Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | Jun. 26, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-41688 | |
Entity Registrant Name | STRONG GLOBAL ENTERTAINMENT, INC. | |
Entity Central Index Key | 0001893448 | |
Entity Incorporation, State or Country Code | A1 | |
Entity Address, Address Line One | 5960 Fairview Road | |
Entity Address, Address Line Two | Suite 275 | |
Entity Address, City or Town | Charlotte | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 28210 | |
City Area Code | (704) | |
Local Phone Number | 471-6784 | |
Title of 12(b) Security | Class A Common Voting Shares, without par value | |
Trading Symbol | SGE | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 7,143,823 |
Condensed Combined Balance Shee
Condensed Combined Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 4,077 | $ 3,615 |
Accounts receivable (net of credit allowances of $273 and $409, respectively) | 5,552 | 6,148 |
Inventories, net | 3,660 | 3,389 |
Other current assets | 5,029 | 4,547 |
Total current assets | 18,318 | 17,699 |
Property, plant and equipment, net | 4,534 | 4,607 |
Operating lease right-of-use assets | 225 | 237 |
Finance lease right-of-use asset | 577 | 606 |
Film and television programming rights, net | 1,584 | 1,501 |
Intangible assets, net | 4 | 6 |
Goodwill | 882 | 882 |
Total assets | 26,124 | 25,538 |
Current liabilities: | ||
Accounts payable | 3,668 | 4,106 |
Accrued expenses | 4,331 | 4,486 |
Payable to FG Group Holdings Inc. (Note 13) | $ 2,288 | $ 1,861 |
Other Liability, Current, Related and Nonrelated Party Status [Extensible Enumeration] | Related Party [Member] | Related Party [Member] |
Short-term debt | $ 3,634 | $ 2,510 |
Current portion of long-term debt | 36 | 36 |
Current portion of operating lease obligations | 65 | 64 |
Current portion of finance lease obligations | 112 | 105 |
Deferred revenue and customer deposits | 2,388 | 1,769 |
Total current liabilities | 16,522 | 14,937 |
Operating lease obligations, net of current portion | 217 | 234 |
Finance lease obligations, net of current portion | 470 | 502 |
Long-term debt, net of current portion | 117 | 126 |
Deferred income taxes | 511 | 529 |
Other long-term liabilities | 5 | 6 |
Total liabilities | 17,842 | 16,334 |
Commitments, contingencies and concentrations (Note 12) | ||
Equity: | ||
Accumulated other comprehensive loss | (5,096) | (5,024) |
Net parent investment | 13,378 | 14,228 |
Total equity | 8,282 | 9,204 |
Total liabilities and equity | $ 26,124 | $ 25,538 |
Condensed Combined Balance Sh_2
Condensed Combined Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Doubtful accounts receivable | $ 273 | $ 409 |
Condensed Combined Statements o
Condensed Combined Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Total net revenues | $ 9,951 | $ 9,720 |
Total cost of revenues | 7,631 | 7,515 |
Gross profit | 2,320 | 2,205 |
Selling and administrative expenses: | ||
Selling | 534 | 541 |
Administrative | 1,432 | 1,295 |
Total selling and administrative expenses | 1,966 | 1,836 |
Gain on disposal of assets | 1 | |
Income from operations | 355 | 369 |
Other income (expense): | ||
Interest expense | (56) | (24) |
Foreign currency transaction gain (loss) | 117 | (78) |
Other income, net | 12 | 1 |
Total other income (expense) | 73 | (101) |
Income before income taxes | 428 | 268 |
Income tax expense | (55) | (75) |
Net income | 373 | 193 |
Product [Member] | ||
Total net revenues | 7,204 | 7,703 |
Total cost of revenues | 5,465 | 5,858 |
Service [Member] | ||
Total net revenues | 2,747 | 2,017 |
Total cost of revenues | $ 2,166 | $ 1,657 |
Condensed Combined Statements_2
Condensed Combined Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net income | $ 373 | $ 193 |
Currency translation adjustment: | ||
Unrealized net change arising during period | (72) | 178 |
Total other comprehensive (loss) income | (72) | 178 |
Comprehensive income | $ 301 | $ 371 |
Condensed Combined Statements_3
Condensed Combined Statements of Equity (Unaudited) - USD ($) $ in Thousands | Total | AOCI Attributable to Parent [Member] | Parent [Member] |
Balance at Dec. 31, 2021 | $ 8,810 | $ (3,628) | $ 12,438 |
Net income | 193 | 193 | |
Net other comprehensive income | 178 | 178 | |
Stock-based compensation expense | 39 | 39 | |
Net transfer from parent | 1,050 | 1,050 | |
Balance at Mar. 31, 2022 | 10,270 | (3,450) | 13,720 |
Balance at Dec. 31, 2022 | 9,204 | (5,024) | 14,228 |
Cumulative effect of adoption of accounting principle (Note 2) | (24) | (24) | |
Net income | 373 | 373 | |
Net other comprehensive income | (72) | (72) | |
Stock-based compensation expense | 18 | 18 | |
Net transfer from parent | (1,217) | (1,217) | |
Balance at Mar. 31, 2023 | $ 8,282 | $ (5,096) | $ 13,378 |
Condensed Combined Statements_4
Condensed Combined Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 373 | $ 193 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Recovery of doubtful accounts | (18) | (15) |
Provision for obsolete inventory | 14 | 13 |
Provision for warranty | 44 | 11 |
Depreciation and amortization | 179 | 213 |
Amortization and accretion of operating leases | 16 | 20 |
Deferred income taxes | (19) | (15) |
Stock-based compensation expense | 18 | 39 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 593 | (408) |
Inventories | (284) | 426 |
Current income taxes | 130 | 428 |
Other assets | (418) | 524 |
Accounts payable and accrued expenses | (457) | (1,994) |
Deferred revenue and customer deposits | 618 | (541) |
Operating lease obligations | (19) | (12) |
Net cash proivded by (used in) operating activities | 770 | (1,118) |
Cash flows from investing activities: | ||
Capital expenditures | (75) | (103) |
Acquisition of programming rights | (83) | (395) |
Net cash used in investing activities | (158) | (498) |
Cash flows from financing activities: | ||
Principal payments on short-term debt | (250) | (79) |
Principal payments on long-term debt | (9) | (3) |
Borrowings under credit facility | 1,596 | |
Repayments under credit facility | (225) | |
Payments on finance lease obligations | (25) | |
Net cash transferred from parent | (1,217) | 1,050 |
Net cash (used in) provided by financing activities | (130) | 968 |
Effect of exchange rate changes on cash and cash equivalents | (20) | 44 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 462 | (604) |
Cash and cash equivalents and restricted cash at beginning of period | 3,615 | 4,494 |
Cash and cash equivalents and restricted cash at end of period | 4,077 | 3,890 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Amount payable to Landmark Studio Group in connection with acquisition of projects (Note 7) | $ 1,345 |
Nature of Operations
Nature of Operations | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 1. Nature of Operations Strong Global Entertainment (“Strong Global Entertainment,” or the “Company”) combines the operating assets and liabilities of Strong/MDI Screen Systems, Inc. (“Strong/MDI”), a leading premium screen and projection coatings supplier in the world, Strong Technical Services, Inc. (“STS”), which provides comprehensive managed service offerings with 24/7/365 support nationwide to ensure solution uptime and availability, and Strong Studios, Inc. (“Strong Studios”), which develops and produces original feature films and television series and acquires rights to distribute content globally. In March 2022, the Company launched Strong Studios, Inc. (“Strong Studios”) with the goal of expanding its business to include content creation and production of feature films and series. The launch of Strong Studios is intended to further diversify our revenue streams and increase our addressable markets, while leveraging and expanding our existing relationships in the industry. The Company currently operates as an operating segment of FG Group Holdings Inc. (formerly Ballantyne Strong, Inc.) (“FG Group Holdings”), as discussed in the Basis of Presentation below. On July 29, 2021, FG Group Holdings announced that its board of directors had approved the pursuit of a separation of its Strong Global Entertainment business segment from FG Group Holdings. FG Group Holdings announced that the separation was expected to be effected through an initial public offering (“IPO”) of newly issued common shares of Strong Global Entertainment, Inc. FG Group Holdings intends to remain the majority shareholder of the subsidiary post-offering. On May 15, 2023, the Company announced the pricing of the IPO of 1,000,000 4.00 1.4 2.1 150,000 Refer to Note 14, Subsequent Events, for details relating to the Company’s IPO and related transactions. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The combined financial statements of Strong Global Entertainment have been derived from the consolidated financial statements and accounting records of FG Group Holdings as if Strong Global Entertainment had operated on a stand-alone basis during the periods presented and were prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission. Historically, Strong Global Entertainment was reported as an operating segment within FG Group Holdings’ reportable segments and did not operate as a stand-alone company. Accordingly, FG Group Holdings historically reported the financial position and the related results of operations, cash flows and changes in equity of Strong Global Entertainment as a component of FG Group Holdings’ consolidated financial statements. The combined financial statements are presented as if Strong Global Entertainment had been carved out of FG Group Holdings for all periods presented. Prior to the completion of the IPO, certain assets and liabilities presented were transferred to Strong Global Entertainment at carry-over (historical cost) basis. Cash and cash equivalents are managed through bank accounts legally owned by FG Group Holdings as well as accounts owned by STS and Strong/MDI. Accordingly, cash and cash equivalents held by FG Group Holdings at the corporate level were not attributable to Strong Global Entertainment for any of the periods presented. Only cash amounts in accounts legally owned by entities dedicated to the Strong Global Entertainment business are reflected in the combined balance sheets. FG Group Holdings manages cash on a centralized basis and routinely transferred cash to and from its operating subsidiaries to maintain target cash levels and fund disbursements. Transfers of cash, both to and from FG Group Holdings, are reflected as a component of Net parent investment in the combined balance sheets and as a financing activity on the accompanying combined statements of cash flows. As the operations that comprise Strong Global Entertainment were not historically held by a single legal entity, total Net parent investment is shown as a component of equity in the combined financial statements. Balances between Strong Global Entertainment and FG Group Holdings that were not historically cash settled are included in Net parent investment. Net parent investment represents FG Group