Financial services

KINGSWAY FINANCIAL SERVICES INC: Entering a Material Definitive Agreement, Other Events, Financial Statements and Supporting Documents (Form 8-K)

Section 1.01. Conclusion of a significant definitive agreement.

On November 18, 2022, Acquirer Pegasus LLC (the “Kingsway Buyer”), a newly formed subsidiary of Kingsway Financial Services Inc. (the “Company” or “Kingsway”), has entered into an asset purchase agreement (the “Agreement”) with
Secure Nursing Service, Inc.a California company (“Seller”), Raphael Gofman (“Gofman”), Ella Gofman (“Ella”), and Zhanna Weiss (“Weiss” and, collectively with Gofman and Ella, the “Shareholders” and each, individually, a “Shareholder”) pursuant to which the purchaser of Kingsway has agreed to purchase and assume from the vendor, substantially all of the assets and certain specified liabilities of Seller (the “SNS Interests”). The acquisition was effective as of
00:01 on November 18, 2022.

Pursuant to the terms of the agreement, in consideration for the interest of SNS, the buyer of Kingsway paid the seller an aggregate cash consideration of approximately $10.9 millionless certain amounts escrowed for the purposes of claims and working capital adjustments, as described below (the “Closing Consideration”).

The Agreement contains customary representations, warranties and covenants of the Seller and the Shareholders, including, but not limited to, representations and warranties regarding the Seller, the Shareholders and the business, assets, financial statements, transactions, Seller’s material contracts, liabilities, real estate and intellectual property rights. property. The Vendor and the Shareholders will also be subject to customary indemnification obligations relating to breaches or misrepresentations under the Agreement, breach of covenants contained in the Agreement and losses relating to certain designated liabilities prior to closing. and taxes before closing. A portion of the closing price equal to approximately $1.05 million has been deposited in an escrow account to satisfy claims and any post-closing working capital adjustments.

Buyer of Kingsway has also made customary representations, warranties and covenants, including, but not limited to, representations and warranties regarding Buyer’s authority to enter into the transaction and its ability to pay the fencing. The Kingsway Buyer shall also be subject to customary indemnification obligations relating to breaches or misrepresentations under the Agreement and failure to perform covenants contained in the Agreement.

The closing consideration was funded by a combination of debt financing provided by Signature Bank and cash on hand. Pegasus Acquirer Holdings LLC and
Acquirer Pegasus LLCsubsidiaries of Kingsway, borrowed a total of $6.5 millionin the form of a term loan, and established a $1 million revolver (together, the “loan”) that was not fired at the fence. The loan has a variable interest rate equal to the prime rate plus 0.50%, with a floor of 5.00%. The loan requires monthly installments of principal and interest and the term loan matures on November 18, 2028.

The above description is a summary and does not purport to be complete and is subject, qualified in its entirety by, to the terms of the Agreement which is filed as Exhibit 10.1 to this Report and is incorporated herein by reference.

Section 8.01 Other Events.

On November 21, 2022, Kingsway has issued a press release (the “Press Release”) announcing the signing of the Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial statements and supporting documents.



(d) Exhibits.

Exhibit
Number  Description

10.1 Asset Purchase Agreement by and between Purchaser Pegasus LLC, as Purchaser,

Secure Nursing Service, Inc.as a seller and Raphael GofmanElla Gofman And

Zhanna Weissas shareholders * 99.1 Kingsway Financial Services Inc. Press release from November 21, 2022
104 Cover page interactive data file (integrated in Inline XBRL

document)

* Appendices, schedules and exhibits have been omitted in accordance with Rule SK 601(a)(5). Kingsway agrees to supply a copy of such Schedules, Schedules and Exhibits, or any section thereof, to the SECOND on demand.

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