# EDGAR Filing Document

**Accession Number:** 0001846702
**File Stem:** 0001437749-25-028443
**Filing Date:** 2025-9
**Character Count:** 176187
**Document Hash:** b4baa34ed86ae972fec4d0aec37458d9
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-028443.hdr.sgml**: 20250905

**ACCESSION NUMBER**: 0001437749-25-028443

**CONFORMED SUBMISSION TYPE**: 1-SA

**PUBLIC DOCUMENT COUNT**: 1

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250905

**DATE AS OF CHANGE**: 20250905

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Forge Group, Inc.
- **CENTRAL INDEX KEY:** 0001846702
- **STANDARD INDUSTRIAL CLASSIFICATION:** FIRE, MARINE & CASUALTY INSURANCE [6331]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 854184821
- **STATE OF INCORPORATION:** PA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 1-SA
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 24R-00607
- **FILM NUMBER:** 251295174

**BUSINESS ADDRESS:**
- **STREET 1:** 8401 CONNECTICUT AVENUE
- **STREET 2:** SUITE 300
- **CITY:** CHEVY CHASE
- **STATE:** MD
- **ZIP:** 20815
- **BUSINESS PHONE:** 202-547-8700

**MAIL ADDRESS:**
- **STREET 1:** 8401 CONNECTICUT AVENUE
- **STREET 2:** SUITE 300
- **CITY:** CHEVY CHASE
- **STATE:** MD
- **ZIP:** 20815

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Amalgamated Specialty Group Holdings, Inc.
- **DATE OF NAME CHANGE:** 20210217

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 1**-**SA**

**SEMIANNUAL REPORT PURSUANT TO REGULATION A**

**OF THE SECURITIES ACT OF 1933**

**For the fiscal semiannual period ended June 30, 2025**

**Forge Group, Inc.**

(Exact name of registrant as specified in its charter)

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| | |
|:---|:---|
| **Pennsylvania** | **85-4184821** |
| (State or other incorporation) | (I.R.S. Employer Identification No.) |

---

**P.O. Box 15033**

**Worcester, MA 01605**

(Full mailing address of principal executive offices)

**(202) 547-8700**

(Issuer's telephone number, including area code)

**Common Stock**

(Title of each class of securities issued pursuant to Regulation A)

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**PART II**

**Use of Terms**

Unless the context otherwise requires, as used in this report:

● "ACIC Properties" or "ACP" refers to ACIC Consolidated Properties, LLC, a majority-owned subsidiary of FIC and the intermediate holding company for (i) 717 8<sup>th</sup> Street, LLC, (ii) 2805 M Street, LLC, and (iii) 810 5<sup>th</sup> Street, LLC, each of which directly own commercial real estate in the District of Columbia;

● "the Company," "we," "us," and "our" refer to Forge Group, Inc. and its consolidated subsidiaries;

● "Department" means the District of Columbia Department of Insurance, Securities and Banking;

● "ESOP" means our employee stock ownership plan;

● "FIC" refers to Forge Insurance Company, a licensed property and casualty insurer, and its consolidated subsidiaries;

● "FRM" refers to Forge Risk Management, Inc., a licensed property and casualty insurance producer;

**Special Note Regarding Forward Looking Statements**

Certain information contained in this report includes forward-looking statements. The statements herein which are not historical reflect our current expectations and projections about our company's future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to our company and our management and our interpretation of what is believed to be significant factors affecting the businesses, including many assumptions regarding future events.

Forward-looking statements are generally identifiable by use of the words "may," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition, prospects and opportunities could differ materially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including matters described in this report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this report will in fact occur.

Undue reliance should not be placed on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

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**ITEM 1. MANAGEMENT**'**S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes included elsewhere in this Form 1-SA. Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 1-SA constitutes forward-looking information that involves risks and uncertainties. Please see *Special Note Regarding Forward-Looking Statements* for more information.

**Overview**

Forge Group, Inc. is a Pennsylvania corporation that was organized in 2021. References to the "Company", "we", "us", and "our" refer to the consolidated group. On a stand-alone basis Forge Group, Inc. is referred to as the "Parent Company". The consolidated group consists of the Parent Company, Forge Risk Management, Inc. ("FRM"), an insurance agency, and Forge Insurance Company ("FIC"), an insurance company. FIC is the majority owner (92.3%) of ACIC Consolidated Properties, LLC ("ACP"), a real estate holding company that has three wholly owned subsidiaries, 717 8th Street LLC, 2805 M Street LLC, and 810 5th Street LLC, each of which own commercial real estate in the District of Columbia. References to the Company's financial information in this report are to the financial information for Forge Group, Inc., FIC, and FRM on a consolidated basis.

Through our wholly owned subsidiaries, we operate as a specialist commercial automobile insurance business. FIC was incorporated in the District of Columbia in 1938 and is rated A- by A.M. Best. As of June 30, 2025, FIC was licensed as a property and casualty insurer in 33 states and the District of Columbia. FIC's insurance products are marketed and distributed through FRM, its appointed insurance producer. FRM solicits business directly from customers and works with insurance agency sub-producers, referred to as "distribution partners". As of June 30, 2025, FRM was licensed as a property and casualty insurance producer in 33 states and the District of Columbia. Through our wholly owned subsidiaries, we market and underwrite commercial automobile insurance products. We are focused on delivering these commercial automobile insurance products to small business owners and operators that operate in (i) certain business class segments and (ii) certain geographic markets in the U.S. Historically, we have focused on the public automobile business class segment ("public auto segment") within the commercial automobile insurance line. In the public auto segment, vehicles are used to transport passengers from one location to another. Specifically, we have historically focused on the following public auto sub-segments: taxi cabs, passenger sedans, golf carts, school vans, and other transportation vehicles. More recently, we have developed commercial auto insurance products targeting additional business class segments, namely trade and service providers such as electricians, plumbers, and carpenters (collectively, the "small business segment").

For the six months ended June 30, 2025, we had net premiums written of $14.7 million, net premiums earned of $14.8 million, and net gain attributable to the Company of $1.7 million. For the six months ended June 30, 2024, we had net premiums written of $10.3 million, net premiums earned of $9.8 million, and net loss attributable to the Company of $0.3 million.

**Principal Revenue and Expense Items**

We derive our revenue primarily from premiums earned, net investment income and net realized gains (losses) from investments.

*Gross and net premiums written*

Gross premiums written is equal to direct and assumed premiums before the effect of ceded reinsurance. Net premiums written is the difference between gross premiums written and premiums ceded or paid to reinsurers (ceded premiums written).

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*Premium earned*

Premium earned is the earned portion of our net premium written. Gross premium written includes all premium recorded by an insurance company during a specified policy period. Insurance premiums on property and casualty insurance contracts are recognized in proportion to the underlying risk insured and are earned ratably over the duration of the policies. At the end of each accounting period, the portion of the premium that is not yet earned is included in unearned premium and is realized as revenue in subsequent periods over the remaining term of the policy. Our policies typically have a term of twelve months. Thus, for example, for a policy that is written on July 1 of a given calendar year, one-half of the premiums would be earned in the calendar year in which the policy was written, and the other half would be earned in the following calendar year.

*Net investment income and net realized gains (losses) on investments*

We invest our surplus and the funds supporting our insurance liabilities (including unearned premiums and unpaid losses and loss adjustment expenses) in cash, cash equivalents, fixed maturity securities, equities, and real estate. Investment income includes interest and dividends earned on invested assets. Net realized gains and losses on invested assets are reported separately from net investment income. We recognize realized gains when invested assets are sold for an amount greater than their cost or amortized cost (in the case of fixed maturity securities) and recognize realized losses when investment securities are written down as a result of an other than temporary impairment ("OTTI") or sold for an amount less than their cost or amortized cost, as applicable. Our portfolio of investment securities is managed internally.

*Loss and loss adjustment expense*

Loss and loss adjustment expenses represent the largest expense item and include: (1) claim payments made, (2) estimates for future claim payments and changes in those estimates for prior periods, and (3) costs associated with investigating, defending and adjusting claims.

*Amortization of deferred policy acquisition costs and underwriting and administrative expenses*

Expenses incurred to underwrite policies are referred to as policy acquisition expenses. Variable policy acquisition costs consist of commission expenses, premium taxes, and certain other underwriting expenses that vary with, and are primarily related to, the writing and acquisition of new and renewal policies. These policy acquisition costs are deferred and amortized over the effective period of the related insurance policies. Fixed policy acquisition costs, referred to herein as underwriting and administrative expenses, are expensed as incurred. These costs include salaries, rent, office supplies, depreciation, and all other operating expenses not otherwise classified separately.

*Income taxes*

We use the asset and liability method of accounting for income taxes. Deferred income taxes arise from the recognition of temporary differences between financial statement carrying amounts and the tax basis of our assets and liabilities. A valuation allowance is provided when it is more likely than not that some or all the deferred tax asset will not be realized. The effect of a change in tax rates is recognized in the period of the enactment date.

**Key Financial Measures**

We evaluate our insurance operations by monitoring certain key measures of growth and profitability. In addition to reviewing our financial performance based on results determined in accordance with generally accepted accounting principles in the United States (GAAP), we utilize certain non-GAAP financial measures that we believe are valuable in managing our business and for comparison to our peers. These non-GAAP measures are written premium, loss and loss adjustment expense ratio, expense ratio, GAAP combined ratio, net premiums written to statutory surplus ratio, underwriting income (loss), net income (loss) and return on average equity.

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We measure growth by monitoring changes in gross premiums written and net premiums written. We measure underwriting profitability by examining loss and loss adjustment expense, underwriting expense, loss and loss adjustment expense ratio, expense ratio, GAAP combined ratio, and underwriting income (loss). We measure consolidated profitability by examining net income (loss).

*Premiums written*

Gross premiums written represent the premiums from policies written during the period, before taking into account any premiums ceded to reinsurers. Ceded premiums written represent the premiums ceded to reinsurers during the period. Net premiums written represent the premiums from policies written during the period, less any premiums ceded to reinsurers.

*Loss and loss adjustment expense ratio*

The loss and loss adjustment expense ratio is the ratio (expressed as a percentage) of losses and loss adjustment expenses incurred to premiums earned. We measure the loss ratio on an accident year and calendar year loss basis to measure underwriting profitability. An accident year loss ratio measures losses and loss adjustment expenses for insured events occurring in a particular year, regardless of when they are reported, as a percentage of premiums earned during that year. A calendar year loss ratio measures losses and loss adjustment expense for insured events occurring during a particular year and the change in loss reserves from prior accident years as a percentage of premiums earned during that year.

*Expense ratio*

The expense ratio is the ratio (expressed as a percentage) of underwriting expenses to premiums earned. As described in this report, we define underwriting expenses as policy acquisition costs and other operating expenses attributable to our insurance segment (net of service fee and other income). In calculating our underwriting expenses, we also include the following items: (i) depreciation and amortization expenses attributable to our insurance segment and (ii) rent expense (net of sublease income). The expense ratio measures our operational efficiency in producing, underwriting and administering our insurance business.

*GAAP combined ratio*

Our GAAP combined ratio is the sum of the loss and loss adjustment expense ratio and the expense ratio and measures our overall underwriting profitability. If the GAAP combined ratio is below 100%, we are making an underwriting profit margin. If the GAAP combined ratio is at or above 100%, we are not profitable without investment income and may not be profitable if investment income is insufficient.

*Net premiums written to statutory surplus ratio*

The net premiums written to statutory surplus ratio represents the ratio of net premiums written, after reinsurance ceded, to statutory surplus. This ratio measures our exposure to pricing errors in our current book of business. The higher the ratio, the greater the impact on surplus should pricing prove inadequate.

*Underwriting income (loss)*

Underwriting income (loss) measures the pre-tax profitability of our insurance operations. It is derived by subtracting loss and loss adjustment expense and underwriting expenses from earned premiums.

*Net income (loss) and return on equity*

We use net income (loss) to measure our profit and return on equity to measure our effectiveness in utilizing equity to generate net income. In determining return on equity for a given year, net income (loss) is divided by the beginning equity for that year.

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**Critical Accounting Policies**

The preparation of financial statements in accordance with GAAP requires both the use of estimates and judgment relative to the application of appropriate accounting policies. We are required to make estimates and assumptions in certain circumstances that affect amounts reported in our financial statements and related footnotes. We evaluate these estimates and assumptions on an on-going basis based on historical developments, market conditions, industry trends and other information that we believe to be reasonable under the circumstances. There can be no assurance that actual results will conform to our estimates and assumptions and that reported results of operations will not be materially adversely affected by the need to make accounting adjustments to reflect changes in these estimates and assumptions from time to time. Our critical accounting policies are more fully described in Item 2, *Management Discussion and Analysis of Financial Condition and Results of Operations* presented in our 2024 Annual Report and is incorporated by reference as if set forth herein. There have been no changes in our critical accounting policies since December 31, 2024.

**Results of Operations**

Our results of operations are influenced by factors affecting the commercial automobile insurance industry in general. The operating results of the United States commercial automobile insurance industry are subject to significant variations due to competition, weather, catastrophic events, regulation, general economic conditions, judicial trends, fluctuations in interest rates and other changes in the investment environment.

Our premium growth and underwriting results have been, and continue to be, influenced by market conditions. Pricing in the commercial automobile insurance industry has historically been cyclical. During a soft market cycle, price competition is more significant than during a hard market cycle and makes it difficult to attract and retain properly priced business, which has a negative effect on premium growth. A hard market typically has a positive effect on premium growth.

The major components of operating revenues and net income (loss) for the six months ended June 30, 2025 and 2024 are as follows:

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| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Revenues |  |  |
| Net premiums earned | $14771 | $9803 |
| Income from real estate held for investment | 1092 | 1102 |
| Investment income, net of investment expense | 944 | 805 |
| Realized investment losses, net | (21) | (339) |
| Unrealized gains (losses) on equity securities, net | 226 | 347 |
| Other income | 43 | 18 |
| Total revenues | 17055 | 11735 |
| Expenses |  |  |
| Loss and loss adjusting expense | 8531 | 5852 |
| Policy acquisition costs and other operating expenses | 6019 | 4923 |
| Depreciation and amortization | 592 | 592 |
| Interest expense | 551 | 568 |
| Other expenses | 116 | 118 |
| Total expenses | 15809 | 12053 |
| Income (loss) before income taxes | 1246 | (318) |
| Income tax expense (benefit) | 4 | 37 |
| Net income (loss) attributable to noncontrolling interest | 1 | (2) |
| Net income (loss) | 1241 | (353) |
| Total other comprehensive earnings (loss) | 437 | 42 |
| Comprehensive income (loss) | $1679 | $(313) |

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***Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024***

*Premiums*

For the six months ended June 30, 2025, our gross premiums written were $15.7 million, compared to $11.1 million for the comparable period in 2024. This represents an increase of $4.6 million, or 41%, for the six months ended June 30, 2025, compared to the comparable period in 2024. The increase is primarily due to an increase in the number of active distribution partners. We define active distribution partners as those agencies that have submitted business that has been written by the Company. For the six months ended June 30, 2025, we had 212 active distribution partners compared to 166 for the comparable period in 2024. This represents an increase of 46, or 28%, for the six months ended June 30, 2025, compared to the comparable period in 2024.

For the six months ended June 30, 2025, we ceded to reinsurers $975 thousand of premiums written, compared to $829 thousand for the comparable period in 2024. The increase in ceded premiums written is due to the increase in our direct premiums written. For the six months ended June 30, 2025 and June 30, 2024, ceded premiums written as a percentage of gross premiums written were 6% and 8%, respectively.

For the six months ended June 30, 2025, our net premiums written were $14.7 million, compared to $10.3 million for the comparable period in 2024. This represents an increase of $4.4 million, or 43%, for the six months ended June 30, 2025, compared to the comparable period in 2024. The increase is due to the increase in direct premiums written.

For the six months ended June 30, 2025, our net premiums earned were $14.8 million, compared to $9.8 million for the comparable period in 2024. This represents an increase of $5.0 million, or 51%, for the six months ended June 30, 2025 compared to the comparable period in 2024. Premiums are earned ratably over the term of the policy whereas premiums written are recorded on the effective date of the policy.

*Income from real estate held for investment*

Real estate assets held for the production of income, were valued at $28.6 million as of June 30, 2025 and $28.9 million as of December 31, 2024. The Company's real estate assets generated income of $1.1 million for both the six months ended June 30, 2025 and June 30, 2024.

*Investment income and realized gains (losses)* 

Our investment portfolio, excluding real estate assets held for the production of income, is generally highly liquid and 95% and 93% of the fixed income portfolio consisted of readily marketable, investment-grade fixed-income securities as of June 30, 2025 and December 31, 2024, respectively. The remainder of the portfolio is generally comprised of unrated fixed income securities, preferred stocks, common stocks, and limited partnership interests in funds which primarily invest in small-capitalization public equities. Net investment income is primarily comprised of interest earned and dividends paid on these securities, net of related investment expenses, and excludes realized gains and losses.

For the six months ended June 30, 2025, net investment income was $944 thousand, compared to $805 thousand for the comparable period in 2024. This represents an increase of $139 thousand, or 17%, compared to the comparable period in 2024. This increase is primarily due to an increase in the average balance of fixed maturity securities and redeemable preferred stock for the six months ended June 30, 2025 compared to the comparable period in 2024. Excluding real estate held for the production of income, cash and invested assets were $53.2 million and $47.8 million as of June 30, 2025 and December 31, 2024, respectively.

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*Unrealized gains (losses) on equity securities, net*

For the six months ended June 30, 2025, net unrealized gains (losses) on equity securities were $0.2 million, compared to $0.3 million for the comparable period in 2024. This represents a decrease of $0.1 million compared to the comparable period in 2024. Changes in the value of our equity securities can be unpredictable from period-to-period and generally track the overall performance of major U.S. stock indices.

