Good afternoon, everyone. This is Thérèse Byars speaking, and I’m the Corporate Secretary of FRMO Corp.

Thank you for joining us on this call. The statements made on this call apply only as of today.

The information on this call should not be construed to be a recommendation to purchase or sell any particular security or investment fund. The opinions referenced on this call 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 securities 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 FRMO Corp. frmocorp.com.

Today’s discussion will be led by Mr. Murray Stahl, Chairman and Chief Executive Officer and Mr.

Steven Gretna, President and Chief Financial Officer. They will review key points related to the 2025 third quarter earnings.

There was an error in the press release that the number for presenters on this call was sent out to our public and I just wanted to ask if you received that number and would you please mute your line so that he can hear Mr. Stahl and Mr.

Gretna clearly. Thank you so much.

And now I’ll turn the discussion over to Mr. Stahl.

Okay. Thanks, Thérèse.

Thanks, everybody, for dialing in and having patience with us. It’s a little technical issue and so, we’ll begin with some conceptual things.

The balance sheet, earnings, I think they speak for themselves. The numbers are self-evident.

I think the thing to do is to give you an idea of how we look at these numbers, and we look at these numbers a little bit differently than you might look at these numbers with the spreadsheets. You’ll observe, of course, we release our holdings and debts of securities and cryptocurrencies, our big holdings, you know what those are.

What we do is we separate out the digital assets and we’re not looking at the balance sheet and the holdings holistically like you might. So let me tell you how we look at them.

So you’ll see on the balance sheet, there is roughly $13.7 million of digital assets. It’s primarily Bitcoin.

Those are coins that we mined over the course of time. You’ll see about $1 million of digital mining assets.

Those are mining rigs, which we use to mine digital assets. And then, you’ll notice we own 1,997,007 shares of Winland as of February 28th.

We own a little bit more now because we resume buying it at HK is because of our 10b5 program. Those assets, in our humble opinion can’t be viewed as mere holdings and the reason is, the purpose of putting cryptocurrency mining into a corporation and viewing as a businesses that the digital assets will increase numerically.

That’s a separate question from valuation. We’ll increase numerically, meaning the number of Bitcoin we have, will increase as a consequence of the mining.

The other Bitcoin investment trust securities and others that we have, a lot that is in the funds. There’s nothing wrong with having them in the funds and we hope and certainly expect they’ll appreciate in value but the only way we’re going to have more of those securities is if we buy more.

They can’t - they can grow in price. They can grow in value.

They can’t organically grow. So - but in the world of mining, your digital assets can organically grow.

That’s the purpose of what happens in Winland. So, if you have two agglomerations of digital assets, and one agglomeration is it’s just net asset value, because it can only grow in price.

The other can grow in price of course, but it can also grow numerically. We believe that should trade at a premium to net asset value.

If it didn’t trade to a premium to net asset value, there would be an arbitrage between the two. How much are a premium to asset value?

One can debate. But you can see because Winland is a public traded security, it actually trades at a premium to the net-net to the net asset value and that’s one of the reasons that we are undertaking to expand it in the manner in which we’re going about that.

So that’s a salient difference and I think it needs to be reflected upon. Another minor point in this regard is, we’re in the process of buying some more Winland in HK Hard Assets one, which we never did before.

So increase our pro rata ownership of Winland, but now we’ve gotten to the point where there’s a fair amount of cash flow in HK Hard Assets, one, and we’d like to make use of that and so, our investment in theory, if we keep doing that, we’ll grow a little faster. Now somebody is rustling some papers.

So if you can kindly mute your phone, it’ll help everybody. Thank you so much.

Anyway, that’s the idea. The goal of Winland and the goal of FRMO is to show that a digital mining business is far superior to an ETF.

So, basically, if you’re interested in cryptocurrencies, you can obtain cryptocurrencies two ways, in only two ways. You can buy it.

You can make it. Making it, I think this is self-evident, but it’s worthwhile pointing out, making it is a lot more difficult than buying it.

So, nobody is going to go through the effort of buying it, obviously, of manufacturing or making it, it’s there is an advantage in doing so. And there is such an advantage.

It’s just not well recognized in the world of assets and the simple reason for that is that, cryptocurrency is really a brand new asset and the world is still learning about cryptocurrency. I think in due course, the world’s going to view cryptocurrency mining in a very, very different way than it views it right now.

Another way another thing I should point out is that, what we do in Winland in terms of mining is very, very different than what the other publicly traded cryptocurrency mining companies do in their work. So to give you an idea, if you were to buy the top of the line Bitcoin mining rig today, just bought it and plugged it in and paid for electric power at the going rate, it’d be very hard to get a payback profit before the having.

It’s not a way of saying, after the having, that machine or that device will not be profitable. So you have to do some pretty creative things to make the thing work.

In other words, it’s effort. In due course, consensus mining is going to be a public trade security and in due course, hopefully, we’ll have more of Winland.