Holdings’ interest in the recorded net assets of Strong Global Entertainment and represents the cumulative investment by FG Group Holdings in Strong Global Entertainment through the dates presented, inclusive of operating results. The operating results of Strong Global Entertainment have historically been disclosed as a reportable segment within the consolidated financial statements of FG Group Holdings enabling identification of directly attributable transactional information, functional departments and headcount. The combined balance sheets were primarily derived by reference to one, or a combination, of Strong Global Entertainment transaction-level information, functional department or headcount. Revenue and Cost of revenue were derived from transactional information specific to Strong Global Entertainment products and services. Directly attributable operating expenses were derived from activities relating to Strong Global Entertainment functional departments and headcount. Certain additional costs, including compensation costs for corporate employees, have been allocated from FG Group Holdings. The allocated costs for corporate functions included, but were not limited to, information technology, legal, finance and accounting, human resources, tax, treasury, research and development, sales and marketing activities, shared facilities and other shared services, which are not provided at the Strong Global Entertainment level. These costs were allocated on a basis of revenue, headcount or other measures Strong Global Entertainment has determined as reasonable. Strong Global Entertainment employees also historically participated in FG Group Holdings’ stock-based incentive plans, in the form of restricted stock units (“RSUs”) and stock options issued pursuant to FG Group Holdings’ employee stock plan. Stock-based compensation expense has been directly reported by Strong Global Entertainment based on the awards and terms previously granted to FG Group Holdings’ employees. Allocations for management costs and corporate support services provided to Strong Global Entertainment totaled $ 0.2 The management of Strong Global Entertainment believes the assumptions underlying the combined financial statements, including the assumptions regarding the allocated expenses, reasonably reflect the utilization of services provided, or the benefit received by, Strong Global Entertainment during the periods presented. Nevertheless, the combined financial statements may not be indicative of Strong Global Entertainment’s future performance, do not necessarily include all of the actual expenses that would have been incurred had Strong Global Entertainment been an independent entity during the historical periods and may not reflect the results of operations, financial position, and cash flows had Strong Global Entertainment been a stand-alone company during the periods presented. During the periods presented in the combined financial statements, the operations of Strong Global Entertainment are included in the consolidated U.S. federal, and certain state and local and foreign income tax returns filed by FG Group Holdings, where applicable. Income tax expense and other income tax related information contained in the combined financial statements are presented on a separate return basis as if Strong Global Entertainment had filed its own tax returns. The income taxes of Strong Global Entertainment as presented in the combined financial statements may not be indicative of the income taxes that Strong Global Entertainment will generate in the future. Additionally, certain tax attributes such as net operating losses or credit carryforwards are presented on a separate return basis, and accordingly, may differ in the future. In jurisdictions where Strong Global Entertainment has been included in the tax returns filed by FG Group Holdings, any income tax receivables resulting from the related income tax provisions have been reflected in the balance sheet within Net parent investment. Net income per share data has not been presented in the combined financial statements because Strong Global Entertainment did not operate as a separate legal entity with its own capital structure during the periods presented. The Company’s fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. These combined financial statements are presented in accordance with the requirements of interim financial data and consequently do not include all of the disclosures normally required by GAAP for annual reporting purposes, such as those made in the Company’s audited combined financial statements for the years ended December 31, 2022 and 2021. These combined financial statements should be read in conjunction with the combined financial statements and for the years ended December 31, 2022 and 2021. The combined balance sheet as of December 31, 2022 was derived from the Company’s audited combined balance sheet as of that date. All other combined 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. The results for interim periods are not necessarily indicative of trends or results expected for a full fiscal year. Unless otherwise indicated, all references to “dollars” and “$” in this Quarterly Report on Form 10-Q are to, and amounts are presented in, U.S. dollars. Use of Management Estimates The preparation of combined 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 combined 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. The coronavirus pandemic (“COVID-19”) and inflationary pressures have posed, and may continue to pose, challenges for our business. The COVID-19 global pandemic resulted in unprecedented impact to consumer behaviors and our customers, particularly our customers’ ability and willingness to purchase our products and services. The Company believes that consumer reticence to engage in outside-the-home activities, caused by the risk of contracting COVID-19, has abated, and our customers have resumed more typical, pre-COVID-19 purchasing behaviors. And while we believe our customers made significant progress in its recovery from the pandemic, the ongoing recovery will be contingent upon several key factors, including the volume of new film content available, the box office performance of new film content released, the duration of the exclusive theatrical release window, and evolving consumer behavior with competition from other forms of in- and out-of-home entertainment. There can be no assurances that there will be no additional public health crises, including further resurgence or variants of COVID-19, which could reverse the current trend and have a negative impact on the Company’s results of operations. Cash and Cash Equivalents All short-term, highly liquid financial instruments are classified as cash equivalents in the condensed combined balance sheets and statements of cash flows. Generally, these instruments have maturities of three months or less from date of purchase. As of March 31, 2023, $ 0.6 4.1 Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for expected credit losses based on several factors, including overall customer credit quality, historical write-off experience and a specific analysis that projects the ultimate collectability of the account. As such, these factors may change over time causing the allowance level and bad debt expense to be adjusted accordingly. Past due accounts are written off when our efforts have been unsuccessful in collecting amounts due. Income Taxes Income taxes are accounted for under the asset and liability method. The Company uses an estimate of its annual effective rate at each interim period based on the facts and circumstances at the time while the actual effective rate is calculated at year-end. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred 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 enactment date. In assessing whether the deferred tax assets are realizable, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company’s uncertain tax positions are evaluated in a two-step process, whereby 1) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and 2) for those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement with the related tax authority. The Company accrues interest and penalties related to uncertain tax positions in the combined statements of operations as income tax expense. Stock Compensation Plans The Company’s employees have historically participated in FG Group Holdings’ stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the FG Group Holdings’ employees. The Company measures stock-based compensation at the grant date based on the fair value of the award. The fair value of stock options is estimated using the Black-Scholes option pricing model. Estimated compensation cost relating to RSUs is based on the closing fair market value of FG Group Holdings’ common stock on the date of grant. The Company recognizes compensation expense for all stock-based payment awards based on estimated fair values on the date of grant. The Company uses the straight-line amortization method over the vesting period of the awards. The Company has historically issued shares upon exercise of stock options or vesting of restricted stock from new stock issuances. The Company estimates the fair value of restricted stock awards based upon the market price of the underlying Common Shares on the date of grant. The fair value of stock options granted is calculated using the Black-Scholes option pricing model. No stock-based compensation cost was capitalized as a part of inventory during the three months ended March 31, 2023 and March 31, 2022. Film and Television Programming Rights Commencing in March 2022, the Company began producing original productions and acquiring rights to films and television programming. Film and television programming rights include the unamortized costs of in-process or in-development content produced or acquired by the Company. The Company’s capitalized costs include all direct production and financing costs, capitalized interest when applicable, and production overhead. Film and television program rights are stated at the lower of amortized cost or estimated fair value. The costs of producing content are amortized using the individual-film-forecast method. These costs are amortized based on the ratio of the current period’s revenues to management’s estimated remaining total gross revenues to be earned (“Ultimate Revenue”) as of each reporting date to reflect the most current available information. Management’s judgment is required in estimating Ultimate Revenue and the costs to be incurred throughout the life of each film or television program. Amortization is adjusted when necessary to reflect increases or decreases in forecasted Ultimate Revenues. For an episodic television series, the period over which Ultimate Revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For films, Ultimate Revenue includes estimates over a period not to exceed ten years following the date of initial