Thank you, Todd. Good afternoon, everyone.

This is Thérèse Byars speaking, and I'm the Corporate Secretary of FRMO Corp. We appreciate all of you joining us for today's 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 exceed -- 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 2019 second 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 one month beginning at 7:15 this evening.

To listen to the replay you may dial the following. For toll free domestic, 1-888-203-1112; for international toll number, 1-719-457-0820; when prompted, key-in the passcode, 5792922.

These dial-in numbers are noted in the FRMO press release stated January 14, 2019 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 Markets 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.

Alright, I'd like to introduce to you Steven Bregman.

As is now becoming a habit, I'd just like to make an observation about the reading of this preface. I'm waiting for the day when you'll have that sheet of papers in hand, but you won't actually be looking at them.

They would just be coming by memory, straight from your head out through your book. I'm sure it'll happen.

Okay. Thank you everybody for joining us.

Thank you, Thérèse. Thank you, Steve.

Steve, I’m always with your remarks. And let's begin.

First, I may one or two minor housekeeping items. When you look at this quarter's financial statements, specifically the balance sheet, you'll see it's feeling more condensed than the prior balance sheets.

So don't get the idea that we're trying to not disclose information. So all the detail that formerly existed in the, if I can use the word, busier balance sheet of prior quarters, is in the footnotes.

So if you're interested, we’ll cover them in the Q&A, the Horizon Kinetics Hard Assets, The Bermuda Stock Exchange investments, it's all there in the footnotes. And we're going to supply today a little more supplementary data.

But it's all there in the footnotes. The idea is we want to be able to look at the balance sheet in one fell swoop and we’re getting kind of busy.

So this was we decided to do. So everything is there.

So with that, I guess number speak for themselves. What don’t -- we can't pick up from this is we're increasing our exposure to cryptocurrency in a gradual but more substantial way than we did previously.

So one of the things that happened in Horizon Kinetics is we purchased -- and of course FRMO owns nearly a 5% interest in Horizon Kinetics, we purchased the majority control of another operating company that is not, I repeat not, an asset management company. It's actually a hosting company and -- but typically the purpose of it is to host cryptocurrency.

And it's because of two things; one, we would have outside clients of -- and we do have outside clients that have nothing to do with Horizon; and secondarily, it's going to host our cryptocurrency funds and some of our proprietary cryptocurrency servers and investments. The idea being that cryptocurrency in its essence, it's really designed to eliminate the economics of called the rent seekers, the intermediaries, if you prefer that term.

So the idea was to get closer to the utility and thereby get much lower electric price, which we were actually able to do. So it’s a big decrease in electric price.

And one of the things you needed to do that is you needed to get these transformers. They are very, very expensive.

And in light of what was happening with cryptocurrency during the quarter, which was going down basically, a lot of cryptocurrencies fell by 50% or more, we thought it was the time to actually commit some money and there wasn't that much money, and we own a hosting company and we're actually negotiating a second deal in an other place and I don't know if we'll reach terms but we're not far away. We may reach terms.

We may have a second hosting company that we will have an equity exposure to. So the interesting thing from your point of view in terms of cryptocurrency mining, the Cryptocurrency Mining LLC that we have, the bigger one, the more invested one, I should say very one, more invested one, actually in terms of cash flow made more money in the quarter ending December 31st than it actually made into the quarter ending September 30th.

I think the increase was about 10% more. And had we closed the deal with the hosting company before we ended up doing it, we would have had even the better experience.

Because when we closed the deal with the hosting company and then we had to get to the utility and change our arrangements to the utility, you couldn't change the utility arrangements within the confines of a monthly billing period. So the billing period ended on December 15th.

To the extent they were able to get a better price, there was only last two weeks of the year but it had some marginal effect. The reason by the way in case you're wondering, the reason why we pay so much attention to cryptocurrency itself is we relate to the asset management business, so reflect on this if you would, in the world of bonds, I think it's self-evident.

Look around the world, see what the bond yields are. And it's very difficult to get a positive real rate of return above inflation even if you don't figure in taxes.

If you figure in the taxes, it teaches me how to do it. So the biggest problem in our humble opinion that the investment world faces is to get in the world of fixed income to get an income yield, which actually is positive after inflation.

And the only place we can think of doing it is in the asset class we call seigniorage, and you'd call cryptocurrency mining. We think this is going to be really, really big.

And we also think that's a very misunderstood kind of investing. So it was amazing during the quarter as these cryptocurrency prices fell and people would talk about how the cost of mining on these coins is now greater than the trading price, so it becomes unprofitable.

And it's a very long lecture, we're really talking about FRMO, we don't want to lift the whole thing to cryptocurrency. Let me say this because it's an important subject.

And if there's more questions about it, you can address it and we'll get answers to you. If the price falls, let's just take a round number, for fair purposes of discussion by 50%, and 50% of the miners actually drop out of the system.

But if you keep competing or hashing as they say in the industry at the same rate, then you have twice as much proportion with greater hash power. What's happening to you is you maybe getting 50% less for a coin that you sale that you mined yourself, but you're getting twice as many coins.

