Unassociated Document

Fromex Equity Corp. (the “Company” or “Fromex”) was incorporated in the State of Delaware on August 31, 2005 as a wholly owned subsidiary of FRMO Corp. (“FRMO”). Fromex has a fiscal year ending on the last day of February, as does its parent company FRMO. As of February 28, 2006 Fromex had 14,400,000 shares of common stock, par value $.01 per share, issued and outstanding all of which are owned by FRMO, for which it paid $844,000, $144,000 for the par value and $700,000 for Fromex’s capital in excess of par value.

On August 31, 2005, FRMO filed Form 8-K with the Securities and Exchange Commission disclosing the formation of Fromex and the intended distribution to FRMO shareholders of 5% of the Fromex shares. In subsequent Form 8-K information filings it was announced that the timing and precise form of the spin-off would be postponed until a better procedure was identified for resolving the problem created by the new accounting rule (EITF 03-16). That rule, which was effective from and after September 1, 2004, mandated a change in the accounting policy for reporting revenue from FRMO’s 8.4% interest in Kinetics’ Advisers, LLC (“Kinetics”) from the cost (cash) method to the equity (accrual) method, as reported in FRMO’s Form 8-K dated June 16, 2005. For a variety of reasons, including the Kinetics practice, as a private company, of using the cash-basis method of accounting and the difficulty of securing audited and accrual-basis financial statements suitable for a public reporting company, FRMO could not itself report accrual-basis financial statements.

On December 9, 2005 the Board of Directors of FRMO authorized the preparation of this Form 10 Registration Statement for the shares of common stock of Fromex pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”). FRMO plans to distribute, five weeks after all SEC comments with respect to this Registration Statement have been cleared, to its shareholders as of the close of business on a date which is 21 days prior to the distribution date (the “record date”), one share of Fromex common stock for each 50 shares of FRMO common stock then outstanding. FRMO has 36,137,774 shares of common stock presently outstanding which means that approximately 720,000 shares of Fromex common stock (taking into consideration the payment of cash for fractional shares) will be distributed, representing 5% of the 14,400,000 shares of Fromex issued and outstanding. Fractional shares will be paid in cash based on the average of the high bid price in the first 15 trading days after the distribution date and/or, if the Board of Directors deem it necessary or appropriate, on an independent appraisal of market value. It is expected that the aggregate of cash paid for fractional shares will not exceed $1,000. The distribution of cash in lieu of fractional shares will not occur at the same time as the distribution of common stock.

Murray Stahl and Steven Bregman are the Chairman and President of both FRMO and Fromex. They are principal persons in the Stahl-Bregman Group which controls FRMO and, after the spin-off distribution date, will control Fromex. 28,883,274 shares of common stock of FRMO are owned by the Stahl Bregman Group, which will receive 577,665 shares of Fromex in the distribution. The Stahl Bregman Group, includes Murray Stahl, Steven Bregman, John Meditz, Peter Doyle, Catherine Bradford, Thomas C. Ewing and Katherine Ewing. See Item 4 below at page 14.

Fromex has entered into a contract with FRMO to perform consulting and management services to FRMO for which FRMO has agreed to pay Fromex ten (10%) percent of the cash receipts which FRMO receives from its rights to share in fees generated by its third party customers during the term of the agreement (the “Consulting Agreement”). The term of the Consulting Agreement is from December 1, 2005 until February 28, 2010 (as amended on December 26, 2006) and for each twelve (12) month period thereafter unless terminated or amended by an instrument in writing signed by both parties on or before January 15 preceding the end of a respective term.

Fromex’s services include the administrative aspect of FRMO’s business activities such as operations, bookkeeping, personnel responsibilities and periodic consulting with the FRMO’s chief financial officer, but do not include the research, business development activities or the services rendered by FRMO or its third party customers, which produce FRMO’s cash receipts. FRMO shall pay to Fromex as its compensation an amount equal to 10% of total cash receipts that FRMO receives from its customers during the term of the Consulting Agreement. Said compensation is based only on the money received by FRMO in each three (3) month period beginning December 1, 2005 and shall not include a percentage of any receivable or accrual until the amount is actually received by FRMO. The payment of such compensation shall be made on or before the close of the month following the end of said three month period.

The first accounting period was the three months which commenced December 1, 2005 and ended February 28, 2006, for which Fromex received $117,013 on March 24, 2006, based on the following cash receipts of FRMO in that quarterly period. In addition, the FRMO cash receipts in the 1^st Quarter of Fromex’s current fiscal year, namely from March 1, 2006 to May 31, 2006 were as set forth below and Fromex received the $162,073 for that quarter on June 23, 2006.

The business of FRMO, and its third party customers focuses on intellectual capital, research and analysis of public companies within a framework of identifying investment strategies and techniques that reduce risk. This includes the 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 interest of FRMO’s shareholders. Such assets include, but are not limited to, those whose value and earnings are based on intellectual capital.

FRMO’s cash receipts derive from its rights to share in fees generated by the third parties customers in the programs described below, namely (i) from an 8.4% equity interest in Kinetics Advisers LLC which earns management and performance fees as investment advisor to hedge funds, (ii) from 100% of the research fees to which Horizon Research Group a division of Horizon Asset Management, Inc. (“Horizon Management”) is entitled to receive from Kinetics Paradigm Fund, a publicly traded mutual fund and (iii) from a one-third interest in the Sub-Advisory Fee Revenue that Horizon Management receives from a large investment firm. See Item 7 below as to the relationship with Horizon Management, which provides the strategic research and business development with a view to produce better than average investment returns and growth in assets under management. This, in turn, increases the fees which are received and FRMO’s share thereof. The three significant programs are:

(i) Kinetics Advisers’ Hedge Funds. FRMO has an 8.4% equity interest, which it acquired for common stock, in Kinetics Advisers’ LLC, which provides investment advice to hedge funds that were small when FRMO acquired its interest but which have been expanding dramatically. Kinetics Advisers LLC manages the portfolios of both (i) Kinetics Partners, LP, a Delaware limited partnership (the “domestic portion of the hedge fund”) and (ii) Kinetics Fund, Inc., an exempted company registered under the Caymen Islands Mutual Funds Law (the “offshore portion of the hedge fund”) with the same strategies. On a cumulative basis over its 5 year - 4 month period from inception through December 31, 2005, the domestic portion of the hedge fund returned 150% and over the 4 year - 11 month period from inception through December 31, 2005 the offshore portion of the hedge fund returned 108% whereas the S&P 500 Index lost 10% and gained 1%, respectively. In the period from January 1, 2006 to December 31, 2006 both the domestic and offshore portions of the hedge fund returned 33.2% compared to 15.8% for the S&P 500 Index.