release. Content assets are expected to be predominantly monetized individually and therefore are reviewed at the individual level when an event or change in circumstance indicates a change in the expected usefulness of the content or the fair value may be less than the unamortized cost. Due to the inherent uncertainties involved in making such estimates of Ultimate Revenues and expenses, these estimates may differ from actual results. In addition, in the normal course of our business, some films and titles will be more successful or less successful than anticipated. Management regularly reviews and revises, when necessary, its Ultimate Revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value. An increase in the estimate of Ultimate Revenue will generally result in a lower amortization rate and, therefore, less film and television program amortization expense, while a decrease in the estimate of Ultimate Revenue will generally result in a higher amortization rate and, therefore, higher film and television program amortization expense, and also periodically result in an impairment requiring a write-down of the film cost to the title’s fair value. The Company has not incurred any of these write-downs. An impairment charge would be recorded in the amount by which the unamortized costs exceed the estimated fair value. Estimates of future revenue involve measurement uncertainties and it is therefore possible that reductions in the carrying value of capitalized costs may be required because of changes in management’s future revenue estimates. Fair Value of Financial Instruments Assets and liabilities measured at fair value are categorized into a fair value hierarchy based upon the observability of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: ● Level 1 – inputs to the valuation techniques are quoted prices in active markets for identical assets or liabilities ● Level 2 – inputs to the valuation techniques are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly ● Level 3 – inputs to the valuation techniques are unobservable for the assets or liabilities The following tables present the Company’s financial assets measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements are classified, as of March 31, 2023 and December 31, 2022. Fair values measured on a recurring basis at March 31, 2023 (in thousands): Schedule of Fair Values Measured on Recurring Basis Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 4,077 $ - $ - $ 4,077 Total $ 4,077 $ - $ - $ 4,077 Fair values measured on a recurring basis at December 31, 2022 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 3,615 $ - $ - $ 3,615 Total $ 3,615 $ - $ - $ 3,615 The Company’s short-term debt is recorded at historical cost. The carrying values of all other financial assets and liabilities, including accounts receivable, accounts payable, accrued expenses and short-term debt reported in the combined balance sheets equal or approximate their fair values due to the short-term nature of these instruments. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which include non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). Net parent investment Net parent investment on the combined balance sheets represents FG Group Holdings’ historical investment in Strong Global Entertainment, the net effect of transactions with, and allocations to and from, FG Group Holdings, and Strong Global Entertainment. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU requires the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The Company adopted this ASU effective January 1, 2023. Upon adoption the Company recorded a cumulative effect adjustment decreasing net parent investment by $ 24,000 |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 3. Revenue The Company accounts for revenue using the following steps: ● Identify the contract, or contracts, with a customer; ● Identify the performance obligations in the contract; ● Determine the transaction price; ● Allocate the transaction price to the identified performance obligations; and ● Recognize revenue when, or as, the Company satisfies the performance obligations. 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 whether they are distinct, 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. The Company estimates the amount of total contract consideration it expects to receive for variable arrangements by determining the most likely amount it expects to earn from the arrangement based on the expected quantities of services it expects to provide and the contractual pricing based on those quantities. The Company only includes 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. The Company considers the sensitivity of the estimate, its relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. 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 the Company has an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when the Company invoices clients, or receives cash, in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when the Company has 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 March 31, 2023 or December 31, 2022. The following tables disaggregate the Company’s revenue by major source and by operating segment for the three months ended March 31, 2023 and 2022 (in thousands): Schedule of Disaggregation of Revenue Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Screen system sales $ 2,582 $ 3,306 Digital equipment sales 3,526 3,544 Extended warranty sales 51 100 Other product sales 1,045 753 Total product sales 7,204 7,703 Field maintenance and monitoring services 1,891 1,618 Installation services 802 371 Other service revenues 54 28 Total service revenues 2,747 2,017 Total $ 9,951 $ 9,720 Total revenue $ 9,951 $ 9,720 Screen system sales The Company typically recognizes revenue on the sale of its screen systems when control of the screen is transferred to the customer, usually at time of shipment. However, revenue is recognized upon delivery for certain international shipments with longer shipping transit times because control transfers upon customer delivery. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. For contracts that are long-term in nature, the Company believes that the use of the percentage-of-completion method is appropriate as the Company has the ability to make reasonably dependable estimates of the extent of progress towards completion, contract revenues, and contract costs. Under the percentage-of-completion method, revenue is recorded based on the ratio of actual costs incurred to total estimated costs expected to be incurred related to the contract. Digital equipment sales The Company recognizes revenue on sales of digital equipment when the control of the equipment is transferred, which typically occurs at the time of shipment from the Company’s warehouse or drop-shipment from a third party. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. Field maintenance and monitoring services The Company sells service contracts that provide maintenance and monitoring services to its Strong Entertainment customers. These contracts are generally 12 months in length. Revenue related to service contracts is recognized ratably over the term of the agreement. In addition to selling service contracts, the Company also performs discrete time and materials-based maintenance and repair work for customers. Revenue related to time and materials-based maintenance and repair work is recognized at the point in time when the performance obligation has been fully satisfied. Installation services The Company performs installation services for its customers and recognizes revenue upon completion of the installations. Extended warranty sales The Company performs installation services for its customers and recognizes revenue upon completion of the installations. Timing of revenue recognition The following tables disaggregate the Company’s revenue by the timing of transfer of goods or services to the customer for the three months ended March 31, 2023 and 2022 (in thousands): Schedule of Disaggregation of Revenue by Timing of Transfer of Goods or Services Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Point in time $ 8,430 $ 8,442 Over time 1,521 1,278 Total $ 9,951 $ 9,720 Total revenue $ 9,951 $ 9,720 At March 31, 2023, the unearned revenue amount associated with long-term projects that the Company uses the percentage-of-completion method to recognize revenue, maintenance and monitoring services and extended warranty sales in which the Company is the primary obligor was $ 0.8 0.8 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories consisted of the following (in thousands): Schedule of Inventories March 31, 2023 December 31, 2022 Raw materials and components $ 1,925 $ 1,826 Work in process 448 279 Finished goods 1,287 1,284 Inventory, net $ 3,660 $ 3,389 The inventory balances are net of reserves of approximately $ 0.5 Schedule of Inventory Reserve Inventory reserve balance at December 31, 2022 $ 486 Inventory write-offs during 2023 (16 ) Provision for inventory reserve during 2023 14 Inventory reserve balance at March 31, 2023 $ 484 |
Other Current Assets
Other Current Assets | 3 Months Ended |
Mar. 31, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | 5. Other Current Assets Other current assets consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Other Current Assets March 31, 2023 December 31, 2022 Prepaid expenses $ 854 $ 417 Receivable from Safehaven 2022, Inc. 1,625 1,625 Costs incurrent in connection with initial public offering 1,987 1,920 Unbilled accounts receivable 500 337 Other 63 248 Total $ 5,029 $ 4,547 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | 6. Property, Plant and Equipment, Net Property, plant and equipment, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Property, Plant and Equipment March 31, 2023 December 31, 2022 Land $ 48 $ 48 Buildings and improvements 6,757 6,752 Machinery and other equipment 4,853 4,778 Office furniture and fixtures 676 675 Construction in progress 15 12 Total properties, cost 12,349 12,265 Property, plant and equipment, gross 12,349 12,265 Less: accumulated depreciation (7,815 ) (7,658 ) Property, plant and equipment, net $ 4,534 $ 4,607 |
Film and Television Programming
Film and Television Programming Rights, Net | 3 Months Ended |
Mar. 31, 2023 | |
Other Industries [Abstract] | |
