8-K
FG Nexus Inc. (FGNX)
UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM8-K
CURRENTREPORT
Pursuantto Section 13 or 15(d) of the
SecuritiesExchange Act of 1934
Dateof Report (Date of earliest event reported): May 14, 2021
FGFINANCIAL GROUP, INC.
(Exactname of registrant as specified in its charter)
| Delaware | 001-36366 | 46-1119100 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
970Lake Carillon Drive, Suite 318, St. Petersburg, FL 33716
(Addressof principal executive offices, including Zip Code)
(727)304-5666
(Registrant’stelephone number, including area code)
NotApplicable
(Formername or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
| [ ] | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| [ ] | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> Symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Common<br> Stock, $0.001 par value per share | FGF | The<br> Nasdaq Stock Market LLC |
| 8.00%<br> Cumulative Preferred Stock, Series A, $25.00 par value per share | FGFPP | The<br> Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. [ ]
Item2.02 Results of Operations and Financial Condition
On May 14, 2021 FG Financial Group, Inc. (the “Company”) announced its first quarter 2021 financial results. Attached as Exhibit 99.1 is a copy of the press release.
As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and Exhibit 99.1 are “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in such filing.
Item9.01 Financial Statements and Exhibits.
(d) Exhibits:
| Exhibit | Description |
|---|---|
| 99.1 | Press Release Issued by the Company on May 14, 2021. |
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 hereunto duly authorized.
| FG FINANCIAL GROUP, INC. | ||
|---|---|---|
| Date:<br> May 14, 2021 | By: | /s/ John S. Hill |
| Name: | John<br>S. Hill | |
| Title: | Executive<br> Vice President, Secretary and Chief<br><br> <br>Financial<br> Officer |
Exhibit 99.1
FGFINANCIAL GROUP, INC. REPORTS FIRST QUARTER 2021 FINANCIAL RESULTS
SPACInvestment and Services Strategy Delivers Unrealized Gain of $3.6 Million
St.Petersburg, FL – May 14, 2021 – FG Financial Group, Inc. (Nasdaq: FGF) (the “Company”), a reinsurance and investment management holding company focused on opportunistic collateralized and loss capped reinsurance, while allocating capital to SPAC and SPAC sponsor-related businesses, today announced results for the first quarter ended March 31, 2021.
ManagementCommentary
FGF CEO Larry Swets, Jr. commented, “In the first quarter we continued to advance our multi-pronged strategy, coupling a selective reinsurance practice with an asset management practice centered on the provision of SPAC sponsor-related businesses. Most notably, our first quarter included positive revenue contributions from our investment portfolio along with reinsurance premiums. Our investment portfolio increased by over 32% from December 31^st^, as we continued to put capital to work.”
Select2021 First Quarter Financial Results and Highlights
Net loss attributable to common shareholders was $(0.3) million for the quarter, or $(0.06) per diluted share, compared to a net loss for the first quarter 2020 of $(8.6) million, or $(1.43) per share.
The Company’s 2021 first quarter financial results included:
| ● | An<br> unrealized gain in the SPAC FG New America Acquisition Corp. (NYSE: FGNA) of $3.6 million. During the quarter, FG New America<br> announced a definitive business combination agreement with Opportunity Financial (“OppFi”), a leading financial<br> technology platform that powers banks to offer accessible products to everyday consumers. |
|---|---|
| ● | Payment<br> of the 8% Series A Preferred Share dividend of $0.35 million, which represents the 12th consecutive quarter of paying the<br> full dividend due on the Preferred shares since their issuance in February 2018. |
| ● | During<br> the first quarter, the Company invested an additional $1.65 million into its FG Special Situations Fund, LP through Fundamental<br> Global Asset Management, LLC (“FGAM”), bringing the total investment by the Company in FGAM to $6.65 million.<br> This additional funding was primarily invested in Aldel Investors, LLC, the sponsor of Aldel Financial, Inc. (NYSE: ADF),<br> a SPAC led by Rob Kauffman, cofounder of Fortress Investment Group. |
| ● | Non-cash<br> losses associated with the change in fair value of the Company’s investment in the common stock of FedNat Holding Company<br> (Nasdaq: FNHC) (“FedNat”) of $1.9 million. |
| ● | General<br> and administrative expense of $2 million. This also includes the shared services fee of $0.5 million with our related party<br> Fundamental Global Management, LLC, as well as the Company’s addition of employees effective January 1, 2021. |
BalanceSheet Highlights
As of March 31, 2021, key balance sheet items included:
| ● | Cash<br> and cash equivalents of $8.8 million. |
|---|---|
| ● | Equity<br> securities of $16.6 million primarily comprised of FedNat common stock of $6.7 million, and private placements of $9.3 million,<br> which consists primarily of FGNA having an estimated fair value of $7.6 million. |
| ● | Total<br> shareholders’ equity of $35.7 million. |
FGFinancial Group, Inc.
