UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Quarterly Period Ended
Or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices and zip code)
(Registrant’s telephone number, including area code)
FG Nexus Inc.
6408 Bannington Road, Charlotte, NC 28226
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The Stock Market LLC |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller
Reporting Company |
Emerging
Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of the registrant’s common stock as of November 4, 2026 was .
Table of Contents
| 2 |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FG Communities Holdings Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
| September 30, 2026 | December 31, 2025 (1) | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Equity holdings | ||||||||
| Property, plant and equipment, net | ||||||||
| Assets of discontinued operations | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Short-term debt, net of issuance costs | ||||||||
| Deferred income taxes, net | ||||||||
| Liabilities of discontinued operations | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Series A Preferred Shares, $ par and liquidation value, shares authorized, shares issued and outstanding as of September 30, 2026 and shares issued and outstanding as of December 31, 2025 | ||||||||
| Common stock, $ par value; shares authorized, issued and outstanding as of September 30, 2026 and issued and outstanding as of December 31, 2025 (2) | ||||||||
| Treasury stock ( and shares at cost as of September 30, 2026 and December 31, 2025, respectively) | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| (1) | |
| (2) |
See accompanying notes to condensed consolidated financial statements.
| 3 |
FG Communities Holdings Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue: | ||||||||||||||||
| Rental income | $ | $ | $ | $ | ||||||||||||
| Merchant banking advisory fees | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Expenses: | ||||||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Stock-based compensation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on impairment and disposal of assets | ( | ) | ||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income (expense), net | ( | ) | ||||||||||||||
| Gain (loss) on equity holdings | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain on financial instruments | ||||||||||||||||
| Foreign currency transaction gain (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss from continuing operations before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) income from discontinued operations (Note 3) | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Premium on repurchase of Series A Preferred Shares | ( | ) | ( | ) | ||||||||||||
| Dividends declared on Series A Preferred Shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net (loss) income per common share: | ||||||||||||||||
| Continuing operations | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Discontinued operations | ) | ) | ||||||||||||||
| Total | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic and diluted (1) | ||||||||||||||||
| (1) |
See accompanying notes to condensed consolidated financial statements.
| 4 |
FG Communities Holdings Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Adjustment to postretirement benefit obligation | ||||||||||||||||
| Unrealized currency translation (loss) gain of equity method holdings | ( | ) | ( | ) | ||||||||||||
| Currency translation adjustment | ||||||||||||||||
| Total other comprehensive (loss) income | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying notes to condensed consolidated financial statements.
| 5 |
FG Communities Holdings Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands)
| Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||
| Shares Outstanding | Amount | Shares Outstanding(1) | Amount | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Repurchase of Series A Preferred Shares | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||
| Repurchase of common stock | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Vesting of restricted stock | - | |||||||||||||||||||||||||||||||||||
| Dividends on Series A Preferred Shares ($ per share) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net other comprehensive income | - | - | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Repurchase of Series A Preferred Shares | ( | ) | ( | ) | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Repurchase of common stock | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Vesting of restricted stock and payment of withholding taxes | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Dividends on Series A Preferred Shares ($ per share) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Repurchase of Series A Preferred Shares | ( | ) | ( | ) | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Repurchase of common stock | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Vesting of restricted stock and payment of withholding taxes | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Dividends on Series A Preferred Shares ($ per share) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||
| Shares Outstanding | Amount | Shares Outstanding(1) | Amount | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | |||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Vesting of restricted stock | - | |||||||||||||||||||||||||||||||
| Dividends on Series A Preferred Shares ($ per share) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||
| Vesting of restricted stock and payment of withholding taxes | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Dividends on Series A Preferred Shares ($ per share) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net other comprehensive income | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Proceeds from private placement, net of offering costs | - | |||||||||||||||||||||||||||||||
| Proceeds from ATM, net of offering costs | - | |||||||||||||||||||||||||||||||
| Transfer of assets to CVR Trust | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Vesting of restricted stock and payment of withholding taxes | - | |||||||||||||||||||||||||||||||
| Dividends on Series A Preferred Shares ($ per share) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net other comprehensive income | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| (1) |
See accompanying notes to condensed consolidated financial statements.
| 6 |
FG Communities Holdings Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Net unrealized loss on fair value equity holdings | ||||||||
| Loss from equity method holdings | ||||||||
| Unrealized gain from cost method holdings | ( | ) | ||||||
| Gain on forward purchase agreement derivative | ( | ) | ||||||
| Loss on disposal of fixed assets | ||||||||
| Net realized gain on sale of equity holdings | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| Deferred income taxes | ( | ) | ||||||
| Stock compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other assets | ( | ) | ( | ) | ||||
| Current income taxes | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities from discontinued operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sales of equity securities | ||||||||
| Proceeds from redemption of Saltire preferred shares | ||||||||
| Proceeds from sales (purchases) of ETH digital assets | ( | ) | ||||||
| Purchases of equity securities | ( | ) | ( | ) | ||||
| (Issuance) collection of note receivable, net | ( | ) | ||||||
| Net cash provided by (used in) investing activities from continuing operations | ( | ) | ||||||
| Net cash provided by investing activities from discontinued operations | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from Private Placement Offering, net of costs | ||||||||
| Proceeds from sales under ATM Offering, net of costs | ||||||||
| Payment of dividends on preferred shares | ( | ) | ( | ) | ||||
| Distribution of cash to CVR Trust | ( | ) | ||||||
| Net repayments on credit facility | ( | ) | ||||||
| Purchases of common shares | ( | ) | ||||||
| Purchases of Series A preferred shares | ( | ) | ||||||
| Payment of withholding taxes in connection with vesting of RSUs | ( | ) | ( | ) | ||||
| Principal payments on short-term debt | ( | ) | ||||||
| Net cash (used in) provided by financing activities from continuing operations | ( | ) | ||||||
| Net cash used in financing activities from discontinued operations | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents from continuing operations | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents from continuing operations | ( | ) | ||||||
| Net (decrease) increase in cash and cash equivalents from discontinued operations | ( | ) | ||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
| 7 |
FG Communities Holdings Inc.
Notes to Condensed Consolidated Financial Statements
Note 1. Nature of Business
FG Communities Holdings Inc. (formerly FG Nexus Inc.) (“FG Communities Holdings”, the “Company”, “we”, or “us”), is a Nevada corporation focused on the acquisition, ownership and operation of income-producing real estate, with an emphasis on manufactured housing communities. The Company also conducts merchant banking activities, including advisory services, capital formation and investments in other businesses.
Real Estate Strategy and Operations
In June 2026, the Company’s Board of Directors (the “Board”) authorized management to allocate capital to direct real estate acquisitions in connection with the Company’s exit from its digital asset business. The Company’s real estate strategy focuses on acquiring and operating manufactured housing communities that provide affordable housing.
As of September 30, 2026, the Company’s directly owned real estate consisted of a property in Quebec, Canada, leased under a long-term triple-net operating lease. In October 2026, the Company acquired its initial manufactured housing communities. These acquisitions will be included in the Company’s real estate segment beginning in the fourth quarter of 2026.
Separately, during September 2026, the Company invested
$
Operating Segments
As of September 30, 2026, the Company had two primary operating segments. See Note 14 for segment financial information.
Real Estate
The real estate segment includes rental income and expenses associated with the Company’s Quebec property. Directly owned manufactured housing communities acquired after September 30, 2026 will be included in the real estate segment in future financial statements.
Merchant Banking
The merchant banking segment includes advisory and support services provided through FG Management Solutions LLC, special purpose acquisition company (“SPAC”) sponsorship activities and the Company’s equity holdings. Services provided include strategic, administrative and regulatory support for SPACs and other merchant banking clients. The Company also co-founded FG Merchant Partners, LP (“FGMP”) to participate in SPAC sponsorships and other merchant banking activities.
| 8 |
Discontinued Operations
The Company exited its digital asset business during the second quarter of 2026 and sold all of its remaining digital assets before June 30, 2026. The Company also completed the sale of its remaining reinsurance business during the first quarter of 2026 and transferred its managed services business to the CVR Trust during August 2025.
The results of these businesses are presented as discontinued operations for the applicable periods. See Note 3.
Recent Developments and Transactions
Reverse Stock Split
On
January 21, 2026, our Board approved a reverse stock split of the authorized, issued and outstanding shares of our common stock, par
value $ per share (the “Common Stock”) at a ratio of
Agreement to Sell Reinsurance Business
In
October 2025, the Company entered into an agreement to sell the remaining portion of its reinsurance business. Pursuant to the agreements,
the Company received (1) the release of $
Letter of Intent to Sell Quebec Real Estate
In
October 2025, the Company signed a non-binding letter of intent to sell its Quebec property for $
Asset Transfer and CVR Trust
In August 2025, the Company transferred a significant portion of its 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.
| 9 |
Note 2. Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements include the accounts of the Company and all controlled domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Unless specifically indicated otherwise, references to the “Company” include the Company and its controlled domestic and foreign subsidiaries.
The condensed consolidated financial statements included in this report are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America (also referred to as “GAAP”) for annual reporting purposes or those made in the Company’s Annual Report on Form 10-K. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
In addition, the current and historical financial results of managed services, reinsurance and digital assets are presented as discontinued operations and are excluded from results from continuing operations in the accompanying condensed consolidated financial statements. The proceeds received from the sale of Ethereum (“ETH”) have been presented as inflows from continuing operations as those funds are expected to be used to fund the Company’s ongoing operations.
The condensed consolidated balance sheet as of December 31, 2025, was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary to present a fair statement of the financial position and the results of operations and cash flows for the respective interim periods. Certain prior period balances have been reclassified to conform to current period presentation. The results for interim periods are not necessarily indicative of trends or results expected for a full year.
Unless otherwise indicated, all references to “dollars” and “$” in this Form 10-Q are to, and amounts are presented in, U.S. dollars.
Use of Management Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods. Estimates and their underlying assumptions are reviewed on an ongoing basis. Changes in estimates are recorded in the accounting period in which they are determined.
Our business and the businesses of our equity holdings are subject to general political and economic risks, including the adverse impact of changes to international trade and tariff policies, which we are closely monitoring. The uncertainty as to the extent and duration of additional tariffs that have or may be imposed could impact estimates we have made, including those for credit losses and valuation of our equity securities and other holdings.