Film and Television Programming Rights, Net | 7. Film and Television Programming Rights, Net Film and television programming rights, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Film and Television Programming Rights March 31, 2023 December 31, 2022 Television series in development $ 1,362 $ 1,308 Films in development 222 193 Total $ 1,584 $ 1,501 The Company has not yet commenced amortization of the projects as they were still in development at March 31, 2023. A rollforward of film and television programming rights, net for the three months ended March 31, 2023, is as follows (in thousands): Schedule of Roll forward of Film and Programming Rights Balance at December 31, 2022 $ 1,501 Expenditures on in-process projects 83 Balance at March 31, 2023 $ 1,584 In March 2022, Strong Studios acquired the rights to original feature films and television series from Landmark Studio Group LLC (“Landmark”), including the assignment of third party rights to content for global multiplatform distribution. The transaction entailed the acquisition of certain projects which are in varying stages of development, none of which have produced revenue as of March 31, 2023. In connection with such assignment and purchase, Strong Studios agreed to pay to Landmark approximately $ 1.7 0.3 1.7 1.0 Safehaven 0.3 Flagrant 0.4 Shadows in the Vineyard 150,000 As a condition precedent to entry into the AA Agreement, Strong Studios agreed to enter into distribution agreements for Safehaven Flagrant Safehaven 6.5 Flagrant 2.5 Flagrant During the second quarter of 2022, Safehaven 2022, Inc. (“Safehaven 2022”) was established to manage the production and financing of Safehaven Strong Studios owns 49% of Safehaven 2022 and the remaining 51% is owned by Unbounded Services, LLC (“Unbounded”). No consideration was paid by Strong Studios in exchange for its 49% equity interest in Safehaven 2022. Unbounded also did not contribute any assets or liabilities to Safehaven 2022 and agreed to provide day-to-day management services in exchange for their 51% ownership Strong Studios allocated $ 1.0 1.7 Safehaven 0.1 1.1 Safehaven 1.1 0.1 1.0 Safehaven The $ 6.5 6.5 Safehaven 2022 entered into a Loan and Security Agreement with Bank of Hope to provide interim production financing for the Safehaven 9.6 0.6 Strong Studios reviewed its ownership in Safehaven 2022 and concluded that it has significant influence, but not a controlling interest, in Safehaven 2022 based on its ownership being less than 50 Safehaven 2022 did not record any income or expense during the three months ended March 31, 2023, because all costs incurred by Safehaven 2022 related to the in-process production have been capitalized. Upon delivery and acceptance of the project, Safehaven 2022 expects to recognize revenue from the distribution rights and will record cost of sales using the individual-film-forecast method based on the ratio of the current period’s revenues to management’s estimated remaining total gross revenues to be earned. A summary of the balance sheet of Safehaven 2022 as of March 31, 2023, is as follows (in thousands): Schedule of Balance Sheet Information Cash $ 37 Television programming rights 11,118 Other assets 76 Total assets $ 11,231 Accounts payable and accrued expenses $ 10 Due to Strong Studios 1,625 Debt 9,596 Equity - Total liabilities and equity $ 11,231 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 8. Accrued Expenses Accrued expenses consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Accrued Expenses March 31, 2023 December 31, 2022 Employee-related $ 1,198 $ 1,283 Warranty obligation 312 309 Interest and taxes 474 294 Legal and professional fees 460 462 Film and television programming rights 1,384 1,709 Other 503 429 Total $ 4,331 $ 4,486 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | 9. Debt Short-term debt and long-term debt consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Short-term debt and Long-term debt March 31, 2023 December 31, 2022 Short-term debt: Strong/MDI 20-year installment loan $ 2,262 $ 2,289 Strong/MDI 5-year equipment loan - 221 Strong/MDI revolving credit facility 1,372 - Total short-term debt $ 3,634 $ 2,510 Long-term debt: Tenant improvement loan $ 153 $ 162 Less: current portion (36 ) (36 ) Long-term debt, net of current portion $ 117 $ 126 Strong/MDI Installment Loans and Revolving Credit Facility On September 5, 2017, the Company’s Canadian subsidiary, Strong/MDI, entered into a demand credit agreement, as amended and restated May 15, 2018, with Canadian Imperial Bank of Commerce (“CIBC”) consisting of a revolving line of credit for up to CAD$ 3.5 20 6.0 5 0.5 2.0 20 5.1 5 0.5 0.5 4.0 In January 2023, Strong/MDI and CIBC entered into a demand credit agreement (the “2023 Credit Agreement”), which amended and restated the 2021 Credit Agreement. The 2023 Credit Agreement consists of a revolving line of credit for up to CAD$ 5.0 20 3.1 1.0 0.5 5 3.1 2.3 20 7.20 3.4 1.9 1.4 7.70% Tenant Improvement Loan During the fourth quarter of 2021, the Company entered into a lease for a combined office and warehouse in Omaha, Nebraska. The Company incurred total costs of approximately $ 0.4 50 0.2 0.1 0.2 0.1 Contractual Principal Payments Contractual required principal payments on the Company’s long-term debt at March 31, 2023, are as follows (in thousands): Schedule of Contractual Principal Payments $ 2 Remainder of 2023 $ 26 2024 38 2025 40 2026 42 2027 7 Thereafter - Total $ 153 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Leases | 10. Leases The Company and its subsidiaries lease plant and office facilities and equipment under operating and finance leases expiring through 2027. The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. Certain of the leases contain extension options; however, the Company has not included such options as part of its right-of-use assets and lease liabilities because it does not expect to extend the leases. The Company measures and records a right-of-use asset and lease liability based on the discount rate implicit in the lease, if known. In cases where the discount rate implicit in the lease is not known, the Company measures the right-of-use assets and lease liabilities using a discount rate equal to the Company’s estimated incremental borrowing rate for loans with similar collateral and duration. The Company elected to not apply the recognition requirements of Accounting Standards Codification Topic 842, “Leases,” to leases of all classes of underlying assets that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Instead, lease payments for such short-term leases are recognized in operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. The Company elected, as a lessee, for all classes of underlying assets, to not separate nonlease components from lease components and instead to account for each separate lease component and the nonlease components associated with that lease component as a single lease component. The following tables present the Company’s lease costs and other lease information (dollars in thousands): Schedule of Lease Costs and Other Lease Information March 31, 2023 March 31, 2022 Lease cost Three Months Ended March 31, 2023 March 31, 2022 Finance lease cost: Amortization of right-of-use assets $ 29 $ - Interest on lease liabilities 12 - Operating lease cost 17 24 Short-term lease cost 17 14 Net lease cost $ 75 $ 38 Other information Three Months Ended March 31, 2023 March 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 12 $ - Operating cash flows from operating leases $ 19 $ 15 Financing cash flows from finance leases $ 23 $ - Right-of-use assets obtained in exchange for new finance lease liabilities $ - $ - Right-of-use assets obtained in exchange for new operating lease liabilities $ - $ - Weighted-average remaining lease term - finance leases (years) 1.4 Weighted-average remaining lease term - operating leases (years) 3.9 Weighted-average discount rate - finance leases 4.5 % Weighted-average discount rate - operating leases 4.5 % The following table presents a maturity analysis of the Company’s operating and finance lease liabilities as of March 31, 2023 (in thousands): Schedule of Operating and Finance Lease Liabilities Operating Leases Finance Leases Remainder of 2023 $ 57 $ 115 2024 78 153 2025 79 401 2026 81 - 2027 14 - Thereafter - - Total lease payments 309 669 Less: Amount representing interest (27 ) (87 ) Present value of lease payments 282 582 Less: Current maturities (65 ) (112 ) Lease obligations, net of current portion $ 217 $ 470 |
Income and Other Taxes
Income and Other Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income and Other Taxes | 11. Income and Other Taxes 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 March 31, 2023 and December 31, 2022. The Tax Cuts and Jobs Act provides for a territorial tax system, which began in 2018. It includes the global intangible low-taxed income (“GILTI”) provision. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The GILTI provisions also allow for a high-tax exclusion if the effective tax rate of the tested income is greater than 18.9 18.9 Changes in tax laws may affect recorded deferred tax assets and liabilities and our effective tax rate in the future. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted and made significant changes to Federal tax laws, including certain changes that were retroactive to the 2019 tax year. 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 this enacted legislation 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 2019 through 2021. 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. |
Commitments, Contingencies and
Commitments, Contingencies and Concentrations | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Concentrations | 12. Commitments, Contingencies and Concentrations Litigation 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 the Company’s business or financial condition. The Company and certain of its subsidiaries are named as defendants 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 the Company. In the Company’s experience, a large percentage of these types of claims have never been substantiated and have been dismissed by the courts. The Company has not suffered any adverse verdict in a trial court proceeding related to asbestos claims and intends to continue to defend these lawsuits. As of March 31, 2023, the Company has a loss contingency reserve of approximately $ 0.2 53,000 Concentrations The Company’s top ten customers accounted for approximately 58 80 Financial instruments that potentially expose the Company to a concentration of credit risk principally consist of accounts receivable. The Company sells product to a large number of customers in many different geographic regions. To minimize credit risk, the Company performs ongoing credit evaluations of its customers’ financial condition. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. Related Party Transactions Related Party Transactions In connection with the IPO, we and FG Group Holdings entered into a management services agreement that provides a framework for our ongoing relationship with FG Group Holdings, whereby which FG Group Holdings will provide certain services to us, which could include information technology, legal, finance and accounting, human resources, tax, treasury, and other services. Pursuant to the Management Services Agreement, FG Group Holdings will charge us a fee that is based on its actual costs for those services in the future. The Company manufactures its screens in an approximately 80,000 Allocation of Corporate Expenses The operating results of Strong Global Entertainment have historically been disclosed as a reportable segment within the consolidated financial statements of FG Group Holdings enabling identification of directly attributable transactional information, functional departments and headcount. The combined balance sheet was primarily derived by reference to one of, or a combination of, Strong Global Entertainment transaction-level information, functional department or headcount. Revenue and Cost of revenue were derived from transactional information specific to Strong Global Entertainment products and services. Directly attributable operating expenses were derived from activities relating to Strong Global Entertainment functional departments and headcount. Certain additional costs, including compensation costs for corporate employees, have been allocated from FG Group Holdings. The allocated costs for corporate functions included, but were not limited to, information technology, legal, finance and accounting, human resources, tax, treasury, research and development, sales and marketing activities, shared facilities and other shared services, which are not provided at the Strong Global Entertainment level. These costs were allocated on a basis of revenue, headcount or other measures Strong Global Entertainment has determined as reasonable. The combined statements of operations of the Company reflect allocations of general corporate expenses from FG Group Holdings including expenses related to corporate services, such information technology, legal, finance and accounting, human resources, tax, treasury, research and development, sales and marketing, shared facilities and other shared services. These costs were allocated based on a basis of revenue, headcount, or other measures the Company has determined as reasonable. These allocations are primarily reflected within operating expenses in the combined statements of operations. The amount of these allocations from FG Group Holdings for each of the three months ended March 31, 2023 and March 31, 2022 was $ 0.2 Costs Incurred in Connection with the IPO As of March 31, 2023, the Company incurred $ 2.0 1.0 1.0 Working Capital Advance to Safehaven 2022 As discussed in Note 7, Safehaven 2022 has received working capital advances of $ 0.6 0.6 Landmark Transaction As discussed in Note 7, Strong Studios acquired, from Landmark, the rights to original feature films and television series, and has been assigned third party rights to content for global multiplatform distribution. In connection with such assignment and purchase, Strong Studios agreed to pay to Landmark approximately $ 1.7 0.6 0.6 0.6 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events On May 18, 2023, subsequent to the close of the Company’s first quarter ended March 31, 2023, the Company completed its IPO of 1,000,000 4.00 150,000 The Company’s shares began trading on the NYSE American under the ticker symbol “SGE” on May 16, 2023. Total net proceeds of approximately $ 1.4 2.1 85.7 On May 18, 2023, the Company and FG Group Holdings entered into a master separation agreement as well as various other agreements that govern the relationship between the Company and FG Group Holdings following the separation, including a management services agreement. On May 26, 2023, the Company issued the Landmark Warrant to Landmark, to purchase up to 150,000 4.00 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The combined financial statements of Strong Global Entertainment have been derived from the consolidated financial statements and accounting records of FG Group Holdings as if Strong Global Entertainment had operated on a stand-alone basis during the periods presented and were prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission. Historically, Strong Global Entertainment was reported as an operating segment within FG Group Holdings’ reportable segments and did not operate as a stand-alone company. Accordingly, FG Group Holdings historically reported the financial position and the related results of operations, cash flows and changes in equity of Strong Global Entertainment as a component of FG Group Holdings’ consolidated financial statements. The combined financial statements are presented as if Strong Global Entertainment had been carved out of FG Group Holdings for all periods presented. Prior to the completion of the IPO, certain assets and liabilities presented were transferred to Strong Global Entertainment at carry-over (historical cost) basis. Cash and cash equivalents are managed through bank accounts legally owned by FG Group Holdings as well as accounts owned by STS and Strong/MDI. Accordingly, cash and cash equivalents held by FG Group Holdings at the corporate level were not attributable to Strong Global Entertainment for any of the periods presented. Only cash amounts in accounts legally owned by entities dedicated to the Strong Global Entertainment business are reflected in the combined balance sheets. FG Group Holdings manages cash on a centralized basis and routinely transferred cash to and from its operating subsidiaries to maintain target cash levels and fund disbursements. Transfers of cash, both to and from FG Group Holdings, are reflected as a component of Net parent investment in the combined balance sheets and as a financing activity on the accompanying combined statements of cash flows. As the operations that comprise Strong Global Entertainment were not historically held by a single legal entity, total Net parent investment is shown as a component of equity in the combined financial statements. Balances between Strong Global Entertainment and FG Group Holdings that were not historically cash settled are included in Net parent investment. Net parent investment represents FG Group Holdings’ interest in the recorded net assets of Strong Global Entertainment and represents the cumulative investment by FG Group Holdings in Strong Global Entertainment through the dates presented, inclusive of operating results. The operating results of Strong Global Entertainment have historically been disclosed as a reportable segment within the consolidated financial statements of FG Group Holdings enabling identification of directly attributable transactional information, functional departments and headcount. The combined balance sheets were primarily derived by reference to one, or a combination, of Strong Global Entertainment transaction-level information, functional department or headcount. Revenue and Cost of revenue were derived from transactional information specific to Strong Global Entertainment products and services. Directly attributable operating expenses were derived from activities relating to Strong Global Entertainment functional departments and headcount. Certain additional costs, including compensation costs for corporate employees, have been allocated from FG Group Holdings. The allocated costs for corporate functions included, but were not limited to, information technology, legal, finance and accounting, human resources, tax, treasury, research and development, sales and marketing activities, shared facilities and other shared services, which are not provided at the Strong Global Entertainment level. These costs were allocated on a basis of revenue, headcount or other measures Strong Global Entertainment has determined as reasonable. Strong Global Entertainment employees also historically participated in FG Group Holdings’ stock-based incentive plans, in the form of restricted stock units (“RSUs”) and stock options issued pursuant to FG Group Holdings’ employee stock plan. Stock-based compensation expense has been directly reported by Strong Global Entertainment based on the awards and terms previously granted to FG Group Holdings’ employees. Allocations for management costs and corporate support services provided to Strong Global Entertainment totaled $ 0.2 The management of Strong Global Entertainment believes the assumptions underlying the combined financial statements, including the assumptions regarding the allocated expenses, reasonably reflect the utilization of services provided, or the benefit received by, Strong Global Entertainment during the periods presented. Nevertheless, the combined financial statements may not be indicative of Strong Global Entertainment’s future performance, do not necessarily include all of the actual expenses that would have been incurred had Strong Global Entertainment been an independent entity during the historical periods and may not reflect the results of operations, financial position, and cash flows had Strong Global Entertainment been a stand-alone company during the periods presented. During the periods presented in the combined financial statements, the operations of Strong Global Entertainment are included in the consolidated U.S. federal, and certain state and local and foreign income tax returns filed by FG Group Holdings, where applicable. Income tax expense and other income tax related information contained in the combined financial statements are presented on a separate return basis as if Strong Global Entertainment had filed its own tax returns. The income taxes of Strong Global Entertainment as presented in the combined financial statements may not be indicative of the income taxes that Strong Global Entertainment will generate in the future. Additionally, certain tax attributes such as net operating losses or credit carryforwards are presented on a separate return basis, and accordingly, may differ in the future. In jurisdictions where Strong Global Entertainment has been included in the tax returns filed by FG Group Holdings, any income tax receivables resulting from the related income tax provisions have been reflected in the balance sheet within Net parent investment. Net income per share data has not been presented in the combined financial statements because Strong Global Entertainment did not operate as a separate legal entity with its own capital structure during the periods presented. The Company’s fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. These combined financial statements are presented in accordance with the requirements of interim financial data and consequently do not include all of the disclosures normally required by GAAP for annual reporting purposes, such as those made in the Company’s audited combined financial statements for the years ended December 31, 2022 and 2021. These combined financial statements should be read in conjunction with the combined financial statements and for the years ended December 31, 2022 and 2021. The combined balance sheet as of December 31, 2022 was derived from the Company’s audited combined balance sheet as of that date. All other combined 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. The results for interim periods are not necessarily indicative of trends or results expected for a full fiscal year. Unless otherwise indicated, all references to “dollars” and “$” in this Quarterly Report on Form 10-Q are to, and amounts are presented in, U.S. dollars. |