It’ll be able to disclose more of what those companies doing. For now, just let’s leave it at this.

And I think you’ll be pleasantly surprised by what’s happening in both those companies. It’s an important part of what FRMO is doing in its transition to a cryptocurrency business.

Historically, I talked about the various businesses we want to get into and for various and sundry reasons, which I won’t repeat, we ended up excluding a lot of things and we ended up with cryptocurrency. So, some exciting things are happening there and it’s worthwhile talking about.

Now let’s shift gears and talk a little bit, if we can about Horizon. So Horizon is also kind of a turning point.

So to give you a story, I think I did this in one or two other presentations. So, Horizon, I think this is true of just about every value-oriented investment company, investment manager, not just Horizon.

The period of time, roughly 2007 to roughly 2024 was a very difficult one for active managers, because of the rise of indexation. Now why should indexation - indexes existed before 02/2007.

Why should indexation have been uniquely problematic in that time period? In order to illustrate that, I’m going to read you some numbers and forgive me for taking a few minutes to read them.

But I think it illustrates more than the verbal analysis could illustrate. So, basically, what happened in that time period is, the big, large multinational companies were able to dramatically lower their tax rates in ways that domestic companies, in other words companies that we would ordinarily buy, just weren’t able to do.

So I’ll read you a name of a company, the tax rate currently, the tax rate as it was in 2007 and I think there are one, two, three, four, five, six, seven, eight, nine, ten, 11, 12, 13, 14 of these and I think these 14 companies represent, in round numbers, about a third of mark capitalization S&P 500 and this will tell you a lot of what you need to know about indexation. Starting with Apple.

Apple, of course, the biggest company in S&P. Current tax rate, 14%.

2007 tax rate, 30.19%. Microsoft, current tax rate, 17.7%.

2007 tax rate, 30.3%. NVIDIA, this is the only one where the tax rate actually went up.

Current tax rate, 12.3%. 2007, 9.37%.

Amazon, current tax rate, 10.3% 2007 tax rate, 27.88%. Meta Platforms, well, I can’t go back to 2007 because it wasn’t even a publicly traded company.

So I found the earliest data I can go back to that was publicly traded, which is 2010. Meta Platforms currently, 12% tax rate.

2010, in this case, tax rate, 39.88%. That formerly known as GOL, current tax rate, 17.6%.

2007 tax rate 25.91%. Broadcom, another interesting example, current tax rate is zero.

2007 tax rate, zero. Tesla, current tax rate, 15.7%.

Tesla, going back as far as I could, 2008, tax rate is irrelevant because they had no profits. Netflix, current tax rate 12.4%.

2007 tax rate, 39.95%. Eli Lilly, current tax rate, 12.5%.

2007 tax rate, 28. - excuse me, 23.81%.

Visa, current tax rate, 17.4%. 2007 rate, 39.82%.

Mastercard, current tax rate, 14.1%. Mastercard, 2007 tax rate, 35.01%.

Coca Cola, current tax rate, 18.6%. 2007 tax rate, 24.03%.

Johnson & Johnson current tax rate, 11.7%. Two 2007 tax rate, 20.36%.

So had the tax rate remained the same, the earnings would not have grown nearly as much and, obviously, the companies wouldn’t have done as well. Will the tax rate go back to what it was historically?

I personally think not, but it’s certainly possible. But a more relevant question is, can the tax rate continue to decline and has declined from 2007 to 2024, I think not.

And I think not because it would be an absurdity to have the book of the S&P pay no taxes. I don’t even think it’s politically tolerable.

So there’s a huge change happening in the world of investing. That favors greatly the stock pickers.

So in principle, an index investor was merely investing in a diversified portfolio of companies. But in practice, an index investor was really investing in a – “sort of tax shelter”, which can’t continue to be a tax shelter at the same rate.

It is arguable that taxes might remain as low as they are right now, perhaps even go lower. The reasons for the decline in tax rate is not germane to our conversation.

I just don’t want to belabor it. If you want to ask in the Q&A, I’ll go into it in great detail why it ended up this way.

But these are right out of the SEC filings. So, I think it’s more important just to enumerate them and talk about the consequences rather than talk about why it happened.

It just happened. It just can’t continue at the same rate.

And therefore, the non-index investments are, like, do better or likely do better than indexation. Just that because now that advantage being eliminated and the advantage of continuing to lower tax rates and maybe quite possibly running in reverse, now the relative advantage moves to the active manager.

Two other things I’d like to talk about indexation that gives an active manager like Horizon a big advantage as opposed to disadvantage it had for a very long period of time. Next thing I’d like to talk about is, the reconceptualization of small cap investing.

So, to put it in its simplistic terms - most simplistic terms, if you want to define small capitalization, the best way to do it is the way the Russell indexes do it. So the top 1,000 mark capitalizations that’s the Russell 1,000 index.

