is a [indiscernible] they could own some of that business. And why not give it a try? Some people would be up for that. Anyway, he introduced us to the Felmer Tanner, who my letter things was an extremely talented securities term. And he did it all for us. But anyway, we were capitalized with $10,000. That was a gift from him. He just decided to put it on the balance sheet. So it's kind of -- it started quite a long time ago. Anyway, the idea of speaking of the process of investing as opposed to actual investments that comes first. anyway, but the way I got to be a CFO was the $10,000 the purpose of that was we didn't have any expenses. Murray and I never took cash salaries. One day, the regulator said that you can't work for free. It's not recognized. So you can claim just debit equity and I think credit is expense, but it's not a cash expense. We just have to recognize it on the income statement. But what we had at first was the cash on the balance sheet. And then we had a revenue stream and the second one and the third one that we had negotiated. And the $10,000 was just what we thought the annual auditing expenses would be. to recover our cost of being a publicly traded company until we had revenues. And we needed some internal accounting. So someone showed me what QuickBooks was and they showed me how to make entries. And I had taken a couple of semesters of accounting and college. But -- and it was easy enough at first, but then we got a little more complicated. And then we started having accruals that had to be made and then reversals. And I kept up for a little while. And after a while, I relies no longer confident to do that. Now we have David [ Ardiseis ] actually the real deal. So in terms of being willing to be publicly embarrassed, I have not had the time to prep properly for this meeting to answer any kind of detailed balancing questions on what -- now we have him. So let's say we base anyway. I will -- I'd like to make one observation, at least that's sort of like, I can talk about the balance sheet and what you're doing in a meaningful way. You might recall from maybe not every time, but it seems to me at most times, these shareholder meetings, preference calls. Murray would talk about some items in the balance sheet that you thought were important. And one of them was the that line item on the liability of the stockholders' equity portion of the balance sheet that says security is sold, not yet purchased. And those follow looks like those are the are persistent selling short of so-called path-dependent ETFs, which by their nature because of a floor in their structure will eventually continuously head towards 0 to volatility in the marketplace. And this contango in the future is particularly we leverage and $717,000 doesn't seem like a lot on our balance sheet. And you'll see that May 31, 2025, is $1.3 million, and now it's as of February 7, 17,000. And it's not that we reduced it. In fact, we continue to sell short like every week. And in point of fact, the cumulative roughly speaking, the cumulative short sale proceeds over time. And this program is a little over quite -- it's over $9 million less than $10 million. And so the -- those are proceeds each site we sell something short, those proceeds it up on the balance sheet. And in the short term, you might say, I can't use them because maybe the security goes against me for a little while. But eventually, years past, it's cash. You just never close the transactions that in helping it's not a comprehensive difference, but if you take the difference in the market value and the short sale proceeds over time and the current market value, that's almost $9 million of profit. And on the balance sheet of our size, you might say it's not much. But it's like 2.5-odd percent of the total market value of a rather substantial balance sheet. It's not nothing. -- it's pretty big, and it didn't require any capital. We required some collateral, but we're like hugely over colitis. So in a sense, it's 3 money or it just requires the trading operations to do it, and we've got that. Anyway, I'll stop there. I just wanted to show that I'm a little tiny bit on the board. And I will shut up now. And David [indiscernible] we'll do more of that some highlights that in the financials that he decided would be with just store and highlighted so David, would you?

Yes. Thank you, Steven, and thank you for the kind words as well. So hello, everyone. My name is David [indiscernible] Chief Financial Officer of FRMO. I'll briefly summarize a few key highlights of the company's financial results for the quarter, which included net income attributable to FRMO of $83 million, bringing year-to-date net income up to just shy of $57 million. These results were primarily driven by unrealized gains and losses in the following investments TPL, which is our largest holding, both directly and in our private funds, increased 82% during Q3 and 40% is up 40% year-to-date. Our investment in Horizon Kinetics Holding Corporation, whose share price increased by over 20% during Q3. And MiX, which although it decreased slightly during the third quarter, still remains a strong driver of year-to-date results, which -- and it has increased about -- by 80% from the prior year-end. Just as a reminder, Mix also went public in August 2025 and has obviously been a strong strategic investment for the company. These unrealized gains were offset by losses in cryptocurrencies where the company also has exposure both in direct and indirect ownership. This was led by Bitcoin, which decreased 26% during the third quarter. and is down 36% year-to-date. Net income was also reduced by a significant income tax expense, primarily related to those increases in deferred taxes from the unrealized gains on the various investments. Consulting and advisory fees decreased in the third quarter versus the prior year. Those fees are related to our revenue participation agreement with Horizon Kinetics. -- who did not benefit from significant incentive fees in our third quarter compared to their earnings in our third quarter of the prior year. Regarding the balance sheet, the company's balance sheet is obviously a source of key strength with over $45 million of cash and a well-positioned portfolio of investments. As of February, we are debt-free due to the sale of our land and building to Syntech Digital, which had a small mortgage associated with that property, and that property was leased -- previously leased to a third party that was to a related party. -- that was involved in that transaction as well. Investments in -- yes, yes, go ahead.