Consolidation Policies
The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.
| 10 |
The condensed consolidated financial statements include the accounts of the Company and entities in which it is required to consolidate under either the Variable Interest Entity (“VIE”) or Voting Interest Entity (“VOE”) models. Both models require the reporting entity to identify whether it has a controlling financial interest in a legal entity and is therefore required to consolidate the legal entity. Under the VOE model, a reporting entity with ownership of a majority of the voting interest of a legal entity is generally considered to have a controlling financial interest. The VIE model was established for situations in which control may be demonstrated other than by the possession of voting rights in a legal entity and instead focuses on the power to direct the activities that most significantly impact the legal entity’s economic performance, as well as the rights to receive benefits and obligations to absorb losses that could potentially be significant to the legal entity.
The determination of whether a legal entity is consolidated under either model is reassessed where there is a substantive change in the governing documents or contractual arrangements of the entity, to the capital structure of the entity or in the activities of the entity. Management continuously reassesses whether it should consolidate under either model. There have been no changes to the legal entities that are consolidated during the nine months ended September 30, 2026. The Company does not have any non-consolidated VIEs as of September 30, 2026.
Digital Assets
As discussed above, the Company sold all of its digital assets prior to June 30, 2026. Prior to the sale of the digital assets and exiting the digital asset business, the Company held ETH and wrapped staked ETH (“wstETH”). ETH and wstETH were presented separately on the condensed consolidated balance sheets under the captions “ETH digital assets” and “Digital intangible assets, at cost less impairment” respectively. The Company had ownership of and control over its digital assets which were held through custodial arrangements with qualified third-party custodians.
ETH Digital Assets
The Company’s ETH digital assets fell within the scope of Accounting Standards Codification (“ASC”) 350-60, Intangible – Goodwill and Other – Crypto Assets. The Company elected to measure its ETH digital assets at fair value, with changes in fair value recognized in earnings.
In determining the fair value of the ETH in accordance with ASC 820, Fair Value Measurement, the Company utilized Coinbase as the principal market. The activity from remeasurement of ETH at fair value was reflected in the condensed consolidated statements of operations within Unrealized measurement of fair value of ETH digital assets. The Company used a first-in, first-out methodology to assign costs to digital assets for purposes of the digital assets held and realized gains and losses. Sales and purchases of digital assets were reflected as cash flows from investing activities in the condensed consolidated statements of cash flows.
Digital Intangible Assets, at Cost Less Impairment
Digital intangible assets, at cost less impairment are recognized at fair value on the date received, which represented their cost basis. Digital intangible assets, at cost less impairment, such as wstETH, do not fall in the scope of ASC 350-60 for subsequent measurement. wstETH represents a receipt token, which in general and by design, grants the holder an enforceable right to redeem ETH for which it was exchanged. Therefore, it fails the ‘other goods and services criterion’ in ASC 350-60-15-1(b) and is outside the scope of ASC 350-60. Digital intangible assets, at cost less impairment were therefore subsequently measured at cost, net of any impairment losses incurred since acquisition, in accordance with ASC 350-30, Intangibles—Goodwill and Other—General Intangibles Other Than Goodwill.
The Company performed an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices in the Company’s principal market, indicated that it is more likely than not that any of the assets are impaired. The quoted (unadjusted) prices on the Coinbase exchange, the active exchange that the Company determined as its principal market, were used in the analysis. In determining if an impairment has occurred, the Company considered the lowest price of one wstETH quoted on the Coinbase exchange, at any time since acquiring the specific wstETH held by the Company. If the carrying value of a wstETH exceeded that lowest intraday price, an impairment loss occurred with respect to that wstETH in the amount equal to the difference between its carrying value and such lowest price. Impairment losses were recognized in the period in which the impairment occurs and are reflected within Impairment of digital assets in the Company’s condensed consolidated statements of operations. The impaired digital assets were written down to their fair value at the time of impairment, which became the new cost basis for those assets. The cost basis of wstETH was not adjusted upward for any subsequent increase in fair value.
| 11 |
Staking
Native Staking
Beginning in the third quarter of 2025, the Company used the proceeds from its capital raising activities to acquire and deploy ETH in native staking activities. The Company has entered into separate contractual agreements with various third-party entities to facilitate its ETH staking activities. The Company commenced native staking in August of 2025, which continued through December 2025. The Company did not engage in native staking activities during the nine months ended September 30, 2026.
The Company utilized a third-party asset manager to manage and stake ETH on its behalf. Through its agreement with the asset manager, the Company’s ETH was held by qualified custodians, staked in the Ethereum protocol, and the stake is delegated to third party validators. When chosen as validators by the Ethereum network, these validators earned staking rewards and transaction fees proportional to the amount of stake delegated to them. The Company recognized rewards from native staking as revenue in accordance with ASC 606, Revenue from Contracts with Customers. However, since the amount of rewards were not known by the Company until a validation activity is completed, and the Company received rewards in their custodial account, the staking rewards were constrained under the Topic 606 guidance on variable consideration until such time.
Because the Company was not the principal to the block validation service, it did not control the full output of the reward-generating activity, and instead receives net staking rewards, after validator commissions are deducted. As such, the Company presented staking revenue on a net basis, reflecting only the portion of protocol rewards to which it was entitled. Asset management and other fees were presented as separate operating expenses within General and administrative expenses on the condensed consolidated statements of operations.
Liquid Staking
The Company also participated in liquid staking through a liquid staking protocol. One key difference and intended benefit of liquid staking versus native staking is that it allowed the Company to earn staking rewards, like native staking, but provides liquidity and the ability to enter into other transactions through the use of receipt token. Instead of directly locking ETH into Ethereum’s staking deposit contract, the Company deposited ETH through its custodian into the liquid staking protocol’s smart contract. The liquid staking protocol then controlled the ETH for deposit into the Ethereum’s staking deposit contract and further delegation to its chosen validators. In exchange for staking its ETH, the Company received wstETH, a freely transferable ERC-20 liquid staking receipt token, which enables participation in decentralized finance (DeFi) and other crypto markets while the underlying ETH remained staked on Ethereum. Upon staking ETH through the liquid staking protocol, the ETH was derecognized because the liquid staking protocol obtains the ability to deploy and direct its use, and the wstETH token received concurrently was then recognized. Any gain or loss on the derecognition of ETH and the recognition of the wstETH was recognized in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”) based on the difference between the carrying amount of the ETH staked and the fair value of the wstETH received; and included in Realized loss on digital assets in the Company’s condensed consolidated statements of operations.
The liquid staking protocol uses a floating conversion rate, or protocol conversion rate, between the receipt token and staked tokens, reflecting the value of accrued network rewards, penalties, and fees associated with the staked ETH. The conversion rate between wstETH and ETH increases over time as staking rewards accrue to the protocol; no new wstETH are received. Staking rewards in the form of ETH are only received upon redemption of wstETH.
Since wstETH is accounted for under ASC 350-30, increases in wstETH fair value while the Company remains staked with the liquid staking protocols, were not recognized. There was no ongoing performance obligation following the staking of ETH through the liquid staking protocol. Additionally, wstETH is a non-rebasing token, meaning its quantity remains fixed over time. Staking rewards are not continuously reflected in token balances but are instead realized separately. Staking rewards are therefore recognized only when the wstETH is redeemed, measured at the fair value of ETH at contract inception, which is when the ETH were staked. The Company redeemed its wstETH during the second quarter of 2026. Accordingly, the Company recognized revenue from staking rewards on its wstETH during the nine months ended September 30, 2026, which is included as part of net loss from discontinued operations.
| 12 |
Derivatives – Option Contracts
During the first quarter of 2026, the Company began entering into ETH-denominated option contracts, primarily through the sale of put and call options, as part of its digital asset treasury strategy. These contracts meet the definition of derivative instruments under ASC 815, Derivatives and Hedging. The Company does not designate any derivative instruments as hedging instruments for accounting purposes.
Upon execution of an option contract, premiums received are recorded as a derivative liability on the condensed consolidated balance sheet. Derivative assets and liabilities are subsequently measured at fair value at each reporting date, with changes in fair value recognized in earnings. If an option is exercised, the derivative liability is derecognized upon settlement. If an option expires unexercised, the related derivative liability is derecognized, with the resulting premium recorded in income.
Gains and losses related to ETH option contracts, including the effects of fair value remeasurement and settlements, are recorded within Gain on financial instruments on the condensed consolidated statements of operations.
The fair value of ETH option contracts is determined using observable market inputs where available, including quoted prices for similar instruments, ETH spot prices, implied volatility, time to expiration, and counterparty credit considerations. These inputs are classified within Level 2 of the fair value hierarchy.
As
of September 30, 2026, the Company did not have any outstanding ETH option contracts. For the three and nine months ended September 30,
2026, the Company recognized a net realized gain of $
Holdings in Equity Securities
Prior
to the distribution of assets to the CVR Trust, the Company’s equity and other holdings consisted, in part, of equity holdings
made in privately held companies accounted for under the equity method. The Company utilizes the equity method to account for holdings
when it possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee.
The ability to exercise significant influence is presumed when the holder possesses more than
In applying the equity method, the Company records the holding at cost and subsequently increases or decreases the carrying amount of the holding by our proportionate share of the net earnings or losses and other comprehensive income of the investee. The Company records dividends or other equity distributions as reductions in the carrying value of the holding. Should net losses of the investee reduce the carrying amount of the holding to zero, additional net losses may be recorded if other holdings in the investee are at-risk, even if the Company has not committed to provide financial support to the investee. Such additional equity method losses, if any, are based upon the change in our claim on the investee’s book value.
When the Company receives distributions from its equity method holdings, it utilizes the cumulative earnings approach. When classifying the related cash flows under this approach, the Company compares the cumulative distributions received, less distributions received in prior periods, with the Company’s cumulative equity in earnings. Cumulative distributions that do not exceed cumulative equity in earnings represent returns on holdings and are classified as cash inflows from operating activities. Cumulative distributions in excess of cumulative equity in earnings represent returns on holdings and are classified as cash inflows from investing activities.
| 13 |
In addition to holdings accounted for under the equity method of accounting, other holdings also consist of equity we have purchased in a corporation for which there does not exist a readily determinable fair value. The Company accounts for these holdings at their cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar holdings by the same issuer. When the Company observes an orderly transaction of an investee’s identical or similar equity securities, the Company adjusts the carrying value based on the observable price as of the transaction date. Once the Company records such an adjustment, the holding is considered an asset measured at fair value on a nonrecurring basis. Any profit distributions the Company receives on these holdings are included in Gain (loss) on equity holdings.
See Note 4 for additional information regarding the Company’s equity holdings.
Cash and Cash Equivalents
Cash and cash equivalents include cash and short-term, highly liquid financial instruments with original maturities of 90 days or less.