Use of Management Estimates | Use of Management Estimates The preparation of combined 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 combined 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. The coronavirus pandemic (“COVID-19”) and inflationary pressures have posed, and may continue to pose, challenges for our business. The COVID-19 global pandemic resulted in unprecedented impact to consumer behaviors and our customers, particularly our customers’ ability and willingness to purchase our products and services. The Company believes that consumer reticence to engage in outside-the-home activities, caused by the risk of contracting COVID-19, has abated, and our customers have resumed more typical, pre-COVID-19 purchasing behaviors. And while we believe our customers made significant progress in its recovery from the pandemic, the ongoing recovery will be contingent upon several key factors, including the volume of new film content available, the box office performance of new film content released, the duration of the exclusive theatrical release window, and evolving consumer behavior with competition from other forms of in- and out-of-home entertainment. There can be no assurances that there will be no additional public health crises, including further resurgence or variants of COVID-19, which could reverse the current trend and have a negative impact on the Company’s results of operations. |
Cash and Cash Equivalents | Cash and Cash Equivalents All short-term, highly liquid financial instruments are classified as cash equivalents in the condensed combined balance sheets and statements of cash flows. Generally, these instruments have maturities of three months or less from date of purchase. As of March 31, 2023, $ 0.6 4.1 |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for expected credit losses based on several factors, including overall customer credit quality, historical write-off experience and a specific analysis that projects the ultimate collectability of the account. As such, these factors may change over time causing the allowance level and bad debt expense to be adjusted accordingly. Past due accounts are written off when our efforts have been unsuccessful in collecting amounts due. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. The Company uses an estimate of its annual effective rate at each interim period based on the facts and circumstances at the time while the actual effective rate is calculated at year-end. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred 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 enactment date. In assessing whether the deferred tax assets are realizable, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company’s uncertain tax positions are evaluated in a two-step process, whereby 1) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and 2) for those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement with the related tax authority. The Company accrues interest and penalties related to uncertain tax positions in the combined statements of operations as income tax expense. |
Stock Compensation Plans | Stock Compensation Plans The Company’s employees have historically participated in FG Group Holdings’ stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the FG Group Holdings’ employees. The Company measures stock-based compensation at the grant date based on the fair value of the award. The fair value of stock options is estimated using the Black-Scholes option pricing model. Estimated compensation cost relating to RSUs is based on the closing fair market value of FG Group Holdings’ common stock on the date of grant. The Company recognizes compensation expense for all stock-based payment awards based on estimated fair values on the date of grant. The Company uses the straight-line amortization method over the vesting period of the awards. The Company has historically issued shares upon exercise of stock options or vesting of restricted stock from new stock issuances. The Company estimates the fair value of restricted stock awards based upon the market price of the underlying Common Shares on the date of grant. The fair value of stock options granted is calculated using the Black-Scholes option pricing model. No stock-based compensation cost was capitalized as a part of inventory during the three months ended March 31, 2023 and March 31, 2022. |
Film and Television Programming Rights | Film and Television Programming Rights Commencing in March 2022, the Company began producing original productions and acquiring rights to films and television programming. Film and television programming rights include the unamortized costs of in-process or in-development content produced or acquired by the Company. The Company’s capitalized costs include all direct production and financing costs, capitalized interest when applicable, and production overhead. Film and television program rights are stated at the lower of amortized cost or estimated fair value. The costs of producing content are amortized using the individual-film-forecast method. These costs are amortized based on the ratio of the current period’s revenues to management’s estimated remaining total gross revenues to be earned (“Ultimate Revenue”) as of each reporting date to reflect the most current available information. Management’s judgment is required in estimating Ultimate Revenue and the costs to be incurred throughout the life of each film or television program. Amortization is adjusted when necessary to reflect increases or decreases in forecasted Ultimate Revenues. For an episodic television series, the period over which Ultimate Revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For films, Ultimate Revenue includes estimates over a period not to exceed ten years following the date of initial release. Content assets are expected to be predominantly monetized individually and therefore are reviewed at the individual level when an event or change in circumstance indicates a change in the expected usefulness of the content or the fair value may be less than the unamortized cost. Due to the inherent uncertainties involved in making such estimates of Ultimate Revenues and expenses, these estimates may differ from actual results. In addition, in the normal course of our business, some films and titles will be more successful or less successful than anticipated. Management regularly reviews and revises, when necessary, its Ultimate Revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value. An increase in the estimate of Ultimate Revenue will generally result in a lower amortization rate and, therefore, less film and television program amortization expense, while a decrease in the estimate of Ultimate Revenue will generally result in a higher amortization rate and, therefore, higher film and television program amortization expense, and also periodically result in an impairment requiring a write-down of the film cost to the title’s fair value. The Company has not incurred any of these write-downs. An impairment charge would be recorded in the amount by which the unamortized costs exceed the estimated fair value. Estimates of future revenue involve measurement uncertainties and it is therefore possible that reductions in the carrying value of capitalized costs may be required because of changes in management’s future revenue estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Assets and liabilities measured at fair value are categorized into a fair value hierarchy based upon the observability of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: ● Level 1 – inputs to the valuation techniques are quoted prices in active markets for identical assets or liabilities ● Level 2 – inputs to the valuation techniques are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly ● Level 3 – inputs to the valuation techniques are unobservable for the assets or liabilities The following tables present the Company’s financial assets measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements are classified, as of March 31, 2023 and December 31, 2022. Fair values measured on a recurring basis at March 31, 2023 (in thousands): Schedule of Fair Values Measured on Recurring Basis Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 4,077 $ - $ - $ 4,077 Total $ 4,077 $ - $ - $ 4,077 Fair values measured on a recurring basis at December 31, 2022 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 3,615 $ - $ - $ 3,615 Total $ 3,615 $ - $ - $ 3,615 The Company’s short-term debt is recorded at historical cost. The carrying values of all other financial assets and liabilities, including accounts receivable, accounts payable, accrued expenses and short-term debt reported in the combined balance sheets equal or approximate their fair values due to the short-term nature of these instruments. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which include non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). |
Net parent investment | Net parent investment Net parent investment on the combined balance sheets represents FG Group Holdings’ historical investment in Strong Global Entertainment, the net effect of transactions with, and allocations to and from, FG Group Holdings, and Strong Global Entertainment. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU requires the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The Company adopted this ASU effective January 1, 2023. Upon adoption the Company recorded a cumulative effect adjustment decreasing net parent investment by $ 24,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Fair Values Measured on Recurring Basis | Fair values measured on a recurring basis at March 31, 2023 (in thousands): Schedule of Fair Values Measured on Recurring Basis Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 4,077 $ - $ - $ 4,077 Total $ 4,077 $ - $ - $ 4,077 Fair values measured on a recurring basis at December 31, 2022 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 3,615 $ - $ - $ 3,615 Total $ 3,615 $ - $ - $ 3,615 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following tables disaggregate the Company’s revenue by major source and by operating segment for the three months ended March 31, 2023 and 2022 (in thousands): Schedule of Disaggregation of Revenue Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Screen system sales $ 2,582 $ 3,306 Digital equipment sales 3,526 3,544 Extended warranty sales 51 100 Other product sales 1,045 753 Total product sales 7,204 7,703 Field maintenance and monitoring services 1,891 1,618 Installation services 802 371 Other service revenues 54 28 Total service revenues 2,747 2,017 Total $ 9,951 $ 9,720 Total revenue $ 9,951 $ 9,720 |