The next 2,000 mark capitalizations in sequence are the Russell 2,000. It doesn’t get any simpler than that.

Now within the 1,000 companies, surely, there will be a number of companies that just don’t do well. Their returns of capital will decline.

It always happens. Some will decline to losses, others will not decline to losses.

But if they decline enough, their stock prices will follow and they will be purged, so to speak, because their market capitalists don’t support a position in the Russell 1,000 index. So what happens to them?

They go to Russell 200 index. Similarly, there’ll be a certain number of companies and an indeterminate number of companies that excel in the Russell 2,000, and their stock prices will rise commensurately and those companies will graduate, so to speak, into Russell 1,000.

So the Russell 1,000 has a mechanism for purging itself of its worst performance. The Russell 2,000 has a mechanism of purging itself from its best performance.

But a wonderful performing stock in the Russell 1,000 will just trade at a higher price. If it keeps trading at a higher price, it’ll always be the Russell 1,000.

The Russell 1,000 will not purge itself of its best performing members like the Russell 2,000. But of course, the Russell 2,000, like any index will have companies that have deteriorating returns on capital.

Their stock prices will decline. But how can they be purged?

There is no place to which they can be purged. Therefore, what happens over time is the Russell 2,000 index, small capitalization index, the index that the active managers draw their expertise from those that are ones that are least efficient stocks, at least in principle.

Those indexes will build up over time, a large number of companies that just have low returns of capital. As a consequence, that ultimately, if there’s enough build-up, that ultimately will affect the returns of the index and if you looked at last decade, the returns of the index, you will see they’re not very robust.

Certainly, not very robust in relation to the 1,000. Of course, the 1,000 has all tax advantages and of course, all the companies I mentioned are in the 1,000.

So it’s a problem if you’re an active manager and you want your portfolio to look something different than the index. There’s a structural disadvantage that’s now about to turn into an advantage.

There’s another problem, which has to do with another competitive asset class, private equity. So private equity, at least insofar as I can determine, is about $7 trillion of money in private equity.

If you follow that asset class, one of the things you’ll notice is, in the last several years, the number of exits, which I’ll define momentarily has declined by about 85%. What is an exit?

An exit is a monetization of a private equity position. Now an exit can be a monetization can be another company just buys the private equity and that happens.

But what actually more frequently happened, at least historically is, those private companies become public once again. They become monetized.

And this has become very problematic in recent years. Why is it problematic?

Because if the money gravitates indexation as it has gravitated indexation over many years, bringing company to public, it can’t get it itself into the index or it can’t be put into the index until it trades for a certain amount of time and that constitutes what’s known as seasoning. It has to be seasoned.

So for example, to qualify for inclusion in the S&P 500 a security not only has to have sufficiently large market capitalization, but it has to trade for a certain period of time without being the index. So, that requires constituency of buyers and what can a constituency of buyers be?

You have to be non-index buyers. But non-index buyers have been losing capital to the index buyers.

So how can a greater and greater number of private equity securities be monetized, so to speak, in the cap in the equity capital markets with an investor base that is shrinking due to loss of assets under management to indexation. It’s very difficult to do.

And the same seasoning process applies to the small capitalization securities, as well. So there is this illiquidity backdrop in private equity that ultimately is going to cause some type of a problem, because private equity exists ultimately for one reason, which is to realize profits and that requires a monetization event and the structure of securities market unintentionally and inadvertently no one planned it this way, doesn’t allow for that.

So, all those stresses and strains added together were a very favorable investment climate for an active manager like Horizon and one final point is the amount of competition because of what happened over the years has been greatly reduced. So Horizon is in as a business is in the best position it’s been in in probably 18 years.

And, of course, you’re aware that Horizon is now a publicly traded security - a publicly traded security, and it has much more disclosure than it had in the past. Anyone can read documents and see what that’s all about.

So we’re in a really, really interesting time period for the kind of investing that we do. And that’s the thought primarily I want to lead you I want to leave you with.

There’s one other minor point that I want to touch on the balance sheet before I’ll turn it over to my colleague, Steve. He might have some comments, which is, I always or usually ask you to take note of an item on our liability side, which is our short sale position and I would invite you to compare the cost to the market value.

And what we basically do is, we continually short path-dependent ETFs. In an efficient market, path-dependent ETFs shouldn’t even exist, but they do.

Path-dependent ETFs are basically destined to decline in price. So it’s a perfect short and, ultimately, you get margin release that margin release contributes to our cash.

So you can see a difference between market and cost. That difference basically ended up in our cash balance.

That’s how we built up our cash balance over the years. So it’s really important to keep track of that.

It’s a business in and of itself and I think it’s a unique business. So with that, I’ll just ask you, Steve.

Do you have anything you want to add to what I said?

No, not yet, but I’ll listen, actually. Okay.

