UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (due of earliest event reported) November 23, 2005
Commission file number: 0-29346
FRMO CORP.
(Exact name of registrant as specified in its charter)
Delaware 13-3754422
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No)
320 Manville Road, Pleasantville, NY 10570
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 632-6730
Item 8.0 Other Events
Proposed Spin-Off of Fromex Shares
On September 30, 2005, FRMO Corp. ("FRMO" or the "Registrant") filed a Current
Report (Form 8-K) about the postponement of a proposed dividend distribution of
shares of common stock of Fromex Equity Corp. ("Fromex"), a wholly-owned
subsidiary of FRMO, in order to provide additional time for the Registrant to
consider a procedure for resolving the problem created for FRMO by a new
accounting rule (EITF 03-16). That rule which was effective from and after
September 1, 2004, mandated a change in FRMO's accounting policy for reporting
revenue from its 8.4% interest in Kinetics Advisers, LLC from the cost (cash)
method to the equity (accrual method) as reported in the Registrant's 8-K report
dated June 16, 2005.
The Board of Directors of FRMO will be meeting early next month to consider the
following proposal to distribute shares of Fromex to FRMO shareholders whereby
Fromex will have more than 500 shareholders of record and will register its
common stock with the Securities and Exchange Commission when it is required to
do so under the Securities Exchange Act of 1934 (the "Exchange Act"):
1. FRMO will continue as the owner of the 8.4% interest in
Kinetics Advisers, LLC and therefore will not be able to file
audited statements until such time, if any, that investment
managers of hedge funds are required to have audited financial
statements by changes in the regulations or laws applicable to
them. If this does not happen FRMO will employ a reverse
stock-split to reduce its shareholders to less than 300 and
then move to de-register its shares.
2. By agreement between FRMO and Fromex, FRMO will pay to Fromex
consulting fees, initially equal to ten (10%) percent of total
cash receipts of FRMO on a quarterly basis (including the cash
receipts from FRMO's equity interest in Kinetics Advisers,
LLC). Since Fromex's right to receive such payments will be
based on, and measured by, cash receipts of FRMO, the revenues
of Fromex can be independently audited for reports to
shareholders.
3. FRMO, the owner of 14,400,000 shares of Fromex common stock,
representing its 100% ownership of Fromex will declare a
dividend in shares of Fromex common stock of one (1) share of
Fromex common stock for each fifty (50) shares of FRMO common
stock. There are currently 36,083,774 shares of FRMO common
stock issued and outstanding, and taking into account that
cash will be paid to shareholders for fractional shares, an
estimated 720,000 shares of Fromex will be distributed,
representing 5% of the common stock of Fromex, with FRMO
continuing to own 95% of Fromex stock.
4. Subject to considering comments from its shareholders
concerning this distribution, the proposed spin-off of Fromex
common stock will be made on January 24, 2006 to FRMO's
shareholders of record at the close of business on December
27, 2005.
Separately, Fromex has commenced negotiations with Horizon Asset Management,
Inc. to acquire a revenue interest in future fees to be received by Horizon from
a hedge fund it is establishing in partnership with a division of United
Overseas Bank. While this fund is expected to be effective before the end of
2005, there can be no assurance that this will occur or that an acceptable
agreement between Fromex and Horizon can be reached.
Further, FRMO Corp. is in the process of establishing, with a minority partner,
an offshore exchange traded fund. Fromex has commenced discussions with FRMO
Corp. about a direct revenue interest in the fees FRMO Corp. is to receive from
this fund. This fund is also expected to be effective before the end of 2005,
but there is likewise no assurance that this will occur or that acceptable terms
between Fromex and FRMO Corp. can be reached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRMO CORP.
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(Registrant)
By Steven Bregman
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Date: November 23, 2005 Steven Bregman, President