*Loss and loss adjusting expense*

The table below details our unpaid losses and loss adjustment expenses ("LAE") for the six months ended June 30, 2025 and 2024:

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| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Unpaid losses and LAE at beginning of year: |  |  |
| Gross | $12344 | $8426 |
| Ceded | 2015 | 690 |
| Net | 10329 | 7736 |
| Increase (decrease) in incurred losses and LAE: |  |  |
| Current year | 8858 | 5970 |
| Prior years | (327) | (118) |
| Total incurred | 8531 | 5852 |
| Loss and LAE payments for claims incurred: |  |  |
| Current year | 2973 | 2010 |
| Prior years | 2568 | 1774 |
| Total paid | 5541 | 3784 |
| Net unpaid losses and LAE at end of year | 13319 | 9804 |
| Unpaid losses and LAE at end of year: |  |  |
| Gross | 15555 | 10842 |
| Ceded | 2236 | 1038 |
| Net | $13319 | $9804 |

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Differences from the initial reserve estimates emerged as changes in the ultimate loss estimates were updated through the reserve analysis process. The recognition of the changes in initial reserve estimates occurred over time as claims were reported, initial case reserves were established, initial reserves were reviewed and updated in light of additional information, and ultimate payments were made on the collective set of claims incurred as of that evaluation date. The new information on the ultimate settlement value of claims is updated until all claims in a defined set are settled. As a small insurer with a narrow product portfolio, our loss and loss adjustment expense experience will ordinarily exhibit fluctuations from period-to-period. While management attempts to identify and react to systematic changes in the loss environment, management must also consider the volume of experience directly available to us and interpret any particular period's indications with a realistic technical understanding of the reliability of those observations.

For the six months ended June 30, 2025, net losses and LAE incurred were $8.5 million, compared to $5.9 million for the comparable period in 2024. The calendar year loss and loss adjustment expense ratios were 57.8% and 59.7% for the six months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, we experienced net favorable development relative to the December 31, 2024 reserve estimates of $327 thousand, primarily from the 2023 accident year. For the six months ended June 30, 2024, we experienced net favorable development relative to the December 31, 2023 reserve estimates of $118 thousand, primarily from the 2023 accident year.

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*Policy acquisition costs and other operating expenses*

For the six months ended June 30, 2025, our policy acquisition costs and other operating expenses totaled $6.0 million, compared to $4.9 million for the comparable period in 2024. This represents an increase of $1.1 million compared to the comparable period in 2024. The increase was primarily the result of higher commission expenses and other variable costs associated with higher premium revenue.

*Expense ratio*

Our expense ratio is calculated by dividing our underwriting expenses by net premiums earned. We use the expense ratio to evaluate the operating efficiency of our insurance operations.

For the six months ended June 30, 2025, our underwriting expenses were $6.2 million, comprised of (i) $6.0 million of policy acquisition costs and other operating expenses, (ii) $137 thousand of depreciation and amortization expense (primarily related to the amortization of intangible assets associated with our acquisition of FRM), (iii) $36 thousand of net lease expenses (lease expense net of sublease income), and (iv) offset by $43 thousand of service fee and other income. For the six months ended June 30, 2024, our underwriting expenses were $5.1 million, comprised of (i) $4.9 million of policy acquisition costs and other operating expenses, (ii) $133 thousand of depreciation and amortization expense (primarily related to the amortization of intangible assets associated with our acquisition of FRM), (iii) $19 thousand of net lease expenses (lease expense net of sublease income), and (iv) offset by $18 thousand of service fee and other income.

For the six months ended June 30, 2025, our expense ratio was 41.6% compared to 51.6% for the comparable period in 2024, which represents a decrease of 10.0%. The decrease is due primarily to growth in our premium revenue while focusing on managing our fixed costs. We expect our expense ratio to continue to decline over time as our premium revenue grows.

*Underwriting results*

The table below details our underwriting results for the six months ended June 30, 2025 and 2024.

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| | | |
|:---|:---|:---|
|  | **For the six months ended** | **For the six months ended** |
|  | **June 30,** | **June 30,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Net premiums earned | $14771 | $9803 |
| Loss and loss adjusting expense | (8531) | (5852) |
| Underwriting expense | (6150) | (5057) |
| Underwriting income (loss) | $90 | $(1106) |
| Loss and loss adjustment expense ratio | 57.8% | 59.7% |
| Expense ratio | 41.6% | 51.6% |
| Combined ratio | 99.4% | 111.3% |

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*Income tax expense (benefit)*

For the six months ended June 30, 2025, we reported a net income tax expense of $4 thousand. This amount reflects a $123 thousand deferred income tax benefit recognized in other comprehensive income, offset by $89 thousand of federal income tax expense and $38 thousand of state income tax expense, primarily related to the activities of our agency subsidiary, FRM.

We have operated at a net loss for several years and, as of both June 30, 2025 and December 31, 2024, maintained a full valuation allowance against our net deferred tax assets. Based on our current full-year forecast, we expect to report profitability in 2025 and will no longer be in a three-year cumulative loss position at year-end. These conditions may support the partial release of our valuation allowance as part of our year-end reporting. The timing and amount of any release will depend on our final results for 2025 and our assessment of the more-likely-than-not realization of our deferred tax assets under applicable accounting guidance.

Although we have significant net operating loss carryforwards available, our ability to use them to offset taxable income is subject to limitations. Under current U.S. federal tax law, NOLs generated after 2017 may only offset up to 80% of taxable income in any given year. In addition, a substantial portion of our NOLs is subject to annual utilization limits under Internal Revenue Code Section 382, which generally restricts their use to offset any taxable income generated by our insurance company subsidiary. As a result of these limitations, we expect to incur some federal income tax expense in 2025 despite our cumulative NOL position.

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**Financial Position**

The major components of our assets and liabilities as of June 30, 2025 and December 31, 2024 are as follows:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **June 30,** | **December 31,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Assets |  |  |
| Investments and cash: |  |  |
| Fixed maturity, at fair value (amortized cost - $34,806 at June 30, 2025 and $32,770 at December 31, 2024) | $34493 | $31908 |
| Redeemable preferred stock, at fair value | 1058 | 1074 |
| Perpetual preferred stock, at fair value | 70 | 95 |
| Common stock, at fair value | 1488 | 1287 |
| Other invested assets | 5189 | 3609 |
| Real estate held for the production of income, net | 28625 | 28931 |
| Short-term investments | 600 |  |
| Cash and cash equivalents | 11237 | 10833 |
| Total investments and cash | 82760 | 77737 |
| Accrued investment income | 306 | 288 |
| Premiums and reinsurance balances receivable | 10208 | 11872 |
| Ceded unearned premiums | 143 | 109 |
| Reinsurance balances recoverable on unpaid losses | 2236 | 2015 |
| Deferred policy acquisition costs | 499 | 491 |
| Straight line rent receivable | 2460 | 2453 |
| Leases in place | 2196 | 2302 |
| Right-of-use asset, net | 28 | 55 |
| Goodwill and other intangibles | 5675 | 5809 |
| Other assets | 1583 | 1577 |
| Total assets | $108094 | $104706 |
| Liabilities and Equity |  |  |
| Liabilities: |  |  |
| Unpaid losses and loss adjusting expenses | $15555 | $12344 |
| Unearned premiums | 15645 | 15667 |
| Reinsurance balances payable | 13 | 90 |
| Notes payable | 25224 | 25612 |
| Defined benefit plan | 1 |  |
| Accrued expenses | 2256 | 2852 |
| Operating lease liability | 34 | 298 |
| Other liabilities | 518 | 691 |
| Total liabilities | 59246 | 57554 |
| Mezzanine equity: |  |  |
| Preferred stock |  |  |
| Additional paid-in capital | 5227 | 5227 |
| Shareholders' equity: |  |  |
| Common stock | 21 | 21 |
| Treasury stock | (283) | (210) |
| Additional paid-in capital | 16913 | 16591 |
| Unearned employee stock ownership plan shares | (1421) | (1421) |
| Retained earnings | 28965 | 27957 |
| Accumulated other comprehensive income (loss), net of tax | (1276) | (1714) |
| Noncontrolling interest | 702 | 701 |
| Total equity | 48848 | 47152 |
| Total liabilities and equity | $108094 | $104706 |

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*Unpaid losses and LAE*

Our reserves for unpaid loss and LAE are summarized below:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **June 30,** | **December 31,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Case reserves | $8541 | $7812 |
| IBNR reserves | 4778 | 2517 |
| Net unpaid loss and LAE | 13319 | 10329 |
| Reinsurance recoverable on unpaid loss and LAE | 2236 | 2015 |
| Gross reserves for unpaid loss and LAE | $15555 | $12344 |

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*Actuarial ranges*

The selection of the ultimate loss is based on information unique to each line of business and accident year and the judgment and expertise of our actuary and management. The following table provides case and IBNR reserves for losses and loss adjustment expenses as of June 30, 2025 and December 31, 2024.

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| | | | |
|:---|:---|:---|:---|
| **As of June 30, 2025** |  |  |  |
|  | **Case** | **IBNR** | **Total** |
| *(dollars in thousands)* | **Reserves** | **Reserves** | **Reserves** |
| Commercial auto liability | $8200 | $4694 | $12894 |
| Commercial auto physical damage | 341 | 84 | 425 |
| Total net amount | 8541 | 4778 | 13319 |
| Reinsurance recoverables | 1316 | 920 | 2236 |
| Total gross amounts | $9857 | $5698 | $15555 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **As of December 31, 2024** |  |  |  | **Actuarially Determined** | **Actuarially Determined** |
|  |  |  |  | **Range of Estimates** | **Range of Estimates** |
|  | **Case** | **IBNR** | **Total** |  |  |
| *(dollars in thousands)* | **Reserves** | **Reserves** | **Reserves** | **Low** | **High** |
| Commercial auto liability | $7411 | $2392 | $9803 | $7954 | $9320 |
| Commercial auto physical damage | 401 | 125 | 526 | 1032 | 1242 |
| Total net amount | 7812 | 2517 | 10329 | 8986 | 10562 |
| Reinsurance recoverables | 1081 | 934 | 2015 | 1844 | 2459 |
| Total gross amounts | $8893 | $3451 | $12344 | $10830 | $13021 |

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On an annual basis, our independent actuary completes an actuarial review of our reserves. As part of this annual reserve review, our actuary determined a range of reasonable reserve estimates which reflect the uncertainty inherent in the loss reserving process. This range does not represent the range of all possible outcomes. We believe that the actuarially determined ranges represent reasonably likely loss and LAE estimates; however actual results could differ significantly from these estimates. The range was determined by line of business and accident year after a review of the output generated by the various actuarial methods utilized. The actuary reviewed the variance around the selected loss reserve estimates for each of the actuarial methods and selected reasonable low and high estimates based on his knowledge and judgment. In addition, when selecting these low and high estimates, the actuary considered:

● historical industry development experience in our business line;

● historical company development experience;

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● the impact of court decisions on insurance coverage issues, which can impact the ultimate cost of settling claims;

● changes in our internal claims processing policies and procedures; and

● trends and risks in claim costs, such as risk that medical cost inflation could increase.

Our actuary is required to exercise a considerable degree of judgment in the evaluation of all of these and other factors in the analysis of our loss and LAE reserves, and related range of anticipated losses. Because of the level of uncertainty impacting the estimation process, it is reasonably possible that different actuaries would arrive at different conclusions. The method of determining the reserve range has not changed and the reserve range generated by our actuary is consistent with the observed development of our loss reserves over the last few years.

The width of the range in reserves arises primarily because specific losses may not be known and reported for some period and the ultimate losses paid and loss adjustment expenses incurred with respect to known losses may be larger than currently estimated. The ultimate frequency or severity of these claims can be very different than the assumptions we used in our estimation of ultimate reserves for these exposures.

Specifically, the following factors could impact the frequency and severity of claims, and therefore, the ultimate amount of loss and LAE paid:

● the rate of increase in labor costs, medical costs, and material costs that underlie insured risks;

● development of risk associated with our expanding producer relationships and our growth in new states or states where we currently have small market share; and

● impact of changes in laws or regulations.

The estimation process for determining the liability for unpaid loss and LAE inherently results in adjustments each year for claims incurred (but not paid) in preceding years. Negative amounts reported for claims incurred related to prior years are a result of claims being settled for amounts less than originally estimated (favorable development). Positive amounts reported for claims incurred related to prior years are a result of claims being settled for amounts greater than originally estimated (unfavorable development). For the six months ended June 30, 2025, we experienced net favorable development on prior year reserves of $0.3 million.

*Investments*

Our fixed maturity and equity securities investments are classified as available-for-sale and carried at estimated fair value as determined by management based upon quoted market prices or a recognized pricing service at the reporting date for those or similar investments. Changes in unrealized investment gains or losses on our fixed maturity investments, net of applicable income taxes, are reflected directly in equity as a component of comprehensive income (loss) and, accordingly, have no effect on net income (loss). Changes in fair value of equity securities are recognized as a component of current earnings. Investment income is recognized when earned, and capital gains and losses are recognized when investments are sold, or other-than-temporarily impaired.

Fair values of interest rate sensitive instruments may be affected by increases and decreases in prevailing interest rates which generally translate, respectively, into decreases and increases in fair values of fixed maturity investments. The fair values of interest rate sensitive instruments also may be affected by the credit worthiness of the issuer, prepayment options, relative values of other investments, the liquidity of the instrument, and other general market conditions.

At June 30, 2025, our fixed maturity portfolio had net unrealized losses of $0.2 million compared to net unrealized losses of $0.8 million at December 31, 2024. The improvement in our unrealized position reflects the overall decline in market interest rates since the elevated levels reached in 2022. The significant rise in prevailing interest rates during 2022 had reduced the fair value of our fixed maturity holdings, resulting in substantial unrealized losses at that time. As interest rates have generally trended lower over the past two years, the fair value of our fixed income securities has recovered, reversing much of those prior unrealized losses.

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The Company monitors the credit quality of its fixed income investments to assess if it is probable that the Company will receive its contractual or estimated cash flows in the form of principal and interest, in accordance with their terms. All fixed income securities in the investment portfolio continue to pay the expected coupon payments in accordance with the contractual terms of the securities. Credit-related impairments on fixed income securities that the Company does not plan to sell, and for which the Company is not more likely than not to be required to sell, are recognized in income before income taxes. Any non-credit related impairment is recognized in comprehensive income. Based on the Company's analysis, the fixed income portfolio is of high credit quality, and it is believed it will recover the amortized cost basis of the fixed income securities.

Under the current allowance for credit losses model, an entity evaluates fixed maturity securities classified as available-for-sale for impairment when fair value is less than amortized cost. If the entity intends to sell the security, or if it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the entire difference between amortized cost and fair value is recognized in earnings. If neither condition is met, the entity evaluates whether a credit loss exists by comparing the present value of expected cash flows to the amortized cost basis. Any expected credit losses are recognized through an allowance for credit losses, with corresponding adjustments to earnings. Subsequent improvements or deteriorations in expected cash flows adjust the allowance and are recognized through earnings. Amounts related to changes in fair value not attributable to credit losses are recognized in other comprehensive income. Recognition of a credit loss allowance does not reduce the amortized cost basis of the investment.

The Company regularly evaluates its fixed maturity securities using both quantitative and qualitative criteria to determine impairment losses for other-than-temporary declines in the fair value of the investments. The following are the key factors used to determine whether a security is other-than-temporarily impaired:

● The extent to which the fair value is less than cost,

● The assessment of significant adverse changes to the cash flows on a fixed maturity investment,

● The occurrence of a discrete credit event resulting in the issuer defaulting on a material obligation, the issuer seeking protection from creditors under the bankruptcy laws, the issuer proposing a voluntary reorganization under which creditors are asked to exchange their claims for cash or securities having a fair value substantially lower than par value,

● The probability that the Company will recover the entire amortized cost basis of the fixed income securities prior to maturity, or

● The ability and intent to hold fixed maturities until maturity.

Quantitative and qualitative criteria are considered to varying degrees depending on the sector for which the analysis is being performed. The sectors are as follows:

*Corporate securities*

The Company performs a qualitative evaluation of holdings that fall below the price threshold. The analysis begins with an opinion of industry and competitive position. This includes an assessment of factors that enable the profit structure of the business (e.g., reserve profile for exploration and production companies), competitive advantage (e.g., distribution system), management strategy, and an analysis of trends in return on invested capital. Analysts may also review other factors to determine whether an impairment exists, including liquidity and asset value cash flow generation.

*Municipal securities*

The Company analyzes the screened impairment candidates on a quantitative and qualitative basis. This includes an assessment of the factors that may be contributing to an unrealized loss and whether the recovery value is greater or less than current market value.

*Asset backed securities*

The Company uses the "stated assumptions" analytic approach which relies on actual 6-month average collateral performance measures (voluntary prepayment rate, gross default rate, and loss severity) sourced through third party data providers or remittance reports. The analysis applies the stated assumptions throughout the remaining term of the transaction using forecasted cash flows, which are then applied through the transaction structure (reflecting the priority of payments and performance triggers) to determine whether there is a loss to the security ("Loss to Tranche").

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For all fixed maturity securities and redeemable preferred stock in an unrealized loss position on June 30, 2025 and December 31, 2024, the Company believes it is probable that it will receive all contractual payments in the form of principal and interest. In addition, the Company is not required to, nor does it intend to sell these investments prior to recovering the entire amortized cost basis for each security, which may be maturity. Accordingly, the fixed maturity securities and redeemable preferred stock in an unrealized loss position were not other-than-temporarily impaired on June 30, 2025 and December 31, 2024.

