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Note 22 - Related Parties
 9 Months Ended
Sep. 30, 2025
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]

NOTE 22 RELATED PARTIES

 

Related party transactions, including services provided to or received by the Company's subsidiaries, are measured in part by the amount of consideration paid or received as established and agreed by the parties. Except where disclosed elsewhere in these unaudited consolidated interim financial statements, the following is a summary of related party relationships and transactions.

 

Argo Management Group, LLC

 

The Company acquired Argo Management Group, LLC ("Argo Management") in April 2016. Argo Management's primary business is to act as Managing Member of Argo Holdings. At  September 30, 2025 and December 31, 2024, each of the Company, John T. Fitzgerald ("Fitzgerald"), the Company's Chief Executive Officer and President, and certain of Fitzgerald’s immediate family members owns equity interests in Argo Holdings, all of which interests were acquired prior to the Company’s acquisition of Argo Management. Subject to certain limitations, Argo Holdings' governing documents require all individuals and entities owning an equity interest in Argo Holdings to fund upon request his/her/its pro rata share of any funding requirements of Argo Holdings up to an aggregate maximum amount equal to his/her/its total capital commitment (each request for funds being referred to as a "Capital Call"). Argo Holdings made no Capital Calls during the nine months ended September 30, 2025 and the year ended  December 31, 2024.  

 

Preferred Stock Private Placements

 

As further described in Note 16, " Redeemable Preferred Stock,":

 

 

•

On September 24, 2024, the Company closed on a private placement for aggregate proceeds totaling $8.3 million, resulting from the sale and issuance of 330,000 shares of Class B Preferred Stock. Fitzgerald, one of Fitzgerald’s immediate family members, certain members of the Company's Board of Directors and members of the KSX Advisory Board invested a total of $5.2 million in the Class B Preferred Stock private placement transaction.

 

•

In February 2025, the Company closed on a private placement for aggregate proceeds totaling $6.0 million, resulting from the sale and issuance of 240,000 shares of Class C Preferred Stock. Certain members of the Company's Board of Directors and one of Fitzgerald’s immediate family members invested a total of $3.7 million in the Class C Preferred Stock private placement transaction.

 

•

On May 8, 2025, the Company closed on a private placement for aggregate proceeds totaling $2.0 million, resulting from the sale and issuance of 80,000 shares of Class D Preferred Stock. Certain members of the Company's Board of Directors invested a total of $2.0 million in the Class D Preferred Stock private placement transaction.

 

VA Lafayette

 

On August 16 2024, the Company closed on the sale of 100% of the membership interests in VA Lafayette to a third-party, who subsequently invested in the Company's private placement transaction that closed on  September 24, 2024 and is a current holder of the Company’s Class B Preferred Stock (refer to Note 5, "Acquisitions and Discontinued Operations," for further detail of the sale of VA Lafayette and Note 16, "Redeemable Preferred Stock," for further detail of the private placement).  The Company determined the sale was an arms-length transaction based upon the purchase price paid compared to the pricing of similar third-party transactions, and given the fact that the terms of the sale were negotiated before the private placement was contemplated.

 

Seller Note Exchange for Common Stock

 

As part of the acquisition of Bud's Plumbing on March 14, 2025, the Company entered into a $1.25 million promissory note ("KPH Note"), with the seller of Bud's Plumbing to partially finance the acquisition of Bud's Plumbing. On  August 7, 2025, the balance of the KPH Note of approximately $1.2 million was repaid in full to the seller of Bud's Plumbing in exchange 82,738 shares of Kingsway common stock issued at $13.90 per share.  The seller is a current employee of Bud's Plumbing.

 

Seller Notes Payable

 

As part of the acquisition of Advanced Plumbing on August 1, 2025, the Company entered into a $0.5 million promissory note, which is recorded as note payable in the consolidated balance sheet (the "AAA Note"), with the seller of Advanced Plumbing to partially finance the acquisition of Advanced Plumbing.  The seller is a current employee of Advanced Plumbing.  The AAA Note matures on August 1, 2030, requires quarterly payments of principal and monthly payments of interest and has an annual fixed interest rate of 6.00%.  

 

As part of the acquisition of Southside Plumbing on August 14, 2025, the Company entered into a $0.5 million promissory note, which is recorded as note payable in the consolidated balance sheet (the "Southside Note"), with the seller of Southside Plumbing to partially finance the acquisition of Southside Plumbing.  The seller is a current employee of Southside Plumbing.  The Southside Note matures on August 1, 2030, requires quarterly payments of principal and monthly payments of interest and has an annual fixed interest rate of 6.00%. 

 

Amounts Payable to Employees 

 

The Company had amounts payable to certain employees who are related parties, primarily representing reimbursable expenses totaling $0.4 million at  September 30, 2025. These employees include management personnel at AAA and Southside Plumbing.  All amounts are non-interest-bearing and are expected to be settled in cash within the normal course of business.

 

Common Stock Private Placement

 

As further described in Note 18, "Shareholders' Equity", on June 24, 2025, the Company entered into a Purchase Agreement with certain third-parties for aggregate gross proceeds of $15.7 million, resulting from the sale of 1,336,264 shares of its Common Stock in a private placement transaction.  Blue Riband Fund LP invested $3.0 million in the Common Stock private placement transaction. Mirabella Financial Services LLP acts as the Investment Manager for Blue Riband Fund LP and is a shareholder known by the Company to be a beneficial owner of more than 5% of the Company’s outstanding common shares.

 

Office Leases 

 

Roundhouse leases its primary office space from an entity owned by the sellers of Roundhouse, one of which is also a current employee of Roundhouse. The lease commenced on July 1, 2025 and provides for monthly rent payments totaling $5.3 million over a term of 10 years. Lease payments are considered to be at rates consistent with those the Company believes could be obtained from an unrelated third party for similar space and terms.  For the three months ended  September 30, 2025, total lease expense of $0.1 million was recognized related to this office lease. 

 

Advanced Plumbing leases its primary office space from an entity owned by the seller of Advanced Plumbing, who is also a current employee of Advanced Plumbing.  The lease commenced on August 1, 2025 and provides for monthly rent payments totaling $0.7 million over a term of 7 years. Lease payments are considered to be at rates consistent with those the Company believes could be obtained from an unrelated third party for similar space and terms.  For the three months ended  September 30, 2025, total lease expense of less than $0.1 million was recognized related to this office lease. 

 

Southside Plumbing leases its primary office space from a current employee of Southside Plumbing.  The lease commenced on August 14, 2025 and provides for monthly rent payments totaling $0.5 million over a term of 7 years. Lease payments are considered to be at rates consistent with those the Company believes could be obtained from an unrelated third party for similar space and terms.  For the three months ended   September 30, 2025, total lease expense of less than $0.1 million was recognized related to this office lease.