Yes, David, just one note. It's a small thing, but we used to have to say that you couldn't technically say that FRMO is debt-free. Accurately, we had no net debt because we had this modest mortgage on this hosting facility in North Carolina versus all this cash we have. But now we actually have no debt. We actually are debt treat without any qualifications. It was minor. It was minor for us. But puts us in even smaller universe of companies.

Correct. Yes. Under investments in equity securities, limited partnerships and our other equity investments, all experienced significant increases during the third quarter due to those unrealized gains that we've discussed. And those also resulted in an increase to our deferred tax liability, which can fluctuate based on those investment balances. Just as a reminder, our financial statements consolidate the results of Horizon Kinetics Hard Assets where FRMO owns just shy of 2 and the stand-alone results of hard assets can also be seen in a relatively new footnote 12 in the financial statements as well. So that concludes the key highlights that I had for this quarter. I will turn it back over to Therese, Steven or Peter to continue.

This is Peter . I'll just a couple of quick comments. And I just wanted to share further what Murray has kind of instilled in us. And has this coded into the DNA of the investors here at Horizon kinetic/FRMO. So one of the great things and one of the advantages is the -- and Steven touched on this, is time horizon. And when you lengthen your time horizon, you give yourself a tremendous advantage. You're not operating in this functional world where they constructed where the world ends on 12/31 of any given year. And since that does not coincide with reality, you get very dysfunctional behavior. We do the opposite of that. We try to take advantage of that dysfunction. He also gave us the ability to scout out scarce resources and to find companies that have those resources, but they're frequently packaged in the right securities. So royalties, as an example, really have no operational risk, and they have a lot of optionality. And the last one I was going to touch on is optionality. Many of the securities that we have, have the ability to grow revenues or reduce cost through no effort of their own. So in the case of TPL when we first bought that, tracking was not a thing. Tracking was developed by the oil and gas industry, but TPL benefited greatly from that. So you can see from the growth of the water business of PPL, the potential for data centers going on that land, there's tremendous optionality built into a lot of the things that we do. And just what Murray's aim was for FRMO, and I'm going to touch on the first question, he understood that in order to drive real value and to get a higher multiple for this other than trading at its cash value and its marketable securities. You needed an operating business. And that was the only way to achieve that. And we were slowly and continue to the no reason for Stephen and I to stop continue to increase our stake in women and I think we're close to now 47%. And I know Murray's intention was definitely to be at least 50% -- over 50% by December of this year, and that's still our intention. So our goal is to have an operating business, grow the earnings, grow the revenues through an operating business. And we -- Stephen and I earlier today sat down with the crypto mining team, if you will, and they presented us with an opportunity. I think Murray would is certainly considered both Bitcoin and Litecoin mining right now is very challenging. It's barely profitable, but they had another coin where we could probably mine that coin, sell off a good chunk of it to buy Bitcoin and still fund the operations of buying the machines to mine that coin. So things are being looked at, things are being paid attention to and still very optimistic about what we're likely to be able to turn that crypto business into -- so with that, Thérèse Stephen wants to add something Well, ready to jump.

