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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
November
9, 2023
Date
of Report (Date of earliest event reported)
FG
GROUP HOLDINGS INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
|
1-13906
|
|
47-0587703
|
(State
or other jurisdiction of |
|
(Commission
|
|
(IRS
Employer |
incorporation
or organization) |
|
File
No.) |
|
Identification
Number) |
5960
Fairview Road, Suite 275 |
|
|
Charlotte,
North Carolina |
|
28210
|
(Address
of principal executive offices) |
|
(Zip
Code) |
(704)
994-8279
(Registrant’s
telephone number including area code)
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of Each Class |
|
Trading
Symbol(s) |
|
Name
of Each Exchange on Which Registered |
Common
Stock, $0.01 par value |
|
FGH |
|
NYSE
American |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
2.02 Results of Operations and Financial Condition
FG
Group Holdings Inc., a Nevada corporation (the “Company”), issued a press release on November 9, 2023, with earnings information
for the Company’s fiscal quarter ended September 30, 2023. The press release is furnished with this Current Report on Form 8-K
(this “Current Report”) as Exhibit 99.1.
Item
7.01 Regulation FD Disclosure
The
information set forth under Item 2.02 of this Current Report is incorporated herein by reference. In addition, on November 10, 2023,
management of the Company plans to discuss the Company’s financial results for the quarter ended September 30, 2023, and the Company’s
business plan, strategy and outlook on an earnings conference call with analysts and investors. The supplemental slides to be referenced
during the conference call are furnished with this Current Report as Exhibit 99.2.
The
information contained in Items 2.02 and 7.01 to this Current Report, including in Exhibits 99.1 and 99.2, is being “furnished”
and, as such, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
Forward
Looking Statements
In
addition to the historical information in this Current Report and in the exhibits furnished with this Current Report, it includes forward-looking
statements which involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors”
section contained in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange
Commission on March 16, 2023, and the following risks and uncertainties: the Company’s ability to maintain and expand its revenue
streams to compensate for the lower demand for the Company’s digital cinema products and installation services; potential interruptions
of supplier relationships or higher prices charged by suppliers; the Company’s ability to successfully compete and introduce enhancements
and new features that achieve market acceptance and that keep pace with technological developments; the Company’s ability to successfully
execute its capital allocation strategy or achieve the returns it expects from these holdings; the Company’s ability to maintain
its brand and reputation and retain or replace its significant customers; challenges associated with the Company’s long sales cycles;
the impact of a challenging global economic environment or a downturn in the markets; the effects of economic, public health, and political
conditions that impact business and consumer confidence and spending, including rising interest rates, periods of heightened inflation
and market instability, the outbreak of any highly infectious or contagious diseases, such as COVID-19 and its variants or other health
epidemics or pandemics, and armed conflicts, such as the ongoing military conflicts in Ukraine and Gaza and related sanctions; economic
and political risks of selling products in foreign countries (including tariffs); risks of non-compliance with U.S. and foreign laws
and regulations, potential sales tax collections and claims for uncollected amounts; cybersecurity risks and risks of damage and interruptions
of information technology systems; the Company’s ability to retain key members of management and successfully integrate new executives;
the Company’s ability to complete acquisitions, strategic investments, entry into new lines of business, divestitures, mergers
or other transactions on acceptable terms, or at all; the impact of economic, public health and political conditions on the companies
in which the Company holds equity stakes; the Company’s ability to utilize or assert its intellectual property rights, the impact
of natural disasters and other catastrophic events, whether natural, man-made, or otherwise (such as the outbreak of any highly infectious
or contagious diseases, or armed conflict); the adequacy of the Company’s insurance; the impact of having a controlling stockholder
and vulnerability to fluctuation in the Company’s stock price. Given the risks and uncertainties, readers should not place undue
reliance on any forward-looking statement and should recognize that the statements are predictions of future results which may not occur
as anticipated. Many of the risks listed above have been, and may further be, exacerbated by the impact of economic, public health and
political conditions that impact consumer confidence and spending, particularly in the cinema, entertainment, and other industries in
which the Company and the companies in which the Company holds an equity stake operate, and the worsening economic environment. Actual
results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks
and uncertainties described herein, as well as others not now anticipated. New risk factors emerge from time to time and it is not possible
for management to predict all such risk factors, nor can it assess the impact of all such factors on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Except where required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes
in factors or assumptions affecting such forward-looking statements.