If you did nothing else other than that, you would be in equilibrium. And one of the interesting things is when people -- the way they have these computer algorithms set up, if the price falls for the coin which happened basically instantaneously because an electric signal moves at the speed of light, it takes some number of minutes before you will actually see the -- and the block cycles, let's say Bitcoin are 10 minute increments, it takes a few minutes before you actually see the aggregate hash power at system declining.

But someone is looking at what they think is the instantaneous hash rate of system and it’s happening at instantaneous profitability, you're willing to wait just a few minutes, let's say like 10, they would see that, they are still profitable. But there is an old saying on Wall Street that I want immediate gratification but I can't wait that long, here is a perfect illustration of that.

So it's a very misunderstood aspect of the best thing, which I personally find fascinating. And we're going to where we have and we're going to get in deeper.

Now, one of the things I promised in the last session, last call was to give you more detail, which you couldn't find in financial statements for our cryptocurrency holdings. So first, I am going to talk about the funds.

So the funds, their cryptocurrency exposure, this is the investment in GBTC that’s the bulk of it, even though there's a small cryptocurrency exposure with GBTC. So from a market value, on a look through basis, if you took the various holdings of the Bitcoin Investment Trust GBTC and you calculate its market value, it will be $2,134,577.

That's compared to the shareholders’ equity. And then in FRMO itself, we own 7,644 shares in our investments of GBTC and that's where -- call it $30,000.

And then we own in addition to that these are all coins that we've mined and we've held. So right now, we don't have that many servers but we're going to increase it.

14.12 Bitcoin, you can calculate the value of that, we own 20.25 Ethereum coins. We own 365.3 Ethereum Classic coins, these all coins we mined and we own 19.81 Zcash coins.

We're looking into mining some other things and expanding our mining business. So that's about mining.

Back to balance sheet, as you can see, we still have a very high cash balance. And in the last couple of sessions, we think we did a very good job explaining what we do or we did a very bad job in explaining what we do, because a lot of the questions pertain to the points we otherwise would have made.

So before I go on further, I'm going to answer a lot of points I would have made. I'm going to take it in the Q&A, which has been submitted to us and we're going to get to that in a little while.

And then I'm going to turn it over for a minute to my colleague, Mr. Bregman and see what he would like to add.

And then after he has his day, we're going to deal with these questions and give you a lot more detail on what's in our financial statements.

I think my -- any first to respond that you have? It's likely more geared towards the questions.

So I'll wait until then.

Okay. So I'm going to read the questions and if you find the question that you feel you're uniquely able to add, okay.

I'm going to turn it all over to you. Okay.

So beginning -- okay, so, here we go. So as of November 30th, you have an equity securities accounts for 22.2% of equity attributable to the company.

Would you consider disclosing the position and more broadly would you consider disclosing the equity positions company hold? I understand, there are plenty of reasons that you may not want to or be able to do so.

But this will go a long way to helping stockholders understand the complexion of balance sheet. So we're certainly able to do that.

We don't want to do it. If we're required to do, we would of course do it.

We don't want to do it and this is why we don't want to do it, because there are two reasons. The first reason is, when people do, they're going to arbitrage, people going to arbitrage us.

And we don't want to turn FRMO into an arbitrage security. So you're going to buy FRMO and sell short to security, or they're going to sell short FRMO and buy that security, and that's not something we want to happen to the company, because it's going to in our humble opinion, maybe we're wrong, it's going to distort things.

Secondly, although this 22% that's an accurate number, but it merits I think some color because there's a difference between buying 22% -- buying a 22% position with the shareholders’ equity you have available and buying some far lesser quantity in relation to then shareholders’ equity and have to appreciate several fold. So one thing that's important to understand about this is that, yes, it's 22% but there's also taxes to be considered against it.

So if they were declined by 1%, we don't go down by 1%, we go down by less than 1% because you reverse it for deferred taxes that are otherwise be payable. So even when people try to arbitrage that, they really have to bear that in mind.

So for us this is a long-term investment. At some point if successful, we're going to have to disclose it and we certainly will do so.

But just understand we don't look at it as if we showed 22% of all our money and threw it into something. We took a much, much smaller portion.

And it just so happened that I appreciate and we left it alone, because we would like to not pay the taxes, we have to pay the taxes. There's going to be inevitably a considerable diminution of the cash we have on the balance sheet and we don't want that.

So in other words, phrased alternatively, if someone said well a large position gives you a certain amount of volatility once you sell a piece of it and control for that volatility, yes, it would be control for the volatility, but there has been outflow of capital from the company. So in the event we actually fear, which is a diminution of our capital, is actually going to happen.

We will be close to make it happen. So I hope that's not too long winded answer.

Next question, performance of limited partners has been quite impressive but it's hard to get a sense of what these look like on a compound basis. Would you consider disclosing these figures given long-term nature of the partnership?

And that just we would be considering disclosing them. We're going to disclose them and we weren't -- I didn't bring the limited numbers with us to this call.

But in future time periods we're going to have somewhere annotation. One of the ways I might do this, I may put out a one or two page sort of abbreviated letter and maybe an accompanied table, I'll have performance data on the partnerships, I should have it just like last time, I didn’t -- it didn’t occur to me to bring the cryptocurrency actual holdings, but I will bring with me and I'll find some way of making it clear and be known to everyone.