I look at some of the questions was relevant -- one of them is relevant to what you were talking about, Peter. One of the questions, a number of them have got inland. And as Murray might be like to say when he was asked about an ancillary company. Look, I don't represent my [indiscernible] I don't represent the it's not may speak [indiscernible] But part of the question was, is it not possible to move more quickly to acquire loan shares to get to over 50% in an orderly manner to move to its next phase of life as an operating company if acquiring Winland is still need to plan. . So moving more quickly to get there. My sense of it is that -- we are actually moving in an orderly fashion. And the goal is to get to 50%. And don't believe it's going to take us very long. But in fact, one aspect of an orderly fashion is to do it in a way that works best for corn loco? And 1 pays attention to what fiscal year you want to complete it in so we can efficiently combine financials and have to get audited. And if you go through that process, yes, you absolutely want to do an orderly fashion. We're heading there. And we pretty much know when we want to do it. And I think we have the resources put in the broad sense, not just the cash to do that, and we'll be hearing more about that. While since I'm on that, I see there are other questions about Winland. There are questions about Winland's revenue mix. One question someone noticed that Winland's mining revenues have been a smaller and smaller mix of the total revenues in electronics and crypto making up 66% and 34% of revenue in 2021 and you're actually chunking down and kind of getting into some details about what it means about women's efficiency in some fashion. But it's -- it's not exactly like that. It's not that we're trying to organize a different mix. It's not that we're following down the job somehow. But the revenue, the profitable revenue possibilities in cryptocurrency mining have their cyclicality, who Murray has spoken at length about this over time. And our current approach of the having and the predictable and historically empirically durable results around that time is that the Bitcoin might poll because minors need to sell some of their cumin bitcoin to get ready to buy more mining rigs and so forth. And so that's just -- that's part of the cycle of what goes on to mining it's not a management decision other than our very careful in the Liberty decision to not buy rigs in order to have market share in order to generate near-term revenues that would be unprofitable in 24 months. So very, very, very careful about not making capital expenditures and having more mining just on that. show that mining revenue is smaller. There's another question I saw about on electronics. Some of this partly following closely. You see that the revenues and margins have been improving and ROA for some years since 2022, and he's looking at customer concentration and things it looks like business and to land management and actively managing the segment for growth will be the legacy and ongoing operating business of with the sensors -- or are these just growth levers just due to external tailwinds. We even taking the person taking they've observed the development cost of enhanced Winland's Insight product that Software-as-a-Service product has greatly reduced with modern AI. So those are all excellent questions. But the I don't know if it'd be appropriate, but our in-house counsel will tell us, a better person to answer that question would be Matt Holk as CEO of Winland. I don't know if it's appropriate for him to comment here at 1 of our earnings calls. But I will tell you that they operate that business as best they can. They're hard-working. They're very detail oriented. They have more spreadsheets in Board meeting reviews of every angle at which to look at how the business is progressing and what the weakness and what the strengths are and whatnot. They work very hard at that. And as well as they can manage that business, they are doing so. And there are even strategic opportunities for them. Perhaps even in data centers or data centers have a need to monitor constantly and remotely moisture content to the year, stuff like that, true. But they're doing what they're doing. They're there the ones managing they're managing themselves. It's a question I were asked of somehow, I suspect I'll be told it's not appropriate for someone else to see to come and speak at in our earnings call. But of course, they probably have their own in these calls. But our interest in Winland as you know, has got broader rate goals. We like their business. And we think their business compelled and ended. And if we can help try to expand it strategically, there are opportunities for that. We will help them do that. Do you want to take a shot at any questions, Peter?

No. I thought maybe we'll let Thérèse read them, and so people can hear them and we'll give -- answer them to the best of our ability. So just to remind you, Steven and I can tell you more or less when the unit was were thought and who were the 2 sides. Murray could tell you why there was blunders by specific generals at a given time and why [indiscernible] might have called for the burning of cartage. His recall on so many subjects are just it's going to be impossible to replicate. But we will do our best in answering all questions as they come.

One of the questions had to do with Murray's Holdings of FRMO Corp. And David Art, if you would want to explain that. Could I turn it over to you for a moment. .

Yes. Sure. Thank you, Thérèse. So yes, as Thérèse mentioned, 1 of the questions we've received from multiple shareholders was regarding what appeared to be a change in Murray's ownership of FRMO between our 2025 annual financial statements and in our financials for the first quarter. of 2026, where it appeared that his ownership increased by 857,000 shares. What occurred was that we thoroughly reviewed both the direct and beneficial ownership requirements of the table. -- in our filing and discovered that some of the affiliated entities controlled by Murray and Horizon Kinetics where there were shares that were inadvertently excluded. So these other accounts should have been included in those prior periods as well. if Murray's ownership -- it was by demand quantity of...

