SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 Amendment No. 1

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended: February 29, 2004

             [_] TRANSITION REPORT PURSUANT TO SECTION 13(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the transition period from ________ to ________


                         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.)

     30 Haights Cross Road, Chappaqua, NY                           10514
   (Address of principal executive offices)                       (Zip Code)

      (Registrant's telephone number, including area code): (914) 632-6730

        Securities Registered Pursuant To Section 12(B) Of The Act: None

           Securities Registered Pursuant To Section 12(G) Of The Act:

                               Title of Each Class
                          Common Stock, $.001 par value

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[_]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

      The aggregate market value of the voting stock held by non-affiliates of
the registrant at May 20, 2004 was $902,108.

      The number of shares outstanding of the registrant's Common Stock as of
May 20, 2004 was 36,083,774 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Part III of this Form 10-K incorporates information by reference from the
registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission within 120 days after the close of the year ended February
29, 2004.

<PAGE>

                                   Form 10-K/A
                             Amendment No. 1 for the
                          Annual Report for the Fiscal
                          Year Ended February 29, 2004

                        This Amendment No. 1 is filed to:

      (a)   provide the required signatures in the registrant's electronic
            submission; and

      (b)   amend Note 11 at page F-16 to restate the first, second and third
            quarters of the fiscal year ended February 28, 2003 as noted in the
            paragraph at the bottom of page F-16.


<PAGE>

                                   FRMO CORP.
                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED FEBRUARY 29, 2004

<TABLE>
<CAPTION>
                                                                                                          Page No.
                                                                                                          --------
<S>                                                                                                           <C>
PART I

Item 1.         Business....................................................................................  1
Item 2.         Properties..................................................................................  4
Item 3.         Legal Proceedings...........................................................................  4
Item 4.         Submission of Matters to a Vote of Security Holders and Other Information...................  4

PART II

Item 5.         Market for Registrant's Common Equity and Related Stockholder Matters.......................  5
Item 6.         Selected Financial Data.....................................................................  6
Item 7.         Management's Discussion and Analysis of Financial Condition and
                   Results of Operations....................................................................  7
Item 7A.        Quantitative and Qualitative Disclosures About Market Risk .................................  10
Item 8.         Financial Statements and Supplementary Data................................................   10
Item 9.         Changes in and Disagreements with Accountants on Accounting and
                   Financial Disclosure ....................................................................  10

PART III

Item 10.        Directors and Executive Officers of the Registrant..........................................  10
Item 11.        Executive Compensation......................................................................  10
Item 12.        Security Ownership of Certain Beneficial Owners and Management..............................  11
Item 13.        Certain Relationships and Related Transactions..............................................  11
Item 14.        Principal Accountants Fees and Services   ..................................................  11

PART IV

Item 15.        Exhibits, Financial Statements, Schedules and Reports on Form 8-K ..........................  12
</TABLE>


<PAGE>

                                     PART I

ITEM 1. BUSINESS

Organization Of The Company

FRMO CORP. (the "Company or "FRMO") was incorporated in November 1993, under the
laws of the State of Delaware under the name of PSI Settlement Corp, (initially
changed to FRM Nexus, Inc. and then to FRMO Corp on November 29, 2001). One of
the Company's former subsidiaries was MFC Development Corp.("MFC"). On August
31, 2000, FRMO transferred to MFC all of its assets (except for $10,000),
including all the shares of its wholly owned subsidiaries, subject to all of its
liabilities which were assumed by MFC. This transfer was made in contemplation
of a spin-off of the common shares of MFC to the Company's shareholders.

Spin-Off Of MFC

On August 31, 2000, FRMO filed Form 8-K with the Securities and Exchange
Commission, which disclosed that FRMO contemplated distributing to its
shareholders one share of MFC common stock for each one share of FRMO's
1,800,000 shares of outstanding common stock at the close of business on
November 1, 2000 (the record date). The MFC shares were distributed to
shareholders of FRMO on January 23, 2001.

FRM Control Group

After the spin-off, FRMO was recapitalized privately by the FRM Control Group
(described below) purchasing 34,200,000 shares of common stock for $3,258,000
($0.095 per share). By retaining only $10,000 in cash in FRMO, the shareholders'
book value for the 1,800,000 shares outstanding was less than $.01 per share. By
fixing the price that the new Control Group paid for their 95% ownership at
$.095 per share, the existing shareholders realized an increase in book value
from about $.01 per share to about $.091 per share and the shares of the new FRM
Control Group were diluted from about $.095 to about $.091 per share. Book value
of FRMO did not take into account its existing structure and status as a public
company with a reporting history which was considered in the transaction. The
FRM Control Group has benefited from that as well as the $10,000 in cash
remaining in FRMO.

Murray Stahl and Steven Bregman, Chairman and President of the Company,
respectively, are the principal persons in the FRM Control Group, which includes
the other persons who purchased the shares for the consideration stated below.
Messrs. Stahl and Bregman have worked together at Horizon Research Group since
1994 and before that at Bankers Trust Company. They are also part of the
ownership of Kinetics Asset Management, Inc., which is the investment adviser to
several mutual funds and hedge funds, including The Internet Fund, The Paradigm
Fund and Kinetics Partners, L.P.

The 34,200,000 shares of common stock of FRMO sold after the spin-off
distribution date were issued to the FRM Control Group as follows:

            (i) 28,800,000 shares of common stock of FRMO Corp. were issued to
      Peter Doyle, as Voting Trustee of 8.1% of the issued and outstanding
      shares of Kinetics Asset Management Inc. ("Kinetics") and Murray Stahl
      (the "Stahl Bregman Group") for $2,880,000, payable as set forth below.
      The Stahl Bregman Group includes Murray Stahl, Steven Bregman, John
      Meditz, Peter Doyle, Catherine Bradford, Thomas C. Ewing and Katherine
      Ewing. That group will be in control of FRMO Corp. and together with the
      persons named below are the "FRM Control Group". The 28,800,000 shares
      were issued to the Stahl Bregman Group on January 23, 2001 but are held in
      escrow and delivered as paid at the rate of ten cents ($.10) per share.


                                       1
<PAGE>

      The Stahl Bregman Group is obligated to pay to FRMO the after tax amount
      (fixed at 54% of the dividend) of all dividends they receive from Kinetics
      until the total $2,880,000 has been paid. The Stahl Bregman Group expects
      the $2,880,000 to be paid to FRMO in about five years. The installment
      payments depend on actual future dividends received from Kinetics. The
      Stahl Bregman Group may make additional payments at its discretion but the
      payment based on the Kinetics dividend is obligatory until the fixed
      purchase is paid. The members of the Stahl Bregman Group have no
      obligation other than to pay the net dividends from Kinetics until the
      fixed purchase price is paid. The Stahl Bregman Group has agreed that it
      will not divest itself of any part of its Kinetics shares or change the
      character of its ownership so as to reduce the pro-rata share of the
      dividends it currently receives from Kinetics without, as a condition
      thereof, paying toward the fixed purchase price of its FRMO shares the
      after-tax proceeds of that part divested, as if the divestiture had not
      occurred.

            (ii) 3,600,000 shares of common stock of FRMO were issued to Lestar
      Partners, LLC, ("LPC") a New York Limited Liability Company owned by
      Lester Tanner, Secretary and a director of FRMO, together with members of
      his family, for $360,000 payable as set forth below. The 3,600,000 shares
      were issued to LPC on January 23, 2001 but are held in escrow and
      delivered as paid at the rate of ten cents ($.10) per share. LPC is
      obligated to pay to FRMO in cash an amount equal to 12.5% of each payment
      made by the Stahl Bregman Group until the purchase price of $360,000 is
      paid.

            (iii) 1,800,000 shares of common stock of FRMO were issued to
      Lawrence J. Goldstein for $18,000 paid on January 23, 2001. Mr. Goldstein
      is a director of FRMO and the General Partner of Santa Monica Partners,
      LP, a private fund, which owns 218,000 shares of common stock of FRMO.

Business of FRMO

FRMO Corp. is an intellectual capital firm. The experience of its management has
been in the analysis of public companies within a framework of identifying
investment strategies and techniques that reduce risk. The business will include
identification of assets, particularly in the early stages of the expression of
their ultimate value, and the participation with them in ways that are
calculated to increase the value of the shareholders' interest in FRMO. Such
assets are expected to include, but are not limited to, those whose values and
earnings are based on intellectual capital. Of the many varieties of capital
upon which investors have earned returns, ranging from real estate to silicon,
perhaps the highest returns on capital have been earned on intellectual capital.
It is the goal of FRMO to maximize its return on this form of asset. The
identification of any business opportunities will follow the process employed by
Horizon Research Group to select and evaluate investment opportunities and
strategies.

