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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

 

 

 

Date of report (Date of earliest event reported): November 1, 2022

 

(Exact Name of Registrant as Specified in Its Charter)

 

 

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (312) 766-2144

 

Former Address

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company         ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

On November 1, 2022, CSuite Acquisition, LLC (the “Kingsway Buyer”), a newly formed subsidiary of Kingsway Financial Services Inc. (the “Company” or “Kingsway”), entered into a Membership Interest Purchase Agreement (the “Agreement”) with Arthur J. Cohen and Beth Garden, as Trustees of the Cohen Garden Trust dated July 13, 2015 (the “Cohen Garden Trust”), Realized Potential, LLC, a Delaware limited liability company (“Realized Potential” and, together with the Cohen Garden Trust, the “Sellers”), and Arthur J. Cohen, in his capacity as the Sellers’ Representative (“Sellers’ Representative”) pursuant to which the Kingsway Buyer acquired all of the outstanding equity interests of CSuite Financial Partners, LLC (the “CSuite Interests”). The acquisition was effective as of 12:01 a.m. on November 1, 2022.

 

Pursuant to the terms of the Agreement, as consideration for the CSuite Interests, the Kingsway Buyer paid to the Sellers aggregate cash consideration of approximately $8,500,000, less certain escrowed amounts for purposes of indemnification claims and working capital adjustments as described below (the “Closing Consideration”). The Closing Consideration was paid using cash on hand. The Kingsway Buyer will also pay additional contingent consideration, only to the extent earned, in an aggregate amount of up to $3,550,000 (the “Earnout Payments”), which is subject to certain conditions, including the successful achievement of gross profit for CSuite during the three-year period commencing on the first full calendar month following the date of the Agreement. The Sellers may become entitled to a portion of the Earnout Payments based on the successful achievement of a minimum level of gross profit during the first six months following the date of the Agreement, but in no event shall the Earnout Payments exceed $3,550,000 in the aggregate.

 

The Agreement contains customary representations and warranties and covenants from the Sellers, including but not limited to representations and warranties about the Sellers, CSuite and its business, assets, financial statements, operations, material contracts, liabilities, real property and intellectual property. The Sellers will also be subject to customary indemnification obligations related to breaches or misrepresentations under the Agreement, failure to perform covenants contained in the Agreement and losses related to certain designated pre-closing liabilities and pre-closing taxes. A portion of the Closing Consideration equal to approximately $550,000 was deposited into an escrow account to satisfy indemnification claims and any post-closing working capital adjustments.

 

The Kingsway Buyer also made customary representations and warranties and covenants, including but not limited to representations and warranties about the Buyer’s authority to enter into the transaction and ability to pay the Closing Consideration and the Earnout Payments. The Kingsway Buyer will also be subject to customary indemnification obligations related to breaches or misrepresentations under the Agreement and failure to perform covenants contained in the Agreement.

 

 

On November 1, 2022, Kingsway issued a press release (the “Press Release”) announcing the execution of the Agreement. A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

 

(d) Exhibits.

 

 

* The annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Kingsway agrees to furnish supplementally a copy of such annexes, schedules and exhibits, or any section thereof, to the SEC upon request.

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.