Kinetics Advisers, LLC earns a monthly management fee based on a percentage of the net assets of each Fund on the last day of each month. The percentage is 1% per annum for the domestic fund and 1 ¼% per annum for the offshore fund. In addition a quarterly performance fee for both funds is earned equal to 20% of net profits. In the case of the offshore fund Kinetics Advisers LLC elects to defer a portion of its management and performance fees earned for a particular fiscal year because such deferred compensation from the offshore fund is not taxable for United States income tax purposes until the year in which it is received by Kinetics Advisers, LLC. Kinetics Advisers LLC distributes, generally on a quarterly basis, substantially all of the management and performance fees it receives in cash, after paying its expenses, to its equity investors and FRMO receives 8.4% of such cash distributions. Kinetics Advisers, LLC reports to its equity investors and files its United States income tax returns on a cash basis without accruing the portion of the deferred management and performance fees until the deferred compensation is received.

(ii) Kinetics Paradigm Mutual Fund. FRMO acquired for its common stock 100% of the research fees to which Horizon Management is entitled from the open-end mutual fund Kinetics Paradigm Fund (trading symbol WWNPX). That fund was small when the acquisition was made but it has grown significantly based on its performance. That research fee is 0.12% per annum of the net assets of the fund which FRMO receives on a monthly basis from Kinetics Paradigm Fund. Kinetics Paradigm Fund was assigned a five-star rating by Morningstar, Inc. in May 2003, the first time it became eligible for rating, and has continued to receive that highest Morningstar rating. In the period from January 1, 2006 to December 31, 2006 the Kinetics Paradigm Fund returned 27.8% compared to 15.8% for the S&P 500 Index.

(iii) Sub-Advisory Fees. On June 1, 2004, FRMO acquired for common stock a one-third interest in the Sub-Advisory Fee Revenue that Horizon Asset Management, Inc. receives in its sub-advisory program for a large investment firm. Under this program, Horizon Management provides investment advisory services to certain clients of the investment firm, its fees being calculated on the basis of assets under management. While the assets under management in this program were quite modest at the time of acquisition, they have expanded significantly as shown below. Horizon Management receives 0.50% per annum of the net assets in the program on a quarterly basis and pays one-third of that amount, net of marketing expenses, to FRMO on a quarterly basis. In the period from January 1, 2006 to December 31, 2006 the Sub-Advisory Program returned 28.5% compared to 15.8% for the S&P 500 Index.

FRMO’s share of the fees which are received under these three programs, and therefore Fromex’s 10% share of the cash receipts therefrom, are based on the assets under management. The approximate net asset levels for these three programs at specific dates are presented below. All three have continued to produce portfolio-level investment returns in the double-digit range, which appears to be the critical requirement for continued asset accumulation. This past performance, however, is not a guaranty of future result.

	Asset Levels in Millions (000,000 omitted)
	December 31,		December 31,		May 31,		December 31,
Program	2004		2005		2006		2006
Kinetics Advisers’ Hedge Funds	$	960	$	l,600	$	2,125	$	2,935
Kinetics Paradigm Fund		125		525		965		2,134
Sub-Advisory Program		100		685		980		1,523
Total	$	1,185	$	2,810	$	4,070	$	6,592

FRMO also receives other fees from two sources: from a consulting agreement with a hedge fund that pays FRMO about $35,000 per year for access to consultation with FRMO’s officers; and from a small interest in the subscription revenues of an investment research publication. These two sources of cash receipts have been small and are not expected to grow or be significant in FRMO’s future revenue stream.

While the foregoing 10% interest of Fromex in FRMO’s cash receipts constituted all of Fromex’s revenue from inception on August 31, 2005 to May 31, 2006, future revenues are expected to be derived from Fromex’s new revenue interests in the two funds described below and from its own future activities as well. One, the Horizon Fund, has already been launched and Fromex has a 66 2/3% revenue interest in the fees to be received by FRMO, which owns 60% of the investment manager. The other fund, the Croupier Fund is in the planning stage and Fromex is negotiating with Horizon Management, the investment manager of the Croupier Fund to acquire a revenue interest in the net fees Horizon Management will receive. See Item 7 below for the affiliations among the Horizon Fund, the Croupier Fund, Fromex, FRMO, Horizon Management and the Stahl-Bregman Group.

(i) Horizon Global Advisers, LLC is a registered United States investment adviser organized in Delaware (“Horizon Advisers”) and acts as the investment manager for Horizon Global Advisers Fund, plc (“Horizon Fund”) which has been established as an open-ended variable capital investment company incorporated with limited liability in Ireland. The Horizon Fund is constituted as an umbrella fund insofar as its share capital will be divided into different series of shares with each series of shares representing a separate portfolio of assets, and comprising a separate sub-fund (a “Fund”) of the Horizon Fund. The first of said sub-funds, Horizon Opportunistic Value Fund, has been listed for trading on the Irish Stock Exchange. Horizon Advisers has commenced operations and as of December 31, 2006 it managed $16 million in assets in the Horizon Fund and $107 million in domestic advisory accounts. It is anticipated that Horizon Advisers will receive management fees based on assets under management. See pages 11-12. FRMO owns 60% of Horizon Advisers and will receive 60% of the fees distributed by Horizon Advisers. FRMO transferred and assigned to Fromex for $250,000, a 66 2/3% revenue interest in those fees as and when received by FRMO in perpetuity. FRMO contributed the $250,000 to Fromex as additional paid-in-capital.

(ii) Croupier Offshore Fund, Ltd. is the second new development in which Fromex hopes to participate (the “Croupier Fund”). This is a hedge fund recently incorporated under the Companies Law of the Caymen Islands. Horizon Management serves as the investment manager and is responsible for managing the portfolio of the Croupier Fund. The investment objective of this hedge fund is to achieve long-term capital appreciation. It will seek to achieve this objective by investing in publicly traded entities that generate revenue primarily by facilitating transactions between other parties including, among other types, stock exchanges, custodial banks, gaming companies, asset management companies, rating agencies, business service companies and payment processing firms. The business model for the fund is less concerned with the qualitative outcome of the underlying transactions but rather with the frequency of such transactions. Such entities, described as “croupiers” by the Fund have largely fixed cost structures with minimal variable expenses, characteristics that may produce earnings that fluctuate over time, thereby creating both long and short opportunities for the Fund in the same issuer.

Horizon Management is a New York corporation registered as an investment adviser with the SEC under the Advisers Act of 1940. Its analysts utilize a variety of long and short strategies in providing investment research to other managers of approximately $4 billion in assets. Horizon Management has entered into a placement agreement with UOB Global Equity Sales, LLC, a New York limited liability company (“UOB Global Equity”) to provide marketing services, investor relations and support services related to the Croupier Fund. UOB Global Equity is a registered broker-dealer and a member of the United Overseas Bank Group.

(iii) Further Business Development. As of December 26, 2006 Fromex’s Board of Directors is composed of a majority of persons who are not officers or directors of FRMO. Fromex will develop new business opportunities which are not associated with FRMO. Fromex plans to employ experienced investment professionals by providing them with financial incentives through the issuance of rights, options or common stock that will reflect the value and performance of their services.