Horizon Research Group is a division of Horizon Asset Management, Inc., which
was co-founded by Murray Stahl and Steven Bregman in 1994. It is an independent
research firm serving primarily mutual fund managers and the hedge fund
community. It provides in-depth analysis of under-researched companies and
strategies to identify complex or overlooked situations that can offer
asymmetric risk/return advantages to the investor. These publications are
addressed to investment managers, but the concepts and process behind them are
expected to serve FRMO's efforts to identify business opportunities in public
and private ventures.

Specific Business Activities

Since its new start on January 23, 2001, FRMO completed the following
transactions through February 29, 2004:

            i. The Company invested $5,000 in FRM NY Capital, LLC, a limited
      liability venture capital company whereby the substantial investment of
      financial capital will be made by unrelated parties but where FRMO will
      have a carried interest based on leveraging the creative services of its
      personnel (its intellectual capital). This interest was inactive and the
      investment was sold at cost during the fiscal 2004 year.


                                       2
<PAGE>

            ii. A consulting agreement was signed effective January 1, 2001,
      whereby FRMO is currently receiving approximately $27,000 a year from the
      manager of Santa Monica Partners, LP, a director and shareholder of FRMO,
      for access to consultations with the Company's personnel. Santa Monica
      Partners, L.P. is a private fund, which owns 218,000 shares of common
      stock of FRMO.

            iii. In March 2001, FRMO acquired the research service fees that
      Horizon Research Group had received from The Paradigm Fund in exchange for
      80,003 shares of FRMO common stock. Management believes that the growth of
      that Fund in the current fiscal year and future years will increase the
      current level of research fees for which the stock consideration was paid.
      The Paradigm Fund outperformed the S&P 500 Index by approximately 13
      percentage points in its first fiscal year of operation, Calendar 2000.
      From inception through Calendar 2003, it outperformed the S&P 500 Index by
      68 percentage points, or in the parlance of investment professionals, by
      6,800 basis points. In May 2003, The New Paradigm Fund was assigned a
      five-star rating by Morningstar, Inc., the fund rating service. This is
      Morningstar's highest rating and is often the basis on which mutual fund
      investors seek to select funds.

            iv. In October 2001, FRMO acquired a 2% interest in the subscription
      revenues from The Capital Structure Arbitrage Report that Horizon Research
      Group and third party receive in exchange for 50 shares of Series R
      preferred stock. While the subscriptions were minimal at the time, they
      have advanced and management believes that they will continue to expand in
      future years.

            v. In February 2002, FRMO acquired a 7.71% interest in Kinetics
      Advisors, LLC and the Finder's Fee Share Interest from the Stahl Bregman
      Group, in exchange for 315 shares of FRMO common stock. Kinetics Advisors,
      LLC controls and provides investment advice to Kinetics Partners, a hedge
      fund, and to The Kinetics Fund, an offshore version of Kinetics Partners.
      While these funds were quite small at the time of acquisition, they have
      expanded dramatically and management believes that they will grow in
      future years. From its first year of operation in 2000, through Calendar
      2003, Kinetics Partners returned 95 percentage points more than the S&P
      500 Index.

Marketing

Currently, the marketing of the Company's services and programs is by the
officers of the Company.

Competition

The Company's business activities are founded on the independent research
experience of its personnel who provide in-depth analysis of information-poor,
under-researched or complex companies and securities, and develop related
strategies that can offer an advantage to the investor. This research is
distinct from but competes with the traditional "sell side" research supported
by the trading commissions and corporate finance fees of brokerage firms that
produce the great majority of "Wall Street" research. The Company also competes
with a wide variety of independent entities, which sell periodicals and research
that is paid for by subscription or fees of its readers. The Company is small in
relation to such competitors but its services and programs are designed to reach
a niche market of sophisticated analysts and accredited investors.


                                       3
<PAGE>

Trademarks - None.

Employees

As of February 29, 2004, the Company had no paid employees.

Regulatory Laws

The Company is in compliance with the regulatory laws that relate to its
business activities. Its operations do not fall within the definition of an
investment company so as to require it to register under the Investment Company
Act of 1940.

ITEM 2. PROPERTIES

None.

ITEM 3. LEGAL PROCEEDINGS

FRMO is not a party to any material litigation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS AND OTHER
INFORMATION

None, other than the election of directors on July 17, 2003.

OTHER INFORMATION

Cautionary Statement

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company is hereby filing cautionary
statements identifying important risk factors that could cause the Company's
actual results to differ materially from those projected in forward looking
statements of the Company made by or on behalf of the Company.

Such statements may relate, but are not limited, to projections of revenues,
earnings, capital expenditures, plans for growth and future operations,
competition as well as assumptions relating to the foregoing. Forward-looking
statements are inherently subject to risks and uncertainties, many of which
cannot be predicted or quantified.

When the Company uses the words "estimates", "expects", "anticipates",
"believes", "plans", "intends", and variations of such words or similar
expressions, they are intended to identify forward-looking statements that
involve risks and uncertainties. Future events and actual results could differ
materially from those underlying the forward-looking statements. The factors
that could cause actual results to differ materially from those suggested by any
such statements include, but are not limited to, those discussed or identified
from time to time in the Company's public filings, including general economic
and market conditions, changes in domestic laws, regulations and taxes, changes
in competition and pricing environments.

Undue reliance should not be placed on these forward-looking statements, which
are applicable only as of the date they are made. The Company undertakes no
obligation to revise or update these forward-looking statements to reflect
events or circumstances that arise after that date or to reflect the occurrence
of anticipated events.


                                       4
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK HOLDER MATTERS

Registration and Market Prices of Common Stock

The authorized capital stock of the Company consists of 92,000,000 shares, of
which, 90,000,000 are shares of common stock, $.001 par value and 2,000,000
shares are preferred stock, $.001 par value. On February 29, 2004, there were
36,083,774 shares of common stock and 50 shares of series R preferred stock
outstanding. Subject to any prior rights of the Company's preferred
shareholders, FRMO's common shareholders are entitled:

      -     to receive dividends as are declared by FRMO's Board of Directors
            out of funds legally available; and

      -     to full voting rights, each share being entitled to one vote.

The FRMO Board of Directors may issue additional authorized shares of FRMO
common stock without shareholder approval. FRMO shareholders do not have any
cumulative rights or any preemptive rights to subscribe for additional
securities that FRMO may issue without obtaining shareholder consent. Subject to
any prior rights of the holders of any preferred stock then outstanding, in the
event of liquidation, dissolution, or winding up of the company, common
shareholders would be entitled to receive, on a pro rata basis, any assets
distributable to shareholders in respect of shares by them.

The FRMO certificate of incorporation authorizes the issuance by FRMO of up to
2,000,000 shares of FRMO preferred stock, of which 50 shares are issued and
outstanding. The FRMO Board of Directors may issue its preferred stock without
obtaining shareholder consent in one or more series at a time or times and for
consideration or considerations as its Board of Directors may determine. The
Board of Directors is authorized by the FRMO certificate of incorporation to
provide at any time for the issuance of FRMO preferred stock with the rights,
preferences, and limitations as established by the Board.

The Company's common stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934 and trades on the NASDAQ Bulletin Board under
the symbol FRMO. The following table sets forth the range of high and low bid
quotations of the Company's common stock for the periods set forth below, as
reported by the National Quotation Bureau, Inc. Such quotations represent
inter-dealer quotations, without adjustment for retail markets, markdowns or
commissions, and do not necessarily represent actual transactions.

     FISCAL PERIOD                                            COMMON STOCK
     -------------                                            ------------
                                                          HIGH BID       LOW BID
                                                          --------       -------
     2003
     ----
     1st        Fiscal Quarter ( 3/1/02 -  5/31/02)        $  0.65      $   0.40
     2nd        Fiscal Quarter ( 6/1/02 -  8/31/02)           0.41          0.25
     3rd        Fiscal Quarter ( 9/1/02 - 11/30/02)           0.25          0.20
     4th        Fiscal Quarter (12/1/02 -  2/28/03)           0.22          0.20


     2004
     ----
     1st        Fiscal Quarter ( 3/1/03 -  5/31/03)        $  0.21      $   0.20
     2nd        Fiscal Quarter ( 6/1/03 -  8/31/03)           1.01          0.20
     3rd        Fiscal Quarter ( 9/1/03 - 11/30/03)           0.70          0.45
     4th        Fiscal Quarter (12/1/03 -  2/29/04)           0.70          0.51


                                       5
<PAGE>

The high bid and low asked quote on May 20, 2004 was $.55 bid and $.95 asked.

Dividends

No cash dividend has been paid by FRMO since its inception. The Company has no
present intention of paying any cash dividends on its common stock.

