FG Communities Holdings Inc.: Form 10-Q for the period ended Jun 30, 2026

You should read the following discussion in conjunction with our consolidated financial statements and related notes and information included elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report for the year ended December 31, 2025 on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 27, 2026, and in subsequent filings with the SEC.

Unless context denotes otherwise, the terms “Company,” “FG Nexus” “we,” “us,” and “our,” refer to FG Nexus Inc., and its subsidiaries.

Cautionary Note about Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q 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, the Company’s ability to execute its business plans which are contemplated to include increasing the Company’s scale through acquisition, fluctuations in the real estate industry, the Company’s ability to achieve profitable operations, customer acceptance of new products and services, general conditions in the global economy; risks associated with operating in the merchant banking industry; risks of not being able to execute on our asset management strategy and potential loss of value of our holdings; risk of becoming an investment company; fluctuations in our short-term results as we implement our business strategies; risks of not being able 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; the requirements of being a public company and losing our status as a smaller reporting company or becoming an accelerated filer; and potential conflicts of interest between us and our directors and executive officers.

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.

Overview

FG Nexus is a holding company incorporated in the state of Nevada. Our common stock and Series A preferred shares are currently listed on Nasdaq under the symbols “FGNX” and “FGNXP,” respectively. The Company currently conducts business through its business segments including merchant banking and real estate.

Merchant Banking

Merchant banking services include various strategic, administrative, and regulatory support services to newly formed SPACs (our “SPAC Platform”). Additionally, the Company co-founded a partnership, FG Merchant Partners, LP (“FGMP”), to participate as a co-sponsor for newly formed SPACs and other merchant banking clients.

The Company’s merchant banking group provides advisory services, facilitates capital formation and allocates capital to equity holdings. In our SPAC Platform, this also includes launching, sponsoring and providing strategic, administrative, and regulatory support services to newly formed SPACs. Our merchant banking division has facilitated the launch of several new companies, including FG Communities, Inc. (“FG Communities”), a self-managed real estate company focused on a growing portfolio of manufactured housing communities that are owned and operated by FG Communities, Craveworthy LLC (“Craveworthy”), an innovative fast casual restaurant platform company, and Saltire Holdings Ltd. (“Saltire”), a Canadian public company that allocates capital to equity, debt and/or hybrid securities of high-quality private companies, among others.

Real Estate

The Company owns real estate in Quebec, Canada that is leased pursuant to a long-term triple net operating lease.

Recent Developments and Transactions

Exiting Digital Assets Business

In August 2025, we launched our digital asset business and adopted Ether, the native cryptocurrency of the Ethereum blockchain (“Ether” or “ETH”) as our primary treasury asset. In June 2026, our Board of Directors (the “Board”) authorized management to continue reducing the Company’s exposure to digital assets by exiting our digital asset business. We completed the sale of all of our previously held digital assets prior to June 30, 2026.

Potential Business Combination with FG Communities

In April 2026, we announced that our Board was reviewing potential strategic alternatives to enhance long-term stockholder value and further our strategic objectives. As part of this review, the Board discussed a potential business combination transaction with FG Communities (the “Potential Transaction”) to establish a durable, income-producing real estate business that addresses critical housing needs. The Board has established a special committee composed solely of independent directors (the “Special Committee”) to evaluate the Potential Transaction or other strategic alternatives. The Special Committee is continuing to evaluate potential transactions and has retained an independent financial advisor to provide a fairness opinion for the Potential Transaction and to assist in the Board’s evaluation and negotiation of the Potential Transaction. In June 2026, the Board also authorized management to reallocate capital to real estate acquisitions in connection with our exit from the digital asset business. We intend to advance our strategy to build a leading platform for tangible assets and believe that the establishment of an in-house real estate division, along with the Potential Transaction with FG Communities would accelerate a strategic expansion into income-producing affordable housing, providing a durable foundation for long-term growth and scalable capital formation.

If the Potential Transaction is completed, we expect it would have a material impact on our future business operations, risks and opportunities, as well as our overall financial position, results of operations, segment and other financial reporting in future periods. The Board’s discussions with respect to the Potential Transaction are preliminary in nature and no decisions or agreements have been reached. There can be no assurance that the Potential Transaction will ultimately be pursued or consummated.

