The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the accompanying Unaudited Consolidated Financial Statements, the notes thereto and the other unaudited financial data included in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with the audited consolidated financial statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2026. The terms the “Company”, “we”, “our” or “us” refer to HG Holdings, Inc., together with its consolidated subsidiaries, and unless otherwise defined herein, capitalized terms used herein shall have the same meanings as set forth in our accompanying Unaudited Consolidated Financial Statements and the notes thereto. Forward-Looking Statements Certain statements made in this report are not based on historical facts, but are forward-looking statements. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “may,” “will,” “should,” “could,” "would," "intends" or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These statements reflect our reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include the occurrence of events that negatively impact the Company’s liquidity in such a way as to limit or eliminate the Company’s ability to use its cash on hand to fund further asset acquisitions, an inability on the part of the Company to identify additional suitable businesses to acquire or develop, and the occurrence of events that negatively impact the title insurance operations of the Company’s subsidiaries and/or the business or assets of HC Realty and the value of our investment in HC Realty, such as HC Realty’s dependence on leases by the U.S. government and its agencies for substantially all of its revenues, and the risk that the U.S. government reduces its spending on real estate or that it changes its preference away from leased properties. Any forward-looking statement speaks only as of the date of this filing and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise. Overview For a description of our business, including descriptions of segments and recent business developments, see the discussion in Note 1, Basis of Presentation and Nature of Operations – Description of the Business in the accompanying Unaudited Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Part I, Item 2. As of June 30, 2026, our sources of income include earnings from our title insurance subsidiaries, management service fees and interest earned on invested assets. The Company believes that the revenue generated from these sources and cash on hand is sufficient to fund operating expenses for at least 12 months from the date of the accompanying Unaudited Consolidated Financial Statements. The Company will continue to pursue acquisition opportunities which will allow us to potentially derive benefit from the Company’s net operating loss carryforwards and also create appropriate risk adjusted returns for stockholders. 24 Table of Contents Title Insurance Segment Trends and Conditions Our title insurance segment revenue is closely related to the level of real estate activity, such as sales, mortgage financing and mortgage refinancing. Declines in the level of real estate activity or the average price of real estate sales will adversely affect our title insurance revenues. The industry as a whole saw declined levels in total real estate transactions in the last several years, largely due to higher mortgage interest rates as compared to pre-2022 levels. During its September, October and December 2025 meetings, the Federal Reserve lowered the federal funds rate by a total of 75 basis points to a current range of 3.50% to 3.75%; however, amid renewed inflationary pressures and ongoing macroeconomic uncertainty and geopolitical tensions, the Federal Reserve held the federal funds rate steady through the first half of 2026. While additional federal funds rate decreases, if and when implemented, may positively impact the title insurance market, ongoing macroeconomic uncertainty and geopolitical tensions have created elevated volatility in domestic and global markets, making it challenging to forecast industry trends or possible rate changes. Per the Mortgage Bankers Association's ("MBA") Mortgage Finance Forecast as of July 2026, interest rates on a Freddie Mac 30-year, fixed-rate mortgage have averaged approximately 6.49% to 6.52% through June and early July 2026, relatively stable following the recent high of 6.57% in March 2026. Despite continued elevated mortgage rates, the MBA projects a gradual recovery in the housing market. Per the July 2026 MBA Mortgage Finance Forecast, total single-family mortgage origination volume is now forecast to increase by approximately 5.5% in 2026 as compared to 2025, from approximately $2.05 trillion in origination value to $2.16 trillion. Purchase mortgage origination volume is expected to total approximately $1.42 trillion in origination value in 2026, up from approximately $1.36 trillion in 2025, while refinance origination volume is expected to increase to approximately $747 billion in origination value from approximately $694 billion in 2025. Because commercial real estate transactions tend to be generally driven by supply and demand for commercial space and occupancy rates in a particular area rather than by interest rate fluctuations, we believe that our commercial real estate title insurance business is less dependent on the industry cycles discussed above than our residential real estate title business. Commercial real estate transaction volume is also often linked to the availability of