Holders

As of May 21, 2004, there were approximately 1,000 holders of record of FRMO
common stock representing about 2,500 beneficial owners of its shares. A
director and former director have each been granted options to purchase a total
of 9,000 shares of the Company's common stock. There are no warrants to purchase
common stock of the Company outstanding. The Company does not know of any shares
of common stock of FRMO that are held by any director, officer or holder of as
much as 5% of the outstanding stock for sale pursuant to a filing under Rule 144
of the Securities Act. The Company has not agreed to register any common stock
for sale under the Securities Act by any shareholder or the Company, the
offering of which could have a material effect on the market price of the
Company's common equity.

ITEM 6. SELECTED FINANCIAL DATA

Prior to February 28, 2001, the Company's operations were included in the
financial reports of MFC Development Corp. and subsidiaries, which were spun off
to the shareholders of FRMO on January 23, 2001. This transaction has been
accounted for in a manner similar to a reverse pooling of interests on the
Company's books. The Company had no operations prior to January 23, 2001 and
accordingly, there is no selected financial data to report before that date.

                                    FRMO Corp
                      Selected Consolidated Financial Data

<TABLE>
<CAPTION>
                                                                  Fiscal Year Ended
                                             --------------------------------------------------------------
                                             February 29,     February 28,     February 28,     February 28,
                                                 2004             2003            2002              2001
                                             -----------      -----------      -----------      -----------
<S>                                          <C>              <C>              <C>              <C>
Income Statement Data:
      Total Revenue                          $   159,955      $   103,748      $    68,785      $     3,600
      Costs and expenses                          60,335           52,409           59,254            4,151
                                             -----------      -----------      -----------      -----------
Net Ordinary Income                               99,619           51,339            9,531             (551)
Other income                                       1,370            1,017            1,304               --
                                             -----------      -----------      -----------      -----------
Income (loss) from operations before
  provision for income taxes                     100,990           52,356           10,835             (551)
Provision for income taxes                        37,792           14,248            2,445               --
                                             -----------      -----------      -----------      -----------
Net Income                                   $    63,198      $    38,108      $     8,390      $      (551)
                                             ===========      ===========      ===========      ===========
Earnings per common share:
      Basic earnings per common share        $      0.01      $      0.01      $        --      $        --
      Diluted earnings per common share      $      0.01      $      0.01      $        --      $        --
Number of shares used in computation of
  basic and diluted earnings per share:
      Basic                                    4,840,207        3,897,524        3,899,772        1,998,616
                                             ===========      ===========      ===========      ===========
      Diluted                                  4,890,207        3,947,524        3,910,046        1,998,616
                                             ===========      ===========      ===========      ===========
</TABLE>


                                       6
<PAGE>

                                    FRMO Corp
                Selected Consolidated Financial Data (continued)

<TABLE>
<CAPTION>
                                           As of           As of
                                        February 29,    February 28,    February 28,    February 28,
                                            2004            2003            2002            2001
                                         ----------      ----------      ----------      ----------
<S>                                      <C>             <C>             <C>             <C>
Balance Sheet Data:
      Working Capital                    $  430,316      $  116,561      $   61,890      $   43,824
                                         ==========      ==========      ==========      ==========
      Total Assets                       $  541,105      $  224,687      $  161,068      $   52,894
                                         ==========      ==========      ==========      ==========
      Long-term Debt                     $       --      $       --      $       --      $       --
                                         ==========      ==========      ==========      ==========
      Shareholders' Equity               $  486,774      $  185,745      $  138,433      $   48,824
                                         ==========      ==========      ==========      ==========
      Book Value per Share               $     0.08      $     0.05      $     0.04      $     0.02
                                         ==========      ==========      ==========      ==========
      Common Shares Outstanding (1)       6,197,524       3,897,524       3,890,087       1,998,616
</TABLE>


      (1)   Common shares outstanding is recorded net of the shares being held
            in escrow (29,936,250 as of 2/29/04, and 32,186,250 as of 2/28/03
            and 2/28/02) for shareholders who have not yet purchased their
            stock, as described in Note 7 of the financial statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.

All statements contained herein that are not historical facts, including but not
limited to, statements regarding future operations, financial condition and
liquidity, capital requirements and the Company's future business plans are
based on current expectations. These statements are forward looking in nature
and involve a number of risks and uncertainties. Actual results may differ
materially. Among the factors that could cause actual results to differ
materially are changes in the financial markets that affect investment managers,
investors, mutual funds and the Company's consulting clients, and other risk
factors described herein and in the Company's reports filed and to be filed from
time to time with the Commission. The discussion and analysis below is based on
the Company's Financial Statements and related Notes thereto included herein and
incorporated herein by reference.

OVERVIEW

By reason of the reverse pooling spin-off transaction described in Item 1, the
Company had a new start in terms of its continuing business and its financial
statement as of January 23, 2001, and there were no operations prior to that
date. After the spin-off its balance sheet consisted of $10,000 in assets, no
liabilities and 1,800,000 shares of common stock. On January 23, 2001 the
Company issued an additional 34,200,000 shares of common stock for $3,258,000 to
be paid as set forth in Item 1. The business engaged in by FRMO thereafter is
described in Item 1.

CRITICAL ACCOUNTING POLICIES

Management's discussion and analysis of its financial position and results of
operations are based upon the Company's financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and judgments that affect the


                                       7
<PAGE>

CRITICAL ACCOUNTING POLICIES (continued)

reported amounts of assets, liabilities, revenues and expenses and related
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates. Management believes that the critical accounting policies
and areas that require the most significant judgments and estimates to be used
in the preparation of the financial statements are revenue recognition and
accounting for investments in subsidiaries.

REVENUE RECOGNITION

The Company primarily generates revenue through consulting, research fees and
subscription revenue.

Revenue relating to consulting agreements is earned primarily on a
month-by-month basis.

Research fees are earned and recorded on a monthly basis based upon FRMO's pro
rata share of The New Paradigm Fund assets.

Subscription revenues are earned and recorded on a monthly basis based upon
FRMO's pro rata share of the subscription revenue generated from a certain
research report provided by a related third party.

The accrual method of accounting is used to record all income.

ACCOUNTING FOR INVESTMENTS IN SUBSIDIARIES

Investments in subsidiaries in which the Company holds a less than 20% voting
interest and does not exert a significant influence over operations or financial
policies are currently accounted for using the cost method.

In March 2004, the FASB ratified Emerging Issues Task Force Issue No. 03-16,
"Accounting for Investments in Limited Liability Companies". Under EITF 03-16,
investments in limited liability companies that have separate ownership accounts
for each investor greater than 3 to 5 percent should be accounted for under the
equity method. The Company is currently accounting for its 8.44% investment in
Kinetics Advisers, LLC ("Kinetics Advisers") under the cost method. Effective
September 1, 2004, the Company will change its method of accounting for this
investment so that it will record its pro rata share of Kinetics Advisers income
(loss) each period. Had EITF 03-16 applied effective March 1, 2003, the
Company's assets and pre-tax income would have been increased by $620,000 and
$530,000, respectively.

RESULTS OF OPERATIONS

Year Ended February 29, 2004 Compared To Year Ended February 28, 2003

The Company's revenues from operations increased by $56,000 for the year ended
February 29, 2004 ("2004") from $104,000 for the year ended February 28, 2003
("2003"). The increases in 2003 were due primarily to income from (i) research
fees and (ii) income from unconsolidated subsidiaries.

Costs and expenses increased by $8,000 in 2004, from $52,000 in 2003. The
increase in 2004 was due primarily to increases in shareholder reporting and
accounting expenses, and higher franchise fees.

For the reasons noted above, the Company's net income for the year ended
February 29, 2004, increased by $25,000 to $63,000, as compared to net income of
$38,000 in 2003.


                                       8
<PAGE>

Some discussion is required with respect to an asset that is presently carried
at zero cost on the FRMO balance sheet and which had a negligible accounting
impact on fiscal 2003 earnings, yet which has had a very significant economic
impact on FRMO. This is the investment in Kinetics Advisors, LLC, ("Kinetics
Advisors"), which was acquired in February 2002 (as discussed in Part I, Item 1,
under the heading Specific Business Activities, of this Form 10-K). This
investment takes the form of a minority interest in Kinetics Advisors, which
controls and provides investment advice to two hedge funds. Kinetics Advisors
has elected to reinvest in these two funds the major portion of the fees to
which it is entitled from them. As a consequence, FRMO does not receive its
proportional interest in those fees until such time that Kinetics Advisors
itself elects to or is required to receive them. Under generally accepted
accounting principles, as they applied in fiscal 2003 and 2004, FRMO must record
this investment on a cost basis, which was $0 as of February 29, 2004. However,
on an economic basis, FRMO's proportional share of Kinetics Advisors' capital
accounts in those funds was approximately $620,000 (pre-tax and unaudited) as of
February 29, 2004. FRMO's proportional share of the increase in the value of
Kinetics Advisors' capital accounts in those funds during the period,
predominantly from fee income and appreciation (also pre-tax and unaudited), was
approximately $530,000 during 2004. As disclosed in the Critical Accounting
Policies section, in accordance with EITF 03-16, "Accounting for Investments in
Limited Liability Companies", the Company will change its accounting policy
regarding this investment effective September 1, 2004 to the equity method.

