KFS Small-Cap Virtual Conference

All right. Thank you, Brendan. Good morning, everyone. Thank you for being here, and thank you to the Sidoti team for having us. As Brendan said, my name is J.T. Fitzgerald, and I am the President and CEO of Kingsway Corporation. As Brendan also said, we trade on the New York Stock Exchange under the ticker KWY. Our tagline here tells you what we do in three words, building through search. As many of you may know, search funds are one of the best returning asset classes, and most investors have never been able to access them. Kingsway is the only public liquid way in, and hopefully over the next 20-25 minutes, I will show you why that is worth your attention. With that, let us get into it. Quickly, here are the usual reminders. Some of what I will share today is forward-looking and includes non-GAAP measures.

These reflect our expectations on what we know today and actual results could differ. Please refer to our SEC filings, including the risk factors in our 2025 annual report on Form 10-K for the full discussion. I will not read all of this, but you feel free to go back and review it at your leisure. Here is a quick framing of who we are. To our knowledge, Kingsway is the only publicly traded U.S. company employing the search fund model to acquire and build great businesses. We own and operate a portfolio of high quality, asset light, growing, profitable B2B and B2C services companies with recurring revenues and strong profitability. Importantly, our goal is to compound long-term shareholder value on a per share basis through a decentralized management model, a talented team of operators, and a tax-advantaged corporate structure. Three parts and one simple through line here.

First, the asset class, why search delivers the returns it does, and why the demographics behind it create a long runway for compounding. Then our value proposition, why Kingsway is the right vehicle to own it. Finally, the flywheel, our strategy and the results that show it is working. Let us first start with the asset class. Why search funds? The simplest answer is they work. The Stanford Graduate School of Business has tracked the asset class since 1984, and the annualized return is 35.1% across 681 search funds. Entrepreneurship through acquisition, or ETA as it is known, has a long, well-documented track record of producing outsized returns by backing talented entrepreneurs to buy and grow small businesses. That is the asset class that we play in. The model works in part because it fills a real structural gap in the market.

On one side, you have a retiring small business owner with no real succession plan, no sons or daughters who want to run the business, no obvious internal buyer. They need a financial exit, but they care deeply about their employees and their legacy. Their business is often too small or lacks the management depth for private equity to treat as a standalone platform. Selling to a strategic competitor or as a tuck-in to a private equity platform can mean layoffs, a loss of legacy, or a poor cultural fit. On the other side, you have a talented, motivated, typically post-MBA operator who can step in, solve the succession problem, and preserve what the founder spent a lifetime building. Search funds are the bridge. It's a genuine win-win, and that alignment is a big part of why sellers choose to sell to Kingsway.

Why does the model outperform? Because a smart, energetic, incentivized operator takes over a business that, quite frankly, isn't often optimized for growth. Founder-led sales becomes a professional sales team. Pen and paper processes become modern systems and technology. A single local market becomes a regional or national footprint. Cash that used to be distributed to the owner gets reinvested into the business. In short, it shifts from a lifestyle business to a growth business. At Kingsway, that's precisely our engine. We target businesses with $1 million-$3 million of EBITDA and pay roughly 4x-6x and finance the acquisition with a roughly 50/50 split of debt and equity. We install a motivated operator with aligned incentives in our business system, KBS, and position the company for growth. The timing couldn't be better.

This is the runway underneath everything we do, and it stretches out for decades. Four pieces define it. Start with the size, nearly $4.8 trillion of net worth changing hands over the next 20 years, the largest intergenerational wealth transfer in U.S. history. Then the volume, more than 2 million small businesses expected to transition leadership over the next 10 years. Look at who isn't there to buy them. The lower middle market private equity is often hesitant to step in when the primary operator wants to exit the day-to-day. Look at who is there. Only a few hundred active searches at any given time. That's the runway. It's enormous. Motivated supply on one side, scarce capable buyers on the other. A supply-demand imbalance that holds for decades. As we like to put it, this is a silver tsunami, and Kingsway is built to ride it.

