FG Communities Holdings Inc.: Form 10-Q for the period ended Jun 30, 2025

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, 2024 on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2025, and in subsequent filings with the SEC.

Unless context denotes otherwise, the terms “Company,” “Fundamental Global” “we,” “us,” and “our,” refer to Fundamental Global 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 Annual Report on Form 10-K 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, general conditions in the global economy; risks associated with operating in the merchant banking and managed services industries, including inadequately priced insured risks and credit risk; 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; any potential conflicts of interest between us and our controlling stockholders and different interests of controlling stockholders; 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

Fundamental Global Inc. (“FG”, “FGF”, the “Company”, “we”, or “us”) is a holding company incorporated in the state of Nevada. On December 9, 2022, FG completed its reincorporation from a Delaware corporation to a Nevada corporation. Our Common Stock and Series A Preferred are currently listed on Nasdaq Stock Market LLC (the “Nasdaq”) under the symbols “FGF” and “FGFPP,” respectively.

On February 29, 2024, FGF and FG Group Holdings, Inc. (“FGH”) closed a plan of merger to combine the companies in an all-stock transaction (the “Merger”). In connection with the Merger, FGH common stockholders received one share of FGF common stock for each share of common stock of FGH held by such stockholder. Upon completion of the Merger, the combined company was renamed to Fundamental Global Inc., and the common stock and Series A cumulative preferred stock of the combined company continued to trade on the Nasdaq under the tickers “FGF” and “FGFPP,” respectively.

On May 3, 2024, Strong Global Entertainment, Inc. (“Strong Global Entertainment” or “SGE”) entered into an acquisition agreement (the “Acquisition Agreement”) with FG Acquisition Corp. (“FGAC”), a special purpose acquisition company (“SPAC”), Strong/MDI Screen Systems, Inc. (“Strong/MDI”), FGAC Investors LLC, and CG Investments VII Inc. The transaction closed on September 25, 2024. As part of the closing, FGAC was renamed Saltire Holdings, Ltd (“Saltire”), and Saltire acquired all of the outstanding shares of one of the Company’s indirect wholly-owned subsidiaries, Strong/MDI. As a result of the acquisition, Strong/MDI became a wholly-owned subsidiary of Saltire.

On May 30, 2024, the Company and Strong Global Entertainment, an operating company in which we held approximately 76% of the Class A common shares, entered into a definitive arrangement agreement and plan of arrangement to combine the companies in an all-stock transaction (the “Arrangement”). Upon completion of the Arrangement, the stockholders of Strong Global Entertainment received 1.5 common shares of the Company for each share of Strong Global Entertainment. The transaction closed on September 30, 2024. Following the closing, Strong Global Entertainment ceased to exist, and its common shares were delisted from NYSE American LLC (“NYSE American”) and deregistered under the Securities Exchange Act of 1934 (the “Exchange Act”). As the Company was the majority shareholder of Strong Global Entertainment, the financial results of Strong Global Entertainment are presented on a consolidated basis in the Company’s condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (this “Form 10-Q”).

As a result of the reverse merger of FGF and FGH, the consolidated financial statements for the periods prior to the merger represent the results of FGH, as the accounting acquirer. For periods subsequent to the merger, the consolidated financial statements represent the combined results of FGH and FGF. As a result, the six months ended June 30, 2024 presents six months of activity related to the FGH operations and four months of activity related to the FGF operations. Accordingly, the results of the current period and the prior period may not be directly comparable. In addition, Strong Studios, Strong/MDI and our reinsurance business are presented as discontinued operations in the accompanying consolidated financial statements.

We sold Strong Studios and Strong/MDI during 2024. The results of those business units are presented as Discontinued Operations in the accompanying consolidated financial statements. We entered into an agreement for the sale of a portion of our reinsurance business for $5.6 million, which closed in the second quarter of 2025. Our original intent was to sell all of the reinsurance business and that remained the case as of June 30, 2025. In connection with the transactions occurring in July 2025, we will reassess those plans as part of our new strategy (see Recent Developments).

Management’s discussion and analysis of financial condition and results of operations reflects the continuing operations of the Company as they existed of June 30, 2025. However, as a result of the recent developments described below, the results reported for the current quarterly period are not indicative of the Company’s future plans or expected future operating results or financial position.

Recent Developments

Closing of Private Placement Offering

On July 29, 2025, we entered into a securities purchase agreement with certain accredited investors (the “Purchasers”) pursuant to which we agreed to sell and issue to the Purchasers in a private placement offering (the “Offering”) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 40,000,000 shares of our common stock (the “Pre-Funded Warrant Shares”) at an offering price of $5.00 per Pre-Funded Warrant, payable at the option of the Purchaser in cash, Bitcoin or ETH, the native token of the Ethereum network.

