Core Viewpoint - Forte Group Holdings Inc. is amending the exercise price of its common share purchase warrants to strengthen its financial position, with the new price set at $0.30 per share effective October 24, 2025 [1] Summary by Relevant Sections - **Company Actions** - The company will amend the exercise price of an aggregate of 1,152,937 common share purchase warrants to $0.30 per share [1] - The amendments are in accordance with Policy 6.7(6)(b) of the Canadian Securities Exchange [1] - All other terms and conditions of the Repriced Warrants remain unchanged, including the requirement for unanimous consent from registered holders [1] - **Financial Position** - The intention behind the amendment is to strengthen the company's financial position [1]

Core Points - Forte Group Holdings Inc. has granted stock options and restricted share units to certain directors, officers, and consultants, effective October 10, 2025, under its Omnibus Equity Incentive Plan [1] - The company granted a total of 1,945,000 stock options at an exercise price of $0.20 per share, which vest immediately and have a two-year term expiring on October 10, 2027 [2] - A total of 2,445,000 restricted share units were granted, with a vesting schedule that includes a statutory hold period of four months and one day from the grant date [3] Stock Options and RSUs - The stock options granted are subject to a two-year term and an immediate vesting schedule [2] - The restricted share units will vest in four equal installments over a year, with specific dates outlined for each installment [8] Insider Grants - The stock option and RSU grants to certain insiders are classified as "related party transactions" and are exempt from certain valuation and minority shareholder approval requirements due to the company's market capitalization [5] - The company believes that the immediate closing of these insider grants is necessary to improve its financial position [5] Warrant Amendments - The company announced the extension and repricing of 1,152,937 common share purchase warrants to a revised expiry date of June 19, 2027, and a revised exercise price of $0.20 [6] - The original exercise price of the warrants was $0.60, and the repricing is subject to the unanimous consent of the registered holders [6][7] - The repricing aligns with the company's capital strategy to strengthen its financial position and provide flexibility for growth initiatives [7] Company Overview - Forte Group Holdings Inc. is focused on longevity and human performance through its TRACE brand and private-label partnerships, developing alkaline and mineral-enriched beverages and nutraceutical supplements [10] - The company operates a Health Canada and HACCP-certified manufacturing facility and owns a natural alkaline spring water aquifer [10]

Core Insights - Forte Group Holdings Inc. has successfully closed a series of financial initiatives aimed at enhancing its capital structure and financial position as of October 1, 2025 [1] Financial Initiatives - The company has completed a non-brokered Private Placement financing [1] - A Debt Settlement has been executed to improve financial stability [1] - Two Convertible Loans have been issued as part of the financial restructuring [1] - Amended Loans have also been issued to further strengthen the capital structure [1] Shareholder Actions - The company has received majority shareholder approval for a potential Consolidation [1] - An update on the status of an amendment to a Convertible Debenture has been provided [1]

Core Viewpoint - Forte Group Holdings Inc. is amending the terms of its financial instruments to strengthen its financial position and capital structure, following a previous announcement regarding proposed initiatives [1] Summary by Relevant Sections Financial Position - The company intends to amend the price of its Convertible Debenture, Convertible Loans, and Amended Convertible Promissory Notes as part of its strategy to enhance financial stability [1] Convertible Debenture Details - The company plans to amend the terms of a secured convertible debenture dated April 14, 2020, with a principal amount of $500,000 and accrued interest of $94,904.14, totaling $594,904.14 as of August 27, 2025 [1]

Core Insights - Forte Group has strengthened its balance sheet through the conversion of promissory notes and a mortgage, enhancing its financial stability and liquidity [1] Financial Performance - The conversion of promissory notes is expected to reduce debt obligations, thereby improving the company's leverage ratios [1] - The mortgage arrangement is anticipated to provide additional capital for operational needs and strategic investments [1] Strategic Implications - This financial maneuver is part of Forte Group's broader strategy to optimize its capital structure and support future growth initiatives [1] - The company aims to leverage its improved balance sheet to pursue new opportunities in the market [1]

