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].
FG (FGH) - 2023 Q2 - Quarterly Report