David, are you there?

He's getting his connection back.

So with regard to TPL and mix, I know there's concerns about that, and those are very strategic assets for us. I'm sitting here with Jake Hewson, our counsel, and we are exploring all opportunities. I don't think that I can say much beyond that. And we are having discussions with both companies, and our hope is to be engaged at all times with those companies and potentially getting a board seat on the 1 or both of those companies

That is our intention. I can share this because it's a fact -- it's not a projection. It's not a judgment. The CEO of Tom Gallagher, [indiscernible] came to Murray's Memorial along, I think, with -- along with his in-house council in Chief Operating Officer. An example of people who wanted to be there and pay their respect. So that's what.

There's also a question regarding with Miami International Holdings and MIAX, and there is a difference between the 2 on the balance sheet. And one just really had to do with being temporarily restricted because it was part of the IPO and the other one was freely traded and they're both now, I believe, freely traded. So there is no distinction any longer.

Thank you, Peter. David, do you have any more to say about Murray's Holdings of FRMO.

No, I apologize. I lost power at my house for a moment. So again, apologies for that. depending on where I got cut off, essentially, it was just a reporting are those -- after our investigation, we determined that those shares were inadvertently excluded. They should have been there from the beginning from -- as part of the annual 2015 financial statement filings in prior periods. But the summarization is that Murray did not acquire 850-plus shares between the end of 2025 in the first quarter of 2026, and we were unaware of him selling any shares in any quantity in that period of time.

Okay. There was a question be interested in your feedback, Steve and Peter was goes like this. In 2019, FRMO shareholder letter, management describes the process where new asset classes are used as learning experiences. It is noted that every employee in all of Horizon Kinetics has the opportunity to develop new knowledge and skills and small experiments, free from pressure of substantial loss of capital when expanding gradually into new asset classes. This process is noted as confirming the ability for employees to return to their former responsibilities or transfer to other related more successful projects should the current experiment sale. Could management please share some examples of what this is actually functioned within the Horizon Kinetics complex or still new as well, call it, now matured asset classes and other areas of interest for HK.

Sure. I'll give you a few examples. Go ahead. Go ahead, Peter. Go ahead, Peter.

Well, I'm going to give one that touches on it partially, but it's -- I think it's critical in reflecting on who we are. James Deals recently did a podcast and he went through how we started at the firm working as an assistant on the trading desk and then how we encourage him to go to school while he was still working and then as he grew his talent, he came back and moved into the asset management side, and he started the inflation beneficiary ETF -- and so that's 1 very positive example of that. The second one I would say is that the cryptocurrency business, we sat down with 2 gentlemen today that still have responsibilities at HK among other responsibilities, but they also got into the mining aspect of the business, and they're running reconciling all of the cryptocurrency that we might be mining, making sure it's paid out correctly. Securing the crypto currency that we have on the balance sheet, et cetera, and they've learned a whole different skill set. And that has been very successful for us. .

Actually, they are now at a level of expertise at an extremely small population in the group, right? May now cryptocurrency mining up, down forward back in sideline. In an operating sense, securing and sourcing equipment to negotiating it, testing it to negotiating leases with hosting facilities visiting around the country to managing rigs to monitoring them to setting up the teams to do that they had none of that a handful years ago. Any more, Peter, because I've got some? So Winland, Matt [indiscernible] the recent weeks. I completely stop my mind. I'm the reason why Winland and its current one exists. And I said, You're joking. What are you talking about? And he came on originally, he wanted to work for us and thought he could add some value. I think you'd be working. Are you working at Goldman?