The schedule below summarizes the fair values of those fixed maturity securities and redeemable preferred stock in an unrealized loss position at June 30, 2025 and December 31, 2024. The schedule further classifies the securities based on the length of time they have been in an unrealized loss position.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(dollars in thousands)* | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** |
|  | **Less than 12 months** | **Less than 12 months** | **12 months or more** | **12 months or more** | **Total** | **Total** |
|  | **Fair** | **Unrealized** | **Fair** | **Unrealized** | **Fair** | **Unrealized** |
|  | **value** | **losses** | **value** | **losses** | **value** | **losses** |
| Fixed maturity securities: |  |  |  |  |  |  |
| U.S. government | $- | $- | $551 | $(78) | $551 | $(78) |
| Municipals | 2305 | (25) | 6014 | (162) | 8319 | (187) |
| Corporate securities | 1795 | (38) | 1161 | (170) | 2956 | (208) |
| Asset backed securities |  |  | 898 | (302) | 898 | (302) |
| Total fixed maturity securities | $4100 | $(63) | $8624 | $(712) | $12724 | $(775) |
| Redeemable preferred stock |  |  | 1058 | (116) | 1058 | (116) |
| Total temporarily impaired AFS securities | $4100 | $(63) | $9682 | $(828) | $13782 | $(891) |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(dollars in thousands)* | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Less than 12 months** | **Less than 12 months** | **12 months or more** | **12 months or more** | **Total** | **Total** |
|  | **Fair** | **Unrealized** | **Fair** | **Unrealized** | **Fair** | **Unrealized** |
|  | **value** | **losses** | **value** | **losses** | **value** | **losses** |
| Fixed maturity securities: |  |  |  |  |  |  |
| U.S. government | $255 | $(1) | $565 | $(60) | $820 | $(61) |
| States, territories and possessions | 212 | (3) |  |  | 212 | (3) |
| Political subdivisions | 4120 | (101) | 1529 | (73) | 5649 | (174) |
| Special revenue | 3184 | (85) | 5011 | (201) | 8195 | (286) |
| Industrial and miscellaneous | 2770 | (49) | 1192 | (213) | 3962 | (262) |
| Asset backed securities |  |  | 898 | (302) | 898 | (302) |
| Total fixed maturity securities | $10541 | $(239) | $9195 | $(849) | $19736 | $(1088) |
| Redeemable preferred stock |  |  | 1074 | (87) | 1074 | (87) |
| Total temporarily impaired AFS securities | $10541 | $(239) | $10269 | $(936) | $20810 | $(1175) |

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*Other Investments*

In order to diversify its investment portfolio and improve expected returns, the Company has made non-controlling (typically less than 5%) investments in a number of unaffiliated, specialized equity investment vehicles (limited partnerships and one limited liability company), which are included in other invested assets. Such investments are broadly diversified and in the aggregate are about 6% of the Company's investment portfolio. The limited partnerships generally limit or preclude redemptions within a period of time (the "lock-up" period, usually between one and three years) from the date of the investment. Subsequent to the expiry of any applicable lock-up periods, withdrawals or redemptions generally require between 30 to 90 days advance notice, with redemptions being permitted on dates varying from month-end to annually, but typically quarter end. The Company also holds an equity investment in Trustar Bank, a related entity.

The Company holds one limited partnership, EAS Investors I, LP, and one closely held equity interest, Stream-IT.app Inc, that do not produce audited GAAP financial statements. The Company determined that both investments were other than temporarily impaired and as of June 30, 2025 and December 31, 2024 the Company had written down both of these assets to $0. The Company recognized a net impairment loss of $559 thousand in 2024 on these two assets and had previously recognized an impairment loss of $818 thousand on these two assets in 2023. The impairment loss recorded was included in net realized investment gains (losses) in each year.

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Since, amongst other qualifying criteria, these other invested assets do not have a readily determined fair value, the Company values them applying the guidance of Accounting Standards Update Subtopic 820-10, *Fair Value Measurements and Disclosures* — *Overall*, which, as a practical expedient, permits the fair value of investments within its scope to be measured on the basis of net asset value per share (or its equivalent).

On August 29, 2022, the Company's Finance and Investment Committee approved an investment commitment of $2.5 million to Mutual Capital Investment Fund, LP ("MCIF"). The Company had a $1.2 million unfunded commitment to MCIF and a carrying value in the investment of $1.5 million as of June 30, 2025.

*Deferred policy acquisition costs*

Certain direct acquisition costs consisting of commissions, premium taxes and certain other direct underwriting expenses that vary with and are primarily related to the production of business are deferred and amortized over the effective period of the related insurance policies as the underlying policy premiums are earned. As of June 30, 2025 and December 31, 2024, deferred acquisition costs and the related unearned premium reserves, which does not include ceded unearned premiums, were as follows:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
| *(dollars in thousands)* | **June 30, 2025** | **December 31, 2024** |
| Deferred policy acquisition costs, net | $499 | $491 |
| Unearned premium reserves | $15645 | $15667 |

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The method followed in computing deferred acquisition costs limits the amount of deferred costs to their estimated realizable value, which gives effect to the premium to be earned, related investment income, loss and loss adjustment expenses, and certain other costs expected to be incurred as the premium is earned. Future changes in estimates, the most significant of which is expected loss and loss adjustment expenses, may require adjustments to deferred policy acquisition costs. If the estimation of net realizable value indicates that the deferred acquisition costs are not recoverable, they would be written off.

*Income taxes*

We use the asset and liability method of accounting for income taxes. Deferred income taxes arise from the recognition of temporary differences between financial statement carrying amounts and the tax bases of our assets and liabilities. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. The effect of a change in tax rates is recognized in the period of the enactment date.

We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed continually as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record an additional valuation allowance against our deferred tax assets.

As of June 30, 2025 and December 31, 2024, we had no material unrecognized tax benefits or accrued interest and penalties. Federal tax years 2022 through 2024 are open for examination.

*Other assets*

As of June 30, 2025 and December 31, 2024, other assets totaled $1.6 million for each measurement date.

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*Right-of-use asset and operating lease liability*

The Company previously leased three office suites, totaling 9,544 square feet, in Chevy Chase, Maryland under a non-cancellable operating lease that commenced in July 2016 with an original 15-year term and an early termination option after the 10th lease year. The lease provided for a 2.5% annual increase in the base rent on the anniversary of the lease commencement date. We also had an option to extend the lease for one 5-year renewal term at the fair market rent as of the date of the renewal term commencement, which we elected not to exercise. In accordance with Topic 842, we had recorded an operating lease liability, representing the discounted present value of future lease payments and a right-of-use asset related to this lease. On June 30, 2025, we exercised the early termination option of this lease, eliminating all remaining lease obligations related to the Chevy Chase premises as of that date.

Prior to the lease termination, the Company had subleased the entire Chevy Chase office space under three separate agreements. The first sublease commenced October 1, 2017, and was amended in 2024 to expire concurrently with our early termination date. The second sublease commenced July 1, 2021, and expired June 30, 2024; however, we negotiated an early surrender with the landlord effective September 30, 2024, reducing our remaining lease liability. The third sublease commenced June 1, 2022, and expired May 31, 2025. Sublease income was recognized on a straight-line basis over the sublease terms, and cumulative differences between lease expense and lease payments were reflected as adjustments to the right-of-use asset.

Consistent with our expectation to exercise the early termination option, we had previously reduced the operating lease liability to the present value of committed future payments and fully impaired the right-of-use asset for the Chevy Chase leases. As of June 30, 2025, following the early termination, the Company has no further right-of-use assets or lease liabilities related to these premises.

Separately, in September 2022 we entered into a lease for a 1,579-square-foot office suite in Bethesda, Maryland. This operating lease expires January 31, 2026 and includes a 3.25% annual increase in base rent on each anniversary of the commencement date.

The following summarizes the line items in the balance sheet which include amounts for operating leases as of June 30, 2025 and December 31, 2024:

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| | | | |
|:---|:---|:---|:---|
|  | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** |
|  | **Operating** |  |  |
| *(dollars in thousands)* | **Lease** | **Sublease** | **Net** |
| Right-of-use asset | $148 | $- | $148 |
| Accumulatied amortization | (119) |  | (119) |
| Impairment of RoU |  |  |  |
| Right-of-use asset, net | $28 | $- | $28 |
| Operating lease liability | $34 | $- | $34 |

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| | | | |
|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Operating** |  |  |
| *(dollars in thousands)* | **Lease** | **Sublease** | **Net** |
| Right-of-use asset | $2451 | $(650) | $1801 |
| Accumulatied amortization | (1793) | 587 | (1206) |
| Impairment of RoU | (541) |  | (541) |
| Right-of-use asset, net | $117 | $(62) | $55 |
| Operating lease liability | $372 | $(73) | $298 |

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We had lease expense of $99 thousand and $105 thousand for the six months ended June 30, 2025 and 2024, respectively. In addition, we had sub-lease income of $62 thousand and $86 thousand for the six months ended June 30, 2025 and 2024, respectively, resulting in a net lease expense of $36 thousand and $19 thousand for the six months ended June 30, 2025 and 2024, respectively.

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The components of lease expense and supplemental cash flow information related to leases as of June 30, 2025 and December 31, 2024 are as follows:

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| | | |
|:---|:---|:---|
|  | **June 30,** | **December 31,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Cash paid for leases | $- | $- |
| Remaining lease term (years) | 1.00 | 1.50 |
| Weighted average annual discount rate | 3.50% | 3.50% |

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| | | |
|:---|:---|:---|
|  | **June 30,** | **December 31,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Sum of remaining payments | $35 | $379 |
| Less: imputed interest | (1) | (7) |
| Net present value of remaining payments | 34 | 372 |
| Less: net present value of sublease rent |  | (73) |
| Operating lease liability, net | $34 | $298 |

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Future minimum lease payments for the lease outlined above as of June 30, 2025 are as follows:

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| | |
|:---|:---|
|  | **Minimum** |
| *(dollars in thousands)* | **Commitments** |
| 2025 | $30 |
| 2026 | 5 |
| 2027 |  |
| 2028 |  |
| 2029 |  |
| Thereafter |  |
|  | $35 |

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**Liquidity and Capital Resources**

We generate sufficient funds from our operations and maintain a high degree of liquidity in our investment portfolio to meet the demands of claim settlements and operating expenses. The primary sources of funds are premium collections, investment earnings and maturing investments.

We maintain investment and reinsurance programs that are intended to provide sufficient funds to meet our obligations without forced sales of investments. We maintain a portion of our investment portfolio in relatively short-term and highly liquid assets to ensure the availability of funds.

Cash flows from continuing operations for the six months ended June 30, 2025 and 2024 were as follows:

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| | | |
|:---|:---|:---|
|  | **For the six-months ended** | **For the six-months ended** |
|  | **June 30,** | **June 30,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Cash flows provided by operating activities | $4978 | $1687 |
| Cash flows (used in)/provided by in investing activities | (3979) | 1354 |
| Cash flows (used in) financing activities | (595) | (769) |
| Net increase in cash and cash equivalents | $404 | $2272 |

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For the six months ended June 30, 2025, net cash provided by operating activities was $5.0 million, compared to $1.7 million for the same period in 2024. The year-over-year increase was primarily driven by growth in premium revenue, which generated higher cash inflows from policyholder receipts. Net cash used in investing activities was $4.0 million for the six months ended June 30, 2025, compared to $1.4 million of net cash provided in the prior-year period. The use of cash in 2025 reflects the deployment of funds into fixed maturity securities and other investments designed to support future policyholder obligations and enhance investment income. Net cash used in financing activities was $0.6 million for the six months ended June 30, 2025, compared to $0.8 million for the same period in 2024. Financing outflows for the period ended June 30, 2025 included the repurchase of 6,452 shares of Company stock for $73 thousand, which were recorded as treasury stock. Financing outflows for the period ended June 30, 2024 included the repurchase of 16,000 shares of Company stock for $140 thousand, which were recorded as treasury stock.

Our principal source of liquidity will be dividend payments and other fees received from FIC and FRM. FIC is restricted by the insurance laws of District of Columbia as to the amount of dividends or other distributions it may pay to us. Under District of Columbia law, there is a maximum amount that may be paid by FIC during any twelve-month period. FIC may pay dividends to us after notice to, but without prior approval of the District of Columbia Department of Insurance, Securities and Banking in an amount "not to exceed" the lesser of (i) 10% of the surplus as regards policyholders of FIC as reported on its most recent annual statement filed with the Department, or (ii) the statutory net income of FIC for the period covered by such annual statement. Dividends in excess of this amount are considered "extraordinary" and are subject to the approval of the Department.

FIC's ability to pay dividends is subject to restrictions contained in the insurance laws of District of Columbia, which require that dividends be approved by the District of Columbia Department of Insurance prior to their payment. Prior to its payment of any dividend, FIC is required to provide notice of the dividend to the Department. This notice must be provided to the Department 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The Department has the power to limit or prohibit dividend payments if FIC is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity.

**Off-Balance Sheet Arrangements**

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital reserves.

**Quantitative and Qualitative Information about Market Risk**

**Market Risk**

Market risk is the risk that we will incur losses due to adverse changes in the fair value of financial instruments. We have exposure to three principal types of market risk through our investment activities: (i) interest rate risk, (ii) credit risk and (iii) equity risk. Our primary market risk exposure is to changes in interest rates. We have not entered, and do not plan to enter, into any derivative financial instruments for hedging, trading or speculative purposes.

**Interest Rate Risk**

Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. Our exposure to interest rate changes primarily results from our significant holdings of fixed rate investments. Fluctuations in interest rates have a direct impact on the fair value of these securities.

The average maturity of the debt securities in our investment portfolio at June 30, 2025, was 4.0 years. Our debt securities investments include U.S. government bonds, securities issued by government agencies, obligations of state and local governments and governmental authorities, and corporate bonds, most of which are exposed to changes in prevailing interest rates and which may experience moderate fluctuations in fair value resulting from changes in interest rates. We carry these investments as available for sale. This allows us to manage our exposure to risks associated with interest rate fluctuations through active review of our investment portfolio by our management and board of directors.

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Fluctuations in near-term interest rates could have an impact on our results of operations and cash flows. Certain of these securities may have call features. In a declining interest rate environment these securities may be called by their issuer and replaced with securities bearing lower interest rates. If we are required to sell these securities in a rising interest rate environment, we may recognize losses.

As a general matter, we attempt to match the durations of our assets with the durations of our liabilities. Our investment objectives include maintaining adequate liquidity to meet our operational needs, optimizing our after-tax investment income, and our after-tax total return, all of which are subject to our tolerance for risk.

The table below shows the interest rate sensitivity of our fixed maturity investments measured in terms of fair value (which is equal to the carrying value for all of our investment securities that are subject to interest rate changes) as of June 30, 2025:

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| | | |
|:---|:---|:---|
| *(dollars in thousands)* | **As of June 30, 2025** | **As of June 30, 2025** |
|  | **Estimated** |  |
|  | **Change in** | **Fair** |
| **Hypothetical Change in Interest Rates** | **Fair Value** | **Value** |
| 200 basis point increase | $(2441) | $33245 |
| 100 basis point increase | $(1247) | $34439 |
| No change | $- | $35686 |
| 100 basis point decrease | $1294 | $36980 |
| 200 basis point decrease | $2641 | $38327 |

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**Impact of Inflation**

Inflation increases our customers' needs for property and casualty insurance coverage due to the increase in the value of the property covered and any potential liability exposure. Inflation also increases claims incurred by property and casualty insurers as property repairs, replacements and medical expenses increase. These cost increases reduce profit margins to the extent that rate increases are not implemented on an adequate and timely basis. We establish property and casualty insurance premiums levels before the amount of losses and loss expenses, or the extent to which inflation may impact these expenses, are known. Therefore, we attempt to anticipate the potential impact of inflation when establishing rates.

**Real Estate Held for the Production of Income**

FIC owns 92.3% of ACIC Consolidated Properties, LLC ("ACIC Properties"), the intermediate holding company for 717 8<sup>th</sup> Street, LLC, 2805 M Street, LLC, and 810 5<sup>th</sup> Street, LLC. Through its wholly owned subsidiaries, ACIC Properties owns and leases three commercial real estate properties located in the District of Columbia. The properties are leased to tenants and the leases are primarily triple net with 10 to 20-year terms. The operations of ACIC Properties may be considered a separate business segment.

FIC has determined that ACIC Properties' commercial leases should be treated as "operating leases" for purposes of GAAP, and operating lease income and expense is recognized on a straight-line basis over the life of the leases. Straight line rent on leased assets represents the cumulative difference between the actual cash receipts for rent and the rental income recorded in the financial statements, which is calculated on a straight-line basis. Straight line rent for each of the six months ending June 30, 2025 and 2024 was $1.1 million.

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The properties are comprised of the following as of June 30, 2025 and December 31, 2024.

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| | | | |
|:---|:---|:---|:---|
|  | **June 30,** | **December 31,** | **Depreciable** |
| *(dollars in thousands)* | **2025** | **2024** | **lives (in years)** |
| Land | $12000 | $12000 |  |
| Building and improvements | 21457 | 21457 | 39 |
| Leasehold/tenant improvements | 931 | 931 | 15 |
| Furniture, fixtures & equipment | 1081 | 1081 | 7 |
| Real estate held for the production of income | 35469 | 35469 |  |
| Accumulated depreciation | (6844) | (6538) |  |
| Real estate held for the production of income, net | $28625 | $28931 |  |

---

Depreciation expense for each of the six months ended June 30, 2025 and 2024 was $306 thousand.