Item
9.01. Financial Statements and Exhibits.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
|
FG
GROUP HOLDINGS INC. |
|
|
Date:
November 9, 2023 |
By:
|
/s/
Todd R. Major |
|
|
Todd
R. Major |
|
|
Chief
Financial Officer |
Exhibit
99.1
FG
Group Holdings Inc. – Fiscal Year 2023 |
Page
1 of 8 |
Third
Quarter 2023 Results
FG
Group Holdings Reports Third Quarter 2023 Operating Results
Charlotte,
NC – November 9, 2023 – FG Group Holdings Inc. (NYSE American: FGH) (the “Company” or “FG Group Holdings”)
today announced operating results for the third quarter ended September 30, 2023.
Operational
Highlights
|
● |
The
Company completed the separation and initial public offering of its Strong Global Entertainment, Inc. subsidiary (“Strong Global
Entertainment” or “SGE”) which began trading on the NYSE American in May 2023. |
|
|
|
|
● |
FG
Group Holdings now owns a controlling stake in Strong and non-controlling interests in GreenFirst Forest Products Inc. (“GreenFirst”),
FG Financial Group Inc. (“FG Financial”) and Firefly Systems, Inc. (“Firefly”). The Company also has commercial
real estate holdings in Alpharetta, Georgia and Quebec, Canada. |
|
|
|
|
● |
The
Company’s Strong Global Entertainment subsidiary completed its first two acquisitions following initial public offering (“IPO”): |
|
● |
Unbounded
Media Corporation (“Unbounded”), completed in third quarter, adds production service capabilities to Strong Studios group;
and |
|
|
|
|
● |
Innovative
Cinema Solutions, completed subsequent to close of third quarter, adds scale to Strong Technical Services group. |
Mark
Roberson, Chief Executive Officer, commented, “Our equity holdings, both consolidated and non-consolidated, continued to execute
on their strategic growth plans. The separation and IPO of SGE positions the entity to accelerate its growth plans, both organic and
through acquisitions. We are pleased to see the first two transactions completed by SGE. In addition, Firefly continues to build and
expand its digital out of home footprint both domestically and internationally; GreenFirst continues to optimize its operations, focus
on its more valuable and profitable mills in Ontario while monetizing non-core assets and operations; and FG Financial continues to expand
its reinsurance business and merchant banking business.”
Kyle
Cerminara, Chairman of the Board, commented, “We are continuing to implement our holding company strategy, and the separation and
IPO of SGE was an important step. We are also pleased with the operational execution in our equity holdings and maintain a long-term
view to drive value for our shareholders.”
Third
Quarter 2023 Financial Review (Compared to Third Quarter 2022)
As
a result of our controlling ownership, the results of Strong Global Entertainment are consolidated into our operating results discussed
below.
|
● |
Revenue
was $11.1 million for the quarter compared to $10.3 million in the third quarter of 2022, primarily driven by growth at Strong Global
Entertainment, which increased 10.3% as demand from cinema customers increased to support laser upgrade initiatives, and from the
introduction of new immersive products and new installation services. |
|
|
|
|
● |
Gross
profit was $3.1 million, or 28.0% of revenue, compared to $2.7 million, or 26.7.% of revenue, during the quarter ended September
30, 2022. Gross profit at Strong Global Entertainment increased to $2.8 million, or 25.8% of its revenue, on increased
product and services revenue, as compared to $2.4 million, or 23.9% of revenue, during the third quarter of the prior. |
FG Group Holdings Inc. – Fiscal Year 2023 | Page 2 of 8 |
Third
Quarter 2023 Results
|
● |
Loss
from operations was $0.7 million compared to $0.3 million during the quarter ended September 30, 2022. The increase in loss from
operations was largely due to increased selling, general and administrative costs at Strong Global Entertainment in connection with
the IPO. |
|
|
|
|
● |
Net
loss attributable to FG Group Holdings was $3.3 million, or $0.17 per basic and diluted share, in the third quarter of 2023, compared
to $2.2 million, or $0.11 per basic and diluted share, in the third quarter of 2022. |
|
|
|
|
● |
Adjusted
EBITDA was breakeven for the current quarter, as compared to $0.2 million in the prior year. |
Conference
Call
A
conference call to discuss the Company’s 2023 third quarter financial results will be held on Friday, November 10, 2023 at 8:30
a.m. Eastern Time. Interested parties can listen to the call via live webcast or by phone. To access the webcast, visit the Company’s
website at https://fg.group/investor-relations/ or use the following link: FGH Webcast Link. To access the conference call
by phone, dial (888) 506-0062 (domestic) or (973) 528-0011 (international) and use participant code 865963. Please access the webcast
or dial in at least five minutes before the start of the call to register.
