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What changed in Reliance Global Group, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Reliance Global Group, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+216 added−242 removedSource: 10-K (2024-04-04) vs 10-K (2023-03-30)

Top changes in Reliance Global Group, Inc.'s 2023 10-K

216 paragraphs added · 242 removed · 152 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

67 edited+21 added−22 removed65 unchanged
Biggest changeThe U.S. insurance broker and agency industry has grown steadily over the five years due to macroeconomic growth, beneficial legislation that has been passed, and positive trends in the insurance sector, achieving approximately $409 billion in revenues in 2022 (BusinessWire, Insurance Brokers & Agents Global Market Report 2022: Market is Expected to Grow to $551.88 Billion in 2026 - Long-term Forecast to 2031 - ResearchAndMarkets.com ) As macroeconomic conditions improve over the five years to 2026, revenue generated by industry operators is expected to increase as businesses regain confidence in their financial stability, despite increased external competition from online insurance marketplace platforms.
Biggest changeAs macroeconomic conditions improve over the next few years, revenue generated by industry operators is expected to increase to $613 billion in 2028 as businesses regain confidence in their financial stability, despite increased external competition from online insurance marketplace platforms.
Some factors to consider are: Strain on investment portfolios – Insurance companies rely on their investment portfolios to generate returns. Markets have been in turmoil and, as a result, insurers’ investment portfolios may be significantly impacted. Delayed payments – Regulators are urging insurance companies to accept late premium payments with no penalty, putting a strain on cash flow.
Some factors to consider: ● Strain on investment portfolios – Insurance companies rely on their investment portfolios to generate returns. Markets have been in turmoil and, as a result, insurers’ investment portfolios may be significantly impacted. ● Delayed payments – Regulators are urging insurance companies to accept late premium payments with no penalty, putting a strain on cash flow.
Benefits Alliance; Michigan-based agencies specializing in the sale of health insurance products in the wholesale and retail industry ● In December 2018, acquired Commercial Coverage Solutions, LLC, a commercial property and casualty insurance company specializing in commercial trucking and transportation insurance ● In September 2019, two agencies transferred ownership from Reliance Global Holdings, LLC, a private company affiliated with Reliance Global Group: ○ Southwestern Montana Insurance, a group health insurance agency providing personal and commercial lines of insurance ○ Fortman Insurance Agency, LLC, an agency providing multiple lines of insurance in the property/casualty and life/health insurance sectors ● In September 2019, acquired Altruis Benefit Consulting; serves customers throughout the entire State of Michigan, specializing in providing individual and group health insurance ● In September 2020, acquired the assets of UIS Agency, LLC (UIS), a premier regional insurance agency serving the commercial transportation industry ● In May 2021, acquired J.P.
Benefits Alliance; Michigan-based agencies specializing in the sale of health insurance products in the wholesale and retail industry ● In December 2018, acquired Commercial Coverage Solutions, LLC, a commercial property and casualty insurance company specializing in commercial trucking and transportation insurance 14 ● In September 2019, two agencies transferred ownership from Reliance Global Holdings, LLC, a private company affiliated with Reliance Global Group: Ø Southwestern Montana Insurance, a group health insurance agency providing personal and commercial lines of insurance Ø Fortman Insurance Agency, LLC, an agency providing multiple lines of insurance in the property/casualty and life/health insurance sectors ● In September 2019, acquired Altruis Benefit Consulting; serves customers throughout the entire State of Michigan, specializing in providing individual and group health insurance ● In September 2020, acquired the assets of UIS Agency, LLC (UIS), a premier regional insurance agency serving the commercial transportation industry ● In May 2021, acquired J.P.
SEO growth opportunities include: ● SEO Audit and Execution to improve HTML, structured data and other technical issues ● SEO review of any future site migration and platform upgrade plans as part of the M&A process ● Information architecture & internal linking for SEO ● Content topic and structural improvements ● Keyword Tracking ● Competitive analysis Product Our best-in-class product offerings include the following: 1) An agency partner contract 2) An agent / pro contract Our value proposition is that we’re giving people a complete, white label business.
SEO growth opportunities include: ● SEO Audit and Execution to improve HTML, structured data and other technical issues ● SEO review of any future site migration and platform upgrade plans as part of the M&A process ● Information architecture & internal linking for SEO ● Content topic and structural improvements ● Keyword Tracking ● Competitive analysis Product Our best-in-class product offerings include the following: 1) An agency partner contract 2) An agent / pro contract 10 Our value proposition is that we’re giving people a complete, white label business.
Competition is largely based upon innovation, knowledge, terms and conditions of coverage, quality of service and price. We believe that we’re well positioned to be highly competitive and continuously gain market share. Additionally, our focus on InsurTech is a game-changer in the industry and helps us stand-out vs. the compention.
Competition is largely based upon innovation, knowledge, terms and conditions of coverage, quality of service and price. We believe that we’re well positioned to be highly competitive and continuously gain market share. Additionally, our focus on InsurTech is a game-changer in the industry and helps us stand-out vs. the competition.
We are led and advised by a management team that offers over 100 years of combined business expertise in insurance, real estate and the financial service industry. In the insurance sector, our management has extensive experience acquiring and managing insurance portfolios in several states, as well as developing specialized programs targeting niche markets.
We are led and advised by a management team that offers over 100 years of combined business expertise in insurance, real estate and the financial service industry. 1 In the insurance sector, our management has extensive experience acquiring and managing insurance portfolios in several states, as well as developing specialized programs targeting niche markets.
Advancements in mobile and digital technology are forcing insurers to innovate, which is expected to continue and intensify, where every insurance agency will need to focus on what makes their customer experiences and products unique. They will also need to integrate with technology enablers to bring to their customers a value proposition via a connected ecosystem.
Advancements in AI, mobile and digital technology are forcing insurers to innovate, which is expected to continue and intensify, where every insurance agency will need to focus on what makes their customer experiences and products unique. They will also need to integrate with technology enablers to bring to their customers a value proposition via a connected ecosystem.
Agents have a fast and easy website presence, get contracts with carriers they wouldn’t normally access, and they can get paid for referrals. 9 Price Costs are very low. Access is approximately $90/month for agents, and $190/month for agency partners. This is a singular solution that gives people an all-in-one insurance agency.
Agents have a fast and easy website presence, get contracts with carriers they wouldn’t normally access, and they can get paid for referrals. Price Costs are very low. Access is approximately $90/month for agents, and $190/month for agency partners. This is a singular solution that gives people an all-in-one insurance agency.
We believe the independent insurance agents, combined with the RELI Exchange platform can serve these needs best. Our platform makes it easy to weigh the options and connect with a knowledgeable agent with the buyer’s interests in mind. Expert Agents We train our agents to evaluate coverages based on buyers’ needs, and to explain options in simple terms.
We believe the independent insurance agents, combined with the RELI Exchange platform can serve these needs best. Our platform makes it easy to weigh the options and connect with a knowledgeable agent with the buyer’s interests in mind. 6 Expert Agents We train our agents to evaluate coverages based on buyers’ needs, and to explain options in simple terms.
Korman also served as President and CEO of Welsh Farms Inc., a full-service dairy processor and distributor of milk, ice cream mix and ice cream products. 6 Ben Fruchtzweig, Director, brings decades of executive experience in accounting and financial services. He has served as Chief Comptroller/Financial Analyst at national financial services and investment companies.
Korman also served as President and CEO of Welsh Farms Inc., a full-service dairy processor and distributor of milk, ice cream mix and ice cream products. Ben Fruchtzweig, Director, brings decades of executive experience in accounting and financial services. He has served as Chief Comptroller/Financial Analyst at national financial services and investment companies.
In the future, we intend to continue to evaluate our use of human capital measures or objectives in managing our business such as the factors we employ or seek to employ in the development, attraction and retention of personnel and maintenance of diversity in our workforce. The success of our business is fundamentally connected to the well-being of our people.
In the future, we intend to continue to evaluate our use of human capital measures or objectives in managing our business such as the factors we employ or seek to employ in the development, attraction and retention of personnel and maintenance of diversity in our workforce. 15 The success of our business is fundamentally connected to the well-being of our people.
Public Relations The digital marketing tactics that we use have the following benefits: ● Increase brand credibility ● Generate leads ● Attract investors and partners ● Make other marketing more effective ● Attract talent ● Improve reputation on Google ● Drive domain authority for SEO ● Differentiate from competitors ● Increase perceived value ● Convert leads faster 8 Social Media As part of our content creation process, we’ve implemented a system for ongoing posts to social media channels such as LinkedIn.
Public Relations The digital marketing tactics that we use have the following benefits: ● Increase brand credibility ● Generate leads ● Attract investors and partners ● Make other marketing more effective ● Attract talent ● Improve reputation on Google ● Drive domain authority for SEO ● Differentiate from competitors ● Increase perceived value ● Convert leads faster 9 Social Media As part of our content creation process, we’ve implemented a system for ongoing posts to social media channels such as LinkedIn.
With New York State’s new cybersecurity regulations, insurers are facing compliance deadlines, which have formed the basis of a nationwide model law developed by the National Association of Insurance Commissioners.
With New York State’s latest cybersecurity regulations, insurers are facing compliance deadlines, which have formed the basis of a nationwide model law developed by the National Association of Insurance Commissioners.
These platforms tap into the growing number of online users and utilize advanced artificial intelligence and data mining techniques, to provide competitive insurance quotes in around 1-5 minutes, with minimal data input needed from the agent/consumer. 4 Agencies and Brokers Outlook Insurance brokers and agencies play a critical role within the insurance market by distributing policies and consulting insurance underwriters and consumers.
These platforms tap into the growing number of online users and utilize advanced artificial intelligence and data mining techniques, to provide competitive insurance quotes in around 1-5 minutes, with minimal data input needed from the agent/consumer. 4 General Industry Outlook Insurance brokers and agencies play a critical role within the insurance market by distributing policies and consulting insurance underwriters and consumers.
Insurance Agency Acquisition Strategy ● Numerous acquisition targets within a highly fragmented market ○ Reliance’s access to capital supports the growth of the acquired companies ● Ownership and management remain engaged ● Focus on acquiring growing and profitable businesses, for below-market prices ○ Ability to leverage cash flow of acquiree through low-cost debt financing and provide earnouts as part of consideration ● Economies of scale through first class technology infrastructure and national sales/marketing platform ○ Few insurance agencies have the size and scale to compete at a national level ● Management expertise in acquisitions, operations, and financial management Digitizing Bricks & Mortar Agencies ● Capitalizing on consumer shift to ‘online’ ○ More and more customers search for insurance online, but consumers prefer the personal touch of an agent ● Proprietary backend processing technology to support Reliance’s agency business ● Strategy to acquire traditional ‘offline’ home, auto and life agencies, and utilize technology to more cost effectively service the acquired policies ● By implementing artificial intelligence, robotic process automation (RPA) and automatic shopping for best rates at renewals, Reliance can: ○ Dramatically reduce cost ○ Allow agents to focus on selling new policies, ○ Create a digitally empowered and scalable insurance agency model ● Ability to rapidly expand Reliance’s agency network nationwide and drive margin expansion through the combination of digital backend and continued M&A of cash flow positive and accretive acquisitions 13 Employees As of March 30, 2023, we employed 78 employees across all Company subsidiaries.