810 5<sup>th</sup> Street, LLC, a wholly owned subsidiary of ACIC Properties, has a mortgage with a financial institution that matures in February 2036 and has a fixed interest rate of 4.15% per annum. A balloon payment of $9.1 million is due at maturity. Debt service payments equal to 95% of 810 5th Street, LLC's net rental proceeds, less an amount for replacement reserves and fees, are due monthly. The loan is secured by the property, held by 810 5th Street, LLC, and a replacement reserve, shown as long-term restricted cash of $114,365 and $102,112 as of June 30, 2025 and 2024, respectively, which is held in escrow, and is not guaranteed by FIC. The replacement reserve is included in other receivables. The property held by 810 5<sup>th</sup> Street, LLC is leased to a single tenant, the District of Columbia, on a triple-net basis. The initial term of the lease expires in February 2036, at which time the tenant has an option to extend the term of the lease for an additional five years. As of June 30, 2025 and 2024, monthly debt service payments were $131 thousand and $127 thousand, respectively. The mortgage balance outstanding at 810 5<sup>th</sup> Street, LLC as of June 30, 2025 and December 31, 2024 was $21.5 million and $21.9 million, respectively, before netting unamortized finance costs of $0.9 million and $1.0 million, respectively.

In addition to the mortgage at 810 5<sup>th</sup> Street, LLC, ACIC Properties, through its wholly owned subsidiaries 717 8<sup>th</sup> Street, LLC and 2805 M Street, LLC, has two commercial lines of credit with the same financial institution that mature in November 2025. The Company plans to refinance these loans before maturity. The commercial lines of credit are secured by the properties held by 717 8<sup>th</sup> Street, LLC and 2805 M Street, LLC and are not guaranteed by FIC. The properties held by 717 8<sup>th</sup> Street, LLC and 2805 M Street, LLC are leased to commercial tenants on a triple-net basis. As of June 30, 2025 and 2024, the interest rate for both commercial lines of credit was 4.25% per annum. The interest rate for both commercial lines of credit is fixed at 4.25% until November 2025. For the six months ending June 30, 2025 and 2024, monthly debt service payments for these commercial lines of credit were $35 thousand. The outstanding balance on the commercial lines of credit as of June 30, 2025 and December 31, 2024 was $4.7 million and $4.8 million, respectively, before netting unamortized finance costs of $3 thousand and $7 thousand, respectively.

Finance costs incurred are being amortized over the terms of the mortgage and commercial lines of credit. Interest expense included $47 thousand of amortized finance costs for each of the six months ended June 30, 2025 and 2024.

------

Long-term debt maturity is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **December 31,** |
| *(dollars in thousands)* | **2025** | **2024** |
| Current maturity | $5380 | $5448 |
| Current portion of unamortized finance costs | (90) | (94) |
| Current maturity, net of unamortized finance costs | 5290 | 5354 |
| Long-term maturity | 20776 | 21144 |
| Unamortized finance costs, net of current portion | (842) | (886) |
| Long-term maturity, net of unamortized finance costs | 19934 | 20258 |
| Notes payable | $25224 | $25612 |

---

Long-term debt maturities as of June 30, 2025, for the twelve-month periods ending June 30, were as follows:

---

| | |
|:---|:---|
| *(dollars in thousands), for the twelve-month period ending June 30* | *(dollars in thousands), for the twelve-month period ending June 30* |
| 2027 | $793 |
| 2028 | 877 |
| 2029 | 966 |
| 2030 | 1061 |
| 2031 | 1161 |
| Thereafter | 15918 |
| Total long-term maturities | 20776 |
| Unamortized finance costs, net of current portion | (842) |
| Long-term maturity, net of unamortized finance costs | $19934 |

---

Future rental income from non-cancelable operating leases as of June 30, 2025, for the twelve-month period ending June 30, were as follows:

---

| | |
|:---|:---|
| *(dollars in thousands), for the twelve-month period ending June 30* | *(dollars in thousands), for the twelve-month period ending June 30* |
| 2026 | $2055 |
| 2027 | 2252 |
| 2028 | 2213 |
| 2029 | 1948 |
| 2030 | 1910 |
| Thereafter | 11740 |
| Future rental income from non-cancellable operating leases | $22118 |

---

In conjunction with the acquisition of the real estate, the following lease assets and liabilities were acquired and are being amortized throughout the remaining terms of the leases as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **December 31,** |
| *(dollars in thousands)* | **2025** | **2025** |
| Acquired leases | $4164 | $4164 |
| Accumulated amortization, acquired leases | (1968) | (1862) |
| Acquired leases, net of accumulated amortization | $2196 | $2302 |

---

Amortization expense for each of the six months ending June 30, 2025 and 2024 was $105 thousand.

------

**ITEM 2. OTHER INFORMATION**

None

**ITEM 3. FINANCIAL STATEMENTS**

**Unaudited Consolidated Forge Group, Inc.** 

Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024

Condensed Consolidated Statements of Earnings and Comprehensive Earnings (unaudited) for the six months ended June 30, 2025 and 2024

Condensed Consolidated Statements of Stockholders' Equity (unaudited) for the six months ended June 30, 2025 and 2024

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2025 and 2024

Notes to Unaudited Condensed Consolidated Financial Statements

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**Forge Group, Inc. and Subsidiaries**<br> **Consolidated Financial Statements**

Periods Ended June 30, 2025 and December 31, 2024

------

**Forge Group, Inc. and Subsidiaries**<br> **Consolidated Financial Statements**<br> Periods Ended June 30, 2025 and December 31, 2024

------

**Table of Contents**

---

| | |
|:---|:---|
| Consolidated balance sheets | 25 |
| Consolidated statements of earnings and comprehensive earnings | 26 |
| Consolidated statements of stockholders' equity | 27 |
| Consolidated statements of cash flows | 28 |
| Notes to consolidated financial statements | 29 |

---

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**Forge Group, Inc. and Subsidiaries**<br> Condensed Consolidated Balance Sheets<br> Periods Ended June 30, 2025 and December 31, 2024

------

---

| | | |
|:---|:---|:---|
|  | As of | As of |
|  | June 30, | December 31, |
|  | 2025 | 2024 |
|  | (Unaudited) |  |
| Assets |  |  |
| Investments and cash: |  |  |
| Fixed maturity securities, at fair value (amortized cost of $34,806,325 and $32,769,612, at June 30, 2025 and December 31, 2024, respectively) | $34492446 | $31908421 |
| Redeemable preferred stock, at fair value | 1058209 | 1073753 |
| Perpetual preferred stock, at fair value | 70142 | 94703 |
| Common stock, at fair value | 1488438 | 1287045 |
| Other invested assets | 5189237 | 3608871 |
| Real estate held for the production of income, net | 28624677 | 28930813 |
| Short-term investments | 600066 |  |
| Cash and cash equivalents | 10990624 | 10596788 |
| Restricted cash | 246217 | 236223 |
| Total investments and cash | 82760056 | 77736617 |
| Accrued investment income | 305709 | 288182 |
| Premium and reinsurance balances receivable | 10208188 | 11871576 |
| Ceded unearned premiums | 142884 | 109266 |
| Reinsurance balances recoverable on unpaid losses | 2235501 | 2014624 |
| Deferred policy acquisition costs | 498899 | 490728 |
| Straight line rent receivable | 2460326 | 2452969 |
| Leases in place | 2196182 | 2301599 |
| Right-of-use asset, net | 28354 | 54822 |
| Goodwill and other intangibles | 5675166 | 5808791 |
| Other assets | 1582431 | 1577265 |
| Total assets | $108093696 | $104706439 |
| Liabilities and Equity |  |  |
| Liabilities: |  |  |
| Unpaid losses and loss adjustment expenses | $15554953 | $12344042 |
| Unearned premium | 15645258 | 15666680 |
| Reinsurance balances payable | 12996 | 89746 |
| Accrued expenses | 2256076 | 2852209 |
| Notes payable | 25223576 | 25612226 |
| Defined benefit plan unfunded liability | 525 |  |
| Operating lease liability, net | 33808 | 298076 |
| Other liabilities | 519161 | 690775 |
| Total liabilities | 59246353 | 57553754 |
| Mezzanine equity: |  |  |
| Preferred stock, without par value, authorized 1,000,000 shares, 550,000 shares outstanding at June 30, 2025 and December 31, 2024 |  |  |
| Additional paid-in capital | 5227000 | 5227000 |
| Stockholders' equity |  |  |
| Common stock, $0.01 par value, authorized 10,000,000 shares, with 2,057,614 shares issued and outstanding at June 30, 2025 and 2,044,149 shares issued and outstanding at December 31, 2024. | 20868 | 20669 |
| Treasury stock | (282634) | (210049) |
| Additional paid-in capital | 16913153 | 16591296 |
| Unearned employee stock ownership plan shares | (1420650) | (1420650) |
| Retained earnings | 28964631 | 27957203 |
| Accumulated other comprehensive loss, net of tax | (1277342) | (1714267) |
| Non-controlling interest | 702317 | 701482 |
| Total equity | 48847343 | 47152684 |
| Total liabilities and equity | $108093696 | $104706439 |

---

------

**Forge Group, Inc. and Subsidiaries**<br> Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited)<br> For the Six Months Ended June 30, 2025 and 2024

------

---

| | | |
|:---|:---|:---|
|  | For the six months ended | For the six months ended |
|  | June 30, | June 30, |
|  | 2025 | 2024 |
| **Revenues** |  |  |
| Net premiums earned | $14771138 | $9802959 |
| Income from real estate held for investment | 1091867 | 1101609 |
| Net investment income | 943854 | 804522 |
| Net realized investment gains (losses) | (20885) | (339486) |
| Net unrealized gains (losses) on equity securities | 226511 | 347297 |
| Service fee and other income | 42853 | 17612 |
| Total revenues | 17055338 | 11734513 |
| **Expenses** |  |  |
| Losses and loss adjustment expenses | 8531371 | 5851682 |
| Policy acquisition costs and other operating expenses | 6019444 | 4922655 |
| Depreciation and amortization | 592357 | 592357 |
| Real estate operating expense | 79147 | 98552 |
| Interest expense on debt | 550648 | 568022 |
| Lease expense | 98847 | 105036 |
| Sublease income | (62413) | (85795) |
| Total expenses | 15809401 | 12052509 |
| Loss before income taxes | 1245937 | (317996) |
| Income tax expense (benefit) |  |  |
| Deferred income tax expense (benefit) | 3924 | 36532 |
| Total income tax expense (benefit) | 3924 | 36532 |
| Net Loss | 1242013 | (354528) |
| Net loss (gain) attributable to non-controlling interest | (835) | 1782 |
| Net loss attributable to Forge Group Inc. | 1241178 | (352746) |
| Other comprehensive income (loss), net of tax |  |  |
| Unrealized gains and losses on investments: |  |  |
| Unrealized holding (losses) gains on AFS securities arising during the period, net of income tax expense (benefit) of $127,112 and ($11171), respectively | 436925 | 6341 |
| Reclassification adjustment for losses (gains) included in net income, net of income tax (benefit) expense of $0 and $9,485, respectively | 0 | 35683 |
| Total other comprehensive (loss) income | 436925 | 42024 |
| Comprehensive (loss) income | $1678938 | $(312504) |
| Earnings per share: |  |  |
| Basic: |  |  |
| Basic net (loss) earnings per share | $0.61 | $(0.17) |
| Diluted: |  |  |
| Diluted net (loss) earnings per share | $0.47 | $(0.13) |
| Weighted average number of common shares outstanding: |  |  |
| Basic | 2050882 | 2047191 |
| Diluted | 2651339 | 2649065 |

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------

**Forge Group, Inc. and Subsidiaries**<br> Condensed Consolidated Statements of Stockholders' Equity (Unaudited)<br> For the Six Months Ended June 30, 2025 and 2024

------

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Preferred<br> stock |  | Common<br> Stock | Unearned employee |  |  | Accumulated |  |  |
|  |  | Additional |  | Additional | stock |  |  | other | Non- |  |
|  | Preferred<br> stock | paid-in<br> capital | Common<br> stock | paid-in<br> capital | ownership<br> plan shares | Treasury<br> Stock | Retained<br> earnings | comprehensive<br> (loss) income | controlling<br> interest | Total equity |
| **Balance January 1, 2024** | $- | $5227000 | $20570 | $16603712 | $(1826550) | $(70049) | $27371682 | $(2152417) | $700351 | $45874299 |
| Net loss attributable to Forge Group Inc. |  |  |  |  |  |  | (352746) |  |  | (352746) |
| Unrealized holding gains on AFS securities arising during the period, net |  |  |  |  |  |  |  | 6341 |  | 6341 |
| Reclassification adjustment for gains included in net income |  |  |  |  |  |  |  | 35683 |  | 35683 |
| Defined benefit plan, net of income tax expense |  |  |  |  |  |  |  |  |  |  |
| Issuance of shares, net of expenses |  |  | 99 | (99) |  |  |  |  |  |  |
| Buyback of Shares - placed into treasury stock |  |  |  |  |  | (140000) |  |  |  | (140000) |
| Distribution of employee stock ownership plan shares |  |  |  | (202950) | 202950 |  |  |  |  |  |
| Share-based compensation |  |  |  | 203396 |  |  |  |  |  | 203396 |
| Dividends incurred on preferred stock |  |  |  |  |  |  | (233750) |  |  | (233750) |
| Net loss attributable to non-controlling interest |  |  |  |  |  |  |  |  | (1782) | (1782) |
| **Balance June 30, 2024** | $- | $5227000 | $20669 | $16604059 | $(1623600) | $(210049) | $26785186 | $(2110393) | $698569 | $45391441 |
| **Balance January 1, 2025** | $- | $5227000 | $20669 | $16591296 | $(1420650) | $(210049) | $27957203 | $(1714267) | $701482 | $47152684 |
| Net gain attributable to Forge Group Inc. |  |  |  |  |  |  | 1241178 |  |  | 1241178 |
| Unrealized holding gains on AFS securities arising during the period, net |  |  |  |  |  |  |  | 436925 |  | 436925 |
| Reclassification adjustment for (losses) gains included in net income |  |  |  |  |  |  |  |  |  |  |
| Defined benefit plan, net of income tax expense |  |  |  |  |  |  |  |  |  |  |
| Issuance of shares, net of expenses |  |  | 99 | (99) |  |  |  |  |  |  |
| Buyback of Shares - placed into treasury stock |  |  |  |  |  | (72585) |  |  |  | (72585) |
| Distribution of employee stock ownership plan shares |  |  |  |  |  |  |  |  |  |  |
| Share-based compensation |  |  |  | 222056 |  |  |  |  |  | 222056 |
| Exercise of Options |  |  | 100 | 99900 |  |  |  |  |  | 100000 |
| Dividends incurred on preferred stock |  |  |  |  |  |  | (233750) |  |  | (233750) |
| Net gain attributable to non-controlling interest |  |  |  |  |  |  |  |  | 835 | 835 |
| **Balance June 30, 2025** | $- | $5227000 | $20868 | $16913153 | $(1420650) | $(282634) | $28964631 | $(1277342) | $702317 | $48847343 |

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**Forge Group, Inc. and Subsidiaries**<br> Condensed Consolidated Statements of Cash Flows (Unaudited)<br> For the Six Months Ended June 30, 2025 and 2024

------

---

| | | |
|:---|:---|:---|
|  | For the six months ended | For the six months ended |
|  | June 30, | June 30, |
|  | 2025 | 2024 |
| **Cash flows from operating activities:** |  |  |
| Net gain/(loss) attributable to Forge Group | $1241178 | $(352746) |
| Adjustments to reconcile net gain/(loss) to net cash provided by operating activities: |  |  |
| Net realized capital loss on investments | 20885 | 339486 |
| Net unrealized gains on equity securities | (226511) | (347297) |
| Depreciation of property and equipment | 306136 | 306135 |
| Amortization of intangibles | 133625 | 133625 |
| Deferred income taxes, net | (116145) | (11171) |
| Net amortization of premiums and discounts on investments | (211596) | (89237) |
| Stock compensation and employee stock ownership plan | 221858 | 202950 |
| Amortization on acquired leases and finance costs | 152596 | 152597 |
| Interest expense | (2224) | (1369) |
| Non-controlling interest | (835) | (1782) |
| Changes in assets and liabilities which provided (used) cash: |  |  |
| Premiums and reinsurace balances receivable | 1663388 | 826016 |
| Deferred policy acquisition costs | (8171) | (53813) |
| Ceded unearned premiums | (33618) | (33815) |
| Reinsurance balances payable | (76750) | (23500) |
| Reinsurance balances recoverable on unpaid losses | (220877) | (348200) |
| Accrued investment income | (17527) | (1555) |
| Straight line rent receivable | (7357) | (44577) |
| Right-of-use asset, net | 26468 | 46602 |
| Other assets | (5166) | 53995 |
| Unpaid losses and loss expenses | 3210911 | 2417005 |
| Unearned premiums | (21422) | 498352 |
| Accrued expenses and other liabilities | (786869) | (1691521) |
| Operating lease liability | (264268) | (295165) |
| Defined benefit plan unfunded liability | 525 | 5794 |
| Net cash provided by operating activities | 4978233 | 1686809 |
| **Cash flows from investing activities:** |  |  |
| Purchases of: |  |  |
| Fixed maturity securities and redeemable preferred stock, available for sale | (2731658) | (682917) |
| Common stock and perpetual preferred stock | (317383) | (112290) |
| Short-term investments | (600066) |  |
| Other invested assets | (1367313) |  |
| Proceeds from sales, maturities and calls of: |  |  |
| Fixed maturity securities and redeemable preferred stock, available for sale | 866641 | 1587198 |
| Common stock and perpetual preferred stock | 113369 | 1251 |
| Other invested assets | 56991 | 560641 |
| Net cash (used in)/provided by investing activities | (3979419) | 1353883 |
| **Cash flows from financing activities:** |  |  |
| Proceeds from exercise of stock options | 100000 |  |
| Purchase of treasury stock | (72585) | (140000) |
| Dividends paid to preferred stock owners | (233750) | (233750) |
| Repayments of borrowed funds | (388650) | (395307) |
| Net cash used in financing activities | (594985) | (769057) |
| Net increase in cash and cash equivalents | 403830 | 2271635 |
| Cash and cash equivalents at beginning of year | 10833011 | 7194357 |
| Cash and cash equivalents at end of period | 11236841 | 9465992 |
| Cash and cash equivalents | 10990624 | 9235896 |
| Restricted cash | 246217 | 230096 |
| Cash, cash equivalents and restricted cash | $11236841 | $9465992 |
| **Supplemental information:** |  |  |
| Federal income tax paid | $200000 | $- |
| Interest paid | $550648 | $568022 |

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

**Note 1** – **Description of Business**

Forge Group, Inc. is a Pennsylvania corporation that was organized in 2021. References to the "Company", "we", "us", and "our" refer to the consolidated group. On a stand-alone basis Forge Group, Inc. is referred to as the "Parent Company". The consolidated group consists of the Parent Company, Forge Risk Management, Inc. ("FRM"), an insurance agency, and Forge Insurance Company ("FIC"), an insurance company that is the majority owner (92.3%) of ACIC Consolidated Properties, LLC ("ACP"), a real estate holding company that has three wholly owned subsidiaries, 717 8th Street LLC, 2805 M Street LLC, and 810 5th Street LLC.