Financial Performance - Net revenues for Q3 2023 were $11.1 million, an increase of 8.0% from $10.3 million in Q3 2022[138] - Strong Entertainment segment revenue increased by 10.3% to $10.9 million in Q3 2023, driven by a $0.3 million rise in product sales and a $0.7 million increase in service revenue[141] - For the nine months ended September 30, 2023, net revenues were $39.2 million, a 33.2% increase from $29.4 million in the same period of 2022[138] - Revenue from Strong Entertainment increased 36.1% to $38.7 million in the first nine months of 2023, driven by $1.5 million in product sales and an $8.7 million increase in service revenue[160] - Consolidated gross profit for the nine months ended September 30, 2023, was $13.0 million, or 33.2% of revenue, compared to $7.7 million, or 26.1% in the same period of 2022[165] - The company reported a net income of $156,000 for the nine months ended September 30, 2023, compared to a net loss of $12.705 million for the same period in 2022[190] Profitability and Losses - Gross profit for Q3 2023 was $3.1 million, representing a gross profit margin of 28.0%, up from 26.7% in Q3 2022[145] - The company reported a net loss of $3.3 million for Q3 2023, compared to a net loss of $2.2 million in Q3 2022, marking a 51.2% increase in losses[138] - Consolidated loss from operations was $0.7 million in Q3 2023, compared to a loss of $0.3 million in Q3 2022, representing a 154.1% increase in losses[150] - Total other expense for the nine months of 2023 was $6.1 million, primarily due to a $5.5 million unrealized loss on equity holdings[175] Expenses - Selling and administrative expenses rose by 26.9% to $3.8 million in Q3 2023, compared to $3.0 million in Q3 2022[138] - Gross profit from service revenue was $0.6 million or 21.8% of revenues for Q3 2023, up from $0.2 million or 10.0% in Q3 2022[148] - Gross profit from service revenue was $6.3 million or 41.9% of revenues for the first nine months of 2023, compared to $0.8 million or 13.1% in the same period of 2022[169] - The Strong Entertainment segment generated operating income of $1.1 million in the first nine months of 2023, down from $1.5 million in the same period of 2022, reflecting increased costs associated with the IPO[173] Cash Flow and Liquidity - As of September 30, 2023, the company had total cash and cash equivalents of $3.5 million, down from $3.8 million at the end of 2022[178] - Net cash used in operating activities increased to $3.4 million for the nine months ended September 30, 2023, compared to $2.8 million for the same period in 2022, primarily due to higher working capital utilization[181] - Net cash provided by investing activities was $0.6 million during the nine months ended September 30, 2023, consisting of $0.2 million from equity securities sales and $0.5 million outflow for film and television programming rights[182] - Net cash provided by financing activities was $3.6 million during the nine months ended September 30, 2023, mainly from $2.4 million in net proceeds from the Strong Global Entertainment IPO[183] - The company expects existing liquidity sources to meet projected capital needs for at least the next twelve months, but future cash requirements depend on revenue levels and operational performance[180] Acquisitions and Investments - The company completed the acquisition of Unbounded Media Corporation in September 2023, marking the first step in a strategy to build a portfolio of content and services companies[133] - The company continues to evaluate capital allocation opportunities for investments in public or private companies and potential acquisitions[135] - The company may engage in additional public or private offerings of equity or debt securities to increase capital resources, depending on market conditions[180] Debt and Credit Agreements - Strong/MDI entered into a 2023 Credit Agreement with CIBC, consisting of a revolving line of credit for up to CAD$5.0 million and a 20-year installment loan for up to CAD$3.1 million[179] - As of September 30, 2023, total borrowings under the 2023 Credit Agreement amounted to CAD$4.5 million, with the lender not indicating any plans to demand repayment[179] - The 2023 Credit Agreement requires maintaining a liabilities to effective equity ratio not exceeding 2.5 to 1 and a fixed charge coverage ratio of at least 1.1 times[179] Accounting and Reporting - No significant changes in critical accounting policies during the three months ended September 30, 2023[195] - The company is classified as a "smaller reporting company" under Regulation S-K, thus not applicable for certain market risk disclosures[196]