Fromex’s revenue from the Consulting Agreement is based on FRMO’ cash receipts from its customers. Fromex’s new business development activities in the Horizon Fund and the Croupier Fund are associated with FRMO and Horizon Fund, respectively. The business activities of FRMO and Horizon Management 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. Fromex intends to conduct future activities unassociated with FRMO and Horizon Management and in that case will be competing with these other firms as well. FRMO, Horizon Management and Fromex are small in relation to such competitors but their services and programs are designed to reach a niche market of sophisticated analysts and accredited investors.

The Company is in compliance with the labor, health, occupancy and environmental regulatory laws that relate to businesses generally. The cost of such compliance does not have a material effect on its business. 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. On December 13, 2006, the Securities and Exchange Commission issued proposed regulations that (i) would increase the financial qualifications for investors in hedge funds to a net worth of $2.5 million from the current standard of $1 million and (ii) would enact a new provision on fraud to protect hedge fund investors. The proposed new rules will not have a material adverse affect on the revenue of Fromex or FRMO. If further laws and regulations were to be adopted which impose tougher requirements on hedge funds or additional financial burdens on managers of hedge funds, this could decrease the Company’s revenues and impede its growth.

many cases, forward-looking statements can be identified by words such as “anticipate”, “believe”. “continue”, “estimate”, “expect”, “may”, “plan”, “potential”, “predict”, “should”, “will”, or the negative of such words and other comparable terminology that bespeak of the future rather than historical fact.

Undue reliance should not be placed on these statements, which speak only as of the date that they were made. Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this Form 10. The Company does not undertake any obligation to publicly update any revisions to forward-looking statements to reflect later circumstances or to reflect the occurrence of unanticipated events.

The Company believes it is important to communicate its expectations to shareholders. However, there may be events in the future that management is not able to predict accurately or over which it has no control. The risk factors listed below include a discussion of all known material risks to investors that may cause actual results to differ materially from the expectations described in the forward-looking statements.

There has never been a market for the common stock of Fromex and quotation on the Over-the-Counter Bulletin Board, which the Company intends to seek, may not happen promptly or at all. A market maker will need to apply to have the Company’s shares traded on the Bulletin Board. An active trading market may not develop even if quotes on Fromex’s stock do appear on the Over-the-Counter Bulletin Board.

After the distribution date of the spin-off, FRMO will continue to own 95% of the issued and outstanding shares of common stock of Fromex and the other shareholders will effectively have no control over the Company’s operations or future business decisions. FRMO’s management control over the Company’s affairs will include the power to (i) elect directors, (ii) appoint management and (iii) approve, without a shareholder’s meeting or vote, any action that usually requires shareholder authorization, including the adoption of amendments to the certificate of incorporation and approval of mergers or sales of substantially all of the Company’s assets. FRMO, in turn, is controlled by the Stahl-Bregman Group. See Item 4 below.

Although the Company has no present intention to raise additional capital through the issuance of additional shares of common stock, it may at some time in the future do so. Any such issuance would likely dilute shareholders’ ownership interest in the Company and may have an adverse impact on the price of the Company’s common stock. The Company does not presently have a Stock Option Plan for key management personnel but may adopt one in the future and the exercise of options issued under the plan will also dilute the shareholders’ ownership interest.

The Company ultimately derives its revenue from investment management fees, a business which is currently subject to federal and state laws and regulations affecting investment advisers and managers, which afford protection to investors in mutual and hedge funds. Moreover new laws and regulations may be adopted which will adversely affect the revenue of the Company as well as the Company’s ability to be profitable on its business development programs. These factors may place new or additional financial burdens on managers of hedge funds and thereby decrease the Company’s revenues and impede its growth.

The executive officers of the Company are the principal beneficial owners in the Stahl-Bregman Group, which controls Fromex, FRMO, Horizon Global Advisers, LLC and Horizon Asset Management, Inc. Fromex’s present agreements with those entities provide all the revenue of the Company. A decline in the capital markets may adversely affect the revenues from those agreements. Additional business development programs, which are not independent of those entities, like the Croupier Fund, depend in large part on future decisions of the Stahl-Bregman Group, which cannot be assured.

After the spin-off, when Fromex will be a 95%, instead of 100%, subsidiary of FRMO, there may be transactions between the two corporations which present a conflict of interest. In such event it will be incumbent on the respective Boards of Directors to determine that the transaction would have been the same if there had not been such a conflict of interest. Fromex’s Code of Ethics provides that a conflict of interest exists when a person’s personal interests influence, or reasonably appear to influence, their judgment or ability to act in the best interests of the Company and its shareholders and it is the person’s duty to make a full disclosure of the situation to the Company and/or the Board of Directors. An example of a conflict of interest would be a transaction whereby FRMO sells to Fromex the rights to a portion of the revenues under an agreement with a third party if the negotiation between FRMO and Fromex would not be at arms length because the Boards of Directors were composed of a majority of the same persons. As of December 26, 2006 a majority of the Board of Directors of Fromex were composed of persons who are not officers or directors of FRMO.

The Consulting Agreement between Fromex and FRMO provides that it continues until February 28, 2010 and thereafter from fiscal year to fiscal year unless terminated or amended by an instrument in writing signed by both parties on or before January 15 preceding the end of a respective term. The risk for Fromex is that the controlling share ownership of both corporations is with the Stahl-Bregman Group which may act adversely to the interests of Fromex. If the Consulting Agreement were not to be continued after February 28, 2010 Fromex would not generate any revenues from that source. It would be left with the non-cancellable right to receive 66 2/3% of the FRMO’s fees from the Horizon Fund, any right it may receive in the Croupier Fund and other funds associated with FRMO and any future activities it may develop which are not associated with FRMO.

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 development 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 the following: changes in the financial markets, and other risk factors described herein and in the Company’s reports 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.

Fromex presently generates its revenues from the Consulting Agreement with FRMO whereby it agreed to provide management services to FRMO including the administrative aspect of FRMO’s business activities such as operations, bookkeeping and personnel responsibilities. As compensation therefor Fromex is to receive ten percent of the cash receipts which FRMO receives from its third party customers, namely, fees received from Kinetics Advisers Hedge Funds, Kinetics Paradigm Mutual Fund and Sub-Advisory fees from a large investment firm, as described in Item 1 above; and to a lesser extent, about $35,000 per year received from a consulting agreement with Santa Monica Partners and a 2% interest in the subscription revenues of an investment research publication (FRMO’s “Other Fees”). Revenues of Fromex from these may vary substantially from period to period depending on when FRMO actually receives the fees, which are subject to the 10% payment, as shown by the following table.