FG Financial Group, Inc., is a reinsurance and investment management holding company focused on opportunistic collateralized and loss capped reinsurance, while allocating capital to SPAC and SPAC sponsor-related businesses. The Company’s principal business operations are conducted through its subsidiaries and affiliates.
ForwardLooking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are therefore entitled to the protection of the safe harbor provisions of these laws. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “budget,” “can,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “evaluate,” “forecast,” “goal,” “guidance,” “indicate,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “possibly,” “potential,” “predict,” “probable,” “probably,” “pro-forma,” “project,” “seek,” “should,” “target,” “view,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or other variations thereon or comparable terminology. In particular, discussions and statements regarding the Company’s future business plans and initiatives are forward-looking in nature. We have based these forward-looking statements on our current expectations, assumptions, estimates, and projections. While we believe these to be reasonable, such forward-looking statements are only predictions and involve a number of risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, and may impact our ability to implement and execute on our future business plans and initiatives. Management cautions that the forward-looking statements in this release are not guarantees of future performance, and we cannot assume that such statements will be realized or the forward-looking events and circumstances will occur. Factors that might cause such a difference include, without limitation: risks associated with our limited business operations since the sale of our insurance operations in December 2019 (the “Asset Sale”); risks associated with our inability to identify and realize business opportunities, and the undertaking of any new such opportunities, following the Asset Sale; our ability to spend or invest the net proceeds from the Asset Sale in a manner that yields a favorable return; general conditions in the global economy, including the impact of health and safety concerns from the current outbreak of the COVID-19 coronavirus; our lack of operating history or established reputation in the reinsurance industry; our inability to obtain or maintain the necessary approvals to operate reinsurance subsidiaries; risks associated with operating in the reinsurance industry, including inadequately priced insured risks, credit risk associated with brokers we may do business with, and inadequate retrocessional coverage; our inability to execute on our investment and investment management strategy, including our strategy to invest in real estate assets; potential loss of value of investments; risk of becoming an investment company; fluctuations in our short-term results as we implement our new business strategy; risks of not being unable to attract and retain qualified management and personnel to implement and execute on our business and growth strategy; failure of our information technology systems, data breaches and cyber-attacks; our ability to establish and maintain an effective system of internal controls; our limited operating history as a publicly traded company; the requirements of being a public company and losing our status as a smaller reporting company or becoming an accelerated filer; any potential conflicts of interest between us and our controlling stockholders and different interests of controlling stockholders; potential conflicts of interest between us and our directors and executive officers; volatility or decline of the shares of FedNat Holding Company common stock received by us as consideration in the Asset Sale or limitations and restrictions with respect to our ownership of such shares; risks of being a minority stockholder of FedNat Holding Company; and risks of our inability to continue to satisfy the continued listing standards of the Nasdaq following completion of the Asset Sale.
Our expectations and future plans and initiatives may not be realized. If one of these risks or uncertainties materialize, 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 included or incorporated by reference to the Form 10-K 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.
INVESTORRELATIONS:
IMS Investor Relations
John Nesbett/Jennifer Belodeau
(203) 972-9200
jnesbett@imsinvestorrelations.com
FGFINANCIAL GROUP, INC.