The Company operates as a specialist property and casualty insurance business. FIC was incorporated in the District of Columbia in 1938. As of June 30, 2025, FIC is licensed as a property and casualty insurer in 33 states and the District of Columbia. FIC's principal business consists of underwriting commercial automobile insurance products targeted to small business owners and operators. Historically, FIC has focused on the public automobile business class segment within the commercial automobile insurance line. Vehicles within the public automobile business class segment are used to transport passengers from one location to another. In this business class segment, operation of the commercial vehicle is generally the primary source of business revenue. Specifically, FIC has historically underwritten insurance for the following public automobile business classes: taxi cabs, passenger sedans, golf carts, school vans, and other light transportation vehicles. FIC has developed commercial auto insurance products targeting additional business class segments, namely trade and service providers such as electricians, plumbers, and carpenters (collectively, the "small business class segment"). FIC's products are marketed and distributed through FRM, its appointed insurance producer. FRM solicits business directly from customers and works with insurance agency sub-producers, referred to as "distribution partners". As of June 30, 2025, FRM is licensed as a property and casualty insurance producer in 33 states and the District of Columbia.

**Note 2** – **Basis of Presentation and Accounting Policies**

<u>Basis of Presentation</u>

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and are unaudited. Accordingly, they do not include all the disclosures required by GAAP for complete financial statements. As such, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company's Annual Report on Form 1-K, for the year ended December 31, 2024. Management believes that the disclosures are adequate to make the information presented not misleading, and all normal and recurring adjustments necessary to present fairly the financial position as of June 30, 2025 and the results of operations of the Company and its subsidiaries for all periods presented have been made. All significant intercompany transactions and account balances have been eliminated in consolidation.

<u>Principles of Consolidation</u>

The consolidated financial statements consist of Forge Group, Inc. and its wholly owned subsidiaries: FRM and FIC (as well as FIC's majority owned subsidiary, ACP). All significant intercompany transactions and account balances have been eliminated in consolidation.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

<u>Revenue Recognition</u>

*Net Premiums Earned*

Insurance policies issued by the Company are short-duration contracts. Accordingly, premium revenues, net of premiums ceded to reinsurers, are recognized as earned in proportion to the amount of insurance protection provided, on a daily pro rata basis over the terms of the underlying policies. Unearned premiums represent premiums applicable to the unexpired portions of in-force insurance contracts at the end of the year.

The Company recognizes a premium deficiency reserve when the sum of expected claim costs and claim adjustment expenses, unamortized acquisition costs and maintenance costs exceed related unearned premiums. Accordingly, there was no premium deficiency reserve required as of June 30, 2025 or December 31, 2024. The Company anticipates investment income, if applicable, as a factor in the premium deficiency reserve evaluation.

*Income from real estate held for investment*

The Company accounts for leases in accordance with GAAP, which often requires significant judgment due to complex provisions. The two primary criteria that are used to classify transactions as sales-type or operating leases are (1) whether the lease term is equal to or greater than 75% of the economic life of the building and (2) whether the present value of the minimum lease payments is equal to or greater than 90% of the fair market value of the equipment at lease inception. ACP's leases are all considered to be "operating leases." Operating lease income and expense is recognized on a straight-line basis over the life of the lease.

<u>Unpaid Losses and Loss Adjustment Expenses (</u><u>"</u><u>LAE</u><u>"</u><u>)</u>

Unpaid losses and LAE represent the Company's best estimates of the ultimate cost of all reported and unreported losses that are unpaid as of the balance sheet dates. The unpaid losses and LAE are estimated on an undiscounted basis, using individual case-basis valuations, statistical analyses, and various actuarial reserving methodologies. The projection of future claims payments and reporting thereof is based on an analysis of the Company's historical experience, supplemented by an analysis of industry loss data. Unpaid losses and LAE include the net amount for claims, after deducting anticipated salvage and subrogation, which have been reported and are unpaid as of the statement date, as well as a provision for claims incurred but not reported as of the statement date. The Company believes that the unpaid losses and LAE are adequate to cover the ultimate cost of losses and claims to date; however, because of inherent uncertainty, including changes in reporting patterns, claims settlement patterns, judicial decisions, legislation, and economic conditions, actual loss experience may not conform to the assumptions used in determining the estimated amounts for such liability at the statement date. Adjustments to these estimates are reflected in loss and loss adjustment expense in the period in which the estimates are changed. Because of the nature of the business historically written, the Company believes that it has no exposure to environmental claim liabilities.

<u>Reinsurance</u>

In the ordinary course of business, the Company seeks to limit its exposure to losses on individual claims and the cumulative effect of adverse loss experience by entering reinsurance contracts with reinsurance companies.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

Reinsurance balances receivable represent the Company's best estimate of paid and unpaid losses and LAE recoverable from reinsurers, and ceded losses receivable and unearned ceded premiums under reinsurance agreements. Ceded losses receivable is estimated using techniques and assumptions consistent with those used in estimating the liability for unpaid losses and LAE, in accordance with the terms of the reinsurance agreement. The Company believes that reinsurance receivables as recorded represent its best estimate of such amounts; however, as changes in the estimated ultimate liability for losses and LAE are determined, the estimated ultimate amount receivable from reinsurers will also change. Accordingly, the ultimate receivable could be significantly more than, or less than, the amount recorded in the consolidated financial statements. Adjustments in these estimates are reflected in the period in which the estimates are changed. As presented in the Consolidated Statements of Operations and Comprehensive Income, losses and LAE incurred are net of reinsurance recoveries.

The Company has evaluated its reinsurance arrangements and determined that significant insurance risk is transferred to its reinsurers. Reinsurance agreements have been determined to be short-duration prospective contracts and, accordingly, the costs of the reinsurance are recognized over the life of the contract in a manner consistent with the earning of premiums on the underlying policies subject to the reinsurance contract.

The Company estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. There was no allowance for uncollectible reinsurance as of June 30, 2025, or December 31, 2024, nor did the Company expense any uncollectible reinsurance for the periods then ended. Significant uncertainties are inherent in the assessment of the creditworthiness of reinsurers and estimates of any uncollectible amounts due from reinsurers. Any change in the ability of the Company's reinsurers to meet their contractual obligations could have a material adverse effect on the consolidated financial statements.

<u>Cash and Cash Equivalents</u>

The Company considers cash at banks in checking and savings accounts, as well as all highly liquid investments with maturities of three months or less to be cash equivalents. For the purpose of reporting cash flows, cash and cash equivalents include cash in bank accounts and short-term investments, which when purchased were due to mature in three months or less.

<u>Short-term Investments</u>

The Company considers investments which when purchased have maturities of twelve months or less to be short-term investments. As of June 30, 2025, the Company's short-term investments consisted of certificates of deposit ("CDs"). CDs with original maturities of three months or less are classified as cash equivalents, those with original maturities greater than three months and less than twelve months are classified as short-term investments, and CDs with maturities greater than twelve months are classified as long-term investments within other invested assets.

<u>Investments</u>

The Company accounts for its fixed income investments in accordance with FASB ASC 320, "Investments – Debt Securities." Fixed maturity securities and redeemable preferred stock are classified as available for sale ("AFS") and valued at fair value. Unrealized gains and losses on these securities are excluded from net earnings but are recorded as a separate component of comprehensive income and equity, net of related deferred income taxes.

The Company accounts for its equity securities in accordance with FASB ASC 321, "Investments – Equity Securities." Equity securities include common stock and perpetual preferred stock. Equity securities are carried at fair value, with changes in fair value recorded in net gain (loss).

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

Interest on fixed maturity securities and short-term investments is recognized in earnings on an accrual basis. Premiums and discounts are amortized or accreted over the lives of the related securities using the effective interest method. Dividends on equity securities are recognized in earnings on the ex-dividend date. Realized investment gains and losses are reported in earning based upon the specific-identification method.

For available-for-sale ("AFS") debt securities, the Company evaluates whether a credit loss exists when the fair value of a security is below its amortized cost basis. If the Company either intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the security is written down to its fair value and the entire difference between the amortized cost basis and fair value is recognized in earnings.

For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the decline in fair value related to credit losses is recognized through an allowance for credit losses, limited to the amount that the fair value is less than amortized cost. The allowance for credit losses is recorded in earnings, with subsequent increases or decreases also recognized in earnings. Declines in fair value that are not credit-related are excluded from earnings and recognized in other comprehensive income, net of tax. Losses are charged against the allowance when management believes the uncollectibility of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

No allowance or impairments for available-for-sale debt securities were recorded for the six months ending June 30, 2025, or the twelve months ending December 31, 2024, respectively.

<u>Premiums Receivable</u>

Premiums receivable include balances due currently or installment premiums contractually due in the future and are presented net of an allowance for doubtful accounts, if any. The allowance for uncollectible amounts is based on an analysis of amounts receivable giving consideration to historical loss experience and current economic conditions and reflects an amount that, in the Company's judgment, is adequate.

<u>Deferred Policy Acquisition Costs</u>

Policy acquisition costs, consisting primarily of commissions, premium taxes, and certain other costs that vary directly with the production of premium revenue, are deferred and amortized over the period in which premiums are earned. Anticipated losses and LAE, expenses for maintenance of policies in force and investment income are considered in the determination of the recoverability of deferred policy acquisition costs. Deferred acquisition costs relate directly to the successful acquisition of a new or renewal insurance contract to qualify for deferral.

<u>Straight-line Rent Receivable on Real Estate Held for the Production of Income</u>

Straight-line rent receivables on leased assets represents the cumulative difference between the actual cash receipts for rent and the rental income recorded in the financial statements, which is calculated on a straight-line basis.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

<u>Leases in Place</u>

The acquisition of real estate held for the production of income includes various other assets. These other assets, leases in place, are recorded at cost and are being amortized over the life of the acquired lease terms. Upon the early termination of a lease, the cost and related accumulated amortization is eliminated from the accounts and any resulting gain or loss is reflected in the results of operations. Amortization is provided for under the straight-line method.

ACP's leases are all considered to be operating leases. Income from real estate held for investment and real estate operating expense are reflected as separate line items in the Consolidated Statements of Earnings and Comprehensive Earnings.

<u>Right-of-use Asset</u>

The Company's lease on its main office is considered to be an operating lease. In accordance with GAAP, the Company's lease is reflected in the consolidated balance sheets as a right-of-use asset, with a corresponding operating lease liability. Lease expense and associated sublease income are reflected as separate line items in the Consolidated Statements of Earnings and Comprehensive Earnings.

<u>Property and Equipment</u>

Property and equipment (including major renewals, replacements, and betterments) with a cost of $5,000 or greater are capitalized and stated at cost. Expenditures for ordinary maintenance and repair items are charged to operations as incurred, while expenditures which substantially increase the useful life of the asset are capitalized. Depreciation is provided for using straight-line and accelerated methods for both financial reporting and income tax purposes over the estimated useful lives of the assets. Upon the sale or other disposition of property, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in the results of operations.

<u>Restricted Cash</u>

Restricted cash represents required replacement reserves of certain deposits required by a lender. The restricted cash is in a separate account with an FDIC insured financial institution.

<u>Income Taxes</u>

Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and tax basis of assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. ACP is a limited liability company that files a partnership return. In lieu of entity level corporate taxes, its members are taxed on their respective shares of ACP's taxable income. The District of Columbia requires ACP to pay a franchise tax on taxable income earned in the District.

A tax sharing agreement is in place between parent company, FGI, and wholly-owned subsidiaries, FIC and FRM. FGI intends to file a consolidated tax return with FIC and FRM. FGI is responsible for the timely and accurate preparation and filing of the consolidated federal income tax return and any consolidated or combined state and/or local income or franchise tax returns and associated tax liability for each tax year. For each tax year, each subsidiary will pay to FGI an amount equal to the federal income tax liability attributable to such subsidiary. The federal income tax liability of each subsidiary shall be determined pursuant to the principles used to determine earnings and profits under Code §1552(a)(2) and Treasury Regulation §1.1502-33(d)(3) using a fixed percentage of one hundred. In the event that FGI shall elect or be required to file a consolidated or combined state and/or local income or franchise tax return for any tax year, each subsidiary shall pay to FGI an amount equal to the amount of state and/or local income or franchise tax for such tax year as if each includible corporation were filing on a separate company basis.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

<u>Goodwill and Other Intangibles:</u>

Goodwill represents the excess of the purchase price over the underlying fair value of acquired entities. When completing acquisitions, we seek to identify separately identifiable intangible assets that we have acquired. We assess goodwill and other intangibles with an indefinite useful life for impairment annually. We also assess goodwill and other intangibles for impairment upon the occurrence of certain events. In making our assessment, we consider several factors including operating results, business plans, economic projections, anticipated future cash flows, and current market data. Inherent uncertainties exist with respect to these factors and to our judgment in applying them when we make our assessment. Impairment of goodwill and other intangibles could result from changes in economic and operating conditions in future periods. We did not record any impairments of goodwill or other intangibles during the period ended June 30, 2025, or December 31, 2024.

Goodwill arising from the acquisition of FRM in March 2022 represents the excess of the purchase price over the fair value of the net assets acquired. Other intangible assets arising from the acquisition of FRM represents the estimated fair values of certain intangible assets, including the value of FRM's distribution network, the value of the FRM trade name and state insurance licenses. The distribution networks asset, trade name and state insurance license are being amortized over eight years, five years and one year, respectively, from the March 11, 2022 acquisition/valuation date.

<u>Employee Stock Ownership Plan</u>

The Company recognizes employee stock ownership plan (ESOP) compensation expense ratably during each year for the shares committed to be allocated to participants that year. This expense is determined by the fair market value of our stock at the time the commitment to allocate the shares is accrued and recognized. The ESOP covers all employees who meet the plan's service requirements.

<u>Earnings Per Share</u>

Basic and diluted earnings per share (EPS) are calculated by dividing earnings available to common shareholders by the weighted average number of common shares outstanding during the period. Dilutive earnings per share includes the effect of all potentially dilutive instruments, such as restricted stock units and stock options, outstanding during the period.

<u>Assessments</u>

The Company is subject to a variety of assessments including insurance-related assessments, which are accrued in the period in which they have been incurred and charged to expense.

<u>Concentration, Credit Risk and Market Risk</u>

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of debt securities other than U.S. government debt and agency securities, cash and cash equivalents, accounts receivable, reinsurance receivable and accrued investment income.

Non-U.S. government debt securities are diversified, and no one investment accounts for a significant portion of the Company's invested assets.

The Company maintains cash deposits in a financial institution that are insured through the Federal Deposit Insurance Corporation as well as cash deposits and securities at various brokerage firms that are insured with the Securities Investor Protection Corporation. Cash deposits and securities may exceed insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on cash and cash equivalents.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

Stressed conditions, volatility and disruptions in capital markets or financial asset classes could have an adverse effect on the Company, in part because the Company has a large investment portfolio supporting its insurance liabilities, which are sensitive to changing market factors. These market factors, which include interest rates, credit spreads, equity prices, and the volatility and strength of the capital markets, all affect the business and economic environment and, ultimately, the profitability of the Company's business. The Company manages its investments to limit credit and other market risks by diversifying its portfolio among various security types and industry sectors based on the Company's investment committee guidelines, which employ a variety of investment strategies.

<u>Use of Estimates</u>

In preparing the consolidated financial statements, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet dates, revenues and expenses for the years then ended, and the accompanying notes to the consolidated financial statements. Such estimates and assumptions could change in the future which could impact the amounts reported and disclosed herein. The most significant of these amounts is the liability for unpaid losses and LAE, stock-based compensation, the pension benefit obligation and the asset for goodwill and intangible assets. Other estimates include investment valuation, the collectability of reinsurance balances, recoverability of deferred tax assets, and deferred policy acquisition costs. These estimates and assumptions are based on the Company's best estimates and judgment. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, which the Company believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Although recorded estimates are supported by actuarial computations and other supportive data, the estimates are ultimately based on expectations of future events. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.