Program	Fees	When Paid	When received by FRMO

Kinetics Advisers Domestic Hedge Fund	Management fee of 1% per annum of net assets and 20% per annum of of net profits	Management fee paid monthly, and performance fee paid quarterly, to Kinetics Advisers, LLC	Kinetics Advisers, LLC distributes to FRMO generally on a quarterly basis, 8.4% of the fees it receives in cash after paying its expenses.

Kinetics Advisers Offshore Hedge Fund	Management fee of 1 ¼% per annum of net assets and 20% per annum of net profits	Kinetics Advisers may elect to defer a portion of its fees	When Kinetics Advisers does receive management and performance fees in cash it distributes to FRMO, generally on a quarterly basis, 8.4% of those fees after paying its expenses.

Kinetics Paradigm Fund	Research fee of 0.12% per annum of the net assets of the Fund	Monthly by Kinetics Paradigm Fund to FRMO	Monthly

Sub-Advisory Program	Fee of 0.50% per annum of net assets.	Horizon Asset Management, Inc. receives the fee from the investment firm on a quarterly basis.	Horizon Asset Management, Inc. pays to FRMO one-third of the fees it has received, net of marketing expenses, on a quarterly basis

Consulting Agreement with Santa Monica	Approximately $35,000 per. annum	Paid to FRMO in advance	Received by FRMO by advance payments determined by Santa Monica Partners.

Interest in Subscription Revenues of Publication	2% per annum of of subscription receipts.	Paid to FRMO for periods determined by publication.	Received by FRMO in advance as determined by the publication.

On December 6, 2005, FRMO transferred and assigned to Fromex for $250,000, a 66 2/3% revenue interest in fees which FRMO will receive from Horizon Global Advisers, LLC (“Horizon Advisers”) in perpetuity. Horizon Advisers is an investment management firm in which FRMO owns a 60% equity interest. Horizon Advisers will receive management fees of 0.55% of net assets on Class A shares of the Fund (minimum subscription $7,500,000) and 0.80% of net assets on Class B shares of the Fund (minimum subscription of 250,000 Euros) as well as advisory fees on individual accounts managed domestically. The fees are payable monthly in arrears. Horizon Advisers is managing $123 million of assets as of December 31, 2006. From inception on June 2, 2006 to December 31, 2006 the Fund returned 18.2% compared to 12.9% for the S&P 500 Index. Accordingly FRMO expects a distribution from Horizon Advisers in respect of its operations in the fiscal year beginning March 1, 2007.

Fromex will seek to acquire other interests in the management fees of entities controlled by the Stahl-Bregman Group which provide investment advice or management to other funds. One such effort is the current negotiation with Horizon Asset Management, Inc. described in Item 1 with respect to the Croupier Fund. Fromex will seek to receive fees from funds unrelated to entities controlled by the Stahl-Bregman Group but no such efforts have been made to date

The revenues of Fromex rely on the performance of certain hedge funds and mutual funds, for which past performance is no guarantee of future performance. The net assets of all hedge funds in the United States, and mutual funds as well, have grown exponentially in recent years as to call attention to the financial problems of a few of those funds which has led, in turn, to the prospect of changes in the securities laws and regulations which protect investors and provide more disclosure by investment managers including a renewed effort to require registration under the Investment Advisers Act. While such changes could have an adverse effect on Fromex, the Company does not anticipate that they will.

This is the Company’s first accounting period in which it received revenue since its incorporation. Fromex’s revenues from continuing operations were $117,013, all of which were generated from the Consulting Agreement as set forth in Item 1 above. Its expenses were $20,000 for accounting, $2,000 for shareholder reporting, $5,833 for amortization of investments, $21,875 for the non-cash compensation of its executive officers and $3,251 for miscellaneous expenses, for a total of $52,959 of expenses, leaving $64,054 as income from operations before interest income and provision for income taxes. Interest income was $1,316 and after a $23,000 provision for income taxes, Fromex earned net income of $42,370 or $0.003 per share on the 14,400,000 shares of common stock issued and outstanding.

The company’s revenues from continuing operations in this period were $162,073, all of which were generated from the Consulting Agreement as set forth in Item 1 above. Expenses were $5,000 for accounting, $3,000 for shareholder reporting, $18,750 for the non-cash compensation of its executive officers, $6,250 for amortization of intangible assets and $251 for miscellaneous expenses, for a total of $33,25l of expenses, leaving $128,822 as income from operations before interest income and provision for income taxes. Interest income was $1,376 and after a $59,300 provision for income taxes, Fromex earned net income of $70,898 or $0.005 per share on the 14,400,000 shares of common stock issued and outstanding.

In the year ended February 28, 2006 the Company provided net cash of $1,316 from operating activities and $306,219 from financing activities (which was an advance from FRMO) resulting in cash at the end of its first accounting period of $307,535. At the close of the first quarter of the current fiscal year, May 31, 2006, the cash on hand has increased by $600,168 to $907,703. This increase came from net cash of $62,387 provided from operating activities and $537,781 from financing activities (which consisted of $844,000 from the issuance of Fromex’s capital stock to FRMO, less the $306,219 which had been advanced in the prior accounting period). The Company expects to have continuing net cash provided from its operating activities as the management and advisory fees, which generate Fromex’s revenues and are derived from assets under management, increase in existing funds and new funds in which Fromex has the revenue interests described in Item 1 above. FRMO does not have any commitment or obligation to further fund the Company’s operations by way of additional financing activities.

Fromex does not now own any property. The Company’s principal place of business was previously located at 271 North Avenue, 5^th Floor, New Rochelle, N.Y. 10801 where it occupied desk space, without the payment of rent, at the office of an unrelated company. Fromex’s principal place of business is now located at 320 Manville Road, Pleasantville, N. Y. 10570 pursuant to a lease ending on February 28, 2009 at a rental of $3,216 per annum.

The table below shows the beneficial ownership of the common stock, par value $.001 per share, of FRMO Corp. as of December 5, 2006 and after the distribution of the Company’s common stock, the ownership of Fromex common stock, par value $.01 per share, to be owned by FRMO Corp. and by (i) each person who, to the knowledge of the Company, is the beneficial owner of more than 5% of the outstanding common stock of FRMO Corp, (ii) each executive officer and director of the Company and (iii) all executive officers and directors of the Company as a group.