Agreement to Sell Reinsurance Business

In October 2025, we entered into an agreement to sell the remaining portion of our reinsurance business. Pursuant to the agreements, we received (1) the release of $3.3 million of collateral that we had posted in connection with certain reinsurance contracts; (2) the payment of $1.0 million in cash; and (3) a 40% equity interest in the entity purchasing the reinsurance business. Additionally, pursuant to the agreements, we agreed to leave $1.3 million dollars in cash in the reinsurance business in exchange for a promissory note in the amount of $1.3 million that accrues interest at a rate of 6% per annum with all principal and accrued interest due and payable on January 1, 2028. The sale transaction closed in early 2026.

Letter of Intent to Sell Quebec Real Estate

In October 2025, we signed a non-binding letter of intent to sell our Quebec property for $15.0 million CAD, or approximately $11.0 million USD. The letter of intent does not constitute a binding agreement. As of June 30, 2026, we do not believe closing of a sale transaction under the previous letter of intent to be probable. We continue to hold the real estate as part of our ongoing real estate operations and the property is classified as held and used.

Asset Transfer and CVR Trust

In August 2025, we transferred a significant portion of our legacy assets (the “Asset Transfer”) to a trust (the “CVR Trust”) established in connection with the creation of contingent value rights (“CVRs”) for the benefit of the Company’s stockholders as of August 8, 2025. The CVRs represent the contractual right to receive a pro rata portion of the net proceeds received by the CVR Trust upon the future disposition, if any, of the assets transferred to the CVR Trust by the Company.

Results of Operations

Management’s discussion and analysis of financial condition and results of operations reflects the continuing operations of the Company as they existed as of June 30, 2026.

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Three Months Ended June 30, 2026 Compared with Three Months Ended June 30, 2025

Revenue of $0.2 million during the three months ended June 30, 2026 included $0.1 million of merchant banking advisory fees and $0.1 million of rental income. Total revenue during the three months ended June 30, 2025 also consisted of $0.1 million of merchant banking advisory fees and $0.1 million of rental income.

Loss from operations increased to $2.1 million during the three months ended June 30, 2026 as compared to $1.6 million during the three months ended June 30, 2025. General and administrative expenses increased $0.7 million during the three months ended June 30, 2026 as compared to the prior year period primarily due to higher compensation costs and legal fees, as well as professional fees and public relations expenses incurred as we operated our ETH treasury operations. The increase in general and administrative expenses was partially offset by a reduction in stock-based compensation expense.

The three months ended June 30, 2026 included an equity method loss on the shares of Saltire of $9.7 million, which included an other-than-temporary write down of the carrying value of $11.2 million, as compared to a $3.6 million equity method gain on the shares of Saltire in three months ended June 30, 2025. The remainder of the net loss on equity holdings and other holdings during the three months ended June 30, 2026 included a $0.6 million gain related to our USFM cost method equity holding, which was offset by a $0.5 million unrealized loss on our fair value method equity holding due to a change in the quoted market price of FG Merger II Corp. The remainder of the net loss on equity holdings and other holdings during the three months ended June 30, 2025 related to holdings distributed to the CVR Trust in August 2025.

Net loss from continuing operations increased to $10.2 million during the three months ended June 30, 2026 compared to net income from continuing operations of $4.4 million during the three months ended June 30, 2025 primarily due to unrealized losses on our equity holdings in the current period compared to gains in the prior year period, partially offset by the gain on financial instruments during the current year.

Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025

Revenue of $0.5 million during the six months ended June 30, 2026 included $0.3 million of merchant banking advisory fees and $0.2 million of rental income. Total revenue during the first half of 2025 consisted of $0.2 million of merchant banking advisory fees and $0.2 million of rental income.

Loss from operations increased to $5.2 million during the six months ended June 30, 2026 as compared to $3.9 million during the six months ended June 30, 2025. General and administrative expenses increased $1.5 million during the six months ended June 30, 2026 as compared to the prior year period primarily due to higher compensation costs, audit fees and legal expenses, as well as professional fees and public relations expenses incurred as we operated our ETH treasury operations. The increase in general and administrative expenses was partially offset by a reduction in stock-based compensation expense.