Next question. What is driving the increase in G&A expenses both the second quarter and first quarter 2019 and year-over-year?

So I can answer, but maybe you want to Steve?

Well, from what I can see, it appears to be an increase in a certain account or accounts under expense in our calculations we do. And it seems to be coming from accounting expense.

So accounting expenses versus the prior preceding quarter and last year similar quarter were more or less the same, I would say, but it was a lot higher this most recent quarter. I'll tell you something when we first started FRMO of course we started with very limited amount of income.

We made sure feeling conservative that we had our first revenue stream upon our organization. And at the time it was just enough to cover what we thought were estimated accounting expenses being a public company, and it was roughly $20,000 a year.

And we got our first accountants. We didn't have really much for them to review, but they do have a process.

And even so they were generous enough or had a longer term outlook and were willing to give us a discounted rate, and so -- and we knew they're getting discounted rate. And so we were able to remain profitable even before we began establishing additional revenue streams.

And eventually I guess their hope or expectation or investment in us turned out, because we began generating more income becoming a larger company, and so did their fees rise. And it would be a great stock I suppose, because in terms of volatility of periodic results, if we measure that as the accounting fees we paid to that firm, they have very, very little volatility and they mostly trend up and they’ve continued to trend up.

So much thought, maybe it's something we should look at but that appears to be the major difference.

Okay. Specifically, I'll give you some numbers and give you a little more color on.

In the quarter -- you may want to write this down. In the quarter of September to November 2017, the accounting fee was $90,402 -- I'm leaving off the pennies because they're not relevant.

In the quarter, June-August 2018, so the accounting fee was $85,672 and in the quarter of September-November ‘18, the November of 2018, the most recent quarter, $142,770, so that's the bulk of it.

I will say that periodically, the accounting profession, I know they're actually different bodies that contribute to the accounting profession. And there's FASB and there's the public accounting PCAOB and so forth, and they'll come up with changes.

And those changes require accountants to inform us of those changes to make changes to how they calculate things. They must be discussed back and forth during our various meetings, both telephonic and when the financial committee meets and so forth.

And most recently we had a long and fascinating meeting with our accountants at most recent Board meeting and they just completely changed what the standards are for revenue and expense recognition. And when I went to school, college and I took accounting, they told us that a critical precept in accounting is you want to present fairly what the underlying business is doing, how it's doing, so investors in it can understand the business.

So for instance if you have a manufacturing business and that business has enough let's say accumulative profits on the balance sheet that they've made some additional investments, they've bought some bonds, they’ve got some stocks or whatnot. And those securities can be quite volatile, but they're just not part of the core business.

So it was -- we were talking, it would be distortion, it would actually obscure people's understanding of the underlying business from quarter-to-quarter, you took the gains and mark-to-market appreciation, depreciation of the securities and put them into the income statement, because maybe the business is doing poorly, but a gain makes it looks -- from the stocks makes that look as it’s doing well. So you don't want to mislead investors so they made an exception, there's a tradeoff for every decision.

And that decision was that you take those gains and losses or mark-to-market changes in values from investments that aren't part of the core business and you sidestep the income statement, that's a big thing to do, but at a reason, you sidestep the income statement. And you just credit or debit them directly to shareholders' equity.

On economic basis those that all flows through this but that's would have happened if you sell those [bonds off] that would have changed shareholders' equity. So just recently though, they said it's better if you show the increases or decreases in market value of these ancillary securities, which are not part of the business, now you must show them in income statement.

And you can imagine what that means for a company like FRMO Corp. And it's so completely distorted various line items in the balance sheet income statements and the calculation of our taxes, basically virtually every part of the financial statements that even the Finance Committee here who’re spending hours and hours and hours themselves trying to understand what it looked like, why the changes occurred, how to explain them, what kind of footnotes to make and then back and forth to the accountants.

And so what happens is periodically the accounting profession for whatever their good reasons changes a rule and it requires a lot of effort and a lot of time, including money. So these things also by the way, so it's not as if suddenly we decided we want to have extra accounting expenses, because we just do it.

And this is quite an interesting set of discussions.

And then one other thing is just, because the accounting is most of it. But let me just give you a little bit more color so you get a sense of what's going on.

So I'm leaving out the things that increase in the $1,000, $2,000 if you may not find them interesting. But here's something you will find interesting.

So in the -- and it's more than you're asking the question. In September and November in 2017 quarter, income from cryptocurrencies, which is basically the revenue we get from mining.

And remember we don't sell the cryptocurrencies we keep them, as I indicated before. We had in that quarter, I remember the cryptocurrencies were very high at that time, $25,678 in income.

So you’re basically taking the market value of cryptocurrencies as they were at the time and you’re holding it. And the cryptocurrency hosting fees for us were as follows.

$3,880 in extra hosting fees that generated $25,000, gives you an idea of how unsustainably profitable cryptocurrency mining was this time. And we also recorded in the same quarter $4,678.