A
replay of the webcast will be available following the conclusion of the live broadcast and accessible on the Company’s website
at https://fg.group/investor-relations/.
About
FG Group Holdings Inc.
FG
Group Holdings Inc. (NYSE American: FGH) is a diversified holding company with operations and investments across a broad range of industries.
The Company has a majority ownership in Strong Global Entertainment, Inc. (NYSE American: SGE), which includes STRONG/MDI Screen Systems,
Inc. (www.strongmdi.com), the leading premium screen and projection coatings supplier in the world and Strong Technical Services, Inc.
(www.strong-tech.com), which provides comprehensive managed service offerings with 24/7/365 support nationwide to ensure solution uptime
and availability. FG Group Holdings also holds equity stakes in GreenFirst Forest Products Inc., Firefly Systems, Inc., and FG Financial
Group, Inc., as well as real estate through its Digital Ignition operating business.
About
Fundamental Global®
Fundamental
Global® is a private partnership focused on long-term strategic holdings. Fundamental Global® was co-founded by former T. Rowe
Price, Point72 and Tiger Cub portfolio manager Kyle Cerminara and former Chairman and CEO of TD Ameritrade, Joe Moglia. Its current holdings
include FG Financial Group Inc., FG Group Holdings Inc., BK Technologies Corp., GreenFirst Forest Products, Inc., iCoreConnect, Inc.,
FG Acquisition Corp., OppFi Inc., Hagerty Inc., and FG Communities, Inc.
The
FG® logo is a registered trademark of Fundamental Global®.
Use
of Non-GAAP Measures
FG
Group Holdings prepares its consolidated financial statements in accordance with United States generally accepted accounting principles
(“GAAP”). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information
regarding Adjusted EBITDA (“Adjusted EBITDA”), which differs from the commonly used EBITDA (“EBITDA”). Adjusted
EBITDA both adjusts net income (loss) to exclude income taxes, interest, and depreciation and amortization, and excludes share-based
compensation, impairment charges, equity method income (loss), fair value adjustments, severance, foreign currency transaction gains
(losses), transactional gains and expenses, gains on insurance recoveries, certain tax credits and other cash and non-cash charges and
gains.
EBITDA
and Adjusted EBITDA are not measures of performance defined in accordance with GAAP. However, Adjusted EBITDA is used internally in planning
and evaluating the Company’s operating performance. Accordingly, management believes that disclosure of these metrics offers investors,
bankers and other stakeholders an additional view of the Company’s operations that, when coupled with the GAAP results, provides
a more complete understanding of the Company’s financial results.
FG Group Holdings Inc. – Fiscal Year 2023 | Page 3 of 8 |
Third
Quarter 2023 Results
EBITDA
and Adjusted EBITDA should not be considered as an alternative to net income (loss) or to net cash from operating activities as measures
of operating results or liquidity. The Company’s calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled
measures used by other companies, and the measures exclude financial information that some may consider important in evaluating the Company’s
performance.
EBITDA
and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis
of the Company’s results as reported under GAAP. Some of these limitations are: (i) they do not reflect the Company’s cash
expenditures, or future requirements for capital expenditures or contractual commitments, (ii) they do not reflect changes in, or cash
requirements for, the Company’s working capital needs, (iii) EBITDA and Adjusted EBITDA do not reflect interest expense, or the
cash requirements necessary to service interest or principal payments, on the Company’s debt, (iv) although depreciation and amortization
are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted
EBITDA do not reflect any cash requirements for such replacements, (v) they do not adjust for all non-cash income or expense items that
are reflected in the Company’s statements of cash flows, (vi) they do not reflect the impact of earnings or charges resulting from
matters management considers not to be indicative of the Company’s ongoing operations, and (vii) other companies in the Company’s
industry may calculate these measures differently than the Company does, limiting their usefulness as comparative measures.
Management
believes EBITDA and Adjusted EBITDA facilitate operating performance comparisons from period to period by isolating the effects of some
items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies.