The six months ended June 30, 2026 included an equity method loss on the shares of Saltire of $9.7 million, which included an other-than-temporary write down of the carrying value of $11.2 million, as compared to a $2.0 million equity method gain on the shares of Saltire in six months ended June 30, 2025. The remainder of the net loss on equity holdings and other holdings during the six months ended June 30, 2026 included a $0.6 million gain related to our USFM cost method equity holding, which was offset by a $0.5 million unrealized loss on our fair value method equity holding due to a change in the quoted market price of FG Merger II Corp. The remainder of the net loss on equity holdings and other holdings during the six months ended June 30, 2025 related to holdings distributed to the CVR Trust in August 2025.

Net loss from continuing operations increased to $13.3 million during the six months ended June 30, 2026 compared to $4.2 million during the six months ended June 30, 2025 primarily due to unrealized losses on our equity holdings in the current period compared to gains in the prior year period, as well as an increase in general and administrative expenses, partially offset by the gain on financial instruments during the current year.

Critical Accounting Estimates

Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Actual results may differ materially from these estimates. Set forth below is qualitative and quantitative information necessary to understand the estimation uncertainty and the impact the critical accounting estimate has had or is reasonably likely to have on financial condition or results of operations, to the extent the information is material and reasonably available.

Equity Holdings

The valuation of the Company’s equity holdings requires management judgment, particularly for holdings accounted for under the equity method and cost method without readily determinable fair values. Judgment regarding the level of influence over each equity method holding includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. Management evaluates equity method holdings for indicators of other-than-temporary impairment and evaluates cost method holdings for observable price changes and impairment indicators. These assessments involve judgment regarding quoted market prices, recent transactions, issuer-specific developments, market conditions and the expected recoverability of carrying amounts. During the three and six months ended June 30, 2026, the Company recorded an $11.2 million impairment charge related to its Saltire equity method holding and a $0.6 million gain related to an observable price change in its USFM cost method holding.

Valuation of Net Deferred Income Taxes

The provision for income taxes is calculated based on the expected tax treatment of transactions recorded in the Company’s consolidated financial statements. In determining its provision for income taxes, the Company interprets tax legislation in a variety of jurisdictions and makes assumptions about the expected timing of the reversal of deferred income tax assets and liabilities and the valuation of net deferred income taxes.

The ultimate realization of the deferred income tax asset balance is dependent upon the generation of future taxable income during the periods in which the Company’s temporary differences reverse and become deductible. A valuation allowance is established when it is more likely than not that all or a portion of the deferred income tax asset balance will not be realized. In determining whether a valuation allowance is needed, management considers all available positive and negative evidence affecting specific deferred income tax asset balances, including the Company’s past and anticipated future performance, the reversal of deferred income tax liabilities, and the availability of tax planning strategies. To the extent a valuation allowance is established in a period, an expense must be recorded within the income tax provision in the consolidated statements of income and comprehensive income.

Revenue Recognition

The Company accounts for revenue for rental income and merchant banking advisory services using the following steps:

• Identify the contract, or contracts, with a customer;
• Identify the performance obligations in the contract;
• Determine the transaction price;
• Allocate the transaction price to the identified performance obligations; and
• Recognize revenue when, or as, the Company satisfies the performance obligations.

The Company combines contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost plus margin approach. Management estimates the amount of total contract consideration the Company expects to receive for variable arrangements by determining the most likely amount we expect to earn from the arrangement based on the expected quantities of services the Company expects to provide and the contractual pricing based on those quantities. The Company only includes some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is subsequently resolved. Management considers the sensitivity of the estimate, the Company’s relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement.

As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration the Company expects to receive in exchange for providing services. The Company typically does not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue.

The Company recognizes contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced to the clients. Unbilled receivables are recorded as accounts receivable when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients, or receive cash, in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.