Schedule of Disaggregation of Revenue by Timing of Transfer of Goods or Services | The following tables disaggregate the Company’s revenue by the timing of transfer of goods or services to the customer for the three months ended March 31, 2023 and 2022 (in thousands): Schedule of Disaggregation of Revenue by Timing of Transfer of Goods or Services Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Point in time $ 8,430 $ 8,442 Over time 1,521 1,278 Total $ 9,951 $ 9,720 Total revenue $ 9,951 $ 9,720 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): Schedule of Inventories March 31, 2023 December 31, 2022 Raw materials and components $ 1,925 $ 1,826 Work in process 448 279 Finished goods 1,287 1,284 Inventory, net $ 3,660 $ 3,389 |
Schedule of Inventory Reserve | Schedule of Inventory Reserve Inventory reserve balance at December 31, 2022 $ 486 Inventory write-offs during 2023 (16 ) Provision for inventory reserve during 2023 14 Inventory reserve balance at March 31, 2023 $ 484 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Other Current Assets March 31, 2023 December 31, 2022 Prepaid expenses $ 854 $ 417 Receivable from Safehaven 2022, Inc. 1,625 1,625 Costs incurrent in connection with initial public offering 1,987 1,920 Unbilled accounts receivable 500 337 Other 63 248 Total $ 5,029 $ 4,547 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Property, Plant and Equipment March 31, 2023 December 31, 2022 Land $ 48 $ 48 Buildings and improvements 6,757 6,752 Machinery and other equipment 4,853 4,778 Office furniture and fixtures 676 675 Construction in progress 15 12 Total properties, cost 12,349 12,265 Property, plant and equipment, gross 12,349 12,265 Less: accumulated depreciation (7,815 ) (7,658 ) Property, plant and equipment, net $ 4,534 $ 4,607 |
Film and Television Programmi_2
Film and Television Programming Rights, Net (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Other Industries [Abstract] | |
Schedule of Film and Television Programming Rights | Film and television programming rights, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Film and Television Programming Rights March 31, 2023 December 31, 2022 Television series in development $ 1,362 $ 1,308 Films in development 222 193 Total $ 1,584 $ 1,501 |
Schedule of Roll forward of Film and Programming Rights | A rollforward of film and television programming rights, net for the three months ended March 31, 2023, is as follows (in thousands): Schedule of Roll forward of Film and Programming Rights Balance at December 31, 2022 $ 1,501 Expenditures on in-process projects 83 Balance at March 31, 2023 $ 1,584 |
Schedule of Balance Sheet Information | Schedule of Balance Sheet Information Cash $ 37 Television programming rights 11,118 Other assets 76 Total assets $ 11,231 Accounts payable and accrued expenses $ 10 Due to Strong Studios 1,625 Debt 9,596 Equity - Total liabilities and equity $ 11,231 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Accrued Expenses March 31, 2023 December 31, 2022 Employee-related $ 1,198 $ 1,283 Warranty obligation 312 309 Interest and taxes 474 294 Legal and professional fees 460 462 Film and television programming rights 1,384 1,709 Other 503 429 Total $ 4,331 $ 4,486 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term debt and Long-term debt | Short-term debt and long-term debt consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands): Schedule of Short-term debt and Long-term debt March 31, 2023 December 31, 2022 Short-term debt: Strong/MDI 20-year installment loan $ 2,262 $ 2,289 Strong/MDI 5-year equipment loan - 221 Strong/MDI revolving credit facility 1,372 - Total short-term debt $ 3,634 $ 2,510 Long-term debt: Tenant improvement loan $ 153 $ 162 Less: current portion (36 ) (36 ) Long-term debt, net of current portion $ 117 $ 126 |
Schedule of Contractual Principal Payments | Contractual required principal payments on the Company’s long-term debt at March 31, 2023, are as follows (in thousands): Schedule of Contractual Principal Payments $ 2 Remainder of 2023 $ 26 2024 38 2025 40 2026 42 2027 7 Thereafter - Total $ 153 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Schedule of Lease Costs and Other Lease Information | The following tables present the Company’s lease costs and other lease information (dollars in thousands): Schedule of Lease Costs and Other Lease Information March 31, 2023 March 31, 2022 Lease cost Three Months Ended March 31, 2023 March 31, 2022 Finance lease cost: Amortization of right-of-use assets $ 29 $ - Interest on lease liabilities 12 - Operating lease cost 17 24 Short-term lease cost 17 14 Net lease cost $ 75 $ 38 Other information Three Months Ended March 31, 2023 March 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 12 $ - Operating cash flows from operating leases $ 19 $ 15 Financing cash flows from finance leases $ 23 $ - Right-of-use assets obtained in exchange for new finance lease liabilities $ - $ - Right-of-use assets obtained in exchange for new operating lease liabilities $ - $ - Weighted-average remaining lease term - finance leases (years) 1.4 Weighted-average remaining lease term - operating leases (years) 3.9 Weighted-average discount rate - finance leases 4.5 % Weighted-average discount rate - operating leases 4.5 % |
Schedule of Operating and Finance Lease Liabilities | The following table presents a maturity analysis of the Company’s operating and finance lease liabilities as of March 31, 2023 (in thousands): Schedule of Operating and Finance Lease Liabilities Operating Leases Finance Leases Remainder of 2023 $ 57 $ 115 2024 78 153 2025 79 401 2026 81 - 2027 14 - Thereafter - - Total lease payments 309 669 Less: Amount representing interest (27 ) (87 ) Present value of lease payments 282 582 Less: Current maturities (65 ) (112 ) Lease obligations, net of current portion $ 217 $ 470 |
Nature of Operations (Details N
Nature of Operations (Details Narrative) - Common Class A [Member] $ / shares in Units, $ in Millions | May 15, 2023 USD ($) $ / shares shares |
IPO [Member] | |
Number of shares issued | shares | 1,000,000 |
Share price | $ / shares | $ 4 |
Proceeds from issuance initial public offering | $ | $ 1.4 |
Estimated offering costs | $ | $ 2.1 |
Over-Allotment Option [Member] | |
Number of shares issued | shares | 150,000 |
Schedule of Fair Values Measure
Schedule of Fair Values Measured on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Mar. 31, 2023 | Mar. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 4,077 | $ 3,615 |
Total | 4,077 | 3,615 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 4,077 | 3,615 |
Total | 4,077 | 3,615 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Total | ||
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Total |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Jan. 01, 2023 | Dec. 31, 2022 | |
Management costs and corporate support services | $ 200,000 | $ 200,000 | ||
Cash and cash equivalents | 4,077,000 | $ 3,615,000 | ||
Cumulative effect adjustment decreasing net parent investment | 13,378,000 | $ 14,228,000 | ||
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | ||||
Cumulative effect adjustment decreasing net parent investment | $ 24,000 | |||
Subsidiaries [Member] | ||||
Cash and cash equivalents | $ 600,000 |
Schedule of Disaggregation of R
Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 9,951 | $ 9,720 |
Screen System Sales [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 2,582 | 3,306 |
Digital Equipment Sales [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 3,526 | 3,544 |
Extended Warranty Sales [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 51 | 100 |
Other Product Sales [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,045 | 753 |
Product [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 7,204 | 7,703 |
Field Maintenance and Monitoring Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,891 | 1,618 |
Installation Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 802 | 371 |
Service, Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 54 | 28 |
Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 2,747 | $ 2,017 |
Schedule of Disaggregation of_2
Schedule of Disaggregation of Revenue by Timing of Transfer of Goods or Services (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 9,951 | $ 9,720 |
Transferred at Point in Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 8,430 | 8,442 |
Transferred over Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 1,521 | $ 1,278 |
Revenue (Details Narrative)
Revenue (Details Narrative) $ in Millions | Mar. 31, 2023 USD ($) |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unearned revenue | $ 0.8 |
Remainder of 2023 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unearned revenue | $ 0.8 |
Schedule of Inventories (Detail
Schedule of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials and components | $ 1,925 | $ 1,826 |
Work in process | 448 | 279 |
Finished goods | 1,287 | 1,284 |
Inventory, net | $ 3,660 | $ 3,389 |
Schedule of Inventory Reserve (
Schedule of Inventory Reserve (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Inventory Disclosure [Abstract] | |
Inventory reserve balance at December 31, 2022 | $ 486 |
Inventory write-offs during 2023 | (16) |
Provision for inventory reserve during 2023 | 14 |
Inventory reserve balance at March 31, 2023 | $ 484 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Net of reserves | $ 0.5 | $ 0.5 |
Schedule of Other Current Asset
Schedule of Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 854 | $ 417 |
Receivable from Safehaven 2022, Inc. | 1,625 | 1,625 |
Costs incurrent in connection with initial public offering | 1,987 | 1,920 |
Unbilled accounts receivable | 500 | 337 |
Other | 63 | 248 |
Total | $ 5,029 | $ 4,547 |
Schedule of Property, Plant and
Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 12,349 | $ 12,265 |
Less: accumulated depreciation | (7,815) | (7,658) |
Property, plant and equipment, net | 4,534 | 4,607 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 48 | 48 |
Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 6,757 | 6,752 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 4,853 | 4,778 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 676 | 675 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 15 | $ 12 |
Schedule of Film and Television
Schedule of Film and Television Programming Rights (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Other Industries [Abstract] | ||
Television series in development | $ 1,362 | $ 1,308 |
Films in development | 222 | 193 |
Total | $ 1,584 | $ 1,501 |
Schedule of Roll forward of Fil
Schedule of Roll forward of Film and Programming Rights (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Other Industries [Abstract] | |
Film and television programming rights, beginning | $ 1,501 |
Expenditures on in-process projects | 83 |
Film and television programming rights, ending | $ 1,584 |
Schedule of Balance Sheet Infor
Schedule of Balance Sheet Information (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Other assets | $ 5,029 | $ 4,547 | ||
Total assets | 26,124 | 25,538 | ||
Due to Strong Studios | 5 | 6 | ||
Equity | 8,282 | 9,204 | $ 10,270 | $ 8,810 |
Total liabilities and equity | 26,124 | $ 25,538 | ||