These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the
impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities
and equipment (affecting relative depreciation expense). The Company also presents EBITDA and Adjusted EBITDA because (i) management
believes these measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in the
Company’s industry, (ii) management believes investors will find these measures useful in assessing the Company’s ability
to service or incur indebtedness, and (iii) management uses EBITDA and Adjusted EBITDA internally as benchmarks to evaluate the Company’s
operating performance or compare the Company’s performance to that of its competitors.
Forward-Looking
Statements
In
addition to the historical information included herein, this press release includes forward-looking statements, such as management’s
expectations regarding its portfolio companies, industry outlook, and the Company’s future sales and financial performance, which
involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section contained
in Item 1A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 16, 2023,
and the following risks and uncertainties: the Company’s ability to maintain and expand its revenue streams to compensate for the
lower demand for the Company’s digital cinema products and installation services; potential interruptions of supplier relationships
or higher prices charged by suppliers; the Company’s ability to successfully compete and introduce enhancements and new features
that achieve market acceptance and that keep pace with technological developments; the Company’s ability to successfully execute
its capital allocation strategy or achieve the returns it expects from these holdings; the Company’s ability to maintain its brand
and reputation and retain or replace its significant customers; challenges associated with the Company’s long sales cycles; the
impact of a challenging global economic environment or a downturn in the markets; the effects of economic, public health, and political
conditions that impact business and consumer confidence and spending, including rising interest rates, periods of heightened inflation
and market instability, the outbreak of any highly infectious or contagious diseases, such as COVID-19 and its variants or other health
epidemics or pandemics, and armed conflicts, such as the ongoing military conflicts in Ukraine and Gaza and related sanctions; economic
and political risks of selling products in foreign countries (including tariffs); risks of non-compliance with U.S. and foreign laws
and regulations, potential sales tax collections and claims for uncollected amounts; cybersecurity risks and risks of damage and interruptions
of information technology systems; the Company’s ability to retain key members of management and successfully integrate new executives;
the Company’s ability to complete acquisitions, strategic investments, entry into new lines of business, divestitures, mergers
or other transactions on acceptable terms, or at all; the impact of economic, public health and political conditions on the companies
in which the Company holds equity stakes; the Company’s ability to utilize or assert its intellectual property rights, the impact
of natural disasters and other catastrophic events, whether natural, man-made, or otherwise (such as the outbreak of any highly infectious
or contagious diseases, or armed conflict); the adequacy of the Company’s insurance; the impact of having a controlling stockholder
and vulnerability to fluctuation in the Company’s stock price. Given the risks and uncertainties, readers should not place undue
reliance on any forward-looking statement and should recognize that the statements are predictions of future results which may not occur
as anticipated. Many of the risks listed above have been, and may further be, exacerbated by the impact of economic, public health (such
as a resurgence of the COVID-19 pandemic) and political conditions (such as the ongoing military conflicts in Ukraine and Gaza) that
impact consumer confidence and spending, particularly in the cinema, entertainment, and other industries in which the Company and the
companies in which the Company holds an equity stake operate, and the worsening economic environment. Actual results could differ materially
from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein,
as well as others not now anticipated. New risk factors emerge from time to time and it is not possible for management to predict all
such risk factors, nor can it assess the impact of all such factors on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except where required
by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions
affecting such forward-looking statements.