Okay. Okay.

So maybe next thing to do, Thérèse is, you if you have some questions for us that people submitted by email. We’d be delighted to answer.

Yes. We have some.

The first question says, why doesn’t TPL use its free cash flow to acquire the rest of the checkerboard?

Why doesn’t TPL use it? Well, I’m not the person that you should ask.

And I really think you should ask the TPL management that. I will just tell you as a generalization, if you’re interested in buying land, it takes two to make a bargain.

So it’s not just it’s not like a publicly traded stock where you have cash. You could say, why don’t I just fill in the shares I don’t own?

You have to have a willing seller. And since almost everybody owns the land at a, essentially a zero cost basis, you’ll find people, I think, and this is my personal opinion that might think they do better with holding on to their property.

But that’s just my opinion. I think that question really should be directed to TPL.

Next, has the desalination technology in the Permian proven itself?

Well, that’s a scientific question and I’m pretty excited about. But I think that’s a question that really - the technical experts at TPL are better informed to answer than I.

So sorry for punting the question back to them, but I’m not the spokesperson for TPL. They’re more than able to speak for themselves.

So, to the extent, you need an update, I think they’re the appropriate party to give one.

Why not merge the rent fund with FRMO to take advantage of the loss carry forwards at the rent fund? Plus, Horizon Kinetics Holding Corp.

would earn a management fee.

Okay. Well, that’s a question I can answer.

So, my understanding of the tax law is, if we were to try that right now with our current structure, we’re going to lose the tax loss carry forwards. There are laws that prevent more than a certain quantity of your shares turning over in any discrete time period.

So, you can’t simply make a bid for the shares and expect to retain the tax loss carry forward unless you first acquired over time a fairly large position. That’s basically what the tax law says.

The next question, I am having a hard time squaring the excellent increase in book value with the fact that that it appears the company also took a hefty loss in the last quarter. Appreciate any clarity you can give.

Sure. We didn’t take an operating loss.

You’ll recall, of course, that our prior quarter end was November 30, 2024. So all you need to do is look at the price of Texas Pacific Land Trust or Texas Pacific Land Corporation on November 30.

The next mark-to-market date is February 28 of 2025. So compute the difference and give or take a rounding error, you have what appears to be the loss on the income statement.

It’s just a mark-to-market. And it I wish TPL went up in every 90-day time period and unfortunately, it doesn’t do that in every 90-day time period as much as we’d like that to happen.

So this is one of those 98 time periods where declining price and the financial statements speak for themselves.

Okay. Anything further that you can share on indirect Bitcoin mining as teased on the Horizon Kinetics Holding Corp.

call?

Okay. I didn’t - well, first of all, I’ll tell you a lot.

First, I didn’t tease it. I just wanted to introduce it.

So basically, if the average miner - let’s say, why would you mine if you didn’t think that Bitcoin was going to rise in price? And I won’t repeat the arguments for Bitcoin rising in value over time, but I actually endorse many of those arguments.

So I believe that myself. There are other coins that don’t have the same appreciation prospects and one of the reasons they don’t have the same appreciation prospects is, there are other coins that are mined that have no halving.

So in the halving process, so in about a 1,000 and I think it’s a 1,086 days, forgive me for being a couple days swap maybe. In about 1,086 days, Bitcoins are going to go through a halving.

What does that mean? That means the number of coins you get for solving a block is going to be cut in half.

That’s why they call it halving. So, assuming just for the purposes of this narrow point, Bitcoin trade at the same price, your revenue is going to be cut in half.

But the expenses, meaning electric power, because that’s your primary expense, electric power expenses the day before the halving, they’re going to be exact same thing as the day after the halving. So your expense is the same and your revenue declines.

Another way of looking at it is, if you want to mine the same number of coins, you have to have twice as many devices and use twice as much electric power. In practice, it doesn’t really work exactly that way.

The machines eventually become more power efficient. But nevertheless, it’s going to take more effort to mine the same number of coins.

So let’s say we were talking about wheat. If there were a certain acreage of land that produced X bushels of wheat and every several years, that land became less productive, meaning it could produce less wheat and that was true of all the acres of land everywhere, not just your unique acreage.

Well, the price of wheat would go up. That’s what happens to Bitcoin.

It’s engineered to appreciate. Now as I said earlier, there are coins that have no halving.

So that doesn’t happen. So it doesn’t get more expensive in principle to mine other coins.

So it doesn’t get more expensive. There is no engineering of appreciation.

If there is no engineering appreciation why should anyone mine them? Well, because they would mine them because, your momentary return - cash return of mining is higher than your momentary return of mining Bitcoin.

Said another way, in mining Bitcoin, there is the momentary return. There is how much did you spend today to make a Bitcoin versus what that Bitcoin’s worth, but you had to have to end what appreciation happens over time.

What if there’s less appreciation and your momentary return of that moment should logically be higher. So let’s say there are such coins.