<u>Other Comprehensive Income</u>

Other comprehensive income refers to revenues, expenses, gains and losses that are included in comprehensive income but are excluded from net gain (loss) as these amounts are recorded directly as an adjustment to equity; such items primarily arise from changes in unrealized gains and losses on available-for-sale securities, net pension liability and related income taxes.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

**Note 3** – **Investments**

<u>Available-for-Sale (</u><u>"</u><u>AFS</u><u>"</u><u>) Fixed Maturity Securities and Redeemable Preferred Stock</u>

Following is a schedule of the cost, estimated fair values, and gross unrealized gains and losses of investments in securities classified as AFS fixed-maturity securities and redeemable preferred stock as of June 30, 2025 and December 31, 2024.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Amortized |  | Gross Unrealized | Gross Unrealized |
| June 30, 2025 | cost | Fair value | Gains | Losses |
| Fixed maturity securities: |  |  |  |  |
| U.S. government | $886544 | $811874 | $3129 | $(77799) |
| Municipals | 17563260 | 17541034 | 164273 | (186499) |
| Corporate securities | 15156521 | 15241362 | 293581 | (208740) |
| Asset backed securities | 1200000 | 898176 |  | (301824) |
| Total fixed maturity securities | 34806325 | 34492446 | 460983 | (774862) |
| Redeemable preferred stock | 1174739 | 1058209 |  | (116530) |
| Total AFS securities | $35981064 | $35550655 | $460983 | $(891392) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Amortized |  | Gross Unrealized | Gross Unrealized |
| December 31, 2024 | cost | Fair value | Gains | Losses |
| Fixed maturity securities: |  |  |  |  |
| U.S. government | $880436 | $819730 | $- | $(60706) |
| States, territories and possessions | 235770 | 232768 | 65 | (3067) |
| Political subdivisions | 6081444 | 5908876 | 1001 | (173569) |
| Special revenue | 9112040 | 8844082 | 18670 | (286628) |
| Industrial and miscellaneous | 15259922 | 15204789 | 207376 | (262509) |
| Asset backed securities | 1200000 | 898176 |  | (301824) |
| Total fixed maturity securities | 32769612 | 31908421 | 227112 | (1088303) |
| Redeemable preferred stock | 1160727 | 1073753 |  | (86974) |
| Total AFS securities | $33930339 | $32982174 | $227112 | $(1175277) |

---

As required by insurance regulations, certain fixed maturity investments amounting to $3,827,875 and $3,762,871 as of June 30, 2025 and December 31, 2024, respectively, were on deposit with either regulatory authorities or banks.

The amortized cost and fair values of the Company's investments in AFS fixed maturity securities by contractual maturity as of June 30, 2025 are shown below. Expected maturities may differ from contractual maturities where borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

---

| | | |
|:---|:---|:---|
|  | Amortized |  |
|  | Cost | Fair Value |
| Due in one year or less | $5457624 | $5484977 |
| Due after one year through five years | 15314656 | 15485773 |
| Due after five years through ten years | 10343231 | 10421302 |
| Due after ten years | 2490814 | 2202218 |
| Asset backed securities | 1200000 | 898176 |
| Total fixed maturity securities | 34806325 | 34492446 |
| Redeemable preferred stock | 1174739 | 1058209 |
| Total AFS securities | $35981064 | $35550655 |

---

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

The schedule below summarizes the fair values of those fixed maturity securities and redeemable preferred stock in an unrealized loss position as of June 30, 2025 and December 31, 2024. The schedule further classifies the securities based on the length of time they have been in an unrealized loss position.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Less than 12 months | Less than 12 months | 12 months or more | 12 months or more | Total | Total |
|  | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized |
| June 30, 2025 | value | losses | value | losses | value | losses |
| Fixed maturity securities: |  |  |  |  |  |  |
| U.S. government | $- | $- | $550496 | $(77799) | $550496 | $(77799) |
| Municipals | 2304342 | (24563) | 6014156 | (161936) | 8318498 | (186499) |
| Corporate securities | 1795218 | (38115) | 1161229 | (170625) | 2956447 | (208740) |
| Asset backed securities |  |  | 898176 | (301824) | 898176 | (301824) |
| Total fixed maturity securities | 4099560 | (62678) | 8624057 | (712184) | 12723617 | (774862) |
| Redeemable preferred stock |  |  | 1058209 | (116530) | 1058209 | (116530) |
| Total AFS securities | $4099560 | $(62678) | $9682266 | $(828714) | $13781826 | $(891392) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Less than 12 months | Less than 12 months | 12 months or more | 12 months or more | Total | Total |
|  | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized |
| December 31, 2024 | value | losses | value | losses | value | losses |
| Fixed maturity securities: |  |  |  |  |  |  |
| U.S. government | $255011 | $(1149) | $564719 | $(59557) | $819730 | $(60706) |
| States, territories and possessions | 212057 | (3067) |  |  | 212057 | (3067) |
| Political subdivisions | 4120352 | (100648) | 1528515 | (72921) | 5648867 | (173569) |
| Special revenue | 3183467 | (85435) | 5011045 | (201193) | 8194512 | (286628) |
| Industrial and miscellaneous | 2770321 | (48639) | 1192634 | (213870) | 3962955 | (262509) |
| Asset backed securities |  |  | 898176 | (301824) | 898176 | (301824) |
| Total fixed maturity securities | 10541208 | (238938) | 9195089 | (849365) | 19736297 | (1088303) |
| Redeemable preferred stock |  |  | 1073753 | (86974) | 1073753 | (86974) |
| Total AFS securities | $10541208 | $(238938) | $10268842 | $(936339) | $20810050 | $(1175277) |

---

The Company monitors the credit quality of its fixed income investments to assess if it is probable that the Company will receive its contractual or estimated cash flows in the form of principal and interest, in accordance with their terms.

As of June 30, 2025, the Company's available-for-sale ("AFS") portfolio included 68 securities in an unrealized loss position, of which 28 had been in an unrealized loss position for 12 consecutive months or longer, representing $828,714 in aggregate unrealized losses. All fixed maturity securities in the portfolio continue to pay contractual coupon payments when due.

For AFS debt securities in an unrealized loss position, the Company first evaluates whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, the security is written down to fair value and the full amount of the loss is recognized in earnings.

If the Company does not intend to sell and is not more likely than not to be required to sell, the Company evaluates whether the decline in fair value is attributable, in part, to credit-related factors. Credit-related losses are recognized through an allowance for credit losses, recorded in earnings, limited to the amount by which the amortized cost basis exceeds fair value. Changes in the allowance, whether increases or decreases, are recognized in earnings in the period of change. Any decline in fair value not related to credit losses is recognized in other comprehensive income, net of tax.

Based on the Company's analysis, the fixed income portfolio is of high credit quality. The Company believes it will recover the amortized cost basis of these securities and, accordingly, no allowance for credit losses has been recorded as of June 30, 2025 or December 31, 2024.

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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<u>Other invested assets</u>

The Company maintains certain non-controlling equity interests (generally less than 5%) in a number of unaffiliated specialized investment vehicles, primarily limited partnerships and one limited liability company, which are reported as other invested assets. These investments are broadly diversified across strategies and, in the aggregate, represented approximately 6% of the Company's total investment portfolio as of June 30, 2025.

The limited partnership interests generally restrict redemptions for an initial lock-up period of one to three years from the date of investment. Subsequent to the expiry of any applicable lock-up periods, withdrawals or redemptions generally require between 30 to 90 days' advance notice, with redemptions being permitted on dates varying from month-end to annually, but typically quarter end.

In addition, the Company also holds an equity investment in Trustar Bank, a related entity, which is a community bank serving the D.C. area which is valued at GAAP equity.

The Company also holds an interest in one limited partnership, EAS Investors I, LP, and one closely held equity investment, Stream-IT.app Inc., neither of which prepare audited GAAP financial statements. Management concluded that both investments were other-than-temporarily impaired and accordingly wrote them down to $0 as of December 31, 2024. No impairment charges were recognized during the six months ending June 30, 2025. An impairment loss of $558,815 was recognized during the year ended December 31, 2024, which was included in net realized investment gains (losses).

Since, amongst other qualifying criteria, these investments do not have a readily determined fair value, the Company values them applying the guidance of Accounting Standards Update Subtopic 820-10, *Fair Value Measurements and Disclosures - Overall*, which, as a practical expedient, permits the fair value of investments within its scope to be measured on the basis of net asset value per share (or its equivalent).

The following table is a schedule of the cost and estimated fair values of the Company's other invested assets as of June 30, 2025, and December 31, 2024.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Carrying | Gross Unrealized | Gross Unrealized | OTTI |
| June 30, 2024 | Cost | Value | Gains | Losses | Impairment |
| Limited partnership investments | $3128756 | $4380640 | $1251884 | $- | $- |
| Equity interest in Trustar Bank | 250000 | 258551 | 8551 |  |  |
| Equity interest in CSE Credit Tenant Fund V, LLC | 150000 | 150000 |  |  |  |
| Certificates of deposit (CDs) with maturities greater than 12 months | 400000 | 400046 | 46 |  |  |
| Total other invested assets | $3928756 | $5189237 | $1260481 | $0.00 | $0.00 |

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---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Carrying | Gross Unrealized | Gross Unrealized | OTTI |
| December 31, 2024 | Cost | Value | Gains | Losses | Impairment |
| Limited partnership investments | $2357904 | $3359012 | $1001108 | $- | $- |
| Limited partnership investment in EAS | 877200 |  | $- | $- | (877200) |
| Equity interest in Trustar Bank | 250000 | 249859 |  | (141) |  |
| Equity interest in Stream-IT.app Inc. | 500000 |  |  |  | (500000) |
| Total other invested assets | $3985104 | $3608871 | $1001108 | $(141) | $(1377200) |

---

Other invested assets contained no investments in an unrealized loss position as of June 30, 2025.

The Company had a $1,195,449 unfunded commitment to Mutual Capital Investment Fund, LP as of June 30, 2025.

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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<u>Unrealized gains (losses) on equity securities, net</u>

The portion of unrealized gains that relates to equity securities held as of June 30, 2025, and December 31, 2024, was $312,437 and $310,078, respectively.

<u>Net Investment Income</u>

A summary of net investment income for the six months ending June 30, 2025 and 2024 is as follows:

---

| | | |
|:---|:---|:---|
|  | June 30, | June 30, |
|  | 2025 | 2024 |
| AFS, fixed maturity securities | $859060 | $737426 |
| AFS, redeemable preferred stock | 41208 | 29909 |
| Perpetual preferred stock | 13000 | 54773 |
| Common stock | 32196 | 27708 |
| Cash and short-term investments | 134176 | 88417 |
| Investment income | 1079640 | 938233 |
| Less investment expenses | (135786) | (133711) |
| Net investment income | $943854 | $804522 |

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<u>Investment related gains (losses)</u>

The following summarizes the proceeds from sales, maturities and calls of invested securities and the related gross realized gains and losses for the six months ended June 30, 2025, and 2024.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Net Realized | OTTI |
| June 30, 2025 | Proceeds | Gains | Losses | Gains (Losses) | Impairment |
| AFS, fixed maturity securities | $866641 | $- | $(1919) | $(1919) | $- |
| Perpetual preferred stock | 34689 |  | (15020) | (15020) |  |
| Common stock | 78680 |  | (14522) | (14522) |  |
| Other invested assets | 56991 | 10576 |  | 10576 |  |
| Total | $1037001 | $10576 | $(31461) | $(20885) | $- |

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---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Net Realized | OTTI |
| June 30, 2024 | Proceeds | Gains | Losses | Gains/(Losses) | Impairment |
| AFS, fixed maturity securities | $2271367 | $- | $(125867) | $(125867) | $- |
| Common stock | 1251 | 1251 |  | 1251 |  |
| Other invested assets | 560642 | 60642 |  | 60642 | 356210 |
| Total | $2833260 | $61893 | $(125867) | $(63974) | $356210 |

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<u>Impairment Review</u>

Under the current allowance for credit losses model, an entity evaluates fixed maturity securities classified as available-for-sale for impairment when fair value is less than amortized cost. If the entity intends to sell the security, or if it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the entire difference between amortized cost and fair value is recognized in earnings. If neither condition is met, the entity evaluates whether a credit loss exists by comparing the present value of expected cash flows to the amortized cost basis. Any expected credit losses are recognized through an allowance for credit losses, with corresponding adjustments to earnings. Subsequent improvements or deteriorations in expected cash flows adjust the allowance and are recognized through earnings. Amounts related to changes in fair value not attributable to credit losses are recognized in other comprehensive income. Recognition of a credit loss allowance does not reduce the amortized cost basis of the investment.

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

The Company regularly evaluates its fixed maturity securities using both quantitative and qualitative criteria to determine impairment losses for other-than-temporary declines in the fair value of the investments. The following are the key factors used to determine whether a security is other-than-temporarily impaired:

● The extent to which the fair value is less than cost,

● The assessment of significant adverse changes to the cash flows on a fixed maturity investment,

● The occurrence of a discrete credit event resulting in the issuer defaulting on a material obligation, the issuer seeking protection from creditors under the bankruptcy laws, the issuer proposing a voluntary reorganization under which creditors are asked to exchange their claims for cash or securities having a fair value substantially lower than par value,

● The probability that the Company will recover the entire amortized cost basis of the fixed income securities prior to maturity, or

● The ability and intent to hold fixed maturities until maturity.

Quantitative and qualitative criteria are considered to varying degrees depending on the sector for which the analysis is being performed. The sectors are as follows:

*Corporate Securities*

The Company performs a qualitative evaluation of holdings that fall below the price threshold. The analysis begins with an opinion of industry and competitive position. This includes an assessment of factors that enable the profit structure of the business (e.g., reserve profile for exploration and production companies), competitive advantage (e.g., distribution system), management strategy, and an analysis of trends in return on invested capital. Analysts may also review other factors to determine whether an impairment exists, including liquidity and asset value cash flow generation.

*Municipal Securities*

The Company analyzes the screened impairment candidates on a quantitative and qualitative basis. This includes an assessment of the factors that may be contributing to an unrealized loss and whether the recovery value is greater or less than current market value.

*Asset Backed Securities*

The Company uses the "stated assumptions" analytic approach which relies on actual 6-month average collateral performance measures (voluntary prepayment rate, gross default rate, and loss severity) sourced through third party data providers or remittance reports. The analysis applies the stated assumptions throughout the remaining term of the transaction using forecasted cashflows, which are then applied through the transaction structure (reflecting the priority of payments and performance triggers) to determine whether there is a loss to the security ("Loss to Tranche").

For all fixed income securities in an unrealized loss position as of June 30, 2025, the Company believes it is probable that it will receive all contractual principal and interest payments. In addition, the Company does not intend to sell these investments, nor is it more likely than not that it will be required to sell them, prior to recovery of their amortized cost basis, which may occur at maturity. Accordingly, no allowance for credit losses was recorded on fixed income securities in an unrealized loss position as of June 30, 2025.

The Company holds one limited partnership, EAS Investors I, LP, and one closely held equity interest, Stream-IT.app Inc. These investments do not have a readily determinable fair value and are carried at cost, adjusted for impairment. In both 2024 and 2023, the Company recognized write-downs on these assets, reducing their carrying value to $0 as of December 31, 2024. The Company recorded no additional write-downs during the six months ending June 30, 2025, compared to $558,815 during the year ended December 31, 2024.

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

Impairment was recognized when, based on the limited information available from investee financial reports and other external sources, management determined that it was more likely than not that the Company would be unable to recover the carrying amount of the investments. The amount of the write-downs represented management's best estimate of fair value under the circumstances.

**Note 4** – **Fair Value Measurements**

Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. The Company determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. GAAP guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance also describes three levels defined by the type of inputs used to measure fair value. The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level:

*Level 1:* is applied to valuations based on readily available, unadjusted quoted prices in active markets for identical assets.

*Level 2*: is applied to valuations based upon quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets; or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

*Level 3:* is applied to valuations that are derived from techniques in which one or more of the significant inputs are unobservable. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value.

As a part of the process to determine fair value, the Company utilizes widely recognized third-party pricing sources to determine fair values. The Company has obtained an understanding of the third-party pricing sources' valuation methodologies and inputs. The following is a description of the valuation techniques used for financial assets that are measured at fair value, including the general classification of such assets pursuant to the fair value hierarchy.

<u>U.S. Treasury Bonds, Common Stocks, and Exchange Traded Funds:</u> U.S. treasury bonds and exchange traded equities have readily observable price levels and are classified as Level 1 (fair value based on quoted market prices). All common stock holdings are deemed Level 1.

<u>Corporate, Agencies, and Municipal Bonds:</u> The pricing source employs a multi-dimensional model that uses standard inputs including (listed in order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing source also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All Corporate, Agencies, and Municipal securities are deemed Level 2.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

<u>Collateralized Mortgage Obligations (</u><u>"</u><u>CMO</u><u>"</u><u>) and Asset-backed Securities (</u><u>"</u><u>ABS</u><u>"</u><u>):</u> The pricing source evaluation methodology includes principally interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile, or credit sensitivity) is based on the pricing vendors' interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, pre-payment assumptions and to incorporate collateral performance. To evaluate CMO volatility, an option-adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates, and recent trade activity. CMO and ABS with corroborative and observable inputs are classified as Level 2. With the exception of one ABS classified as Level 3, all CMO and ABS holdings are deemed to be Level 2.

<u>Preferred Stock:</u> Preferred stocks do not have readily observable prices but do have quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices are classified as Level 2. All preferred stock holdings are deemed Level 2.

