SCHEDULE: David Capital Partners Boosts Kingsway Stake to 9%

David Capital Partners and Adam J. Patinkin have increased their beneficial ownership in Kingsway Financial Services Inc. to 9.0% through early option exercises and convertible preferred stock.

Summary

• David Capital Partners, LLC, David Capital Partners Fund, LP, David Capital Partners Special Situation Fund, LP, and Adam J. Patinkin (collectively, the "Reporting Persons") now beneficially own an aggregate of 2,615,421.08 shares of Kingsway Financial Services Inc. Common Stock.
• This represents approximately 9.0% of the Company's outstanding Common Stock, based on 28,956,152 shares reported by the Company as outstanding on November 6, 2025.
• The Reporting Persons acquired 1,315,000 additional shares of Common Stock on December 17, 2025, through the early exercise of previously held options.
• DCP Fund exercised options for 275,000 shares at an exercise price of $8.25 per share, totaling $2,268,750.
• DCP Special exercised options for 540,000 shares from Stilwell Value LLC and affiliates at $8.25 per share, totaling $4,455,000.
• DCP Special also exercised options for 500,000 shares from Oakmont Capital Inc. at $8.25 per share, totaling $4,125,000.
• The total cost for these option exercises was $10,848,750, funded by working capital.
• The beneficial ownership also includes 68,421.08 shares of Common Stock that may be acquired upon the conversion of Class D Preferred Stock held by DCP Special, convertible at an initial price of $9.50 per share.

Sentiment

Score: 8

Explanation: The significant increase in beneficial ownership by an activist investor group, coupled with the early exercise of options, suggests strong conviction and a belief in the company's potential for value creation. The stated intentions to potentially influence corporate strategy and governance are typically viewed positively by investors seeking change or improved performance.

Positives

• The Reporting Persons, including activist investor Adam J. Patinkin, have significantly increased their stake, signaling strong conviction in Kingsway Financial Services Inc.
• Early exercise of options, originally set to expire on December 29, 2025, demonstrates a proactive and decisive investment strategy.
• The acquisition of shares at an exercise price of $8.25 per share suggests a belief that the current market price or future value exceeds this level.

Negatives

• The filing does not present any explicit negative financial or operational information about Kingsway Financial Services Inc.

Risks

• The Reporting Persons explicitly state their intent to review their investment and potentially engage in discussions with management and the board, make proposals concerning changes to capitalization, ownership structure, board and senior management composition, or operations of the Company, which could lead to corporate activism and potential management changes.
• Future actions by the Reporting Persons, including selling some or all of their securities or engaging in short selling/hedging, could impact the Company's stock price.

Future Outlook

The Reporting Persons acquired the Common Stock for investment purposes and intend to review their investment on a continuing basis. They may acquire additional shares, dispose of existing shares, or engage in hedging transactions. They also reserve the right to engage with management and the board, discuss with other stockholders, and propose changes to the Company's capitalization, ownership structure, board and senior management composition, or operations.

Management Comments

• Adam J. Patinkin, in his capacity as a director of the Company, or the Company's board of directors with his participation, may propose actions related to the Company's capitalization, ownership structure, board and senior management composition, or operations.

Industry Context

This filing indicates an increased stake by an activist investor group, David Capital Partners, in Kingsway Financial Services Inc. Such moves often precede efforts to influence corporate strategy, operational efficiency, or capital allocation, aligning with broader trends of shareholder activism seeking to unlock perceived value in publicly traded companies.

Comparison to Industry Standards

• NA This filing primarily concerns an investor's stake increase and potential activist intentions, rather than company performance metrics that would be benchmarked against industry standards or comparable companies/projects.

Corporate Governance

Related Party Transactions

• The option agreements were with Stilwell Value LLC (an affiliate of Mr. Stilwell) and Oakmont Capital Inc. for the acquisition of shares.
• DCP Special entered into a subscription agreement with Kingsway Financial Services Inc. for the purchase of Preferred Stock.

Stakeholder Impact

• Shareholders: Potential for increased shareholder value if activist initiatives are successful, but also potential for volatility during periods of activist engagement.
• Management/Board: Increased scrutiny and potential pressure for strategic or operational changes.
• Employees: Potential for changes in company strategy or operations that could impact employees, depending on the nature of any proposed changes.

Next Steps

• The Reporting Persons will continue to review their investment in Kingsway Financial Services Inc. on an ongoing basis.
• They may engage in further communications with the Company's management and/or board of directors and their advisors.
• They may engage in discussions with other stockholders of the Company.
• They may make proposals to the Company concerning changes to capitalization, ownership structure, board and senior management composition, or operations.
• They may purchase additional securities or sell existing securities of the Company.
• They may enter into financial instruments or other agreements that increase or decrease their economic or beneficial exposure to the Company.

Key Dates

Recommendation

The significant increase in beneficial ownership by David Capital Partners, an activist investor group, to 9.0% of Kingsway Financial Services Inc., coupled with the early exercise of options, signals strong conviction in the company's underlying value or potential for improvement. Activist involvement often acts as a catalyst for value creation through strategic, operational, or governance changes. While specific plans are not yet detailed, the stated intent to engage with management and potentially propose changes suggests a proactive approach to unlock shareholder value, making it an attractive 'buy' for investors seeking potential upside from such catalysts.

Keywords

Kingsway Financial Services, David Capital Partners, Adam J. Patinkin, Schedule 13D/A, Beneficial Ownership, Activist Investor, Option Exercise, Preferred Stock Conversion, Investment Strategy, Corporate Governance