Investor
Relations Contacts
Mark
Roberson |
John
Nesbett / Jennifer Belodeau |
FG
Group Holdings Inc. - Chief Executive Officer |
IMS
Investor Relations |
(704)
994-8279 |
(203)
972-9200 |
IR@fg.group |
fggroup@imsinvestorrelations.com |
FG Group Holdings Inc. – Fiscal Year 2023 | Page 4 of 8 |
Third
Quarter 2023 Results
FG
Group Holdings Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
(In
thousands)
(Unaudited)
| |
September
30, 2023 | | |
December
31, 2022 | |
Assets | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash
and cash equivalents | |
$ | 3,472 | | |
$ | 3,789 | |
Accounts
receivable, net | |
| 7,453 | | |
| 6,167 | |
Inventories,
net | |
| 3,597 | | |
| 3,389 | |
Other
current assets | |
| 1,725 | | |
| 4,871 | |
Total
current assets | |
| 16,247 | | |
| 18,216 | |
Property,
plant and equipment, net | |
| 12,247 | | |
| 12,649 | |
Operating
lease right-of-use assets | |
| 229 | | |
| 310 | |
Finance
lease right-of-use asset | |
| 1,053 | | |
| 666 | |
Equity
holdings | |
| 27,450 | | |
| 37,522 | |
Film and
television programming rights, net | |
| 8,205 | | |
| 1,501 | |
Intangible
assets, net | |
| - | | |
| 5 | |
Goodwill | |
| 2,049 | | |
| 882 | |
Other
assets | |
| - | | |
| 2 | |
Total
assets | |
$ | 67,480 | | |
$ | 71,753 | |
| |
| | | |
| | |
Liabilities
and Stockholders’ Equity | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts
payable | |
$ | 3,885 | | |
$ | 4,375 | |
Accrued
expenses | |
| 7,563 | | |
| 5,167 | |
Short-term
debt | |
| 5,206 | | |
| 2,510 | |
Current
portion of long-term debt | |
| 222 | | |
| 216 | |
Current
portion of operating lease obligations | |
| 104 | | |
| 116 | |
Current
portion of finance lease obligations | |
| 216 | | |
| 117 | |
Deferred
revenue and customer deposits | |
| 1,541 | | |
| 1,787 | |
Total
current liabilities | |
| 18,737 | | |
| 14,288 | |
Operating
lease obligations, net of current portion | |
| 182 | | |
| 257 | |
Finance
lease obligations, net of current portion | |
| 851 | | |
| 550 | |
Long-term
debt, net of current portion and deferred debt issuance costs, net | |
| 4,916 | | |
| 5,004 | |
Deferred
income taxes | |
| 3,891 | | |
| 4,851 | |
Other
long-term liabilities | |
| 621 | | |
| 105 | |
Total
liabilities | |
| 29,198 | | |
| 25,055 | |
| |
| | | |
| | |
Stockholders’ equity: | |
| | | |
| | |
Preferred
stock | |
| - | | |
| - | |
Common
stock | |
| 225 | | |
| 223 | |
Additional
paid-in capital | |
| 55,446 | | |
| 53,882 | |
Retained
earnings | |
| 3,830 | | |
| 16,437 | |
Treasury
stock | |
| (18,586 | ) | |
| (18,586 | ) |
Accumulated
other comprehensive loss | |
| (4,978 | ) | |
| (5,258 | ) |
Total
FG Group Holdings shareholders’ equity | |
| 35,937 | | |
| 46,698 | |
Equity
attributable to non-controlling interest | |
| 2,345 | | |
| - | |
Total
stockholders’ equity | |
| 38,282 | | |
| 46,698 | |
Total
liabilities and stockholders’ equity | |
$ | 67,480 | | |
$ | 71,753 | |
FG Group Holdings Inc. – Fiscal Year 2023 | Page 5 of 8 |
Third
Quarter 2023 Results
FG
Group Holdings Inc. and Subsidiaries
Condensed
Consolidated Statements of Operations
(In
thousands, except per share data)
(Unaudited)
| |
Three
Months Ended
September
30, | | |
Nine
Months Ended
September
30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net product sales | |
$ | 7,994 | | |
$ | 7,690 | | |
$ | 23,609 | | |
$ | 22,076 | |
Net
service revenues | |
| 3,100 | | |
| 2,584 | | |
| 15,617 | | |
| 7,366 | |
