KWY 10-K & 10-Q changes, risk factors and insider trading

Additionally, we incurred indebtedness in connection with our acquisitions of PWI Holdings, Inc. and its various subsidiaries (collectively, "PWI") on December 1, 2020, Ravix Financial, Inc. ("Ravix") on October 1, 2021, CSuite Financial Partners, LLC ("CSuite") on November 1, 2022, Secure Nursing Service Inc. ("SNS") on November 18, 2022, Digital Diagnostics Inc. ("DDI") on October 26, 2023 and2023, Image Solutions, LLC ("Image Solutions") on September 26, 2024.2024, Roundhouse Electric & Equipment Co., Inc. ("Roundhouse") on July 1, 2025 and Efficient Plumbing, LLC (d/b/a Southside Plumbing, "Southside Plumbing") on August 14, 2025. As of December 31, 2024,2025, we have $44.6$55.7 million principal value of such acquisition financing outstanding; however, such acquisition financing is non-recourse to other Kingsway entities.

Our outstanding recourse subordinate debt as of December 31, 20242025 of $15.0 million principal value bears interest directly related to CME Term SOFR and $51.9 million of our outstanding acquisition financing of $44.6 million related to the acquisitions of PWI, Ravix, CSuite, SNS, DDI andDDI, Image Solutions and Roundhouse bears interest directly related to either SOFR or the Prime Rate. As a result, increases in CME Term SOFR, SOFR and the Prime Rate would increase the cost of servicing our debt and could adversely affect our results of operations. Each one hundred basis point increase in CME Term SOFR, SOFR or the Prime Rate would result in an approximately $0.6 million increase in our annual interest expense.

Our business, financial condition and results of operations could be materially and adversely affected by public health crises and changes in international and national economic and industry conditions.

ThePublic health crises, epidemics and pandemics, including a pandemic similar in nature to COVID-19 pandemicthat created significant disruption and uncertainty in the global economy andeconomy, negatively impacted our business and results of operations and financial condition.condition, Pandemics, including the emergence of new COVID-19 variants,and may lead to adverse United States domestic and global macroeconomic effects,effects. includingThese effects may include adverse impacts on various industries' supply chains and automobile sales, consumer demand for our products and services, and our ability to access capital, and may otherwise adversely impact the operation of our businesses, cause substantial disruption to our employees, distribution channels, investors, tenants, and customers through self-isolation, travel limitations, business restrictions, and/or other means. TheseAs such, these effects, individually or in the aggregate, may adversely impact our businesses, financial condition, operating results and cash flows, and such adverse impacts may be material.

TheA COVID-19severe pandemicor hasprolonged ledeconomic to,weakness and auncertainty, future adverse changeboth in marketthe conditionU.S. and worldwide, could lead to,to instability in the global credit markets, including heightened credit risk, reduced valuation of investments and decreased economic activity. Depending on market conditions going forward, we could incur substantial realized and unrealized losses in future periods, which could have an adverse effect on our results of operations or financial condition. These market conditions may affect the Company's ability to access debt and equity capital markets. Additionally, certain trust accounts for the benefit of related companies and third parties have been established with collateral on deposit under the terms and conditions of the relevant trust agreements. The value of collateral could fall below the levels required under these agreements putting the subsidiary or subsidiaries in breach of the agreements which could expose us to damages or otherwise adversely impact our business, financial condition, operating results or cash flows.

Our Certificate of Incorporation authorizes the issuance of up to 1,000,000 shares of preferred stock, par value $0.01 per share, without stockholder approval and on terms established by our board of directors. We have outstanding shares of Class B Preferred Stock, Class C Preferred Stock and Class D Preferred Stock which will have, and we may issue additional shares of preferred stock in the future which have, rights and preferences that are senior to the rights of our common stock.

If we fail to comply with applicable insurance andinsurance, securities or other applicable laws or regulatory requirements, our business, results of operations, financial condition or cash flow could be adversely affected.

AsWe are subject to numerous laws and regulations, including those applicable to us as a publicly traded holding company listed on the New York Stock Exchange, we are subject to numerous laws and regulations.Exchange. These laws and regulations delegate regulatory, supervisory and administrative powers to federal, provincial or state regulators.