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.
| 14 |
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 September 30, 2026 or December 31, 2025.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes, whereby deferred income tax assets and liabilities are recognized for (i) the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and (ii) loss and tax credit carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not and a valuation allowance is established for any portion of a deferred tax asset that management believes will not be realized. Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense (benefit).
Concentration of Credit Risk
Financial instruments which potentially expose the Company to concentrations of credit risk include holdings in equity securities and cash.
The
Company maintains its cash with a major U.S. domestic banking institution which is insured by the Federal Deposit Insurance Corporation
(“FDIC”) for up to $
The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – Stock Compensation, which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model using assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate along with multiple Monte Carlo simulations to determine a derived service period as the options vest based upon meeting certain performance conditions. The fair value of each stock option award is recorded as compensation expense on a straight-line basis over the requisite service period, which is generally the period in which the stock options vest, with a corresponding increase to additional paid-in capital.
The Company has also issued restricted stock units (“RSUs”) to certain of its employees and directors which have been accounted for as equity-based awards since, upon vesting, they are required to be settled in the Company’s common shares. We have used the fair value of the Company’s common stock on the date the RSUs were issued to estimate the grant date fair value of those RSUs which vest solely based upon the passage of time. The fair value of each RSU is recorded as compensation expense over the requisite service period, which is generally the expected period over which the awards will vest.
Based upon the Company’s historical forfeiture rates relating to stock options and RSUs, the Company has not made any adjustment to stock compensation expense for expected forfeitures as of September 30, 2026.
| 15 |
Fair Value of Financial Instruments
The carrying values of certain financial instruments, including cash, accounts receivable, short-term holdings, deposits held, accounts payable, other accrued expenses, and short-term debt, approximate fair value due to their short-term nature. The Company measures the fair value of financial instruments in accordance with GAAP which defines fair value as the exchange price that would be received for an asset (or paid to transfer a liability) in the principal or most advantageous market for the asset (or liability) in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s short-term debt is recorded at historical cost. See Note 5 for further information on the fair value of the Company’s financial instruments.
Basic income (loss) per common share is computed using the weighted average number of shares outstanding during the respective period.
Diluted income (loss) per common share assumes conversion of all potentially dilutive outstanding stock options, restricted stock units, warrants or other convertible financial instruments. Potential common shares outstanding are excluded from the calculation of diluted income (loss) per share if their effect is anti-dilutive.
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. ASU 2024-03 also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of ASU 2024-03 can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the consolidated financial statements. While early adoption is permitted, the Company does not plan to adopt ASU 2024-03 early. ASU 2024-03 will likely result in additional disclosures being included in the Company’s financial statements once adopted. The Company is currently evaluating the provisions of ASU 2024-03.
Note 3. Discontinued Operations
Digital Assets
Following the private placement that closed in August 2025, the Company previously transitioned its operations to focus primarily on the tokenization of real-world assets supported by a digital asset treasury model with ETH as the Company’s initial primary treasury asset. The Company’s treasury strategy was focused on commercializing and expanding the tokenization of real-world assets, potentially including affordable housing, reinsurance, real estate and other asset classes. The Company’s digital asset portfolio was comprised of a combination of ETH and wrapped staked ETH (“wstETH”).
In June 2026, the Company’s Board authorized management to exit the Company’s digital asset business. As a result, the Company sold all of its cryptocurrency assets prior to the end of the second quarter of 2026.
Reinsurance
The Company’s former wholly owned reinsurance subsidiary, FG Reinsurance Ltd (“FGRe”), a Cayman Islands limited liability company, provides specialty property and casualty reinsurance. During the fourth quarter of 2024, the Board approved a plan to evaluate the potential sale of the Company’s reinsurance business. As a result, management evaluated the classification of its reinsurance business as a discontinued operation as of December 31, 2024 and determined the reinsurance business is a component of an entity and represented a discontinued operation. Accordingly, the reinsurance business has been included as part of discontinued operations for all periods presented.
| 16 |
On
March 14, 2025, the Company entered into an agreement for the sale of the entire issued share capital of FG RE Corporate Member Limited
and for the planned commutation of its Lloyds of London reinsurance treaties UHA 251 22, B1868HT2300259, and B1868HT2400259. The transaction
closed during the second quarter of 2025, and the Company received consideration of $
In
October 2025, the Company entered into an agreement to sell the remaining portion of its reinsurance business, which closed during the
first quarter of 2026. Pursuant to the agreements, the Company received (1) the release of $
During
the first quarter of 2026, the Company recorded a $
Strong Technical Services, Inc.
On August 8, 2025, the Company transferred its ownership of Strong Technical Services, Inc. (its managed services operating segment) to the CVR Trust, as described above. Management evaluated the classification of Strong Technical Services as a discontinued operation and determined it is a component of an entity and represented a discontinued operation. Accordingly, the managed services segment is included as part of discontinued operations in the accompanying consolidated financial statements.
The major line items constituting the net (loss) income from discontinued operations during the three and nine months ended September 30, 2026 and September 30, 2025 are as follows (in thousands):
| Three Months Ended September 30, 2026 | ||||||||||||
| Digital Assets | Reinsurance | Total | ||||||||||
| Staking rewards | $ | $ | $ | |||||||||
| General and administrative expenses | ( | ) | ( | ) | ||||||||
| Loss on ETH digital assets | ( | ) | ( | ) | ||||||||
| Total expenses | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||||||
| Other expense | ||||||||||||
| Loss from discontinued operations before taxes | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||
| Net loss from discontinued operations | $ | ( | ) | $ | $ | ( | ) | |||||
| 17 |
| Three Months Ended September 30, 2025 | ||||||||||||||||
| Digital Assets | Managed Services | Reinsurance | Total | |||||||||||||
| Net product and services revenue | $ | $ | $ | $ | ||||||||||||
| Net premiums earned | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of products and services revenues | ( | ) | ( | ) | ||||||||||||
| Net losses and loss adjustment expenses | ( | ) | ( | ) | ||||||||||||
| Amortization of deferred policy acquisition costs | ( | ) | ( | ) | ||||||||||||
| Realized loss on cryptocurrency assets | ( | ) | ( | ) | ||||||||||||
| Unrealized gain on ETH digital assets | ||||||||||||||||
| Selling and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total expenses | ( | ) | ( | ) | ||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Income (loss) from discontinued operations before taxes | ( | ) | ||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income (loss) from discontinued operations | $ | $ | $ | ( | ) | $ | ||||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||
| Digital Assets | Reinsurance | Total | ||||||||||
| Staking rewards | $ | $ | $ | |||||||||
| General and administrative expenses | ( | ) | ( | ) | ||||||||
| Loss on ETH digital assets | ( | ) | ( | ) | ||||||||
| Gain on digital intangible assets | ||||||||||||
| Impairment of digital intangible assets | ( | ) | ( | ) | ||||||||
| Gain on sale of reinsurance business | ||||||||||||
| Total expenses | ( | ) | ( | ) | ||||||||
| (Loss) income from operations | ( | ) | ( | ) | ||||||||
| Other expense | ||||||||||||
| (Loss) income from discontinued operations before taxes | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||
| Net (loss) income from discontinued operations | $ | ( | ) | $ | $ | ( | ) | |||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||
| Digital Assets | Managed Services | Reinsurance | Total | |||||||||||||
| Net product and services revenue | $ | $ | $ | $ | ||||||||||||
| Net premiums earned | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of products and services revenues | ( | ) | ( | ) | ||||||||||||
| Net losses and loss adjustment expenses | ( | ) | ( | ) | ||||||||||||
| Amortization of deferred policy acquisition costs | ( | ) | ( | ) | ||||||||||||
| Realized loss on cryptocurrency assets | ( | ) | ( | ) | ||||||||||||
| Unrealized gain on ETH digital assets | ||||||||||||||||
| Selling and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment of assets | ( | ) | ( | ) | ||||||||||||
| Total expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Income (loss) from operations | ( | ) | ||||||||||||||
| Other income | ||||||||||||||||
| Income (loss) from discontinued operations before taxes | ( | ) | ||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income (loss) from discontinued operations | $ | $ | $ | ( | ) | $ | ||||||||||
| 18 |
The liabilities of discontinued operations as of September 30, 2026 relate to obligations in connection with exiting the digital asset business. The major line items constituting the assets and liabilities of discontinued operations as of December 31, 2025 are as follows (in thousands):
| December 31, 2025 | ||||||||||||
Digital Assets | Reinsurance | Total | ||||||||||
| ETH digital assets | $ | $ | $ | |||||||||
| Reinsurance balance receivable | ||||||||||||
| Funds deposited with reinsured companies | ||||||||||||
| Total assets of discontinued operations | $ | $ | $ | |||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | |||||||||
| Loss and loss adjustment expense reserves | ||||||||||||
| Present value of future profits | ||||||||||||
| Total liabilities of discontinued operations | $ | $ | $ | |||||||||
Note 4. Equity Holdings
As of September 30, 2026 and December 31, 2025, the Company’s equity holdings consisted of the following ($ in thousands):
| September 30, 2026 | December 31, 2025 | |||||||||||
| Carrying Amount | Economic Interest | Carrying Amount | Economic Interest | |||||||||
| Equity Method Holdings | ||||||||||||
| Saltire Capital Ltd. | $ | $ | ||||||||||
| Devondale Holdings LLC | ||||||||||||
| Cost Method Holdings | ||||||||||||
| FG Communities Inc. | n/a | |||||||||||
| USFM Corporation | n/a | |||||||||||
| Total | $ | $ | ||||||||||
Gain (loss) on equity holdings for the three and nine months ended September 30, 2026 and September 30, 2025 were as follows (in thousands):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||
| Realized gain on common stock holdings | $ | $ | $ | $ | ||||||||||||
| Unrealized gain (loss) in value on common stock holdings | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on equity method holdings | ( | ) | ( | ) | ( | ) | ||||||||||
| Dividend income | ||||||||||||||||
| Gain on cost method holdings | ||||||||||||||||
| Other | ||||||||||||||||
| Net gain (loss) on equity holdings and other holdings | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
During
the three and nine months ended September 30, 2026, the Company recorded an equity method gain on the shares of Saltire (as defined
below) of $
During
the three and nine months ended September 30, 2025, the Company recorded an equity method loss on the shares of Saltire of $
| 19 |
Equity Method Holdings
Saltire Capital Ltd.