Financial Performance - Net revenues for Q2 2023 were $18.0 million, a 97.1% increase from $9.1 million in Q2 2022[126]. - For the six months ended June 30, 2023, net revenues were $28.1 million, a 46.8% increase from $19.2 million in the same period of 2022[126]. - Total net revenues for the first half of 2023 were $28.1 million, a 46.8% increase from $19.2 million in the first half of 2022[147]. - Revenue from Strong Entertainment segment more than doubled to $17.8 million in Q2 2023 from $8.8 million in Q2 2022, driven by a $7.3 million increase in service revenue[129]. - Revenue from Strong Entertainment increased 49.9% to $27.8 million in H1 2023, driven by $1.2 million in product sales and an $8.0 million increase in service revenue[149]. Profitability - Gross profit for Q2 2023 was $7.4 million, representing a 207.7% increase from $2.4 million in Q2 2022, with a gross profit margin of 41.3%[133]. - Gross profit from Strong Entertainment segment was $7.3 million, or 40.7% of revenues, in Q2 2023 compared to $2.1 million, or 23.8%, in Q2 2022[135]. - Gross profit from service revenue was $5.1 million or 54.1% of revenues for Q2 2023, up from $0.2 million or 11.6% in Q2 2022[137]. - Consolidated gross profit for the first half of 2023 was $9.9 million, representing 35.3% of revenue, compared to $4.9 million or 25.7% in the same period of 2022[153]. - Gross profit from product sales was $3.9 million or 25.0% of revenues for H1 2023, slightly down from $3.7 million or 25.7% in H1 2022[156]. Losses and Expenses - The net loss attributable to FG Group Holdings for Q2 2023 was $5.3 million, a 5.8% improvement from a net loss of $5.6 million in Q2 2022[126]. - Net loss attributable to FG Group Holdings was $9.3 million, or $0.48 per share, in the first half of 2023, compared to a net loss of $6.4 million, or $0.33 per share, in the first half of 2022[164]. - Total other expense for H1 2023 was $5.1 million, primarily due to a $4.5 million unrealized loss on equity holdings[162]. - Consolidated loss from operations was $0.8 million in Q2 2023, a slight improvement from a loss of $0.9 million in Q2 2022[139]. Cash Flow and Liquidity - The company ended Q2 2023 with total cash and cash equivalents of $5.0 million, up from $3.8 million at the end of 2022[165]. - Net cash used in operating activities decreased to $2.6 million for the six months ended June 30, 2023, compared to $3.0 million for the same period in 2022, primarily due to improvements in working capital[168]. - Net cash provided by investing activities was $0.2 million during the six months ended June 30, 2023, consisting of proceeds from the sale of equity securities[169]. - Net cash provided by financing activities was $3.9 million during the six months ended June 30, 2023, primarily from net proceeds of $2.4 million from the Strong Global Entertainment IPO[170]. - Cash flows from operating activities improved due to the collection of accounts receivable and customer deposits, despite higher vendor payments[168]. Strategic Plans and Investments - The company plans to manage the Strong Entertainment business segment to grow market share and organic revenue[121]. - The company continues to evaluate capital allocation opportunities for investments in public or private companies and potential acquisitions[123]. - The company expects existing sources of liquidity to meet projected capital needs for at least the next twelve months, but future cash requirements may depend on revenue levels and market conditions[167]. - The company may need additional liquidity in the event of market deterioration or declines in net sales, which could require evaluating available alternatives[167]. Credit and Borrowings - Strong/MDI entered into a 2023 Credit Agreement with CIBC, consisting of a revolving line of credit for up to CAD$5.0 million and a 20-year installment loan for up to CAD$3.1 million[166]. - As of June 30, 2023, total borrowings under the 2023 Credit Agreement amounted to CAD$3.6 million[166]. - The 2023 Credit Agreement requires a liabilities to effective equity ratio not exceeding 2.5 to 1 and a fixed charge coverage ratio of not less than 1.1 times[166]. Accounting and Reporting - No significant changes in critical accounting policies during the six months ended June 30, 2023[184]. - The company is classified as a "smaller reporting company" under Regulation S-K, thus not applicable for certain market risk disclosures[185].

