Fundamental Global Inc. (Nasdaq: FGF, FGPP) (the “Company” or
"Fundamental Global"), formerly known as FG Financial Group, Inc.
(“FG Financial”), today announced results for the second quarter
ended June 30, 2024. FG Financial and FG Group Holdings Inc. (“FG
Group Holdings”) completed their merger (the “Merger”) on February
29, 2024, and the combined company was renamed Fundamental Global.
Kyle Cerminara, Chairman and CEO of Fundamental
Global, commented, “We’re aggressively simplifying and enhancing
our operations. We’ve executed a series of strategic moves this
year that have resulted in over $4 million in annual cost savings,
and we have plans for additional savings coming over the next few
quarters.”
“We’ve also announced the combination of
Strong/MDI Screen Systems with FG Acquisition Corp., which will
create Saltire Holdings, Ltd., a new Canadian publicly traded
private equity platform. Additionally, merging Strong Global
Entertainment into Fundamental Global will remove redundant costs
and streamline our structure. We expect these transactions to close
by the end of the third quarter, driving efficiency and focusing on
high-growth opportunities.”
Second Quarter Financial
Highlights
Note: The financial results for the second
quarter and first six months of 2024 reflect the Company's
performance following the Merger, which was treated as a reverse
merger. Consequently, the financial results before the merger
include only the operations of FG Group Holdings, while results
after February 29, 2024, reflect the combined operations of
Fundamental Global. Additionally, due to a pending transaction, the
current and historical results of Strong/MDI have been reclassified
as discontinued operations and are not covered in the discussion
below.
As of June 30, 2024, Fundamental Global’s key
balance sheet items included:
- Total assets of
$98.4 million, an increase of $36.3 million from December 31, 2023.
Assets included equity holdings of $43.6 million, which included
directly or indirectly held positions in OppFi Inc., iCoreConnect
Inc., FG Acquisition Corp., FG Communities, Inc., Craveworthy LLC,
and other holdings, as well as the consolidated assets of Strong
Global Entertainment. Of the $43.6 million of equity holdings as of
June 30, 2024, approximately $22.5 million were owned by our Cayman
Islands-based reinsurance subsidiary, FGRe, where we use such
investment and equity holdings to support the capital structure of
our reinsurance business.
- Total
stockholders’ equity of $60.4 million, an increase of $23.4 million
from December 31, 2023, reflecting the increased scale on a
combined basis following the Merger.
- Short- and
long-term debt totaled $3.1 million, a decrease of $4.7 million
from December 31, 2023.
Strong Global Entertainment
Revenue increased 18.7% to $8.1 million for the
second quarter with increased sales of digital equipment and
increased demand for services. The increase in demand from cinema
customers was due to a combination of increased sales efforts,
expanded market share, laser projection upgrades and the
acquisition of Innovative Cinema Solutions (“ICS”) contributing
favorably to overall revenue growth.
Gross profit increased $0.6 million to $1.5
million or 18.8% of revenues in the second quarter. The increase in
gross profit resulted primarily from increased demand for
installation and maintenance services, and contributions from the
ICS acquisition.
Loss from operations improved to $0.7 million in
the second quarter of 2024 compared to $1.6 million during the
second quarter of 2023. Administrative expenses were higher in the
second quarter for 2023 largely due to one-time costs incurred upon
the completion of the IPO in May 2023, which did not repeat in the
current period. However, we incurred higher general and
administrative expenses in connection with operating as an
independent public company following the separation in May 2023,
which partially offset increases in gross profit.
Reinsurance
The reinsurance business generated $3.7 million
of premium revenue during the second quarter of 2024. Reinsurance
operating expenses totaled $3.2 million during the second quarter
of 2024, which primarily included $2.1 million of claims and
reserve adjustment expenses and $0.9 million of deferred policy
acquisition cost amortization.
Asset Management
Investment losses from asset management were
$4.0 million in the second quarter of 2024, primarily due to
unrealized mark-to-market losses recognized on equity
securities.
Fundamental Global Inc.
Fundamental Global Inc. (Nasdaq: FGF, FGFPP) and
its subsidiaries engage in diverse business activities including
reinsurance, asset management, merchant banking, manufacturing and
managed services.