Assets measured at fair value on a recurring basis as of June 30, 2025, and December 31, 2024, were as summarized below:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Significant |  |  |
|  | Quoted in active | Other | Significant |  |
|  | Markets for | Observable | Unobservable |  |
|  | Identical Assets | Inputs | Inputs |  |
| June 30, 2025 | (Level 1) | (Level 2) | (Level 3) | Total |
| Fixed maturity securities: |  |  |  |  |
| U.S. government | $- | $811874 | $- | $811874 |
| Municipals |  | 17541034 |  | 17541034 |
| Corporate securities |  | 15241362 |  | 15241362 |
| Asset backed securities |  |  | 898176 | 898176 |
| Total fixed maturity securities |  | 33594270 | 898176 | 34492446 |
| Redeemable preferred stock |  | 1058209 |  | 1058209 |
| Total AFS securities |  | 34652479 | 898176 | 35550655 |
| Common stock | 1488438 |  |  | 1488438 |
| Perpetual preferred stock |  | 70142 |  | 70142 |
| Total marketable investments measured at fair value | $1488438 | $34722621 | $898176 | $37109235 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Significant |  |  |
|  | Quoted in active | Other | Significant |  |
|  | Markets for | Observable | Unobservable |  |
|  | Identical Assets | Inputs | Inputs |  |
| December 31, 2024 | (Level 1) | (Level 2) | (Level 3) | Total |
| Fixed maturity securities: |  |  |  |  |
| U.S. government | $- | $819730 | $- | $819730 |
| States, territories and possessions |  | 232768 |  | 232768 |
| Political subdivisions |  | 5908876 |  | 5908876 |
| Special revenue |  | 8844082 |  | 8844082 |
| Industrial and miscellaneous |  | 15204789 |  | 15204789 |
| Asset backed securities |  |  | 898176 | 898176 |
| Total fixed maturity securities |  | 31010245 | 898176 | 31908421 |
| Redeemable preferred stock |  | 1073753 |  | 1073753 |
| Total AFS securities |  | 32083998 | 898176 | 32982174 |
| Common stock | 1287045 |  |  | 1287045 |
| Perpetual preferred stock |  | 94703 |  | 94703 |
| Total marketable investments measured at fair value | $1287045 | $32178701 | $898176 | $34363922 |

---

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

As of both June 30, 2025, and December 31, 2024, the reported fair value of the Company's investment in a Level 3 AFS asset backed security was $898,176. Fair value was determined by discounting the expected contractual cash-flows using two significant inputs: the interpolated treasury rate, corresponding to the weighted average life of the certificates, and an appropriate credit spread which was determined by considering the market spread for commercial mortgage-backed securities with similar characteristics (e.g., maturity, underlying assets, and credit worthiness).

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Beginning | Transfers | Transfers | Total gains | Total (losses) |  |  | Ending |
|  | Balance at | into | out of | included in | gains included |  |  | Balance at |
| June 30, 2025 | 1/1/2025 | Level 3 | Level 3 | Net Income | in Equity | Purchases | Sales | 6/30/2025 |
| AFS securities: |  |  |  |  |  |  |  |  |
| Asset backed securities | $898176 | $- | $- | $- | $- | $- | $- | $898176 |
| Total AFS securities | $898176 | $- | $- | $- | $- | $- | $- | $898176 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Beginning | Transfers | Transfers | Total gains | Total (losses) |  |  | Ending |
|  | Balance at | into | out of | included in | gains included |  |  | Balance at |
| December 31, 2024 | 1/1/2024 | Level 3 | Level 3 | Net Income | in Equity | Purchases | Sales | 12/31/2024 |
| AFS securities: |  |  |  |  |  |  |  |  |
| Asset backed securities | $897576 | $- | $- | $- | $600 | $- | $- | $898176 |
| Total AFS securities | $897576 | $- | $- | $- | $600 | $- | $- | $898176 |

---

There were no transfers in or out of level 3 in either period. Additionally, no securities were transferred in or out of levels 1 or 2 during either period.

**Note 5** – **Real Estate Held for the Production of Income**

As of June 30, 2025, and December 31, 2024, ACP owned two commercial buildings and one building leased to the District of Columbia. One building is multi-tenant and the other two buildings are leased to single tenants. The leases are primarily triple net with 10 to 20-year terms. The properties comprised the following as of June 30, 2025, and December 31, 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | June 30, | December 31, | Depreciable |
|  | 2025 | 2024 | lives (in years) |
| Land | $11999958 | $11999958 |  |
| Building and improvements | 21457097 | 21457097 | 39 |
| Leasehold/tenant improvements | 931318 | 931318 | 15 |
| Furniture, fixtures & equipment | 1080522 | 1080522 | 7 |
| Real estate held for the production of income | 35468895 | 35468895 |  |
| Accumulated depreciation | (6844218) | (6538082) |  |
| Real estate held for the production of income, net | $28624677 | $28930813 |  |

---

Depreciation expense for each of the six-month periods ending June 30, 2025 and 2024 was $306,135.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

ACP's future annual rental income from non-cancelable operating leases as of June 30, 2025, was as follows:

---

| | |
|:---|:---|
| ***For the twelve-month period ending June 30*** |  |
| 2026 | $2055307.0 |
| 2027 | 2252127.0 |
| 2028 | 2213258.0 |
| 2029 | 1948394.0 |
| 2030 | 1909823.0 |
| Thereafter | 11739041.0 |
| Future rental income from non-cancelable operating leases | $22117950.0 |

---

In conjunction with the acquisition of the real estate, lease assets were acquired and are being amortized throughout the remaining terms of the leases. The lease assets as of June 30, 2025, and December 31, 2024, are as follows:

---

| | | |
|:---|:---|:---|
|  | June 30, | December 31, |
|  | 2025 | 2024 |
| Leases in place | $4163966 | $4163966 |
| Accumulated amortizaton, leases in place | (1967784) | (1862367) |
| Leases in place, net of accumulated amortization | $2196182 | $2301599 |

---

Amortization expense for each the six-month periods ended June 30, 2025, and 2024 was $105,417.

**Note 6** – **Deferred Policy Acquisition Costs**

Changes in deferred policy acquisition costs for the six-month periods ending June 30, 2025, and 2024 were as follows:

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Balance, January 1, | $490728 | $297639 |
| Acquisition costs deferred, during the period | 500359 | 361747 |
| Amortization charged to earnings | (492188) | (307934) |
| Balance, June 30 | $498899 | $351452 |

---

**Note 7** – **Right-of-Use Asset and Operating Lease Liability**

The Company previously leased three office suites, totaling 9,544 square feet, in Chevy Chase, Maryland under a non-cancellable operating lease that commenced in July 2016 with an original 15-year term and an early termination option after the 10th lease year. The lease provided for a 2.5% annual increase in the base rent on the anniversary of the lease commencement date. We also had an option to extend the lease for one 5-year renewal term at the fair market rent as of the date of the renewal term commencement, which we elected not to exercise. In accordance with Topic 842, we recorded an operating lease liability, representing the discounted present value of future lease payments and a right-of-use asset related to this lease. On June 30, 2025, we exercised the early termination option of this lease, eliminating all remaining lease obligations related to the Chevy Chase premises as of that date.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

Prior to the lease termination, the Company had subleased the entire Chevy Chase office space under three separate agreements. The first sublease commenced October 1, 2017, and was amended in 2024 to expire concurrently with our early termination date. The second sublease commenced July 1, 2021, and expired June 30, 2024; however, we negotiated an early surrender with the landlord effective September 30, 2024, reducing our remaining lease liability. The third sublease commenced June 1, 2022, and expired May 31, 2025. Sublease income was recognized on a straight-line basis over the sublease terms, and cumulative differences between lease expense and lease payments were reflected as adjustments to the right-of-use asset.

Consistent with our expectation to exercise the early termination option, we had previously reduced the operating lease liability to the present value of committed future payments and fully impaired the right-of-use asset for the Chevy Chase leases. As of June 30, 2025, following the early termination, the Company has no further right-of-use assets or lease liabilities related to these premises.

Separately, in September 2022 we entered into a lease for a 1,579-square-foot office suite in Bethesda, Maryland. This operating lease expires January 31, 2026, and includes a 3.25% annual increase in base rent on each anniversary of the commencement date.

The following summarizes the line items in the balance sheet which include amounts for operating leases as of June 30, 2025, and December 31, 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | June 30, 2025 | June 30, 2025 | June 30, 2025 |
|  | Operating | Sublease | Net of |
|  | Lease | Agreement | Sublease |
| Operating lease right-of-use office space | $147810 | $- | $147810 |
| Accumulated amortization | (119457) |  | (119457) |
| Impairment of right-of-use asset |  |  |  |
| Operating lease right-of-use asset | $28354 | $- | $28354 |
| Operating lease liability | $33808 | $- | $33808 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, 2024 | December 31, 2024 | December 31, 2024 |
|  | Operating | Sublease | Net of |
|  | Lease | Agreement | Sublease |
| Operating lease right-of-use office space | $2451004 | $(649678) | $1801326 |
| Accumulated amortization | (1793143) | 587265 | (1205878) |
| Impairment of right-of-use asset | (540626) |  | (540626) |
| Operating lease right-of-use asset | $117235 | $(62413) | $54822 |
| Operating lease liability | $371517 | $(73441) | $298076 |

---

The Company had lease expense of $98,847 and $105,036 for the six-month periods ending June 30, 2025, and 2024, respectively. In addition, the Company had sublease income of $62,413 and $85,795 for each of the six months then ended.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

The components of lease expense and supplemental cash flow information related to leases for the periods ended June 30, 2025, and December 31, 2024, are as follows:

---

| | | |
|:---|:---|:---|
|  | June 30, | December 31, |
|  | 2025 | 2024 |
| Cash paid for leases | $- | $- |
| Remaining lease term (in years) | 1.00 | 1.50 |
| Weighted average annual discount rate | 3.50% | 3.50% |

---

---

| | | |
|:---|:---|:---|
|  | June 30, | December 31, |
|  | 2025 | 2024 |
| Sum of remaining payments | $34663 | $378751 |
| Less: imputed interest | (855) | (7234) |
| Net present value of remaining payments | 33808 | 371517 |
| Less: net present value of sublease rent |  | (73441) |
| Operating lease liability, net | $33808 | $298076 |

---

Annual future minimum lease payments for the lease outlined above as of June 30, 2025, is as follows:

---

| | |
|:---|:---|
|  | Minimum |
|  | Commitments |
| 2025 | $29666 |
| 2026 | 4997 |
| Future minimum lease payments | $34663 |

---

**Note 8** – **Unpaid Losses and LAE**

Activity in the liability for unpaid losses and LAE for the six months ended June 30, 2025, and 2024 was as follows:

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Balance, January 1, | $12344042 | $8425518 |
| Less reinsurance receivable | (2014624) | (690000) |
| Net balance, January 1, | 10329418 | 7735518 |
| Incurred losses and LAE related to: |  |  |
| Current year | 8857630 | 5969843 |
| Prior years | (326259) | (118161) |
| Total incurred losses and LAE | 8531371 | 5851682 |
| Paid losses and LAE related to: |  |  |
| Current year | 2972882 | 2009907 |
| Prior years | 2568455 | 1772970 |
| Total paid losses and LAE | 5541337 | 3782877 |
| Net balance, June 30, | 13319452 | 9804323 |
| Plus reinsurance receivable | 2235501 | 1038200 |
| Balance, June 30, | $15554953 | $10842523 |

---

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

As a result of changes in estimates for unpaid losses and LAE related to insured events of prior years, the liability for losses and LAE decreased by $326,259 and $118,161 for the six months ended June 30, 2025, and 2024, respectively. The favorable development for the six months ended June 30, 2025, was primarily attributable to re-estimation of unpaid losses and LAE from the 2023 accident year.

The Company made no significant changes in its reserving philosophy, key reserving assumptions or claims management personnel, and has made no significant offsetting changes in estimates that increased or decreased losses and LAE reserves in 2025 or 2024.

The Company determines incurred but not reported ("IBNR") reserves by subtracting the cumulative losses and LAE amounts the Company has paid, and the case reserves the Company has established at the balance sheet date from an actuarial estimate of the ultimate cost of losses and LAE. Accordingly, IBNR reserves include actuarial projections of the cost of unreported claims, as well as actuarial projected development of case reserves on known claims and reopened claims. The Company's methodology for estimating IBNR reserves has been in place for several years, and the Company made no significant changes to that methodology during 2025 or 2024.

The Company generally prepares an initial estimate of ultimate losses and LAE for the current accident year by multiplying earned premium by an expected loss ratio for each line of business the Company writes. Expected loss ratios represent the Company's expectation of losses at the time the Company prices and writes policies before the emergence of any actual claims experience. The Company determines an expected loss ratio by analyzing historical experience and adjusting for loss cost trends, loss frequency and severity trends, premium rate-level changes, reported and paid loss emergence patterns and other known or observed factors.

The Company is not aware of any claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels.

**Note 9 - Reinsurance**

The Company entered into an excess of loss reinsurance contract which provides the Company with excess of loss reinsurance coverage for commercial automobile liability losses, including 100 percent of losses in excess of policy limits and 100 percent of extra contractual obligations, occurring on or after June 1, 2019. Under the agreement coverage is provided for 100 percent of losses in excess of $400,000 up to $1.6 million per occurrence per policy. Aggregate limits under the reinsurance treaties are $6.6 million for losses under $1.0 million and $2.0 million for losses in excess $1.0 million.

Effective June 1, 2022, the Company's reinsurance treaties provide the Company with excess of loss reinsurance coverage for commercial automobile liability losses. Under the agreement coverage is provided for 97.5 percent of losses in excess of $400,000 up to $1.6 million per occurrence per policy, including 97.5 percent of losses in excess of policy limits and 97.5 percent of extra contractual obligations. Aggregate limits under the reinsurance treaties are $6.6 million for losses under $1.0 million and $2.0 million for losses in excess $1.0 million. Subject to the terms of the contract, the Company has retained a 2.5 percent share of the $1.6 million liability in excess of $400,000, which is not reinsured.

Effective June 1, 2023, the Company's reinsurance treaties provide the Company with excess of loss reinsurance coverage for commercial automobile liability losses. Under the agreement coverage is provided for 100.0 percent of losses in excess of $500,000 up to $1.5 million per occurrence per policy, including 100 percent of losses in excess of policy limits and 100 percent of extra contractual obligations. Aggregate limits under the reinsurance treaties are $5.5 million for losses under $1.0 million and $3.0 million for losses in excess $1.0 million.

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

On June 30, 2025, and December 31, 2024, the Company had ceded premiums receivable totaling $122,175 and $909,842, respectively. All reinsurance amounts recoverable are due from companies with financial strength ratings of "A" or better by A.M. Best.

The effect of reinsurance on premiums written, premiums earned, and loss and LAE incurred for the six-month periods ended on June 30, 2025, and 2024 is as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | June 30, 2025 | June 30, 2025 | June 30, 2025 | June 30, 2024 | June 30, 2024 | June 30, 2024 |
|  | Premium | Premium | Losses & LAE | Premium | Premium | Losses & LAE |
|  | Written | Earned | Incurred | Written | Earned | Incurred |
| Direct | $15691047 | $15712469 | $8752248 | $11096773 | $10598421 | $6199882 |
| Ceded | (974949) | (941331) | (220877) | (829286) | (795462) | (348200) |
| Net | $14716098 | $14771138 | $8531371 | $10267487 | $9802959 | $5851682 |

---

**Note 10** – **Goodwill and Other Intangibles**

<u>Goodwill</u>

The carrying amount of the Company's goodwill was $4,506,000 as of June 30, 2025, and December 31, 2024.

<u>Other Intangible Assets</u>

The following table presents the carrying amount of the Company's other intangible assets as of June 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | Gross Carrying | Accumulated |  |
|  | Amount | Amortization | Net |
| Agency Relationships | $1930000 | $804160 | $1125840 |
| Trade Name | 130000 | 86673 | 43327 |
| Licenses | 50000 | 50000 |  |
| Total | $2110000 | $940833 | $1169167 |

---

Amortization expense was $133,625 for the six months ended both June 30, 2025, and 2024.

Other intangible assets that have finite lives, including agency relationships, trade names and licenses, are amortized over their useful lives. As of June 30, 2025, the estimated amortization of other intangible assets with finite lives for the next five years and thereafter is as follows:

---

| | |
|:---|:---|
| Year ending December 31, | Amount |
| 2025 | $133625 |
| 2026 | 267250 |
| 2027 | 245572 |
| 2028 | 241248 |
| 2029 | 241248 |
| Thereafter | 40224 |
|  | $1169167 |

---

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

**Note 11** – **Notes Payable**

ACP has a mortgage with a financial institution that matures in February 2036 and has a fixed interest rate of 4.15% per annum. A balloon payment of the remaining mortgage is due at maturity. Installments of 95% of 810 5th Street LLC's net rental proceeds, less $1,546 in replacement reserves and fees, are due monthly. Replacement reserves are included in other receivables. The mortgage outstanding balance as of June 30, 2025, and December 31, 2024, was $20,559,912 and $20,877,622, net of $929,532 and $973,104 of unamortized finance costs, respectively. The loan is secured by the property, held by 810 5th Street LLC, and the replacement reserve is held in escrow.

In addition to the mortgage, ACP has two commercial lines of credit with the same financial institution with monthly payments totaling $35,206, maturing November 2025. Interest was calculated using a floating rate based off the 5-year treasury rate, subject to a floor of 4.25%. Effective November 2020, interest became fixed at 4.25%. ACP expects to refinance this debt before the loan matures in 2025. The outstanding balances on the lines of credit as of June 30, 2025, and December 31, 2024, were $4,663,664 and $4,765,630, net of $3,006 and $6,612 in unamortized finance costs, respectively. The lines of credit are secured by the properties held by 717 8th Street LLC and 2805 M Street LLC.