Insurance Agency Acquisition Strategy ● Numerous acquisition targets within a highly fragmented market Ø Reliance’s access to capital supports the growth of the acquired companies ● Ownership and management remain engaged ● Focus on acquiring growing and profitable businesses, for below-market prices Ø Ability to leverage cash flow of acquiree through low-cost debt financing and provide earnouts as part of consideration ● Economies of scale through first class technology infrastructure and national sales/marketing platform Ø Few insurance agencies have the size and scale to compete at a national level ● Management expertise in acquisitions, operations, and financial management Digitizing Bricks & Mortar Agencies ● Capitalizing on consumer shift to ‘online’ Ø More and more customers search for insurance online, but consumers prefer the personal touch of an agent ● Proprietary backend processing technology to support Reliance’s agency business ● Strategy to acquire traditional ‘offline’ home, auto and life agencies, and utilize technology to more cost effectively service the acquired policies ● By implementing artificial intelligence, robotic process automation (RPA) and automatic shopping for best rates at renewals, Reliance can: Ø Dramatically reduce cost Ø Allow agents to focus on selling new policies, Ø Create a digitally empowered and scalable insurance agency model ● Ability to rapidly expand Reliance’s agency network nationwide and drive margin expansion through the combination of digital backend and continued M&A of cash flow positive and accretive acquisitions Employees As of December 31, 2023, we employed 67 employees across all Company subsidiaries.
The convergence of market pressures to attain sustainable growth, a persistent wealth of capital and capacity, combined with the upturn in interest rates may demonstrate that insurers should be prepared for an uptick in M&A activity in 2023.
The convergence of market pressures to attain sustainable growth, a persistent wealth of capital and capacity, combined with the upturn in interest rates may demonstrate that insurers should be prepared for an uptick in M&A activity in 2024.
While we are not an insurer, and thus not required to comply with state laws and regulations regarding insurance rates, our commissions are derived from a percentage of the premium rates set by insurers in conjunction with state law. 14
While we are not an insurer, and thus not required to comply with state laws and regulations regarding insurance rates, our commissions are derived from a percentage of the premium rates set by insurers in conjunction with state law. 16
In order to keep pace with the industry and prepare for a cloud-enabled future, insurance carriers should prioritize migrating their existing systems to the cloud and launch new applications off-site. ● Product Development .
To keep pace with the industry and prepare for a cloud-enabled future, insurance carriers should prioritize migrating their existing systems to the cloud and launch new applications off-site. ● Product Development .
Kush & Associates ● US Benefits Alliance ● Employee Benefits Solutions ● Fortman Insurance Solutions ● Medigap Healthcare ● Southwestern Montana Insurance Center ● UIS Agency ● Commercial Coverage Solutions Acquisition History ● In October 2018, announced first two acquisitions: Employee Benefits Solutions and U.S.
Kush & Associates ● US Benefits Alliance ● Employee Benefits Solutions ● Fortman Insurance Solutions ● Southwestern Montana Insurance Center ● UIS Agency ● Commercial Coverage Solutions Acquisition History ● In October 2018, announced first two acquisitions: Employee Benefits Solutions and U.S.
Due to this, insurers should seek to review and adjust their compliance structures to accommodate what could turn into a patchwork oversight system. One possibility could be to integrate new technologies that would allow for continual oversight and management of the sales process. ○ Cyber risk .
Due to these standards, insurers should seek to review and adjust their compliance structures to accommodate what could turn into a patchwork oversight system. One possibility could be to integrate new technologies that would allow for continual oversight and management of the sales process. ○ Cyber risk .
Ezra Beyman, Chairman & CEO , brings nearly three decades of entrepreneurial experience in real estate and fifteen years in insurance. His portfolio of commercial and residential properties at one point consisted of more than 40,000 residential units, as well as several insurance companies.
Ezra Beyman, Chairman & Chief Executive Officer , brings nearly three decades of entrepreneurial experience in real estate and fifteen years in insurance. His portfolio of commercial and residential properties at one point consisted of more than 40,000 residential units, as well as several insurance companies.
In addition, we have a vast mentorship program behind the scenes, to keep sales teams active. Once people are registered, we enroll them in our mentorship program, and coach them to bring new business.
In addition, we have a vast mentorship program behind the scenes, to upskill our sales teams. Once people are registered, we enroll them in our mentorship program, and coach them to bring new business.
The platform is currently live in 44 states and offers coverage with up to 16 carriers. Over the next 12 months, we plan to expand and grow our footprint and market share both through organic growth, and by expansion through additional acquisitions in various insurance markets.
The platform is currently live in 44 states and offers coverage with more than thirty carriers. Over the next 12 months, we plan to expand and grow our footprint and market share both through organic growth, and by expansion through additional acquisitions in various insurance markets.
Thus, since insurers control their own destinies, potentially the most significant factor is likely to be how committed and prepared insurers are to quickly adjust to changes in the economy, society, and technology, and respond accordingly. Insurance Options Single-product platforms limit buyers’ choices and often lead to high costs or insufficient coverage.
Thus, since insurers have choice in their decision making process, potentially the most significant factor is likely to be how committed and prepared insurers are to quickly adjust to changes in the economy, society, and technology, and respond accordingly. Insurance Options Single-product platforms limit buyers’ choices and often lead to high costs or insufficient coverage.
(Source: IBISWorld’s Insurance Brokers & Agencies Industry in the US ). Insurance carriers should not continue to depend on the positive (though uncertain) fundamental economic strength of years past to maintain positive balance sheet momentum. In order to succeed, carriers must address foundational challenges, which include remaining relevant despite systemic economic changes combined with expanding consumer preferences.
Insurance carriers should not continue to depend on the positive (though uncertain) fundamental economic strength of years past to maintain positive balance sheet momentum. To succeed, carriers must address foundational challenges, which include remaining relevant despite systemic economic changes combined with expanding consumer preferences.
Natural disasters are inherently difficult to forecast, but any increase in the frequency of these events has the potential to boost insurance policy volumes, particularly for property and casualty products. This risk difference is key, especially considering volatile weather patterns and an increased rate of natural disasters.
(Source: IBISWorld Insurance Brokers & Agencies Industry in the US, January 2023). Natural disasters are inherently difficult to forecast, but any increase in the frequency of these events has the potential to boost insurance policy volumes, particularly for property and casualty products. 3 This risk difference is key, especially considering volatile weather patterns and an increased rate of natural disasters.
Kush and Associates, Inc., a premier healthcare insurance agency with operations in 10 states, headquartered in Troy, Michigan ● In January 2022, Medigap Health Insurance Company, an insurance brokerage company headquartered in Florida, specializing in Medicare supplement insurance ● In April 2022, acquired Barra & Associates, (changed to RELI Exchange following acquisition) a recognized provider of both personal and commercial insurance products, including P&C insurance, life insurance, health insurance and other insurance products.
Kush and Associates, Inc., a premier healthcare insurance agency with operations in 10 states, headquartered in Troy, Michigan ● In April 2022, acquired Barra & Associates, (changed to RELI Exchange following acquisition) a recognized provider of both personal and commercial insurance products, including P&C insurance, life insurance, health insurance and other insurance products.
The RELI Exchange B2B InsurTech platform and partner network for insurance agents and agencies also: ● Boast being the only white label insurance brokerage agency – New agents can have a multi-million dollar agency look on day 1, with a full suite of back-office support (licensing, compliance, etc). ● Combines the low barriers to entry of an agency network, with state-of-the-art tech. ● Builds on the artificial intelligence and data mining backbone of 5MinuteInsure.com ● Is designed to provide instant and competitive insurance quotes from more than thirty insurance carriers nationwide. ● Reduces back-office burden and expenses by eliminating paperwork. ● Provides agents more time to focus on selling policies.
The RELI Exchange Business to Business (“B2B”) InsurTech platform and partner network for insurance agents and agencies also: ● Boast being the only white label insurance brokerage agency – New agents can have a multimillion-dollar agency look on day one, with a full suite of back-office support (business resources, licensing, compliance, etc.). ● Combines the low barriers to entry of an agency network, with state-of-the-art tech. ● Builds on the artificial intelligence and data mining backbone of 5MinuteInsure.com ● Is designed to provide instant and competitive insurance quotes from more than thirty insurance carriers nationwide. ● Reduces back-office burden and expenses by reducing the need for paperwork and redundant tasks. ● Provides agents more time to focus on revenue driving activities, such as selling policies.
Total, % of GDP), OECD Insurance Agency Industry Overview Insurance agencies act as intermediaries between insurance carriers and consumers. Unlike carriers, agencies do not bear insurance risk. The market has grown steadily exploded in 2019 due to macroeconomic growth, beneficial legislation, COVID treatments, and positive trends within the insurance sector.
Insurance Agency Industry Overview Insurance agencies act as intermediaries between insurance carriers and consumers. Unlike carriers, agencies do not bear insurance risk. The market has grown steadily including a sharp increase in 2019 due to macroeconomic growth, beneficial legislation, COVID treatments, and positive trends within the insurance sector.
Specific benefits of the 5MinuteInsure.com platform include: ● First, a simplified application process ● Second, 5MinuteInsure.com has real-time connections with over 15 top-rated insurance companies, which allows consumers to transparently compare real live quotes from multiple insurers side-by-side. ● Third, 5MinuteInsure.com provides instant accurate coverage recommendations for home, auto and life insurance, providing consumers confidence they are not under or over-insured. ● Fourth, 5MinuteInsure.com provides in-house insurance buying and policy binding capabilities, meaning no redirection to other websites and the ability to finalize purchases on 5MinuteInsure.com in as little as five minutes. ● Fifth, coming soon is 5MinuteInsure’s free and secure account enables 24/7 access to previous quotes, policies and other documents. ● And finally, when it’s time for a policy renewal, 5MinuteInsure.com can populate the best offers in the market before their policy expires.
By implementing artificial intelligence, robotic process automation and automatic shopping for best rates at renewals, we believe we can dramatically reduce costs, and allow our agents to focus on selling new policies, creating a digitally empowered and scalable insurance agency model. 12 Specific benefits of the 5MinuteInsure.com platform include: ● First, a simplified application process ● Second, 5MinuteInsure.com has real-time connections with over 15 top-rated insurance companies, which allows consumers to transparently compare real live quotes from multiple insurers side-by-side. ● Third, 5MinuteInsure.com provides instant accurate coverage recommendations for home, auto and life insurance, providing consumers confidence they are not under or over-insured. ● Fourth, 5MinuteInsure.com provides in-house insurance buying and policy binding capabilities, meaning no redirection to other websites and the ability to finalize purchases on 5MinuteInsure.com in as little as five minutes. ● Fifth, coming soon is 5MinuteInsure’s free and secure account enables 24/7 access to previous quotes, policies and other documents. ● Finally, when it’s time for a policy renewal, 5MinuteInsure.com can populate the best offers in the market before their policy expires.