The FG® logo and Fundamental
Global® are registered trademarks of Fundamental Global
LLC.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
These statements are therefore entitled to the protection of the
safe harbor provisions of these laws. These statements may be
identified by the use of forward-looking terminology such as
“anticipate,” “believe,” “budget,” “can,” “contemplate,”
“continue,” “could,” “envision,” “estimate,” “expect,” “evaluate,”
“forecast,” “goal,” “guidance,” “indicate,” “intend,” “likely,”
“may,” “might,” “outlook,” “plan,” “possibly,” “potential,”
“predict,” “probable,” “probably,” “pro-forma,” “project,” “seek,”
“should,” “target,” “view,” “will,” “would,” “will be,” “will
continue,” “will likely result” or the negative thereof or other
variations thereon or comparable terminology. In particular,
discussions and statements regarding the Company’s future business
plans and initiatives are forward-looking in nature. We have based
these forward-looking statements on our current expectations,
assumptions, estimates, and projections. While we believe these to
be reasonable, such forward-looking statements are only predictions
and involve a number of risks and uncertainties, many of which are
beyond our control. These and other important factors may cause our
actual results, performance, or achievements to differ materially
from any future results, performance or achievements expressed or
implied by these forward-looking statements, and may impact our
ability to implement and execute on our future business plans and
initiatives. Management cautions that the forward-looking
statements in this release are not guarantees of future
performance, and we cannot assume that such statements will be
realized or the forward-looking events and circumstances will
occur. Factors that might cause such a difference include, without
limitation: risks associated with our inability to identify and
realize business opportunities, and the undertaking of any new such
opportunities; our lack of operating history or established
reputation in the reinsurance industry; our inability to obtain or
maintain the necessary approvals to operate reinsurance
subsidiaries; risks associated with operating in the reinsurance
industry, including inadequately priced insured risks, credit risk
associated with brokers we may do business with, and inadequate
retrocessional coverage; our inability to execute on our investment
holdings and asset management strategy, including our strategy to
invest in the risk capital of special purpose acquisition companies
(SPACs); our ability to maintain and expand our revenue streams to
compensate for the lower demand for our digital cinema products and
installation services; potential interruptions of supplier
relationships or higher prices charged by suppliers in connection
with our Strong Global Entertainment business; our ability to
successfully compete and introduce enhancements and new features
that achieve market acceptance and that keep pace with
technological developments; our ability to maintain Strong Global
Entertainment’s brand and reputation and retain or replace its
significant customers; challenges associated with Strong Global
Entertainment’s long sales cycles; the impact of a challenging
global economic environment or a downturn in the markets; the
effects of economic, public health, and political conditions that
impact business and consumer confidence and spending, including
rising interest rates, periods of heightened inflation and market
instability; potential loss of value of investment holdings; risk
of becoming an investment company; fluctuations in our short-term
results as we implement our new business strategy; risks of being
unable to attract and retain qualified management and personnel to
implement and execute on our business and growth strategy; failure
of our information technology systems, data breaches and
cyber-attacks; our ability to establish and maintain an effective
system of internal controls; our limited operating history as a
public company; the requirements of being a public company and
losing our status as a smaller reporting company or becoming an
accelerated filer; any potential conflicts of interest between us
and our controlling stockholders and different interests of
controlling stockholders; potential conflicts of interest between
us and our directors and executive officers; risks associated with
our related party transactions and investment holdings; and risks
associated with our investments in SPACs, including the failure of
any such SPAC to complete its initial business combination. Our
expectations and future plans and initiatives may not be realized.
If one of these risks or uncertainties materializes, or if our
underlying assumptions prove incorrect, actual results may vary
materially from those expected, estimated or projected. You are
cautioned not to place undue reliance on forward-looking
statements. The forward-looking statements are made only as of the
date hereof and do not necessarily reflect our outlook at any other
point in time. We do not undertake and specifically decline any
obligation to update any such statements or to publicly announce
the results of any revisions to any such statements to reflect new
information, future events or developments.
Investor
Contact:investors@fundamentalglobal.com
FUNDAMENTAL GLOBAL INC.
