Reliance Global Group Inc

Previous wording

Over the next 12 months, we plan to focus on the expansion and growth of our business through continued asset acquisitions in insurance markets and organic growth of our current insurance operations through geographic expansion and market share growth, and more specifically, on May 14, 2024, the Company announced the signing of a definitive agreement to acquire Spetner Associates (“Spetner”), a well-established benefits enrollment company that, through its BenManage benefits enrollment company, is a leading provider of voluntary benefits to over 75,000 employees throughout the United States. Pursuant to a Stock Exchange Agreement (the “SE Agreement”), dated as of May 14, 2024, by and among the parties thereto, the Company shall: (i) acquire eighty percent (80%) of the issued and outstanding shares of common stock, par value $1.00 per share, of Spetner (the “Spetner Common Stock”) for the amount of $13,714,286 (which shall be paid in $8 million cash, the issuance of certain shares of common stock of the Company, and the issuance a promissory note of the Company); and (ii) have the sole option to acquire the remaining twenty percent (20%) of the Spetner Common Stock for a predetermined amount based on a multiple of EBITDA.

Current wording

Over the next 12 months, we plan to focus on the expansion and growth of our business through continued asset acquisitions in insurance markets and organic growth of our current insurance operations through geographic expansion and market share growth. To that end, on May 14, 2024, the Company entered into a Stock Exchange Agreement (the “Stock Exchange Agreement”) to acquire Spetner Associates (“Spetner”), a well-established benefits enrollment company that, through its BenManage benefits enrollment company, is a leading provider of voluntary benefits to over 75,000 employees throughout the United States. Pursuant to the Stock Exchange Agreement, the Company agreed to: (i) acquire 80% of Spetner’s issued and outstanding shares of common stock, par value $1.00 per share (the “Spetner Common Stock”) for $13,714,286 (which amount was to be paid as $8,000,000 in cash, the issuance of certain shares of the Company’s common stock, and the Company’s issuance of a promissory note; and (ii) have the sole option to acquire the remaining 20% of the Spetner Common Stock for a predetermined amount based on a multiple of EBITDA

Previous wording

We’ve adopted a ‘One-Firm’ strategy, whereby the Reliance owned and operated agencies come together to operate as one cohesive unit which allows for efficient and effective cross-selling, cross-collaboration, and the effective deployment of the Company’s human capital. This strategy also aims to enhance the Company’s overall market presence across the U.S., with all business lines operating under the RELI Exchange brand. It’s expected to benefit agents and clients by improving relationships with carriers, leading to better commission and bonus contracts due to higher business volumes. The approach also strengthens the capability of RELI Exchange agency partners in securing diverse insurance policies and fosters increased cross-selling opportunities. This unified strategy positions the company for rapid scaling and integration of accretive acquisitions, expanding its industry reach.

Current wording

We’ve adopted a “One-Firm” strategy, pursuant to which Company owned and operated agencies come together to operate as one cohesive unit, which allows for efficient and effective cross-selling, cross-collaboration, and the effective deployment of the Company’s human capital. This strategy also aims to enhance the Company’s overall market presence across the U.S., with all business lines operating under the RELI Exchange brand. It’s expected to benefit agents and clients by improving relationships with carriers, leading to better commission and bonus contracts due to higher business volumes. The approach also strengthens the capability of RELI Exchange agency partners in securing diverse insurance policies and fosters increased cross-selling opportunities. This unified strategy positions the Company for rapid scaling and integration of accretive acquisitions, expanding its industry reach.

Previous wording

The Company’s financial instruments as of March 31, 2024, consist of derivative warrants. These are accounted at fair value as of inception/issuance date, and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, (non-cash) gain or loss.

Current wording

During the quarter ended June 30, 2024, the Company’s financial instruments consisted of derivative warrants. These were accounted at fair value as of inception/issuance date, and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, (non-cash) gain or loss. As of June 18, 2024, all of the remaining derivative warrants were exercised and there are currently none outstanding.