Each of the Pre-Funded Warrants is exercisable, following the effectiveness of the Charter Amendment, for one share of the Company’s common stock with an exercise price of $0.001 per Pre-Funded Warrant Share and may be exercised at any time until all of the Pre-Funded Warrants issued in the Offering are exercised in full. Certain Pre-Funded Warrants were issued with an automatic exercise feature, which will result in the automatic exercise of such Pre-Funded Warrant upon the effectiveness of the Charter Amendment. Each Purchaser’s ability to exercise its Pre-Funded Warrants in exchange for shares of Common Stock is subject to certain beneficial ownership limitations set forth therein.

On August 4, 2025, we closed on the Offering for expected aggregate gross proceeds of $200 million before deducting placement agent fees and other offering expenses (funded in a combination of cash and cryptocurrencies) to launch our Ethereum treasury strategy. We intend to use the net proceeds from the Offering to fund the acquisition of cryptocurrency, the establishment of our cryptocurrency treasury operations as well as pay all transaction fees, expenses, professional fees and other costs incurred in connection with the Offering and for general corporate purposes.

The Pre-Funded Warrants and the Pre-Funded Warrant Shares were offered in reliance upon the exemption from the registration requirement of the Securities Act pursuant to Section 4(a)(2) thereof and/or Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws.

Charter Amendment

On July 23, 2025, our board of directors (the “Board”) and stockholders holding at least a majority of our outstanding voting shares (the “Consenting Stockholders”) approved an amendment to our Articles of Incorporation to, among other things, increase our authorized capital stock and to change our name (the “Charter Amendment”). The Charter Amendment includes (i) an increase in the total number of authorized shares of common stock from 4,000,000 to 1,000,000,000, the number of authorized shares of preferred stock, par value $.0001 per share, from 99,000,000 to 500,000,000, and the number of authorized shares of 8% cumulative preferred stock, Series A from 1,000,000 to 15,000,000 and (ii) a change in the name of the Company to “FG Nexus Inc.” We filed a preliminary information statement on Schedule 14C (the “Information Statement”) with the Securities and Exchange Commission (the “SEC”) on July 30, 2025 to provide notice to its stockholders of the approval of certain corporate actions, including the Charter Amendment. The Charter Amendment is expected to be filed by the Company as soon as practicable after the required 20-calendar day waiting period following the mailing of the definitive Information Statement to stockholders.

Asset Transfer

The Company intends to transfer a significant portion of its current assets (the “Asset Transfer”) to a trust (the “CVR Trust”) to be established in connection with the creation of contingent value rights (“CVRs”) for the benefit of the Company’s current stockholders. The Company will distribute the CVRs to the Company’s existing stockholders prior to the effectiveness of the Charter Amendment and the exercise of any of the Pre-Funded Warrants sold in the Offering. 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. The Company has fixed August 8, 2025 as the record date for the Company stockholders who will receive the CVRs and the CVRs will be distributed to the Company’s stockholders shortly thereafter.

The transferred assets will include: (i) all interests in Strong Technical Services, Inc., (ii) the preferred shares of Saltire Capital Ltd. plus all accumulated dividends, (iii) all shares or other interests in FG Merchant Partners, (iv) all interests in Firefly Systems Inc., (v) all interests in Green First Forest Products Ltd., (vi) all interests in FG Communities Inc., (vii) all interests in Craveworthy Brands, (viii) all interests in FG Merger II Corp., (ix) all interests in Aldel Financial II Inc., (x) all interests in Greenland Exploration Limited, (xi) all interests in Argo Holdings, (xii) all interests in Think Markets, (xiii) all interests in Pivotal Capital, (xiv) all interests in B-Scada Inc. and (xv) all current cash and cash equivalents of the Company as of the establishment of the CVR Trust.

Following the Asset Transfer, the Company will retain assets relating to, among other things, its reinsurance business segment, its merchant banking business segment, certain real estate assets, and certain equity holdings. The Company expects to enhance and expand its existing financial industry segments through its adoption of an Ethereum treasury, staking and RWA tokenization strategy that will be implemented following the closing of the Offering.

Additional Approvals in connection with the Offering

In connection with the Offering and in accordance with Nasdaq listing rules, our Board and Consenting Stockholders also approved the issuance of: (i) greater than 19.9% of the Company’s outstanding common stock and the related possible change in control of the Company (as defined by Nasdaq listing rules) as a result of the potential issuance to an institutional investor (the “Investor”) of such number of shares as would result in the Investor being the largest beneficial owner of our common stock following the consummation of the Offering and the effectiveness of the Charter Amendment, and (ii) an aggregate of 1,360,000 warrants to strategic advisors and FG Merchant Partners LP concurrently with the closing of the Offering at a price below Nasdaq’s minimum price.