Again, I'm leaving off the pennies because they’re more confusing more than often, $4,678 in depreciation. Now, in the June to August 2018 quarter, income from cryptocurrencies unsurprisingly $10,792, because obviously the prices went down a lot.

Depreciation expense $8,448 and cryptocurrency hosting fees $7,716. So on a formal accounting basis, you could say we actually lost money on that.

However, be very -- could be very careful about saying that because you haven't heard a next number. September to November 2018 into cryptocurrencies, I'm reading off the balance sheet, I mean on the income statement, $17,823 in income, cryptocurrency hosting fees $7,292, depreciation expense zero.

Why zero? Because we basically rolled everything off, what we have to do under a tax law.

We basically took accelerated depreciation and took whatever we got. So basically did that to save taxes.

In the end of the day, you can see that given the size of the income statement, it's not a big deal but that's one of the things you do. I am giving this kind of detail but sometimes you do things for tax purposes.

On income statement that makes you look less profitable but it makes a lot of sense for tax purposes, in the sequentially following quarter, when you look at, it’s duly profitable. So I don't think you could then say that if you calculate just profit margin, we have $17,000 odd of income in cryptocurrencies and we really have $7,000 of expenses.

And therefore we have a profit margin that really is astronomical, because at some point in the future alone, hopefully it’s going to be long time now, we're going to have to replace those service. But that's just what you're allowed to do in accounting expense.

So even though most of the time we're looking at financial statements, we're actually looking at someone else's financial statements. Now we're looking at our own financial statements and you have a lot of choices to make.

So I'll give you some kind of color into the choices we make and when you look at the G&A expenses take hold in their account. And also when you look at our decisions in cryptocurrency even at it's what I think to be and who knows if it's right, depress prices, so you can measure I think with some degree of precision what the actual profit is.

Therefore, you can understand our interest in continuing to invest into this asset class, if you want to call it an asset class. All right.

So I hope that gives you a lot more detail than you ever hoped you would get from G&A expenses. We're trying to be as transparent as is reasonable.

I would have bored you too much. Next question?

Did FRMO put any money to work during the volatility in December? Yes.

But we didn't put any money to work in buying investments. We did put some money to work in terms of changing the complexion of our short portfolio.

Remember there are a lot of things you can do in the short portfolio, you can see in the balance sheet a lot of interesting things to do. And during the quarter, which will end on February 28th, we're going to have to basically one of the ETNs that we are short is reaching the maturity.

Therefore, it's going to have to go off our balance sheet not going to exist. We're actually going to realize a gain and change the cost needed, cost, basically investments.

But -- so if you're just looking at the balance sheet, it might give you just a idea of how profitable this is. This is a very profitable undertaking.

And over the years, we've done options, we've done ETNs, we've done ETFs. And we've had to make changes in the portfolio mostly for reasons like that.

That the thing doesn't exist anymore we have to close our position. We realize gains if it weren't necessary, we keep it forever.

Anyway, it gives you an idea of what's going on. We didn't invest any more money in equities.

So I think the essence of your question is, do we invest any more money in equities? Every quarter we're buying a little bit of equities, because we're adding to HK Hard Assets.

We'll get to that shortly. So I don't want to go into it right now.

Basically, even with the declined equities in December, equities historically in relation to their valuations throughout time are very expensive. Here and there you find some stocks, you like, you buy them but it's not a tremendous amount of money.

Okay, given the decline in the FRMO share price, is there any more interest in buying back shares and/or will the plan continue to be to wait for an opportunity to buy a company during a period of market distress? To begin with, yes, we're waiting to buy a business or expand the cryptocurrency business during a period of market distress.

We're basically doing that. In terms of buying back shares, it's important to note that Horizon Kinetics has a plan I think the 10.85 plan and we're in the market every day buying it from our stock.

So, we've accumulated in Horizon Kinetics which we own 5% of, we've actually over last 24 months, actually brought back a reasonable amount of FRMO stocks, and so we, FRMO and ourselves personally are the owners, we just chose to do it through that pile of capital rather than another pile of capital. So if you want to look at it this way, one way or another, those shares went off the market.

The only difference is they didn't get cancelled, but we own those shares. So we're not really -- we're interested in acquiring shares, we were not interested in shrinking the shareholders’ equity.

So, the problem was, how do we acquire shares? We think we need to acquire shares, but not to shrink our shareholders’ equity and that's why we did it the way we did, if that makes any sense to anyone.

So, if I may going on to the next question, as investment thesis, receipts confirming -- enough confirming information, has this changed for most portfolio allocation or not, such as with TPL or Bitcoin? Well, I guess ….

Let me tell, of course, let me introduce -- I'll preface, I'll be the -- I'll be the guy to warm up the audience for you. So, this is a question that in more general terms, we're getting from all corners now.

Why? Unusual because of December, these stocks were down.

And more important, as an adding to that, it was a year-end, which means that taxes, which means people get urgent calls from their accountants, telling them about a loss they can take to offset a gain and so forth. And then people are asking, so what are you doing?

Are you reallocating? Are you selling?

Or they just tell us, you should sell and take losses and so forth and so on and it happens all the time. And we really want to do the best for our clients, we really do have their best interests at heart.