Financial Performance - Net revenues for Q1 2023 were $10.1 million, a slight increase of 0.8% from $10.0 million in Q1 2022[121] - Gross profit for Q1 2023 was $2.48 million, a decrease of 1.3% from $2.51 million in Q1 2022, with a gross profit percentage of 24.5%[127] - The loss from operations remained consistent at $0.78 million for both Q1 2023 and Q1 2022[133] - The company reported a net loss of $4.0 million, or $0.20 per share, in Q1 2023, compared to a net loss of $0.8 million, or $0.04 per share, in Q1 2022[138] - Total segment operating income fell to $407,000 in Q1 2023, down from $476,000 in Q1 2022, a decrease of $69,000 or 14.5%[134] Revenue Segments - Revenue from the Strong Entertainment segment increased by 2.4% to $9.95 million in Q1 2023, driven by higher service revenue[124] - The decline in product revenue was attributed to project timing for Eclipse curvilinear screens, offset by increased sales of traditional cinema screens[125] - Other revenue decreased significantly due to the expiration of a support services agreement with Firefly at the end of 2022[126] - Strong Entertainment segment operating income decreased to $0.6 million in Q1 2023 from $0.6 million in Q1 2022, reflecting a $34,000 decline or 5.6%[134] Cash Flow and Investments - Total cash and cash equivalents increased to $4.3 million as of March 31, 2023, up from $3.8 million at the end of 2022[140] - Net cash used in operating activities improved to $0.5 million in Q1 2023 from $1.7 million in Q1 2022, primarily due to better working capital management[144] - Net cash provided by investing activities was $40,000 in Q1 2023, a decrease from $1.1 million in Q1 2022[145] - Net cash provided by financing activities was $1.0 million in Q1 2023, primarily from net borrowings under the CIBC revolving line of credit[146] - The company is evaluating capital allocation opportunities for investments or acquisitions in public or private companies[116] Other Financial Metrics - The company recorded a total other expense of $2.9 million in Q1 2023, mainly due to a $2.9 million unrealized loss on equity holdings[136] - Unallocated administrative expenses decreased to $1.2 million in Q1 2023 from $1.2 million in Q1 2022, reflecting a $54,000 reduction[135] - The company ended Q1 2023 with outstanding intercompany loans from its Canadian subsidiary of approximately $38.6 million, which could incur a 5% Canadian withholding tax if not repaid[140] Strategic Plans and Market Conditions - The company plans to separate its Strong Entertainment business and pursue an initial public offering to support growth[115] - The company expects the transition from xenon to laser projection to accelerate throughout 2023 and continue for several years[125] - The impact of COVID-19 continues to affect customer spending, particularly in the entertainment and advertising industries[118] - Revenue and earnings fluctuate moderately from quarter to quarter, with potential changes in seasonality patterns as the company expands into new markets[155] - No significant changes in critical accounting policies during the three months ended March 31, 2023[158] - The company is classified as a "smaller reporting company" and thus does not provide quantitative and qualitative disclosures about market risk[159]

Financial Data and Key Metrics Changes - The company reported a 17% increase in revenue, a 52% increase in gross profit, and an almost 180% increase in adjusted EBITDA compared to the prior year [10][11][40] - The debt balance was approximately $8 million, primarily related to real estate in Atlanta and Quebec [12] Business Line Data and Key Metrics Changes - The Strong Entertainment operating business experienced over 50% growth in annual revenues, with Q4 revenue reaching the highest level since COVID [48] - The Technical Services Group grew by 41% for the quarter, driven by increased demand for services related to laser upgrades [6][10] - Strong Studios launched its first project, generating $900,000 in revenue during the quarter [11][89] Market Data and Key Metrics Changes - Box office revenues increased by over 60% from 2021, trending closer to pre-COVID levels [32] - The cinema industry is expected to see a significant increase in film releases, with major exhibitors like Cinemark and AMC projecting substantial growth in 2023 [5][32] Company Strategy and Development Direction - The company is transitioning to a holding company structure, aiming to create meaningful value for shareholders and capitalize on growth opportunities in the entertainment sector [14][27] - The focus is on expanding service offerings, particularly in screen installation and project management, to enhance customer service and drive growth [16][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the cinema industry, citing strong demand and a robust film release calendar for 2023 [5][32] - The company is well-positioned to benefit from the ongoing upgrade cycle in cinema technology, particularly with laser projection [50][33] Other Important Information - The company signed exclusive arrangements with major exhibitors, solidifying its market position and increasing market share [31] - The company is exploring various options for liquidity, including potential sales of real estate and leveraging credit facilities [63][67] Q&A Session Summary Question: How does the company handle screen installation? - The company has traditionally not provided installation services but is now expanding to offer these services in response to customer demand for a one-stop shop [42][16] Question: What are the levers available for raising cash? - The company has multiple options for accessing capital, including leveraging credit lines and potential sales of real estate [62][67] Question: What was the $900,000 project with Strong Studios? - The project was "Inside the Black Box," a limited series that generated revenue without significant capital risk [89] Question: How does the company view the impact of a potential recession? - Historically, the cinema business has shown resilience during recessions, and management expects this trend to continue [92] Question: What is the company's strategy regarding potential IPOs or mergers? - The company is exploring various strategic options, including IPOs and mergers with larger entertainment companies, to enhance value [87][88]