Yes. Goldman

He's got a math mind. Like he reads advanced mathematic books for fun when he's on the treadmill believe or not. But what they do is say, well, we'll find a place for you, you'll find a place, just hang around and to what I did any time to read our research get to know what we're doing and just -- and he pop his head in my office here once in a while, like we're waiting the evening and say, I feel like I'm not pulling my weight. If there's anything you do, let me know. I'd say, don't worry about it. You know what, I'm not worried about you. You know why? He said, no. He's a very, very earnest person because you're worried about it. I'm worried about people who don't worry about whether they're doing it a good job in our pulling that weight. It finally came in to me when he repeated the question plantable. You said, well, is there anything you need like I said, well, you know what we could use -- we can always use another publicly traded vehicle kind of like FRMO Corp, I explained the how we built that up. That can always come to hand said, oh, okay, I had no idea. He told me that set him on a path. When you started scouring the stock market. For some small companies, some deep value kind of company, and you hand Winland. It had all this extra cash on the balance sheet than it's trading below the level of cash, and they were bleeding cash because they're spending R&D that they should have been spending on and he managed to get hold of it. And here we are. Now you might say that's old, you're looking for new things. So Peter and I have been and Tom [indiscernible] even touch base and our operations managers touching base bit by bit with employees and making trim what's going on. So this weekend, I spent it's just touching base with Eric sites, I mentioned earlier, we have [indiscernible] stock exchange. I said is it fine and you talked a bit what's up? Is it about I'm down here in Texas. I've been living here 5 years. And I've been doing some interesting things in developing relationships and working with Murray on some of these. And I said like, what there 3 hours went fine. And so I said, can you write up kind of the prices of what you're working on and so sure. And you sent me a list of 4 or 5 different -- very different business opportunities we've been working with, he's been working on. And he's actually a very, very good personality as a kind of a business diplomat. He's got a soft touch and he seems to be good at developing relationships. And 2 or 3 of these are actually nearing a point where you might be able to do some real transactions with them become investment products or something else. And one in particular might become an investment like inside of our investment management business and investment product cores. And others are a little more strategic in nature. James De Volos invest committed is on Monday, reviewed about 3 of his. And we talked about a particular rule came across that might be interesting in terms of uranium I won't say more than that. And it turns out that another one of our analysts actually follows that closely and just on a personal basis. and we've now engaged him and being the person who can represent us as the meetings with people in that sector because it kind of has a good sense of what's going on. So we do that kind of stuff. It's a meritocracy in that if someone wants to and we think they at the right level for a certain for certain engagement, we'll let them do that. Murray used to think of it as coming tends about 1,000 hours group at 1,000 flowers bloom. You just don't know which ones were will take root and keep growing. So that is just part and parcel of the way we operate research and, let's call it, career development.

Are there any of the other questions that you would like to address because we could wrap this up, and you could invite shareholders to submit more questions.