Year Ended February 28, 2003 Compared To Year Ended February 29, 2002

The Company's revenues from operations increased by $35,000 for the year ended
February 28, 2003 ("2003") from $69,000 for the year ended February 28, 2002
("2002"). The increases in 2003 were due primarily to income from (i) research
fees and (ii) consulting fees.

Costs and expenses decreased by $7,000 in 2003, from $59,000 in 2002. The
decrease in 2003 was due primarily to a decrease in shareholder reporting
expenses and lower administrative fees, partially offset by higher accounting
fees and the recording of non-cash compensation expense. The non-cash
compensation expense represents a notional salary allocation for the Company's
senior officers, as required under generally accepted accounting principles. The
officers of the Company are responsible for all of the Company's operations and
have agreed to not draw any salaries during the period of formation.

For the reasons noted above, the Company's net income for the year ended
February 28, 2003, increased by $30,000 to $38,000, as compared to net income of
$8,000 in 2002.

LIQUIDITY AND CAPITAL RESOURCES

The Company's activities during the year ended February 29, 2004 resulted in an
increase in cash of $271,000. This increase was due to net income (after
adjusting for amortization and non-cash compensation) of $83,000, less $6,000
net increase of receivables over payables and deferrals, which, are normal
fluctuations primarily caused by timing differences. Investing activities,
primarily accounted for by the purchase of marketable securities of $36,000 and
the sale of the Company's investment in an unconsolidated subsidiary, decreased
the cash balance by $31,000; there were no cash flows provided by or used in
investing activities during fiscal 2003. Financing activities during the year
ended in 2004 provided cash flow of $225,000 and is attributable to the payment
of common shares held in escrow, as described in Item 1; there were no such
activities in 2003. The Company expects its business with prospective new
clients to develop without the outlay of cash, since the growth will come from
the services of its officers who will not receive salaries until the Company's
operations and revenues warrant the payment.

On January 23, 2001 the Company issued 34,200,000 shares of $.001 par value
stock for $3,258,000. Only $39,375 was paid for at the time, and the balance
remaining as of February 29, 2004 of $2,993,625 will be paid to the Company as
set forth in Item 1. The Company believes that its present cash resources will
be sufficient on a short-term basis and over the next 12 months to fund
continued expansion of its business.


                                       9
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK.

See subsections (i) and (ii) at page 2 relating to the obligations of the Stahl
Bregman Group and LPC to pay for the shares of common stock of the Company based
on dividends from Kinetics and the income generated from the management of the
mutual funds for which Horizon is the investment advisor.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Financial Statements and supplementary data required by this Item 8 are set
forth at the pages indicated in Item 15(a) below.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the Company's Securities Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, as ours are designed to do, and
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

During the 90-day period prior to the date of this report, an evaluation was
performed under the supervision and with the participation of our Company's
management, including the Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based upon that evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that our disclosure controls and
procedures were effective. Subsequent to the date of this evaluation, there have
been no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls, and no corrective
actions taken with regard to significant deficiencies or material weaknesses in
such controls.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is set forth in the Company's definitive
proxy statement, which will be filed with the Securities and Exchange Commission
within 120 days of February 29, 2004. Such information is incorporated herein by
reference and made a part hereof.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is set forth in the Company's definitive
proxy statement, which will be filed with the Securities and Exchange Commission
within 120 days of February 29, 2004. Such information is incorporated herein by
reference and made a part hereof.


                                       10
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this Item is set forth in the Company's definitive
proxy statement, which will be filed with the Securities and Exchange Commission
within 120 days of February 29, 2004. Such information is incorporated herein by
reference and made a part hereof.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is set forth in the Company's definitive
proxy statement, which will be filed with the Securities and Exchange Commission
within 120 days of February 29, 2004. Such information is incorporated herein by
reference and made a part thereof.

                                     PART IV

ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES

The information required by this item is set forth in the Company's definitive
proxy statement, which will be filed with the Securities and Exchange Commission
within 120 days of February 29, 2004. Such information is incorporated herein by
reference and made a part hereof.


                                       11
<PAGE>

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K

(a)   Financial Statements, Schedules And Exhibits

(1)   Financial Statements:

Index to Financial Statements and Schedules................................. F-1
Report of Holtz Rubenstein & Co., LLP....................................... F-2
Balance Sheets - February 29, 2004 and February 28, 2003.................... F-3
Statements of Operations -
   Years ended February 29, 2004, February 28, 2003 and February 28, 2002... F-4
Statement of Stockholders' Equity -
   Years ended February 29, 2004, February 28, 2003 and February 28, 2002... F-5
Statements of Cash Flows -
   Years ended February 29, 2004, February 28, 2003 and February 28, 2002... F-6
Notes to Financial Statements  ............................................. F-7

(2)   Financial Statement Schedules:

All schedules are omitted because they are not applicable, not required, or
because the required information is included in the financial statements or
notes thereto.

(3)   Exhibits:

Exhibits 3.01 and 21.01 are incorporated herein by reference to Form 8-K dated
January 25, 2001 with which said exhibits were previously filed. Exhibits 3.01
and 5.01 are incorporated herein by reference to Form 10 dated June 27, 1997
with which said exhibits were previously filed.

Exhibit
Number      Description
-------     -----------

3.01        Amended Certificate of Incorporation of the Company*.

3.03        Amended By-Laws of the Company*.

5.01        Opinion of Tanner Propp, LLP*

21.01       The Company has no subsidiaries. The spin-off on January 23, 2001 of
            MFC Development Corp, a former subsidiary ("MFC"), is described in
            Form 10, the General Form for Registration of Common Stock of MFC
            pursuant to Section 12(g) of The Securities Exchange Act of 1934, as
            amended, which was incorporated by reference as an exhibit in the
            Company's Form 8-K Current Report filed on January 25, 2001.*

31.1        Certification by the Chief Executive Officer Pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

31.2        Certification by the Chief Financial Officer Pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

32.1        Certification of the Chief Executive Officer and Chief Financial
            Officer Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to
            Section 906 of the Sarbanes-Oxley Act of 2002.

----------
      *     Previously filed

(b)   Reports on Forms 8-K

None.


                                       12
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d)2 of the Securities Exchange
Act of 1934 as amended, the Registrant has duly cause this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on May 28, 2004.

                                    FRMO CORP.

                                By: /s/ Steven Bregman
                                    --------------------------------------------
                                    Steven Bregman
                                    President and Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on May 28, 2004.


Signature                                       Title
---------                                       -----


/s/ Murray Stahl
------------------------------                  Chairman of the Board
    Murray Stahl                                (Principal Executive Officer)


/s/ Steven Bregman
------------------------------                  President, Director
    Steven Bregman


/s/ Lester Tanner
------------------------------                  Secretary, Director
    Lester Tanner


/s/ Allan Kornfeld
------------------------------                  Director
    Allan Kornfeld


/s/ Peter Doyle
------------------------------                  Director
    Peter Doyle


                                       13
<PAGE>

                                   FRMO Corp.
                          Index to Financial Statements


This Index................................................................   F-1
Report of Independent Auditors ...........................................   F-2
Balance Sheets --
   As of February 29, 2004 and February 28, 2003..........................   F-3
Statements of Operations --
   Years Ended February 29, 2004, February 28, 2003
   and February 28, 2002 .................................................   F-4
Statement of Stockholders' Equity --
   Years Ended February 29, 2004, February 28, 2003
   and February 28, 2002 .................................................   F-5
Statements of Cash Flows --
   Years Ended February 29, 2004, February 28, 2003
   and February 28, 2002 .................................................   F-6

Notes to Financial Statements.............................................   F-7



The data required by all other schedules is either included in the financial
statements or is not required.


                                      F-1
<PAGE>

                         Report of Independent Auditors

The Board of Directors and Shareholders
FRMO Corp.

We have audited the accompanying balance sheets of FRMO Corp. as of February 29,
2004 and February 28, 2003 and the related statements of income, stockholders'
equity and cash flows for the three years ended February 29, 2004. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FRMO Corp. at February 29, 2004
and February 28, 2003, and the results of its operations and its cash flows for
the three years ended February 29, 2004 in conformity with accounting principles
generally accepted in the United States of America.