Before joining Reliance he served as an Audit & Assurance Professional at Deloitte & Touche, LLP where he successfully led audit teams on both public and privately held corporations. He brings extensive experience in internal controls, financial analysis and reporting for both private and publicly traded companies.
Alex Blumenfrucht, Director, previously served as CFO of Reliance, and prior to that, served as an Audit & Assurance Professional at Deloitte & Touche, LLP where he successfully led audit teams on both public and privately held corporations. He brings extensive experience in internal controls, financial analysis and reporting for both private and publicly traded companies.
Lower payroll levels lead to lower payroll-based premiums, such as those in workers’ compensation, and an uptick in layoffs results in fewer people buying houses, cars, and other insurable purchases. A decrease in premium volume means a decrease in income for insurers.
Lower payroll levels lead to lower payroll-based premiums, such as those in workers’ compensation, and an uptick in layoffs results in fewer people buying houses, cars, and other insurable purchases.
Due to the uncertainties associated with the COVID-19 pandemic and the indeterminate length of time it will affect, we have taken proactive measures to secure our liquidity position to be able to meet our obligations for the foreseeable future. 5 https://optisins.com/wp/2023/01/2022-ma-report/ 12 Insurance Agency Brand Acquisitions as of 1Q 2023 ● RELI Exchange ● 5 Minute Insure ● Altruis Benefits ● J.P.
Due to the uncertainties associated with the COVID-19 pandemic and the indeterminate length of time it will affect, we have taken proactive measures to secure our liquidity position to be able to meet our obligations for the foreseeable future. Reliance Insurance Agency Brand Acquisitions: ● RELI Exchange ● Altruis Benefits ● J.P.
Moreover, our software platform delivers economies of scale so that fixed and variable costs are reduced for greater profitability. 10 Online Insurance and 5MinuteInsure.com In August 2021, we launched 5MinuteInsure.com, which is a licensed online insurance agency that utilizes state of the art digital technology and seek to use this platform to develop business in the online insurance business which we believe represents an underutilized opportunity.
Online Insurance and 5MinuteInsure.com In August 2021, we launched 5MinuteInsure.com, which is a licensed online insurance agency that utilizes state of the art digital technology and seek to use this platform to develop business in the online insurance business which we believe represents an underutilized opportunity.
Agents benefit from low startup costs and minimal overhead—no employees or physical location is required. In contrast, captive agents are often burdened with immediate hiring requirements, storefront leases, and advertising budgets.
Our revenues are tied directly to their success, creating an environment that delivers consistent results. Agents benefit from low startup costs and minimal overhead—no employees or physical location is required. In contrast, captive agents are often burdened with immediate hiring requirements, storefront leases, and advertising budgets.
Regulation will continue to play a significant role in the operations and development of the insurance industry, with three high-priority compliance issues (each with global and domestic implications) facing insurers: ○ Market conduct . “Best interest” standards are being considered at both the federal and state levels to protect consumers who purchase annuities and life insurance.
Regulation will continue to play a significant role in the operations and development of the insurance industry, with three high-priority compliance issues (each with global and domestic implications) facing insurers: ○ Market conduct .
During 2022, the Company acquired multiple insurance entities, most notably, Barra & Associates, LLC., an unaffiliated full-service insurance agency, which we rebranded to RELI Exchange and expanded its footprint nationally. 1 The Company also developed and launched 5MinuteInsure.com (“5MI”), a proprietary direct to consumer InsurTech platform which went live during the summer of 2021. 5MI is a business to consumer website which enables consumers to compare and purchase car and home insurance in a time efficient and effective manner.
The Company also developed and launched 5MinuteInsure.com (“5MI”), a proprietary direct to consumer InsurTech platform which went live during the summer of 2021. 5MI is a business to consumer website which enables consumers to compare and purchase car and home insurance in a time efficient and effective manner.
Plus, our back-office support team is readily available to train and assist agents at every step. We actively recruit agents who are passionate about owning their own business and have a proven track record in business development. Our revenues are tied directly to their success, creating an environment that delivers consistent results.
We provide every agent with comprehensive training, product and carrier knowledge, and cutting-edge technology. Plus, our back-office support team is readily available to train and assist agents at every step. We actively recruit agents who are passionate about owning their own business and have a proven track record in business development.
Key external drivers for insurance industry performance include factors such as motor vehicle registrations, the homeowner rate, and per capita disposable income. The industry is in a hardening cycle, which leads to growth. There are still effects from the COVID-19 measures, with shifting sales trends expected to boost profitability while lowering marginal costs.
The industry is in a hardening cycle, which leads to growth. There are still effects from the COVID-19 measures, with shifting sales trends expected to boost profitability while lowering marginal costs.
This tech savviness has been applied into the insurance and financial services industries with the founding of Fishman Insurance Agency as well as Tekeno Financial. Mr. Fishman is one of the driving talents of the RELI Exchange & 5MinuteInsure.com InsurTech platforms. Jonathan Fortman, VP of Acquisitions, brings a wealth of experience to the acquisition process. Prior to joining Reliance, Mr.
Fishman was a recognized guru in the travel industry leveraging the technology in the travel sector. This tech savviness has been applied into the insurance and financial services industries with the founding of Fishman Insurance Agency as well as Tekeno Financial. Mr. Fishman is one of the driving talents of the RELI Exchange & 5MinuteInsure.com InsurTech platforms.
Additionally, our automations and back-office support eliminate time spent on service requests and renewals, so agents can focus on sales growth. We spent years developing our proprietary sales processes, backed up by an engaging mentorship program to maximize agent success. We provide every agent with comprehensive training, product and carrier knowledge, and cutting-edge technology.
They have access to multiple carriers in their markets, to provide more choices and solutions that fit their customers’ needs. Additionally, our automations and back-office support eliminate time spent on service requests and renewals, so agents can focus on sales growth. We spent years developing our proprietary sales processes, backed up by an engaging mentorship program to maximize agent success.
Since insurance brokers and agents are a central part of the distribution of these products, they normally benefit from this increase in demand and premiums despite damaged profit margins among these upstream underwriters and carriers. (Source: IBISWorld’s Insurance Brokers & Agencies Industry in the US, January 2023).
Furthermore, increased damage caused by natural disasters generally boosts demand for insurance and results in possible premium increases. Since insurance brokers and agents are a central part of the distribution of these products, they normally benefit from this increase in demand and premiums despite damaged profit margins among these upstream underwriters and carriers.
Thus, insurance agencies can decide which insurance carriers they would like to represent and which products they would like to sell. They are like a retail shop that sells insurance services and products created by the insurance carrier. The main difference between a broker and an agent has to do with who they represent.
They are like a retail shop that sells insurance services and products created by the insurance carrier. The main difference between a broker and an agent has to do with who they represent. An agent represents one or more insurance companies, acting as an extension of the insurer. A broker represents the insurance buyer.
Thus, we believe in the specific benefits of the online insurance business, and we believe that 5MinuteInsure.com provides the platform to transform this segment of the industry. 11 Insurance M&A Overview The solid growth within the insurance agency market has resulted in strong mergers and acquisition (M&A) activity within this sector.
Thus, we believe in the specific benefits of the online insurance business, and we believe that 5MinuteInsure.com provides the platform to transform this segment of the industry.
Additional guidance could be imminent on many other important provisions, including how the new loss carryover rules will fit with the old rules in the context of consolidated returns. While the industry may need to address internal and external pressures, the impact from these issues will continue to fall within the individual insurer.
Additional guidance could be imminent on many other important provisions, including how the new loss carryover rules will fit with the old rules in the context of consolidated returns.
By using technologies such as AI and data analytics, InsurTech solutions allow products to be priced more competitively. Insurance companies are widely adopting these solutions to drive cheaper, better, and faster operational results. Hence, the insurance industry is witnessing increased investment in technology. The outbreak of COVID-19 is anticipated to have a positive impact on the market.
Insurance companies are widely adopting these solutions to drive cheaper, better, and faster operational results. Hence, the insurance industry is witnessing increased investment in technology. The outbreak of COVID-19 had a positive impact on the market. Numerous insurance companies are reconsidering their long-term strategies and short-term needs.
The potential financial risks to the insurance industry caused by unforeseen events such as natural disasters are the responsibility of the carriers (and their re-insurers). Agencies and brokers bear no insurance risk. Furthermore, increased damage caused by natural disasters generally boosts demand for insurance and results in possible premium increases.
Insurance policies are created and administered by the insurance carrier. A key operating difference between agencies and carriers is the risk profile. The potential financial risks to the insurance industry caused by unforeseen events such as natural disasters are the responsibility of the carriers (and their re-insurers). Agencies and brokers bear no insurance risk.
An agent represents one or more insurance companies, acting as an extension of the insurer. A broker represents the insurance buyer. An insurance carrier, on the other hand, is a manufacturer of insurance services and products that the insurance agencies sell. They control the underwriting process, claims process, pricing, and the overall management of the insurance products.
An insurance carrier, on the other hand, is a manufacturer of insurance services and products that the insurance agencies sell. They control the underwriting process, claims process, pricing, and the overall management of the insurance products. Insurance carriers do not sell their products through direct agents, but only through independent agencies.
Coverage disputes – Pandemics are generally excluded from insurance policy coverage and therefore policy premium has not included the necessary charges to provide such coverage. A number of states are attempting to legislate to force insurance companies to provide insurance coverage for business interruption and other losses for claims resulting from the COVID-19 pandemic.
A decrease in premium volume means a decrease in income for insurers. ● Coverage disputes – Pandemics are generally excluded from insurance policy coverage and therefore policy premium has not included the necessary charges to provide such coverage.
With basic contact information, our proprietary tool can generate accurate home auto and life insurance quotes from credible providers in under 5 minutes, for free. Then, our platform connects each user with a fully trained and knowledgeable agent who guides them through the rest of the process to deliver the best coverage at the best price.
With basic contact information, our proprietary tool can generate accurate home auto and life insurance quotes from credible providers in under 5 minutes, for free.
RELI Exchange is at the forefront of the digital transformation of the insurance industry. Our platform leverages unique technology, a proprietary database, and expert methodologies from experienced insurance agents to deliver a quality experience to agents and people looking to get insured.
Our platform leverages unique technology, a proprietary database, and expert methodologies from experienced insurance agents to deliver a quality experience to agents and people looking to get insured. In addition to providing customers with a great experience, RELI Exchange automates many processes for agents to free up their time to sell to new customers.