But it's very difficult when someone is anxious and they are tense and their eyes are fixated on the red exit sign above the exit door to say calm down, don't get excited or to get them to think it in higher more subtle terms. So I'm going to review something from an e-mail response I wrote to a client on December 20th, who was asking me to, what about TPL, and if we have any high tax cost much we take -- should we take the benefit of it?

So, I wrote to him and I said look without context and sufficient information so investors typically resort the price, that's what they can focus on. So all their attention, their higher cognitive powers, they kind of contract into a singularity around something they can readily understand like the exit door or a single metric like the stock price.

And it's instant effortless analysis. So I said, look, here's I'll give you two facts.

Here's fact A, the shares of Texas Pacific Land, TPL are down about 45% from their highs earlier this year. And if price behavior carries information content, then that suggests that this distillation of all investor knowledge is that TPL's business must be worthless, not worth less but worthless.

And that must be why they sold the stock down. And moreover we know that the price of West Texas Intermediate oil is down about 40% from its high this year.

Yes, that must be it, not a good stock. And here's fact B I wrote.

The Texas Pacific Land Trust is up 2% from the start of the year and the S&P 500 is down about 6%. Yes, it must be a pretty good stock.

So which is it, what should we do? So another client asked me a generally related question some weeks later.

And I had to show them that, they want me to take tax losses like across the board where we can find them. And I said look, if you have let's say as a general case, a 50% mark-to-market loss in the stock and your accountant tells you look, you could take the benefit, okay, so you get 20% benefit on that 50% loss, that’s 10%.

Now what's happening though is that, second week of December, third week of December, everybody is doing the same thing. They are all focused on that exit door.

And I took like a half-dozen stocks that we own in my core value and that’s in the Horizon Kinetics or in FRMO Corp or in strategic value companies like Civeo or Texas Pacific Land Trust or Lionsgate Entertainment or Royce Micro-Cap Trust. And I showed the prices of these as of December 3rd and the prices of them as of the end of the second week of December and the prices as of more or less into the third week in December.

And they are going down and down and down and down. And by the first week of January, more or less like a rounding error they were exactly where they start.

Anybody who started it selling along with everybody else, middle of the month, late in the month, they basically took a loss of market value of like 20%, 30%. They can't buy it back.

They got a 10% benefit on the price that was 30% lower. That's what happened.

There is a reason for something called January effect. So anyway I know that's not -- I know that this question was a lot better informed than that because there isn’t a lot of price action in TPL, but TPL finished the month exactly where it started, actually 15% higher really, but call it even or 5% higher.

But I don’t know Murray, may be different than I am, but I'm not planning to make major changes because they -- in a security non-specific manner without being more informed just because prices goes topsy-turvy. And then finally, that even goes that topsy-turvy, it's not even such a big deal but people feel that way.

And I can't help if that they feel that way and I try to help them.

Okay, I just have some of the things to say about the expected differently. So important note that I've been using TPL first when we got into Bitcoin, to give you specific example because you are asking this sort of question, So I have been in TPL since 1984 and winning [Car-Nation] and others.

It's okay, so at the end of the year the price well went down 40 odd percent and from its dead higher price TPL went down relatively similar quantity. That might be -- if I figure it out from 1984 that might be the 16th or 17th time I've endured that.

Numbers might be a few percent higher or lower in different occasions, I’ve been able to do that many times. So let's just go into and they didn't react one-time -- and let's just go into the prior time, clear a little more historical perspective, what happened.

So in 2014 -- the latter half of 2014 you might recall well went from $114 dollars a barrel all way down to the low 40s that maybe a midday, I don’t remember anymore it might have traded a certain day below 40, let's call it in the low 40s, I think that was the all-through days. TPL might have went down 40 odd percent, I don’t know the exact number but something like that.

TPL if you look at that time period there was also near the end of year TPL might have ended up under the few dollars off, let's say $100 a share. So now here we are in oil it’s a little bit higher than it was then but it's not that much higher.

In TPL, it's 6 times higher. So I completely get that in a very -- in a relatively brief period of time that if the oil price is clearly the dominant variable, maybe dominant to virtual solution of everything else because what -- oil can go down in the few weeks a lot there is very little you can do to make that business materially better, or maybe are some ways make it marginally better but very little is going to happen in a number of weeks.

So maybe going down a little bit less than the price of oil, maybe it don’t, but that’s what it is. But you can't forget that what you are sitting on, you are sitting on like the greatest hydrocarbon property in North America and you can even make a strong argument maybe even the world.

The technology keeps getting better. This pipeline is being constructed, as gas being flared that in 11 months is not going to be flared and this is going to -- there is leases, there is water being sold, there’s all kind of things happening except those variables don’t change in any appreciable way in a matter of week.

It's completely logical that people would sure react the way they do, give or take a few percent. But if you choose to do that then you’re going to ignore all the other things.

So if you think of how many times we could have done that trade since 1984, and by the way when we sell it, because we think the price were always going down, how many times did they go down? 5%, and then went it right back up.

And how many times we missed it? So, it presumes certain talent at least speaking myself I don't have.