Results of Operations

As a result of the reverse merger of FGF and FGH, the condensed consolidated financial statements for the periods prior to the merger represent the results of FGH, as the accounting acquirer. For periods subsequent to the merger, the condensed consolidated financial statements represent the combined results of FGH and FGF. In addition, Strong Studios, Inc., the reinsurance business, and Strong/MDI are presented as discounted operations in the accompanying condensed consolidated financial statements.

We are closely monitoring U.S. trade policy developments with countries from which we and our customers source product and equipment. There is uncertainty as to the extent and duration of additional tariffs that have or may be imposed on imports from these countries. Additionally, certain of our U.S.-based suppliers source some of their components from these countries, which could result in higher procurement costs from U.S.-based suppliers. Our results of operations in future periods may be adversely impacted if we were unable to navigate the foreign regulatory environment.

Because of the reverse merger transaction, the first half of 2024 includes four months of revenue, expenses and cash flows from FGF whereas the first half of 2025 reflects six full months of consolidated operating activities. Accordingly, comparisons between periods may not be comparable.

Management’s discussion and analysis of financial condition and results of operations reflects the continuing operations of the Company as they existed of June 30, 2025. However, as a result of the recent developments described above, the results reported for the current quarterly period are not indicative of the Company’s future plans or expected future operating results or financial position.

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Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024

Revenue

Total revenue during the three months ended June 30, 2025 increased $11.0 million from the prior year period as a result of higher non-cash equity method adjustments in the current quarter combined with an increase in product and services revenues in our managed services business.

Revenue from products and services, which primarily includes our managed services segment, increased $0.8 million or 9.4% to $9.1 million during the three months ended June 30, 2025 from $8.3 million during the three months ended June 30, 2024. The increase in revenue during the second quarter of 2025 was primarily related to higher digital equipment sales, as well as installation services, as the industry momentum that started towards the end of the first quarter of 2025 continued into the second quarter. We expect those trends to continue in the remainder of the year, however, we are monitoring the economic environment and customer order trends closely as the year progresses.

Gains on our equity holdings were higher during the second quarter of 2025 as compared to the prior year period primarily as a result of increases in the market value of the common stock of Saltire, as well as equity method gains on the common shares of Saltire we directly hold. Our results of equity holdings are impacted by many factors including market volatility, which can be amplified in any given short term measurement period.

Expenses

Total expenses decreased $0.8 million or 7.5% to $10.0 million for the three months ended June 30, 2025 from $10.9 million for the three months ended June 30, 2024. Expenses are comprised of cost of sales related to managed services, costs of the asset management business and selling, general and administrative expenses.

The decrease in total expenses during the second quarter of 2025 compared to the prior year period is comprised of a $1.3 million reduction in general and administrative expenses, partially offset by a $0.5 million increase in costs of products sold and services provided to our customers in connection with year-over-year increase in revenue. The decrease in general and administrative expenses was primarily due to our cost reduction initiatives.

Income from Operations

Income from operations increased $11.9 million or 180.5% to $5.3 million for the three months ended June 30, 2025 from a loss from operations of $6.6 million during the three months ended June 30, 2024. The increase in the income from operations was primarily due to the higher non-cash gains on equity holdings, an increase in gross profit from STS, and lower general and administrative expenses.

Net Income from Continuing Operations

Net income from continuing operations increased $11.6 million to $5.0 million for the three months ended June 30, 2025 from a net loss from continuing operations of $6.6 million during the three months ended June 30, 2024. The increase in net loss from continuing operations was due to the increase in income from operations in the second quarter of 2025, partially offset by higher income tax expense in the current year.

Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024

Revenue

Total revenue during the six months ended June 30, 2025 increased $6.8 million or 77.0% from the prior year period as a result of higher non-cash equity method adjustments in the current quarter, partially offset by a decrease in product sale revenues in our managed services business.

Revenue from products and services, which primarily includes our managed services segment, decreased $0.4 million or 2.4% to $15.9 million during the six months ended June 30, 2025 from $16.3 million during the six months ended June 30, 2024. The decrease in revenue during the first half of 2025 was primarily related to lower product sales as we saw cinema customers delay projects partly due to a softer first quarter release schedule and box office, combined with a reaction to the overall macroeconomic uncertainties in early 2025. We saw order volumes and revenues rebound in the second quarter and expect those trends to continue in the remainder of the year, however, we are monitoring the economic environment and customer order trends closely as the year progresses.