(Sources: Grand View Research Insurtech Market Size, Share & Growth Report, 2021-2028 and 2022 - 2030) The Company therefore has strategically invested in its RELI Exchange and 5MinuteInsure.com, its online digital platforms as additional steps in expanding its national footprint.
The Company therefore has strategically invested in its RELI Exchange and 5MinuteInsure.com online digital platforms as additional steps in expanding its national footprint which now also includes a client referral portal.
In addition to providing customers with a great experience, RELI Exchange automates many processes for agents to free up their time to sell to new customers. The result is higher profitability with less work. Most importantly, mentorship is part of the RELI Exchange model, so that agents always receive the support they need to be successful.
The result is higher profitability with less work. Most importantly, mentorship is part of the RELI Exchange model, so that agents always receive the support they need to be successful. System for Agent and Agency Partner Success RELI Exchange agents have a distinct advantage over their captive counterparts when it comes to serving clients.
He also serves on a voluntary basis as a trustee of a non-profit private foundation, which serves to provide the needed financial support, services and guidance to qualifying individuals and families. Alex Blumenfrucht, CPA, Director, Mr. Blumenfrucht previously served as CFO for Reliance Global.
He also serves on a voluntary basis as a trustee of a non-profit private foundation, which serves to provide the needed financial support, services and guidance to qualifying individuals and families. Sheldon Brickman, Director, brings over 25 years of M&A advisory and business development experience with more than $40 billion in deals value.
In 2022, the global insurance brokerage market had an estimated value of $409 billion, and is forecasted to grow to $551 billion in 2026 (Source: Research and Markets, Insurance Brokers & Agents Global Market Report 2022 ). The growth within the insurance agency market has resulted in strong mergers and acquisition (M&A) activity within this sector.
In 2023, the global insurance brokerage & agency market had an estimated value of $436 billion, and is forecasted to grow 7.2% to $468 billion in 2024 and to $613 billion by 2028 (Source: Research and Markets, Insurance Brokers & Agents Global Market Report 2024).
Moshe Fishman, Director of Insurtech and Operations, brings a unique perspective to the insurance sales process. Prior to starting his own insurance agency, Mr. Fishman was a recognized guru in the travel industry leveraging the technology in the travel sector.
Barra was appointed as Reliance’s senior vice president of operations, where he’s responsible to oversee operations, innovation, and growth, amongst other senior responsibilities. Moshe Fishman, Director of Insurtech and Operations, brings a unique perspective to the insurance sales process. Prior to starting his own insurance agency, Mr.
Sheldon Brickman, Director, has over 25 years of M&A advisory and business development experience, totaling more than $40 billion in deal value. He has worked for numerous multibillion-dollar insurance carriers, including assignments for such companies as AIG, Aetna and National General. Sheldon has assisted international companies (UAE, UK, Asia and Latin America), start-up operations, and regional insurance carriers. Mr.
He has worked for numerous multibillion-dollar insurance carriers, including assignments for such companies as AIG, Aetna and National General. Sheldon has assisted international companies (UAE, UK, Asia and Latin America), start-up operations, and regional insurance carriers. Mr. Brickman’s experience covers the property casualty and life/health markets, including working with insurance carriers, managing general agencies, wholesalers, retailers and third-party administrators.
It is expected to expand at a compound annual growth rate (CAGR) of 51.7% from 2022 to 2030. The increasing need for digitization of insurance services is expected to propel the market growth. Insurtech is the usage of technology innovations particularly designed to make the existing insurance model more efficient.
The increasing need for digitization of insurance services is expected to propel the market growth. Insurtech is the usage of technology innovations particularly designed to make the existing insurance model more efficient. By using technologies such as AI and data analytics, InsurTech solutions allow products to be priced more competitively.
Our platform makes it easy for people to start their own agencies - These people have no experience - Its a huge market where the majority of the current audience comes from, though it’s the tertiary choice. Promotion To meet our agency registration objectives, we have engaged in both inbound and outbound marketing.
Target #3: New Agency Startups ● Our platform makes it easy for those with little to no experience that want to start their own agency business. This is a significant market with manty potential participants. Promotion To meet our agency registration objectives, we have engaged in both inbound and outbound marketing.
The insurance industry plays a huge role in the U.S. economy (Source: OECD Insurance Statistics). The U.S. remained the world’s largest insurance market, with a 40% market share of global direct premiums written in 2021., with premiums of $2.7 trillion, respectively (Source: beinsure, Top Ranking the World’s Largest Insurance Markets ).
The U.S. remained the world’s largest insurance market, with a 40% market share of global direct premiums written in 2023, with premiums of $2.8 trillion, and Swiss Re forecasts that premiums will grow by an average 9% per annum over the next decade, stronger than the 7.5% annual average of 2015–2023 (Source: beinsure, Top Ranking the World’s Largest Insurance Markets 2024).
As part of our growth and acquisition strategy, we are currently in negotiations with several non-affiliated parties and expect to complete a number of material insurance asset transactions throughout the course of 2023 and beyond. As of December 31, 2022, we have acquired ten insurance agencies, including both affiliated and unaffiliated companies.
As part of our growth and acquisition strategy, we remain active in M&A markets and anticipate completing insurance agency/brokerage transactions throughout the course of 2024 and beyond. As of December 31, 2023, we have acquired nine insurance agencies.
The economic costs of 2022’s 421 natural disaster events were estimated at $313 billion, with insurance only covering 42% of the overall total (Source: AON, Testimony of Eric Anderson, President of Aon, before the United States Senate Committee on Budget, Wednesday, March 22, 2023).
Insurance only covered 42% of the total damages from 421 natural disaster events in 2022 (Source: AON, Testimony of Eric Anderson, President of Aon, before the United States Senate Committee on Budget, Wednesday, March 22, 2023 ). Key external drivers for insurance industry performance include factors such as motor vehicle registrations, the homeowner rate, and per capita disposable income.
While inflation and other factors have impacted the industry, it has continued to grow with a positive outlook for 2023 as rising interest rates begin to stabilize. An insurance agency or broker, solicits, writes, and binds policies through many different insurance companies, as they are not directly employed by any insurance carrier.
An insurance agency or broker solicits, writes, and binds policies through many different insurance companies, as they are not directly employed by any insurance carrier. Thus, insurance agencies can decide which insurance carriers they would like to represent and which products they would like to sell.
This gap was reduced significantly during the last six months of 2022, when there were 384 deals valued at $1.2 billion, only a 22% volume decrease from the same period in 2021. This was due to a 40-year high in inflation, rising capital costs and tightening budgets. In 2023, the strongest M&A drivers are inflation and interest rates.
That said, there were 22 mega-deals of over $1 billion in 2023, a 38% increase over 2022 (Source: GlobalData, Insurance M&A Deals 2023 – Top Themes – Thematic Intelligence). The drop in deal volume was due to a 40-year high in inflation, rising capital costs and tightening budgets.
Numerous insurance companies are reconsidering their long-term strategies and short-term needs. The COVID-19 and its impacts are accelerating the implementation of online platforms and new mobile applications to meet consumer needs.
COVID-19 and its impacts have accelerated the implementation of online platforms and new mobile applications to meet consumer needs. (Sources: Grand View Research, Insurtech Market Size, Share & Growth Report, 2021-2028 and 2022 - 2030).
There is uncertainty regarding which party will ultimately incur the additional cost for these adjustments.
A number of states are attempting to legislate to force insurance companies to provide insurance coverage for business interruption and other losses for claims resulting from the COVID-19 pandemic. There is uncertainty regarding which party will ultimately incur the additional cost for these adjustments.
Brickman’s experience covers the property casualty and life/health markets, including working with insurance carriers, managing general agencies, wholesalers, retailers and third-party administrators. Joel Markovits, CPA, Chief Financial Officer, Joel joined Reliance Global Group in June 2021, bringing over 12 years of financial and accounting experience in both the public and private sectors.
Currently Alex serves as the CFO of a Private Equity backed company in the healthcare space. Additionally, he has served as a Board Member of an ESOP structured entity. 7 Joel Markovits, CPA, Chief Financial Officer, Joel joined Reliance Global Group in June 2021, bringing over 12 years of financial and accounting experience in both the public and private sectors.
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“Gross premiums are forecast to grow by as much as six times, to $722 billion by 2030, with China and North America expected to account for more than two-thirds of the global market.” “Global life insurance premium growth in real terms is expected to contract slightly (-0.2%) in 2022 (figure 2), primarily due to inflation-driven disposable income pressure and financial market volatility.
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During 2022, the Company acquired Barra & Associates, LLC., an unaffiliated full-service insurance agency, which we rebranded to RELI Exchange and expanded its footprint nationally.
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There is an expectation for a turnaround in 2023 of an estimated 1.9% rise in global premiums in real terms across advanced and emerging markets, as inflation pressures ease and economic conditions improve.” (Source: Deloitte’s 2023 Insurance Industry Outlook ).
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The insurance industry plays a huge role in the U.S. economy (Source: OECD Insurance Statistics).
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Insurance industry at-a-glance (Sources: Federal Insurance Office, US Department of the Treasury, Annual Report on the Insurance Industry September 2022; IBISWorld, Property, Casualty and Direct Insurance in the US - Market Size 2004–2029; Insurance Information Institute, A Firm Foundation: How Insurance Supports the Economy; Zippia, 20+ INTERESTING U.S.
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While inflation and other factors have impacted the industry, it has continued to grow through 2021. The market flattened in 2022 (12.15% of US GDP in 2022 vs. 12.20% in 2021), with a positive outlook due to the increased use of AI.
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INSURANCE INDUSTRY STATISTICS [2023]: INSURANCE FACTS, MARGINS AND MORE; Swiss Re Institute, Inflation may be easing, but claims severity pressures in P&C are likely to remain ● U.S. insurance industry net premiums written totaled $1.4 trillion in 2021, with premiums recorded by property/casualty (P/C) insurers accounting for 53 percent, and premiums by life/annuity insurers accounting for 47 percent, according to S&P Global Market Intelligence. ● The P&C and Direct Insurance industry market size in 2023 is expected to be $873 billion in revenue ● The P&C and Direct Insurance industry is the 5 th largest Finance and Insurance industry by market size ● The number of motor vehicle registrations in 2023 is expected to increase, which represents an opportunity for growth ● There were 5,929 licensed insurance companies in the US in 2021, including 2,651 P&C, 667 L&H, and 1,321 health insurers. ● Net premiums written for P/C insurance including auto, homeowners and commercial insurance totaled $715.9 billion in 2021. ● Net premiums written for the life/annuity insurance sector including annuities, accident and health, and life insurance totaled $635.8 billion in 2021. ● Total assets held were $8.5 trillion for L&H, $2.6 trillion for P&C, and $735 billion for the Health Sector at the end of 2021. ● High inflation led to an increase in P/C claims of 5-7.5% in 2022 and is expected to drive an additional increase of 3.5-6.5% in 2023. ● The U.S. insurance industry employed 2.8 million people in 2021, according to the U.S.
