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Note 4 - Acquisitions | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | NOTE 4 ACQUISITIONS During the years ended December 31, 2023 and December 31, 2022, the Company incurred acquisition expenses related to business combinations of $0.7 million a nd $1.1 million, respectively, which are included in general and administrative expenses in the consolidated statements of operations. Systems Products International, Inc. On September 7, 2023, the Company acquired 100% of the outstanding equity interests of Systems Products International, Inc. ("SPI") for aggregate cash consideration of $2.8 million, less certain escrowed amounts for purposes of indemnification claims and working capital adjustments. SPI, based in Miami, Florida, is a vertical market software company, created exclusively to serve the management needs of all types of shared-ownership properties. As further discussed in Note 22, "Segmented Information," SPI is included in the Kingsway Search Xcelerator segment. This acquisition was the Company’s fourth acquisition under its novel CEO Accelerator program and its first in the vertical market software space and further expands the Company’s portfolio of businesses with recurring revenue and low capital intensity. This acquisition was accounted for as a business combination using the acquisition method of accounting. The purchase price was provisionally allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition and are subject to adjustment during a measurement period subsequent to the acquisition date, not to exceed one year as permitted under U.S. GAAP. The Company expects to complete its purchase price allocation during the first quarter of 2024. These estimates, allocations and calculations are subject to change as we obtain further information; therefore, the final fair values of the assets acquired and liabilities assumed could change from the estimates included in these consolidated financial statements. Refer to Note 9, "Intangible Assets," for further disclosure of the intangible assets related to this acquisition. The goodwill of $0.1 million represents the premium paid over the fair value of the net tangible and intangible assets acquired, which the Company paid to grow its portfolio of companies and acquire an assembled workforce. The goodwill is not deductible for tax purposes. The following table summarizes the preliminary estimated allocation of the SPI assets acquired and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
|  | September 7, 2023 |
Cash and cash equivalents |  | $ | 121 |
Restricted cash |  |  | 6 |
Service fee receivable |  |  | 381 |
Goodwill |  |  | 107 |
Intangible asset not subject to amortization - trade name |  |  | 120 |
Intangible asset subject to amortization - customer relationships |  |  | 1,000 |
Intangible asset subject to amortization - developed technology |  |  | 600 |
Other assets |  |  | 1,789 |
Total assets |  | $ | 4,124 |
Accrued expenses and other liabilities |  | $ | 125 |
Deferred service fees |  |  | 423 |
Net deferred income tax liabilities |  |  | 776 |
Total liabilities |  | $ | 1,324 |
Purchase price |  | $ | 2,800 |
The consolidated statements of operations include the earnings of SPI from the date of acquisition. From the date of acquisition through December 31, 2023, SPI earned revenue of $0.8 million and had a net income of $0.4 million. Digital Diagnostics Imaging, Inc. On October 26, 2023, the Company acquired 100% of the outstanding equity interests of Digital Diagnostics Imaging, Inc. ("DDI") for aggregate cash consideration of approximately $11.0 million, less certain escrowed amounts for purposes of indemnification claims and working capital adjustments. DDI, based in Wall, New Jersey, is a provider of fully managed outsourced cardiac telemetry services. As further discussed in Note 22, "Segmented Information," DDI is included in the Kingsway Search Xcelerator segment. This acquisition was the Company’s fifth acquisition under its novel CEO Accelerator program and further expands the Company’s portfolio of businesses with recurring revenue and low capital intensity. This acquisition was accounted for as a business combination using the acquisition method of accounting. The purchase price was provisionally allocated to the assets acquired and liabilities ass umed based on their estimated fair values at the date of acquisition and are subject to adjustment during a measurement period subsequent to the acquisition date, not to exceed one year as permitted under U.S. GAAP. The Company expects to complete its purchase price allocation during the first quarter of 2024. These estimates, allocations and calculations are subject to change as we obtain further information; therefore, the final fair values of the assets acquired and liabilities assumed could change from the estimates included in these consolidated financial statements. Refer to Note 9 , " Intangible Assets ," for further disclosure of the intangible assets related to this acquisition. The goodwill of $4.8 million represents the premium paid over the fair value of the net tangible and intangible assets acquired, which the Company paid to grow its portfolio of companies and acquire an assembled workforce. The goodwill is not deductible for tax purposes. The following table summarizes the preliminary estimated allocation of the DDI assets acquired and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