Previous wording

As of the balance sheet date, we have acquired multiple insurance brokerages (see table below). As our acquisition strategy continues, our reach within the insurance arena can provide us with the ability to offer lower rates, which could boost our competitive position within the industry. In furtherance of this strategy, on May 14, 2024, the Company entered into a Stock Exchange Agreement to acquire Spetner Associates (“Spetner”) for cash, stock and issuance of a promissory note. Spetner is a well-established benefits enrollment company that, through its BenManage benefits enrollment company, is a leading provider of voluntary benefits to over 75,000 employees throughout the United States. Completion of the transaction is subject to standard and stipulated closing. See “Note 10. Subsequent Events” to the financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

As of the balance sheet date, we have acquired multiple insurance brokerages (see table below). As our acquisition strategy continues, our reach within the insurance arena can provide us with the ability to offer lower rates, which could boost our competitive position within the industry. In furtherance of this strategy, on May 14, 2024, the Company entered into a Stock Exchange Agreement to acquire Spetner Associates (“Spetner”) for cash, stock and issuance of a promissory note. Spetner is a well-established benefits enrollment company that, through its BenManage benefits enrollment company, is a leading provider of voluntary benefits to over 75,000 employees throughout the United States. Completion of the transaction is subject to standard and stipulated closing.

Previous wording

The Company believes certain financial measures which meet the definition of non-GAAP financial measures, as defined in Regulation G of the SEC rules, provide important supplemental information. Namely our key financial performance metric Adjusted EBITDA (“AEBITDA”) is a non-GAAP financial measure that is not in accordance with, or an alternative to, measures prepared in accordance with GAAP. “AEBITDA” is defined as earnings before interest, taxes, depreciation, and amortization (EBITDA) with additional adjustments as further outlined below, to result in Adjusted EBITDA (or “AEBITDA”). The Company considers AEBITDA an important financial metric because it provides a meaningful financial measure of the quality of the Company’s operational, cash impacted and recurring earnings and operating performance across reporting periods. Other companies may calculate Adjusted EBITDA differently than we do, which might limit its usefulness as a comparative measure to other companies in the industry. AEBITDA is used by management in addition to and in conjunction (and not as a substitute) with the results presented in accordance with GAAP. Management uses AEBITDA to evaluate the Company’s operational performance, including earnings across reporting periods and the merits for implementing cost-cutting measures. We have presented AEBITDA solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations and assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Consistent with Regulation G, a description of such information is provided below herein and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Report on Form 10-Q under “Results of Operations”.

Current wording

The Company believes certain financial measures which meet the definition of non-GAAP financial measures, as defined in Regulation G of the SEC rules, provide important supplemental information. Adjusted EBITDA (“AEBITDA”), our key financial performance metric, is a non-GAAP financial measure that is not in accordance with, or an alternative to, measures prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). “AEBITDA” is defined as earnings before interest, taxes, depreciation, and amortization (EBITDA) with additional adjustments as further outlined below. The Company considers AEBITDA an important financial metric because it provides a meaningful financial measure of the quality of the Company’s operational, cash impacted and recurring earnings and operating performance across reporting periods. Other companies may calculate Adjusted EBITDA differently than we do, which might limit its usefulness as a comparative measure to other companies in the industry. AEBITDA is used by management in addition to and in conjunction (and not as a substitute) with the results presented in accordance with GAAP. Management uses AEBITDA to evaluate the Company’s operational performance, including earnings across reporting periods and the merits for implementing cost-cutting measures. We have presented AEBITDA solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations and assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Consistent with Regulation G, a description of such information is provided below herein and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q under “Results of Operations”.

Previous wording

We exclude the following items, and the following items define our non-GAAP financial measure AEBITDA:

Current wording

We exclude the following items when calculating AEBITDA, and the following items define our non-GAAP financial measure AEBITDA:

Previous wording

The following table provides a reconciliation from net (loss) income to AEBITDA (adjusted EBITDA) for the years ended December 31, 2023 and December 31, 2022.

Current wording

The following table provides a reconciliation from net loss to AEBITDA for the three and six months ended June 30, 2024 and June 30, 2023.