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Results may be impacted by changes to federal interest rates, with the federal funds rate skyrocketing from about 0% in early 2022 to 5.33% in February 2024, the highest rate in over 20 years (Source: St. Louis Federal Reserve, Federal Funds Effective Rate ).
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Department of Labor. Of those, 1.6 million worked for insurance companies, including life and health insurers (911,400 workers), P/C insurers (628,600 workers) and reinsurers (26,900 workers). The remaining 1.2 million people worked for insurance agencies, brokers and other insurance-related enterprises. Insurance spending (2001-2021: Global vs. U.S.
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The economic costs of 2023’s natural disaster events was $380 billion, up from $313 billion in 2022 (Source: Statista, Cost of natural disaster losses worldwide from 2000 to 2023, by type of loss ).
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Insurance carriers do not sell their products through direct agents, but only through independent agencies. Insurance policies are created and administered by the insurance carrier. 3 A key operating difference between agencies and carriers is the risk profile.
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The insurance distribution industry continues to prove its resiliency and the growth is reflected in continued robust mergers and acquisition (M&A) activity within the sector, despite decreases as compared to recent prior years. Total deal volume in 2023 was $78 billion, 41% lower than in 2022, with a 15% drop in total deals to 1,062 M&A deals in 2023.
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The insurance distribution industry continues to prove its resiliency. Total deal volume in 2022 was 32% lower than in 2021 during the first six months, moving from 374 transactions totaling $22 billion to 254 transactions totaling $16.5 billion.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTo the extent that additional shares of common stock are issued, our shareholders would experience dilution of their respective ownership interests. If we issue shares of common stock in connection with our intent to pursue new business opportunities, a change in control of the Company may be expected to occur.
Biggest changeAs of December 31, 2023 we had 4,761,974 shares issued and outstanding. We may be expected to issue additional shares in connection with our pursuit of new business opportunities and new business operations. To the extent that additional shares of common stock are issued, our shareholders would experience dilution of their respective ownership interests.
To date, much of our capital for acquiring and operating insurance agencies comes from funds provided by Reliance Global Holdings our affiliate, loans from unaffiliated lenders, or from direct market capital raises. We may be required to seek additional financing. We cannot assure you that such financing would be available on acceptable terms, if at all.
To date, much of our capital for acquiring and operating insurance agencies comes from loans from unaffiliated lenders, from direct market capital raises or funds provided by Reliance Global Holdings our affiliate. We may be required to seek additional financing. We cannot assure you that such financing would be available on acceptable terms, if at all.
Beyman’s wife, or Yaakov Beyman, son of Mr. and Ms. Beyman, or someone else approved by Oak Street, as applicable, will be the manager of the current subsidiaries of the Company, (ii) Mr.
Beyman’s wife, or Yaakov Beyman, son of Mr. and Ms. Beyman, or someone else approved by Oak Street, as applicable, will be the manager of the current subsidiaries of the Company, (ii) Mr.
Among the factors that could affect our stock price are: ● General economic and political conditions such as recessions, economic downturns and acts of war or terrorism; ● Quarterly variations in our operating results; ● Seasonality of our business cycle; ● Changes in the market’s expectations about our operating results; ● Our operating results failing to meet the expectation of securities analysts or investors in a particular period; ● Changes in financial estimates and recommendations by securities analysts concerning us or the insurance brokerage or financial services industries in general; ● Operating and stock price performance of other companies that investors deem comparable to us; ● News reports relating to trends in our markets, including any expectations regarding an upcoming “hard” or “soft” market; ● Cyberattacks and other cybersecurity incidents; ● Changes in laws and regulations affecting our business; ● Material announcements by us or our competitors; ● The impact or perceived impact of developments relating to our investments, including the possible perception by securities analysts or investors that such investments divert management attention from our core operations; ● Market volatility; ● A negative market reaction to announced acquisitions; ● Competitive pressures in each of our divisions; 23 ● General conditions in the insurance brokerage and insurance industries; ● Legal proceedings or regulatory investigations; ● Sales of substantial amounts of common shares by our directors, executive officers or significant stockholders or the perception that such sales could occur.
Among the factors that could affect our stock price are: ● General economic and political conditions such as recessions, economic downturns and acts of war or terrorism; ● Quarterly variations in our operating results; ● Seasonality of our business cycle; ● Changes in the market’s expectations about our operating results; ● Our operating results failing to meet the expectation of securities analysts or investors in a particular period; ● Changes in financial estimates and recommendations by securities analysts concerning us or the insurance brokerage or financial services industries in general; ● Operating and stock price performance of other companies that investors deem comparable to us; ● News reports relating to trends in our markets, including any expectations regarding an upcoming “hard” or “soft” market; ● Cyberattacks and other cybersecurity incidents; ● Changes in laws and regulations affecting our business; ● Material announcements by us or our competitors; ● The impact or perceived impact of developments relating to our investments, including the possible perception by securities analysts or investors that such investments divert management attention from our core operations; ● Market volatility; ● A negative market reaction to announced acquisitions; ● Competitive pressures in each of our divisions; ● General conditions in the insurance brokerage and insurance industries; ● Legal proceedings or regulatory investigations; ● Sales of substantial amounts of common shares by our directors, executive officers or significant stockholders or the perception that such sales could occur.
Disclosure of this information could harm our reputation and subject us to liability under our contracts and laws that protect personal data, resulting in increased costs or loss of revenues. Our business, results of operations, financial condition and liquidity may be materially adversely affected by certain actual and potential claims, regulatory actions and proceedings.
Disclosure of this information could harm our reputation and subject us to liability under our contracts and laws that protect personal data, resulting in increased costs or loss of revenues. 21 Our business, results of operations, financial condition and liquidity may be materially adversely affected by certain actual and potential claims, regulatory actions and proceedings.
Such losses may not be insured against or not fully covered through insurance we maintain. Rapid technological change may require additional resources and time to adequately respond to dynamics, which may adversely affect our business and operating results. Frequent technological changes, new products and services and evolving industry standards are influencing the insurance businesses.
Such losses may not be insured against or not fully covered through insurance we maintain. 19 Rapid technological change may require additional resources and time to adequately respond to dynamics, which may adversely affect our business and operating results. Frequent technological changes, new products and services and evolving industry standards are influencing the insurance businesses.
Estimates, judgments and assumptions are inherently subject to change in the future, and any such changes could result in corresponding changes to the values of assets, liabilities, revenues, expenses and income, and could have a material adverse effect on our financial position, results of operations and cash flows. 18 Improper disclosure of confidential information could negatively impact our business.
Estimates, judgments and assumptions are inherently subject to change in the future, and any such changes could result in corresponding changes to the values of assets, liabilities, revenues, expenses and income, and could have a material adverse effect on our financial position, results of operations and cash flows. Improper disclosure of confidential information could negatively impact our business.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 19 In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus.
Post-acquisition deterioration of operating performance could also result in lower or negative earnings contribution and/or goodwill impairment charges. 16 A cybersecurity attack, or any other interruption in information technology and/or data security and/or outsourcing relationships, could adversely affect our business, financial condition and reputation.
Post-acquisition deterioration of operating performance could also result in lower or negative earnings contribution and/or goodwill impairment charges. A cybersecurity attack, or any other interruption in information technology and/or data security and/or outsourcing relationships, could adversely affect our business, financial condition, and reputation.
Such coverage may not be adequate or may not continue to be available at commercially reasonable rates and terms. If we fail to comply with the covenants contained in certain of our agreements, our liquidity, results of operations and financial condition may be adversely affected.
Such coverage may not be adequate or may not continue to be available at commercially reasonable rates and terms. 20 If we fail to comply with the covenants contained in certain of our agreements, our liquidity, results of operations and financial condition may be adversely affected.
Because profit-sharing contingent commissions and override commissions affect our revenues, any decrease in their payment to us could adversely affect our results of operations, profitability, and our financial condition. Our business practices and compensation arrangements are subject to uncertainty due to potential changes in regulations.
Because profit-sharing contingent commissions and override commissions affect our revenues, any decrease in their payment to us could adversely affect our results of operations, profitability, and our financial condition. 23 Our business practices and compensation arrangements are subject to uncertainty due to potential changes in regulations.
It is the Company’s expectation that future management following a business combination will determine to retain any earnings for use in its business operations and accordingly, the Company does not anticipate declaring any dividends in the foreseeable future. Speculative Nature of Warrants.
It is the Company’s expectation that future management following a business combination will determine to retain any earnings for use in its business operations and accordingly, the Company does not anticipate declaring any dividends in the foreseeable future. 28 Speculative Nature of Warrants.
Ezra Beyman will be President and Chairperson of the Board of the Company, and (iii) Reliance Holdings will continue to remain a shareholder of the Company’s equity and Ezra and Debra will be the sole owners of Reliance Holdings as tenants in entirety.
Ezra Beyman will be President and Chairperson of the Board of the Company, and (iii) Reliance Global Holdings will continue to remain a shareholder of the Company’s equity and Ezra and Debra will be the sole owners of Reliance Global Holdings as tenants in entirety.
Ezra Beyman will be President and Chairperson of the Board of the Company, and (iii) Reliance Holdings will continue to remain a shareholder of the Company’s equity and Ezra and Debra will be the sole owners of Reliance Holdings as tenants in entirety.
Ezra Beyman will be President and Chairperson of the Board of the Company, and (iii) Reliance Global Holdings will continue to remain a shareholder of the Company’s equity and Ezra and Debra will be the sole owners of Reliance Global Holdings as tenants in entirety.
Although we believe that we are in compliance in all material respects with applicable local, state and federal laws, rules and regulations, there can be no assurance that more restrictive laws, rules, regulations or interpretations thereof, will not be adopted in the future that could make compliance more difficult or expensive. 21 Risks Related to Investing in our Securities We may experience volatility in our stock price that could affect your investment.
Although we believe that we are in compliance in all material respects with applicable local, state, and federal laws, rules and regulations, there can be no assurance that more restrictive laws, rules, regulations or interpretations thereof, will not be adopted in the future that could make compliance more difficult or expensive. 25 Risks Related to Investing in our Securities We may experience volatility in our stock price that could affect your investment.
There are a number of constituencies that are involved in a range of ESG issues, including investors, special interest groups, public and consumer interest groups and third-party service providers. As a result, there is an increased emphasis on corporate responsibility ratings and a number of third parties provide reports on companies in order to measure and assess corporate responsibility performance.
There are a number of constituencies that are involved in a range of ESG issues, including investors, special interest groups, public and consumer interest groups and third-party service providers. As a result, there is an increased emphasis on corporate responsibility ratings and several third parties provide reports on companies to measure and assess corporate responsibility performance.
Due to the Company’s limited operating history, we believe period to period comparisons of our financial results are not always meaningful and should not be relied upon as an indication of future performance. 15 The Company has limited resources and there is significant competition for business combination opportunities.
