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Note 10 - Debt | 9 Months Ended
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Sep. 30, 2025
Notes to Financial Statements |
Debt Disclosure [Text Block] | NOTE 10 DEBT Debt consists of the following instruments at September 30, 2025 and December 31, 2024:
(in thousands) |  | September 30, 2025 |  |  | December 31, 2024 |
|  | Principal |  |  | Carrying Value |  |  | Fair Value |  |  | Principal |  |  | Carrying Value |  |  | Fair Value |
Bank loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2021 Ravix Loan |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,288 |  |  | $ | 2,288 |  |  | $ | 2,312 |
2022 Ravix Loan |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,300 |  |  |  | 4,182 |  |  |  | 4,389 |
2022 Ravix Revolver |  |  | 500 |  |  |  | 500 |  |  |  | 514 |  |  |  | 500 |  |  |  | 500 |  |  |  | 500 |
2025 Ravix Loan |  |  | 8,593 |  |  |  | 8,561 |  |  |  | 9,212 |  |  |  | — |  |  |  | — |  |  |  | — |
SNS Term Loan |  |  | 2,867 |  |  |  | 2,816 |  |  |  | 2,938 |  |  |  | 3,842 |  |  |  | 3,779 |  |  |  | 3,942 |
SNS Revolver |  |  | 1,000 |  |  |  | 1,000 |  |  |  | 1,003 |  |  |  | 450 |  |  |  | 450 |  |  |  | 452 |
DDI Term Loan |  |  | 4,667 |  |  |  | 4,621 |  |  |  | 4,869 |  |  |  | 5,507 |  |  |  | 5,452 |  |  |  | 5,704 |
DDI Revolver |  |  | 23 |  |  |  | 23 |  |  |  | 23 |  |  |  | — |  |  |  | — |  |  |  | — |
Image Solutions Loan |  |  | 6,975 |  |  |  | 6,838 |  |  |  | 7,345 |  |  |  | 7,556 |  |  |  | 7,399 |  |  |  | 7,669 |
Roundhouse Term Loan |  |  | 10,817 |  |  |  | 10,640 |  |  |  | 11,364 |  |  |  | — |  |  |  | — |  |  |  | — |
KPH Term Loan |  |  | 3,750 |  |  |  | 3,584 |  |  |  | 4,176 |  |  |  | — |  |  |  | — |  |  |  | — |
2024 KWH Term Loan |  |  | 11,397 |  |  |  | 11,326 |  |  |  | 11,722 |  |  |  | 13,313 |  |  |  | 13,228 |  |  |  | 13,536 |
2024 KWH DDTL |  |  | 4,894 |  |  |  | 4,894 |  |  |  | 5,056 |  |  |  | 5,850 |  |  |  | 5,850 |  |  |  | 5,982 |
KWH Revolver |  |  | 1,000 |  |  |  | 1,000 |  |  |  | 1,003 |  |  |  | 1,000 |  |  |  | 1,000 |  |  |  | 1,067 |
Total bank loans |  |  | 56,483 |  |  |  | 55,803 |  |  |  | 59,225 |  |  |  | 44,606 |  |  |  | 44,128 |  |  |  | 45,553 |
Notes payable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ravix Note |  |  | 188 |  |  |  | 188 |  |  |  | 188 |  |  |  | — |  |  |  | — |  |  |  | — |
AAA Note |  |  | 500 |  |  |  | 422 |  |  |  | 422 |  |  |  | — |  |  |  | — |  |  |  | — |
Southside Note |  |  | 500 |  |  |  | 422 |  |  |  | 422 |  |  |  | — |  |  |  | — |  |  |  | — |
Total notes payable |  |  | 1,188 |  |  |  | 1,032 |  |  |  | 1,032 |  |  |  | — |  |  |  | — |  |  |  | — |
Subordinated debt |  |  | 15,000 |  |  |  | 13,889 |  |  |  | 13,889 |  |  |  | 15,000 |  |  |  | 13,409 |  |  |  | 13,409 |
Total |  | $ | 72,671 |  |  | $ | 70,724 |  |  | $ | 74,146 |  |  | $ | 59,606 |  |  | $ | 57,537 |  |  | $ | 58,962 |
Subordinated debt mentioned above consists of the following trust preferred debt instrument at September 30, 2025 and December 31, 2024:
Issuer |  | Principal (in thousands) |  | Issue date |  | Interest |  | Redemption date |
Kingsway DE Statutory Trust III |  | $ 15,000 |  | 5/22/2003 |  | annual interest rate equal to CME Term SOFR, plus 4.20% payable quarterly |  | 5/22/2033 |
The contractual maturities of the Company's principal debt balances as of September 30, 2025 were as follows:
(in thousands) |  | Principal Maturities |
2025 |  | $ | 4,136 |
2026 |  |  | 8,715 |
2027 |  |  | 10,164 |
2028 |  |  | 8,566 |
2029 |  |  | 12,092 |
Thereafter |  |  | 28,998 |
Total |  | $ | 72,671 |
(a) Bank loans: Ravix As part of the acquisition of Ravix Group, Inc. ("Ravix") on October 1, 2021, Ravix became a wholly owned subsidiary of Ravix Acquisition LLC ("Ravix LLC"), and together they borrowed from a bank a principal amount of $6.0 million in the form of a term loan, and established a $1.0 million revolver to finance the acquisition of Ravix (together, the "2021 Ravix Loan"). The 2021 Ravix Loan required monthly payments of principal and interest. The 2021 Ravix Loan had an annual interest rate equal to the greater of the Prime Rate plus 0.5%, or 3.75% and the term loan was due to mature on October 1, 2027, prior to the fourth amendment of the 2021 Ravix Loan on February 7, 2025 (see further discussion below). The Company also recorded as a discount to the carrying value of the 2021 Ravix Loan issuance costs of $0.2 million specifically related to the 2021 Ravix Loan. The 2021 Ravix Loan is carried in the consolidated