Condensed Consolidated Balance Sheets($ in
thousands)
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,850 |
|
|
$ |
5,995 |
|
Accounts receivable, net |
|
|
4,243 |
|
|
|
3,529 |
|
Inventories, net |
|
|
2,548 |
|
|
|
1,482 |
|
Equity securities, at fair
value |
|
|
5,063 |
|
|
|
10,552 |
|
Investments |
|
|
38,491 |
|
|
|
17,469 |
|
Property, plant and equipment,
net |
|
|
3,118 |
|
|
|
11,115 |
|
Operating lease right-of-use
assets |
|
|
295 |
|
|
|
371 |
|
Finance lease right-of-use
assets |
|
|
1,071 |
|
|
|
1,258 |
|
Deferred policy acquisition
costs |
|
|
1,637 |
|
|
|
- |
|
Reinsurance balances
receivable, net |
|
|
18,139 |
|
|
|
- |
|
Funds deposited with reinsured
companies |
|
|
8,055 |
|
|
|
- |
|
Assets of discontinued
operations |
|
|
8,396 |
|
|
|
9,886 |
|
Other assets |
|
|
1,498 |
|
|
|
486 |
|
Total assets |
|
$ |
98,404 |
|
|
$ |
62,143 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses |
|
$ |
6,832 |
|
|
$ |
4,834 |
|
Deferred revenue and customer
deposits |
|
|
1,157 |
|
|
|
867 |
|
Loss and loss adjustment
expense reserves |
|
|
9,742 |
|
|
|
- |
|
Unearned premium reserves |
|
|
7,781 |
|
|
|
- |
|
Operating lease
liabilities |
|
|
338 |
|
|
|
421 |
|
Finance lease liabilities |
|
|
1,100 |
|
|
|
1,283 |
|
Short-term debt |
|
|
2,614 |
|
|
|
2,294 |
|
Long-term debt, net of debt
issuance costs |
|
|
437 |
|
|
|
5,461 |
|
Deferred income taxes |
|
|
2,735 |
|
|
|
3,075 |
|
Liabilities of discontinued
operations |
|
|
5,142 |
|
|
|
6,799 |
|
Other liabilities |
|
|
90 |
|
|
|
102 |
|
Total liabilities |
|
|
37,968 |
|
|
|
25,136 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Series A Preferred Shares |
|
|
22,365 |
|
|
|
- |
|
Common stock |
|
|
29 |
|
|
|
225 |
|
Additional paid-in
capital |
|
|
50,004 |
|
|
|
55,856 |
|
(Accumulated deficit) retained
earnings |
|
|
(8,390 |
) |
|
|
2,336 |
|
Treasury stock |
|
|
- |
|
|
|
(18,586 |
) |
Accumulated other
comprehensive loss |
|
|
(5,268 |
) |
|
|
(4,682 |
) |
Total Fundamental Global
stockholders’ equity |
|
|
58,740 |
|
|
|
35,149 |
|
Equity attributable to
non-controlling interest |
|
|
1,696 |
|
|
|
1,858 |
|
Total stockholders’
equity |
|
|
60,436 |
|
|
|
37,007 |
|
Total liabilities and
stockholders’ equity |
|
$ |
98,404 |
|
|
$ |
62,143 |
|
FUNDAMENTAL GLOBAL
INC.Condensed Consolidated Statements of
Operations($ in thousands, except share and per
share data)(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
3,697 |
|
|
$ |
- |
|
|
$ |
4,472 |
|
|
$ |
- |
|
Net investment loss |
|
|
(4,011 |
) |
|
|
(3,690 |
) |
|
|
(7,411 |
) |
|
|
(7,232 |
) |
Net product sales |
|
|
4,782 |
|
|
|
3,794 |
|
|
|
9,417 |
|
|
|
7,564 |
|
Net services revenue |
|
|
3,406 |
|
|
|
3,232 |
|
|
|
6,651 |
|
|
|
6,137 |
|
Total revenue |
|
|
7,874 |
|
|
|
3,336 |
|
|
|
13,129 |
|
|
|
6,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses and loss adjustment expenses |
|
|
2,094 |
|
|
|
- |
|
|
|
2,460 |
|
|
|
- |
|
Amortization of deferred policy acquisition costs |
|
|
872 |
|
|
|
- |
|
|
|
1,156 |
|
|
|
- |
|
Costs of products |
|
|
3,973 |
|
|
|
3,542 |
|
|
|
7,874 |
|
|
|
6,875 |
|
Costs of services |
|
|
2,514 |
|
|
|
2,285 |
|
|
|
4,880 |
|
|
|
4,451 |
|
Selling expense |