financing. Factors including U.S. tax reform and a shift in U.S. monetary policy have had, or are expected to have, varying effects on availability of financing in the U.S. Lower corporate and individual tax rates, and corporate tax-deductibility of capital expenditures have provided increased capacity and incentive for investments in commercial real estate. Historically, real estate transactions have produced seasonal revenue fluctuations in the real estate industry. The first calendar quarter is typically the weakest quarter in terms of revenue due to the generally low volume of home sales during January and February. The second and third calendar quarters are typically the strongest quarters in terms of revenue, primarily due to a higher volume of residential transactions in the spring and summer months. The fourth quarter is typically strong due to the desire of commercial entities to complete transactions by year-end. Seasonality in recent years deviated from historical patterns due to changes in interest rates and other market conditions. Results from Operations (in thousands) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2026 2025 Change 2026 2025 Change Revenues: Net premium written $ 2,101 $ 1,998 $ 103 $ 3,679 $ 3,386 $ 293 Escrow and other title fees 854 812 42 1,592 1,396 196 Management fees from related parties 1,500 1,250 250 3,000 2,000 1,000 Total revenues 4,455 4,060 395 8,271 6,782 1,489 Cost of revenues (173 ) (157 ) (16 ) (313 ) (257 ) (56 ) Gross profit $ 4,282 $ 3,903 $ 379 $ 7,958 $ 6,525 $ 1,433 Operating expenses (3,292 ) (3,321 ) 29 (6,552 ) (6,492 ) (60 ) Other income, net 363 366 (3 ) 746 635 111 Income from operations before income taxes $ 1,353 $ 948 $ 405 $ 2,152 $ 668 $ 1,484 25 Table of Contents Comparison of three and six months ended June 30, 2026 and 2025 The Company’s net premium written were $2.1 million and $3.7 million for the three and six months ended June 30, 2026, respectively, compared with $2.0 million and $3.4 million for the corresponding periods in 2025. Net premium written increased by $0.1 million, or 5.2%, for the three-month period ended June 30, 2026 as compared to the three-month period ended June 30, 2025, and by $0.3 million, or 8.7%, for the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025. The increase in net premium written was due to higher volume of affiliated title insurance business in 2026 as compared to the same period of the prior year. Escrow and other title fees were $0.9 million and $1.6 million for the three and six months ended June 30, 2026, respectively, compared with $0.8 million and $1.4 million for the corresponding periods in 2025. Escrow and other title fees increased by less than $0.1 million, or 5.2%, for the three-month period ended June 30, 2026 as compared to the three-month period ended June 30, 2025, and by $0.2 million, or 14.0%, for the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025, primarily due to higher volume of affiliated title insurance business in 2026 as compared to the same period of the prior year. Management fees were $1.5 million and $3.0 million for the three and six months ended June 30, 2026, respectively, compared with $1.3 million and $2.0 million for the corresponding periods in 2025. Management fees increased by $0.3 million, or 20.0%, for the three-month period ended June 30, 2026 as compared to the three-month period ended June 30, 2025, and by $1.0 million, or 50.0%, for the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025. The increase was due to the Services Agreement with HP Risk becoming effective June 1, 2025. HP Risk is a wholly-owned subsidiary of HP Holding Company, LLC, which, in turn, is wholly owned by certain affiliates of Steven A. Hale II, our Chairman and Chief Executive Officer, pursuant to which the Company is providing certain managerial and operational services to HP Risk for consideration from HP Risk of $6.0 million per year over the course of three years. Such services include, but are not limited to: reinsurance brokerage services; the review and improvement of financial goals; compliance with legal and regulatory mandates; maintenance of an ethical business environment; investment and asset manager compliance; cash and equity management; corporate tax management; personnel management; related party transaction oversight; tax preparation administration; strategic capital modeling; the review of potential acquisitions and transactions involving affiliates and third parties, including but not limited to, renewal rights deals, loss portfolio transfers or entity acquisitions; execution of (or provision for the execution of) all general corporate legal matters; and provision of internal control management services. Total revenue was $4.5 million and $8.3 million for the three and six-month periods ended June 30, 2026, respectively, compared with $4.1 million and $6.8 million for the three and six months ended June 30, 2025. Total revenue increased by $0.4 million, or 9.7%, for the three-month period ended June 30, 2026 as compared to the three-month period ended June 30, 2025, and by $1.5 million, or 22.0%, for the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025. The increase in revenue was primarily a result of the management fees derived from the Services Agreement with HP Risk and higher volume of affiliated title insurance business in 2026 as compared to the same period of the prior year. The Company’s cost of revenues consists primarily of a provision for title claim losses