Page 1

☑ KINGSWAY REPORTS SECOND QUARTER 2021 RESULTS Itasca , Illinois ( August 5 , 2021 ) - ( NYSE : KFS ) Kingsway Financial Services Inc. ( “ Kingsway ” or the “ Company ” ) today announced its operating results for the three and six months ended June 30 , 2021 , which includes the following highlights : • Net loss improved to ( $ 0.3 ) million for the three months ended June 30 , 2021 , from a net loss of ( $ 1.4 ) million for the same period in 2020 Non - GAAP adjusted income grew to $ 1 million for the three months ended June 30 , 2021 , compared to a non - GAAP adjusted loss of ( $ 0.5 ) million for the same period in 2020 Extended Warranty segment operating income increased to $ 2.6 million for the three months ended June 30 , 2021 compared to $ 1.3 million for the same period in 2020 , Extended Warranty segment non - GAAP adjusted EBITDA improved to $ 2.7 million for the three months ended June 30 , 2021 , from $ 1.4 million for the same period in 2020 Refer to " Second Quarter Cash Flows " below for an explanation regarding a one - time , $ 11.7 million current quarter cash outflow to operating cash flows . Refer to “ Leased Real Estate ” below for further explanation regarding a $ 2.9 million non - cash , non - recurring increase in other ( expense ) income and tax benefit . Non - GAAP Adjusted Income Loss For the three months ended June 30 , 2021 , non - GAAP adjusted income ( loss ) improved to income of $ 1 million in 2021 , from a loss of ( $ 0.5 ) million in 2020. Included in 2021 are three months of PWI results following its acquisition effective December 1 , 2020 . Reconciliations of net ( loss ) income to non - GAAP adjusted income ( loss ) are presented in the attached schedules . Second Quarter Cash Flows The Company reported year - to - date net cash used in operating activities of ( $ 11.5 ) million , compared to net cash used in operating activities of ( $ 1 ) million for the prior period . A majority of the increase in net cash used in operating activities is related to the monetization of future rental proceeds from the Company's Leased Real Estate segment . During the second quarter of 2021 , the Company borrowed $ 15.0 million , at an interest rate of 3.2 % , against future rental proceeds that were not being used to service the existing mortgage . As a result of this borrowing , the Company paid $ 11.7 million in management and guarantee fees as per the settlement of CMC litigation , of which $ 10.6 million is shown as an operating cash outflow in the statement of cash flows . Had the Company not executed the borrowing , this amount would not have been due or paid . See Note 27 , " Commitments and Contingent Liabilities " , to our 2020 Annual Report on Form 10 - K , for further information on the settlement . As a result of this monetization , the Company retained $ 2.7 million , which it believes it can deploy and earn a return in excess of the stated interest rate on the borrowed funds .