Okay. If there are such coins and your momentary return is higher, and you could take those coins, you could turn them into cash essentially instantaneously.

So what if your momentary return on coin X are higher than your momentary return on Bitcoin, why don’t mine coin X, convert the cash instantaneously and take that cash and buy the Bitcoin? And you will find you can buy more Bitcoin meaning you can - at the end of one day, add more Bitcoin to your portfolio than you would have if you mined it directly and we call that indirect mining.

So, none of the other publicly traded companies that I’ve been able to observe do that. We’ve been doing that in Winland, and we’ve been doing that in consensus mining, gradually adding to indirect mining.

Matter of fact, right now, we’re in the process of increasing our indirect mining effort in both Winland and consensus. So in theory, and at least historically in practice, we’ve been able to grow our Bitcoin per share at a higher rate via the indirect mining effort than we actually experienced via direct mining effort.

And that’s what indirect mining is all about simplistically put. Sorry.

I didn’t mean to tease it. I tried to make it as simple understand as possible.

Does the $4.6 million payable to FRMO on Horizon Kinetics Holding Corp’s latest 10-K represent the 2024 revenue stream performance fee payment? And if so, has it been paid yet?

Yes. It represents that.

And hasn’t been paid yet. I believe it has been paid and I have to check on that because I don’t look every day, but I think it’s been paid.

But it’s going to be paid. If it hasn’t been paid, it’s going to be paid.

And our last question is, does the company target a specific percentage of assets for the short portfolio and path-dependent ETFs, or are they primarily used to deploy excess cash to cover collateral calls?

Okay. The answer to that question is neither.

We have the balance sheet. We could add a lot to the short position if we wanted to.

So why don’t we? Well, two reasons.

The first reason is, believe it or not, on certain days, when we would very much like to short path-dependent ETFs, we either, A, literally cannot borrow them, literally cannot borrow them, or, B, we can borrow them, but we can only borrow them in a very small quantity. There are days when we get allocated literally 25 shares.

That’s the first point. Second point is with path-dependent ETFs, they’re so volatile.

It turns out that was a blessing in disguise. It’s not a good idea to just pick a certain day to add greatly your position, because you never know what’s going to happen in the subsequent days.

So, if that’s the way it is, which is the way it is we can’t borrow mass amounts of shares, we just content ourselves with borrowing a little bit. Some days, we’re able to borrow a little bit more.

In the fullest of time, we have a pretty big position. And what happens is you’re a lot better off doing it that way, doing a little bit, because you don’t know if you did it on a given day if that day is going to be successful several days later.

What you do know is, in the fullness of time, it’s going to work out. So we do a little bit every day.

Chances are relative to the cost of that day in not very many months, no matter what happens in the marketplace, you will have a profit. So it turns out you have a much more exponentially smooth rate of return, much less disruptive if you do a little bit of a time.

That’s not the way we originally envisage it, but we were sort of constrained into that posture. But it turns out to be a fortuitous, happenstance and we like it that way, and we wouldn’t change it.

So maybe, Steve, you’d like to add a point to this or maybe not, I don’t know?

Well, when you asked me before if I’d like to say something, I was thinking I was thinking with the my FRMO hat, but I really should be thinking with the Horizon hat too since so much of the firm was valued is tied to the results of Horizon. And in respect of the conversation you were having about some decades long reversals happening that affect the way corporate profits have been distributed in the stock market and the way the way ratings amongst different kinds of companies have been distributed.

There’s a frustration I have as a portfolio manager periodically, which is that, I can speak as eloquently as I might, not as eloquently as you, of course, but some people said I can do it sometimes? And I’ll explain to a prospective let’s say, institutional investor client, maybe, who behind that person comes many, many, many potential sub advisory accounts.

And they’re very sophisticated. They’re really they are analysts of portfolio managers, and they’re portfolio managers themselves.

And I’ll talk about our long-term approach. I’ll talk about how we don’t track the market.

I will talk about how we’re value conscious and so forth and so on. And then then the way we go about things and they nod their head and they seem to agree.

And yet, if we lag for a while, we don’t know things that are going up, somehow they forget what we said and assets leave us, which is what you were describing. Contrarily, when our securities, our portfolios go up for a while and the market doesn’t or they go up more than the market and especially if we’re up when the market is down, they come back.

And they come back when I haven’t even spoken to them and it’s happened lately. So, what we’ve been preparing for and positioning ourselves for a long time, and we’ve written about it extensively for years and years, it’s beginning to - these underlying forces are beginning to manifest themselves.

And if I were to paint you an anecdotal picture, because I don’t know how many of you on the call actually pay attention to the performance of the various Horizon Kinetic’s asset management strategies. So what the asset flows are or whether you’re you are students of portfolio structure.