balance sheet at December 31, 2024 at its unpaid principal balance. Subsequent to the acquisition of CSuite Financial Partners, LLC ("CSuite") on November 1, 2022, CSuite became a wholly owned subsidiary of Ravix LLC. As a result of the acquisition of CSuite, on November 16, 2022, the 2021 Ravix Loan was amended to: (1) include CSuite as a borrower; (2) borrow an additional principal amount of $6.0 million in the form of a supplemental term loan (the "2022 Ravix Loan"); and (3) amend the maturity date and interest rate of the $1.0 million revolver (the "2022 Ravix Revolver"). The 2022 Ravix Loan required monthly payments of principal and interest. The 2022 Ravix Loan was due to mature on November 16, 2028 and had an annual interest rate equal to the Prime Rate plus 0.75%, prior to the fourth amendment of the 2021 Ravix Loan on February 7, 2025 (see further discussion below). The Company also recorded as a discount to the carrying value of the 2022 Ravix Loan issuance costs of $0.1 million specifically related to the 2022 Ravix Loan. The 2022 Ravix Loan is carried in the consolidated balance sheet at December 31, 2024 at its amortized cost, which reflects the monthly pay-down of principal as well as the amortization of the debt discount and issuance costs using the effective interest rate method. The 2022 Ravix Loan and the 2021 Ravix Loan were not deemed to be substantially different; therefore, the 2022 Ravix Loan was accounted for as a modification of the 2021 Ravix Loan and a new effective interest rate was determined based on the carrying amount of the 2021 Ravix Loan. The issuance costs related to the 2022 Ravix Loan, along with the existing unamortized issuance costs from the 2021 Ravix Loan, are being amortized over the remaining term of the 2022 Ravix Loan using the effective interest rate. On July 23, 2024, Ravix, Ravix LLC and CSuite entered into a second amendment to the 2021 Ravix Loan that provides for: (1) a principal prepayment of the 2021 Ravix term loan of $1.5 million, partially financed by borrowing $0.5 million under the 2022 Ravix Revolver and the remainder to be paid with available cash; and (2) amending the loan amortization payment schedule to provide for equal monthly payments through the loan maturity date. The 2021 Ravix Loan was not deemed to be substantially different as a result of the second amendment; therefore, the amended 2021 Ravix Loan was accounted for as a modification of the original 2021 Ravix Loan. On October 4, 2024, Ravix, Ravix LLC and CSuite entered into a third amendment to the 2021 Ravix Loan to extend the maturity date of the 2022 Ravix Revolver to February 13, 2025. On February 7, 2025, Ravix, Ravix LLC and CSuite entered into a fourth amendment to the 2021 Ravix Loan that provides for: (1) a new 2025 term loan in the principal amount of $9.1 million, with a maturity date of February 7, 2031 (the "2025 Ravix Loan"); and (2) extending the maturity date of the 2022 Ravix Revolver to February 7, 2027. In connection with the fourth amendment, Ravix used a portion of the proceeds from the 2025 Ravix Loan to repay the following outstanding principal balances under the 2021 and 2022 Ravix Loans: (1) $2.2 million related to the 2021 Ravix term loan; and (2) $4.2 million related to the 2022 Ravix term loan. The 2025 Ravix Loan and 2022 Ravix Revolver have an annual interest rate equal to the Prime Rate plus 0.5%. At September 30, 2025, the interest rate was 7.75%. The Company also recorded as a discount to the carrying value of the 2025 Ravix Loan issuance costs of less than $0.1 million specifically related to the 2025 Ravix Loan. The 2025 Ravix Loan is carried in the consolidated balance sheet at September 30, 2025 at its amortized cost, which reflects the monthly pay-down of principal as well as the amortization of the debt discount and issuance costs using the effective interest rate method. The 2025 Ravix Loan and the 2021 and 2022 Ravix Loans were not deemed to be substantially different as a result of the fourth amendment; therefore, the 2025 Ravix Loan is accounted for as a modification of the second amended 2021 Ravix Loan. The unamortized debt discount and issuance costs from the 2021 and 2022 Ravix Loans at the modification date of $0.1 million were recorded as loss on extinguishment of debt during the nine months ended September 30, 2025 since the original debt related the 2021 Ravix Loan and 2022 Ravix Loan were fully repaid as part of the modification. The fair values of the 2021 Ravix Loan, 2022 Ravix Loan, 2022 Ravix Revolver and 2025 Ravix Loan disclosed in