Previous wording

As of March 31, 2024, we had a cash balance of approximately $2,113,000 and working capital deficiency of approximately $120,000, compared with a cash balance of approximately $2,739,000 and working capital of approximately $1,189,000 at December 31, 2023. During the first quarter of 2024 the Company entered into an At Market Issuance Sales Agreement with EF Hutton as sales agent (the “ATM Agreement”) under which the Company may offer and sell, from time to time through the sales agent, shares of its Common Stock (the “Shares”), having an aggregate offering price of up to $858,637. Under the ATM Agreement, the Company pays the sales agent a commission equal to 3.5% of the aggregate gross proceeds of any sales of common stock under the ATM Agreement.

Current wording

As of June 30, 2024, we had a cash balance of approximately $2,816,000 and working capital of approximately $600,000, compared with a cash balance of approximately $2,739,000 and working capital of approximately $1,189,000 at December 31, 2023. During the first quarter of 2024, the Company entered into an At Market Issuance Sales Agreement with EF Hutton LLC as sales agent (the “ATM Agreement”), pursuant to which the Company may offer and sell, from time to time through the sales agent, shares of its common stock having an aggregate offering price as determined by the then in effect prospectus supplement to the base prospectus included in the registration statement (the “ATM Capacity”).

Previous wording

The Company generally may be impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases. The Company believes inflation could have a material impact to pricing and operating expenses in future periods due to the state of the economy and current inflation rates.

Current wording

The Company generally may be impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases. The Company believes inflation could have a material impact on pricing and operating expenses in future periods due to the state of the economy and current inflation rates.

Previous wording

We do not have any off-balance sheet arrangements as such term is defined in Regulation S-K.

Current wording

We did not have any off-balance sheet arrangements, as such term is defined in Regulation S-K, during the six months ended June 30, 2024.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 was approximately $204,000, compared to net cash flows used in operating activities of approximately $1.1 million for the three months ended March 31, 2023. The cash used includes net loss of approximately $5,347,000, decreased by approximate non-cash adjustments of $5,142,000 related to asset impairments of approximately $3,922,000, income of recognition and change in fair value of warrant liabilities of approximately $95,000, depreciation and amortization of approximately $534,000, other small adjustments totaling approximately $79,000, as well as a net increase in cash due to changes of net working capital items of approximately $702,000.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024, was approximately $890,000, compared to net cash flows used in operating activities of approximately $2.0 million for the six months ended June 30, 2023. The cash used includes a net loss of approximately $6,836,000, decreased by approximate non-cash adjustments of $5,332,000 related to asset impairments of approximately $3,922,000, gain from recognition and change in fair value of warrant liabilities of approximately $156,000, depreciation and amortization of approximately $1,004,000, other adjustments totaling approximately $562,000, as well as a net increase in cash due to changes of net working capital items of approximately $615,000.

Previous wording

During the three months ended March 31, 2024, cash flows used in investing activities approximated $29,000 compared to cash flows used in investing activities of approximately $96,000 for the three months ended March 31, 2023. The cash used is primarily related to the purchase of property and equipment.

Current wording

During the six months ended June 30, 2024, cash flows used in investing activities approximated $36,500 compared to cash flows used in investing activities of approximately $735,000 for the six months ended June 30, 2023. The cash used is primarily related to the purchase of fixed tangible and intangible assets.

Previous wording

During the three months ended March 31, 2024, approximate cash used in financing activities was $392,000 as compared to approximately $2.8 million provided for the three months ended March 31, 2023. Net cash used in financing activities relates to proceeds from common shares issued pursuant to the ATM Agreement totaling approximately $125,000, offset by net debt principal, short term financings, and related party payables repayments of approximately $517,000.

Current wording

During the six months ended June 30, 2024, approximate cash used in financing activities was $1.0 million, as compared to approximately $2.0 million provided for the six months ended June 30, 2023. Net cash used in financing activities relates to proceeds from common shares issued pursuant to the ATM Agreement totaling approximately $2,068,000, offset by net debt principal, net short-term financings, and related party payables repayments of approximately $1,066,000.