FG Financial (US:FGF)2025-11-14 21:31Treasury and Asset Management - As of September 30, 2025, FG Nexus has accumulated 50,778 ETH as its primary treasury asset[194] - The company is focused on increasing net asset value through capital raising activities and treasury strategies, including staking ETH[193] - Staking rewards are issued natively by the Ethereum protocol and are retained in custodial wallets to compound[196] - The asset management agreement with Galaxy Digital includes a tiered asset-based fee ranging from 0.75% to 1.25% per annum, with a minimum fee of $83,333.33 per month[205] - The company intends to deploy net proceeds from future capital raising initiatives to scale its ETH treasury operations[194] - FG Nexus is evaluating complementary yield-generation strategies, including institutional lending and liquid staking, but is not currently engaged in these activities[199] - Digital assets are held with custodians Anchorage and BitGo, with insurance policies ranging from $100 million to $250 million for theft and fraud[202] - The company maintains internal controls requiring multiple levels of approval for transactions related to digital assets[201] - The ETH treasury strategy aims to accumulate ETH as a long-term asset, focusing on maximizing holdings and value accretion[192] - The asset management agreement with Galaxy Digital is effective until July 21, 2028, with provisions for early termination[206] Financial Performance - Total revenue for the three months ended September 30, 2025, increased to $0.9 million, a 710.9% increase from $0.1 million in the prior year period[233] - Total revenue for the nine months ended September 30, 2025, rose to $1.3 million, reflecting a 125.1% increase from $0.6 million in the prior year[238] - Income from operations for the three months ended September 30, 2025, was $4.2 million, compared to a loss of $2.8 million in the prior year[235] - Unrealized gain on ETH digital assets for the three months ended September 30, 2025, amounted to $14.1 million, contributing significantly to the income from operations[235] - Stock-based compensation for the three months ended September 30, 2025, was $7.4 million, a 1570.5% increase from $440,000 in the prior year[233] - Loss from continuing operations before income taxes for the three months ended September 30, 2025, improved to a loss of $3.0 million, a 45.9% reduction from a loss of $5.6 million in the prior year[233] Cash Flow and Investments - For the nine months ended September 30, 2025, net cash used in operating activities from continuing operations was approximately $4.1 million, a decrease from $5.2 million for the same period in 2024[263] - Net cash used in investing activities from continuing operations was approximately $161.9 million for the nine months ended September 30, 2025, compared to $10.4 million of cash provided in the same period in 2024[264] - Cash provided by financing activities from continuing operations was approximately $162.4 million for the nine months ended September 30, 2025, compared to net cash used of $6.5 million during the same period in 2024[265] - The Company had cash and cash equivalents of $7.5 million at the end of the period on September 30, 2025, up from $3.2 million at the end of the same period in 2024[263] - The Company recorded $171.7 million of ETH purchases during the nine months ended September 30, 2025, which significantly impacted cash flows from investing activities[264] - Cash used in operations decreased primarily due to the receipt of $0.8 million of dividends on the Saltire preferred shares and improvements in working capital[263] Shareholder Activities - In July 2025, the company entered into a private placement offering, selling pre-funded warrants to purchase up to 40 million shares at an offering price of $5.00 per warrant[215] - As of November 12, 2025, approximately 38.7 million pre-funded warrants have been converted into common stock, with about 1.3 million remaining unconverted[215] - The company approved a share repurchase program to acquire up to $200 million of its outstanding common stock, which is open-ended[220] - From October 23, 2025, to November 12, 2025, the company purchased approximately 2.6 million shares at a total cost of approximately $10.1 million, representing about 6% of its common stock outstanding[221] Business Development - In October 2025, the company entered into an agreement to sell its remaining reinsurance business, receiving $1.0 million in cash and a 40% equity interest in the purchasing entity[222] - A non-binding letter of intent was signed to sell Quebec property for $15.0 million CAD, expected to generate approximately $8.0-$9.0 million USD in net pretax proceeds[223] - The company filed a certificate of amendment to increase the total number of authorized shares of common stock from 1.0 billion to 900.0 billion shares[217] - The company has facilitated the launch of several new companies, including FG Communities, Inc. and Craveworthy LLC, through its merchant banking division[214] Operational Metrics - The company commenced ETH staking activities in August 2025, contributing to revenue generation strategies[247] - General and administrative expenses for the three months ended September 30, 2025, increased to $3.4 million, a 33.8% increase from $2.5 million in the prior year[233] - Losses on equity holdings for the three months ended September 30, 2025, were $7.3 million, a 176.5% increase from $2.6 million in the prior year[233] - The Company did not have any deferred contract costs as of September 30, 2025 or December 31, 2024[257] - The Company recognizes contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced[256] - The Company uses the fair-value method for accounting stock-based compensation, impacting the overall compensation expense recognized[258] - The liquidity management strategy is primarily supported by funds generated from operations, capital raises, and credit facilities[261]