Revenue Growth - Net revenues increased by 52.6% to $41.2 million in 2022 from $27.0 million in 2021, primarily due to the recovery of the Strong Entertainment business and the commencement of Strong Studios operations [140] - Revenue from Strong Entertainment rose 54.0% to $39.9 million in 2022, driven by a $10.5 million increase in product revenue and a $3.5 million increase in service revenue [141] - Strong Studios generated $0.9 million in revenue related to production services in the fourth quarter of 2022 [143] Profitability - Consolidated gross profit increased by 33.0% to $10.9 million in 2022, but gross profit percentage decreased to 26.5% from 30.4% in 2021 [145] - Strong Entertainment segment gross profit increased to $9.5 million, representing 23.9% of revenues in 2022, compared to $7.3 million or 28.1% in 2021 [147] - Total gross profit rose to $10.9 million in 2022, a 33.0% increase from $8.2 million in 2021 [147] - Operating income for the Strong Entertainment segment increased by 24.9% to $2.8 million in 2022, compared to $2.2 million in 2021 [152] Operational Performance - Consolidated loss from operations improved to $2.4 million in 2022, down from $3.1 million in 2021, reflecting a 24.8% reduction [151] - Net cash used in operating activities from continuing operations was $3.6 million in 2022, primarily due to increases in working capital [164] - Total cash and cash equivalents decreased to $3.8 million as of December 31, 2022, down from $8.9 million in 2021 [160] Investment and Capital Allocation - The company continues to evaluate capital allocation opportunities for investments or acquisitions in public or private companies [130] - The company recorded a gain of approximately $14.8 million from the divestiture of the Convergent business segment in February 2021, with a total enterprise value of approximately $23.2 million [131] - Net cash used in investing activities was $0.6 million in 2022, compared to $13.9 million in 2021 [165] Tax and Losses - Income tax expense decreased to approximately $0.5 million in 2022 from $3.2 million in 2021 [157] - The company recorded a net loss from continuing operations of $7.2 million, or $0.37 per share, in 2022, compared to a net income of $3.4 million, or $0.19 per share, in 2021 [158] - Total other loss was $4.7 million in 2022, primarily due to a $4.5 million loss on equity holdings [155] Customer Concentration - The top ten customers accounted for 49% of consolidated net revenues in 2022, with trade accounts receivable from these customers representing 68% of net consolidated receivables [174] Strategic Initiatives - The company plans to separate the Strong Entertainment operating business and pursue an initial public offering to support growth plans [128] - The company started producing original productions and acquiring rights to films and television programming in March 2022, indicating a strategic expansion into content creation [187] Risk Management - The company performs ongoing credit evaluations to minimize credit concentration risk, indicating a proactive approach to managing financial risk [176] - The primary exposure to foreign currency fluctuations is related to operations in Canada, with the company entering into foreign exchange contracts to manage this risk [177] Economic Factors - The impact of COVID-19 has led to significant disruptions, but there is now pent-up demand for out-of-home entertainment, which is expected to drive favorable trends in the cinema exhibition and theme park industries [135] - Inflation has begun to increase since the second half of 2021, but the company has historically managed to offset inflationary effects through price increases or cost efficiencies [179] Amortization and Impairment - The amortization of film and television programming costs is based on the ratio of current period revenues to estimated ultimate revenues, reflecting management's ongoing revenue estimates [188] - The company has not incurred any impairment write-downs on film costs, suggesting that current revenue estimates remain stable [191] EBITDA - Adjusted EBITDA for 2022 was $(2,979,000), while in 2021 it was $(3,957,000), showing an improvement year-over-year [173]