Safehaven 2022 [Member] | ||||
Cash | 37 | |||
Television programming rights | 11,118 | |||
Other assets | 76 | |||
Total assets | 11,231 | |||
Accounts payable and accrued expenses | 10 | |||
Debt | 9,596 | |||
Equity | ||||
Total liabilities and equity | 11,231 | |||
Safehaven 2022 [Member] | Related Party [Member] | ||||
Due to Strong Studios | $ 1,625 |
Film and Television Programmi_3
Film and Television Programming Rights, Net (Details Narrative) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | |||||
Equity ownership percent description | Strong Studios owns 49% of Safehaven 2022 and the remaining 51% is owned by Unbounded Services, LLC (“Unbounded”). No consideration was paid by Strong Studios in exchange for its 49% equity interest in Safehaven 2022. Unbounded also did not contribute any assets or liabilities to Safehaven 2022 and agreed to provide day-to-day management services in exchange for their 51% ownership | ||||
Safehaven 2022 [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Ownership percentage | 50% | 50% | |||
Landmark Studio Group [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | $ 1.7 | $ 1.7 | |||
Business acquisition transaction costs | $ 0.3 | $ 0.3 | |||
Warrants to purchase shares | 150,000 | 150,000 | |||
Landmark Studio Group [Member] | Safehaven, Flagrant and Shadows in the Vineyard [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | $ 1.7 | ||||
Landmark Studio Group [Member] | Safehaven [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | 1 | ||||
Landmark Studio Group [Member] | Flagrant [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | 0.3 | ||||
Landmark Studio Group [Member] | Shadows in the Vineyard [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | 0.4 | ||||
Screen Media Ventures LLC [Member] | Safehaven [Member] | AA Distribution Agreements [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | 6.5 | ||||
Screen Media Ventures LLC [Member] | Flagrant [Member] | AA Distribution Agreements [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | $ 2.5 | ||||
Screen Media Ventures LLC [Member] | Safehaven 2022 [Member] | Loan and Security Agreement [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Borrowing of amount | 9.6 | $ 9.6 | |||
Working capital | $ 0.6 | $ 0.6 | |||
Unbounded Services LLC [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | $ 1 | ||||
Unbounded Services LLC [Member] | Safehaven [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business acquisition purchase price | 1.7 | ||||
Business acquisition transaction costs | 1.1 | ||||
Development costs | 0.1 | ||||
Payment secured debt | 1.1 | ||||
Payment to acquire business | $ 1 | ||||
Business acquisition installments, description | The $6.5 million minimum guarantee is due and payable to Safehaven 2022 in installments of 25% upon delivery and acceptance, 25% three months thereafter, and the remaining 50% six months thereafter | ||||
Business acquisition due and payable | $ 6.5 | ||||
Revenue | $ 6.5 |
Schedule of Accrued Expenses (D
Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Employee-related | $ 1,198 | $ 1,283 |
Warranty obligation | 312 | 309 |
Interest and taxes | 474 | 294 |
Legal and professional fees | 460 | 462 |
Film and television programming rights | 1,384 | 1,709 |
Other | 503 | 429 |
Total | $ 4,331 | $ 4,486 |
Schedule of Short-term debt and
Schedule of Short-term debt and Long-term debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Short-Term Debt [Line Items] | ||
Total short-term debt | $ 3,634 | $ 2,510 |
Tenant improvement loan | 153 | 162 |
Less: current portion | (36) | (36) |
Long-term debt, net of current portion | 117 | 126 |
Twenty Year Installment Loan [Member] | ||
Short-Term Debt [Line Items] | ||
Total short-term debt | 2,262 | 2,289 |
Five Year Equipment Loan [Member] | ||
Short-Term Debt [Line Items] | ||
Total short-term debt | 221 | |
Revolving Credit Facilities [Member] | ||
Short-Term Debt [Line Items] | ||
Total short-term debt | $ 1,372 |
Schedule of Contractual Princip
Schedule of Contractual Principal Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
Remainder of 2023 | $ 26 | |
2024 | 38 | |
2025 | 40 | |
2026 | 42 | |
2027 | 7 | |
Thereafter | ||
Total | $ 153 | $ 162 |
Debt (Details Narrative)
Debt (Details Narrative) $ in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | ||||||
Jun. 07, 2021 CAD ($) | May 15, 2018 CAD ($) | May 31, 2023 CAD ($) | Jan. 31, 2023 CAD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Mar. 31, 2023 CAD ($) | |
Line of Credit Facility [Line Items] | ||||||||
Revolving line of credit | $ 1,596 | |||||||
Long-Term Debt, Percentage Bearing Variable Interest, Percentage Rate | 7.70% | 7.70% | ||||||
Lease cost | $ 75 | 38 | $ 400 | |||||
Loan percentage | 50% | |||||||
Total costs to build out facility | 200 | $ 200 | ||||||
Loan amount | $ 100 | $ 100 | ||||||
Revolving Credit Facility [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Installment loan term | 5 years | 5 years | 5 years | |||||
Installment loan | $ 0.5 | $ 0.5 | ||||||
Loan interest rate | 0.50% | 0.50% | 7.20% | |||||
Revolving line of credit | $ 1,400 | $ 1.9 | ||||||
Revolving Credit Facility [Member] | Line of Credit [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Loan interest rate | 1% | |||||||
Revolving Credit Facility [Member] | Related Party [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Due from related parties | $ 4 | |||||||
Revolving Credit Facility [Member] | Demand Credit Agreement [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Revolving line of credit | $ 2 | $ 3.5 | $ 5 | |||||
Installment loan term | 20 years | 20 years | 20 years | 20 years | ||||
Installment loan | $ 5.1 | $ 6 | $ 3.1 | |||||
Principal amount | $ 2,300 | $ 3.1 | ||||||
Revolving Credit Facility [Member] | Demand Credit Agreement [Member] | Subsequent Event [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Revolving line of credit | $ 3.4 |
Schedule of Lease Costs and Oth
Schedule of Lease Costs and Other Lease Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2021 | |
Leases | |||
Amortization of right-of-use assets | $ 29 | ||
Interest on lease liabilities | 12 | ||
Operating lease cost | 17 | 24 | |
Short-term lease cost | 17 | 14 | |
Net lease cost | 75 | 38 | $ 400 |
Operating cash flows from finance leases | 12 | ||
Operating cash flows from operating leases | 19 | 15 | |
Financing cash flows from finance leases | 23 | ||
Right-of-use assets obtained in exchange for new finance lease liabilities | |||
Right-of-use assets obtained in exchange for new operating lease liabilities | |||
Finance Lease, Weighted Average Remaining Lease Term | 1 year 4 months 24 days | ||
Operating Lease, Weighted Average Remaining Lease Term | 3 years 10 months 24 days | ||
Weighted average discount rate finance leases | 4.50% | ||
Weighted average discount rate operating leases | 4.50% |
Schedule of Operating and Finan
Schedule of Operating and Finance Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract] | ||
Operating leases Remainder of 2023 | $ 57 | |
Operating leases 2024 | 78 | |
Operating leases 2025 | 79 | |
Operating leases 2026 | 81 | |
Operating leases 2027 | 14 | |
Operating leases Thereafter | ||
Operating leases Total lease payments | 309 | |
Operating leases Less: Amount representing interest | (27) | |
Present value of lease payments | 282 | |
Operating leases Less: Current maturities | (65) | $ (64) |
Lease obligations, net of current portion | 217 | 234 |
Finance Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract] | ||
Finance leases Remainder of 2023 | 115 | |
Finance leases 2024 | 153 | |
Finance leases 2025 | 401 | |
Finance leases 2026 | ||
Finance leases 2027 | ||
Finance leases Thereafter | ||
Finance leases Total lease payments | 669 | |
Finance leases Less: Amount representing interest | (87) | |
Present value of lease payments | 582 | |
Finance leases Less: Current maturities | (112) | (105) |
Lease obligations, net of current portion | $ 470 | $ 502 |
Income and Other Taxes (Details
Income and Other Taxes (Details Narrative) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Global Intangible Low Taxed Income [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Effective tax rate | 18.90% | 18.90% |
Commitments, Contingencies an_2
Commitments, Contingencies and Concentrations (Details Narrative) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Product Information [Line Items] | |
Loss contingency reserve | $ 200,000 |
Loss contingency loss in period | $ 53,000 |
Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | Ten Customer [Member] | |
Product Information [Line Items] | |
Concentration risk percentage | 58% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Ten Customer [Member] | |
Product Information [Line Items] | |
Concentration risk percentage | 80% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2023 USD ($) ft² | Mar. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) ft² | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Related Party Transaction [Line Items] | |||||
General and administrative expense | $ 1,432 | $ 1,295 | |||
Incurred cost | $ 2,288 | 2,288 | $ 1,861 | ||
Landmark Studio Group [Member] | |||||
Related Party Transaction [Line Items] | |||||
Business acquisition purchase price | 1,700 | $ 1,700 | |||
Business acquisition transaction costs | $ 300 | 300 | |||
FG Group Holdings [Member] | |||||
Related Party Transaction [Line Items] | |||||
Business acquisition transaction costs | 600 | 600 | |||
Reimbursement to related party | 600 | 600 | |||
Payable to related party | 600 | 600 | |||
Safehaven 2022 [Member] | |||||
Related Party Transaction [Line Items] | |||||
Working capital advance | 600 | 600 | |||
IPO [Member] | |||||
Related Party Transaction [Line Items] | |||||
Incurred cost | 2,000 | 2,000 | |||
FG Group Holdings [Member] | |||||
Related Party Transaction [Line Items] | |||||
General and administrative expense | 200 | $ 200 | |||
Incurred cost | 1,000 | 1,000 | |||
FG Group Holdings [Member] | Safehaven 2022 [Member] | |||||
Related Party Transaction [Line Items] | |||||
Working capital | $ 600 | $ 600 | |||
Management Service Agreement [Member] | FG Group Holdings [Member] | IPO [Member] | |||||
Related Party Transaction [Line Items] | |||||
Area of land | ft² | 80,000 | 80,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | May 26, 2023 | May 18, 2023 |
Subsequent Event [Line Items] | ||
Price per share | $ 4 | |
Number of new shares purchased | 150,000 | |
IPO [Member] | ||
Subsequent Event [Line Items] | ||
Additional shares of common stock | $ 1,000,000 | |
Price per share | $ 4 | |
Proceeds from issuance initial public offering | $ 1,400,000 | |
Offering costs | $ 2,100,000 | |
IPO [Member] | FG Group Holdings [Member] | ||
Subsequent Event [Line Items] | ||
Equity owned percentage | 85.70% | |
Over-Allotment Option [Member] | ||
Subsequent Event [Line Items] | ||
Additional shares of common stock | $ 150,000 |