[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for Q2 2023 reflect significant growth driven by the new Strong Studios segment and its IPO, despite increased operating expenses leading to a net loss Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$41,550** | **$25,538** | | Cash and cash equivalents | $4,371 | $3,615 | | Film and television programming rights, net | $7,691 | $1,501 | | **Total Liabilities** | **$32,678** | **$16,334** | | Short-term debt | $12,219 | $2,510 | | **Total Equity** | **$8,872** | **$9,204** | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total net revenues | $17,839 | $8,823 | $27,790 | $18,543 | | Gross profit | $7,209 | $2,099 | $9,530 | $4,304 | | Income (loss) from operations | $177 | ($60) | $535 | $309 | | Net (loss) income | ($416) | $13 | ($40) | $206 | | Basic EPS | ($0.06) | $0.00 | ($0.01) | $0.03 | - Net cash used in operating activities for the six months ended June 30, 2023, was **$0.6 million**, a significant improvement from the **$2.0 million** used in the same period of 2022. Net cash from financing activities was **$1.9 million**, primarily due to **$2.4 million** in net proceeds from the IPO[19](index=19&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's IPO, the accounting for the new Strong Studios segment's content acquisitions and revenue events, and changes in debt and related-party transactions - The company completed its IPO on May 15, 2023, selling **1,000,000** Class A Common Shares at **$4.00** per share, raising net proceeds of approximately **$1.4 million** after costs[22](index=22&type=chunk)[69](index=69&type=chunk) - Strong Studios acquired film and TV rights from Landmark Studio Group for approximately **$1.7 million** and issued a warrant to Landmark[74](index=74&type=chunk) - In June 2023, the company acquired **100%** of Safehaven 2022, which holds the rights to the 'Safehaven' series. Subsequently, Safehaven 2022 sold a **75%** interest in the series to Ravenwood, recognizing **$6.4 million** in revenue and **$5.4 million** in related costs during Q2 2023[76](index=76&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - The company's top ten customers accounted for **41%** of consolidated net revenues for the first six months of 2023, with one customer representing over **10%** of both revenues and receivables, indicating significant customer concentration[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes significant Q2 2023 revenue growth to the Strong Studios segment, while noting increased operating expenses and sufficient liquidity post-IPO Q2 2023 vs Q2 2022 Performance (in thousands) | Metric | Q2 2023 | Q2 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $17,839 | $8,823 | $9,016 | 102.2% | | Gross profit | $7,209 | $2,099 | $5,110 | 243.4% | | Gross profit % | 40.4% | 23.8% | - | - | | Income (loss) from operations | $177 | ($60) | $237 | (395.0)% | | Net (loss) income | ($416) | $13 | ($429) | N/M | - Q2 2023 revenue included **$6.4 million** from the sale of an ownership stake in the 'Safehaven' series. Excluding this, revenue increased **29.9%** YoY[124](index=124&type=chunk) - Gross profit for Q2 2023 included approximately **$4.4 million** from the 'Safehaven' sale. Excluding this, the gross profit margin would have been **24.5%**[127](index=127&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | ($416) | $13 | ($40) | $206 | | EBITDA | $1,866 | $303 | $2,531 | $808 | | **Adjusted EBITDA** | **$3,515** | **$130** | **$4,081** | **$752** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable as the company qualifies as a 'smaller reporting company' under SEC regulations - Disclosure is not required as the company is a "smaller reporting company" as defined by Item 229.10(f)(1) of Regulation S-K[175](index=175&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective[176](index=176&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter[177](index=177&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal disputes, including an asbestos-related indemnity agreement with its former parent, for which a loss contingency reserve has been recorded - The company has an agreement to indemnify former parent FG Group Holdings for certain asbestos-related personal injury claims, capped at **$250,000** per year plus legal expenses[178](index=178&type=chunk) - A loss contingency reserve of approximately **$0.2 million** was recorded as of June 30, 2023, for potential losses related to these claims[178](index=178&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported since the final prospectus filing on May 16, 2023 - No material changes to risk factors were reported since the final prospectus filed on May 16, 2023[179](index=179&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the use of IPO proceeds and various unregistered equity issuances, including warrants and shares withheld for tax obligations - The IPO, which closed on May 18, 2023, raised total net proceeds of approximately **$1.4 million** after deducting underwriting discounts and commissions[182](index=182&type=chunk) - On May 26, 2023, the company issued a warrant to Landmark Studio Group LLC to purchase up to **150,000** Common Shares at an exercise price of **$4.00** per share, exercisable for three years beginning six months after the IPO[181](index=181&type=chunk) - During the quarter, **26,177** shares were withheld from employees at an average price of **$3.99** per share to satisfy tax obligations on stock grants[185](index=185&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[186](index=186&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[187](index=187&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[188](index=188&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) The company filed various exhibits, including agreements related to the 'Safehaven' production and standard CEO and CFO certifications - Filed agreements related to the 'Safehaven' series, including a purchase agreement, an assignment agreement amendment, a stock purchase agreement, and a management agreement[189](index=189&type=chunk) - Standard certifications under Rule 13a-14(a) and Section 1350 were filed by the CEO and CFO[189](index=189&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-41688 STRONG GLOBAL ENTERTAINMENT, INC. (Exact Name of Registrant as Specified in Its Charter) British Columbia, Canada N/A (State or Other Jurisdiction of (IRS Empl ...