Due to the Company’s limited operating history, we believe period to period comparisons of our financial results are not always meaningful and should not be relied upon as an indication of future performance. 17 The Company has limited resources and there is significant competition for business combination opportunities.
We risk damage to our brand and reputation in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies. In the future, we may be required to make substantial investments in matters related to ESG which could require significant investment and impact our results of operations.
We risk damage to our brand and reputation if our corporate responsibility procedures or standards do not meet the standards set by various constituencies. In the future, we may be required to make substantial investments in matters related to ESG which could require significant investment and impact our results of operations.
Other competitive concerns may include the quality of our products and services, our pricing and the ability of some of our customers to self-insure and the entrance of technology companies into the insurance intermediary business. A number of insurance companies are engaged in the direct sale of insurance, primarily to individuals, and do not pay commissions to agents and brokers.
Other competitive concerns may include the quality of our products and services, our pricing, and the ability of some of our customers to self-insure and the entrance of technology companies into the insurance intermediary business. Several insurance companies are engaged in the direct sale of insurance, primarily to individuals, and do not pay commissions to agents and brokers.
Therefore, the Company may not be able to acquire other assets or businesses ● The Company may be unable to obtain additional financing, if required, to complete an acquisition, or to complement the operations and growth of existing and target business, which could compel the Company to restructure a potential business transaction or abandon a particular business combination ● Our inability to retain or hire qualified employees, as well as the loss of any of our executive officers, could negatively impact our ability to retain existing business and generate new business ● Our growth strategy depends, in part, on the acquisition of other insurance intermediaries, which may not be available on acceptable terms in the future or which, if consummated, may not be advantageous to us ● A cybersecurity attack, or any other interruption in information technology and/or data security and/or outsourcing relationships, could adversely affect our business, financial condition and reputation ● Rapid technological change may require additional resources and time to adequately respond to dynamics, which may adversely affect our business and operating results ● Changes in data privacy and protection laws and regulations, or any failure to comply with such laws and regulations, could adversely affect our business and financial results ● Because our insurance business is highly concentrated in Michigan, New Jersey, Montana and Ohio, adverse economic conditions, natural disasters, or regulatory changes in these regions could adversely affect our financial condition ● If we fail to comply with the covenants contained in certain of our agreements, our liquidity, results of operations and financial condition may be adversely affected ● Certain of our agreements contain various covenants that limit the discretion of our management in operating our business and could prevent us from engaging in certain potentially beneficial activities ● There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with United States Generally Accepted Accounting Principles (U.S.
Therefore, the Company may not be able to acquire other assets or businesses ● The Company may be unable to obtain additional financing, if required, to complete an acquisition, or to complement the operations and growth of existing and target business, which could compel the Company to restructure a potential business transaction or abandon a particular business combination ● We hold our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts that could be adversely affected if the financial institution holding such funds fail. ● Our inability to retain or hire qualified employees, as well as the loss of any of our executive officers, could negatively impact our ability to retain existing business and generate new business ● Our growth strategy depends, in part, on the acquisition of other insurance intermediaries, which may not be available on acceptable terms in the future or which, if consummated, may not be advantageous to us ● A cybersecurity attack, or any other interruption in information technology and/or data security and/or outsourcing relationships, could adversely affect our business, financial condition and reputation ● Rapid technological change may require additional resources and time to adequately respond to dynamics, which may adversely affect our business and operating results ● Changes in data privacy and protection laws and regulations, or any failure to comply with such laws and regulations, could adversely affect our business and financial results ● Because our insurance business is highly concentrated in Michigan, New York, Montana, New Jersey, Ohio, and Illinois adverse economic conditions, natural disasters, or regulatory changes in these regions could adversely affect our financial condition ● If we fail to comply with the covenants contained in certain of our agreements, our liquidity, results of operations and financial condition may be adversely affected ● Certain of our agreements contain various covenants that limit the discretion of our management in operating our business and could prevent us from engaging in certain potentially beneficial activities ● There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with United States Generally Accepted Accounting Principles (U.S.
As of December 31, 2021, the Company was in compliance with all financial covenants. Certain of our agreements contain various covenants that limit the discretion of our management in operating our business and could prevent us from engaging in certain potentially beneficial activities.
As of December 31, 2023, the Company is in compliance with all financial covenants. Certain of our agreements contain various covenants that limit the discretion of our management in operating our business and could prevent us from engaging in certain potentially beneficial activities.
Upon an event of default, the lender has customary and usual remedies to cure these defaults including, but not limited to, the ability to accelerate the indebtedness. The credit agreements contain financial covenants including debt service coverage ratio and debt to EBIDTA tests.
Upon an event of default, the lender has customary and usual remedies to cure these defaults including, but not limited to, the ability to accelerate the indebtedness. The credit agreements contain financial covenants including debt service coverage ratio and debt to EBIDTA (earnings before interest, taxes, depreciation, and amortization) tests.
The notice had no immediate effect on the listing or trading of the Company’s common stock and the common stock continued to trade on Nasdaq under the symbol “RELI.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company had a compliance period of 180 calendar days, or until March 27, 2023, to regain compliance with Nasdaq Listing Rule 5550(a)(2).
The notice has no immediate effect on the listing or trading of the Company’s common stock and the common stock continued to trade on Nasdaq under the symbol “RELI.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until July 10, 2024, to regain compliance with Nasdaq Listing Rule 5550(a)(2).
In particular, among other covenants, our debt agreements require us to maintain a minimum ratio of Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted for certain transaction-related items (“Consolidated EBITDA”), to consolidated interest expense and a maximum ratio of consolidated net indebtedness to Consolidated EBITDA.
Among other covenants, our debt agreements require us to maintain a minimum ratio of Consolidated EBITDA, adjusted for certain transaction-related items (“Consolidated EBITDA”), to consolidated interest expense and a maximum ratio of consolidated net indebtedness to Consolidated EBITDA.
The Oak Street credit agreements, in the aggregate principal amount of $13,782,223 and $8,133,925, as of December 31, 2022 and 2021, that govern our debt contain various covenants and other limitations with which we must comply including a debt to EBITDA ratio covenant and a covenant that at all times that the loans are outstanding: (i) Ezra Beyman, our chief executive officer, Debra Beyman, Mr.
The Oak Street credit agreements, in the aggregate principal amount of $12,417,737 and $13,468,394, as of December 31, 2023 and 2022, that govern our debt contain various covenants and other limitations with which we must comply including a debt to EBITDA ratio covenant and a covenant that at all times that the loans are outstanding: (i) Ezra Beyman, our chief executive officer, Debra Beyman, Mr.
As previously disclosed in the Current Report on Form 8-K filed on September 29, 2022 by the Company on September 27, 2022, the Company received written notice from Nasdaq’s Listing Qualifications Department notifying the Company that for the preceding 30 consecutive business days (August 15, 2022 through September 26, 2022), the Company’s common stock did not maintain a minimum closing bid price of $1.00 per share as required by Nasdaq Listing Rule 5550(a)(2).
As previously disclosed in the Current Report on Form 8-K filed on January 16, 2024 by the Company on January 12, 2024, the Company received written notice from Nasdaq’s Listing Qualifications Department notifying the Company that for the preceding 30 consecutive business days (November 29, 2023 to January 11, 2024), the Company’s common stock did not maintain a minimum closing bid price of $1.00 per share as required by Nasdaq Listing Rule 5550(a)(2).
As of December 31, 2022, the outstanding loan balances due from affiliated entities to our CEO, Reliance Global Holdings LLC and YES Americana Group, LLC, were approximately $100,724 and $1,500,000. 22 Under our credit agreements with Oak Street, the Company has agreed that at all times that the loans are outstanding: (i) Ezra Beyman, our chief executive officer, Debra Beyman, Mr.
As of December 31, 2023, the are no outstanding loan balances due to affiliated entities to our CEO, Reliance Global Holdings LLC and YES Americana Group, LLC. 26 Under our credit agreements with Oak Street, the Company has agreed that at all times that the loans are outstanding: (i) Ezra Beyman, our chief executive officer, Debra Beyman, Mr.
The warrants offered in our February 2021 offering do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period of time.
Warrants offered in our various equity offerings do not confer any rights of common stock ownership on their holders, such as voting rights, and could limit the rights to receive dividends, they rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period of time.
There can be no assurance that the market price of the common stock will ever equal or exceed the exercise price of the warrants, and consequently, whether it will ever be profitable for holders of the warrants to exercise the warrants. 24 State blue sky registration; potential limitations on resale of the Company’s common stock The holders of the Company’s shares of common stock registered under the Securities Exchange Act of 1934, as amended (the “Securities Act”) and those persons who desire to purchase them in any trading market that may develop in the future, should be aware that there may be state blue-sky law restrictions upon the ability of investors to resell the Company’s securities.
State blue sky registration; potential limitations on resale of the Company’s common stock The holders of the Company’s shares of common stock registered under the Securities Exchange Act of 1934, as amended (the “Securities Act”) and those persons who desire to purchase them in any trading market that may develop in the future, should be aware that there may be state blue-sky law restrictions upon the ability of investors to resell the Company’s securities.
In addition to potential environmental liabilities or costs associated with our current multifamily residential communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or multifamily residential communities we no longer own or operate.
In addition to potential environmental liabilities or costs associated with our current multifamily residential communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or multifamily residential communities we no longer own or operate. 24 We compete in a highly regulated industry, which may result in increased expenses or restrictions on our operations.
The Series B Warrants are exercisable commencing on the date of issuance, and will expire five years from the date of issuance. Moreover, following these offerings, the market value of the warrants is uncertain and there can be no assurance that the market value of the warrants will equal or exceed their public offering price.
Moreover, following these offerings, the market value of the warrants is uncertain and there can be no assurance that the market value of the warrants will equal or exceed their public offering price.
In addition, and to the extent that banks, securities firms, private equity companies, and insurance companies affiliate, the financial services industry may experience further consolidation, and we therefore may experience increased competition from insurance companies and the financial services industry, as a growing number of larger financial institutions increasingly, and aggressively, offer a wider variety of financial services, including insurance intermediary services.
In addition, and to the extent that banks, securities firms, private equity companies, and insurance companies affiliate, the financial services industry may experience further consolidation, and we therefore may experience increased competition from insurance companies and the financial services industry, as a growing number of larger financial institutions increasingly, and aggressively, offer a wider variety of financial services, including insurance intermediary services. 22 Worsening of Current U.S. economic conditions as a result of the COVID-19 pandemic and the Russian Federation Military Action may adversely affect our business.
For the years ended December 31, 2022, and 2021 we derived $16,755,884 and $9,710,334 respectively or 100%, of our annual revenue, respectively, from our operations located in these regions (FYE 2022 - Michigan – 38%, New York – 2%, Montana – 11%, Ohio – 13%, Florida – 30%, and Illinois – 7%.