As
of September 30, 2026, the Company held approximately
Devondale Holdings LLC
As
discussed in Note 3, the Company entered into an agreement for the sale of its reinsurance business to Devondale. As a result of the
transaction, the Company received a
Cost Method Holdings without Readily Determinable Fair Value
In addition to our equity method holdings, other holdings which do not have a readily determinable fair value are accounted for at their cost, subject to any adjustment from time to time due to impairment or observable price changes in orderly transactions. When the Company observes an orderly transaction of an investee’s identical or similar equity securities, the Company adjusts the carrying value based on the observable price as of the transaction date. Any profit distributions the Company receives on these holdings are included in Gain (loss) on equity holdings.
USFM Corporation
During
the first quarter of 2026, the Company entered into a subscription agreement with USFM Corporation (“USFM”) pursuant to which
the Company purchased common shares of USFM at a total cost of $
FG Communities Inc.
During
the third quarter of 2026, the Company entered into a subscription agreement with FGCI pursuant to which the Company purchased
approximately million common shares of FGCI at a total cost of $
Impairment
For equity securities without readily determinable fair values, impairment is determined via a qualitative assessment which considers indicators to evaluate whether the holding is impaired. Some of these indicators include a significant deterioration in the earnings performance or asset quality of the investee, a significant adverse change in regulatory, economic or general market conditions in which the investee operates, or doubt over an investee’s ability to continue as a going concern. If the holding is deemed to be impaired after conducting this analysis, management would estimate the fair value of the holding to determine the amount of impairment loss.
| 20 |
For equity method holdings, evidence of a loss in value might include a series of operating losses of an investee, the absence of an ability to recover the carrying amount of the holding, or a deterioration in the value of the investee’s underlying assets. If these, or other indicators, lead to the conclusion that there is a decrease in the value of the holding that is other than temporary, the Company would recognize that decrease in value even though the decrease may be in excess of what would otherwise be recognized under the equity method of accounting.
The risks and uncertainties inherent in the assessment methodology used to determine impairment include, but may not be limited to, the following:
| ● | the opinions of professional appraisers could be incorrect; | |
| ● | the past operating performance and cash flows generated from the investee’s operations may not reflect their future performance; and | |
| ● | the estimated fair values for holdings for which observable market prices are not available are inherently imprecise. |
As
discussed above, the Company recorded an $
Fair Value Method Holding
During the second quarter of 2026,
pursuant to the Forward Purchase Agreement (as defined below) the Company purchased approximately
million shares of FG Merger II Corp (“FGMC”) at a total cost of approximately $
Note 5. Fair Value Measurements
The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. The FASB has issued guidance that defines fair value as the exchange price that would be received for an asset (or paid to transfer a liability) in the principal, or most advantageous market in an orderly transaction between market participants. This guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance categorizes assets and liabilities at fair value into one of three different levels depending on the observation of the inputs employed in the measurements, as follows:
| ● | Level 1 – inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets providing the most reliable measurement of fair value since it is directly observable. | |
| ● | Level 2 – inputs to the valuation methodology which include quoted prices for similar assets or liabilities in active markets. These inputs are observable, either directly or indirectly, for substantially the full-term of the financial instrument. | |
| ● | Level 3 – inputs to the valuation methodology which are unobservable and significant to the measurement of fair value. |
Forward Purchase Agreement
In May 2026, the Company entered into an Assignment and Novation Agreement with Atsion Opportunity Fund LLC – Series 2 (“Atsion”), FGMC and BOXABL, Inc. (“BOXABL”) (the “Forward Purchase Agreement”) pursuant to which the Company assumed 50% of certain rights and obligations under an OTC Equity Prepaid Forward Transaction originally entered into between Atsion, FGMC and BOXABL. Prior to its merger with BOXABL in July 2026, FGMC was a SPAC.
The Forward Purchase Agreement relates to shares of FGMC’s Class A common stock prior to the consummation of the business combination with BOXABL and, following consummation of the business combination, shares of Class A common stock of the combined company. The maximum number of shares subject to the Forward Purchase Agreement allocated to the Company is 1.5 million shares.
Following consummation of the business combination, the Forward Purchase Agreement is subject to cash settlement based principally on the daily volume-weighted average price of the underlying shares during the applicable valuation period, subject to the contractual settlement amount adjustment and other provisions of the Forward Purchase Agreement.
| 21 |
The
Forward Purchase Agreement is accounted for as a derivative financial instrument under ASC 815 and is measured at fair value with changes
in fair value recognized in earnings. The Company evaluates the derivative at each reporting date and recognizes changes in fair value
in its condensed consolidated statement of operations. During the three and nine months ended September 30, 2026, the Company recorded
a $
The
Company applies ASC 820 in the valuation of the derivative related to the Forward Purchase Agreement for financial statement
purposes. The fair value of the derivative asset was determined using a Monte Carlo simulation model that incorporates the reference
price (as defined in the Forward Purchase Agreement) as of September 30, 2026 ($), the closing price of BOXABL common stock as
of September 30, 2026 ($), and the projected volatility of BOXABL common stock (
ETH Digital Assets
The Company applies ASC 820 in the valuation of ETH held by the Company for financial statement purposes. The fair value of ETH uses Level 1 inputs to reflect the price that would be received for ETH in a current sale, which assumes an orderly transaction between market participants on the measurement date in the Company’s principal market, or in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. The Company determines its principal market (or in the absence of a principal market, the most advantageous market) on a periodic basis to determine which market is its principal market for the purpose of calculating fair value for the creation of quarterly and annual financial statements. Issuer-specific events, market trends, bid/ask quotes of brokers and information providers and other data may be reviewed in the course of making a good faith determination of the digital asset’s fair value.
Financial instruments measured, on a recurring basis, at fair value in accordance with the guidance promulgated by the FASB as of September 30, 2026 and December 31, 2025 are as follows (in thousands):
| As of September 30, 2026 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Forward Purchase Agreement derivative asset | $ | $ | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| As of December 31, 2025 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| ETH digital assets | $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
A rollforward of the assets classified within Level 3 of the fair value hierarchy for the nine months ended September 30, 2026 is as follows (in thousands):
| Balance as of December 31, 2025 | $ | |||
| Addition related to Forward Purchase Agreement derivative asset | ||||
| Proceeds from settlements | ( | ) | ||
| Unrealized gain | ||||
| Balance as of September 30, 2026 | $ |
Note 6. Property, Plant and Equipment
Property,
plant and equipment primarily consists of the Company’s real estate and is presented net of accumulated depreciation for a net
book value of $
As discussed in Note 1, subsequent to September 30, 2026, the Company acquired its initial manufactured housing communities. In October 2026, the Company acquired two manufactured housing communities in North Carolina with a total of 78 homesites. Both of the manufactured housing communities were purchased from an unaffiliated third party and were paid for by the Company using cash on hand.
| 22 |
Note 7. Income Taxes
The
Company recorded a consolidated income tax benefit of $
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The Company considers the scheduled reversal of taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. A cumulative loss in a particular tax jurisdiction in recent years is a significant piece of evidence with respect to the realizability that is difficult to overcome. Based on the available objective evidence, including recent updates to the taxing jurisdictions generating income, the Company concluded that a valuation allowance should be recorded against all of the Company’s U.S. tax jurisdiction deferred tax assets as of September 30, 2026 and December 31, 2025. The Canadian deferred tax benefit remains recorded for the period ended September 30, 2026, there is no valuation allowance in Canada and the benefit is a result of the decrease in the deferred tax liability during the quarter.
For taxable years beginning after
December 31, 2025, the One Big Beautiful Bill Act renamed and modified the GILTI regime as net CFC tested income
(“NCTI”). Under Section 951A of the Internal Revenue Code, U.S. shareholders generally include their pro rata share of
CFC tested income, without the former deduction for a deemed return on qualified business asset investment. A high-tax exception may
be available for income subject to an effective foreign tax rate greater than
Changes in tax laws may affect recorded deferred tax assets and liabilities and the Company’s effective tax rate in the future. In July of 2025, the One Big Beautiful Bill Act was enacted and made significant changes to Federal tax laws. The effects of these changes relate to deferred tax assets and net operating losses; all of which are offset by valuation allowance. There were no material income tax consequences of the recently enacted laws on the reporting period of these financial statements.
The Company is subject to possible examinations not yet initiated for Federal purposes for the fiscal years 2023, 2024, or 2025. The returns were filed in October 2024, October 2025, and October 2026, respectively, and generally remain open to assessment until the corresponding filing-date anniversaries in October 2027, October 2028, and October 2029, subject to applicable extensions and statutory exceptions. The Company is also subject to possible examinations for state and local purposes. In most cases, these examinations in the state and local jurisdictions remain open based on the particular jurisdiction’s statute of limitations. There were no material changes to unrecognized tax benefits during the first nine months of 2026.
The Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was originally approved by the Company’s stockholders on October 1, 2021, and has subsequently been amended, most recently pursuant to Amendment No. 3 approved by stockholders on September 4, 2025, to increase the number of shares authorized for issuance under the 2021 Plan to million shares. The purpose of the 2021 Plan is to attract and retain directors, consultants, officers and other key employees of the Company and its subsidiaries and to provide to such persons incentives and rewards for superior performance. The 2021 Plan is administered by the Compensation and Management Resources Committee of the Board and has a term of ten years. The 2021 Plan awards may be in the form of stock options (which may be incentive stock options or nonqualified stock options), stock appreciation rights (“SARs”), restricted shares, RSUs, and other share-based awards. As of September 30, 2026, there were approximately million shares remaining available for future issuance.
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In
addition, on March 24, 2023,
Stock-based compensation expense for the three months ended September 30, 2026 and September 30, 2025 was approximately $ million and $ million, respectively. Stock-based compensation expense from continuing operations for the nine months ended September 30, 2026 and September 30, 2025 was approximately $ million and $ million, respectively. The stock-based compensation expense in the prior year period was primarily related to the issuance of warrants in connection with the Private Placement Offering that closed in August 2025. As of September 30, 2026, total unrecognized stock compensation expense of approximately $ million remained, which primarily related to RSUs and will be recognized through June 2031.
Restricted Stock Units
| Restricted Stock Units | Number of Units | Weighted Average Grant Date Fair Value | ||||||
| Non-vested units, December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired | ||||||||
| Forfeited | ||||||||
| Non-vested units, September 30, 2026 | $ | |||||||
In April 2026, the Company granted a total of RSUs to the members of its Board pursuant to the Company’s director compensation policy.