Any failure to comply with applicable laws or regulations or the mandates of applicable regulators could result in the imposition of fines or significant restrictions on our ability to do business, which could adversely affect our results of operations or financial condition. In addition, any changes in laws or regulations (or the interpretation or application thereof, including changes to applicable case law and legal precedent) could materially adversely affect our business, results of operations or financial condition. It is not possible to predict the future effect of changing federal, state and provincial law or regulation (or the interpretation or application thereof) on our operations, and there can be no assurance that laws and regulations enacted in the future will not be more restrictive than existing laws and regulations. Further, as new laws, regulations, treaties, executive orders, directives, enforcement priorities and similar initiatives and programs are adopted and implemented, we are required to comply or potentially face market access limitations or restrictions on our products entering certain jurisdictions or our ability to provide services within certain jurisdictions, sanctions or other penalties.

We are required to evaluate the effectiveness of the design and operation of our disclosure controls and procedures under the Securities Exchange Act of 1934. In the past, we have identified the existence of material weaknesses in our internal control over financial reporting, which have since been remediated. Although we have remediated material weaknesses previously identified, we can provide no assurance that additional material weaknesses in our internal control over financial reporting will not be identified in the future and that such material weaknesses, if identified, will not result in material misstatements in our consolidated financial statementsstatements.

Over the past several years, we have restructured our operating insurance subsidiaries, including exiting states and lines of business, placing subsidiaries into voluntary run-off, terminating managing general agent relationships, hiring a new management team, selling Mendota and CMC and acquiring PWI,various Ravix, CSuite, SNS, SPI, DDI and Image Solutionscompanies with the objective of focusing on our Extended Warranty and Kingsway Search Xcelerator and Extended Warranty segments, creating a more effective and efficient operating structure and focusing on profitability. These actions resulted in changes to our structure and business processes. While these changes are expected to bring us benefits in the form of a more agile and focused business, success is dependent on management effectively realizing the intended benefits. Change management may result in disruptions to the operations of the business or may cause employees to act in a manner that is inconsistent with our objectives. Any of these events could negatively affect our performance. We may not always achieve the expected cost savings and other benefits of our initiatives.

OurFurther, information technology systems facilitate our ability to monitor, operate and control our operations. Changeschanges or modifications to our information technology systems could cause disruption to our operations or cause challenges with respect to our compliance with laws, regulations or other applicable standards. For example, delays, higher than expected costs or unsuccessful implementation of new information technology systems could adversely affect our operations. In addition, any disruption in or failure of our information technology systems to operate as expected could, depending on the magnitude of the problem, adversely affect our business, financial condition, results of operation and cash flows, including by limiting our capacity to monitor, operate and control our operations effectively. Failures of our information technology systems could also lead to violations of privacy laws, regulations, trade guidelines or practices related to our customers and employees. If our disaster recovery plans do not work as anticipated, or if the third-party vendors to which we have outsourced certain information technology or other services fail to fulfill their obligations to us, our operations may be adversely affected. Any of these circumstances could adversely affect our reputation, business, financial condition, results of operation and cash flows.

Geminus primarily sells vehicle service agreements to used car buyers across the United States, mainly through its subsidiaries,subsidiary, The Penn Warranty Corporation ("Penn") and Prime Auto Care, Inc. ("Prime"). Penn and Prime distributedistributes these products in 46 and 34 states, respectively,states via independent used car dealerships and franchised car dealerships. Penn also sells and administers a guaranteed asset protection product ("GAP") in states where Penn is approved.

PWI markets, sells and administers vehicle service agreements to used car buyers in all fifty47 states via independent used car and franchise network of approved automobile and motorcycle dealer partners. PWI’s business model is supported by an internal sales and operations team and partners with American Auto Shield in three states with a white label agreement.team.

Throughout this 20242025 Annual Report, we present our operations in the way we believe will be most meaningful, useful and transparent to anyone using this financial information to evaluate our performance. In addition to the U.S. GAAP presentation of net income,loss, we present segment operating income as a non-U.S. GAAP financial measure, which we believe is valuable in managing our business and drawing comparisons to our peers. Below is a definition of our non-U.S. GAAP measure and its relationship to U.S. GAAP.