                         /s/ HOLTZ RUBENSTEIN & CO., LLP


Melville, New York
May 17, 2004


                                      F-2
<PAGE>

                                                 FRMO Corp.
                                               Balance Sheets


                                                    February 29,   February 28,
                                                        2004           2003
                                                    ---------------------------

Assets
Current assets:
   Cash and cash equivalents                        $  406,110       $  135,003
   Accounts receivable                                  41,637           20,500
   Investment in marketable securities                  36,900               --
                                                    ---------------------------
Total current assets                                   484,647          155,503
                                                    ---------------------------

Other assets:
   Intangible assets, net                               56,458           64,184
   Investments in unconsolidated subsidiaries
                                                            --            5,000
                                                    ---------------------------
Total other assets                                      56,458           69,184
                                                    ---------------------------

Total assets                                        $  541,105       $  224,687
                                                    ===========================

Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable and accrued expenses            $   20,187       $   20,551
   Income taxes payable                                 22,112           11,587
   Deferred income                                      12,031            7,008
                                                    ---------------------------
Total current liabilities                               54,330           39,146
                                                    ---------------------------

Stockholders' equity:
   Preferred stock - $.001 par value;
     Authorized - 2,000,000 shares;

     Issued and outstanding - 50 shares Series R            --              --
   Common stock - $.001 par value;
     Authorized - 90,000,000 shares;
     Issued and outstanding - 36,083,774 shares         36,083          36,083
   Capital in excess of par value                    3,334,136       3,322,136
   Unrealized gain on marketable securities              1,036              --
   Retained earnings                                   109,145          45,947
                                                    --------------------------
                                                     3,480,400       3,404,166
   Less: Receivables from shareholders for
                common stock issuance                2,993,625       3,218,625
                                                    --------------------------
   Total stockholders' equity                          486,775         185,541
                                                    --------------------------

   Total liabilities and stockholders' equity       $  541,105      $  224,687
                                                    ==========================

See accompanying notes.


                                      F-3
<PAGE>

                                              FRMO Corp.
                                         Statements of Income

<TABLE>
<CAPTION>
                                                 Year ended       Year ended        Year ended
                                                February 29,     February 28,      February 28,
                                                    2004             2003              2002
                                                 -----------      -----------       -----------
<S>                                              <C>              <C>               <C>
Revenues
      Consulting                                 $    84,022      $    87,839       $    56,763
      Research Fees                                   33,130           12,438             8,041
      Subscriptions                                    8,606            3,676             3,018
      Investments                                     34,197             (205)              963
                                                 ----------------------------------------------
      Total Income                                   159,955          103,748            68,786
                                                 ----------------------------------------------
Costs and expenses
      Amortization                                     7,725            7,359             9,676
      Accounting                                       9,250            7,030             6,100
      Shareholder reporting                           26,363           23,775            36,588
      Office expenses                                 12,586           13,500             6,178
      Other                                            4,411              744               712
                                                 ----------------------------------------------
                                                      60,335           52,409            59,254
                                                 ----------------------------------------------

Income from operations                                99,620           51,339             9,531
  Dividend income                                      1,370            1,017             1,304
                                                 ----------------------------------------------
Income from operations before provision
  for income taxes                                   100,990           52,356            10,835
Provision for income taxes                            37,792           14,248             2,445
                                                 ----------------------------------------------
Net income                                       $    63,198      $    38,108       $     8,390
                                                 ==============================================
Basic earnings per common share                  $      0.01      $      0.01       $      0.00
Diluted earnings per common share                $      0.01      $      0.01       $      0.00
Average shares of common stock outstanding:
  Basic                                            4,840,207        3,897,524         3,889,772
                                                 ==============================================
  Diluted                                          4,890,207        3,947,524         3,910,046
                                                 ==============================================
</TABLE>

See accompanying notes


                                      F-4
<PAGE>

                                   FRMO Corp.
                        Statement of Stockholders' Equity

<TABLE>
<CAPTION>


                                                    Series R                                                    Additional
                                                 Preferred Stock                        Common Stock             Paid-In
                                               Shares          Amount             Shares          Amount          Capital
                                         ----------------------------------------------------------------------------------------
<S>                                         <C>              <C>               <C>             <C>              <C>
Balance, February 28, 2001                           --      $        --       36,000,000      $    36,000      $ 3,232,000

  Issuance of new stock for the
    assignment of research agreements                --               --           83,459               83           54,886
  Issuance of new stock for the
    assignment of subscription revenue               50               --               --               --           26,250
  Issuance of new stock for the
    acquisition of 7.71% of Kinetics
    Advisors, LLC and 50% of Finder's
    Fee Share Interest                               --               --              315               --               --
  Net income (loss)                                  --               --               --               --               --
                                         ----------------------------------------------------------------------------------------
Balance, February 28, 2002                           50       36,083,774           36,083        3,313,136            7,839
  Non-cash compensation expense                      --               --               --               --            9,000
  Net income (loss)                                  --               --               --               --               --
                                         ----------------------------------------------------------------------------------------
Balance, February 28, 2003                           50               --       36,083,774           36,083        3,322,136
                                         ----------------------------------------------------------------------------------------
  Subscription payment for stock
    held in escrow                                   --               --               --               --               --
  Unrealized gain on marketable                      --               --               --               --               --
     securities                                      --               --               --               --               --
  Non-cash compensation expense                      --               --               --               --           12,000
  Net income (loss)                                  --               --               --               --               --
                                         ----------------------------------------------------------------------------------------
Balance, February 29, 2004                           50      $        --       36,083,774      $    36,083      $ 3,334,136
                                         ========================================================================================

<CAPTION>
                                                          Receivables
                                                           from Share-      Unrealized
                                          Retained         holders for         Gain on          Total
                                          Earnings        Common Stock       Marketable      Stockholders'
                                          (Deficit)         Issuance         Securities         Equity
                                         -----------------------------------------------------------------
<S>                                      <C>               <C>               <C>              <C>
Balance, February 28, 2001               $      (551)      $(3,218,625)      $        --      $    48,824
                                                                                              -----------
  Issuance of new stock for the
    assignment of research agreements             --                --                --           54,969
  Issuance of new stock for the
    assignment of subscription revenue            --                --                --           26,250
  Issuance of new stock for the
    acquisition of 7.71% of Kinetics
    Advisors, LLC and 50% of Finder's
    Fee Share Interest                            --                --                --               --
  Net income (loss)                            8,390                --                --            8,390
                                         -----------------------------------------------------------------
Balance, February 28, 2002                (3,218,625)               --           138,433
  Non-cash compensation expense                   --                --                --            9,000
  Net income (loss)                           38,108                ~~                ~~           38,108
                                         -----------------------------------------------------------------
Balance, February 28, 2003                    45,947        (3,218,625)               --          185,541
                                         -----------------------------------------------------------------
  Subscription payment for stock
    held in escrow                                --           225,000                --          225,000
  Unrealized gain on marketable                   --                --                --               --
     securities                                   --                --             1,036            1,036
  Non-cash compensation expense                   --                --                --           12,000
  Net income (loss)                           63,198                --                --           63,198
                                         -----------------------------------------------------------------
Balance, February 29, 2004               $   109,145       $(2,993,625)      $     1,036      $   486,775
                                         =================================================================
</TABLE>

See accompanying notes


                                      F-5
<PAGE>

                                                    FRMO Corp.
                                             Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                 Year ended      Year ended      Year ended
                                                                February 29,    February 28,    February 28,
                                                                    2004            2003            2002
                                                                 ------------------------------------------
<S>                                                              <C>             <C>             <C>
Cash flows from operating activities
Net income                                                       $   63,198      $   38,108      $    8,390
Adjustments to reconcile net income to net cash
  provided by operating activities:
       Amortization of research agreements                            7,725           7,359           9,676
       Non-cash loss from unconsolidated subsidiary                      --             205              --
       Non-cash compensation                                         12,000           9,000              --
       Changes in operating assets and liabilities:
         Other current assets                                       (21,137)        (19,386)          1,823
         Accounts payable and accrued expenses                       10,162          12,004          15,859
         Deferred income                                              5,023           4,302           2,706
                                                                 ------------------------------------------
Net cash provided by operating activities
                                                                     76,971          51,592          38,454
                                                                 ------------------------------------------

Cash flows from investing activities
Purchase of marketable securities                                   (35,864)             --              --
Proceeds from sale of FRM NY Capital, LLC                             5,000              --              --
                                                                 ------------------------------------------

Net cash used in investing activities                               (30,864)             --              --
                                                                 ------------------------------------------