Well, there's one that pops out. And Peter and I might both take a crack at it. I'll say it's not a new question. It's a class of question. And it's touch in the answer, I don't know. I really -- it's not a touch so that there's a different conception in mind understanding and that has to do with education and discussion. . So there are a couple of questions. I'm not looking at them, and it's going to casually by memory. That has to do with, are there things we can do or are planning to do or will do with respect to the poor performance of foot. And by that, the name of the stock. And disconnect with the difference in perspective comes is that -- it's a kind of question that sometimes I have to address. I know Peter certainly has to also when we deal with individual, let's say, investment advisory clients and every time a significant holding goes down, let's take TPL. We get a lot of questions saying, what's wrong with TPL and should I be concerned? And in many cases, it doesn't even matter how long the client has been with us and how many cycles they've gone through. I've got a client who has been with us for I think 2-plus years. And the last time TPL went down on not so many months ago. You called me up. He said, should I be concerned? He loves us. He said, he actually says, I love you guys. And I said we have to have this -- I didn't mean that it wasn't an edge in my voice. I didn't mean it and he understood insane. I said, do we have to go through this again, Barry. He said, Well, it would make you feel better. As I took them through the reasoning -- but sometimes what I'll do is this. I've had occasion to be in a world where client think what someone came to evaluate how Horizon Kinetics or subadvisory business and what to go through that process. And I think he asked about TPL. If you down so much, are you thinking of doing anything about it. and I was prepared for him. So I had 3 charts, I think, maybe just me before. In the first chart, it showed TPL in both letters, large up on top and a chart and enjoyed chart of TPL stock, like just cratering and coming down and it was flat for a while, not for a long time, but just a snapshot. And I said, you say here we are. This is [indiscernible] It's now, it's down 40%. I said, Oh, I'm sorry, I didn't put the dates in, but people don't look at that, right? I said, this is from 12 years ago. Let me it was my mistake. I'm sorry. He's here and here's the chart. Then you have another chart, and it shows T going down more in the view I did it again. I don't know what what's wrong with me. That was a chart from 8 years ago. Here's where we are today, and I gave the chart of the entire period. And those prior declines is like they barely show in the long-term that. And I said, look, it's not reflective for us. You don't keep holding it just because we believe in -- we evaluate it. We evaluate it very carefully, and we think it's worth a lot more. So why should I sell it now? Let me get to other discussions which are complicated for them, but we want can you sell it and buy it back in that whole discussion, which is near year and there are periods of time when TPL or other investments is simply flat for a long time. And so our response is I'm not concerned about the share price if financially, the company. It's intrinsic value, it's book value, it's earnings capability. Whatever particular measure we need is actually doing what it's supposed to do. And that's going up 10% or 15% a year. then I've got a compounding machine and the price will catch up. People can be discomforted by that say, yes, that's fine for you, but I can [indiscernible] this to happen. The thing is we can't do anything about that. That's the market on. The market is doing that. Someone can tell us, we go round and round in circles in this logic, why can't you buy back some shares to push the stock up? Separate from any academic study you can look up that tells you that, that only lasts for so long. We could buy it back, but there's not an awful lot of float, right? And if we do buy it back, some people say, well, will you do to increase the float, so people will recognize the stock and therefore, give it a greater market value. So I see the complaint and I understand the reason why. I'm not insensitive to it. But we come from a different perspective. That's what we do what we do. So for instance, we're working on -- actually have a mockup in front of me. It's a it's an inactive mockup of a web page. A series of web website actually, for FRMO because we've been remiss in not giving FRMO Corp its own more updated website. And we have our own IT department and the IT department at warnings. Help me put a mock up together and you can work the outside programmers to build us a site at unlike the functionality of the Horizon Kinetics website. And a lot of things I got I put on there, you still have to get everybody's input, but that's why we have the markup. I put a stand-in title for the front page, strategic thinking/strategic assets, right? And I put together a table had just updated the table that are dear and extremely respected former Board member and shareholder of Lester Tanner, had started once this is a history of -- for growth in book value per share. I mean, you're familiar with it, and maybe you're saying, I don't know, but it starts on February 29 [indiscernible] the $10,000 I mentioned earlier, which rounded to $0.01 per share. And at the -- by May of May 31, 2020, 2 years later. The $10,000 have become $115 million, and the book value was or than $0.01 to $1.61, and that 19% a year compounded. -- for those 20 years. And as of May 31, 2025, 5 years beyond that, up to $353 million, $8.02 a share of book value, and that's a 20.5% and annualized compounded after-tax accumulation for the most part, of after-tax earnings and appreciation from our strategic assets. So I would ask not [indiscernible], but really as part of a debate, a constructive debate or thought experiment. What else would you have us do that's a really, really fine result. And we did it without leverage and so all I can say, a Peter might have something else to offer is we can just keep doing what we know how to do best and not to step out of our circle competence and continue to do things deliberately and know what -- which means try to know what we're doing and why, just like that Burger King discussion on acres had before we do anything else. There's a story maybe I told our someone recently this week. I was reminded of talking too much. I was reminded of I was on a bus 15 years ago or so or 12 years ago, this stayed with me, never lucky. I don't know where it was. It could have been on third agent. And I was on a bustle ready and the bus stop somewhere and woman got up and she shipped inside the bus, and she's beginning to about to pay her fare and the bus driver closes the doors and they start moving. And I was close to go hear her. She's asking him -- is this the bus that goes to such and such a place. And he said, "No, no, it's not. What you want is the other bus and the next stop, I get off on, you get out there and look back a block it's this number, okay? This number in either the number of the bus. And then after that, she got off -- he just seemed dumbfounded. He couldn't reconcile this, and he was speaking out loud as this to himself, but allowing to everybody in the basket here and about 20 integrations of the CR, for a couple of minutes and he's basically saying to himself out loud to all of us, how could somebody get on a bus and not know where it's going. I don't understand it, why would you -- if you don't know where you're going, why would you get on a bus before you stand and figure out what bus? He went on and on like this. Basically, we have to know where we're going. If we think it's a good idea, we always entertain new ideas. But we're doing what we can. I don't know what to do at the stock price. I'll contest you other than I don't know, maybe get more people to come and ask questions others like that we answer them well. Peter?