Total
net revenues | |
| 11,094 | | |
| 10,274 | | |
| 39,226 | | |
| 29,442 | |
Total cost of products | |
| 5,699 | | |
| 5,543 | | |
| 17,414 | | |
| 16,234 | |
Total
cost of services | |
| 2,289 | | |
| 1,991 | | |
| 8,779 | | |
| 5,538 | |
Total
cost of revenues | |
| 7,988 | | |
| 7,534 | | |
| 26,193 | | |
| 21,772 | |
Gross
profit | |
| 3,106 | | |
| 2,740 | | |
| 13,033 | | |
| 7,670 | |
Selling and administrative
expenses: | |
| | | |
| | | |
| | | |
| | |
Selling | |
| 501 | | |
| 499 | | |
| 1,653 | | |
| 1,723 | |
Administrative | |
| 3,347 | | |
| 2,533 | | |
| 13,672 | | |
| 7,887 | |
Total
selling and administrative expenses | |
| 3,848 | | |
| 3,032 | | |
| 15,325 | | |
| 9,610 | |
Gain
on disposal of assets | |
| - | | |
| - | | |
| 6 | | |
| - | |
Loss from
operations | |
| (742 | ) | |
| (292 | ) | |
| (2,286 | ) | |
| (1,940 | ) |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Interest
income | |
| - | | |
| - | | |
| - | | |
| 7 | |
Interest
expense | |
| (183 | ) | |
| (91 | ) | |
| (432 | ) | |
| (238 | ) |
Foreign
currency transaction gain (loss) | |
| 124 | | |
| 517 | | |
| (183 | ) | |
| 382 | |
Unrealized
loss on equity holdings | |
| (976 | ) | |
| (1,301 | ) | |
| (5,514 | ) | |
| (3,752 | ) |
Other
income (expense), net | |
| 19 | | |
| 11 | | |
| 28 | | |
| (187 | ) |
Total
other expense | |
| (1,016 | ) | |
| (864 | ) | |
| (6,101 | ) | |
| (3,788 | ) |
Loss before
income taxes and equity method holding loss | |
| (1,758 | ) | |
| (1,156 | ) | |
| (8,387 | ) | |
| (5,728 | ) |
Income tax beneft (expense) | |
| 101 | | |
| (245 | ) | |
| 45 | | |
| (292 | ) |
Equity
method holding loss | |
| (1,668 | ) | |
| (798 | ) | |
| (4,362 | ) | |
| (2,578 | ) |
Net loss | |
| (3,325 | ) | |
| (2,199 | ) | |
| (12,704 | ) | |
| (8,598 | ) |
Net
loss attributable to non-controlling interest | |
| (4 | ) | |
| - | | |
| (122 | ) | |
| - | |
Net
loss attributable to FG Group Holdings | |
$ | (3,321 | ) | |
$ | (2,199 | ) | |
$ | (12,582 | ) | |
$ | (8,598 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share: | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | (0.17 | ) | |
$ | (0.11 | ) | |
$ | (0.64 | ) | |
$ | (0.45 | ) |
Diluted | |
$ | (0.17 | ) | |
$ | (0.11 | ) | |
$ | (0.64 | ) | |
$ | (0.45 | ) |
FG Group Holdings Inc. – Fiscal Year 2023 | Page 6 of 8 |
Third
Quarter 2023 Results
FG
Group Holdings Inc. and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(In
thousands)
(Unaudited)
| |
Nine
Months Ended September 30, | |
| |
2023 | | |
2022 | |
Cash flows from operating
activities: | |
| | | |
| | |
Net
loss | |
$ | (12,704 | ) | |
$ | (8,598 | ) |
Adjustments
to reconcile net loss from continuing operations to net cash used in operating activities: | |
| | | |
| | |
(Recovery
of) provision for doubtful accounts | |
| (32 | ) | |
| 11 | |
Benefit
from obsolete inventory | |
| (47 | ) | |
| - | |
Provision
for warranty | |
| 131 | | |
| 9 | |
Depreciation
and amortization | |
| 2,814 | | |
| 1,038 | |
Amortization
and accretion of operating leases | |
| 88 | | |
| 166 | |
Equity
method holding loss | |
| 4,362 | | |
| 2,578 | |
Adjustment
to SageNet promissory note in connection with prepayment | |
| - | | |
| 202 | |
Unrealized
loss on equity holdings | |
| 5,514 | | |
| 3,752 | |
Deferred
income taxes | |
| 124 | | |
| (435 | ) |
Stock-based
compensation expense | |
| 1,415 | | |
| 511 | |
Changes
in operating assets and liabilities: | |