The Company defers costs to acquire contracts, including commissions, incentives and payroll taxes, if they are incremental and recoverable costs of obtaining a customer contract with a term exceeding one year. Deferred contract costs are reported within other assets and amortized to selling expense over the contract term, which generally ranges from one to five years. The Company has elected to recognize the incremental costs of obtaining a contract with a term of less than one year as a selling expense when incurred. The Company did not have any deferred contract costs as of June 30, 2026 or December 31, 2025.

Stock-Based Compensation Expense

The Company uses the fair-value method of accounting for stock-based compensation awards granted. The Company has determined the fair value of its outstanding stock options on their grant date using the Black-Scholes option pricing model along with multiple Monte Carlo simulations to determine a derived service period as the options vest based upon meeting certain performance conditions. The Company determines the fair value of restricted stock units (“RSUs”) on their grant date using the fair value of the Company’s common stock on the date the RSUs were issued (for those RSUs which vest solely based upon the passage of time). The fair value of these awards is recorded as compensation expense over the requisite service period, which is generally the expected period over which the awards will vest, with a corresponding increase to additional paid-in capital. When the stock options are exercised, or correspondingly, when the RSUs vest, the amount of proceeds together with the amount recorded in additional paid-in capital is recorded in shareholders’ equity.

Recent Accounting Pronouncements

See Note 2, Significant Accounting Policies, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of recently issued accounting pronouncements.

Liquidity and Capital Resources

As of June 30, 2026, we had cash and cash equivalents of $24.9 million. Subsequent to June 30, 2026, we received $15.5 million in connection with the redemption of the FG Merger II Corp. equity holdings and an additional $15.0 million related to the receivable from sale of ETH digital assets. As of July 31, 2026, we had cash and cash equivalents of approximately $51.4 million.

The purpose of liquidity management is to ensure that there is sufficient cash to meet all financial commitments and obligations as they become due. The liquidity requirements of the Company and its subsidiaries have been met primarily by funds generated from operations, proceeds from capital raises, sales of ETH digital assets and certain equity holdings and credit facilities.

Cash Flows

The following table summarizes the Company’s consolidated cash flows for the six months ended June 30, 2026 and 2025 (in thousands).

For the first half of 2026, net cash used in operating activities from continuing operations was approximately $9.3 million compared to cash provided by operating activities from continuing operations of $2.0 million for the first half of 2025. Cash used in operations increased during the first half of 2026 as a result of higher operating expenses as well as an increase in working capital uses.

For the first half of 2026, net cash provided by investing activities from continuing operations was approximately $45.1 million, compared to $3.5 million during the first half of 2025. Cash provided by investing activities during the first half of 2026 primarily included $61.0 million of ETH sales and $0.2 million repayment of a note receivable, partially offset by $15.7 million outflow from purchase of equity holdings. Cash provided by investing activities during the first half of 2025 included $3.6 million of proceeds from the sale of equity securities and $0.1 million repayment of a note receivable, partially offset by $0.3 million of purchases of equity securities.

For the first half of 2026, net cash used in financing activities from continuing operations was approximately $22.8 million compared to $1.4 million during the first half of 2025. Cash used in financing activities during the first half of 2026 included $22.0 million of purchases under our common and preferred share buyback programs, and $0.1 million of principal payments on debt, $0.7 million of payments of dividends on our Series A Preferred Shares. Cash used in financing activities during the first half of 2025 primarily included $0.2 million of principal payments on debt, $0.3 million of withholding taxes paid related to the net settlement of the vesting of RSUs and $0.9 million of payments of dividends on our Series A Preferred Shares.

Evaluation of Disclosure Controls and Procedures

The Company’s management performed an evaluation under the supervision and with the participation of the Company’s principal executive officer and principal financial officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2026. Based upon this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company’s management has concluded its internal control over financial reporting was effective as of the end of the period covered by this report. The Company continues to monitor and assess its internal controls related to digital asset transactions and reporting, and will continue to evaluate the effectiveness of these controls as the business evolves. The Company’s management is committed to ensuring the effectiveness of its internal controls and compliance with applicable regulatory requirements.

There have been no material changes to the risk factors applicable to the Company after its exit from the digital asset business that were previously disclosed in Part I, Item 1A. “Risk Factors” to our annual report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 27, 2026.