|
|
370 |
|
|
|
161 |
|
|
|
658 |
|
|
|
398 |
|
General and administrative expenses |
|
|
4,104 |
|
|
|
3,559 |
|
|
|
7,493 |
|
|
|
5,693 |
|
(Gain) loss on impairment and disposal of assets |
|
|
- |
|
|
|
(5 |
) |
|
|
1,475 |
|
|
|
(5 |
) |
Total
expenses |
|
|
13,927 |
|
|
|
9,542 |
|
|
|
25,996 |
|
|
|
17,412 |
|
Loss from operations |
|
|
(6,053 |
) |
|
|
(6,206 |
) |
|
|
(12,867 |
) |
|
|
(10,943 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(91 |
) |
|
|
(93 |
) |
|
|
(233 |
) |
|
|
(162 |
) |
Foreign currency transaction loss |
|
|
(5 |
) |
|
|
- |
|
|
|
(6 |
) |
|
|
(2 |
) |
Bargain purchase on acquisition and other income, net |
|
|
- |
|
|
|
1 |
|
|
|
1,858 |
|
|
|
24 |
|
Total other (expense) income, net |
|
|
(96 |
) |
|
|
(92 |
) |
|
|
1,619 |
|
|
|
(140 |
) |
Loss from
continuing operations before income taxes |
|
|
(6,149 |
) |
|
|
(6,298 |
) |
|
|
(11,248 |
) |
|
|
(11,083 |
) |
Income tax
(expense) benefit |
|
|
74 |
|
|
|
14 |
|
|
|
91 |
|
|
|
7 |
|
Net loss from
continuing operations |
|
|
(6,075 |
) |
|
|
(6,284 |
) |
|
|
(11,157 |
) |
|
|
(11,076 |
) |
Net income from
discontinued operations |
|
|
150 |
|
|
|
893 |
|
|
|
785 |
|
|
|
1,694 |
|
Net loss |
|
|
(5,925 |
) |
|
|
(5,391 |
) |
|
|
(10,372 |
) |
|
|
(9,382 |
) |
Net loss attributable to non-controlling interest |
|
|
(143 |
) |
|
|
(118 |
) |
|
|
(160 |
) |
|
|
(118 |
) |
Dividends declared on Series A Preferred Shares |
|
|
(447 |
) |
|
|
- |
|
|
|
(516 |
) |
|
|
- |
|
Loss attributable
to common shareholders |
|
$ |
(6,229 |
) |
|
$ |
(5,273 |
) |
|
$ |
(10,728 |
) |
|
$ |
(9,264 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
net (loss) income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(0.22 |
) |
|
$ |
(0.63 |
) |
|
$ |
(0.51 |
) |
|
$ |
(1.15 |
) |
Discontinued operations |
|
|
- |
|
|
|
0.09 |
|
|
|
0.04 |
|
|
|
0.18 |
|
Total |
|
$ |
(0.22 |
) |
|
$ |
(0.54 |
) |
|
$ |
(0.47 |
) |
|
$ |
(0.97 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
28,518 |
|
|
|
9,705 |
|
|
|
22,651 |
|
|
|
9,564 |
|
FUNDAMENTAL GLOBAL
INC.Condensed Consolidated Statements of Cash
Flows(in
thousands)(Unaudited)
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net loss from continuing
operations |
|
$ |
(11,157 |
) |
|
$ |
(11,076 |
) |
Adjustments to reconcile net
loss to net cash used by operating activities: |
|
|
|
|
|
|
|
|
Net unrealized holding loss on equity investments |
|
|
6,377 |
|
|
|
4,538 |
|
Loss from equity method investments |
|
|
1,806 |
|
|
|
2,694 |
|
Gain on acquisition of ICS assets |
|
|
- |
|
|
|
- |
|
Net realized (gain) loss on sale of equity investments |
|
|
(118 |
) |
|
|
- |
|
Provision for (recovery of) doubtful accounts |
|
|
30 |
|
|
|
(26 |
) |
Benefit from (provision for) obsolete inventory |
|
|
(38 |
) |
|
|
30 |
|
Provision for warranty |
|
|
3 |
|
|
|
6 |
|
Depreciation and amortization |
|
|
454 |
|
|
|
344 |
|
Amortization and accretion of operating leases |
|
|
168 |
|
|
|
59 |
|
Impairment of property and equipment |
|
|
1,405 |
|
|
|
- |
|
Gain on merger of FGF and FGF |
|
|
(1,831 |
) |
|
|
- |
|
Deferred income taxes |
|
|
(16 |
) |
|
|
(57 |
) |
Stock compensation expense |
|
|
725 |
|
|
|