For the years ended December 31, 2023, and 2022 we derived $13,731,826 and $11,761,882 respectively or 100% of our annual revenue, respectively, from our operations located in these regions (FYE 2023 - Michigan – 55%, New York – 2%, Montana – 14% and Ohio – 16%, and Illinois – 13%.
If our operating results fail to meet or exceed the expectations of securities analysts or investors, our stock price could drop suddenly and significantly.
These factors, some of which are not within our control, may cause the price of our common stock to fluctuate substantially. If our operating results fail to meet or exceed the expectations of securities analysts or investors, our stock price could drop suddenly and significantly.
Losing employees who manage or support substantial customer relationships or possess substantial experience or expertise could adversely affect our ability to secure and complete customer engagements, which would adversely affect our results of operations.
If we are not able to successfully attract, retain and motivate our employees, our business, financial results and reputation could be materially and adversely affected. 18 Losing employees who manage or support substantial customer relationships or possess substantial experience or expertise could adversely affect our ability to secure and complete customer engagements, which would adversely affect our results of operations.
We compete in a highly regulated industry, which may result in increased expenses or restrictions on our operations. We conduct business in several states of the United States of America and are subject to comprehensive regulation and supervision by government agencies in each of those states.
We conduct business in several states of the United States of America and are subject to comprehensive regulation and supervision by government agencies in each of those states.
The market price of our common stock could decline as a result of sales of shares of our common stock or the perception that such sales could occur.
The market price of our common stock could decline as a result of sales of shares of our common stock or the perception that such sales could occur. The price of our common stock may fluctuate significantly, and this may make it difficult to resell shares of common stock at attractive prices.
The enactment of more restrictive laws, rules, regulations or future enforcement actions or investigations could impact us through increased costs or restrictions on our business, and noncompliance could result in regulatory penalties and significant legal liability. 17 Because our insurance business is highly concentrated in Michigan, New York, Montana and Ohio, Florida, and Illinois adverse economic conditions, natural disasters, or regulatory changes in these regions could adversely affect our financial condition.
The enactment of more restrictive laws, rules, regulations or future enforcement actions or investigations could impact us through increased costs or restrictions on our business, and noncompliance could result in regulatory penalties and significant legal liability.
FYE 2021 - Michigan – 56.64%, New Jersey – 3.44%, Montana – 17.97% and Ohio – 21.95%). The insurance business is primarily a state-regulated industry, and therefore, state legislatures may enact laws that adversely affect the insurance industry.
FYE 2022 - Michigan – 55%, New York – 2%, Montana – 16%, Ohio – 18%, and Illinois – 9%.). The insurance business is primarily a state-regulated industry, and therefore, state legislatures may enact laws that adversely affect the insurance industry.
As of March 30, 2023, our CEO, Ezra Beyman, is the beneficial owner of approximately 25% of the common stock, consisting of 394,402 common shares.
As of April 4, 2024, our CEO, Ezra Beyman, is the beneficial owner of approximately 8% of the common stock, consisting of 381,020 common shares.
Any changes in estimates, judgments and assumptions could have a material adverse effect on our financial position and results of operations and therefore our business ● Improper disclosure of confidential information could negatively impact our business ● Our business, results of operations, financial condition and liquidity may be materially adversely affected by certain actual and potential claims, regulatory actions and proceedings These factors, some of which are not within our control, may cause the price of our common stock to fluctuate substantially.
GAAP). Any changes in estimates, judgments and assumptions could have a material adverse effect on our financial position and results of operations and therefore our business ● Improper disclosure of confidential information could negatively impact our business ● Our business could be adversely impacted by inflation.
There is significant competition from within the insurance industry and from businesses outside the industries for exceptional employees, especially in key positions. If we are not able to successfully attract, retain and motivate our employees, our business, financial results and reputation could be materially and adversely affected.
There is significant competition from within the insurance industry and from businesses outside the industries for exceptional employees, especially in key positions.
Stockholder class action lawsuits may be instituted against us following a period of volatility in our stock price. Any such litigation could result in substantial cost and a diversion of management’s attention and resources. We can provide no assurance that our common stock or the warrants will always meet the Nasdaq continued listing standards.
Stockholder class action lawsuits may be instituted against us following a period of volatility in our stock price. Any such litigation could result in substantial cost and a diversion of management’s attention and resources. 27 Possible issuance of additional securities. Our Articles of Incorporation authorize the issuance of 2,000,000,000 shares of common stock, par value $0.086 per share.
The issuance of additional shares of common stock may adversely affect the market price of our common stock, in the event that an active trading market commences. We could be negatively impacted by cybersecurity attacks.
If we issue shares of common stock in connection with our intent to pursue new business opportunities, a change in control of the Company may be expected to occur. The issuance of additional shares of common stock may adversely affect the market price of our common stock, in the event that an active trading market commences.
A significant portion of our insurance business is concentrated in Michigan, New York, Montana, Ohio, Florida, and Illinois.
Because our insurance business is highly concentrated in Michigan, New York, Montana, New Jersey, Ohio, and Illinois adverse economic conditions, natural disasters, or regulatory changes in these regions could adversely affect our financial condition. A significant portion of our insurance business is concentrated in Michigan, New York, Montana, New Jersey, Ohio, and Illinois.
Removed
As of December 31, 2022, the Company passes the debt service coverage test and slightly exceeds the debt to EBITDA limit. Oak Street has committed to providing the Company with a waiver for the debt to EBITDA test and will increase the limit for the first three quarters of 2023 so that the Company remains in compliance.
Added
We could be negatively impacted by cybersecurity attacks.
Removed
Worsening of Current U.S. economic conditions as a result of the COVID-19 pandemic and the Russian Federation Military Action may adversely affect our business.
Added
There can be no assurance that the market price of the common stock will ever equal or exceed the exercise price of the warrants, and consequently, whether it will ever be profitable for holders of the warrants to exercise the warrants.
Removed
We may have unforeseen risks as a result of the COVID-19 pandemic The spread of the coronavirus (COVID-19) outbreak in the United States has resulted in economic uncertainties which may negatively impact the Company’s business operations.
Removed
While the disruption is expected to be temporary, there is uncertainty surrounding the duration and extent of the impact. 20 Adverse events such as health-related concerns about working in our offices, the inability to travel and other matters affecting the general work environment could harm our business and our business strategy.
Removed
While we do not anticipate any material impact to our business operations as a result of the coronavirus, in the event of a major disruption caused by the outbreak of pandemic diseases such as coronavirus, we may lose the services of our employees or experience system interruptions, which could lead to diminishment of our business operations.
Removed
Any of the foregoing could harm our business and delay the implementation of our business strategy and we cannot anticipate all the ways in which the current global health crisis and financial market conditions could adversely impact our business. Management is actively monitoring the global situation on its financial condition, liquidity, operations, industry and workforce.
Removed
On March 9, 2023, Nasdaq’s Listing Qualifications Department notified the Company that it had regained compliance with Nasdaq Listing Rule 5550(a)(2).
Removed
The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell shares of common stock owned by you at times or at prices you find attractive.
Removed
Our common stock is currently quoted on the Nasdaq. We can provide no assurance that that an active trading market on Nasdaq for our common stock and the warrants will develop and continue.
Removed
If our common stock remains quoted on or reverts to an over-the-counter system rather than being listed on a national securities exchange, you may find it more difficult to dispose of shares of our common stock or obtain accurate quotations as to the market value of our common stock. Possible issuance of additional securities.
Removed
Our Articles of Incorporation authorize the issuance of 133,333,333 shares of common stock, par value $0.086 per share. As of December 31, 2022 we had 1,219,573 shares issued and outstanding. We may be expected to issue additional shares in connection with our pursuit of new business opportunities and new business operations.
Removed
Specifically, commencing on the date of issuance, holders of the Series A Warrants may exercise their right to acquire the common stock and pay an exercise price of $99.00 per share (110% of the public offering price of our common stock and warrants in the February-2021 offering), prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value.
Removed
By entering into the Private Placement (as hereinunder defined in this Annual Report on From 10-K), on December 22, 2021, we entered into a commitment to issue B Warrants on the Initial Closing Date for a fixed price and exercise price, as applicable.
Removed
The commitment to issue Series B Warrants (the “Warrant Commitment”) represents a financial instrument, other than an outstanding share, that, at inception, has both of the following characteristics: (i) embodies a conditional obligation indexed to the Company’s equity shares and (ii) may require the Company to settle the obligation by transferring assets.
Removed
Under ASC 480, Distinguishing Liabilities from Equity, it was required to be initially measured and subsequently remeasured, at fair value as an asset or liability with changes in fair value recognized in earnings.
Removed
The Series B Warrant has an exercise price of $61.35 per share, subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for, Common Stock at a price below the then-applicable exercise price (subject to certain exceptions, including a floor price of $57.60 per share of Common Stock, until the Company has received shareholder approval for the sale of securities in the Private Placement).

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed1 unchanged
Biggest changeLakewood, NJ Lease Office Building 4,436 6/2021 – 3/2029 9,174 J.P. Kush and Associates Troy, MI Lease Office Building 1,400 4/2022– 4/2025 2,980 Medigap Health Insurance Company, LLC Boca Raton, FL Lease Office Building 2/2022 – 12/2023 15,215 Barra & Associates, LLC Schaumburg, IL Lease Office Building 4/2022 – 05/2025 3,608 Reliance Global Group, Inc.
Biggest changeLakewood, NJ Lease Office Building 4,436 6/2021 – 3/2029 $ 8,737 Reliance Global Group, Inc. Suffern, NY Lease Office Building 9/2022 – 8/2024 $ 2,000 Reli Exchange Schaumburg, IL Lease Office Building 4/2022 – 05/2025 $ 3,589
Footage Lease Term Monthly Rent in USD Employee Benefits Solutions Cadillac, Michigan Lease Office Building 3,024 10/2019– 9/2024 $ 2,400 Southwestern Montana Insurance Center Helena, Montana Lease Office Building 1,500 Monthly 1,500 Southwestern Montana Insurance Center Belgrade, Montana Lease Office Building 6,000 4/2019– 3/2023 Lease renewal expected 7,000 Fortman Insurance Center Bluffton, Ohio Lease Office Building 990 9/2020 – 8/2023 555 Fortman Insurance Center Ottawa, Ohio Lease Office Building 2,386 5/2019– 4/2024 2,400 Commercial Coverage Solutions/UIS Pomona, New York Lease Office Building 1,000 8/2020– 8/2023 3,667 Altruis Benefits Consultants Bingham Farms, MI Lease Office Building 1,767 6/2021– 5/2024 4,855 Reliance Global Group, Inc.