That’s all just to give you some responses I’ve had in the last few months. So in in November of last year, I had a client send me just a two sentence email and she wrote something very close to, she’s glued to her iPad because the market was going up a lot, as you recall.

And then I think the market was up 26% as of November something, rather and she said, I’m glued to my iPad I keep thinking, this is totally nuts. What do you say?

Are we in the roaring twenties? And I went back to her.

I didn’t know why she was saying that. I realized, I looked at her portfolio.

It wasn’t the market she was looking at. The market was 26%.

Her portfolio was up 100% at that point. And while I was speaking to her, it was up another 5% that day.

So, that’s what she thought was nuts. And so rather than address the market, I think addressed her portfolio more and what I saw was that, the lion’s share of the excess returns really came from two positions.

One was Texas Pacific Land Corp. and the other was some Bitcoin related trusts that trade on the stock New York Stock Exchange.

And I said that now those are up a lot and they’re large positions. But in a sense, it seems like it’s happened all at once.

But in her particular account, we’d owned each of those positions for about eight years. So in a sense, they were manifesting now, the result of underlying financial compounding different types for each of those holdings and just the price was suddenly reflecting that.

So in one sense, it really wasn’t so very sudden. Right?

There was a rational basis for it and that’s a problem that active managers face because they’re being judged against an artificial benchmark with artificial measuring elements to it. And as it happens, it’s continuing this year because our accounts for the most part are up a fair amount and the markets down.

So all of a sudden, we’re getting many more accounts, different people I haven’t even spoken to. So that’s the way it works in this industry.

It’s you think you’re communicating well and maybe you are, but it doesn’t mean that anybody’s really paying attention to that. Very often, they’re paying attention to something else.

But based on what we’re seeing and based upon how we’re positioned, I dare say that if I had to if I had to make a kind of a wager, I would say that our at Horizon Connects, the asset gathering experience is going to be probably rather rewarding and it may very well be attached to performance fees, as well. Time will tell.

But, it’s something to pay attention to, which you’re not going to see on the FRMO balance sheet in any direct way, and if you don’t look at the now you can, at the Horizon Kinetics financial statements and the various disclosures. So you’ll just see it through the revenue share.

Anyway, I hope I didn’t go on too long, but it’s No.

That makes sense.

It’s worth paying attention if you’re a student of FMRO Corp. You can now be a better student of Horizon Kinetics too.

Well, that’s excellent. That’s excellent.

Thanks for saying that. So I’ll just add one thing to that which is the numbers I read out about taxes, we like to think of ourselves as a research company.

If you’re looking at financial statements and extracting your tax rates for different years, it’s hardly a different exercise. So but and we’re talking about the biggest companies in the world.

So, given that the tax rates did declined a lot over at least in historical sense, a not very lengthy period of time, and it clearly added the performance of the shares. You would think because taxes is such a controversial issue.

There would be front page stories about tax rates either for it or against it. And when I made that table, I decided to look, maybe you can find them.

I can’t even find a story about it. Either a story thinking it’s a good thing or a thing it’s a bad thing.

It’s one thing to have one opinion or another opinion. There is no opinion on it, because there’s no commentary on it.

So what does that tell me? That tells me that the world has stopped doing research and the world is going to return to research and that’s probably the thought I’d leave you with FRMO and Horizon.

At the end of the day, it comes down to research. This kind of research is not obscure research.

This kind of research is trivial research and the trivial research is not being done. Can you imagine what’s happening to the consequential research?

So there’s a lot to be gained by a research-oriented company, so I’ll just leave you with that thought. So any further questions to ask?

No, that was our last question. So if you have any further, closing remarks, this would be the time, otherwise just wrap it up.

Well, just to say thanks so much for attending the call. I like the questions and I thought they were very perceptive.

And of course, it always happens at the end of a call. Someone’s going to think of something they would have liked to ask, but you didn’t ask.

So just don’t hesitate to contact us and we’ll get you an answer to whatever your question is. And of course, we’ll reprise this 90 days from now, approximately 90 days now.

So thanks so much for listening and we’ll do this again soon. Good afternoon.

Murray, I’m sorry to interrupt that lovely closing, but apparently, we do have a couple more questions.

Okay. Well, in that case in that case, ignore the closing remarks.

Let’s hear the questions.

Okay. The first is, do you have any thoughts on how the tariff wars get resolved?

What are the implications for inflation once they are resolved?

Okay. So first, the tariff war.

To begin with, you can’t separate the tariff war from the tax question. So let’s give an example.

The most quintessentially American company I can think of is Coca Cola. And it might astonish you to learn that something around 35% of the Coca Cola, which is consumed in United States of America is manufactured in Mexico.

So now, if they were a Mexican company and it just so happened they produced a drink and people liked it more than they like Coca Cola, I would say, more power to them and I guess Coca Cola just has to work harder. But at least part of our trade deficit with Mexico is not a Mexican company coming up with a drink that is perceived to be superior to the drink of Coca Cola.