the table above are derived from quoted market prices of B and BB minus rated industrial bonds with similar maturities and is categorized within Level 2 of the fair value hierarchy. The 2021 Ravix Loan, as amended, is secured by certain of the equity interests and assets of Ravix and CSuite. The 2021 Ravix Loan, as amended (including by the 2025 Ravix Loan) contains a number of covenants, including, but not limited to, a leverage ratio and a fixed charge ratio, all of which are as defined in and calculated pursuant to the 2021 Ravix Loan, as amended that, among other things, restrict Ravix and CSuite’s ability to incur additional indebtedness, create liens, make dividends and distributions, engage in mergers, acquisitions and consolidations, make certain payments and investments and dispose of certain assets. SNS As part of the asset acquisition of Secure Nursing Service, Inc. on November 18, 2022, the Company formed Secure Nursing Service LLC ("SNS"), which became a wholly owned subsidiary of Pegasus Acquirer Holdings LLC ("Pegasus LLC"), and together they borrowed from a bank a principal amount of $6.5 million in the form of a term loan, and established a $1.0 million revolver (the "SNS Revolver") to finance the acquisition of SNS (together, the "SNS Loan"). The SNS Loan has an annual interest rate equal to the greater of the Prime Rate plus 0.5%, or 5.00%. At September 30, 2025, the interest rate was 7.75%. The SNS Revolver matures on February 2, 2026 and the term loan matures on November 18, 2028. During the fourth quarter of 2024, the Company borrowed $0.4 million under the SNS Revolver. During the nine months ended September 30, 2025, the Company borrowed an additional $0.6 million under the SNS Revolver. The Company also recorded as a discount to the carrying value of the SNS Loan issuance costs of $0.1 million specifically related to the SNS Loan. The SNS Loan is carried in the consolidated balance sheets at its amortized cost, which reflects principal payments as well as the amortization of the debt discount and issuance costs using the effective interest rate method. The fair value of the SNS Loan disclosed in the table above is derived from quoted market prices of B plus and BB minus rated industrial bonds with similar maturities and is categorized within Level 2 of the fair value hierarchy. The SNS Loan is secured by certain of the equity interests and assets of SNS. The SNS Loan contains a number of covenants, including, but not limited to, a leverage ratio and a fixed charge ratio and limits on annual capital expenditures, all of which are as defined in and calculated pursuant to the SNS Loan that, among other things, restrict SNS’s ability to incur additional indebtedness, create liens, make dividends and distributions, engage in mergers, acquisitions and consolidations, make certain payments and investments and dispose of certain assets. At each quarter end beginning March 31, 2024 through September 30, 2025, SNS was in default under the SNS Loan due to debt covenant violations related to the leverage and fixed charge ratios. The Company has entered into an amendment to the SNS Loan that waives the events of default for the fiscal quarter ended September 30, 2025. As of the report date, there is some uncertainty as to whether the Company will be in compliance with the covenants in future periods, and if not, when the Company will be able to cure any potential violations. A default may permit the lender to declare the amounts owed under the SNS Loan immediately due and payable, exercise their rights with respect to collateral securing the obligation, and/or exercise any other rights and remedies available. DDI As part of the acquisition of Digital Diagnostics Inc. ("DDI") on October 26, 2023, DDI became a wholly owned subsidiary of DDI Acquisition, LLC ("DDI LLC"), and together they borrowed from a bank a principal amount of $5.6 million in the form of a term loan, and established a $0.4 million revolver (the "DDI Revolver") to finance the acquisition of DDI (together, the "DDI Loan"). The DDI Loan has an annual interest rate equal to the greater of the Prime Rate plus 0.5%, or 5.00%. At September 30, 2025, the interest rate was 7.75%. Monthly principal payments on the term loan began on December 15, 2024. The DDI Revolver matures on November 1, 2026 and the term loan matures on October 26, 2029. During the nine months ended September 30, 2025, the Company borrowed $0.1 million and made principal repayments of less than $0.1 million under the DDI Revolver. The Company also recorded as a discount