|  | October 26, 2023 |
Cash and cash equivalents |  | $ | 124 |
Service fee receivable |  |  | 522 |
Property and equipment, net |  |  | 1,183 |
Right-of-use asset |  |  | 145 |
Goodwill |  |  | 4,762 |
Intangible asset not subject to amortization - trade name |  |  | 260 |
Intangible asset subject to amortization - customer relationships |  |  | 6,500 |
Other assets |  |  | 7 |
Total assets |  | $ | 13,503 |
Accrued expenses and other liabilities |  | $ | 214 |
Income taxes payable |  |  | 141 |
Lease liability |  |  | 145 |
Net deferred income tax liabilities |  |  | 2,013 |
Total liabilities |  | $ | 2,513 |
Purchase price |  | $ | 10,990 |
The consolidated statements of operations include the earnings of DDI from the date of acquisition. From the date of acquisition through December 31, 2023, DDI earned revenue of $0.9 million and had net income of $1.5 million, primarily related to a tax benefit recognized for the partial release of the Company’s deferred tax valuation allowance related to the acquired deferred tax liabilities. CSuite Financial Partners, LLC On November 1, 2022, the Company acquired 100% of the outstanding equity interests of CSuite Financial Partners, LLC ("CSuite"). CSuite, based in Manhattan Beach, California, is a national financial executive services firm providing financial management leadership to companies in every industry, regardless of size, throughout the United States. As further discussed in Note 22, "Segmented Information," CSuite is included in the Kingsway Search Xcelerator segment. This acquisition was the Company’s second acquisition under its novel CEO Accelerator program and further expands the Company’s portfolio of businesses with recurring revenue and low capital intensity. The Company acquired CSuite for aggregate cash consideration of approximately $8.5 million, less certain escrowed amounts for purposes of indemnification claims and working capital adjustments. The final purchase price was subject to a working capital true-up of less than $0.1 million that was settled during the first quarter of 2023. The Company will also pay additional contingent consideration, only to the extent earned, in an aggregate amount of up to $3.6 million, which is subject to certain conditions, including the successful achievement of certain financial metrics for CSuite during the three-year period commencing on the first full calendar month following the acquisition date. The estimated fair value of the contingent consideration obligation at December 31, 2023 and December 31, 2022 was zero. This acquisition was accounted for as a business combination using the acquisition method of accounting. The purchase price was provisionally allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition and were subject to adjustment during a measurement period subsequent to the acquisition date, not to exceed one-year as permitted under U.S. GAAP. During the first quarter of 2023, the Company finalized its fair value analysis of the assets acquired and liabilities assumed with the assistance of a third party. No measurement period adjustments were recorded as a result of finalizing the fair value analysis. Refer to Note 9, "Intangible Assets," for further disclosure of the intangible assets related to this acquisition. The goodwill of $4.1 million represents the premium paid over the fair value of the net tangible and intangible assets acquired, which the Company paid to grow its portfolio of companies and acquire an assembled workforce. The goodwill is not deductible for tax purposes. The estimated fair value of the contingent consideration obligation at the acquisition date of zero was determined using a Monte Carlo simulation based on forecasted future results. The following table summarizes the estimated allocation of the CSuite assets acquired and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
|  | November 1, 2022 |
Cash and cash equivalents |  | $ | 569 |
Service fee receivable |  |  | 311 |
Other receivables |  |  | 21 |
Goodwill |  |  | 4,109 |
Intangible asset not subject to amortization - trade name |  |  | 1,500 |
Intangible asset subject to amortization - customer relationships |  |  | 2,500 |
Other assets |  |  | 53 |
Total assets |  | $ | 9,063 |