Segment operating income represents one measure of the pretax profitability of our segments and is derived by subtracting direct segment expenses from direct segment revenues. Revenues and expenses presented in the consolidated statements of operations are not subtotaled by segment; however, this information is available in total and bysegmentby segment in Note 22, "Segmented Information," to the Consolidated Financial Statements, regarding reportable segment information. The nearest comparable U.S. GAAP measure to total segment operating income is operating (loss) income that, in addition to total segment operating income, includes corporate general and administrative expenses and excludes segment non-operating other revenuerevenue, (expense).net.

Service fee and commissionother revenue represents vehicle service agreement fees, guaranteed asset protection products ("GAP") commissions, maintenance support service fees, warranty product commissions, business services consulting revenue, healthcare services revenue andrevenue, software license and support revenue, motor sales and repair service revenue and skilled trades repair and service revenue. Revenue is based on terms of various agreements with credit unions, consumers and businesses. Customers either pay in full at the inception of a warranty contract or commission product sale, or when consulting, healthcare andhealthcare, software license and supportsupport, motor sales and repair and skilled trades services are billed, or on terms subject to the Company’s customary credit reviews.

Certain of the Company’s contracts with customers include obligations to provide multiple services to a customer. Determining whether services are considered distinct performance obligations that should be accounted for separately from one another requires judgment. Revenue from GAP commissions and software license and support containcontains multiple distinct performance obligations that are accounted for separately.

Judgment is required to determine the standalone selling price ("SASP") for each distinct performance obligation. Revenue is allocated to each performance obligation based on the relative SASP. SASP are not directly observable in the GAP and software license and support contracts for the separate performance obligations.

We perform a quarterly analysis of our investments classified as available-for-sale fixed maturity investments and other investments to determine if an impairment loss has occurred.

As a result of the analysis performed, the Company recorded no impairment losses related to available-for-sale fixed maturity investments or other investments during the yearyears ended December 31, 2025 and December 31, 2024.

At Marcheach 31,quarter 2024,end Juneof the first through third quarters of 2025 and 2024 and at November 30, 2024, September 30, 2024 2025 and November 30, 2024, 2024 , the Company determined that certain trade names should be further examined under a quantitative approach due to actual revenue coming in lower than previous projections. Based upon these quantitative assessments, the Company recorded impairment charges of $0.7 million and $2.1 million during 2025 2024and 2024, respectively, related to the SNS,CSuite, CSuiteRavix and RavixSNS indefinite-lived trade names. The fair value of the SNS,CSuite, CSuiteRavix and RavixSNS trade names were estimated using the relief-from-royalty method. The significant unobservable inputs used in the relief-from-royalty method, which are level 3 inputs, include a royalty rate and discount rate. The reduction in value is primarily due to higher discount rates and a reduction in projected revenue. Future impairments may be recorded if discount rates increase further, or if actual revenue falls short of current projections. The valuation of these assets is not dependent on the underlying profit or loss generated by the respective business. Therefore, even if a change in revenue does not have a significant impact on operating results, it could significantly impact the fair value of the trade name. No impairment charges were recorded against intangible assets in 2023.

Additional information regarding our intangible assets is included ini n Note 9, "Intangible Assets," to the Consolidated Financial Statements.

Based upon the assessment performed at November 30, 2025, no impairment assessmentscharges were recorded against goodwill in 2025. Based upon the quantitative assessment performed at November 30, 2024, the Company recorded an impairment charge of $0.7 million during 2024 related to the Argo Management reporting unit. No impairment charges were recorded against goodwill for the Company's other reporting units in 2024, as the estimated fair values of the Company's other reporting units exceeded their respective carrying values. No impairment charges were recorded against goodwill in 2023.

A reconciliation of total segment operating income to net (loss) income for the years ended December 31, 20242025 and December 31, 20232024 is presented in Table 1 below:

Table 1 Segment Operating Income for the Years Ended December 31, 2024 and December 31, 2023

Net Realized and Unrealized Investment Gains

TheNet Companyrealized recordedand unrealized investment gains were $0.7 million in 2025 compared to $1.9 million in 2024, due primarily to net realized gains on the sale of investments of $0.1 million in 2025 compared to $1.6 million in 2024 compared to $0.8 million in 2023.2024. The net realized gains for 2024 primarily relate to realized gains recognized by Argo Holdings Fund I, LLC ("Argo Holdings") and a net realized gain related to the sale of one of the private company investments. The net realized gains for 2023 primarily relate to realized gains recognized by Argo Holdings and net realized gains on sales of limited liability investments.