	Position at		Number of Shares				Percent of Class
Name and Address of Beneficial Owner	Fromex		FRMO		Fromex		FRMO			Fromex

FRMO Corp.		—		—		13,680,000		—			95.0	%

Murray Stahl ^(a)		Chairman, CEO Director		6,635,920		132,718		18.4	%		0.9	%

Steven Bregman ^(a)		President, Treasurer, CFO, Director		6,635,920		132,718		18.4	%		0.9	%

Peter Doyle ^(a)		Vice President Secretary		3,609,168		72,183		10.0	%		0.5	%
Lawrence J. Goldstein ^(b)		—		2,587,269		51,745		7.2	%		0.4	%
Lester J. Tanner ^(c)		Director		2,152,254		43,045		6.0	%		0.3	%
Allan Kornfeld (_d)		Director		10,000		200		—			—
Jay Hirschson (_d)		Director		110		—		—			—
John Meditz ^(a)		—		6,635,920		132,718		18.4	%		0.9	%
Thomas C. Ewing ^(a)		—		3,423,575		68,471		9.5	%		0.5	%
Stahl-Bregman Control Group and all other officers and directors as a group (11 persons) ^(a)		—		33,632,90		14,253,658		93.1	%		99.7	%

(a) The Stahl-Bregman Control Group beneficially owns 28,883,274 shares of FRMO common stock, which consists of the 26,940,503 share shown above for Messrs. Stahl, Bregman, Doyle, Meditz and Ewing, plus 1,136,442 shares beneficially owned by Catherine Bradford and 476,855 shares owned by Katherine Ewing. Horizon Research Group, an affiliate of the Chairman and President of the Company, owns 329,474 shares of FRMO common stock which are included in the total of 28,883,274 shares. The address of all members of the Stahl-Bregman Control Group listed in the table is 470 Park Avenue South, New York, N. Y. 10016.

_^(b) The shares shown above for Lawrence J. Goldstein consists of 1,938,256 shares beneficially owned by him plus 649,013 shares beneficially owned by Santa Monica Partners, L. P. and Santa Monica Partners II, L. P., private funds of which Mr. Goldstein is the President and owner of their General Partner, SMP Asset Management, LLC. Mr. Goldstein’s address is 1865 Palmer Avenue, Larchmont, N. Y. 10538

_^(d) Allan Kornfeld’s address is 123 Wild Dunes Way, Jackson, N. J. 08527. Jay Hirschson's address is 15 Charles Street, New York, N. Y. 10014. In addition to the shares shown above Mr. Kornfeld has options to purchase a total of 12,000 shares of FRMO common stock and Mr. Hirschson has an option to purchase 3,000 shares of FRMO common stock. See Item 11 herein.

Murray Stahl:

Age 53. Mr. Stahl has been Chairman of the Board and Chief Executive Officer of FRMO Corp. since 2001. He co-founded Horizon Research Group, a subsidiary of Horizon Asset Management, Inc., in 1995. Prior to 1995 Mr. Stahl was with Bankers Trust Company for 16 years as a portfolio manager and research analyst.

Peter Doyle:

Age 44. Mr. Doyle has been Vice President of FRMO Corp since 2001. He is a co-founder of Horizon Research Group and also Kinetics Asset Management, Inc. in 1996 where he is Chief Investment Strategist for the Kinetics family of mutual funds. Prior to 1996 Mr. Doyle was with Bankers Trust Company for 9 years, where he was an Investment Officer.

Jay Hirschson:

Age 39. For more than the past five years Mr. Hirschson has operated JPH Consulting Group, which advises companies on corporate development and financial matters. Before that he was an executive or consultant to media and internet companies including Miramax Films, New Line Cinema and News Corporation. He is a graduate of Brown University and received an MBA degree from Columbia University.

Allan Kornfeld:

Age 69. Mr. Kornfeld is currently an Independent Consultant on financial matters and a Director at M & A London, LLC of Montclair, New Jersey which provides corporate development services to mid-range public and private companies. He is a certified public accountant and attorney. He was accountant and audit partner of Ernst & Young from 1960-1975, a comptroller, Vice President and Senior Vice President of Ametek, Inc. (NYSE) from 1975-1986 and then Chief Financial Officer and Executive Vice President of Ametek from 1986-1994.

Lester J. Tanner:

Age 83. Mr. Tanner was President of MFC Development Corp. from August 1, 2000 until November 29, 2005. Prior to August 1, 2000 he practiced law as a partner in his firm for more than 30 years with a concentration in corporate, and financial matters. Mr. Tanner has a J. D. degree from Harvard Law School and is currently a member of the law firm of Tanner McColgan, LLP.

The Audit Committee currently consists of Messrs. Kornfeld (Chair), Hirschson and Tanner. All members are “financially literate” and Mr. Kornfeld qualifies as an “audit committee financial expert” as defined by applicable regulations. The Audit Committee is a standing committee which reviews actions with respect to various auditing and accounting matters, including the selection of the Company’s independent registered public accounting firm, the scope of annual audits, the nature of any non-audit services, the fees to be paid to said accountants and the accounting practices of the Company.

The Company has adopted a written Code of Ethics that applies to all of its directors, officers and employees, which is filed as an Exhibit to this Form 10. Any shareholder may obtain a paper copy of that Code free of charge by writing to the Secretary at the address set forth on the cover page. Any amendment to the code of Ethics will be made available promptly after its date.

No portion of such compensation was paid in cash, but all of it was recorded as non-cash compensation and contributions to capital. Fromex does not expect to pay any cash compensation to its executive officers in the current fiscal year ending February 28, 2007 and the compensation earned by them will also be recorded as non-cash compensation and contributions to capital.

The executive officers of the Company are Murray Stahl, Steven Bregman and Peter Doyle. They met at Bankers Trust Company where they were portfolio managers and research analysts for 16 years, 9 years and 9 years respectively, before 1995. Together with others, including the other members of the Stahl-Bregman Group (see Item 4 herein), they commenced business as officers and stockholders of Horizon Asset Management, Inc. (“Horizon Management”) in 1995. The members of the Stahl-Bregman Group are substantially all the stockholders of Horizon Management.

Horizon Management is a New York corporation, registered as an investment adviser under the Advisers Act of 1940. Its team of analysts utilize a variety of long and short strategies for the funds in which it participates as a manager. Its research division, Horizon Research Group, is an independent research organization serving the investment community, primarily managers of mutual funds and hedge funds and other institutional investors.

Horizon Research Group provides in-depth analysis of information-poor, under-researched companies and securities to find complex or overlooked situations that can offer an advantage to the investor. Horizon’s research periodicals include, among others, The Contrarian Research Report, The Spin-Off Report and The Devil’s Advocate, a short sale report. These reports are addressed to investment managers but the concepts and process behind the reports also identify business opportunities in public and private companies for Horizon Management.

In 2001 the Stahl-Bregman Group acquired control of FRMO Corp. (“FRMO”), organized in Delaware, with about 2,500 beneficial owners of its common stock (trading symbol “FRMO”). It utilizes its management’s experience in the analysis and research of public companies as well as the identification of companies in the early stages of promising business strategies. FRMO’s common stock is currently traded in the “Pink Sheets.” Messrs. Stahl, Bregman and Doyle are the executive officers of FRMO, namely, Chairman, President and Vice President, respectively,

Fromex was incorporated in Delaware on August 31, 2005 as a wholly owned subsidiary of FRMO. As of February 28, 2006 Fromex had 14,400,000 shares of common stock, par value $.01 per share, issued and outstanding, all of which were owned by FRMO, for which it paid $844,000, $144,000 for the par value and $700,000 for Fromex’s capital in excess of par value. FRMO had advanced $306,219 upon the organization of Fromex which was repaid by Fromex to FRMO during the three months ended May 31, 2006 when Fromex received from FRMO the cash proceeds of $844,000 for the fiscal 2006 issuance of its common stock.