Cash flows from financing activities
Payment for release of stock held in escrow                         225,000              --              --
                                                                 ------------------------------------------
Net cash provided by financing activities                           225,000              --              --
                                                                 ------------------------------------------

Net increase in cash and cash equivalents                           271,107          51,592          38,454
Cash and cash equivalents, beginning of year                        135,003          83,411          44,957
                                                                 ------------------------------------------
Cash and cash equivalents, end of year                           $  406,110      $  135,003      $   83,411
                                                                 ==========================================

Additional cash flow information
Interest paid                                                    $       --      $       --      $       --
                                                                 ==========================================
Income taxes paid                                                $   12,926      $       --      $      155
                                                                 ==========================================

Non-cash investing and financing activities
Preferred stock issued in consideration for the acquisition
  of research agreements                                         $       --      $       --      $   26,250
                                                                 ==========================================

Common stock issued in consideration for the assignment
  of subscription revenues                                       $       --      $       --      $   54,886
                                                                 ==========================================
</TABLE>

See accompanying notes


                                      F-6
<PAGE>

                                   FRMO Corp.
                          Notes to Financial Statements

1.    Organization Of The Company

      FRMO CORP. (the "Company or "FRMO") was incorporated in November 1993
      under the laws of the State of Delaware under the name of PSI Settlement
      Corp, (initially changed to FRM Nexus, Inc. and then to FRMO Corp on
      November 29, 2001). One of the Company's former subsidiaries was MFC
      Development Corp.("MFC"). On August 31, 2000, FRMO transferred to MFC all
      of its assets (except for $10,000), including all the shares of its wholly
      owned subsidiaries subject to all of its liabilities which were assumed by
      MFC. This transfer was made in contemplation of a spin-off of MFC.

      On August 31, 2000, FRMO filed Form 8-K with the Securities and Exchange
      Commission, which disclosed that FRMO contemplated distributing to its
      shareholders one share of MFC common stock for each share of FRMO's
      1,800,000 shares of outstanding common stock at the close of business on
      November 1, 2000 (the record date). In fiscal 2001, MFC filed a Form 10 to
      register its common stock and on January 23, 2001, 1,800,000 shares of MFC
      were distributed to FRMO's shareholders.

      Because FRMO and MFC were under common control, the spin-off transaction
      has been accounted for on FRMO's books in a manner similar to a reverse
      pooling of interests with FRMO having a new start on January 23, 2001 with
      $10,000 in assets, no liabilities and 1,800,000 shares of common stock
      outstanding. The Statements of Shareholders' Equity reflect the spin-off
      as of the beginning of the periods presented, with no operations until
      January 23, 2001.

      On November 29, 2000, the Company increased authorized capital stock from
      2,000,000 shares common stock, par value $.10 per share to 2,000,000
      shares preferred stock, par value $.001 per share and 90,000,000 shares
      common stock, par value $.001 per share. Stockholders' equity for prior
      periods was restated to reflect this change.

      On January 23, 2001, 34,200,000 shares of common stock were issued to the
      FRM Control Group. Murray Stahl and Steven Bregman, Chairman and President
      of the Company, respectively, are the principal persons in the FRM Control
      Group, which includes the other persons who purchased the shares for the
      consideration set forth in Note 6.

      On July 2, 2001, the Company authorized the establishment of Series R
      preferred stock. The number of authorized shares is 5,000 with a par value
      of $.001 per share. These shares are each convertible to 1,000 shares of
      the Company's common stock at the option of the Company at any time and at
      the option of the holder after March 1, 2006. The Company may redeem the
      shares at $1,000 per share at any time after March 1, 2011 and shall be
      required to redeem them at $1,000 per share upon the request of a holder
      after March 1, 2012. These shares have one vote per share on all matters
      that common stock can vote upon. Upon liquidation, there is preference to
      the extent of $1,000 per share. No dividends may be paid on common stock
      unless a dividend per share of 1,000% of common stock dividends are paid
      on the preferred stock.


                                      F-7
<PAGE>

2.    Basis Of Presentation

      Business Activities Of The Company

      FRMO Corp. is an intellectual capital firm. The experience of its
      management has been in the analysis of public companies within a framework
      of identifying investment strategies and techniques that reduce risk. The
      business will include identification of assets, particularly in the early
      stages of the expression of their ultimate value, and the participation
      with them in ways that are calculated to increase the value of the
      shareholders' interest in FRMO. Such assets are expected to include, but
      are not limited to, those whose values and earnings are based on
      intellectual capital. Of the many varieties of capital upon which
      investors have earned returns, ranging from real estate to silicon,
      perhaps the highest returns on capital have been earned on intellectual
      capital. It is the goal of FRMO to maximize its return on this form of
      asset. The identification of any business opportunities will follow the
      process employed by Horizon Research Group to select and evaluate
      investment opportunities and strategies.

      Horizon Research Group was co-founded by Murray Stahl and Steven Bregman
      in 1994. It is an independent research firm serving primarily mutual fund
      managers and the hedge fund community. It provides in-depth analysis of
      information-poor, under-researched companies and strategies to identify
      the complex or overlooked situations that can offer an advantage to the
      investor.

      Since its new start on January 23, 2001, FRMO completed the following
      transactions by February 29, 2004, the close of its fiscal year:

                  i. The Company invested $5,000 in FRM NY Capital, LLC, a
            limited liability venture capital company whereby the substantial
            investment of financial capital will be made by unrelated parties
            but where FRMO will have a carried interest based on leveraging the
            creative services of its personnel (its intellectual capital). This
            interest was inactive and the investment was sold at cost during the
            fiscal 2004 year.

                  ii. A consulting agreement was signed effective January 1,
            2001 whereby FRMO is currently receiving approximately $27,000 a
            year from the manager of Santa Monica Partners, LP, a director and
            shareholder of FRMO, for access to consultations with the Company's
            personnel designated by Murray Stahl and Steven Bregman. Santa
            Monica Partners, L.P. is a private fund, which owns 218,000 shares
            of common stock of FRMO.

                  iii. In March 2001, FRMO acquired the research service fees
            that Horizon Research Group had received from The New Paradigm Fund
            in exchange for 80,003 shares of FRMO common stock. Management
            believes that the growth of that Fund in the current fiscal year and
            future years will increase the current level of research fees for
            which the stock consideration was paid.

                  iv. In October 2001, FRMO acquired a 2% interest in the
            subscription revenues from subscribers to The Convertible/High Yield
            Arbitrage Report that Horizon Research Group and another third party
            receive in exchange for 50 shares of Series R preferred stock. While
            these funds were quite small at the time of acquisition, they have
            advanced and management believes that they will continue to expand
            in future years.

                  v. In February 2002, FRMO acquired a 7.71% interest in
            Kinetics Advisors, LLC and the Finder's Fee Share Interest (0.73%)
            from the Stahl Bregman Group, in exchange for 315 shares of FRMO
            common stock. Kinetics Advisors, LLC controls and provides
            investment advice to Kinetics Partners and Kinetics Fund, both of
            which are hedge funds. While the funds were quite


                                      F-8
<PAGE>

2.    Basis Of Presentation (continued)

      Business Activities of the Company (continued)

      small at the time of acquisition, they have expanded dramatically and
      management believes that they will grow in future years.

3.    Significant Accounting Policies

      Revenue Recognition

      The Company primarily generates revenue through consulting, research fees
      and subscription revenue.

      Revenue relating to consulting agreements is earned primarily on a
      month-by-month basis.

      Research fees are earned and recorded on a monthly basis based upon FRMO's
      pro rata share of The New Paradigm Fund assets.

      Subscription revenues are earned and recorded on a monthly basis based
      upon FRMO's pro rata share of the subscription revenue generated from a
      certain research report provided by a related third party.

      The accrual method of accounting is used to record all income.

      Receivables

      Receivables consist of monthly consulting fees. All receivables are
      current and management believes they are fully collectible.

      Investment in FRM NY CAPITAL, LLC

      The investment in FRM NY CAPITAL, LLC represents a 7% Class B membership
      interest. This investment is accounted for under the cost method of
      accounting. This investment was liquidated in 2004, and the Company
      received a return of its $5,000 investment.

      Investment in Kinetics Advisers, LLC

      The Company accounts for its 8.44% investment in Kinetics Advisers, LLC
      using the cost method of accounting at February 29, 2004. In March 2004,
      the FASB ratified Emerging Issues Task Force Issue No. 03-16, "Accounting
      for Investments in Limited Liability Companies". Under EITF 03-16,
      investments in limited liability companies that have separate ownership
      accounts for each investor greater than 3 to 5 percent should be accounted
      for under the equity method. Effective September 1, 2004, the Company will
      change its method of accounting for this investment so that it will record
      its pro rata share of Kinetics Advisers income (loss) each period. Had
      EITF 03-16 applied effective March 1, 2004, the Company's assets and
      pre-tax income would have been increased by $620,000 and $530,000,
      respectively.