to the carrying value of the DDI Loan issuance costs of $0.1 million specifically related to the DDI Loan. The DDI Loan is carried in the consolidated balance sheets at its amortized cost, which reflects the amortization of the debt discount and issuance costs using the effective interest rate method. The fair value of the DDI Loan disclosed in the table above is derived from quoted market prices of B plus to BB minus rated industrial bonds with similar maturities and is categorized within Level 2 of the fair value hierarchy. The DDI Loan is secured by certain of the equity interests and assets of DDI. The DDI Loan contains a number of covenants, including, but not limited to, a senior leverage ratio and a fixed charge ratio and limits on annual capital expenditures, all of which are as defined in and calculated pursuant to the DDI Loan that, among other things, restrict DDI’s ability to incur additional indebtedness, create liens, make dividends and distributions, engage in mergers, acquisitions and consolidations, make certain payments and investments and dispose of certain assets. As of September 30, 2025, DDI was in default under the DDI Loan due to a debt covenant violation related to the fixed charge ratio. The Company has entered into an amendment to the DDI Loan that waives the event of default for the fiscal quarter ended September 30, 2025. As of the report date, there is some uncertainty as to whether the Company will be in compliance with the covenants in future periods, and if not, when the Company will be able to cure any potential violations. A default may permit the lender to declare the amounts owed under the DDI Loan immediately due and payable, exercise their rights with respect to collateral securing the obligation, and/or exercise any other rights and remedies available. Image Solutions As part of the acquisition of Image Solutions on September 26, 2024, Image Solutions became a wholly owned subsidiary of Steel Bridge Acquisition, LLC ("SB LLC"), and together they borrowed from a bank a principal amount of $7.75 million in the form of a term loan, and established a $0.5 million revolver to finance the acquisition of Image Solutions (together, the "Image Solutions Loan"). The Image Solutions Loan requires monthly payments of principal and interest and has an annual interest rate equal to the greater of the Prime Rate plus 0.5%, or 7.25%. At September 30, 2025, the interest rate was 7.75%. The revolver matures on September 26, 2026 and the term loan matures on September 26, 2030. At September 30, 2025 and December 31, 2024, the balance of the revolver was zero. The Company also recorded as a discount to the carrying value of the Image Solutions Loan issuance costs of $0.2 million specifically related to the Image Solutions Loan. The Image Solutions Loan is carried in the consolidated balance sheets at its amortized cost, which reflects the monthly pay-down of principal as well as the amortization of the debt discount and issuance costs using the effective interest rate method. The fair value of the Image Solutions Loan disclosed in the table above is derived from quoted market prices of B plus to BB minus rated industrial bonds with similar maturities and is categorized within Level 2 of the fair value hierarchy. The Image Solutions Loan is secured by certain of the equity interests and assets of Image Solutions. The Image Solutions Loan contains a number of covenants, including, but not limited to, a senior leverage ratio and a fixed charge ratio, all of which are as defined in and calculated pursuant to the Image Solutions Loan that, among other things, restrict Image Solutions’ ability to incur additional indebtedness, create liens, make dividends and distributions, engage in mergers, acquisitions and consolidations, make certain payments and investments and dispose of certain assets. Roundhouse As part of the acquisition of Roundhouse on July 1, 2025, Roundhouse became a wholly owned subsidiary of Longhorns Acquisition LLC ("Longhorns LLC"), and together they borrowed from a bank a principal amount of $11.0 million in the form of a term loan, and established a $0.5 million revolver to finance the acquisition of Roundhouse. The Roundhouse term loan requires monthly payments of principal and interest and has an annual interest rate equal to the greater of the one-month term Secured Overnight Financing Rate ("SOFR") plus 3.3%, or 5.0%. At September 30, 2025, the interest rate was 7.63%. The term loan and revolver mature on July 1, 2035. At September 30, 2025, the balance of the revolver was