In 2006 FRMO organized Horizon Global Advisers, LLC (“Horizon Advisers”) in which it has a 60% equity interest. Horizon Advisers acts as the investment manager for Horizon Global Advisers Fund, plc (“Horizon Fund”) described at page 5 above. The Croupier Offshore Fund, Ltd. (“Croupier Fund”) was organized in 2006 by Horizon Management and is described on page 6 above.

Messrs. Stahl, Bregman and Doyle also provide their personal services to both FRMO and Horizon Management, which through them and their staff provide research and management to the funds having a total of $6.6 billion of assets under management at December 31, 2006, as shown in the table at page 5 above. This total does not include the assets under management of the Horizon Fund and the Croupier Fund which presently are modest.

The authorized capital stock of the Company consists of 20,000,000 shares of common stock, $.01 par value. The common stock is the security to be registered. There are issued and outstanding 14,400,000 shares of common stock of which about 720,000 shares are to be distributed to shareholders in connection with the distribution described in Item 1.

Pursuant to Article VII of the Company’s By-Laws Fromex will indemnify its directors, officers, employees and agents to the extent allowed by Section 145 of the General Corporation Law of the State of Delaware (the “Indemnitee”). Section 145 authorizes Fromex to indemnify any person who is a party to an action by reason of the fact of being a director, officer, employee or agent of Fromex against expenses (including attorney’s fees) judgments, fines and amounts paid in settlement if said person acted in good faith and in a manner he reasonable believed to be in or not opposed to the best interests of Fromex. Accordingly Fromex shall, and is obligated to, indemnify and advance the expenses of the Indemnitee in every situation where Fromex has made the determination that the Indemnitee has acted in good faith and in a manner such Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. The statute and Fromex’s indemnification also covers any criminal action or proceeding if the Indemnitee did not have reasonable cause to believe that such Indemnitee’s conduct was unlawful.

Report of Independent Registered Public Accounting Firm	ii

Balance Sheets- as of February 28, 2006 and May 31, 2006 (unaudited)	F1

Statements of Income - Period August 31, 2005 (Inception) through February 28, 2006 and Three months ended May 31, 2006 (unaudited)	F2

Statements of Cash Flows - Period August 31, 2005 (Inception) through February 28, 2006 and Three months ended May 31, 2006 (unaudited)	F3

Statements of Stockholders’ Equity - Period August 31, 2005 (Inception) through February 28, 2006 and Three months ended May 31, 2006 (unaudited)	F4

Notes to Financial Statements	F5

We have audited the accompanying balance sheet of Fromex Equity Corp. as of February 28, 2006 and the related statements of income, stockholder’s equity and cash flows for the period August 31, 2005 (inception) through February 28, 2006. 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 audit.

We conducted our audit in accordance with the 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 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 audit provides 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 Fromex Equity Corp. at February 28, 2006 and the results of its operations and cash flows for the period August 31, 2005 (inception) through February 28, 2006 in conformity with accounting principles generally accepted in the United States of America.

			May 31,
	February 28,		2006
	2006		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	307,535	$	907,703
Subscription receivable from parent		844,000		—
Accounts receivable from parent		117,013		162,073
Total current assets		1,268,548		1,069,776

Other assets:
Intangible assets, net of accumulated amortization of $5,833 and $12,083		244,167		237,917

Total other assets		244,167		237,917

Total Assets	$	1,512,715	$	1,307,693


Liabilites and Stockholder's Equity
Current liabilites:
Accounts payable and accrued expenses	$	25,251	$	30,000
Income taxes payable		23,000		29,800
Due to parent		306,219		—
Total current liabilities		354,470		59,800

Total Liabiliites		354,470		59,800


Stockholder's Equity:
Common Stock - $.01 par value:
Authorized - 20,000,000 shares Issued and outstanding - 14,400,000 shares		144,000		144,000
Capital in excess of par value		971,875		990,625
Retained earnings		42,370		113,268
Total stockholder's equity		1,158,245		1,247,893
Total liabilities and stockholder's equity	$	1,512,715	$	1,307,693

	Period
	August 31, 2005			Three Months
	(Inception) to			Ended May 31,
	February 28,			2006
	2006			(unaudited)
Revenues
Consulting Fees	$	117,013		$	162,073
Total revenue		117,013			162,073


Costs and Expenses
Accounting		20,000			5,000
Shareholder reporting		2,000			3,000
Amortization		5,833			6,250
Compensation (all non-cash)		21,875			18,750
Other expenses		3,251			251
		52,959			33,251
Income from operations		64,054			128,822
Interest Income		1,316			1,376
Income before provision for income taxes		65,370			130,198


Provision for income taxes		(23,000	)		(59,300	)
Net Income	$	42,370		$	70,898

Earnings per share-primary and fully diluted:
Shares of common stock outstanding		14,400,000			14,400,000
Net income per share	$	0.003		$	0.005

	Period
	August 31, 2005			Three Months
	(Inception) to			Ended May 31
	February 28,			2006
	2006			(unaudited)
Cash flows from operating activities
Net Income	$	42,370		$	70,898
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization		5,833			6,250
Non-cash compensation		21,875			18,750
Changes in operating assets and liabilities
Account receivable		(117,013	)		(45,060	)
Accounts payable and accrued expenses		25,251			4,749
Income taxes payable		23,000			6,800
Net cash provided by operating activities		1,316			62,387


Cash flows from financing activities
Issuance of common stock		—			844,000
Advances from parent		306,219			—
Repayments to parent		—			(306,219	)

Net cash provided by financing activities		306,219			537,781

Net increase in cash		307,535			600,168
Cash and cash equivalents at beginning of period		—			307,535

Cash and cash equivalents at end of period	$	307,535		$	907,703

Additonal cash flow information
Income taxes paid	$	—		$	52,500

Non-cash investing and financing activities:
During the period August 31, 2005 (Inception) to February 28, 2006, the Company acquired an intangible asset of $250,000 through a capital contribution from its shareholder.

During the three months ended May 31, 2006, the Company received cash proceeds of $844,000 from the Fiscal 2006 issuance of its common stock.