Stock Options
| Common Stock Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (yrs) | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value | |||||||||||||||
| Outstanding, December 31, 2025 | $ | $ | $ | |||||||||||||||||
| Granted | ||||||||||||||||||||
| Exercised | ||||||||||||||||||||
| Expired | ||||||||||||||||||||
| Forfeited | ||||||||||||||||||||
| Outstanding, September 30, 2026 | $ | $ | $ | |||||||||||||||||
| Exercisable, September 30, 2026 | $ | $ | $ | |||||||||||||||||
| 24 |
Note 9. Stockholders’ Equity
8.00% Cumulative Preferred Stock, Series A
As of September 30, 2026, the Company had Series A Preferred Stock shares outstanding, compared to outstanding as of December 31, 2025. As of November 4, 2026, there were 598,547 shares of Series A Preferred Stock outstanding.
Dividends
on the Series A Preferred Stock are cumulative from the date of original issue and are payable quarterly on the 15th day of March, June,
September and December of each year, when, as and if declared by our Board of Directors or a duly authorized committee thereof. Dividends
are payable out of amounts legally available therefore at a rate equal to
Preferred Stock Share Repurchase Program
In December 2025, the Company’s Board of Directors approved a preferred share repurchase program to acquire up to shares of the Company’s outstanding Series A Preferred Stock shares (the “Preferred Share Repurchase Program”). The Preferred Share Repurchase Program, which is open-ended, allows the Company to repurchase its preferred shares from time to time in the open market and in negotiated transactions. Any repurchases conducted pursuant to the Preferred Share Repurchase Program will be in accordance with Rule 10b-18 of the Exchange Act and will be made in accordance with applicable laws and regulations in effect from time to time.
During the nine months ended September 30, 2026, the Company purchased a total of approximately thousand shares of its Series A Preferred Stock at a total cost (including commissions) of approximately $ million. Subsequent to September 30, 2026 and through November 4, 2026, the Company purchased an additional approximately 3 thousand shares of its Series A Preferred Stock at a total cost (including commissions) of approximately $ million. Through November 4, 2026, the Company has repurchased approximately 33% of its Series A Preferred Stock outstanding immediately prior to implementation of the program. All repurchased Series A Preferred Stock are recorded as a reduction to the liquidation value of the Preferred Stock.
Common Stock
The total number of shares of common stock outstanding as of September 30, 2026 was , compared to as of December 31, 2025. As of November 4, 2026, there were shares of common stock outstanding. Shares of the Company’s common stock trade on the Nasdaq Stock Market under the symbol “FGC”.
Common Stock Share Repurchase Program
In September 2025, the Company’s Board adopted a share repurchase program to acquire up to $ million of the Company’s outstanding common stock (the “Share Repurchase Program”). The Share Repurchase Program, which is open-ended, allows the Company to repurchase its Common Stock from time to time in the open market and in negotiated transactions. Any repurchases conducted pursuant to the Share Repurchase Program will be in accordance with Rule 10b-18 of the Exchange Act and will be made in accordance with applicable laws and regulations in effect from time to time. Subject to applicable rules and regulations, the shares of common stock may be purchased from time to time in the open market transactions and in amounts as the Company deems appropriate, based on factors such as market conditions, legal requirements, and other business considerations.
During the nine months ended September 30, 2026, the Company purchased a total of approximately million shares of its Common Stock at a total cost (including commissions) of approximately $ million. Subsequent to September 30, 2026 and through November 4, 2026, the Company purchased an additional approximately 19 thousand shares of its Common Stock at a total cost (including commissions) of approximately $ million. Through November 4, 2026, the Company has repurchased approximately % of its Common Stock outstanding immediately prior to implementation of the program. All repurchased shares are recorded as treasury stock.
| 25 |
Warrants
The following table summarizes activity for warrants for the nine months ended September 30, 2026:
| Warrants | Units | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (yrs) | |||||||||
| Outstanding, December 31, 2025 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Expired | ( | ) | ||||||||||
| Outstanding, September 30, 2026 | $ | |||||||||||
In June 2026, the Company granted warrants to a former employee in the digital assets segment. The stock-based compensation expense related to the grant has been allocated to discontinued operations. The grant date fair value of warrants issued during 2026 was $. The fair value of each warrant issued was estimated on the date of grant using a lattice valuation model with the following assumptions:
| Expected dividend yield at date of issuance | % | |||
| Risk-free interest rate | % | |||
| Expected stock price volatility | % | |||
| Expected life of warrants (years) |
Note 10. Related Party Transactions
Related party transactions are carried out in the normal course of operations and are measured in part by the amount of consideration paid or received, as established and agreed by the parties. Except where disclosed elsewhere in these condensed consolidated financial statements, the following is a summary of related party transactions.
Limited Liability Company Interests
The Company participated as a limited partner in a fund that was unwound during 2023.
As a result of the winddown, the Company held a direct limited liability company interests in FGAC Investors LLC, FG Merger Investors LLC, and GreenFirst Forest Products Holdings, LLC. Mr. Cerminara and Mr. Swets, the head of the Company’s merchant banking business, serve as managers of FGAC Investors LLC and FG Merger Investors LLC, while Mr. Cerminara ultimately controls GreenFirst Forest Products Holdings, LLC. The Company’s interest in each of these LLC’s was transferred to the CVR Trust in August 2025.
FG Merchant Partners, LP
FGMP was formed to co-sponsor newly formed SPACs and other merchant banking clients with their founders or partners. Certain of our directors and officers also hold limited partner interests in FGMP. Mr. Swets holds a limited partner interest through Itasca Financial LLC, an advisory and investment firm for which Mr. Swets is managing member. Mr. Cerminara also holds a limited partner interest through Fundamental Global, LLC (“FG LLC”), a holding company for which Mr. Cerminara is the manager and one of the members.
FGMP has invested in the founder shares and warrants of Aldel Financial Inc., FG Merger Corp, FG Acquisition Corp, Aldel Financial II Inc., FG Communities and Craveworthy. Certain of our directors and officers are affiliated with these entities. The Company’s ownership interest in each of these entities was distributed to the CVR Trust in August 2025.
FG Communities, Inc.
In
October 2022, the Company directly invested $
As discussed in Note 4, in the third quarter of 2026, the Company
invested $
During the nine months ended September 30 2026, certain employees of the
Company provided administrative services for FGCI. The Company invoiced FGCI $
| 26 |
Craveworthy Brands LLC
On
March 16, 2023, the Company invested $
FG Imperii Investors LLC
During
the third quarter of 2025, the Company entered into a promissory note with FG Imperii Investors LLC (“FGII”) pursuant to
which the Company agreed to loan approximately $
Saltire Capital Ltd.
The
Company owns real estate in Canada that it leases to a wholly-owned subsidiary of Saltire. Pursuant to the terms of the lease, the Company
receives annual rental income of $
FG Merger II Corp
During
the second quarter of 2026, the Company purchased approximately million shares of FGMC at a total cost of approximately $
Shared Services Agreement
In 2020, the Company entered into a Shared Services Agreement (the “Shared Services Agreement”) with Fundamental Global Management, LLC (“FGM”), an affiliate of FG LLC, pursuant to which FGM provides the Company with certain services related to the day-to-day management of the Company, including assisting with regulatory compliance, evaluating the Company’s financial and operational performance, providing a management team to supplement the executive officers of the Company, and such other services consistent with those customarily performed by executive officers and employees of a public company. In exchange for these services, the Company pays FGM a fee of $ per quarter (the “Shared Services Fee”), plus reimbursement of expenses incurred by FGM in connection with the performance of the services, subject to certain limitations approved by the Board or Compensation and Management Resources Committee from time to time.
The Shared Services Agreement has an initial term of three years, and thereafter renews automatically for successive one-year terms unless terminated in accordance with its terms. The Shared Services Agreement may be terminated by FGM or by the Company, by a vote of the Company’s independent directors, at the end of the initial or automatic renewal term upon 120 days’ notice, subject to payment by the Company of certain costs incurred by FGM to wind down the provision of services and, in the case of a termination by the Company without cause, payment of a termination fee equal to the Shared Services Fee paid for the two quarters preceding termination. In 2022, the Shared Services Agreement was amended to eliminate termination fees and to increase the termination notice from 120 days to 365 days.
| 27 |
The Company paid $ million and $ million, respectively, to FGM under the Shared Services Agreement for each of the three and nine months ended September 30, 2026 and September 30, 2025, respectively. This amount is included in General and administrative expenses on the condensed consolidated statement of operations.
Net earnings per share is computed by dividing net income by the weighted average number of common shares and common share equivalents outstanding during the periods presented. In calculating diluted earnings per share, those potential common shares that are found to be anti-dilutive are excluded from the calculation. The table below provides a summary of the numerators and denominators used in determining basic and diluted earnings per share for the three and nine months ended September 30, 2026 and 2025 (in thousands, except per share amounts).
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Basic and diluted: | ||||||||||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Premium on repurchase of Series A Preferred Shares | ( | ) | ( | ) | ||||||||||||
| Dividends declared on Series A Preferred Shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss attributable to FG Communites Holdings common shareholders from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding (1) | ||||||||||||||||
| Loss per common share from continuing operations (1) | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| (1) |
| As of September 30, | ||||||||
| 2026 | 2025 | |||||||
| Options to purchase common stock | ||||||||
| Restricted stock units | ||||||||
| Warrants | ||||||||
Note 12. Debt
The Company’s short-term debt consists of the following (in thousands):
| September 30, 2026 | December 31, 2025 | |||||||
| Short-term debt: | ||||||||
| 20-year installment loan | $ | $ | ||||||
| Revolving credit facility | ||||||||
| Total short-term debt | ||||||||
| Less: deferred debt issuance costs, net | ( | ) | ||||||
| Total short-term debt, net of issuance costs | $ | $ | ||||||
Installment Loan and Revolving Credit Facility
In
January 2023, Strong/MDI and Canadian Imperial Bank of Commerce (“CIBC”) entered into a demand credit agreement (the “2023
Credit Agreement”), which amended and restated the prior credit agreement entered into in 2021. The 2023 Credit Agreement consists
of a revolving line of credit for up to CAD$
| 28 |
Under
the 2023 Credit Agreement:
The
20-year installment note bears variable interest at
Note 13. Commitments and Contingencies
Legal Proceedings
The Company is involved, from time to time, in certain legal disputes in the ordinary course of business. No such disputes, individually or in the aggregate, are expected to have a material effect on its business or financial condition.
One of the Company’s subsidiaries is named as a defendant in personal injury lawsuits based on alleged exposure to asbestos-containing materials. A majority of the cases involve product liability claims based principally on allegations of past distribution of commercial lighting products containing wiring that may have contained asbestos. Each case names dozens of corporate defendants in addition to FG Communities Holdings. In our experience, a large percentage of these types of claims have never been substantiated and have been dismissed by the courts. FG Communities Holdings has not suffered any adverse verdict in a trial court proceeding related to asbestos claims and intends to continue to defend these lawsuits.
