Reliance Global Group Inc

Previous wording

As part of our growth and acquisition strategy, we continue to survey the current insurance market for value-add acquisition opportunities. As of June 30, 2024, we have acquired nine insurance agencies.

Current wording

As part of our growth and acquisition strategy, we continue to survey the current insurance market for value-add acquisition opportunities. As of September 30, 2024, we had acquired nine insurance agencies.

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. 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

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 $5,500,000 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

Further, we launched our 5MinuteInsure.com (“5MI”) Insurtech platform during 2021, which expanded our national footprint. 5MI is a high-tech proprietary tool developed by us as a business to consumer portal which enables consumers to instantly compare quotes from multiple carriers and purchase their car and home insurance in a time efficient and effective manner. 5MI taps into the growing number of online shoppers and utilizes advanced artificial intelligence and data mining techniques, to provide competitive insurance quotes in around 5 minutes with minimal data input needed from the consumer. The platform launched during the summer of 2021 and currently operates in 46 states offering coverage with up to 30 highly rated insurance carriers.

Current wording

Further, we launched our 5MinuteInsure.com (“5MI”) Insurtech platform during 2021, which expanded our national footprint. 5MI is a high-tech proprietary tool developed by us as a business to consumer portal which enables consumers to instantly compare quotes from multiple carriers and purchase their car and home insurance in a time efficient and effective manner. 5MI taps into the growing number of online shoppers and utilizes advanced artificial intelligence and data mining techniques, to provide competitive insurance quotes in around 5 minutes with minimal data input needed from the consumer. The platform currently operates in 46 states offering coverage with up to 30 highly rated insurance carriers.

Previous 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.

Current wording

We’ve adopted a “OneFirm” 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

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.

Current wording

During the nine months ended September 30, 2024, the Company’s financial instruments consisted of derivative warrants. These were accounted for 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, the majority of the derivative warrants were exercised and as of September 30, 2024 only a nominal immaterial amount remain 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.

Current wording

As of September 30, 2024, 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

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023

Current wording

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023

Previous wording

Non-GAAP Reconciliation from Net (Loss) Income to AEBITDA

Current wording

Non-GAAP Reconciliation from Net Loss to AEBITDA

Previous 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.

Current wording

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

Previous 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”).

Current wording

As of September 30, 2024, we had a cash balance of approximately $2,354,000 and working capital of approximately $431,000, 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

During the six months ended June 30, 2024, the Company sold 313,713 shares of common stock under the ATM Agreement, at an average price of $5.3492, resulting in proceeds, net of $141,631 in agent commissions and legal and other fees, of $2,068,344. From the net sales proceeds, $146,174 was received in July 2024 and was recorded in the other receivables account in the unaudited condensed consolidated balance sheets as of June 30, 2024. As of the date of filing of this Quarterly Report on Form 10-Q, the net remaining ATM Capacity was $1,728,825.

Current wording

During the nine months ended September 30, 2024, the Company sold and issued respectively 658,088 and 561,131 shares of common stock under the ATM Agreement, at an average price of $4.56, receiving aggregate proceeds, net of $176,509 in agent commissions and legal and other fees, of $2,824,227. As of the date of filing of this Quarterly Report on Form 10-Q, the net remaining ATM Capacity was $902,000.

Previous 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.

Current wording

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

Previous 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.

Current wording

Net cash used in continuing operating activities for the nine months ended September 30, 2024, was approximately $1,648,000, compared to net cash flows used in continuing operating activities of approximately $3,833,545 for the nine months ended September 30, 2023. The cash used includes a net loss of approximately $7,673,000, decreased by approximate non-cash adjustments of $5,830,000 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 $1,426,000, other adjustments totaling approximately $639,000, as well as a net increase in cash due to changes of net working capital items of approximately $195,000.

Previous 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.

Current wording

During the nine months ended September 30, 2024, cash flows used in continuing and discontinued investing activities approximated $59,000 compared to cash flows provided by continuing and discontinued investing activities of approximately $719,000 for the nine months ended September 30, 2023. The cash used during the nine months ended September 30, 2024 is primarily related to the purchase of fixed tangible and intangible assets.

Previous 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.

Current wording

During the nine months ended September 30, 2024, approximate cash provided by continuing and discontinued financing activities was $1.3 million, as compared to approximately $576,000 for the nine months ended September 30, 2023. Net cash provided in financing activities during the nine months ended September 30, 2024, relates to proceeds from common shares issued pursuant to the ATM Agreement totaling approximately $2,824,000, offset by net debt principal, net short-term financings, and related party payables repayments and/or drawdowns of approximately $1,503,000.