Refer toSee Note 11,25 ,"Derivatives, Commitments and Contingent Liabilities " to the Consolidated Financial Statements,Statements for further informationdetails onrelated to the optionAegis agreements.Settlement Agreement.

Extended Warranty includes the following subsidiaries of the Company: IWS Acquisition Corporation ("IWS"), Geminus Holding Company, Inc. ("Geminus"), PWI Holdings, Inc. ("PWI") and Trinity Warranty Solutions LLC ("Trinity"). As discussed in Note 5, "Acquisitions and Disposal," to the unaudited consolidated interim financial statements, the Company sold Trinity on May 8, 2026. The earnings of Trinity are included in the unaudited interim consolidated statements of operations and the segment disclosures through the date of sale. Throughout Management's Discussion and Analysis, the term "Extended Warranty" is used to refer to this segment.

Trinity sellssold heating, ventilation, air conditioning ("HVAC"), standby generator, commercial LED lighting and commercial refrigeration warranty products and providesprovided equipment breakdown and maintenance support services to companies across the United States. As a seller of warranty products, Trinity marketsmarketed and administersadministered product warranty contracts for certain new and used products in the HVAC, standby generator, commercial LED lighting and commercial refrigeration industries throughout the United States. Trinity actsacted as an agent on behalf of the third-party insurance companies that underwrite and guaranty these warranty contracts. Trinity does not guaranty the performance underlying the warranty contracts it sells. As a provider of equipment breakdown and maintenance support services, Trinity actsacted as a single point of contact to its clients for both certain equipment breakdowns and scheduled maintenance of equipment. Trinity willwould provide such repair and breakdown services by contracting with certain HVAC providers.

Segment operating income represents one measure of the pretax profitability of our segments and is derived by subtracting direct segment expenses from direct segment revenues. Revenues and expenses are presented in the unaudited consolidated interim statements of operations, but are not subtotaled by segment; however, this information is available in total and by segment in Note 21, "Segmented Information," to the unaudited consolidated interim financial statements, regarding reportable segment information. The nearest comparable U.S. GAAP measure to total segment operating income is operating income (loss) income that, in addition to total segment operating income, includes corporate general and administrative expenses and excludes segment non-operating other revenue,income, net.

A reconciliation of total segment operating income to net income (loss) for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025 is presented in Table 1 below:

Kingsway Search Xcelerator revenue increased to $21.1$22.3 million (80.3%67.7%) for the three months ended MarchJune 31,30, 2026 compared to $11.7$13.3 million for the three months ended MarchJune 31,30, 2025.2025 (an increase to $43.5 million year to date compared to $25.0 million prior year to date). Kingsway Search Xcelerator operating income was $2.9$3.5 million for the three months ended MarchJune 31,30, 2026 compared to $1.7$2.0 million for the three months ended MarchJune 31,30, 2025.2025 Revenue($6.4 andmillion operatingyear incometo weredate primarilycompared impactedto by$3.8 themillion following:prior year to date).

Extended Warranty revenue increaseddecreased 7.2%2.8% (or $1.2$0.5 million) to $17.9$17.1 million for the three months ended MarchJune 31,30, 2026 compared with $16.7$17.6 million for the three months ended MarchJune 31,30, 2025, while cash sales and the average price per contract sold were up 11.8%2.4% and 7.3%,4.6%, respectively, over the prior year.year (revenue of $35.0 million year to date compared to $34.3 million prior year to date). Extended Warranty operating income was $0.2$0.7 million for the three months ended MarchJune 31,30, 2026 compared with $0.5operating loss of $0.1 million for the three months ended MarchJune 31,30, 2025.2025 (operating income of $0.9 million year to date compared to $0.5 million prior year to date). Extended Warranty's revenue – and therefore operating income – is impacted by the fact that VSA sales are recognized over the life of the contract, which is not on a straight-line basis. This means that in periods where cash VSA sales are declining, revenue and operating income may continue to be strong due to higher prior-year sales. Conversely, when VSA cash sales are in a period of growth – as we are seeing now – revenue and operating income may continue to lag as prior-year lower sales have a larger impact on current period revenue/operating income than current period VSA cash sales.