                                      F-9
<PAGE>

3.    Significant Accounting Policies (continued)

      Investment in Marketable Securities

      Investments in debt and equity securities are designated as trading,
      held-to-maturity or available-for-sale. Available-for-sale securities are
      reported at amounts that approximate fair value. Temporary declines in the
      market value of any available-for-sale security below cost are charged
      against stockholders' equity; meanwhile, declines deemed other than
      temporary are charged to earnings, resulting in the establishment of a new
      cost basis for the security.

      Income Taxes

      Deferred income taxes are recognized for all temporary differences between
      the tax and financial reporting bases of the Company's assets and
      liabilities based on enacted tax laws and statutory tax rates applicable
      to the periods in which the differences are expected to affect taxable
      income.

      Cash and Cash Equivalents

      For purposes of the statements of cash flows, the Company considers all
      highly liquid, short-term investments with an original maturity of three
      months or less to be cash equivalents.

      Intangible Assets

      Intangible assets are amortized over their estimated lives, ten years,
      using the straight line method.

      Concentration of Credit Risk

      Financial instruments that potentially subject the Company to
      concentrations of credit risk consist principally of cash, money market
      mutual funds, and trade receivables. The Company maintains cash and cash
      equivalents with major financial institutions, and at times such amounts
      may exceed the FDIC limits.

      Trade receivables arise from consulting fees in the New York City area.
      For the year ended February 29, 2004, fees earned from one client, which
      is a related party, represented 40% of all income, and fees earned from
      another client represented 21% of all income. For the year ended February
      28, 2003, fees earned from one client represented 40% of all income, and
      fees earned from another client, which is a related party, represented 24%
      of all income. As of February 29, 2004, trade receivables from one client
      comprised 83% of total trade receivables. As of February 28, 2003, trade
      receivables from one client comprised 51% of total trade receivables.

      Advertising Costs

      The Company's policy is to expense the cost of advertising as incurred.
      There were no advertising expenses for the years ended February 29, 2004
      and February 28, 2003 and 2002.

      Fair Value Of Financial Instruments

      The following disclosure of the estimated fair value of financial
      instruments is made in accordance with the requirements of Statement of
      Financial Accounting Standards No. 107, "Disclosures about Fair Value of
      Financial Instruments". The estimated fair values of financial instruments
      have been determined by the Company using available market information and
      appropriate valuation methodologies.Considerable judgment is required in


                                      F-10
<PAGE>

3.    Significant Accounting Policies (continued)

      Fair Value Of Financial Instruments (continued)

      interpreting market data to develop the estimates of fair value.
      Accordingly, the estimates presented herein are not necessarily indicative
      of the amounts that the Company could realize in a sale. The carrying
      amount of financial instruments at the Balance Sheet dates, except for the
      investment in unconsolidated subsidiaries, approximated their estimated
      fair value at those dates.

      Use Of Estimates

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.

      Comprehensive Income (Loss)

      Other comprehensive income refers to revenues, expenses, gains and losses
      that under generally accepted accounting principles are included in
      comprehensive income but are excluded from net income, as these amounts
      are recorded directly as an adjustment to stockholders' equity.
      Comprehensive income was $64,234 for the year ended February 29, 2004.
      Comprehensive income (loss) was equivalent to net income (loss) for the
      years ended February 28, 2003 and 2004.

      Effects Of New Accounting Pronouncements

      Recent Accounting Pronouncements

      In April 2002, the Financial Accounting Standards Board ("FASB") issued
      Financial Accounting Standard No. 145, "Rescission of FASB Statements No.
      4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
      Corrections" was issued. This statement provides guidance on the
      classification of gains and losses from the extinguishment of debt and on
      the accounting for certain specified lease transactions. Certain
      provisions of this statement related to the classification of gains and
      losses from extinguishment of debt were adopted by the Company beginning
      March 1, 2003. All other provisions were adopted after May 15, 2002. In
      June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit or
      Disposal Activities" was issued. This statement provides guidance on the
      recognition and measurement of liabilities associated with disposal
      activities and became effective for the Company on January 1, 2003. The
      adoption of these statements did not have a material impact on the
      financial position, results of operations or liquidity of the Company.

      In December 2002, the FASB issued SFAS No. 148, "Accounting for
      Stock-Based Compensation - Transition and Disclosure, an amendment of FASB
      Statement No. 123," which amends SFAS No, 123, "Accounting for Stock-Based
      Compensation," to provide alternative methods of transition for a
      voluntary change to the fair value based method of accounting for
      stock-based employee compensation. The transition and annual disclosure
      provisions of SFAS No. 148 are effective for fiscal years ending after
      December 15, 2002. In addition, SFAS No. 148 amends the disclosure
      requirements of SFAS No. 123 to require prominent disclosures in both
      annual and interim financial statements about the method of accounting for


                                      F-11
<PAGE>

3.    Significant Accounting Policies (continued)

      Recent Accounting Pronouncements (continued)

      stock-based employee compensation and the effect of the method used on
      reported results. The Company will continue to account for stock-based
      compensation to employees under APB Opinion No. 25 and related
      interpretations.

      Stock Based Compensation

      The Company applies APB Opinion No. 25 and related interpretations in
      accounting for stock based compensation to employees and directors. Stock
      compensation to non-employees is accounted for at fair value in accordance
      with Statement of Financial Accounting Standard No. 123, Accounting for
      Stock-Based Compensation ("SFAS 123").

      During the year ended February 29, 2004, the Company granted a director
      and former director options to acquire a total of 6,000 shares of common
      stock, at an exercise price of $0.40 per share, through July 17, 2008.
      During the year ended February 28, 2003, the Company granted an officer
      and two directors options to acquire a total of 36,000 shares of common
      stock, at an exercise price of $0.40 per share, through July 18, 2007. All
      options are exercisable upon issuance. The Company has elected the
      disclosure-only provisions of SFAS 123 in accounting for its employee
      stock options. Accordingly, no compensation expense has been recognized
      for these options. Had the Company recorded compensation expense for the
      stock options based on the fair value at the date for awards, consistent
      with the provisions of SFAS 123, the Company's net income for the years
      ended February 29, 2004 and February 28, 2003 would have been reduced by
      approximately $2,000 ($0.00 per share) and $11,000 ($0.00 per share),
      respectively.

4.    Investment in Marketable Securities

      During the year ended February 29, 2004, the Company acquired marketable
      equity securities with a cost of $35,864. The securities are classified as
      an available for sale investment. The carrying value at February 29, 2004
      of $36,900 includes an unrealized gain of $1,036.

5.    Intangible Assets

      Intangible assets consist of the following:

                                                February 29,     February 28,
                                                    2004             2003
                                                 ----------       ----------
            Research agreements                  $   51,003       $   51,003
            Subscription revenue                     26,250           26,250
                                                 ----------       ----------
                                                     77,253           77,253
            Less accumulated amortization            20,795           13,069
                                                 ----------       ----------
            Intangible assets, net               $   56,458       $   64,184
                                                 ==========       ==========

      Amortization of intangible assets was $7,725, $7,359, and $9,676 for the
      years ended February 29, 2004, and February 28, 2003, and 2002,
      respectively. Annual amortization expense for the next five years is
      estimated to approximate $7,700.


                                      F-12
<PAGE>

6.    Commitments And Contingencies

      As of February 29, 2004, the Company did not enter into any commitments
      and management believes that there were no contingencies.