zero. The Company also recorded as a discount to the carrying value of the Roundhouse Loan issuance costs of $0.2 million specifically related to the Roundhouse Loan. The Roundhouse Loan is carried in the consolidated balance sheet at September 30, 2025 at its amortized cost, which reflects the monthly pay-down of principal as well as the amortization of the debt discount and issuance costs using the effective interest rate method. The fair value of the Roundhouse Loan disclosed in the table above is derived from quoted market prices of BB rated industrial bonds with similar maturities and is categorized within Level 2 of the fair value hierarchy. The Roundhouse is secured by certain of the equity interests and assets of Roundhouse. The Roundhouse Loan contains a number of covenants, including, but not limited to, a debt service coverage ratio, maximum senior funded debt ratio and maximum total funded debt ratio, all of which are as defined in and calculated pursuant to the Roundhouse Loan that, among other things, restrict Roundhouse’s ability to incur additional indebtedness, create liens, make dividends and distributions, engage in mergers, acquisitions and consolidations, make certain payments and investments and dispose of certain assets. Kingsway Plumbing Holdco LLC In 2025, the Company formed Kingsway Plumbing Holdco LLC ("KPH"), whose subsidiaries include Bud's Plumbing, Advanced Plumbing and Southside Plumbing. As part of the acquisition of Southside Plumbing on August 14, 2025, KPH and its subsidiaries borrowed from a bank a principal amount of $3.75 million in the form of a term loan, and established a $0.5 million revolver. The KPH term loan requires monthly payments of interest and has an annual fixed interest rate of 7.5%. Monthly principal payments on the KPH term loan begin September 14, 2026. The term loan matures on August 14, 2032. The revolver matures on August 14, 2026. At September 30, 2025, the balance of the revolver was zero. The Company also recorded as a discount to the carrying value of the KPH Loan issuance costs of $0.2 million specifically related to the KPH Loan. The KPH Loan is carried in the consolidated balance sheet at September 30, 2025 at its amortized cost, which reflects the amortization of the debt discount and issuance costs using the effective interest rate method. The fair value of the KPH Loan disclosed in the table above is derived from quoted market prices of BBB rated industrial bonds with similar maturities and is categorized within Level 2 of the fair value hierarchy. The KPH is secured by certain of the equity interests and assets of KPH. The KPH Loan contains a number of covenants, including, but not limited to, a debt service coverage ratio, maximum senior funded debt ratio, senior leverage ratio and maximum total funded debt ratio, all of which are as defined in and calculated pursuant to the KPH Loan that, among other things, restrict KPH’s ability to incur additional indebtedness, create liens, make dividends and distributions, engage in mergers, acquisitions and consolidations, make certain payments and investments and dispose of certain assets. KWH In 2019, the Company formed Kingsway Warranty Holdings LLC ("KWH"), whose subsidiaries include IWS Acquisition Corporation ("IWS"), Geminus Holdings Company, Inc. ("Geminus") and Trinity Warranty Solutions LLC ("Trinity"). As part of the acquisition of PWI Holdings, Inc. ("PWI") on December 1, 2020, PWI became a wholly owned subsidiary of KWH, which borrowed a principal amount of $25.7 million from a bank, consisting of a $24.7 million term loan and a $1.0 million revolving credit facility (the "2020 KWH Loan"). The proceeds from the 2020 KWH Loan were used to partially fund the acquisition of PWI and to fully repay the prior outstanding loan at KWH, which occurred on December 1, 2020. The 2020 KWH Loan had an annual interest rate equal to SOFR, having a floor of 0.75%, plus spreads ranging from 2.62% to 3.12%. The 2020 KWH Loan was to mature on December 1, 2025, prior to entering into the third amendment to the KWH Loan further discussed below. The Company also recorded as a discount to the carrying value of the 2020 KWH Loan issuance costs of $0.4 million specifically related to the 2020 KWH Loan. On February 28, 2023, KWH entered into a second amendment to the 2020 KWH Loan (the “KWH DDTL”) that provides for an additional delayed draw term loan in the principal amount of up to $10.0 million, with a maturity date of December 1, 2025. All or any portion of the KWH DDTL, subject to a $2.0 million minimum draw