During the three and six months ended MarchJune 31,30, 2026, there was a 7.1%0.7% decrease and a 2.9% increase in claims paid at our auto Extended Warranty companies, respectively. While the number of claims were down in the quarter and year-to-date compared to prior year, the average cost per claim continued to increase primarily due to inflationary pressures on the cost of parts and labor, butas notwell due to a spike inas the numbertype of claims.claims incurred. We are able to mitigate the impact of higher claims expense by increasing pricing and re-categorizing vehicles to ensure they are in the appropriate rate class, which we do at least annually. However, due to the deferred revenue model under US GAAP, these price increases may impact our financials more in future periods rather than in the current period.

Interest and investment income, net was $0.7$2.7 million in the firstsecond quarter of 2026 compared to $0.3$0.7 million in the firstsecond quarter of 2025. Included is net investment income, realized gains2025 (losses$3.4 million year to date compared to $1.0 million prior year to date) and gain on change in fair value limited liability investment, at fair value.. The increase for the firstsecond quarter and year to date of 2026 is primarily due to realized gains recognized of $2.0 million resulting from distributions received during the second quarter of 2026 from private company investments and investments held by Argo Holdings Fund I, LLC ("Argo Holdings"). Also, the gain on change in fair value recognized by Argo Holdings Fundwas I, LLC ("Argo Holdings") of $0.3$0.4 million for the three months ended MarchJune 31,30, 2026 compared to less than $0.1$0.2 million for the three months ended MarchJune 31,30, 2025.2025 ($0.7 million year to date compared to $0.2 million prior year to date).

Selling, general and administrative expenses and other income not allocated to segments was a net expense of $2.4$4.1 million in the firstsecond quarter of 2026 compared to $2.9 million in the firstsecond quarter of 2025.2025 ($6.5 million year to date compared to $5.8 million prior year to date). Included are primarily expenses associated with our corporate holding company, expenses associated with our Operator-in-Residence who search for our next acquisitions, revenue and expenses associated with our various other investments (such as Argo Holdings) that are accounted for on a consolidated basis, (loss) gain on change in fair value of debt and loss on extinguishment of debt.

See Note 10, "Debt," to the unaudited consolidated interim financial statements, for further discussion of changes in fair value of debt and loss on extinguishment of debt recorded for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

Interest expense for the firstsecond quarter of 2026 was $1.4 million compared to $1.2$1.3 million in the firstsecond quarter of 2025.2025 ($2.8 million year to date compared to $2.5 million prior year to date). The increase for the three and six months ended MarchJune 31,30, 2026 is primarily attributabledue to the inclusion of the Roundhouse and KPH loans for the firstsecond quarter and year to date of 2026, partially offset by reduced expense for existing loans due to principal amortization.

Amortization of intangible assets was $2.2$2.1 million in the firstsecond quarter of 2026 compared to $1.7 million in the firstsecond quarter of 2025.2025 ($4.3 million year to date compared to $3.4 million prior year to date). The increase is primarily due to the inclusion of Roundhouse, Advanced Plumbing and Southside Plumbing (acquired in the third quarter of 2025) for the three and six months ended MarchJune 31,30, 2026, partially offset by decreased amortization expense for the Company's other intangible assets.

Impairment of intangible assets was $0.2$0.3 million in the firstsecond quarter of 2026 compared to $0.1 million in the firstsecond quarter of 2025.2025 ($0.5 million year to date compared to $0.2 million prior year to date). The Company's indefinite-lived intangible assets consist of trade names, which are assessed for impairment annually as of November 30, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. At Marcheach 31,quarter end of the first and second quarters of 2026 and March 31, 2025, the Company determined that certain of its trade name intangible assets should be further examined under a quantitative approach due to actual revenue coming in lower than previous projections. Based upon this assessment, the Company recorded an impairment charge during the firstsecond quarter of 2026 related to the CSuite indefinite-lived trade name (year to date impairment related to CSuite and SNS indefinite-lived trade namenames); and during the firstsecond quarter and year to date of 2025 related to the Ravix indefinite-lived trade name. The reductions in value are primarily due to higher discount rates and a reduction in projected revenue. See Note 8,"Intangible Assets," to the unaudited consolidated interim financial statements, for further discussion.

