FG Financial (FGF) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company's Q1 2025 results show a sharp revenue drop to $0.39 million and a net loss of $8.8 million, impacted by equity losses and discontinued operations Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $100.3 million and stockholders' equity fell to $64.2 million, driven by a higher accumulated deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,669 | $7,794 | | Equity holdings, at fair value | $4,720 | $5,763 | | Other equity holdings and other holdings | $47,300 | $54,310 | | Assets of discontinued operations | $31,961 | $31,626 | | Total assets | $100,309 | $109,469 | | Total liabilities | $36,156 | $35,272 | | Total stockholders' equity | $64,153 | $74,197 | | Total liabilities and stockholders' equity | $100,309 | $109,469 | Condensed Consolidated Statements of Operations Q1 2025 revenue fell to $0.39 million from $4.48 million year-over-year, widening the net loss from continuing operations to $8.8 million Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenue | $392 | $4,480 | | Net loss on equity holdings and other holdings | $(6,419) | $(3,399) | | Net product sales | $3,516 | $4,637 | | Loss from operations | $(8,850) | $(6,811) | | Net loss from continuing operations | $(8,797) | $(5,076) | | Net loss attributable to common shareholders | $(10,202) | $(4,497) | | Basic and diluted net loss per common share | $(8.03) | $(6.71) | Condensed Consolidated Statement of Cash Flows Net cash used in operating activities increased to $2.9 million in Q1 2025, contributing to a $2.1 million overall decrease in cash and cash equivalents Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,923) | $(1,030) | | Net cash provided by investing activities | $1,519 | $2,234 | | Net cash used in financing activities | $(720) | $(634) | | Net (decrease) increase in cash and cash equivalents | $(2,125) | $565 | | Cash and cash equivalents at end of period | $5,669 | $7,209 | Notes to Condensed Consolidated Financial Statements Notes detail the company's two-segment structure, the reverse acquisition merger with FGH, and the classification of its reinsurance business as a discontinued operation - The company operates through two business segments: Merchant Banking (advisory, capital formation, SPAC platform) and Managed Services (technical services for entertainment venues via its subsidiary STS)[24][25][27] - On February 29, 2024, FGF and FGH merged in an all-stock transaction, which was accounted for as a reverse acquisition with FGH as the accounting acquirer, resulting in a bargain purchase gain of $1.8 million[21][75][77] - The company's reinsurance business has been classified as a discontinued operation, with a portion agreed to be sold for $5.6 million in Q2 2025, with the remainder intended for sale in the second half of 2025[29][84][85] Total Equity and Other Holdings (in thousands) | Method | As of March 31, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Fair Value Method | $4,720 | $5,763 | | Cost Method | $15,429 | $15,429 | | Equity Method | $31,871 | $38,881 | | Total | $52,020 | $60,073 | - The company has a Shared Services Agreement with Fundamental Global Management, LLC (FGM), an affiliate of the CEO, for management services, paying a fee of $456,000 per quarter[139][141] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management attributes the Q1 2025 revenue decline to non-cash equity losses and lower managed services revenue, while noting that G&A costs remain too high Q1 2025 vs Q1 2024 Results of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $392 | $4,480 | $(4,088) | (91.3)% | | Revenue from products and services | $6,811 | $7,879 | $(1,068) | (13.6)% | | Loss from operations | $(8,850) | $(6,811) | $(2,039) | 29.9% | | Net loss from continuing operations | $(8,797) | $(5,076) | $(3,721) | 73.3% | - The decrease in revenue from products and services was primarily due to lower product sales as cinema customers delayed projects amid macroeconomic uncertainties and a soft box office schedule in early 2025[183] - Higher losses on equity holdings were driven by market value declines in the common stock of Saltire and GreenFirst Forest Products during the quarter[184] - Management acknowledges that general and administrative costs remain too high for the company's current scale and is considering additional actions to simplify the organization[189] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the current reporting period - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[210] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[211] - No changes occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[212] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal disputes, including asbestos and landfill claims, with a loss contingency reserve of $0.3 million - The company is a defendant in personal injury lawsuits alleging exposure to asbestos-containing materials in commercial lighting products distributed in the past[152] - A subsidiary was named as a defendant in a civil action for cost recovery related to hazardous substance release from the BKK Class 1 Landfill in Los Angeles County for periods prior to 1987[153] - The company has a loss contingency reserve of approximately $0.3 million as of March 31, 2025, for various open proceedings and claims[155] Risk Factors No material changes to risk factors were reported since the company's 2024 Annual Report on Form 10-K - No material changes to risk factors were reported since the last annual report on Form 10-K[214] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None reported[215] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported[216] Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable[217] Other Information The company reported no other information for the period - None reported[218] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and iXBRL data files - The report includes a list of filed exhibits, such as officer certifications (31.1, 31.2, 32.1, 32.2) and an agreement related to FG Reinsurance Holdings, LLC (10.1)[219]