					Additional				Total
	Common Stock				Paid-In		Retained		Shareholder's
	Shares		Amount		Capital		Earnings		Equity

Balance August 31, 2005		—	$	—	$	—	$	—	$	—
Issuance of Stock		14,400,000		144,000		700,000		—		844,000
Net Income		—		—		—		42,370		42,370
Non-cash compensation		—		—		21,875		—		21,875
Contribution by parent		—		—		250,000		—		250,000
Balance February 28, 2006		14,400,000		144,000		971,875		42,370		1,158,245
Non-cash compensation (Unaudited)		—		—		18,750		—		18,750
Net income (Unaudited)		—		—		—		70,898		70,898
Balance May 31, 2006 (Unaudited)		14,400,000	$	144,000	$	990,625	$	113,268	$	1,247,893

Fromex Equity Corp. (the “Company” or “Fromex”) was incorporated in the State of Delaware on August 31, 2005 as a wholly owned subsidiary of FRMO Corp. (“FRMO”). Fromex has a fiscal year ending on the last day of February, as does its parent company FRMO. As of February 28, 2006 Fromex had 14,400,000 shares of common stock, par value $.01 per share, issued and outstanding all of which are owned by FRMO, for which it paid $144,000 and contributed $700,000 to Fromex’s paid in capital.

On August 31, 2005, FRMO filed a Form 8-K with the Securities and Exchange Commission disclosing the formation of Fromex and the intended distribution to FRMO shareholders of 5% of the Fromex shares. In subsequent Form 8-K information filings it was announced that the timing and precise form of the spin-off would be postponed until a better procedure was identified for resolving the problem created by the new accounting rule (EITF 03-16). That rule, which was effective from and after September 1, 2004, mandated a change in the accounting policy for reporting revenue from FRMO’s 8.4% interest in Kinetics Advisers, LLC (“Kinetics”) from the cost (cash) method to the equity (accrual) method, as reported in FRMO’s Form 8-K dated June 16, 2005. For a variety of reasons, including the Kinetics practice, as a private company, of using the cash-basis method of accounting and the difficulty of securing audited and accrual-basis financial statements suitable for a public reporting company, FRMO could not itself report accrual-basis financial statements.

On December 9, 2005 the Board of Directors of FRMO authorized the preparation of the Form 10 Registration Statement for the shares of common stock of Fromex pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”). The Board of Directors of FRMO has adopted resolutions to distribute, 15 business days after the date on which said Registration Statement becomes effective, to its shareholders as of the close of business on September 15, 2006 or such other date as may be determined based on said effective date (the “record date”), one share of Fromex common stock for each 50 shares of FRMO common stock then outstanding. FRMO has 36,137,774 shares of common stock presently outstanding which means that approximately 720,000 shares of Fromex common stock (taking into consideration the payment of cash for fractional shares) will be distributed, representing 5% of the 14,400,000 shares of Fromex issued and outstanding.

Effective December 1, 2005, Fromex entered into a contract with FRMO to perform consulting and management services to FRMO for which FRMO has agreed to pay Fromex ten (10%) percent of the cash receipts which FRMO receives from its customers during the term of the agreement (The “Consulting Agreement”). The term of the Consulting Agreement is from December 1, 2005 until February 28, 2007 and for each twelve (12) month period thereafter unless terminated or amended by an instrument in writing signed by both parties on or before January 15 preceding the end of a respective term.

Fromex’s services include the administrative aspect of FRMO’s business activities such as operations, bookkeeping, personnel responsibilities and periodic consulting with the FRMO’s chief financial officer, but do not include the research, business development activities or the services rendered by FRMO itself to its customers, which produce FRMO’s cash receipts. FRMO shall pay to Fromex as its compensation an amount equal to 10% of total cash receipts that FRMO receives from its customers during the term of the Consulting Agreement. Said compensation is based only on the money received by FRMO in each three (3) month period beginning December 1, 2005 and shall not include a percentage of any receivable or accrual until the amount is actually received by FRMO. The payment of such compensation shall be made on or before the close of the month following the end of said three month period.

The first accounting period is the three months which commenced December 1, 2005 and ended February 28, 2006, for which Fromex received $117,013 on March 24, 2006 based on the following cash receipts of FRMO in that quarterly period. In addition the FRMO cash receipts in the 1^st Quarter of Fromex’s current fiscal year, namely from March 1, 2006 to May 31, 2006 were as set forth below and Fromex received the $162,073 for that quarter on June 23, 2006.

Fromex Equity Corp.

Notes To Financial Statements

FRMO’s cash receipts have been increasing in its last two fiscal years, which are set forth below to illustrate its growth, but past performance is no guaranty of future results:

FRMO’s Cash Receipts From:	3/1/04 - 2/28/05			3/1/05 - 2/28/06
Kinetics Advisers’ Hedge Funds	$	274,728		$	1,978,026
Kinetics Paradigm Mutual Fund		118,394			410,020
Sub-Advisory Fees		(9,335	)		74,770
Other Fees		134,308			142,925

Total	$	518,095		$	2,605,741

The business of FRMO, on which Fromex receives its 10% of cash receipts, is as an intellectual capital firm. FRMO’s research and business development activities focus on the analysis of public companies within a framework of identifying investment strategies and techniques that reduce risk. Its business includes the 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 interest of FRMO’s shareholders. Such assets include, but are not limited to, those whose value and earnings are based on intellectual capital.

(ii) Kinetics Paradigm Mutual Fund. FRMO acquired for its common stock 100% of the research fees to which Horizon Research Group is entitled from the open-end mutual fund Kinetics Paradigm Fund (trading symbol WWNPX). That fund was small when the acquisition was made but it has grown significantly based on its performance. Kinetics Paradigm Fund was assigned a five-star rating by Morningstar, Inc. in May 2003, the first time it became eligible for rating, and has continued to receive that highest Morningstar rating since May 2003 to date.

FRMO also receives other fees from two sources; from a consulting agreement with a hedge fund that pays FRMO about $35,000 per year for access to consultation with FRMO’s officers and from a small interest in the subscription revenues of an investment research publication. These two sources of cash receipts have been small and are not expected to grow or be significant in FRMO’s future revenue stream.

While the foregoing 10% interest of Fromex in FRMO’s cash receipts constituted all of Fromex’s revenue from inception on August 31, 2005 to May 31, 2006, future revenues are expected to be derived from Fromex’s new business development activities, one of which has already been launched, and one which is in the planning stage.

(i) Horizon Global Advisers, LLC is a registered United States investment adviser organized in Delaware (“Horizon Advisers”) and acts as the investment manager for Horizon Global Advisers Fund, plc (“Horizon Fund”) which has been established as an open-ended variable capital investment company incorporated with limited liability in Ireland. The Horizon Fund is constituted as an umbrella fund insofar as its share capital will be divided into different series of shares with each series of shares representing a separate portfolio of assets, and comprising a separate sub-fund (a “Fund”) of the Horizon Fund. The first of said sub-funds, Horizon Opportunistic Value Fund, has been listed for trading on the Irish Stock Exchange. Horizon Advisers has commenced operations and managed over $70 million in assets as of May 31, 2006. It is anticipated that Horizon Advisers will receive management fees from Horizon Fund based on assets under management. FRMO owns 60% of Horizon Advisers and will receive 60% of the fees distributed by Horizon Advisers. FRMO transferred and assigned to Fromex for $250,000, a 66 2/3% revenue interest in those fees as and when received by FRMO in perpetuity. FRMO contributed the $250,000 to Fromex as additional paid-in-capital.