Income Tax Expense (Benefit)

Income tax benefit for the firstsecond quarter of 2026 was lessan thanexpense $0.1of $0.2 million compared to $0.3a benefit of $0.1 million in the firstsecond quarter of 2025.2025 (expense of $0.1 million year to date compared to a benefit of $0.4 million prior year to date). For the three and six months ended MarchJune 31,30, 2026, the Company reported a tax benefitexpense primarily due to thestate current period operating losses generating indefinite life deferredincome tax assets utilizable against existing indefinite life deferred tax liabilities.expense. For the three and six months ended MarchJune 31,30, 2025, the Company reported a tax benefit primarily due to the release of its valuation allowance associated with indefinite life business interest expense carryforwards. See Note 14, "Income Taxes," to the unaudited consolidated interim financial statements, for additional detail of the income tax expense (benefit) recorded for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

At MarchJune 31,30, 2026, we held cash and cash equivalents, restricted cash and investments with a carrying value of $57.2$59.1 million. Our operations typically invest in U.S. dollar-denominated instruments to mitigate their exposure to currency rate fluctuations.

The Company performs a quarterly analysis of its investments to determine if declines in fair value may result in the recognition of impairment losses in net loss.income (loss). Factors considered in the determination of whether or not an impairment loss is recognized in net income (loss) include a current intention or need to sell the security or an indication that a credit loss exists. See the "Significant Accounting Policies and Critical Estimates" section of Management's Discussion and Analysis of Financial Condition included in the 2025 Annual Report for further information regarding the Company's detailed analysis and factors considered in establishing an impairment loss on an investment.

The Company's fixed maturities are subject to declines in fair value below amortized cost that may result in the recognition of impairment losses in net loss.income (loss). If the decline in fair value is due to credit factors and the Company does not expect to receive cash flows sufficient to support the entire amortized cost basis, the credit loss is reported in the consolidated statements of operations in the period that the declines are evaluated. Significant judgment is required in the determination of whether a credit loss has occurred for a security. The Company considers all available evidence when determining whether a security requires a credit allowance to be recorded, including the financial condition and expected near-term and long term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions, industry, sector or other specific factors and whether the Company expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company performs a quarterly analysis of its available for-sale fixed maturity investments to determine if an impairment loss has occurred.

There were no impairment losses recorded related to investments during the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

At MarchJune 31,30, 2026 and December 31, 2025, the gross unrealized losses for fixed maturities amounted to $0.5$0.6 million forand each$0.5 period,million, respectively, and there were no unrealized losses attributable to non-investment grade fixed maturities.

The principal and carrying value of the Company's debt instruments at MarchJune 31,30, 2026 and December 31, 2025 are as follows:

See Note 10, "Debt," to the unaudited consolidated interim financial statements for a detailed discussion of the Company’s debt instruments. Changes related to the Company’s debt during the threesix months ended MarchJune 31,30, 2026 are further described below.

During the threesix months ended MarchJune 31,30, 2026:

Beginning March 31, 2024 through MarchJune 31,30, 2026, SNS was in default under its loan due to debt covenant violations related to the leverage and fixed charge ratios (measured quarterly). In February 2026, SNS and the lender amended the credit agreement to (1) extend the SNS revolver maturity date to be June 2, 2026; and (2) suspend monthly principal payments beginning February 2026 through May 2026, with the next principal payment resuming in June 2026. In July 2026, SNS and the lender amended the credit agreement to (1) extend the SNS revolver maturity date to be December 2, 2026; and (2) suspend monthly principal payments through November 2026, with the next principal payment resuming in December 2026.

Also, beginningBeginning September 30, 2025 through MarchJune 31,30, 2026, DDI was in default under its loan due to a debt covenant violation related to the fixed charge ratio (measured quarterly).