If it goes down 2% or 3% is that the signal for 45% decline or is just a 2% or 3% deviation and it’s going to go higher? I don’t really know and I can’t know that.

Imagine if had been a different scenario. Imagine if something horrendous had happened in Saudi Arabia and the price of oil after a 10% decline goes up a 100%.

So the best thing -- and then you have to pay the taxes, I don’t think it’s a proper undertaking. I think the best thing to do to is leave and let.

The Bitcoin does the exact same thing. The Bitcoin to be successful at the moment lacks two things, that’s going to get in shorter, by shorter I mean, it certainly not going to get in a week or two but in a year or two it’s definitely going to get it.

What are those two things? One, it's in the process of getting institutional great customer.

If you want people own it and buy, you have to have a way of safely storing the private keys. That’s coming and it's in the process of being implemented and it takes some time to implement, but that’s going to happen.

Examples of that is, Bakkt which in the process of being implemented. And it's going to happen.

The second thing that needs is, it needs price surveillance. So it's important to note, when we look at the price of Bitcoin, it's unlike being what the price of REIT is on the Minneapolis Grain Exchange.

So for example speaking with some authority of Minneapolis Grain Exchange and know what happens on that exchange, I think this is self-evident, the idea of wash sale, theoretically even I could take a bush of wheat or 150,000 bush of contract and sell it back and forth on exchange and do what you speak whole, continue to take, just create information. There are over 16,000 venues in the world where supposedly Bitcoin is traded but there is no price surveillance.

So if Steve Bregman and I were trading on a certain so called exchange, where they are really brokers. We could take one Bitcoin and go back and forth, and agree to a price among us and really going to settle that transaction, we just are reporting trades.

And are those really of the day trades or are they wash sales? In a real exchange supervised universe you can get in big trouble for doing wash sales, because you're distorting the price with a view to doing something.

We don’t know at the moment when you look at the prices we have to accept them because it’s the only thing we have. But we don’t know if those are real prices, all we know is that the largest holders of Bitcoin owned by far the lion’s share of Bitcoin.

I don’t remember a number, I can look it up, but it’s a relatively small number addresses, and 96% plus of all the Bitcoin. And you can see all the blockchain and when they transact by and large it might be the exception here or there, by and large, they are buyers not sellers.

Because -- so the lion’s share of the transactions you see are $36 or $50 or $100 valuations, people trading, it did really trade, who knows what it is, there is no changed supervision. So until there is exchange price trading supervision, which is coming we don’t really know what the price is, we don’t really have price discovery.

So therefore I would be very, very low to draw conclusions about the price of any of these cryptocurrencies until we have a better understanding when appeared prices are. That’s coming in not too distant future.

Once we have those two things that can then be institutional grade investing in cryptocurrency. By the way even though you didn't ask it, I think I should add because you're asking about confirming and non-confirming information.

So just think about this, I'd like to tell this to people. So let's say Bitcoin is a failure and all cryptocurrencies are failure with this one exception.

So there are some currencies of world which are highly inflationary and I’m going to name them in a second. At least so far as those currencies is concerned people would rather use Bitcoin fixed issuance because in 490 some odd days Bitcoin is going to be at 1.80% inflation rate, 1.80, it's going to decline till there.

So, the Brazilian real or reais as that they call it, Brazil reais has $720 billion market capitalization, $720 billion, that's 11 times the current market capitalization of Bitcoin, 11 times. So if Bitcoin is a failure except for the fact that it ends up at least being a better alternative than the Brazilian reais, which by the way when you think of the cruzeiro, the cruzado, the noble cruzeiro, noble cruzado, I think they had two or three iterations of reais.

They had second cruzeiro, second cruzado, it's been inflated more times anybody cares to remember, the 1944 reais, you would need literally billions upon billions, it’s 10th -- 1 times 10th is something, I think it's 10 to 18th or something, some unbelievable number of reais to get the person out of 1 reais in 1944. They're placed that you make a little amount of money.

So let's take a step further and I'm only using currencies that start with R and I’m not using all of them. So the Iranian rial, they seem to have a very high inflation rate and they'll have a lot of regard for debasement.

So let's say Bitcoin ends up displacing or replacing if you like the Iranian rial and Iranian rial has $260 billion market cap, call it 6 times to the value of Bitcoin. Now we’re -- if it does that, now we're, not 11 times, 17 times appreciation, call it, expansion.

One other R, I won't go on like this, even though I could, the Russian ruble. I don't know about you and I don't want to say anything pejorative to anybody, I don’t have to say anything pejorative to people, but the governments of the country as well the central bank, let's say, they are not of the -- they don't rank at the level of the Swiss franc.

I think we'd all agree with that. So they have a pretty high inflation rate and they’ve certain tendency to debase when the mood suits them that's about $720 billion market cap, setting not 11 times, now we’re instead of, let's say 17, we’re 28 times, 28 times.

So you made Bitcoin, I'm not saying you should make 1% position, I'm just using it for those lecturing purposes. Let's say someone made Bitcoin of 1% position and what happens is you lose 1%.

And if it's only successful in the regard to the three nations I mentioned, you make 28 times your money. So where do you find a risk-reward like that.