It’s Coca Cola distributing its product manufactured in Mexico in United States. So that’s something that international trade theory doesn’t tell you about.

International trade theory, they speak in the abstract. Again we’re back to research versus philosophical abstractions.

So international trade theory, there is nation A and there’s nation A and nation A might produce wheat, and nation A has a real advantage in producing wheat relative to nation B. But nation B might be very good at producing textiles.

So the international trade theory says, well, nation A should focus on wheat because that’s what they do well and let free trade happen and the wheat’s going to go and be produced and sold into nation B. Nation B is very good at producing textiles and that’ll be sold to nation A and all is right with the world.

No international trade theorist with which - with whom I am conversant has ever undertaken to study the question of a company domiciled in a certain market producing its product outside of that country and bringing into that country. So why is that a problem?

If I said, if we’re a Mexican company and I would say more power to them, why is it a problem if Coca Cola does it? The reason is, because of transfer pricing, the profit is realized in Mexico and not realized in United States.

And therefore so in other words, if you can produce a bottle of Coca Cola in Mexico, the issue is not what the cost is in producing in Mexico. It’s actually more expensive to make a bottle of Coca Cola in Mexico than it is to make it in the United States because the Mexican electricity prices are higher.

You don’t make Coca Cola with people. You make them with machinery.

So it’s more expensive to make it in Mexico and you have to ship it a longer distance and it’s liquid. It’s heavy.

Costs money you ship it. So why would you make it in Mexico?

Because you have a tax advantage. So, I’m making up numbers just for luster purposes because it’s easy to do it this way.

These aren’t the actual numbers. Let’s say it costs $1 to make a bottle of Coca Cola in Mexico.

So Coca Cola Mexico sells that bottle of Coca Cola to Coca Cola United States at $2, and it retails for $2 in the United States. Coca Cola United States didn’t make any money.

Coca Cola, the entire corporation, Coca Cola Consolidated made a dollar, but that dollar is taxed in Mexico. It’s not taxed in the United States.

So the World Trade Organization, they have strict rules about giving your domestic companies a tax advantage. That would be forbidden.

There is no rule about giving the foreign company tax advantage relative to their own market. And that’s what’s going on.

You could apply the same thing to Apple or any other company. That’s the problem that has to be resolved.

So if it kept going the way it’s going, United States will get you can see for the numbers that I read to you, ultimately, if you if it was allowed to continue the way it’s continuing, what would end up happening is, United States would be demuted of tax revenue from corporations. And how could that be allowed to continue?

So, the proposed remedy, whether it works or not, we’ll have to see. There are a lot of potential remedies to this problem.

One remedy which you don’t have available is, you can’t assign a bigger tax rate, because everyone accepts transfer pricing. You can’t raise the corporate tax if there’s no profits book wise in the United States of America.

It doesn’t you could raise, the corporate tax, but you’re getting any more money. So if you put a tariff on and you say, basically, the tariff is designed to negate the tax advantage and overwhelm the tax advantage of making it a foreign nation to force the nation to bring them back to the United States.

So if Coca Cola brought the battle bottling or those bottling plans back in the United States, it will create a small number of jobs. It’s not going to make a meaningful fiscal difference in the employment in the United States of America, but it will bring in corporate tax revenue.

That’s the point. And if it doesn’t, well, it will bring in tariff revenue.

That’s the logic. So it’s not designed to be inflationary.

It’s designed to be a tax equilibrium strategy. Whether it works or not is an entirely different debate, but that’s what it’s all about.

Okay.

What else is the question?

Okay. At what point does Horizon become capacity constrained?

Okay. I am going to take the liberty of interpreting that as a number of assets under management and the truthful answer is, I don’t have a hard and fast number and the reason I don’t have a hard and fast number is, it would have to be it would have to be by strategy.

So, I can’t say we can manage this much money, but look how many different strategies we have. First of we have a small cap strategy.

We have a large cap strategy. Obviously, there’s a finite amount capacity we have in small capitalization, but it has nothing to do with what we can do in cryptocurrency.

And then we have some private equity investments that we have other plans for and that has nothing to do with the other strategies. So I don’t know.

In round numb in round numbers, we’re currently managing $11 billion. I can just say this.

Our goal is not to bring in billions of dollars of new assets. We’d like to bring in some.

But as we say internally, we want to make money, not raise money. So a lot of the assets under management that we have right now, we didn’t get $11 billion to manage, and now it’s $11 billion.

We got a considerably smaller sum of the long-term investors, and it appreciated greatly over the years. That’s why we come to run $11 billion and we’d like to continue to do the same.

So, we’re not going to make a heroic effort to bring in $1 billion a month. And if such as - I don’t think such a thing is going to happen.

But if it were to happen, we’d have to design the path and stop it. At the moment, there’s nothing to do.