Accrued expenses and other liabilities |  | $ | 539 |
Total liabilities |  | $ | 539 |
Purchase price |  | $ | 8,524 |
The consolidated statements of operations include the earnings of CSuite from the date of acquisition. From the date of acquisition through December 31, 2022, CSuite earned revenue of $1.3 million and had a net loss of less than $0.1 million. Secure Nursing Service, Inc. On November 18, 2022, the Company acquired substantially all of the assets and assumed certain specified liabilities of Secure Nursing Service, Inc. ("SNS") for aggregate cash consideration of $11.5 million, less certain escrowed amounts for purposes of indemnification claims and working capital adjustments. SNS, based in Los Angeles, California, employs highly skilled and professional per diem and travel Registered Nurses, Licensed Vocational Nurses, Certified Nurse Assistants and Allied Healthcare Professionals with multiple years of acute care hospital experience. SNS places these healthcare professionals in both per diem assignments, and in short-term and long-term travel assignments in a variety of hospitals in southern California. As further discussed in Note 22, "Segmented Information," SNS is included in the Kingsway Search Xcelerator segment. This acquisition was the Company’s third acquisition under its novel CEO Accelerator program and further expands the Company’s portfolio of businesses with recurring revenue and low capital intensity. This acquisition was accounted for as a business combination using the acquisition method of accounting. The purchase price was provisionally allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition and were subject to adjustment during a measurement period subsequent to the acquisition date, not to exceed one-year as permitted under U.S. GAAP. During the first quarter of 2023, the Company finalized its fair value analysis of the assets acquired and liabilities assumed with the assistance of a third party. No measurement period adjustments were recorded as a result of finalizing the fair value analysis. Refer to Note 9, "Intangible Assets," for further disclosure of the intangible assets related to this acquisition. The goodwill of $1.6 million represents the premium paid over the fair value of the net tangible and intangible assets acquired, which the Company paid to grow its portfolio of companies and acquire an assembled workforce. The goodwill is not deductible for tax purposes. The following table summarizes the estimated allocation of the SNS assets acquired and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
|  | November 18, 2022 |
Service fee receivable |  | $ | 3,200 |
Goodwill |  |  | 1,600 |
Intangible asset not subject to amortization - trade name |  |  | 3,100 |
Intangible asset subject to amortization - customer relationships |  |  | 3,600 |
Other assets |  |  | 6 |
Total assets |  | $ | 11,506 |
Accrued expenses and other liabilities |  | $ | 6 |
Total liabilities |  | $ | 6 |
Purchase price |  | $ | 11,500 |
The consolidated statements of operations include the earnings of SNS from the date of acquisition. From the date of acquisition through December 31, 2022, SNS earned revenue of $2.4 million and had a net loss of $0.1 million. Unaudited Pro Forma Summary The following unaudited pro forma summary presents the Company's consolidated financial statements for the year ended December 31, 2023 and December 31, 2022 as if DDI, CSuite and SNS had been acquired on January 1 of the year prior to the acquisitions. The pro forma summary is presented for illustrative purposes only and does not purport to represent the results of our operations that would have actually occurred had the acquisitions occurred as of the beginning of the period presented or project our results of operations as of any future date or for any future period, as applicable. The pro forma results primarily include purchase accounting adjustments related to the acquisitions of DDI, CSuite and SNS, interest expense and the amortization of debt issuance costs and discounts associated with the related financing obtained in connection with the DDI, CSuite and SNS acquisitions (see Note 12, "Debt"), tax related adjustments and acquisition-related expenses. The pro forma effects of the SPI acquisition are not material to the Company’s consolidated statements of operations for the years ended December 31, 2023 and December 31, 2022.
(in thousands, except per share data) |  | Years ended December 31, |
|  | 2023 |  |  | 2022 |
Revenues |  | $ | 107,188 |  |  | $ | 125,510 |
Income from continuing operations attributable to common shareholders |  | $ | 24,593 |  |  | $ | 33,614 |
Basic earnings per share - continuing operations |  | $ | 0.96 |  |  | $ | 1.46 |
Diluted earnings per share - continuing operations |  | $ | 0.93 |  |  | $ | 1.34 |

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