Gains on our equity holdings were $7.2 million higher during the first half of 2025 as compared to the prior year period primarily as a result of increases in the market value of the common stock of Saltire. Our results of equity holdings are impacted by many factors including market volatility, which can be amplified in any given short term measurement period.

Expenses

Total expenses decreased $3.1 million or 14.0% to $19.3 million for the six months ended June 30, 2025 from $22.4 million for the six months ended June 30, 2024. Expenses are comprised of cost of sales related to managed services, costs of the asset management business and selling, general and administrative expenses.

The decrease in total expenses during the first half of 2025 compared to the prior year period is comprised of a $1.4 million reduction in general and administrative costs and a $1.5 million non-cash impairment related to the sale of the Digital Ignition building recognized in the prior year period. The decrease in general and administrative expenses was primarily due to the mergers and our cost reduction initiatives.

Loss from Operations

Loss from operations decreased $10.0 million or 73.7% to $3.6 million for the six months ended June 30, 2025 from $13.5 million during the six months ended June 30, 2024. The improvement in the loss from operations was primarily due to lower general and administrative expenses and higher non-cash gains on equity holdings, partially offset by lower gross profit from STS, and the $1.5 million non-cash impairment related to the sale of the Digital Ignition building recognized in the prior year period.

Net Loss from Continuing Operations

Net loss from continuing operations decreased $8.1 million to $3.7 million for the six months ended June 30, 2025 from $11.8 million during the six months ended June 30, 2024. The improvement in net loss from continuing operations was due to the improvement in loss from operations in the first half of 2025, partially offset by a $1.8 million gain related to the FGF merger transaction that closed in the first quarter of 2024.

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.

Other Holdings

Other holdings consist, in part, of equity holdings made in privately held companies accounted for under the equity method. As discussed further in Note 5 to the accompanying condensed consolidated financial statements, certain holdings held by our equity method investees are valued using Monte-Carlo simulation and option pricing models. Inherent in Monte-Carlo simulation and option pricing models are assumptions related to expected volatility and discount for lack of marketability of the underlying holding. Our investees estimate the volatility of these holdings based on the historical performance of various broad market indices blended with various peer companies which they consider as having similar characteristics to the underlying holding, as well as consideration of price and volatility of relevant publicly traded securities such as SPAC warrants. Our investees also consider the probability of a successful merger when valuing equity for SPACs that have not yet completed a business combination.

Current Expected Credit Loss

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Management determines the allowance for expected credit losses based on several factors, including overall customer credit quality, historical write-off experience and a specific analysis that projects the ultimate collectability of the account. As such, these factors may change over time causing the allowance level and provision for expected credit losses to be adjusted accordingly. Past due accounts are written off when our efforts have been unsuccessful in collecting amounts due.

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 for Products and Services

The Company accounts for revenue 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.

We combine 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. We estimate the amount of total contract consideration we expect 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 we expect to provide and the contractual pricing based on those quantities. We only include 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. We consider the sensitivity of the estimate, our 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 transferring goods or providing services. We typically do 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.

We recognize 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.

We defer 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. We did not have any deferred contract costs as of June 30, 2025 or December 31, 2024.

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

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

Cash Flows

The following table summarizes the Company’s consolidated cash flows for the three months ended June 30, 2025 and 2024 (in thousands).

For the six months ended June 30, 2025, net cash used in operating activities from continuing operations was approximately $3.4 million, compared to $3.2 million for the six months ended June 30, 2024. Cash from operations decreased primarily due to increased working capital.

For the six months ended June 30, 2025, net cash provided by investing activities from continuing operations was approximately $3.5 million, compared to $4.3 million for the six months ended June 30, 2024. Cash provided by investing activities during the six months ended June 30, 2025 primarily included $3.4 million of a net inflow from the sale of equity holdings. Cash provided by investing activities during the six months ended June 30, 2024 included $1.9 million of an increase in cash as a result of the Merger of FGF and FGH, $1.3 million of net proceeds from the sale of the building in Alpharetta and $1.2 million of proceeds from the sale of equity holdings.

For the six months ended June 30, 2025, net cash used in financing activities from continuing operations was approximately $1.7 million compared to $1.3 million for the six months ended June 30, 2024. Cash used in financing activities during the six months ended June 30, 2025 included $0.5 million of principal payments on debt and finance leases, $0.9 million of payments of dividends on our Series A Preferred Shares and $0.3 million of withholding taxes paid related to the net settlement of the vesting of RSUs. Cash used in financing activities during the six months ended June 30, 2024 included $0.4 million of principal payments on debt and finance leases 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, 2025. 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 were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” to our annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC on June 30, 2025.