amount, could be requested at any time through February 27, 2024. The proceeds are evidenced by an intercompany loan and guarantee between KAI and KWH. The principal amount shall be repaid in quarterly installments in an amount equal to 3.75% of the original amount of the drawn KWH DDTL. Proceeds from certain assets dispositions, as defined, may be required to be used to repay outstanding draws under the KWH DDTL. The KWH DDTL also increases the senior cash flow leverage ratio maximum permissible for certain periods. During the first quarter of 2024, the Company borrowed $3.5 million under the KWH DDTL and $0.5 million under the KWH Revolver (as defined below). On May 24, 2024, KWH entered into a third amendment to the 2020 KWH Loan that provides for: (1) a new 2024 term loan in the principal amount of $15.0 million, with a maturity date of May 24, 2029 (the “2024 KWH Loan”); and (2) a new 2024 delayed draw term loan in a principal amount of up to $6.0 million, with a maturity date of May 24, 2029 (the “2024 KWH DDTL”). All or any portion of the 2024 KWH DDTL, subject to a $2.0 million minimum draw amount, could be requested at any time in up to three advances through May 24, 2026. In connection with the third amendment, KWH used the proceeds from the 2024 KWH Loan to repay the following outstanding balances under the 2020 KWH Loan: (1) $9.6 million related to the original 2020 term loan; (2) $1.0 million related to the revolver; and (3) $3.1 million related to the KWH DDTL. The 2024 KWH Loan has an annual interest rate equal to SOFR, having a floor of 0.75%, plus spreads ranging from 2.62% to 3.12%. At September 30, 2025, the interest rate was 7.28%. KWH continues to have access to a $1.0 million revolving credit facility (“KWH Revolver”) under the 2020 KWH Loan. The 2020 KWH Loan and the 2024 KWH Loan were not deemed to be substantially different; therefore, the 2024 KWH Loan was accounted for as a modification of the 2020 KHW Loan. The unamortized debt discount and issuance costs from the 2020 KWH Loan at the modification date of $0.2 million were recorded as loss on extinguishment of debt during the second quarter of 2024 since the original debt was fully repaid as part of the modification. During the third and fourth quarters of 2024, $6.0 million was borrowed under the KWH DDTL and $1.0 million was drawn on the KWH Revolver. As of December 31, 2024 and September 30, 2025, both the KWH DDTL and the KWH Revolver are fully drawn. The Company also recorded as a discount to the carrying value of the 2024 KWH Loan issuance costs of $0.1 million specifically related to the 2024 KWH Loan. The 2024 KWH Loan is carried in the consolidated balance sheets at amortized cost, which reflects the quarterly pay-down of principal as well as the amortization of the debt discount and issuance costs using the effective interest rate method. The fair values of the 2024 KWH Loan, 2024 KWH DDTL and KWH Revolver disclosed in the table above are derived from quoted market prices of B and BB minus rated industrial bonds with similar maturities and is categorized within Level 2 of the fair value hierarchy. The 2020 KWH Loan, as amended is secured by certain of the equity interests and assets of KWH and its subsidiaries. The 2024 KWH Loan contains a number of covenants, including, but not limited to, a leverage ratio, a fixed charge ratio and limits on annual capital expenditures, all of which are as defined in and calculated pursuant to the 2024 KWH Loan that, among other things, restrict KWH’s ability to incur additional indebtedness, create liens, make dividends and distributions, engage in mergers, acquisitions and consolidations, make certain payments and investments and dispose of certain assets. SPI On June 15, 2025, the Company's subsidiaries, Systems Products International Inc. ("SPI") and Vertical Market Solutions LLC, together established a $0.3 million revolver with a bank (the "SPI Revolver"). The SPI Revolver has an annual interest rate equal to the Prime Rate. The SPI Revolver matures on July 15, 2026. At September 30, 2025, the balance of the SPI Revolver was zero. (b) Notes payable: As part of the acquisition of Bud's Plumbing on March 14, 2025, Bud's Plumbing became a wholly owned subsidiary of KPH, and together they borrowed from the seller of Bud's Plumbing a principal amount of $1.25 million in the form of a promissory note, to partially finance the acquisition of Bud's Plumbing (the "KPH Note"). The KPH Note was recorded at its estimated fair value of $1.1 million, which included the unpaid principal amount