In order to obtain the loans, finance costs were incurred and are being amortized over the loans' terms. Interest expense included $47,180 of amortized finance costs in each of the six-month periods ended June 30, 2025, and 2024.

Under the terms of each of the credit facilities, each of the borrowers has granted the bank a right of set-off so that, in the event of a default, the bank may set-off the balance in the defaulting borrower's account against amounts owed to the bank. On June 30, 2025, and December 31, 2024, amounts included in cash and cash equivalents that were subject to the right of set-off were as follows:

---

| | | |
|:---|:---|:---|
|  | June 30, | December 31, |
| Borrower | 2025 | 2024 |
| 717 8th Street LLC | $424912 | $311241 |
| 2805 M Street LLC | 37367 | 30074 |
| Total | $462279 | $341315 |

---

Current and long-term debt maturity on June 30, 2025, and December 31, 2024 were as follows:

---

| | | |
|:---|:---|:---|
|  | June 30, | December 31, |
|  | 2025 | 2024 |
| Current maturity | $5379962 | $5447525 |
| Current portion of unamortized finance costs | (90149) | (93755) |
| Current maturity, net of unamortized finance costs | $5289813 | $5353770 |
| Long-term maturity | 20776152 | 21144417 |
| Unamortized finance costs | (842389) | (885961) |
| Long-term maturity, net of unamortized finance costs | 19933763 | 20258456 |
| Notes payable | $25223576 | $25612226 |

---

------

Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

Annual long-term debt maturities as of June 30, 2025, for the twelve-month periods ending June 30 were as follows:

---

| | |
|:---|:---|
| ***For the twelve-month period ending June 30*** |  |
| 2027 | $792672 |
| 2028 | 876885 |
| 2029 | 966181 |
| 2030 | 1060821 |
| 2031 | 1161076 |
| Thereafter | 15918517 |
| Total notes payable | 20776152 |
| Unamortized finance costs | (842389) |
| Notes payable, net of unamortized finance costs | $19933763 |

---

**Note 12** – **Employee Benefits**

<u>401(k) Plan</u>

In 2007, the Company introduced a Safe Harbor 401(k) plan for its employees. Contributions of 3% of each employee's compensation are made each year. The Company's accrued contributions for the six-month periods ending June 30, 2025, and 2024 were $49,032 and $44,933, respectively.

<u>Defined Benefit Pension Plan</u>

The Company has a non-contributory defined benefit pension plan (the "Pension"). The Pension benefits are based on years of service and the employee's compensation. The Pension covered all employees of FIC who had completed one year of service and attained age 21 before June 20, 2006. As of June 20, 2006, the Company decided to freeze the accrual of the future benefits for the Pension. Accordingly, there have not been, nor will there be, additional benefits credited to plan participants after June 20, 2006.

For the six-month periods ending June 30, 2025, and 2024, the components of the net periodic benefit costs related to the pension plan were as follows:

---

| | | |
|:---|:---|:---|
|  | June 30, | June 30, |
|  | 2025 | 2024 |
| Net periodic benefit costs: |  |  |
| Interest costs | $101807 | $94894 |
| Expected return on plan assets | (119964) | (117482) |
| Amortization of actuarial loss | 23548 | 28382 |
| Total net periodic benefit costs | $5391 | $5794 |

---

The Company made a contribution in the amount of $37,670 to the defined benefit plan during the six-month periods ended June 30, 2025 and did not make any contributions to the defined benefit plan during the six-month period ended June 30, 2024.

<u>ESOP</u>

In connection with our public offering, the Company established an employee stock ownership plan (the "ESOP"). The ESOP borrowed from the Company to purchase 202,950 shares in the offering. The issuance of the shares to the ESOP resulted in a contra account established in the equity section of the balance sheet for the unallocated shares at an amount equal to their $10.00 per share purchase price.

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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The Company may make discretionary contributions to the ESOP and pay dividends on unallocated shares to the ESOP. The Company makes annual contributions to the ESOP sufficient to repay the loan. When loan payments are made, ESOP shares are allocated to participants based on relative compensation. The Company repurchases shares from participants that have left our employment. The Company made no contributions to the ESOP for the six months ending June 30, 2025, and $226,772 for the 6 months ending June 30, 2024.

A compensation expense charge is booked monthly during each year for the shares committed to be allocated to participants that year, determined with reference to the fair market value of our stock at the time the commitment to allocate the shares is accrued and recognized. For the six months ended June 30, 2025, the Company recognized $136,991 related to 10,148 shares of our common stock that are committed to be released to participants' accounts for 2025. For the six months ended June 30, 2024, the Company recognized compensation expense of $121,770 related to 10,148 shares of our common stock that were committed to be released to participants accounts for 2024.

<u>Share-based Compensation</u>

In connection with our conversion and public offering, the Company established the Forge Group, Inc. 2021 Stock and Incentive Plan (the "Plan"). The purpose of the Plan is to promote the interests of the Company and its shareholders by aiding the Company in attracting, retaining, and motivating employees and non-employee directors. The Plan provides for the grant of restricted stock awards, restricted stock unit awards, qualified stock options and nonqualified stock options.

The total aggregate number of shares of common stock that may be issued under the Plan shall not exceed 287,000 shares, subject to adjustments as provided in the Plan. No eligible participant may be granted any awards for more than 100,000 shares in the aggregate in any calendar year, subject to adjustments in accordance with the Plan.

The Board of Directors has granted restricted stock awards to non-employee directors annually since March of 2022. Additionally, the Board of Directors granted a restricted stock award to one employee officer in March of 2023. The restricted stock awards vest over various periods. Dividend equivalents on restricted stock awards are accrued during the vesting period and paid in cash at the end of the vesting period but are subject to forfeiture until the underlying shares become vested. Participants do not have voting rights with respect to unvested restricted stock grants. The Company recognizes stock-based compensation costs for restricted stock awards based on the grant date fair value. The compensation costs are expensed over the vesting periods to each vesting date. Estimated forfeitures are included in the determination of compensation costs. No forfeitures are currently estimated.

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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A summary of the Company's outstanding and unearned restricted stock awards is presented below:

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| | | |
|:---|:---|:---|
|  |  | Weighted-Average |
|  |  | Grant Date Fair |
|  | Shares | Value Per Share |
| Restricted shares outstanding and unearned at January 1, 2024 | 23000 | 10.14 |
| Shares granted during 2024 | 6500 | 10.78 |
| Shares earned during 2024 | (2000) | 10.00 |
| Shares earned during 2024 | (7917) | 10.21 |
| Restricted shares outstanding and unearned at June 30, 2024 | 19583 | $10.34 |
| Restricted shares outstanding and unearned at January 1, 2025 | 19583 | 10.34 |
| Shares granted during 2025 | 6500 | 11.83 |
| Shares earned during 2025 | (2000) | 10.00 |
| Shares earned during 2025 | (1417) | 10.21 |
| Shares earned during 2025 | (6500) | 10.78 |
| Restricted shares outstanding and unearned at June 30, 2025 | 16166 | $10.81 |

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The Board of Directors has awarded qualified and non-qualified stock options. The options vest over various periods or performance objectives. The Company recognizes stock-based compensation costs for stock options based on the grant date fair value. The compensation costs are normally expensed over the actual or estimated vesting periods to each vesting date. Estimated forfeitures are included in the determination of compensation costs.

A summary of the Company's outstanding and unearned option awards is presented below:

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| | | |
|:---|:---|:---|
|  |  | Weighted-Average |
|  |  | Grant Date Fair |
|  | Shares | Value Per Share |
| Options outstanding and unearned at January 1, 2024 | 100000 | $10.28 |
| Options granted during 2024 | 4500 | 10.70 |
| Options forfeited during 2024 |  |  |
| Options earned during 2024 | (3333) | 10.70 |
| Options earned during 2024 | (10000) | 10.00 |
| Options outstanding and unearned at June 30, 2024 | 91167 | 10.32 |
| Options outstanding and unearned at January 1, 2025 | 87833 | 10.28 |
| Options granted during 2025 | 9500 | 11.50 |
| Options forfeited during 2025 |  |  |
| Options earned during 2025 | (10000) | 10.00 |
| Options earned during 2025 | (3333) | 10.21 |
| Options earned during 2025 | (900) | 10.70 |
| Options outstanding and unearned at June 30, 2025 | 83100 | $10.45 |

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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**Note 13** – **Other Comprehensive Income**

The following tables summarize the net change in after-tax accumulated other comprehensive income for the six months ending June 30, 2025, and 2024 and significant amounts reclassified out of accumulated other comprehensive income for the six months ending June 30, 2025, and 2024.

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| | | | |
|:---|:---|:---|:---|
|  | Unrealized |  | Accumulated other |
|  | appreciation on | Defined | comprehensive |
|  | investments, net | Benefit Plan | income (loss) |
| Balance at January 1, 2024 | $(815764) | $(1336653) | $(2152417) |
| Other Comprehensive income before reclassifications | 6341 |  | 6341 |
| Reclassifications from accumulated other comprehensive income | 35683 |  | 35683 |
| Balance at June 30, 2024 | $(773740) | $(1336653) | $(2110393) |
| Balance at January 1, 2025 | $(653783) | $(1060486) | $(1714269) |
| Other Comprehensive income before reclassifications | 436927 |  | 436927 |
| Reclassifications from accumulated other comprehensive income |  |  |  |
| Balance at June 30, 2025 | $(216856) | $(1060486) | $(1277342) |

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**Note 14** – **Related Parties**

In 2019, the Company made an investment in Trustar Bank ("Trustar"), a newly formed financial institution. Certain members of the Board of Trustees of the Company maintain board of directors', advisory director, and executive management positions at Trustar. Accordingly, Trustar is considered a related party. The carrying value, which approximated fair value, of the investment in Trustar was $258,551 and $249,859 on June 30, 2025, and December 31, 2024, respectively.

On August 29, 2022, the Company's Finance and Investment Committee approved an investment commitment of $2,500,000 to Mutual Capital Investment Fund, LP ("MCIF"). The Company had a $1,195,449 unfunded commitment to MCIF as of June 30, 2025. MCIF is an investment fund that is focused on providing capital to mutual insurance companies in the U.S. property and casualty insurance segment. Jason Wolfe, a director of the Company, serves as the President and Chief Executive Officer of Mutual Capital Investment Advisors, LLC ("MCIA"), which serves as the investment adviser for MCIF.

**Note 15** – **Treasury Stock**

December 2024, the Company's Board of Directors approved a stock repurchase plan pursuant to which the Company may repurchase up to $1,000,000 of its outstanding shares of common stock. The stock repurchase plan covers the repurchase of shares of common stock commencing no earlier than January 1, 2025, and expiring December 31, 2025 (the "2025 Stock Repurchase Plan"). In January 2025, the Company repurchased 6,452 of its outstanding shares of common stock in a single transaction at a price of $11.25 per share. The total cash used for this share repurchase was $73,014, inclusive of commissions and transaction processing fees of $429.

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Forge Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

------

In December 2023, the Company's Board of Directors approved a stock repurchase plan pursuant to which the Company may repurchase up to $1,000,000 of its outstanding shares of common stock. The stock repurchase plan covered the repurchase of shares of common stock commencing no earlier than January 1, 2024, and expiring December 31, 2024 (the "2024 Stock Repurchase Plan"). In February 2024, the Company repurchased 16,000 of its outstanding shares of common stock in a single transaction at a price of $8.75 per share. The total cash used for this share repurchase was $140,806, inclusive of commissions and transaction processing fees of $806.

**Note 16** – **Commitments and Contingencies**

<u>Litigation</u>

The Company is party to numerous claims, losses, and litigation matters that arise in the normal course of business for the Company's wholly owned insurance subsidiary, FIC. Many of such claims, losses, or litigation matters involve claims under policies that the Company underwrites as an insurer. The Company believes that the resolution of these claims and any resulting losses will not have a material adverse effect on the Company's financial condition, results of operations, or cash flows.

**Note 17** – **Income Taxes**

The Company files a U.S. federal income tax return that includes the pass-through income or loss of majority owned direct and indirect subsidiaries. State tax returns are filed depending on applicable laws. The Company records adjustments related to prior years' taxes during the period in which they are identified, generally when the tax returns are filed. The effect of these adjustments on the current and prior periods (during which the differences originated) is evaluated based upon quantitative and qualitative factors and are considered in relation to the consolidated financial statements taken as a whole for the respective years.

At June 30, 2025 and December 31, 2024, we had no unrecognized tax benefits, no accrued interest and penalties, and no significant uncertain tax positions. No interest and penalties were recognized during the six-month periods ending June 30, 2025, or 2024.

At December 31, 2024, the Company had net operating loss "NOL" carry forwards available for tax purposes of $13,158,727 that will begin to expire in 2037.

Generally, taxing authorities may examine the Company's tax returns for the three years from the date of filing. The Company's tax returns for the years ended December 31, 2022, through December 31, 2024, remain subject to examination.

**Note 18** – **Subsequent Events**

The Company has evaluated events that occurred subsequent to June 30, 2025, through September 5, 2025, the date on which the unaudited consolidated financial statements were issued for matters that required disclosure or adjustment to these consolidated financial statements.

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**ITEM 4. EXHIBITS**

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| | |
|:---|:---|
| **Exhibit No.** | **Description of Exhibit** |
| 2.1 | [<u>Amended and Restated Articles of Incorporation of Forge Group, Inc.\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521361342/d340984dex1a2acharter.htm) |
| 2.2 | [<u>Bylaws of Forge Group, Inc.\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521361342/d340984dex1a2bbylaws.htm) |
| 3.1 | [<u>Amended and Restated Amalgamated Casualty Insurance Company Plan of Conversion from Mutual to Stock Form adopted February 3, 2021.\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521361342/d340984dex1a6matctrct.htm) |
| 3.2 | [<u>Form of Stock Certificate of Forge Group, Inc.\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521361342/d340984dex1a6matctrct1.htm) |
| 3.3 | [<u>Statement with Respect to Shares for Series A 8.5% Cumulative Convertible Preferred Stock of Forge Group, Inc.\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521361342/d340984daddexhb.htm) |
| 4.1 | [<u>Stock Order Form and Instructions\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521361342/d340984dex1a6matctrct2.htm) |
| 6.1 | [<u>Forge Group, Inc. 2021 Stock Incentive Plan\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521228302/d340984dex1a6matctrct.htm) |
| 6.2 | [<u>Form of Non-Qualified Stock Option Award Agreement under the Forge Group, Inc. 2021 Stock Incentive Plan\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521228302/d340984dex1a6matctrct1.htm) |
| 6.3 | [<u>Form of Qualified Stock Option Award Agreement under the Forge Group, Inc. 2021 Stock Incentive Plan\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521228302/d340984dex1a6matctrct2.htm) |
| 6.4 | [<u>Form of Restricted Stock Award Agreement under the Forge Group, Inc. 2021 Stock Incentive Plan\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521228302/d340984dex1a6matctrct3.htm) |
| 6.5 | [<u>Automobile Excess of Loss Reinsurance Contract dated June 1, 2020, between Amalgamated Casualty Insurance Company, Swiss Reinsurance America Corporation, Renaissance Reinsurance US, Inc. and Odyssey Reinsurance Company\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521172252/d340984dex1a6matctrct.htm) |
| 6.6 | [<u>Forge Group, Inc. Employee Stock Ownership Plan\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521228302/d340984dex1a6matctrct4.htm) |
| 6.7 | [<u>Employment Agreement dated January 5, 2022, between Forge Group, Inc., Amalgamated Casualty Insurance Company and Patrick J. Bracewell\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312522020299/d340984dex1a6matctrct.htm) |
| 6.8 | [<u>Form of Restricted Stock Unit Award Agreement under the Forge Group, Inc. 2021 Stock Incentive Plan.\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521228302/d340984dex1a6matctrct5.htm) |
| 7.1 | [<u>Stock Purchase Agreement dated April 7, 2021, between Amalgamated Specialty Group, Inc. and MCW Holdings, Inc.\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312521172252/d340984dex1a7acqagmt.htm) |
| 8.1 | [<u>Form of Escrow Agreement among Griffin Financial Group, LLC, Amalgamated Casualty Insurance Company, Forge Group, Inc., and Computershare Trust Company, N.A.\*\*</u>](http://www.sec.gov/Archives/edgar/data/1846702/000119312522020299/d340984dex1a6matctrct1.htm) |

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\*\* Previously filed.

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**SIGNATURES**

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Exact name of issuer as specified in its charter): **Forge Group, Inc.** 

This report has been signed by the following persons in the capacities and on the dates indicated.

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| | |
|:---|:---|
| By:  | */s/ Patrick J. Bracewell* |
|  | Name: Patrick J. Bracewell<br> Title: Chief Executive Officer<br> (Principal Executive Officer) |

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(Date): September 5, 2025

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| | |
|:---|:---|
| By:  | */s/ Stephanie E. Taylor* |
|  | Name: Stephanie E. Taylor<br> Title: Vice President, Treasurer, and Chief Financial Officer<br> (Principal Financial Officer, Principal Accounting Officer) |

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(Date): September 5, 2025

Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.

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| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */s/ Patrick J. Bracewell* | Chairman, President and Chief Executive | September 5, 2025 |
| Patrick J. Bracewell | Officer, Director |  |
| */s/ Shaza L. Andersen* | Director | September 5, 2025 |
| Shaza L. Andersen |  |  |
| */s/ Fred L. Brewer* | Director | September 5, 2025 |
| Fred L. Brewer |  |  |
| */s/ Jason K. Wolf* | Director | September 5, 2025 |
| Jason K. Wolfe |  |  |

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