On July 16, 2024, the Company received notice that it was named as a defendant, along with over 500 other companies, in a civil action filed for cost recovery and contributions related to the release and/or threatened release of hazardous substances from a facility known as the BKK Class 1 Landfill in Los Angeles County California from periods prior to 1987. The action alleges that a former subsidiary of the Company is a successor to Pichel Industries, Inc. (“Pichel Industries”) and that Pichel Industries contributed waste to the landfill. The Company is not aware of any successor relationship between it and Pichel. There have been no further actions in this case since the initial filing in 2024, and the Company intends to defend itself vigorously in the event the plaintiffs choose to pursue action against the Company.
As
of September 30, 2026, the Company has a loss contingency reserve of approximately $
Note 14. Segment Reporting
The
Company has
| 29 |
The following tables present the financial information for each segment that is specifically identifiable or based on allocations using internal methodology for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| Three Months Ended September 30, 2026 | ||||||||||||
| Merchant Banking | Real Estate | Total | ||||||||||
| Rental income | $ | $ | $ | |||||||||
| Merchant banking advisory fees | ||||||||||||
| Total revenue | ||||||||||||
| Compensation costs | ( | ) | ( | ) | ||||||||
| Professional fees | ( | ) | ( | ) | ||||||||
| Gain on equity holdings | ||||||||||||
| Gain on forward purchase agreement derivative | ||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ||||||||
| Other operating expenses | ( | ) | ( | ) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||||||
| Segment income before taxes | ||||||||||||
| Corporate and other non-segment operating expenses | ( | ) | ||||||||||
| Stock-based compensation | ( | ) | ||||||||||
| Foreign currency transaction gain | ||||||||||||
| Interest income, net | ||||||||||||
| Loss from continuing operations before taxes | $ | ( | ) | |||||||||
| Three Months Ended September 30, 2025 | ||||||||||||
| Merchant Banking | Real Estate | Total | ||||||||||
| Rental income | $ | $ | $ | |||||||||
| Merchant banking advisory fees | ||||||||||||
| Total revenue | ||||||||||||
| Compensation costs | ( | ) | ( | ) | ||||||||
| Professional fees | ( | ) | ( | ) | ||||||||
| Gain on equity holdings | ( | ) | ( | ) | ||||||||
| Depreciation and amortization | ( | ) | ( | ) | ||||||||
| Other operating expenses | ( | ) | ( | ) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||||||
| Segment income (loss) before taxes | ( | ) | ( | ) | ||||||||
| Corporate and other non-segment operating expenses | ( | ) | ||||||||||
| Stock-based compensation | ( | ) | ||||||||||
| Foreign currency transaction loss | ( | ) | ||||||||||
| Interest income, net | ||||||||||||
| Income from continuing operations before taxes | $ | ( | ) | |||||||||
| 30 |
| Nine Months Ended September 30, 2026 | ||||||||||||
| Merchant Banking | Real Estate | Total | ||||||||||
| Rental income | $ | $ | $ | |||||||||
| Merchant banking advisory fees | ||||||||||||
| Total revenue | ||||||||||||
| Compensation costs | ( | ) | ( | ) | ||||||||
| Professional fees | ( | ) | ( | ) | ||||||||
| Loss on equity holdings | ( | ) | ( | ) | ||||||||
| Gain on forward purchase agreement derivative | ||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ||||||||
| Other operating expenses | ( | ) | ( | ) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||||||
| Segment (loss) income before taxes | ( | ) | ( | ) | ||||||||
| Corporate and other non-segment operating expenses | ( | ) | ||||||||||
| Stock-based compensation | ( | ) | ||||||||||
| Foreign currency transaction loss | ( | ) | ||||||||||
| Gain on financial instruments | ||||||||||||
| Interest income, net | ||||||||||||
| Loss from continuing operations before taxes | $ | ( | ) | |||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||
| Merchant Banking | Real Estate | Total | ||||||||||
| Rental income | $ | $ | $ | |||||||||
| Merchant banking advisory fees | ||||||||||||
| Total revenue | ||||||||||||
| Compensation costs | ( | ) | ( | ) | ||||||||
| Professional fees | ( | ) | ( | ) | ||||||||
| Loss on equity holdings | ( | ) | ( | ) | ||||||||
| Depreciation and amortization | ( | ) | ( | ) | ||||||||
| Other operating expenses | ( | ) | ( | ) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||||||
| Segment (loss) income before taxes | ( | ) | ( | ) | ||||||||
| Corporate and other non-segment operating expenses | ( | ) | ||||||||||
| Stock-based compensation | ( | ) | ||||||||||
| Foreign currency transaction loss | ( | ) | ||||||||||
| Interest income, net | ||||||||||||
| Loss from continuing operations before taxes | $ | ( | ) | |||||||||
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The following table presents the Company’s specifically identifiable assets for each of the Company’s segments as of September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | ||||||||||||||||
| Merchant Banking | Real Estate | Corporate | Total | |||||||||||||
| Segment assets | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | ||||||||||||||||
| Merchant Banking | Real Estate | Corporate & Discontinued Operations | Total | |||||||||||||
| Segment assets | $ | $ | $ | $ | ||||||||||||
The
“Corporate & Discontinued Operations” segment assets as of December 31, 2025 includes $
Note 15. Subsequent Events
The Company’s management has evaluated subsequent events after the consolidated balance sheet dated as of September 30, 2026, through the date of filing of this Form 10-Q. Based on the evaluation, management has determined that, other than as disclosed in the accompanying notes, no subsequent events have occurred that would require recognition in the accompanying condensed consolidated financial statements or disclosure in the notes thereto.
| 32 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 Communities Holdings” “we,” “us,” and “our,” refer to FG Communities Holdings Inc. (formerly 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, the acquisition, ownership, operation and financing of manufactured housing communities; the use of cash, debt financing and proceeds from common-stock issuances to fund acquisitions; future share repurchases; the Company’s acquisition pipeline and growth strategy; and the anticipated size and long-term characteristics of the manufactured housing market, 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.
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Overview
FG Communities Holdings is focused on building a portfolio of income-producing real estate, with an emphasis on manufactured housing communities. We also conduct merchant banking activities, including advisory services, capital formation and investments in other businesses.
During 2026, we exited our digital asset business and began allocating capital to our real estate strategy. In September 2026, we invested $10.0 million in FGCI, a separate, privately held owner and operator of manufactured housing communities. In October 2026, we acquired our initial directly owned manufactured housing communities.
Our investment in FGCI and our direct property acquisitions represent separate uses of capital. FGCI remains independently operated, while properties acquired directly by us form part of our real estate operations.
Current Operations and Sources of Earnings
For the three and nine months ended September 30, 2026, our operating revenue from continuing operations consisted of rental income from our Quebec property and merchant banking advisory fees. The manufactured housing communities acquired in October 2026 did not contribute revenue or operating results during the periods presented.
Our results of operations also reflect equity-method earnings and losses, changes in the value of certain investments and financial instruments, and interest income. These items can cause significant fluctuations in reported earnings and may not correspond to cash received or used during the same period.
Real Estate Strategy and Capital Allocation
We intend to expand our directly owned real estate portfolio through acquisitions of manufactured housing communities. Our ability to implement this strategy will depend on the availability of suitable properties, acquisition pricing, financing terms and our available capital.
We expect to fund acquisitions through a combination of cash on hand, property-level debt and proceeds from common stock issuances. The financing structure of each acquisition will depend on the property, market conditions, balance sheet liquidity and other capital requirements.
As our property portfolio grows, rental revenue and property operating expenses are expected to represent a larger portion of our results of operations. Until such time as the portfolio reaches scale, corporate expenses, preferred stock dividends and other obligations will continue to require funding from available cash and other sources of liquidity. We will evaluate these competing sources and uses of capital as we implement our growth strategy.
Recent Developments
During September 2026, we invested $10.0 million in FGCI following a review of strategic alternatives by our Board of Directors and a special committee composed of independent directors. The special committee retained an independent financial advisor to assist with its evaluation.
During October 2026, we acquired two separate manufactured housing communities located in North Carolina, with a combined total of 78 homesites for rental.
We completed the exit from our digital asset business during the second quarter of 2026 and the sale of our remaining reinsurance business during the first quarter of 2026. Results of these businesses are presented as discontinued operations. See Note 3.
| 34 |
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 September 30, 2026.
| Three Months Ended Months September 30, | ||||||||||||||||
| 2026 | 2025 | $ Change | % Increase (Decrease) | |||||||||||||
| Total revenue | $ | 232 | $ | 251 | $ | (19 | ) | (7.6 | )% | |||||||
| General and administrative expenses | (1,844 | ) | (2,898 | ) | 1,054 | (36.4 | )% | |||||||||
| Stock-based compensation | (135 | ) | (7,350 | ) | 7,215 | (98.2 | )% | |||||||||
| Loss from operations | (1,747 | ) | (9,997 | ) | 8,250 | (82.5 | )% | |||||||||
| Interest income, net | 336 | 13 | 323 | n/m | ||||||||||||
| Gain (loss) on equity holdings | 928 | (7,289 | ) | 8,217 | (112.7 | )% | ||||||||||
| Gain on financial instruments | 169 | - | 169 | 100.0 | % | |||||||||||
| Foreign currency translation gain (loss) | 6 | (5 | ) | 11 | (220.0 | )% | ||||||||||
| Loss from continuing operations before income taxes | (308 | ) | (17,278 | ) | 16,970 | (98.2 | )% | |||||||||
| Income tax benefit (expense) | 90 | (103 | ) | 193 | (187.4 | )% | ||||||||||
| Net loss from continuing operations | $ | (218 | ) | $ | (17,381 | ) | $ | 17,163 | (98.7 | )% | ||||||
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| Nine Months Ended Months September 30, | ||||||||||||||||
| 2026 | 2025 | $ Change | % Increase (Decrease) | |||||||||||||
| Total revenue | $ | 704 | $ | 696 | $ | 8 | 1.1 | % | ||||||||
| General and administrative expenses | (7,276 | ) | (6,787 | ) | (489 | ) | 7.2 | % | ||||||||
| Stock-based compensation | (381 | ) | (7,775 | ) | 7,394 | (95.1 | )% | |||||||||
| Loss on impairment and disposal of assets | - | (5 | ) | 5 | (100.0 | )% | ||||||||||
| Loss from operations | (6,953 | ) | (13,871 | ) | 6,918 | (49.9 | )% | |||||||||
| Interest income, net | 510 | (40 | ) | 550 | n/m | |||||||||||
| Loss on equity holdings | (8,248 | ) | (7,468 | ) | (780 | ) | 10.4 | % | ||||||||
| Gain on financial instruments | 1,252 | - | 1,252 | 100.0 | % | |||||||||||
| Foreign currency translation loss | (20 | ) | (4 | ) | (16 | ) | 400.0 | % | ||||||||
| Loss from continuing operations before income taxes | (13,459 | ) | (21,383 | ) | 7,924 | (37.1 | )% | |||||||||
| Income tax expense | (106 | ) | (245 | ) | 139 | (56.7 | )% | |||||||||
| Net loss from continuing operations | $ | (13,565 | ) | $ | (21,628 | ) | $ | 8,063 | (37.3 | )% | ||||||
Three Months Ended September 30, 2026 Compared with Three Months Ended September 30, 2025
Revenue during each of the three months ended September 30, 2026 and September 30, 2025 included $0.1 million of merchant banking advisory fees and $0.1 million of rental income.