So that's that sort of thing you should be trading at and in light of the things I said, I think should be holding it, but that's me and people can do what they like. And by the way, we also don't want to pay our taxes.

Because so now when I gave you earlier on the market capitalization, GBTC that we have, understand that it's appreciated many, many fold. Cost a lot of money to exit at that position especially when you think of even went to zero, it’s going to hurt us that much.

And if we make money, it's going to be just an enormous increase in shareholders' equity, if it works even to the degree that I mentioned, let alone works to a greater degree. So I hope that’s more than enough color on that.

Next question. Please explain the approximately $500,000 increase with investment in Horizon Kinetics Hard Assets, easy, this will be a short one.

We didn't increase the investment, what do you see is the increase in the balance sheet is in entirely attributable to the earnings that we -- our proportional share of earnings that had been retained on the balance sheet of Horizon Kinetics plus any appreciation in the market value of the assets held on the balance sheet. So, we didn't buy any more Horizon Kinetics, it's just the way they do the accounting.

Next question. Please explain the change in the investments of stock exchanges, National Stock Exchange Holdings and cryptocurrency there?

That's okay. We didn't change the stock exchange investments.

We did eliminate National Stock Exchange, not because we wanted to, because New York Stock Exchange bought it, and I think we mentioned in the prior conference call. We didn't like that and we decided to buy debt and given the size of the investment, there is a limit realistically to how much money you wanted to have to buy debt.

We did buy that and we ended up getting the settlements and we had signed the document that you know what it looks like. We can't disclose anything so obviously we are not going to disclose anything.

We weren't happy that we were forced to sell it, but such as life we had to do that. Other than that we've retained all our investments in the exchanges and I should say, what I think the policy with regard to the three exchanges, the MIAX and the OneChicago and the Canada Securities Exchange, so called CSEX, the policy is to hold them at cost.

And in my humble opinion, they're probably worth more but just my opinion. And then there's Bermuda Exchange and there is some appreciation there.

And then with regard to South LaSalle which holds our seats on Minneapolis, you can go to website of Minneapolis and you can check it out and they sold subsequent to the end of the quarter. I believe a seat is 211,000 bid, I believe that's true.

And I think it’s $255,000 ask, I think it's something like that, well they are handling me a sheet of paper, I beg your pardon, the moments it’s $215,000 bid and $220,000 ask, so maybe there's going to be a transaction at -- so less transaction incidentally was a couple days ago like $220,000. So you can compare that to -- it's still on the website, bidding exchange, what their prices were and you can get an idea just for the non-material investments and the exchange I mentioned before, they are not considered to be material, they have their certain market value, immaterial.

The General Accepted Accounting Principle is, you carry at cost until they have reasons to offer it. So I hope that's enough on that.

On cryptocurrency, I think we’ve already addressed, so I guess if you have the information. Next question.

Do you agree markets are late cycled near recession, and if so, when you see value as commodities and trade, don’t perform during the recession, this is simply matter of having discipline to stockpile up cash and having the redemption to invest this cash after asset prices have collapsed? Okay.

That's a complicated question because I think as a generalization subject to qualification there’s always a stock or two that you might like. Equities are really overvalued, and bonds and any foreign credit, so pick whatever you like, the 10 year treasury, the five-year treasury of corporate bond.

Think of coupon of any country, you are not even getting enough money to maintain yourself against the inflation in before taxes. So trouble is from a policymaker point of view, remember we’re not policymakers, as I am speaking for myself, I also think the country had better shaped if I were the policymaker.

So I am just giving my personal point of view, and maybe it’s better for United States of America, I'm not a policymaker. But in any event, two days ago, the United States of America passed a milestone.

What's the milestone? The milestone is $72 trillion of debt in all forms.

That's not federal debt. It includes federal debt, state debt.

Your car loan if you have one, mortgages, student loans, everything, so over $73 million and it increases and over $8 billion -- well over 8 billion a day. And that rate of increase is growing.

So now let's think about, you are a policymaker. You would like to normalize the deals and you would like to make yield curve upward sloping because it's not upward sloping.

The moment it isn’t upward sloping and it's really bad for banking. That much everyone agrees.

So what's 1% of $72 trillion? $720 billion in a $20.8 trillion economy.

That's enough to bring it all down, that’s a big increase. You want to make it too, just through, like I'm saying it, that’s really $1.4 trillion debt expense.

And bear in mind, it's a moving target because number increases over $8 billion a day. So we did it over the course of the year you have $8 billion times 365 days.

So you get an idea of how serious that problem is. And if you want to make it a little bit worse, if you either brought -- if that was either -- if that brought on recession or alternatively just coincidentally just happen to have a recession, the government revenues would drop as they always do in recessions.

And there is going to be a big question by creating worthiness of everything. So this is not -- we are not in a position your typical, it goes down, we have recession and then we all work it out every year or two, and we all go back to normal.

We're not going back to normal. The policymakers have an awful decision to make.

And I'm glad I'm not a policymaker, I wouldn't have to make decision. You can't raise the rates.

If you normalize the rates you'll bring down the whole system. If you don't normalize the rates, you're asking people to buy bonds and by the way the bond market worldwide it's like 3 times the size of the stock market.