So maybe I'm an optimist, Steve, but my intention is to hang on to it. And if you studied the career of Warren Buffett, you would have seen that I think from 1964 to 1982, he was compounding his book value at a very high rate and the stock went nowhere. I think you would have lost money as a shareholder. And then it took off. So returns come in a pretty episodic fashion. And we have intentions of trying to grow this business and compounding at the rate that it has historically. So I'm just going to conclude from my standpoint, 1 of my new roles in life is helping to spread the legacy of Murray Stahl and the lessons he gave us the way he lived his life. He is not replaceable. He did give us the foundation, he did give us the skills and the tools to basically grow and make things better for our organizations. And that's our intention. And I can tell you that the sadness here is also offset somewhat by the willingness and the energy of the people to step in and to fulfill roles that they probably didn't think they would have, and that's been very gratifying to see. So again, I know a lot of you -- I'm not going to say like Murray stall. I know you felt love from Arista as did Stephen and I and if you like to reach out to us, talk to us, we'll happily share more private stories with you. But that's all I really have to say for today, Steve.

Okay. On that topic or any of them, should we wrap up? pretty much any Okay. A couple of pop out to me and I'll confess, I don't mind being honest about some things. They're easy ones. I picked a couple of easy ones. This one, Jay, are you allowed to speak for us here? . I'll tell you what the question is before you answer because it's about when promo reports its top 5 holdings this person noticed the delineation between MIH restricted shares and [indiscernible] and can you explain the difference in how 1 could determine a value for MIH shares? And for example, is there any fixed ratio by acapesented ferric MI. And I think this is no longer a consideration, but maybe you can explain it in proper fashion.

Yes, that's correct, Peter. Steve. There were some shares that were previously restricted. All of the restriction on the Miami shares is listed, so they're eligible to be traded. They still may carry the restricted legend on them, but that's a fairly simple process to have that removed. But as we sit today, all of the shares, Miami shares owned by FRMO are unrestricted. In fact, all of the shares owned by Horizon Kinetics are unrestricted or eligible to be unrestricted.

I see one more. It looks like an easy one. If our analyst, James Devore here because he's 1 of the specialties in energy, you talked to you about this for 10 or 15 minutes and very rapid passion like on. But then the question is unlike the oil and Venezuela, an oil is a very similar grade of oil extracted in the [indiscernible] share and oil reserves have in Guyana have a much lower breakeven. Do you have any thoughts on risks to premium shale oil prices pose by the development in the online industry in Guyana, especially now that threaten by enabling realistically reduced for years involvement growth period. No, I would say no. And now for probably a lot of reasons when James has had more reasons, more detailed reasons but while you wait for development of some or oil fields or all the risks and that going with it. I'm not familiar with them. So well, I know they're ready to produce another 5 years -- and then shipping them to us. That's the question would be import we're a net exporter, although we do certain kinds of oil pay cells that we import within that low mix. But I don't know that's something that's technically like at the wellhead cheaper than oil in Los Texas. I think we're talking about importing here, maybe that's not the question. whether it remains so once you have shipping costs and so forth. We have plenty of use for our oil here. And in fact, the on the challenges and opportunities in the United States is that all the extra natural gas, the associated natural gas that comes up with oil. We don't have enough takeaway capacity for it, but we don't have enough consumption for it, and we don't -- it's problematic. It's one of the reasons why natural gas in the Permian Basin has been flat to negative prices for years now because there isn't enough pipeline take to bring in places. And basically, it has to be paid to get rid of it. And it's a challenge for the oil producers here because they can't get rid of the excess natural gas, they actually curtail some of the oil drilling. And yet, now we have extra demand coming from 2 prices, the demand coming from data centers. We realize now they have to make their own off the grid sources of electric power that we predominantly the method of choice with the natural gas coal-fired cogeneration natural gas-fired cogeneration plants. There's going to be a lot more natural demand for natural gas from there. We had LNG capacity, which is going up tremendously to ship to other nations overseas predominantly in Asia. And in can -- so just the oil market is way more complicated than that. And I don't see it maybe people more likely think is an issue, but it doesn't turn a couple .

Steve, if I remember correctly, Murray used to talk about it isn't just the oil in Texas. It's also the availability of water for certain of the processes for producing the electricity.