Loss from operations decreased to $1.7 million during the three months ended September 30, 2026 as compared to $10.0 million during the three months ended September 30, 2025. Stock-based compensation expense decreased from $7.4 million during the three months ended September 30, 2025 to $0.1 million in the current year period with the prior year expense primarily attributable to warrants issued in connection with the Private Placement Offering in 2025. General and administrative expenses decreased $1.1 million during the three months ended September 30, 2026 as compared to the prior year period primarily due to reduced spending on legal fees, professional fees and public relations expenses incurred in the prior year period.
Gain on equity holdings during the three months ended September 30, 2026 included an equity method gain on the shares of Saltire of $0.8 million and a reversal of the $0.5 million unrealized loss on our previous fair value method equity holding recorded during the second quarter of 2026 due to the redemption of our shares at our original purchase price, which was partially offset by a $0.4 million equity method loss on our Devondale equity ownership. Loss on equity holdings during the three months ended September 30, 2025 included a $6.6 million equity method loss from Saltire, partially offset by $0.8 million of dividend income from the Saltire preferred shares. The remainder of the net loss on equity holdings and other holdings during the three months ended September 30, 2025 related to holdings distributed to the CVR Trust in August 2025.
Net loss from continuing operations decreased to $0.2 million during the three months ended September 30, 2026 compared to $17.4 million during the three months ended September 30, 2025 due to a reduction in stock-based compensation, general and administrative expenses, equity holdings losses and income taxes in the current year period, as well as higher interest income and a gain on financial instruments during the current year.
Nine Months Ended September 30, 2026 Compared with Nine Months Ended September 30, 2025
Revenue of $0.7 million during each of the nine months ended September 30, 2026 and September 30, 2025 included $0.4 million of merchant banking advisory fees and $0.3 million of rental income.
Loss from operations decreased to $7.0 million during the nine months ended September 30, 2026 as compared to $13.9 million during the nine months ended September 30, 2025. Stock-based compensation expense decreased to $0.4 million from $7.8 million, primarily because the prior-year period included expense related to warrants issued in connection with the August 2025 private placement. General and administrative expenses increased $0.5 million during the nine months ended September 30, 2026 as compared to the prior year period primarily due to higher professional fees and public relations expenses incurred as we operated our ETH treasury operations.
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The nine months ended September 30, 2026 included an equity method loss on the shares of Saltire of $8.8 million, which included an other-than-temporary write down of the carrying value of $11.2 million, as compared to a $4.6 million equity method loss on the shares of Saltire in nine months ended September 30, 2025. The remainder of the net loss on equity holdings and other holdings during the nine months ended September 30, 2026 included a $0.6 million gain related to our USFM cost method equity holding. The remainder of the net loss on equity holdings and other holdings during the nine months ended September 30, 2025 related to holdings distributed to the CVR Trust in August 2025.
Net loss from continuing operations decreased to $13.6 million during the nine months ended September 30, 2026 compared to $21.6 million during the nine months ended September 30, 2025 primarily due to a reduction in stock-based compensation as well as higher interest income and a gain on financial instruments during the current year, which was partially offset by higher general and administrative expenses and losses on equity holdings in the current year period.
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 nine months ended September 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.
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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 September 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 stockholders’ equity.
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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 September 30, 2026, we had cash and cash equivalents of $35.1 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 nine months ended September 30, 2026 and 2025 (in thousands).
Nine Months Ended September 30, | ||||||||
| Summary of Cash Flows | 2026 | 2025 | ||||||
| Cash and cash equivalents – beginning of period | $ | 13,395 | $ | 6,562 | ||||
| Net cash used in operating activities from continuing operations | (9,038 | ) | (1,700 | ) | ||||
| Net cash provided by (used in) investing activities from continuing operations | 64,181 | (161,890 | ) | |||||
| Net cash (used in) provided by financing activities from continuing operations | (31,149 | ) | 162,368 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (12 | ) | 22 | |||||
| Net increase (decrease) in cash and cash equivalents from continuing operations | 23,982 | (1,200 | ) | |||||
| Net (decrease) increase in cash and cash equivalents from discontinued operations | (2,262 | ) | 2,133 | |||||
| Cash and cash equivalents – end of period | $ | 35,115 | $ | 7,495 | ||||
For the first nine months of 2026, net cash used in operating activities from continuing operations was approximately $9.0 million compared to $1.7 million for the first nine months of 2025. Cash used in operations increased during the first nine months of 2026 despite improved loss from operations as a result of increased general and administrative expenses in the first nine months of 2026 along with the timing of payments of accounts payable and accrued expenses.
For the first nine months of 2026, net cash provided by investing activities from continuing operations was approximately $64.2 million, compared with cash used in investing activities from continuing operations of $161.9 million during the first nine months of 2025. Cash provided by investing activities during the first nine months of 2026 primarily included $75.8 million of ETH sales, partially offset by $11.5 million outflow for the FGCI and USFM investments and $0.2 million related to the issuance of a note receivable. Cash used in investing activities during the first nine months of 2025 primarily included $171.7 million of ETH purchases and $0.9 million of purchases of equity securities, partially offset by $3.2 million of proceeds from sales of equity securities and $7.5 million received from the redemption of Saltire preferred shares.
For the first nine months of 2026, net cash used in financing activities from continuing operations was approximately $31.1 million compared to cash provided by financing activities of $162.4 million during the first nine months of 2025. Cash used in financing activities during the first nine months of 2026 included $30.0 million of purchases under our common and preferred share buyback programs, $0.1 million of principal payments on debt, $1.0 million of payments of dividends on our Series A Preferred Shares, and $0.1 million of withholding taxes paid related to the net settlement of the vesting of RSUs. Cash provided by financing activities during the nine months ended September 30, 2025 included $168.1 million of net proceeds received as part of the Private Placement Offering, $14.1 million of net proceeds received under our at-the-market offering, partially offset by $18.0 million of cash distributed to the CVR Trust, $0.2 million of principal payments on debt, $1.3 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.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
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 September 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 September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management is currently evaluating which additional internal controls, if any, need to be implemented in connection with the Company’s real estate strategy.
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’s management is committed to ensuring the effectiveness of its internal controls and compliance with applicable regulatory requirements.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved, from time to time, in certain legal disputes in the ordinary course of business. No such disputes, individually or in the aggregate, are expected to have a material effect on our business or financial condition.
There have been no material changes to the legal proceedings previously disclosed in Part I, Item 3. “Legal Proceedings” to our annual report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 27, 2026.
ITEM 1A. RISK FACTORS
Except as set forth below, 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.
General economic conditions and the concentration of our manufactured housing properties in certain states may affect our ability to generate sufficient revenue to achieve profitability.
The market and economic conditions in our current markets may significantly affect manufactured home occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our communities do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay or refinance our debt obligations could be adversely affected. As a result of the geographic concentration of our properties in North Carolina, we are exposed to the risks of downturns in the local economy or other local real estate market conditions which could adversely affect occupancy rates, rental rates, and property values in these markets.
Our revenue would also be adversely affected if residents of our manufactured housing communities were unable to pay rent or if sites were unable to be rented on favorable terms. If we were unable to promptly relet or renew the leases for a significant number of the sites, or if the rental rates upon such renewal or reletting were significantly lower than expected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each property (such as real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the property.
The following factors, among others, may adversely affect the revenues generated by our properties:
| ● | the international, national, and local economic climate which may be adversely impacted by, among other factors, plant closings, industry slowdowns, inflation, tariffs or threats of tariffs, wars or other international conflicts, trade wars, immigration issues, and supply chain disruptions; | |
| ● | local real estate market conditions such as the oversupply of manufactured housing communities or a reduction in demand for manufactured housing community sites in an area, and an oversupply of, or a reduced demand for, manufactured homes; | |
| ● | increased operating costs, including insurance premiums, real estate taxes, and utilities; | |
| ● | a decrease in the number of people interested in the manufactured housing lifestyle; | |
| ● | outbreaks of disease and related restrictions on business operations; | |
| ● | the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria; | |
| ● | an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured home sales; | |
| ● | the lack of an established manufactured housing dealer network; | |
| ● | the housing rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates; | |
| ● | the perceptions by prospective residents of the safety, convenience and attractiveness of our manufactured housing communities, and the neighborhoods where they are located; | |
| ● | zoning or other environmental regulatory restrictions; | |
| ● | our ability to effectively manage, maintain, and insure our properties; and | |
| ● | the enactment of rent control laws or laws taxing the owners of manufactured homes. |
Competition affects occupancy levels and rents, which could adversely affect our revenues.
The manufactured housing industry is highly fragmented. There are many international, national, and regional competitors in the markets we currently serve and in new markets that we may enter. Properties that we may acquire could be located in developed areas that include other manufactured housing communities. The number of competitive communities in a particular area could have a material adverse effect on our ability to lease sites and increase rents charged at our properties or at any newly acquired properties. We may be competing with others with greater resources. In addition, other forms of multi-family residential properties, such as private and federally funded or assisted multi-family housing projects and single-family housing, provide housing alternatives to potential residents of manufactured housing communities.
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We may incur liability under environmental laws arising from conditions at properties we acquire or operations at the properties we own and operate.
Under various federal, state, local, and foreign laws, ordinances and regulations, an owner or operator of real estate is liable for the costs of removal or remediation of certain hazardous substances at, on, under, or in such property. Such hazardous substances may be used at or located on our properties. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner’s ability to sell or rent the property, to borrow using the property as collateral or to develop the property. Persons who arrange for the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos-containing materials and for the release of such materials into the air. These laws may result in fines or penalties and may permit third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials.
As the purchaser of the manufactured housing properties we acquire, or in connection with the operation of the manufactured housing properties we own or manage, we may be liable for removal or remediation costs, governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities.