1,037 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Reinsurance balances receivable |
|
|
967 |
|
|
|
- |
|
Deferred policy acquisition costs |
|
|
127 |
|
|
|
- |
|
Other assets |
|
|
634 |
|
|
|
287 |
|
Loss and loss adjustment expense reserves |
|
|
707 |
|
|
|
- |
|
Unearned premium reserves |
|
|
(2,964 |
) |
|
|
- |
|
Accounts receivable |
|
|
(386 |
) |
|
|
(57 |
) |
Inventories |
|
|
(1,027 |
) |
|
|
395 |
|
Current income taxes |
|
|
(458 |
) |
|
|
(16 |
) |
Accounts payable and accrued expenses |
|
|
1,251 |
|
|
|
2,210 |
|
Deferred revenue and customer deposits |
|
|
286 |
|
|
|
(584 |
) |
Operating lease obligations |
|
|
(123 |
) |
|
|
(65 |
) |
Net cash used by operating
activities from continuing operations |
|
|
(3,178 |
) |
|
|
(281 |
) |
Net cash used by operating
activities from discontinued operations |
|
|
(572 |
) |
|
|
(2,305 |
) |
Net cash used by operating
activities |
|
|
(3,750 |
) |
|
|
(2,586 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(20 |
) |
|
|
(121 |
) |
Proceeds from sales of equity securities |
|
|
1,154 |
|
|
|
198 |
|
Proceeds from sales of property and equipment |
|
|
1,289 |
|
|
|
- |
|
Cash acquired in Merger of FGF and FGH |
|
|
1,903 |
|
|
|
- |
|
Net cash provided by investing
activities from continuing operations |
|
|
4,326 |
|
|
|
77 |
|
Net cash used in investing
activities from discontinued operations |
|
|
(59 |
) |
|
|
(283 |
) |
Net cash provided by (used in)
investing activities |
|
|
4,267 |
|
|
|
(206 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Payment of dividends on preferred shares |
|
|
(894 |
) |
|
|
- |
|
Principal payments on short-term debt |
|
|
(97 |
) |
|
|
(132 |
) |
Payment payments on long-term debt |
|
|
(185 |
) |
|
|
(101 |
) |
Proceeds from Strong Global Entertainment initial public
offering |
|
|
- |
|
|
|
2,411 |
|
Payments of withholding taxes for net share settlement of equity
awards |
|
|
- |
|
|
|
(104 |
) |
Payments on finance lease obligations |
|
|
(120 |
) |
|
|
(66 |
) |
Net cash (used in) provided by
financing activities from continuing operations |
|
|
(1,296 |
) |
|
|
2,008 |
|
Net cash provided by financing
activities from discontinued operations |
|
|
477 |
|
|
|
1,930 |
|
Net cash (used in) provided by
financing activities |
|
|
(819 |
) |
|
|
3,938 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents from continuing
operations |
|
|
3 |
|
|
|
(3 |
) |
Effect of exchange rate
changes on cash and cash equivalents from discontinued
operations |
|
|
(11 |
) |
|
|
34 |
|
Net (decrease) increase in
cash and cash equivalents from continuing operations |
|
|
(145 |
) |
|
|
1,801 |
|
Net decrease in cash and cash
equivalents from discontinued operations |
|
|
(165 |
) |
|
|
(624 |
) |
Net (decrease) increase in
cash and cash equivalents |
|
|
(310 |
) |
|
|
1,177 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents from
continuing operations at beginning of period |
|
|
5,995 |
|
|
|
3,063 |
|
Cash and cash equivalents from
continuing operations at end of period |
|
$ |
5,850 |
|
|
$ |
4,864 |
|
Fundamental Global (NASDAQ:FGF)
Gráfica de Acción Histórica
De Jul 2024 a Ago 2024
Fundamental Global (NASDAQ:FGF)
Gráfica de Acción Histórica
De Ago 2023 a Ago 2024