You’re asking people to buy bonds that are guaranteed purchasing power. Therefore, you're asking people do something that you should never do with the rational, it’s committing economic suicide.

Either way it’s dead and that now you could -- with that background, now you can understand how we look at asset prices. Another question that goes down X percent and we have the guts to buy debts.

You can solve the problem of investing within the context dimensional asset classes because it's all tied together with interest rates and global monetary policy. You have to go outside that.

Now you understand the mining, now you understand the path dependent EPS. Now you understand the cryptocurrency.

The problem is not solvable within the context of normal equities. And there are the exceptions to approve, there always going to be some interesting companies that you want to be involved in, you can't solve the investment problem that way.

You have to do something radically different. And that's why we're doing it and so it's not a question of having disciplined stocked pile of cash and then just backing up the truck when it all goes down, if it ever goes.

And it might not just go down, like went down in 2008. It might be more keen to Japan with monitoring authorities that basically have a zero in policy for decades.

And that might happen everywhere in the world. That is actually my humble opinion.

I’d say humble because no one really knows, didn't experience this. This could be a very, very bizarre experience record.

So there's a lot of thinking about it. So I hope that answers the question.

It’s not merely a repeat of history in terms of cycle. This is a much, much more serious situation.

That's going to reasonably have those cash on the balance sheet and we’d like to get some more. Okay.

Next question. Regards to non-controlling interest, I noted, I recorded on the balance sheet, would it be possible to add more color on which assets this does represent?

Do they primarily have equity securities as there’s some portion of the cash equivalents on the FRMO balance sheet sit inside HKHA? Okay.

This is easy answer. So, on the balance sheet, so I'll just read the number and I'll give you exactly, the non-controlling interest -- here we go, the non-controlling interest, 51,278,792, non-controlling interest all pertains to Horizon Kinetics Hard Assets, every penny of it.

Now that portfolio is almost fully invested, there's a small amount of cash there. And to degree there is a small amount of cash there, it's obviously consolidated in our cash balance.

But the cash balance is almost entirely I'd say is 99% or so belongs to FRMO and call it round numbers. 1% contained is really a non-controlling interest.

But basically, that's what it is, but the cash is our cash less a certain amount that we don't own basically hard assets and non-controlling interest in its entirety refers to HK Hard Assets. Okay, so hope that answers that with enough specificity.

Okay, next question. and I think there's the last one, if I’m not mistaken.

Why does this RCG meaning the Renn Fund traded at 35% discount to net asset value. Isn't the best interest to do rights offering these levels or shareholders better served by a stock repurchase?

Okay. It trades at a big discount to net asset value because -- primarily because we're in the process of doing a rights offering and we're offering to sell shares to all the participants and way below net asset value.

And of course, it's going to go with discount to that number. That's just the way it works in closed end funds.

So so really, I guess what you're asking is, why would you do anything like that? Once you take your cash and buy back the shares, we actually have a reasonable amount of cash relative to NAV in the Renn Fund like we do in all our funds.

And the answer is, we can't do that. I guess we could legally but we don't want to.

The reason is, if you want to have a close end fund, you have to have enough assets to qualify for continued listing on New York Stock Exchange. And we didn't have when we took over this fund, enough assets.

And happily the NAV as you can see from the reports that you had at your disposal, the NAV increased a lot. So we kind of solved that problem.

But what goes up sometimes comes down, although we hope it doesn't, but it might. And therefore make sure we don't encounter this problem again.

If you want to raise enough capital to make sure we don't run into that problem again. So we're not looting anybody.

We're basically all going to participate hopefully pro-rata. And if someone doesn't want to participate we're going to participate, we're going to back up not FRMO but Horizon Kinetics or Hugh Ross personally going to back it up and I guess we'll have more cash on the fund.

And the idea is want to have a closed end fund and sort of listing priority you have to comply with. So we're doing it for that reason.

Now had we done the other thing, which is use our cash to buying shares, it is so, it is true than we would have increased the net asset value per share maybe even a lot depending on where we could buy the shares. Have we wouldn’t qualified for listing and then to what end?

That's the problem, so the more shares we would have moved back at a bigger discount, less share of equity we would have, and therefore the more deviant we would be if I may use that word from the listing requirements and then we're going end up with a non-tradable security at least the near touching if we were to view which no one wants. That was the logic of it, so if that makes any sense to anyone.

So with that, I'll ask my colleague, Steve, do you have any further remarks?

No, really don't.

You don't. Okay.

So with that, I'm going to thank everyone this afternoon for listening to our call. I hope we gave you a lot more detail than we normally do on these calls.

We're going to do as much as we can do. So if you want information, don't hesitate to request it.

And if we can give it to you or if it doesn't interfere with some objectives we have, we'll certainly give it to you. And hopefully, we'll have a more in-depth written accompaniment to the press release.

So, we'll put some more data in that like the longer term returns of the funds and maybe some other things, if that occurs to us. And with that, I wish you all a great afternoon.

I thank you for coming. And of course, we're going to repeat this again in three months.

Thanks so much for being with us. And I guess we’re going to signoff.