We can make it we do raise some money, but we don’t raise sums that require any impediments doping new accounts. But we’ll let you know.

I didn’t so you can see why we didn’t formalize it. And, incidentally, the formalization and I went through this before, so I won’t dwell on it, but you see what numerical formula formalization did in the world of small capitalization equity?

It creates all sorts of dysfunctional things. We didn’t numerically formalize it.

We just know we shouldn’t raise tremendous quantities of money and we’re going to leave it at that. I hope that’s an adequate answer.

Okay. Dividends and interest income line looks high relative to $43.8 million of cash balance.

Where does this all come from?

Dividends income, don’t forget the securities. The income is obviously interest income.

You know what the rate is. We’re going to get the same rate everyone gets more or less, give or take a few basis points on our short-term investments, you’ll see what the cash balance is.

You can repeat that sum. But don’t forget we have securities like TPL.

There are some other things like Mesabi Trust. So for example, in November, our Mesabi Trust position collected an extraordinary dividend.

I don’t remember the exact amount. It was something like - it wasn’t exactly $6 a share.

I don’t remember the number, but it wasn’t far from $6 a share. That’s an extraordinary dividend.

So things like that happen periodically. But we’re mostly - most of our income comes from dividends, not from interest income.

So related to that question, is the fee and other income line all from HK HC, Horizon Kinetics Holding Corp. latest quarter is disproportionate compared to nine months.

Can you explain?

Yes. It’s disproportionate because of the performance fee.

Some years, we get a performance fee and this year, we got the biggest performance fee in the history of Horizon, which as an aside, turned out to be problematic for Horizon because the performance fee has to be estimated on December 15th even though we don’t know what the performance fee is going to be until December 31st. It has to be estimated because we have to pay estimated taxes on the 15th as a publicly traded corporation.

So, we had never contemplated getting a - fee that big and we almost didn’t have enough cash to pay the taxes. Happily, we did have enough cash, but we didn’t provide for it.

We didn’t think it ever it could ever happen, because it simply had never happened before. Now we had plenty of liquidity.

We had plenty of securities. We could have sold securities and raised any amount of money required.

But any securities we would have raised, we would have sold it again and that would have increased our tax liability. So we certainly didn’t want to do that.

So, I guess there’s a downside to getting big performance fees. But that’s why the management income is so large essentially.

Okay. There’s a little cluster of questions that are all kind of related.

Can you elaborate on the source of the fee and other income line on the income statement, all from HK HC 4.42% participation? Second, can you elaborate on the source of the dividends and interest income line in addition to the interest on the $44 million of cash balance?

Where else does this come from?

Okay. I think I pretty much answered it.

Just to - yeah. Just I’ll just recapitulate then.

So, the primary - in the management fee category, the primary factor was the performance fees. It was bigger than any time in Horizon’s history.

And we only get that at the end of the year. That’s the way the funds work.

So it doesn’t matter how much appreciation we have. We can’t get that in the next quarter.

We could be up a 100%, because it crystallizes at the end of the year. It’s just so we know.

So don’t try to forecast next quarter based on our performance. All we can do is accrue.

But we can’t but we can’t crystallize. So we’re not going to get it, no matter what our performance is.

In terms of the dividends and the interest income or that kind of income, as I said previously, it’s primarily dividends in securities and one thing I’ll say that I didn’t say before, that’s the great thing about keeping securities for a long period of time because companies raise their dividends over time. And your cash flow increases, because and you didn’t do anything.

It’s just that the company pays you more money. So it’s really very pleasant experience when that happens.

And sometimes, like it happened to us in the most recent quarter, the case of or the prior quarter, the case of Mesabi Trust, we actually got an extraordinary dividend. Of course, we’re not getting extraordinary dividend every quarter.

But we got a dividend, and that dividend is much higher than the quarter one year ago. So, we have a fairly sizable position in the Mesabi Trust.

And Horizon itself owns, as you can see by filings, a very large position in Mesabi Trust. I think we’re the largest holder of Mesabi.

So I think that answers that or it should answer that?

I believe it does. Yeah, those were the last questions.

Okay. Okay.

So I’m going to assume that those were indeed last questions. But I’m going to speak very slowly because I want to answer every question.

So I’m giving you an opportunity to email yet another question. I’d be delighted to answer.

But in the event such a question doesn’t occur to you and it just happens to occur to you once you hang up this phone, please don’t hesitate to contact us. We will get you an answer.

And apart from that, in about 90 days, we’re going to reprise this call and we’re going to answer all your questions. And, I thought this was a good meeting and I really enjoy the questions.

I like the give and take. And as you can see, we don’t have a lot of secrets in FRMO at Horizon.

So please don’t hesitate to contact us if you want to know things and we look forward to the next set of questions. So thanks so much for attending today.

So I think this meeting is adjourned right, Thérèse?

Yes. The conference has ended.

You may now disconnect.