7.    Receivables From Shareholders For Issuance Of Common Stock

      The 34,200,000 shares of common stock of FRMO sold after the spin-off
      distribution date were issued to the FRM Control Group as follows:

                  i. 28,800,000 shares of common stock of FRMO Corp. were issued
            to Peter Doyle, as Voting Trustee of 8.1% of the issued and
            outstanding shares of Kinetics Asset Management Inc. ("Kinetics")
            and Murray Stahl (the "Stahl Bregman Group") for $2,880,000, payable
            as set forth below. The Stahl Bregman Group includes Murray Stahl,
            Steven Bregman, John Meditz, Peter Doyle, Catherine Bradford, Thomas
            C. Ewing and Katherine Ewing. That group is in control of FRMO Corp.
            and together with the persons named below are the "FRM Control
            Group". The 28,800,000 shares were issued to the Stahl Bregman Group
            on January 23, 2001 but are held in escrow and delivered as paid at
            the rate of ten cents ($.10) per share. The Stahl Bregman Group is
            obligated to pay to FRMO the after tax amount (fixed at 54% of the
            dividend) of all dividends they receive from Kinetics until the
            total $2,880,000 has been paid. The Stahl Bregman Group expects the
            $2,880,000 to be paid to FRMO in about five years. The installment
            payments depend on actual future dividends received from Kinetics.
            The Stahl Bregman Group may make additional payments at its
            discretion but the payment based on the Kinetics dividend is
            obligatory until the fixed purchase price is paid. The members of
            the Stahl Bregman Group have no obligation other than to pay the net
            dividends from Kinetics until the fixed purchase price is paid. The
            Stahl Bregman Group has agreed that it will not divest itself of any
            part of its Kinetics shares or change the character of its ownership
            so as to reduce the pro-rata share of the dividends it currently
            receives from Kinetics without, as a condition thereof, paying
            toward the fixed purchase price of its FRMO shares the after-tax
            proceeds of that part divested, as if the divestiture had not
            occurred. During the year ended February 29, 2004, the Stahl Bregman
            Group paid $200,000 of this receivable balance.

                  ii. 3,600,000 shares of common stock of FRMO were issued to
            Lestar Partners, LLC, ("LPC") a New York Limited Liability Company
            owned by Lester Tanner, Secretary and a director of FRMO, together
            with members of his family, for $360,000 payable as set forth below.
            The 3,600,000 shares were issued to LPC on January 23, 2001 but are
            held in escrow and delivered as paid at the rate of ten cents ($.10)
            per share. LPC is obligated to pay to FRMO in cash an amount equal
            to 12.5% of each payment made by the Stahl Bregman Group until the
            purchase price of $360,000 is paid. During the year ended February
            29, 2004, LPC paid $25,000 of this receivable balance.

                  iii. 1,800,000 shares of common stock of FRMO were issued to
            Lawrence J. Goldstein for $18,000 paid on January 23, 2001. Mr.
            Goldstein is a director of FRMO and the General Partner of Santa
            Monica Partners, LP, a private fund, which owns 218,000 shares of
            common stock of FRMO.

                  iv. There now remain a total of 29,936,250 shares held in
            escrow.


                                      F-13
<PAGE>

8.    Net Income Per Common Share And Per Common Share Equivalent

      Basic earnings per common share for each of the three years ended February
      29, 2004 are calculated by dividing net income by the weighted average
      common shares outstanding during the period. Diluted earnings per common
      share for each of the three years ended February 29, 2004 are calculated
      by dividing net income by weighted average common shares outstanding
      during the period plus dilutive potential common shares, which are
      determined as follows:

<TABLE>
<CAPTION>
                                                  Year ended     Year ended     Year ended
                                                 February 29,   February 28,   February 28,
                                                     2004           2003           2002
                                                 -----------    -----------    -----------
<S>                                                <C>            <C>            <C>
            Weighted average common shares         4,840,207      3,897,524      3,889,772
            Effect of dilutive securities:
              Conversion of preferred stock           50,000         50,000         20,274
                                                 -----------    -----------    -----------
            Dilutive potential shares              4,890,207      3,947,524      3,910,046
                                                 ===========    ===========    ===========
</TABLE>

9.    Income Taxes

      The provision for income taxes consist of the following:

                                    Year ended      Year ended      Year ended
                                   February 29,    February 28,    February 28,
                                       2004            2003            2002
                                   -----------     -----------     -----------
            Current:
              Federal              $    27,130     $     8,952     $     1,497
              State                     10,662           5,296             948
                                   -----------     -----------     -----------
            Total current               37,792          14,248           2,445
                                   ===========     ===========     ===========
            Deferred:
              Federal                       --              --              --
              State                         --              --              --
                                   -----------     -----------     -----------
            Total deferred                  --              --              --
                                   -----------     -----------     -----------
            Total                  $    37,792     $    14,248     $     2,445
                                   ===========     ===========     ===========


            FRMO and its former subsidiaries filed consolidated tax returns
            through January 23, 2001. There was no federal tax liability due to
            current and prior year net operating losses. After January 23, 2001,
            FRMO began filing individual tax returns. FRMO and its former
            subsidiaries filed individual state tax returns. The Company has net
            operating loss carry forwards for Federal purposes of approximately
            $1,091,000 arising from FRMO's share of losses from the consolidated
            tax returns that were filed through January 23, 2001. The use of
            these NOLs is restricted, subject to the provisions of Internal
            Revenue Code section 382 and accordingly, the Company has taken a
            100% reserve against the deferred tax asset resulting from these
            NOLs.


                                      F-14
<PAGE>

10.   Income Taxes (continued)

      The following is a reconciliation of the statutory federal and effective
      income tax rates for the years ended:

<TABLE>
<CAPTION>
                                                February 29,       February 28,      February 28,
                                                    2004               2003              2002
                                                -----------        -----------        -----------
<S>                                                    <C>                <C>              <C>
      Statutory federal income tax
        expense rate                                   34.0%              34.0%            34.0 %
      Adjustment for utilization of
        lower tax brackets                            (12.5)             (19.2)             (19.0)
      State taxes, less federal tax effect              6.1                2.3                7.6
      Permanent differences                             5.8                5.8                 --
      Other                                             4.0                4.3                 --
                                                -----------        -----------        -----------
                                                       37.4%              27.2%              22.6%
                                                ===========        ===========        ===========
</TABLE>


                                      F-15
<PAGE>

11.   Supplemental Financial Information
      Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                                              Quarter
                                             --------------------------------------------------------------------------
                                                First          Second           Third          Fourth          Total
                                             ----------      ----------      ----------      ----------      ----------
<S>                                          <C>             <C>             <C>             <C>             <C>
Year ended February 29, 2004
Total revenue                                $   23,257      $   26,427      $   40,514      $   69,757      $  159,955
                                             ==========      ==========      ==========      ==========      ==========
Income from operations                       $   10,993      $    8,482      $   27,707      $   52,438      $   99,620
                                             ==========      ==========      ==========      ==========      ==========
Net income                                   $    8,075      $    6,067      $   21,026      $   28,030      $   63,198
                                             ==========      ==========      ==========      ==========      ==========
Earnings per common share:
  Basic                                      $       --      $       --      $       --      $       --      $     0.01
                                             ==========      ==========      ==========      ==========      ==========
  Diluted                                    $       --      $       --      $       --      $       --      $     0.01
                                             ==========      ==========      ==========      ==========      ==========
Number of shares used in computation of
  earnings per share:
  Basic                                       3,897,524       3,897,524       4,485,902       6,137,195       4,840,207
                                             ==========      ==========      ==========      ==========      ==========
  Diluted                                     3,947,524       3,947,524       4,535,902       6,187,195       4,890,207
                                             ==========      ==========      ==========      ==========      ==========

<CAPTION>

                                                                              Quarter
                                             --------------------------------------------------------------------------
                                                First          Second           Third
                                             (Restated)      (Restated)       (Restated)       Fourth          Total
                                             ----------      ----------      ----------      ----------      ----------
<S>                                          <C>             <C>             <C>             <C>             <C>
Year ended February 28, 2003
Total revenue                                $   25,783      $   26,971      $   26,614      $   24,380      $  103,748
                                             ==========      ==========      ==========      ==========      ==========
Income (loss) from operations                $   11,898      $    9,357      $   12,525      $   17,559      $   51,339
                                             ==========      ==========      ==========      ==========      ==========
Net income (loss)                            $    9,509      $    3,260      $    2,039      $   23,300      $   38,108
                                             ==========      ==========      ==========      ==========      ==========
Earnings (loss) per common share:
  Basic                                      $       --      $       --      $       --      $       --      $     0.01
                                             ==========      ==========      ==========      ==========      ==========
  Diluted                                    $       --      $       --      $       --      $       --      $     0.01
                                             ==========      ==========      ==========      ==========      ==========
Number of shares used in computation of
  earnings per share:
  Basic                                       3,897,524       3,897,524       3,897,524       3,897,524       3,897,524
                                             ==========      ==========      ==========      ==========      ==========
  Diluted                                     3,947,524       3,947,524       3,947,524       3,947,524       3,947,524
                                             ==========      ==========      ==========      ==========      ==========
</TABLE>

During the fourth quarter of the fiscal year ended February 28, 2003, the
Company reevaluated its accounting for its investment in Kinetics Advisers, LLC,
correcting it from the equity method to the cost method. As a result, the
Company recorded an adjustment that reduced revenues and net income by $22,000.
Accordingly, the first, second and third quarters of that fiscal year are
restated as set forth above by a reduction in total revenue and net income by
approximately $6,000, $8,000 and $8,000 respectively. As a result the restated
amounts set forth above for those periods do not agree to amounts previously
reported in prior filings.


                                      F-16