Each of SNS and DDI has entered into an amendment to its respective loan that waives the events of default for the fiscal quarter ended MarchJune 31,30, 2026. As of the report date, there is some uncertainty as to whether the companies will be in compliance with the covenants in future periods, and if not, when the companies will be able to cure any potential violations. As a result, the Company has included the total principal balance due after one-year related to the DDI Loan of $2.6 million and the SNS Loan of $1.7 million in short-term and current portion of long-term debt in the consolidated balance sheet as of June 30, 2026. A default may permit the lender to declare the amounts owed under the loans immediately due and payable, exercise their rights with respect to collateral securing the obligations, and/or exercise any other rights and remedies available.

The Company's subordinated debt is measured and reported at fair value. At MarchJune 31,30, 2026, the carrying value of the subordinated debt is $13.1$13.4 million. The fair value of the subordinated debt is calculated using a model based on significant market observable inputs and inputs developed by a third party. For a description of the market observable inputs and inputs developed by a third party used in determining fair value of debt, see Note 22, "Fair Value of Financial Instruments," to the unaudited consolidated interim financial statements.

During the threesix months ended MarchJune 31,30, 2026, the net cash usedprovided inby operating activities from continuing operations was essentially$1.2 break even,million, primarily due to operating income from the Kingsway Search Xcelerator and Extended Warranty (the latter due to higher cash sales) segments. During the threesix months ended MarchJune 31,30, 2025, the Company reported $1.8$1.5 million of net cash used in operating activities, primarily due to cash paid to settle the Ravix contingent liability of $2.3 million that is reported as an operating activity, partially offset by operating income from the Extended Warranty and Kingsway Search Xcelerator segments.

During the threesix months ended MarchJune 31,30, 2026, the net cash usedprovided inby investing activities was $1.0$3.3 million. This usesource of cash is primarily attributed to proceeds received from salesthe sale of Trinity, net of cash disposed, of $4.4 million and maturitiescash distributions received from private company investments and investments held by Argo Holdings of $2.0 million, partially offset by purchases of fixed maturities in excess of purchasessales and maturities of fixed maturities, as well as annet assetpurchases acquisitionof byproperty Ravix.and equipment. During the threesix months ended MarchJune 31,30, 2025, the net cash used in investing activities was $3.2$13.7 million. This use of cash is primarily attributed to the acquisition of Bud's Plumbing, net of cash acquired, partially offset by proceeds from sales and maturitiescash paid on June 30, 2025 to pre-fund the acquisition of fixedRoundhouse maturitiesthat inoccurred excesson July 1, 2025 of purchases$10.3 of fixed maturities.million.

During the threesix months ended MarchJune 31,30, 2026, the net cash used in financing activities was $0.2$5.7 million. This use of cash was primarily attributed to principal proceeds from debt of $2.1 million, partially offset by principal repaymentrepayments on debt of $2.0$7.1 million, distributions to noncontrolling interest holders of $0.7 million and payment of preferred stock dividends of $0.3$0.6 million, partially offset by principal proceeds from debt of $3.0 million. During the threesix months ended MarchJune 31,30, 2025, the net cash provided by financing activities was $5.8$21.5 million. This source of cash was primarily attributed to net proceeds from the issuance of common stock of $15.6 million, principal proceeds from debt of $9.3$9.4 million and proceeds from the issuance of Class C and Class D preferred stock of $6.0 million and $2.0 million, respectively, partially offset by principal repayment on debt of $8.5$10.4 million, cash paid to settle the Ravix contingent liability of $0.4 million, payment of preferred stock dividends of $0.4 million and cash paid for repurchases of common stock of $0.3 million.

The holding company’s liquidity, defined as the amount of cash in the bank accounts of Kingsway Financial Services Inc.Corporation and Kingsway America Inc., was $0.9$1.0 million and $1.0 million at MarchJune 31,30, 2026 and December 31, 2025, respectively, which excludes future actions available to the holding company that could be taken to generate liquidity. Such future actions include, but are not limited to, issuance of equity securities and distributions from the Kingsway Search Xcelerator and Extended Warranty operating companies subject to certain loan covenants that may be in place at each operating company. The holding company cash amounts are reflected in the cash and cash equivalents of $7.3$7.4 million and $8.3 million reported at MarchJune 31,30, 2026 and December 31, 2025, respectively, on the Company’s consolidated balance sheets.