| | | |
| | |
Accounts
receivable | |
| (1,213 | ) | |
| (394 | ) |
Inventories | |
| (158 | ) | |
| (556 | ) |
Current
income taxes | |
| (666 | ) | |
| 117 | |
Other
assets | |
| (9,760 | ) | |
| 1,455 | |
Accounts
payable and accrued expenses | |
| 7,053 | | |
| (1,490 | ) |
Deferred
revenue and customer deposits | |
| (248 | ) | |
| (975 | ) |
Operating
lease obligations | |
| (98 | ) | |
| (161 | ) |
Net cash
used in operating activities | |
| (3,425 | ) | |
| (2,770 | ) |
| |
| | | |
| | |
Cash flows from investing
activities: | |
| | | |
| | |
Capital
expenditures | |
| (306 | ) | |
| (858 | ) |
Acquisition
of programming rights | |
| (511 | ) | |
| (407 | ) |
Sale (purchase)
of equity holdings | |
| 198 | | |
| (2,000 | ) |
Receipt
of SageNet promissory note | |
| - | | |
| 2,300 | |
Net cash
used in investing activities | |
| (619 | ) | |
| (965 | ) |
| |
| | | |
| | |
Cash flows from financing
activities: | |
| | | |
| | |
Principal
payments on short-term debt | |
| (678 | ) | |
| (487 | ) |
Principal
payments on long-term debt | |
| (152 | ) | |
| (114 | ) |
Proceeds
from Strong Global Entertainment initial public offering | |
| 2,411 | | |
| - | |
Borrowings
under credit facility | |
| 6,790 | | |
| - | |
Repayments
under credit facility | |
| (4,483 | ) | |
| - | |
Payments
of withholding taxes for net share settlement of equity awards | |
| (131 | ) | |
| (15 | ) |
Payments
on finance lease obligations | |
| (109 | ) | |
| (5 | ) |
Net
cash provided by (used in) financing activities | |
| 3,648 | | |
| (621 | ) |
| |
| | | |
| | |
Effect
of exchange rate changes on cash and cash equivalents | |
| 80 | | |
| (184 | ) |
Net increase (decrease) in
cash and cash equivalents and restricted cash | |
| (316 | ) | |
| (4,540 | ) |
Cash
and cash equivalents and restricted cash at beginning of period | |
| 3,789 | | |
| 8,882 | |
Cash
and cash equivalents and restricted cash at end of period | |
$ | 3,473 | | |
$ | 4,342 | |
FG Group Holdings Inc. – Fiscal Year 2023 | Page 7 of 8 |
Third
Quarter 2023 Results
FG
Group Holdings and Subsidiaries
Summary
by Business Segment
(In
thousands)
(Unaudited)
| |
Three
Months Ended
September
30, | | |
Nine
Months Ended
September
30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
| | |
| | |
| | |
| |
Strong
Entertainment | |
| | | |
| | | |
| | | |
| | |
Revenue | |
$ | 10,920 | | |
$ | 9,904 | | |
$ | 38,709 | | |
$ | 28,446 | |
Gross
profit | |
| 2,822 | | |
| 2,371 | | |
| 12,351 | | |
| 6,674 | |
Operating
income | |
| 183 | | |
| 732 | | |
| 1,112 | | |
| 1,522 | |
Adjusted
EBITDA | |
| 503 | | |
| 817 | | |
| 4,665 | | |
| 1,838 | |
| |
| | | |
| | | |
| | | |
| | |
Corporate
and Other | |
| | | |
| | | |
| | | |
| | |
Revenue | |
$ | 174 | | |
$ | 370 | | |
$ | 517 | | |
$ | 996 | |
Gross
profit | |
| 284 | | |
| 369 | | |
| 682 | | |
| 996 | |
Operating
loss | |
| (925 | ) | |
| (1,024 | ) | |
| (3,398 | ) | |
| (3,462 | ) |
Adjusted
EBITDA | |
| (507 | ) | |
| (620 | ) | |
| (2,401 | ) | |
| (2,194 | ) |
| |
| | | |
| | | |
| | | |
| | |
Consolidated | |
| | | |
| | | |
| | | |
| | |
Revenue | |
$ | 11,094 | | |
$ | 10,274 | | |
$ | 39,226 | | |
$ | 29,442 | |
Gross
profit | |
$ | 3,106 | | |
$ | 2,740 | | |
$ | 13,033 | | |
$ | 7,670 | |
Operating
loss | |
$ | (742 | ) | |
$ | (292 | ) | |
$ | (2,286 | ) | |
$ | (1,940 | ) |
Adjusted
EBITDA | |
$ | (4 | ) | |
$ | 197 | | |
$ | 2,264 | | |
$ | (356 | ) |