Outsized returns, a real structural need, and a runway measured in decades. That's the case for the asset class, which raises the obvious question: how do you actually own it? Here's the catch for most investors. This asset class is genuinely hard to access. ETA is a tight-knit world and hard to break into. The best deals flow through close networks to insiders who've spent years there. A newcomer rarely sees the strongest searchers at all, and even if they could, ends up writing small, illiquid, $100,000-$300,000 checks into deals they have to find and vet alone. It's illiquid, hard to access, and difficult to scale. An alternative is a fund of search funds or an accelerator.

That gives you access, but it adds a second layer of fees on top of the carry the searchers themselves earn, which can take a bite out of the underlying returns, and your capital is still locked up for 10 plus years in a fund. Kingsway is the third option, a publicly traded vehicle that gives you instant liquid access to a diversified portfolio of search fund acquisitions, self-funded at scale, with multiple operating platforms already in place, and with public company transparency and reporting built in. One ticker, no second layer of fees, daily liquidity, and public company transparency. Why are we uniquely well positioned to succeed? There are nine reasons on this slide, and they reinforce one another.

A proven track record, real infrastructure and support, disciplined investment criteria, top-quality searcher talent, a world-class advisory board, a public company reputation that opens doors with sellers, a long-term mindset, access to debt capital on competitive terms, and a tax-advantaged structure. Each one of these matters on their own. Together, they're very powerful and hard to replicate. Let me draw out a few here. Let's start with talent, because for us, it's not a slogan, it's the core of the whole strategy. In the last 12 months, we've had over 200 qualified applicants for operator and residence positions. That kind of funnel lets us be extraordinarily selective about who we back. The roster on this slide is our current operating bench, the CEOs running our platforms today, plus our operators and residents, with more OIRs to be announced soon.

These are the people who chose to bet their careers on building something meaningful inside Kingsway. I encourage you to visit our website and read their bios and watch their presentations at our investor days. I think you'll be astounded by the quality of the people running our businesses. A deepening, high caliber operator bench is the single most important investment we make, because in this model, the operator is, in many ways, what makes it work. Our investment criteria haven't changed, and they won't. We buy B2B or B2C services businesses. We target industries that are large and growing, supported by long-term secular tailwinds. We look for fragmented industries with lots of opportunity for shots on goal, and interesting niches where even a small company with a focused operator can have a competitive advantage.

At the company level, we seek high revenue quality, recurring revenue businesses with low customer concentration, strong margins, and a long history of consistent profitability that are also capital light, meaning the businesses don't need to consume cash to grow. That combination is our margin of safety. We are patient, and we stick to it. Our operators don't go it alone. They have access to an active and engaged advisory board of current shareholders that most companies our size could only dream of. Tom Joyce is the former CEO of Danaher, widely regarded as one of the best run companies in history. Tom was instrumental in building the Danaher Business System, the gold standard our own operating system is modeled on. Will Thorndike, many of you know Will as the author of The Outsiders, the seminal text on capital allocation.

But what many people don't know is that Will's also one of the earliest and most prolific investors in search funds. Decades of pattern recognition built over hundreds of reps that our operators and OIRs get to tap into directly. And finally, Tyler Gordy, the former CEO of PWSC, a Kingsway subsidiary that delivered a 10x return when we sold it. Tyler has operated in our structure, helped build and refine KBS and had tremendous success in the process. That's the caliber of coaching and mentorship behind every one of our CEOs. And now to a genuinely differentiated asset, one most companies our size simply don't have, the tax assets. Kingsway carries approximately $620 million of net operating loss carryforwards left over from our legacy insurance business. These are real usable tax assets that shelter future earnings and capital gains.

So more of every dollar we produce drops to the bottom line and we compound faster. Put it together, elite operators, disciplined underwriting criteria, real coaching and mentorship, and a tax structure that makes every dollar compound faster, all inside a public permanent capital vehicle. That combination is hard to replicate and why we believe Kingsway is the best way to own this asset class. So here's the entire strategy in one picture. Acquire a profitable business, invest to grow it, and yes, that often means working through a short J-curve as we put in systems and people to position the business for its next stage. Then reap the increased cash flow and reinvest it into the next acquisition, and then repeat. More acquisitions create more cash flow, which in turn funds more operators and acquisitions. Talent and capital compounding on each other turn after turn. That's the flywheel. Does the model actually work in practice, not just in Stanford's data set?