Discontinued Operations

6 Months Ended

Jun. 30, 2025

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Note 4. Discontinued Operations

Strong/MDI

On May 3, 2024, Strong Global Entertainment entered into the Acquisition Agreement with FGAC, Strong/MDI, FGAC Investors LLC, and CG Investments VII Inc. On September 25, 2024, Strong Global Entertainment completed the transaction. As part of the closing, FGAC was renamed Saltire. Pursuant to the Acquisition Agreement, Strong Global Entertainment received the equivalent of approximately $29.5 million in cash and preferred and common shares of Saltire, consisting of: (i) cash consideration in an amount equal to 25% of the net proceeds of a concurrent private placement (or $0.8 million), (ii) the issuance of preferred shares with an initial preferred share redemption amount of $9.0 million, and (iii) the issuance of $19.7 million of Saltire common shares. In connection with the transaction, and after including the impact of the reclassification of approximately $5.4 million from accumulated other comprehensive income to realized loss on foreign exchange, the Company recorded a net gain on the sale of Strong/MDI of approximately $21.8 million during the third quarter of 2024. Upon completion of the transaction, Strong Global Entertainment held an ownership interest of approximately 37.3% in Saltire, which is 30.5% as of June 30, 2025.

Management evaluated the classification of Strong/MDI as a discontinued operation and determined Strong/MDI is a component of an entity and represented a discontinued operation. Accordingly, Strong/MDI has been included as part of discontinued operations for the three months and six months ended June 30, 2024.

Reinsurance

The Company’s wholly owned reinsurance subsidiary, FG Reinsurance Ltd (“FGRe”), a Cayman Islands limited liability company, provides specialty property and casualty reinsurance. FGRe has been granted a Class B (iii) insurer license in accordance with the terms of The Insurance Act (as revised) of the Cayman Islands and underlying regulations thereto and is subject to regulation by the Cayman Islands Monetary Authority (the “Authority”). The terms of the license require advance approval from the Authority should FGRe wish to enter into any reinsurance agreements which are not fully collateralized.

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.

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, the Company received consideration of $5.6 million.

Management’s original intent was to sell all of the reinsurance business and that remained the case as of June 30, 2025. In connection with the transactions occurring in July 2025, management is reassessing those plans as part of the Company’s new strategy (see Recent Developments).

During the fourth quarter of 2024, the Company recorded an impairment charge of approximately $2.1 million to adjust the carrying amount of the disposal group to its fair value less cost to sell. The Company adjusted the impairment charge in the first quarter of 2025 and recorded an additional impairment charge of $1.5 million.

Strong Studios

In March 2022, Strong Studios acquired, from Landmark Studio Group LLC (“Landmark”), the rights to original feature films and television series, and was assigned third party rights to content for global multiplatform distribution.

In September 2023, the Company acquired all of the outstanding capital stock of Unbounded Media Corporation (“Unbounded”), an independent media and creative production company.

As of December 31, 2023, the board of directors of Strong Global Entertainment approved the Company’s plan to exit its content business, including Strong Studios and Unbounded and authorized management to proceed with such plan. As a result, management evaluated the classification of Strong Studios as a discontinued operation as of December 31, 2023 and determined Strong Studios is a component of an entity and represented a discontinued operation. Accordingly, Strong Studios has been included as part of discontinued operations for all periods presented.

The assets and liabilities included as part of discontinued operations as of June 30, 2025 and December 31, 2024 related to the Company’s reinsurance business. The major classes of assets and liabilities are as follows (in thousands):

	June 30, 2025		December 31, 2024
Reinsurance balance receivable	$	10,574	$	22,976
Funds deposited with reinsured companies		2,944		8,650
Total assets of discontinued operations	$	13,518	$	31,626
Loss and loss adjustment expense reserves	$	5,227	$	13,283
Present value of future profits		4,727		9,153
Total liabilities of discontinued operations	$	9,954	$	22,436

The loss from discontinued operations during the three and six months ended June 30, 2025 related to the Company’s reinsurance business. The major line items constituting the net income (loss) from discontinued operations during the three and six months ended June 30, 2024 are as follows (in thousands):

	Three Months Ended June 30, 2024												Six Months Ended June 30, 2024
	Strong/MDI			Reinsurance			Strong Studios			Total			Strong/MDI			Reinsurance			Strong Studios			Total
Net product and services revenue	$	3,940		$	-		$	-		$	3,940		$	7,327		$	-		$	-		$	7,327
Net premiums earned		-			3,697			-			3,697			-			4,472			-			4,472
Total revenue		3,940			3,697			-			7,637			7,327			4,472			-			11,799
Cost of products and services revenues		2,358			-			110			2,468			4,394			-			205			4,599
Net losses and loss adjustment expenses		-			2,094			-			2,094			-			2,460			-			2,460
Amortization of deferred policy acquisition costs		-			872			-			872			-			1,156			-			1,156
Selling and administrative expenses		1,145			218			204			1,567			1,783			178			131			2,092
Loss on disposal of assets		-			-			-			-			2			-			-			2
Total expenses		3,503			3,184			314			7,001			6,179			3,794			336			10,309
Income (loss) from operations		437			513			(314	)		636			1,148			678			(336	)		1,490
Other income (expense)		62			(1	)		-			61			141			(3	)		-			138
Income (loss) from discontinued operations before taxes		499			512			(314	)		697			1,289			675			(336	)		1,628
Income tax expense		(35	)		(6	)		-			(41	)		(168	)		-			-			(168	)
Net income (loss) from discontinued operations	$	464		$	506		$	(314	)	$	656		$	1,121		$	675		$	(336	)	$	1,460