Consolidated Statements of Operations
($ in thousands, except share and per share data)
(Unaudited)
| Three<br> months ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Revenue: | ||||||
| Net<br> premiums earned | $ | 185 | $ | – | ||
| Net<br> investment income (loss) | 1,850 | (8,706 | ) | |||
| Other<br> income | 55 | 29 | ||||
| Total<br> revenue | 2,090 | (8,677 | ) | |||
| Expenses: | ||||||
| Net<br> losses and loss adjustment expenses | 106 | – | ||||
| Amortization<br> of deferred policy acquisition costs | 57 | – | ||||
| General<br> and administrative expenses | 2,039 | 805 | ||||
| Total<br> expenses | 2,202 | 805 | ||||
| Loss<br> from continuing operations before income taxes | (112 | ) | (9,482 | ) | ||
| Income<br> tax benefit | – | (1,185 | ) | |||
| Net<br> loss from continuing operations | $ | (112 | ) | $ | (8,297 | ) |
| Discontinued<br> operations: | ||||||
| Gain<br> from sale of the Maison Business, net of taxes | 145 | – | ||||
| Net<br> income (loss) | 33 | (8,297 | ) | |||
| Loss<br> attributable to noncontrolling interests | (1 | ) | – | |||
| Dividends<br> declared on Series A Preferred Shares | 350 | 350 | ||||
| Loss<br> attributable to FG Financial Group, Inc. common shareholders | $ | (316 | ) | $ | (8,647 | ) |
| Basic<br> and diluted net income (loss) per common share: | ||||||
| Continuing<br> operations | $ | (0.09 | ) | $ | (1.43 | ) |
| Discontinued<br> operations | 0.03 | – | ||||
| (0.06 | ) | $ | (1.43 | ) | ||
| Weighted average<br> common shares outstanding: | ||||||
| Basic<br> and diluted | 4,992,989 | 6,067,845 |
FGFINANCIAL GROUP, INC.
Consolidated Balance Sheets
($in thousands, except share and per share data)
| December<br>31, 2020 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Equity<br> securities, at fair value (cost basis of 27,110 and 24,763, respectively) (includes 9,956 and 4,013 held by the Company’s<br> consolidated VIE, respectively) | 16,637 | $ | 12,554 | ||
| Other<br> investments | 5,470 | 5,334 | |||
| Cash<br> and cash equivalents (includes 850 and 987 held by the Company’s consolidated VIE, respectively) | 8,796 | 12,132 | |||
| Funds<br> deposited with reinsured companies | 2,444 | 2,444 | |||
| Current<br> income taxes recoverable | 1,471 | 1,724 | |||
| Reinsurance<br> balances receivable | 479 | – | |||
| Deferred<br> policy acquisition costs | 215 | – | |||
| Other<br> assets | 494 | 517 | |||
| Total<br> assets | 36,005 | $ | 34,705 | ||
| LIABILITIES | |||||
| Loss<br> and loss adjustment expense reserves | 106 | $ | – | ||
| Unearned<br> premium reserves | 697 | – | |||
| Accounts<br> payable | 483 | 455 | |||
| Other<br> liabilities | 9 | 57 | |||
| Total<br> liabilities | 1,295 | $ | 512 | ||
| SHAREHOLDERS’<br> EQUITY | |||||
| Series<br> A Preferred Shares, 25.00 par value, 1,000,000 shares authorized, 700,000 shares issued and outstanding as of both periods | 17,500 | $ | 17,500 | ||
| Common<br> stock, 0.001 par value; 10,000,000 shares authorized; 6,291,888 and 6,269,821 shares issued as of March 31, 2021 and December<br> 31, 2020,respectively, and 5,010,377 and 4,988,310 shares outstanding as of March 31, 2021 and December 31, 2020, respectively | 6 | 6 | |||
| Additional<br> paid-in capital | 47,242 | 47,065 | |||
| Accumulated<br> deficit | (24,509 | ) | (24,193 | ) | |
| Less:<br> treasury stock at cost; 1,281,511 shares for both periods | (6,185 | ) | (6,185 | ) | |
| Total<br> shareholders’ equity attributable to FG Financial Group, Inc. | 34,054 | 34,193 | |||
| Noncontrolling<br> interests | 656 | – | |||
| Total<br> shareholders’ equity | 34,710 | 34,193 | |||
| Total<br> liabilities and shareholders’ equity | 36,005 | $ | 34,705 |
All values are in US Dollars.