FG Group Holdings Inc. – Fiscal Year 2023 | Page 8 of 8 |
Third
Quarter 2023 Results
FG
Group Holdings and Subsidiaries
Reconciliation
of Net Loss to Adjusted EBITDA
(In
thousands)
(Unaudited)
| |
Quarters
Ended September 30, | |
| |
2023 | | |
2022 | |
| |
| | |
| | |
| | |
| | |
| | |
| |
| |
Strong
Entertainment | | |
Corporate
and Other | | |
Consolidated | | |
Strong
Entertainment | | |
Corporate
and Other | | |
Consolidated | |
Net (loss) income | |
$ | 34 | | |
$ | (3,359 | ) | |
$ | (3,325 | ) | |
$ | 315 | | |
$ | (2,514 | ) | |
$ | (2,199 | ) |
Interest expense, net | |
| 88 | | |
| 95 | | |
| 183 | | |
| 33 | | |
| 58 | | |
| 91 | |
Income tax expense (benefit) | |
| 205 | | |
| (306 | ) | |
| (101 | ) | |
| 202 | | |
| 43 | | |
| 245 | |
Depreciation
and amortization | |
| 129 | | |
| 163 | | |
| 292 | | |
| 153 | | |
| 183 | | |
| 336 | |
EBITDA | |
| 456 | | |
| (3,407 | ) | |
| (2,951 | ) | |
| 703 | | |
| (2,230 | ) | |
| (1,527 | ) |
Stock-based compensation expense | |
| 124 | | |
| 254 | | |
| 378 | | |
| - | | |
| 142 | | |
| 142 | |
Equity method holding loss | |
| - | | |
| 1,668 | | |
| 1,668 | | |
| - | | |
| 798 | | |
| 798 | |
Unrealized loss on equity
holdings | |
| - | | |
| 976 | | |
| 976 | | |
| 631 | | |
| 670 | | |
| 1,301 | |
Foreign currency transaction
loss (income) | |
| (126 | ) | |
| 2 | | |
| (124 | ) | |
| (517 | ) | |
| - | | |
| (517 | ) |
Transaction related expenses | |
| 42 | | |
| - | | |
| 42 | | |
| - | | |
| - | | |
| - | |
Severance
and other | |
| 7 | | |
| - | | |
| 7 | | |
| - | | |
| - | | |
| - | |
Adjusted
EBITDA | |
$ | 503 | | |
$ | (507 | ) | |
$ | (4 | ) | |
$ | 817 | | |
$ | (620 | ) | |
$ | 197 | |
| |
Nine
Months Ended June 30, | |
| |
2023 | | |
2022 | |
| |
| | |
| | |
| | |
| | |
| | |
| |
| |
Strong
Entertainment | | |
Corporate
and Other | | |
Consolidated | | |
Strong
Entertainment | | |
Corporate
and Other | | |
Consolidated | |
Net income (loss) | |
$ | 156 | | |
$ | (12,861 | ) | |
$ | (12,705 | ) | |
$ | (322 | ) | |
$ | (8,276 | ) | |
$ | (8,598 | ) |
Interest expense, net | |
| (983 | ) | |
| 1,416 | | |
| 433 | | |
| 85 | | |
| 146 | | |
| 231 | |
Income tax expense | |
| 318 | | |
| (363 | ) | |
| (45 | ) | |
| 242 | | |
| 50 | | |
| 292 | |
Depreciation
and amortization | |
| 2,438 | | |
| 376 | | |
| 2,814 | | |
| 521 | | |
| 517 | | |
| 1,038 | |
EBITDA | |
| 1,929 | | |
| (11,432 | ) | |
| (9,503 | ) | |
| 526 | | |
| (7,563 | ) | |
| (7,037 | ) |
Stock-based compensation expense | |
| 839 | | |
| 351 | | |
| 1,190 | | |
| - | | |
| 511 | | |
| 511 | |
Equity method holding loss | |
| - | | |
| 4,362 | | |
| 4,362 | | |
| - | | |
| 2,578 | | |
| 2,578 | |
Unrealized loss on equity
holdings | |
| 1,191 | | |
| 4,323 | | |
| 5,514 | | |
| 1,695 | | |
| 2,057 | | |
| 3,752 | |
IPO related expenses | |
| 475 | | |
| - | | |
| 475 | | |
| - | | |
| - | | |
| - | |
Gain on disposal of assets | |
| (1 | ) | |
| (5 | ) | |
| (6 | ) | |
| - | | |
| - | | |
| - | |
Transaction related expenses | |
| 42 | | |
| - | | |
| 42 | | |
| - | | |
| - | | |
| - | |
Foreign currency transaction
loss (income) | |
| 183 | | |
| - | | |
| 183 | | |
| (383 | ) | |
| 1 | | |
| (382 | ) |
Severance
and other | |
| 7 | | |
| - | | |
| 7 | | |
| - | | |
| 222 | | |
| 222 | |
Adjusted
EBITDA | |
$ | 4,665 | | |
$ | (2,401 | ) | |
$ | 2,264 | | |
$ | 1,838 | | |
$ | (2,194 | ) | |
$ | (356 | ) |
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