Well that goes to the center of the value of TPL, people listening, I presume they may know this, but maybe it should be mentioned that Water is now the limiting factor. It always was. It just even people in the certainly, Wall Street wasn't where did you think it through. And I think even an awful lot of 1 billion class data centers weren't really thinking to me, is that water not natural gas is really a limiting factor. Core data center build-out because not least for the cooling the data center itself, but the data center needs the electric power, which has to come from their own associated power plant. And that requires that thermal plait burn stock makes heat the boil order to make new direct turbines. And that whole process, it requires a cooling process, and we need to order from that. And for those of you who don't know, and surprising the first time when it comes across it all if go to the [indiscernible] service. They keep track of all the water users in the United States and where they are and where the aquifers are and where the aquifers are being over extended and so forth, but they'll give you information about the largest water users. All -- actually all the different users, whether it's factories, industrial, commercial, households, so forth and so on. And the largest water user in the United States, mostly led by industry sector. Most people would say, it's agriculture, but it's not, it's electric power, it's utilities because they need the water to cool to pool their plan. And it doesn't matter actually whether it's nuclear or coal and natural gas. They all need order. Natural gas needs at least amount natural gas-fired plants. So you can have a data center somewhere. You can have all the land you want. It's not in your town. Nobody is bothering you as far as the politics goes. You found a significant source of long-term natural gas you ready to go, but you don't have water and get in the water. And you really can't do it in farming areas because they're already -- it's already a different kind of crisis, it depends where the challenge that they've overdrawn their aquifers for many, many years. There's been land subsidence and there could be a permanent dam to the acquirers. So they don't want you there even if you're at the middle lower. So the geology and the geography and the engineering needs and so forth, they all kind of all kind of I think like a slope that all kind of leads towards exclusively, but it leads towards the Permian Basin, where they have over that right there, including an excess supply of the cheapest natural gas in the moment. So and as far as TPL goes, Water is the fastest-growing part of their business. And at some point, it will surpass the revenues from natural gas and oil and there's a reason for them to understand one, it has to happen. It has to happen because as well as in the Delaware Basin age. And/or as you go deeper for the next layer of oil, the amount of water mixed in with the oil because that whole area was retinas increases. So without even doing anything so long as there's continued drilling in the Delaware Basin. The ratio of water to oil at comes up, will climb and limit client cling from 3 plants, which well in exactly have from 3 barrels of water per barrel of oil to 4 to 5 to 6 and for the drillers, getting rid of the oil and getting rid of the water is also a limiting factor, and they can't get takeaway capacity for that water, they have to stop drilling. Like where is it going to go, right? So they have to have -- it's a growing business. You have to have somebody who's reliable who's got the network to make alterations to what the volumes are or takeaway volumes are necessary at one well or another. They need a company that can both take away work but also oddly deliver water to them different kind of water for injection into the well to actually do their fracking. And so that is a really important growing business and TPLs there too.

Thank you very much, Steve. Are there any other questions you'd like to address? .

I was going through. Peter?

I think we hit all of the ones that we could possibly answer with any degree of confidence. I think we're only leaving 1 and 2 that are there that I don't have any insight, but I would certainly research them and get back to whoever asked those questions.

So I like that. Yes. There are some questions there. I'm not sure I could do a responsible job of or answer with confidence or competence. But we do have the resources at Horizon Kinetics to compose some financials for the people who request response.

Okay. So I just want to thank you both for stepping up and giving our shareholders this information and for the beautiful tributes to Murray. So if there's nothing else, would you like to give closing remarks?

Yes. I'll do a bit of a bit of a sign off and maybe Peter wants to I can always hear his words in my head at the end of Murray's bridge heads at the end of a call like this, which is that we do thank you for showing up. and for asking questions and for listening. And next time, we hope to be able to give you responses at a more detailed level. we have to start somewhere and we're starting where we can provide appropriate answers. And next time I can do a better job, I hope.

Yes.. I have nothing further to add other than thank you. Steve and I will endeavor to make this successful. And as Steven pointed out and I had also said we're on rock-solid foundation, and we should be able to navigate this difficult time pretty easily as a result of that, and I think we'll have good things in the future .

Thank you both very much. I believe this is the end of the earnings call. So you may now disconnect.