of $1.25 million as of the date of acquisition less a discount of $0.2 million. The KPH Note required monthly payments of principal and interest and had an annual fixed interest rate of 6.00%. The KPH Note was due to mature on April 1, 2030; however on August 7, 2025, the KPH Note was repaid in full to the seller of Bud's Plumbing in exchange for shares of Kingsway common stock. See Note 18, "Shareholders' Equity," for further discussion of the exchange. The settlement of the KPH Note by issuing the Company's common shares is accounted for as a debt extinguishment. The difference between the reacquisition price of the debt and the net carrying amount of the KPH Note at the date of the exchange of $0.1 million recorded as loss on extinguishment of debt in the unaudited consolidated statement of operations for the three and nine months ended September 30, 2025. As part of the acquisition of certain assets from The HR Team, Inc. on August 1, 2025, Ravix borrowed from the seller a principal amount of $0.2 million in the form of a promissory note, to partially finance the acquisition of assets (the "Ravix Note"). The Ravix Note requires quarterly payments of principal and interest beginning October 1, 2025 and has an annual fixed interest rate of 8.00%. The Ravix Note matures on August 1, 2027. As part of the acquisition of Advanced Plumbing on August 1, 2025, Advanced Plumbing borrowed from the seller of Advanced Plumbing a principal amount of $0.5 million in the form of a promissory note, to partially finance the acquisition of Advanced Plumbing (the "AAA Note"). The AAA Note, which is recorded as notes payable in the consolidated balance sheet at September 30, 2025, was recorded at its estimated fair value of $0.4 million, which included the unpaid principal amount of $0.5 million as of the date of acquisition less a discount of $0.1 million. The AAA Note requires quarterly payments of principal and interest beginning November 1, 2025 and has an annual fixed interest rate of 6.00%. The AAA Note matures on August 1, 2030. As part of the acquisition of Southside Plumbing on March 14, 2025, Southside Plumbing became a wholly owned subsidiary of KPH, and together they borrowed from the seller of Southside Plumbing a principal amount of $0.5 million in the form of a promissory note, to partially finance the acquisition of Southside Plumbing (the "Southside Note"). The Southside Note, which is recorded as note payable in the consolidated balance sheet at September 30, 2025, was recorded at its estimated fair value of $0.4 million, which included the unpaid principal amount of $0.5 million as of the date of acquisition less a discount of $0.1 million. The Southside Note requires quarterly payments of principal and interest beginning November 1, 2025 and has an annual fixed interest rate of 6.00%. The Southside Note matures on August 1, 2030. (c) Subordinated debt: On May 22, 2003, a subsidiary trust of the Company issued $15.0 million of 30-year capital securities to third-parties in a private transaction. A corresponding floating rate junior subordinated deferrable interest debenture was then issued by KAI to the trust in exchange for the proceeds from the private sale. The floating rate debenture bears interest at the rate of CME Term SOFR, plus a spread of 4.20%. The Company has the right to call these securities at par value any time after five years from its issuance until its maturity. The subordinated debt, or TruPs, is carried in the consolidated balance sheets at fair value. See Note 21, "Fair Value of Financial Instruments," for further discussion of the subordinated debt. The portion of the change in fair value of subordinated debt related to the instrument-specific credit risk is recognized in other comprehensive (loss) income. Of the $0.5 million increase in fair value of the Company's subordinated debt between December 31, 2024 and September 30, 2025, $0.5 million is reported as increase in fair value of debt attributable to instrument-specific credit risk in the Company's unaudited consolidated statements of comprehensive loss and less than $0.1 million is reported as gain on change in fair value of debt in the Company's unaudited consolidated statement of operations. The agreement governing the remaining subordinated debt contains a number of covenants that, among other things, restrict the Company’s ability to incur additional indebtedness, make dividends and distributions, and make certain payments in respect of the Company’s outstanding securities.

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