and underwriting expenses, which are largely comprised of commissions to unaffiliated title agencies. Cost of revenues was generally flat at $0.2 million and $0.3 million for the three and six months ended June 30, 2026, respectively, compared with $0.2 million and $0.3 million for the three and six months ended June 30, 2025, respectively. The Company’s operating expenses primarily consist of general and administrative expenses such as personnel expenses, office and technology expenses, and professional fees. Operating expenses were generally flat at $3.3 million and $6.6 million for the three and six months ended June 30, 2026, respectively, compared with $3.3 million and $6.5 million for the three and six months ended June 30, 2025. Other income, net primarily consists of net interest income, change in the net asset value of investment in limited partnership as well as changes in value and income or loss from our related party investments. Other income, net was $0.4 million and $0.7 million, respectively, for the three and six-month periods ended June 30, 2026, compared to $0.4 million and $0.6 million for the three and six-month periods ended June 30, 2025. Other income, net, was generally unchanged for the three-month period ended June 30, 2026 as compared to the three-month period ended June 30, 2025, and increased by $0.1 million, or 17.5%, for the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025. The increase was primarily a result of higher income from investments in limited partnerships for the six-month period ended June 30, 2026 as compared to the corresponding period in 2025. 26 Table of Contents Financial Condition, Liquidity and Capital Resources Sources of liquidity include cash on hand, earnings from our title insurance subsidiaries, management service fees and interest earned on invested assets. At June 30, 2026, we had $12.3 million in cash and cash equivalents and an additional $9.8 million in restricted cash, substantially all of which is cash held in escrow for title insurance transactions. A portion of our unrestricted and restricted cash is currently held in savings accounts earning interest at approximately 3.4% annually. During the second quarter of 2025, the Company entered into the Services Agreement with HP Risk under which the Company earns a management advisory fee of $6.0 million per year over the course of three years. We believe that the sources stated above will be sufficient to satisfy our operating requirements for the foreseeable future, and we do not anticipate a need to raise funds from sources other than those described above within the next 12 months. Cash Flows (in thousands) Six Months Ended Six Months Ended June 30, 2026 June 30, 2025 Net cash provided by operating activities $ 4,945 $ 2,907 Net cash provided by investing activities 472 1,059 Net cash used in financing activities (359 ) (3,851 ) Net increase in cash and cash equivalents and restricted cash 5,058 115 Cash and cash equivalents and restricted cash at beginning of period $ 17,079 $ 20,409 Cash and cash equivalents and restricted cash at end of period $ 22,137 $ 20,524 Cash flows provided by operating activities differ from net income due to adjustments for non-cash items, such as gains and losses on investments, the timing of disbursements for taxes, claims and other accrued liabilities, and collections or changes in receivables and other assets. Net cash provided by operating activities of $4.9 million differs from operating results for the six-month period ended June 30, 2026, primarily due to an increase of $3.1 million in escrow liabilities on the title insurance subsidiaries. Net cash provided by operating activities of $2.9 million differs from operating results for the six-month period ended June 30, 2025, primarily due to an increase of $2.8 million in escrow liabilities on the title insurance subsidiaries. Cash flows provided by investing activities include effects of purchases of investments and proceeds from sales or maturities of investments. During the six-month period ended June 30, 2026, the Company received proceeds from its investments in limited partnership of $0.5 million and purchased approximately $19,000 in property and equipment. During the six-month period ended June 30, 2025, the Company's fixed income portfolio matured, resulting in $1.0 million in proceeds. Additionally, during the six-month period ended June 30, 2025, the Company received proceeds from its investments in limited partnership of $0.3 million and provided additional contributions to related parties of $0.3 million. Cash flows used in financing activities include share repurchases and effects of changes in noncontrolling interest. Cash flows used in financing activities for the six-month period ended June 30, 2026 of $359,000 consisted of $287,000 of repurchases of common stock and $72,000 of distributions to noncontrolling interest shareholders. Cash used in financing activities during the six-month period ended June 30, 2025 consisted of $3.8 million of repurchases of common stock and $17,000 of distributions to noncontrolling interest shareholders. Critical Accounting Policies Our critical accounting policies and estimates are provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K for the year ended December 31, 2025. We believe there have been no new critical accounting policies or material changes to our existing critical accounting policies and estimates during the three and six months ended June 30, 2026. 27 Table of Contents