(ii) Croupier Offshore Fund, Ltd. is the second new development in which Fromex is participating (the (“Croupier Fund”). This is a hedge fund recently incorporated under the Companies Law of the Caymen Islands. Horizon Asset Management, Inc. (“Horizon Management”) serves as the investment manager and is responsible for managing the portfolio of the Croupier Fund. The investment objective of this hedge fund is to achieve long-term capital appreciation.

Horizon Management is a New York corporation registered as an investment adviser with the SEC under the Advisers Act of 1940. Horizon Management has entered into a placement agreement with UOB Global Equity Sales, LLC. a New York limited liability company (“UOB Global Equity”) to provide marketing services, investor relations and support services related to the Croupier Fund. UOB Global Equity is a registered broker-dealer and a member of the United Overseas Bank Group.

The company primarily generates revenue through its right to receive 10% of the cash-basis revenue receipts of FRMO. Subsequent to May 31, 2006, revenue will be received from its investment in the two thirds revenue interest in FRMO’s receipts from Horizon Advisers. The Company intends to acquire additional investments of this kind, such as the Croupier Fund.

Revenue relating to such sources is earned primarily on a quarter-by-quarter basis but will vary substantially from period to period depending on when FRMO receives the fees in which Fromex has an interest. The accrual method of accounting is used by the Company to record all income. The Company’s revenue is based upon FRMO’s revenue that FRMO receives in cash rather than the amount accrued in each quarter. The revenues accrued by Fromex at the end of each accounting period are received in the following month.

Income taxes follow the reported results of the Company’s operations. There were no material differences between the financial reporting and the tax reporting of the Company’s revenue, assets and liabilities. The income tax provisions and liability for income taxes are based on enacted tax laws and statutory tax rates applicable to the respective periods.

Intangible assets at February 28, 2006 consist of the $250,000 purchase price of the 66 2/3% revenue interest in FRMO’s receipts from Horizon Global Advisers, LLC, which is being amortized beginning December 6, 2005 over its estimated life of ten years, using the straight line method. The purchase price was determined by computing the estimated management fee on the net assets committed to the Horizon Fund at December 6, 2005, deducting estimated expenses to produce an estimated net profit of $62,500 of which 60% of $37,500 was allocable to FRMO. The purchase price determined by the parties was ten times $25,000, which was the estimated amount of the two-thirds revenue interest sold by FRMO to Fromex. Based on management’s experience with similar funds it is its opinion that this intangible asset has an estimated life of ten years. Annual amortization expenses of $25,000 is expected over the next five years.

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 will be determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates when presented herein are not necessarily indicative of the amounts that the Company could realize in a sale. There were no financial instruments at the balance sheet dates.

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.

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 equivalent to net income for the period ended February 28, 2006 and the quarter ended May 31, 2006.

In December 2004, the FASB issued Statement No. 123(R), “Stock-Based Payment” (“FAS 123(R)”). FAS 123(R) supercedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends FAS No. 95, “Statement of Cash Flows.” Generally, the approach in FAS 123(R) is similar to the approach described in FAS 123. FAS 123(R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods

or services. This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. FAS 123(R) requires that the fair value of such equity instruments be recognized as an expense in the historical financial statements as services are performed. Prior to FAS 123(R), only certain pro forma disclosures of fair value were required. The provisions of this statement are effective for fiscal years beginning March 1, 2006 for the Company. The adoption of FAS 123(R) will have an impact on the Company’s financial position and results of operations if the Company establishes a stock-based compensation plan.

In December 2004, the FASB issued Statement No. 153, “Exchange of Non-monetary Assets”, (“FAS 153”). FAS 153 provides a general exception from fair value measurement for exchanges of non-monetary assets that do not have commercial substance. The statement is effective for non-monetary asset exchanges occurring in fiscal periods beginning after March 1, 2006 for the Company. The adoption of FAS 153 is not expected to have a material impact on the Company’s financial position or results of operations.

In May 2005, the FASB issued statement No. 154, “Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement no. 3” (“FAS 154”). This Statement requires retrospective application to prior period financial statements of a voluntary change in accounting principle unless it is impracticable and is effective for fiscal years beginning after March 1, 2006 for the Company. The adoption of FAS 154 is not expected to have a material impact on the Company’s financial position or results of operations.

Delaware		04-3826570
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No)


320 Manville Road, Pleasantville, N. Y.		10570
(Address of Principal executive offices)		(Zip Code)

FRMO’s Cash Receipts From:	12/1/05 - 2/28/06		3/1/06 - 5/31/06
Kinetics Advisers’ Hedge Funds	$	959,311	$	842,637
Kinetics Paradigm Mutual Fund		174,332		308,544
Sub - Advisory Fees		0		317,935
Other Fees		36,491		151,617
Total	$	1,170,134	$	1,620,733

10% payable to Fromex	$	117,013	$	162,073

Name	No. of FRMO Shares		Expiration Date		Option Price Per Share

Allan Kornfeld, Director		3,000		7/17/08	$	0.40
		3,000		7/15/11		1.00
		6,000		6/19/13		4.00

Jay Hirschson, Director		3,000		6/19/13		4.00

David Michael, Former Director		3,000		7/18/07		0.40
		3,000		7/17/08		0.40


	FROMEX EQUITY CORP. (Registrant)

Date: January 18, 2007	By:	/s/ Steven Bregman
		Steven Bregman, President

FRMO’s Cash Receipts From:	12/1/05 - 2/28/06		3/1/06 - 5/31/06
Kinetics Advisers’ Hedge Funds	$	959,311	$	842,637
Kinetics Paradigm Mutual Fund		174,332		308,544
Sub - Advisory Fees		0		317,935
Other Fees		36,491		151,617
Total	$	1,170,134	$	1,620,733

10% payable to Fromex	$	117,013	$	162,073

Person		Position
Murray Stahl		Chairman of the Board and Chief Executive Officer
Steven Bregman		Director, President and Chief Financial Officer
Peter Doyle		Vice President, Secretary
Jay Hirschson		Director
Allan Kornfeld		Director
Lester J. Tanner		Director

	Ended				All Other
Name and Principal Position	Feb. 28		Salary		Bonus		Compensation

Steven Bregman President and CFO		2006	$	13,250		—		—

Murray Stahl Chairman & CEO		2006		750		—		—

Fromex Equity Corp.
Statements of Stockholder's Equity

	Period August 31, 2005 (Inception) to February 28, 2006		Three Months Ended May 31, 2006
Federal	$	15,300	$	46,200
State		7,700		13,100
Total provision	$	23,000	$	59,300