Moreover, we cannot be sure that future laws, ordinances or regulations will not impose any material environmental liability, or that the current environmental condition of our properties will not be affected by residents and occupants of the properties, by the condition of land or operations in the vicinity of our properties (such as the presence of underground storage tanks), or by unrelated third parties. Environmental liabilities that we may incur could have an adverse effect on our financial condition, results of operations, and cash flows.
Rent control legislation may harm our ability to increase rents.
National, state, and local rent control laws in certain jurisdictions may limit our ability to increase rents at our manufactured housing communities to recover increases in operating expenses and the costs of capital improvements. Enactment of such laws has been considered from time to time in other jurisdictions. Properties we may purchase may be in markets subject to rent controls or where other rent-limiting legislation exists or may be enacted.
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Our properties may not be readily adaptable to other uses.
Properties in our portfolio are specific-use properties and may contain features or assets that have limited alternative uses. These properties may also have distinct operational functions that involve specific procedures and training. If the operations of any of those properties becomes unprofitable due to industry competition, operational execution or otherwise, then it may not be feasible to operate that Property for another use and the value of certain features or assets used at that Property, or the Property itself, may be impaired. Should any of these events occur, our financial condition, results of operations and cash flows could be adversely impacted.
We may be required or otherwise need to expend capital to maintain, repair and renovate our properties, which could negatively impact our financial condition, results of operations and cash flows.
We may be required or choose to make significant capital expenditures to maintain or enhance the competitiveness of our manufactured housing properties, including infrastructure improvements. In addition, as most of our residents own their homes located in our properties, the replacement, repairs and refurbishment of these homes may not be within our control. If our properties are not as attractive to current and prospective residents as compared to the properties owned by our competitors, we could lose residents or suffer lower rental rates. There is no assurance that any capital expenditure would result in higher occupancy or higher rental rates. In addition, the price of commodities and skilled labor for our construction projects may increase unpredictably due to external factors, including supply chain disruptions. It is uncertain whether we would be able to source the essential commodities, supplies, materials, and skilled labor timely or at all without incurring significant costs or delays, particularly during times of economic uncertainty resulting from events outside of our control.
There is a risk of accidents, injuries or disease outbreaks occurring at our properties which may negatively impact our operations.
While we maintain and promote safety at our properties, there are inherent risks associated with certain features, assets and activities at our properties. An accident, injury or disease outbreak at any of our properties, particularly an accident, injury or disease outbreak involving the safety of our residents, guests and employees, may be associated with claims against us involving higher assertions of damages and/or higher public visibility. The occurrence of an accident, injury or disease outbreak at any of our properties could also cause damage to our brand or reputation, lead to loss of consumer confidence in us, reduce occupancy at our properties and negatively impact our results of operations.
We may be unable to sell properties when appropriate because real estate investments are illiquid.
Real estate investments generally cannot be sold quickly and, therefore, will tend to limit our ability to vary our property portfolio promptly in response to changes in economic or other conditions.
Many of our costs may be adversely impacted by continued heightened inflation.
A sustained or further increase in inflation could have an adverse impact on our general and administrative and operating expenses, including the costs of personnel, professional fees, insurance, utilities, security, and the purchase of manufactured homes, and otherwise adversely affect our business and results of operations. While we expect to recover some cost increases through increases in our rental rates, there can be no assurance that higher operating expenses resulting from inflationary pressures will be fully offset by higher rental rates. As a result, to the extent the inflation rate exceeds the annual rent increases we are able to institute, we may not adequately mitigate the impact of inflation, which may adversely affect our business, financial condition, results of operations, and cash flows.
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Costs associated with taxes and regulatory compliance may reduce our revenue.
We may become subject to significant governmental regulation that inhibits our activities and may increase our costs in certain jurisdictions. Local zoning and use laws, environmental statutes and other governmental requirements may restrict expansion, rehabilitation and reconstruction activities. These regulations may prevent us from taking advantage of economic opportunities. Legislation such as the Americans with Disabilities Act may require us to modify our properties at a substantial cost and noncompliance could result in the imposition of fines or an award of damages to private litigants. Future legislation may impose additional requirements. We cannot predict what requirements may be enacted or amended or what costs we will incur to comply with such requirements. Costs resulting from changes in real estate laws, income taxes, service or other taxes may adversely affect our funds from operations and our ability to pay or refinance our debt. Similarly, changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which would adversely affect our business and results of operations.
Laws and regulations in certain jurisdictions may also govern the provision of utility services. Such laws regulate, for example, how and to what extent owners or operators of property can charge renters for provision of utilities. Such laws can also regulate the operations and performance of utility systems and may impose fines and penalties on real property owners or operators who fail to comply with these requirements. The laws and regulations may also require capital investment to maintain compliance.
Climate change may adversely affect our business.
To the extent that significant changes in the climate occur in areas where our properties are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including significant property damage to or destruction of our properties, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulations based on concerns about climate change could result in increased capital expenditures on our properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our net income.
Losses in excess of our insurance coverage or uninsured losses could adversely affect our cash flow.
We generally maintain insurance policies related to our business, including casualty, general liability and other policies covering business operations, employees and assets. However, we may be required to bear all losses that are not adequately covered by insurance. In addition, there are certain losses that are not generally insured because it is not economically feasible to insure against them, including, but not limited to, losses due to riots, acts of war or other catastrophic events. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated profits and cash flow from the properties and, in the case of debt which is with recourse to us, we would remain obligated for any mortgage debt or other financial obligations related to the properties. Although we believe that our insurance programs are adequate, no assurance can be given that we will not incur losses in excess of our insurance coverage, or that we will be able to obtain insurance in the future at acceptable levels and reasonable cost.
Our investments are concentrated in the manufactured housing communities sector and our business would be adversely affected by an economic downturn in that sector.
Our investments in real estate assets are primarily concentrated in the manufactured housing communities sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities included a more significant portion of other sectors of the real estate industry.
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We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected.
We have acquired and intend to continue to selectively acquire manufactured housing communities. Our acquisition activities and their success are subject to the following risks:
| ● | we may be unable to acquire a desired property because of competition from other well-capitalized real estate investors, including both publicly traded real estate investment trusts and institutional investment funds; | |
| ● | even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction, which may not be satisfied; | |
| ● | even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price; | |
| ● | we may be unable to finance acquisitions on favorable terms; | |
| ● | acquired properties may fail to perform as expected; | |
| ● | acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, and unfamiliarity with local governmental and permitting procedures; and | |
| ● | we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations. | |
| ● | If any of the above risks occur, our business and results of operations could be adversely affected. | |
| ● | In addition, we may acquire properties subject to liabilities and we may be left with no, or limited, recourse, with respect to unknown liabilities. As a result, we may have to pay substantial sums to settle any liabilities asserted against us based upon ownership of newly acquired properties, which could adversely affect our cash flows. |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Share Repurchases
Common Stock
In September 2025, the Company’s Board of Directors adopted a share repurchase program to acquire up to $200 million of the Company’s outstanding common stock (the “Share Repurchase Program”). The Share Repurchase Program, which is open-ended, allows the Company to repurchase its Common Stock from time to time in the open market and in negotiated transactions. Any repurchases conducted pursuant to the Share Repurchase Program will be in accordance with Rule 10b-18 of the Exchange Act and will be made in accordance with applicable laws and regulations in effect from time to time. Subject to applicable rules and regulations, the shares of common stock may be purchased from time to time in the open market transactions and in amounts as the Company deems appropriate, based on factors such as market conditions, legal requirements, and other business considerations.
The following table provides information about purchases made by us of our common stock for each month included in the third quarter of 2026:
| Period | Total number of shares purchased | Average price paid per share, including commissions | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs | ||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| July 2026 | 414 | $ | 6.30 | 414 | $ | 155,967 | ||||||||||
| August 2026 | 407 | $ | 7.68 | 407 | $ | 152,841 | ||||||||||
| September 2026 | 210 | $ | 8.27 | 210 | $ | 151,100 | ||||||||||
| Quarter Ended September 30, 2026 | 1,031 | $ | 7.24 | 1,031 | $ | 151,100 | ||||||||||
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Preferred Stock
In December 2025, the Company’s Board of Directors approved a preferred share repurchase program to acquire up to 894,580 shares of the Company’s outstanding preferred shares (the “Preferred Share Repurchase Program”). The Preferred Share Repurchase Program, which is open-ended, allows the Company to repurchase its preferred shares from time to time in the open market and in negotiated transactions. Any repurchases conducted pursuant to the Preferred Share Repurchase Program will be in accordance with Rule 10b-18 of the Exchange Act and will be made in accordance with applicable laws and regulations in effect from time to time.
The following table provides information about purchases made by us of our preferred stock for each month included in the third quarter of 2026:
| Period | Total number of shares purchased | Average price paid per share, including commissions | Total number of shares purchased as part of publicly announced plans or programs | The maximum number of shares that may still be purchased under the plans or programs | ||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| July 2026 | 2 | $ | 25.73 | 2 | 619 | |||||||||||
| August 2026 | - | $ | - | - | 619 | |||||||||||
| September 2026 | 18 | $ | 25.47 | 18 | 601 | |||||||||||
| Quarter Ended September 30, 2026 | 20 | $ | 25.49 | 20 | 601 | |||||||||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended September 30, 2026, none of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.
On November 4, 2026, the Board approved a change of the Company’s principal address to 3540 Toringdon Way, Suite 200 #1074, Charlotte, North Carolina 28277.
ITEM 6. EXHIBITS
| * | Filed herewith. | |
| ** | Furnished herewith. | |
| # | The Registrant has redacted provisions or terms of this Exhibit pursuant to Regulation S-K Item 601(b)(10)(iv). While portions of the Exhibits have been omitted, these Exhibits include a prominent statement on the first page of each redacted Exhibit that certain identified information has been excluded from the exhibit because it is both not material and is the type that the Registrant treats as private or confidential. The Registrant agrees to furnish an unredacted copy of the Exhibit to the SEC upon its request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FG COMMUNITIES HOLDINGS INC. | ||
| Date: November 6, 2026 | By: | /s/ D. Kyle Cerminara |
| D. Kyle Cerminara, Chief Executive Officer | ||
| (principal executive officer) | ||
| Date: November 6, 2026 | By: | /s/ Mark D. Roberson |
| Mark D. Roberson, Chief Financial Officer | ||
| (principal financial officer) | ||
| Date: November 6, 2026 | By: | /s/ Todd R. Major |
| Todd R. Major, Chief Accounting Officer | ||
| (principal accounting officer) | ||
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