Footage Lease Term Monthly Rent in USD Employee Benefits Solutions Cadillac, Michigan Lease Office Building 3,024 10/2019– 9/2024 $ 2,600 Southwestern Montana Insurance Center Belgrade, Montana Lease Office Building 6,000 4/2019– 3/2024 $ 7,000 Southwestern Montana Insurance Center Belgrade, Montana Lease Office Building 6,000 4/2024– 3/2028 $ 7,500 Fortman Insurance Center Bluffton, Ohio Lease Office Building 990 9/2020 – 8/2024 $ 600 Fortman Insurance Center Ottawa, Ohio Lease Office Building 2,386 5/2019– 4/2024 $ 2,400 Altruis Benefits Consultants Bingham Farms, MI Lease Office Building 1,767 6/2021– 5/2024 $ 4,997 Reliance Global Group, Inc.
Removed
Suffern, NY Lease Office Building 9/2022 – 8/2024 2,000

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+11 added−6 removed4 unchanged
Biggest changeThe following table gives information about the Company’s common stock that may be issued upon the exercise of options granted to employees, directors and consultants under its 2019 Equity Incentive Plans as of December 31, 2022 which had outstanding grants and remaining unissued shares, taking into account issuance of restricted stock to officers and directors, as follows: Equity Compensation Plan Information Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 10,928 $ 232.78 21,463 Equity compensation plans not approved by security holders - - - Total 10,928 $ 232.78 21,463 26 Recent Sales of Unregistered Securities Date of Transaction Transaction type (e.g. new issuance, cancellation, shares returned to treasury) and all under Section 4(a)(2) of the Securities Act of 1933 Number of Shares Issued (or cancelled) Class of Securities Value of shares issued ($/per share) at Issuance Were the shares issued at a discount to market price at the time of issuance?
Biggest changeThe following table gives information about the Company’s common stock that may be issued upon the exercise of options granted to employees, directors and consultants under its 2019 Equity Incentive Plans as of December 31, 2023 which had outstanding grants and remaining unissued shares, taking into account issuance of restricted stock to officers and directors, as follows: Equity Compensation Plan Information Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 10,928 $ 232.55 - Equity compensation plans not approved by security holders - - - Total 10,928 $ 232.55 - 31 2023 Equity Incentive Plans On August 10, 2023, the Company adopted the Reliance Global Group, Inc. 2023 Equity Incentive Plan (the “2023 Plan”, and together with the 2019 Plan, the “Plans”).
Issuer Purchases of Equity Securities There have been no equity securities repurchased by the Company for the years ending December 31, 2022 and 2021.
Issuer Purchases of Equity Securities There have been no equity securities repurchased by the Company for the years ending December 31, 2023 and 2022.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities As of December 31, 2022, there were approximately 495 holders of record of our ordinary shares, although there is a much larger number of beneficial owners.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Holders of Record As of December 31, 2023, there were approximately 522 holders of record of our ordinary shares, although there is a much larger number of beneficial owners.
Market Information Our common stock is listed on the NASDAQ Capital Market under the symbol “RELI”, and our warrants to purchase common stock are listed on the NASDAQ Capital Market under the symbol “RELIW.” Holders of Record On March 29, 2023, the closing price per share of our common stock was $2.94 as reported on the NASDAQ.
Market Information Our common stock is listed on the NASDAQ Capital Market under the symbol “RELI”, and our warrants to purchase common stock are listed on the NASDAQ Capital Market under the symbol “RELIW.” On April 03, 2024, the closing price per share of our common stock was $0.37 as reported on the NASDAQ.
(Yes/No) Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed). Reason for share issuance (e.g. for cash or debt conversion) OR Nature of Services Provided (if applicable) Restricted or Unrestricted as of this filing?
(Yes/No) Individual/ Entity Securities were issued to (entities must have individual with voting / investment control disclosed). Reason for Securities issuance (e.g. for cash or debt conversion) OR Nature of Services Provided (if applicable) Restricted or Unrestricted as of this filing? Exemption or Registration Type? 01/05/2023 New 92,771 (1) Common 7.50 Yes Altruis Benefits Consulting, Inc.
Removed
Exemption or Registration Type? 1/3/2022 New 1,000 Common Yes Warberg Exercise of Series A warrants Restricted 4(a) (2) 1/4/2022 New 16,000 Common Yes Clear Street LLC Exercise of Series A warrants Restricted 4(a) (2) 1/5/2022 New 4,000 Common Yes Clear Street LLC Exercise of Series A warrants Restricted 4(a) (2) 1/5/2022 New 178,060 Common Yes Hudson Bay Master Fund Ltd. and Armistice Capital Master Fund, LTD.
Added
The purpose of the 2023 Plan is to provide a means through which the Company and its subsidiaries may attract and retain key personnel, and to provide a means whereby directors, officer, employees, consultants, and advisors of the Company and its subsidiaries can acquire and maintain an equity interest in the Company, or be paid incentive compensation, thereby strengthening their commitment to the welfare of the Company and its subsidiaries and aligning their interests with those of the Company’s stockholders.
Removed
Cash Restricted 4(a) (2) 1/5/2022 New 9,076 Preferred Yes Hudson Bay Master Fund Ltd. and Armistice Capital Master Fund, LTD.
Added
There were no options issued under the 2023 Equity Incentive Plan.
Removed
Cash Restricted 4(a) (2) 1/10/2022 New 40,402 Common Yes Pagidem, LLC Acquisition Restricted 4(a) (2) 1/18/2022 New 4,000 Common Yes Clear Street LLC and Warberg Exercise of Series A warrants Restricted 4(a) (2) 3/22/2022 New (218,462 ) Common Yes Hudson Bay Master Fund Ltd., Pagidem, LLC and Armistice Capital Master Fund, LTD.
Added
Recent Sales of Unregistered Securities Date of Transaction Transaction type (e.g. new issuance, cancellation, shares returned to treasury) and all under Section 4(a)(2) of the Securities Act of 1933 Number of Securities Issued (or cancelled) (1) Class of Securities Value of Securities issued ($/per share) at Issuance Were the Securities issued at a discount to market price at the time of issuance?
Removed
Exchange of common shares for series C and D warrants Restricted 4(a) (2) 5/24/2022 New 89,030 Common Yes Hudson Bay Master Fund Ltd. Exercise of Series C warrants Restricted 4(a) (2) 5/24/2022 New 40,402 Common Yes Pagidem, LLC Exercise of Series C warrants Restricted 4(a) (2) 6/14/2022 New 88,963 Common Yes Armistice Capital Master Fund, LTD.
Added
Acquisition 4(a)(2) 1/17/2023 New 16,587 (1) Common 8.85 Yes Joshua Paul Kushnereit Acquisition 4(a)(2) 2/13/2023 New 66,743 (1) Common 9.664 No YES Americana Group, LLC Conversion 3(a)(9) 3/16/2023 New 155,038 Common 3.55 No Armistice Capital Master Fund, Ltd. Cash 4(a)(2) 3/16/2023 New 897,594 Prefunded (Series E) Warrants exercisable @ $0.001 per share 3.549 No Armistice Capital Master Fund, Ltd.
Removed
Exercise of Series C warrants Restricted 4(a) (2) 8/4/2022 New 122,869 Common Yes Armistice Capital Master Fund, LTD. Conversion of preferred shares Restricted 4(a) (2) 8/15/2022 New 28,497 Common Yes Hudson Bay Master Fund Ltd. Exercise of Series D warrants Restricted 4(a) (2) 8/18/2022 New 52,926 Common Yes Armistice Capital Master Fund, LTD.
Added
Cash 4(a)(2) 3/16/2023 New 2,105,264 Common (Series F) Warrants exercisable @ $3.55 per share 0.125 No Armistice Capital Master Fund, Ltd.
Removed
Exercise of Series D warrants Restricted 4(a) (2) 8/24/2022 New 25,070 Common Yes Hudson Bay Master Fund Ltd. Conversion of preferred shares Restricted 4(a) (2) 27 Use of Proceeds from Registered Securities Not applicable Issuer Purchases of Equity Securities Not applicable.
Added
Cash 4(a)(2) 4/03/2023 New 65,000 Common 2.63 No New To The Street Services 4(a)(2) 5/18/2023 New 176,130 Common 4.07 No Jonathan Fortman Acquisition 4(a)(2) 5/18/2023 New 176,130 Common 4.07 No Zachary Fortman Acquisition 4(a)(2) 6/06/2023 New 29,974 Common 4.41 No Maxim Partners LLC Services 4(a)(2) 06/20/2023 New 440 Common 4.50 No Chad Champion Services 4(a)(2) 06/20/2023 New 13,187 Common 4.50 No Sandstone Group Corp.
Added
Services 4(a)(2) 06/20/2023 New 3,956 Common 4.50 No Newbridge Securities Corporation Services 4(a)(2) 7/7/2023 New 400 Common 2.50 Yes Bitbean LLC Services 4(a)(2) 7/14/2023 New 73,264 Common 2.50 Yes Hudson Bay Master Fund Ltd. Exercise of Series B warrants 3(a)(9) 10/11/2023 New 174,610 Common 2.42 No Julie A.
Added
Blockey Acquisition Earn-Out payment Restricted 4(a)(2) 12/06/2023 New 65,000 Common 1.64 No New to the Street Group, LLC Services Restricted 4(a)(2) 12/08/2023 New 82,645 Common 1.21 No Outside the Box Capital Inc. Services Restricted 4(a)(2) 12/12/2023 New 4,210,528 Series G Warrants See footnote (2) No Armistice Capital Master Fund, Ltd.
Added
Inducement to exercise Series F Warrants Restricted 4(a)(2) 12/15/2023 New 300,000 Common See footnote (3) See footnote (3) Hudson Bay Master Fund Ltd. Inducement to exchange Series B Warrants Restricted 3(a)(9) (1) Gives effect to a 1:15 reverse stock split effective as of February 23, 2023.
Added
(2) Reflects issuance of Series G Warrants pursuant to Series F Inducement Agreement dated December 12, 2023 exercisable at an exercise price of $0.6562 per share.
Added
(3) Reflects issuance of Common Stock in exchange for 300,000 Series B Warrants pursuant to Exchange Offer of Warrants to Purchase Common Stock and Amendment dated December 12, 2023. 32 Use of Proceeds from Registered Securities Not applicable Issuer Purchases of Equity Securities Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

33 edited+30 added−45 removed31 unchanged
Biggest changeDuring the year ended December 31, 2022, cash provided by financing activities was $25,121,356 as compared to $8,643,776 for the year ended December 31, 2021. The 2022 net cash provided by financing activities is primarily related to proceeds from the Private Placement offering in January 2022. The net proceeds from the issuance of these shares was $17,853,351.
Biggest changeNet cash provided from continuing and discontinued financing activities for the year ended December 31, 2023, was approximately $967,000 as compared to $25,121,000 for the year ended December 31, 2022.
The preliminary allocation of the purchase price in connection with the acquisition of Medigap was calculated as follows: Description Fair Value Weighted Average Useful Life (Years) Acquired accounts receivable $ 92,585 Property, plant and equipment 8,593 7 Right-of-use asset 122,984 Trade names 22,000 4 Customer relationships 550,000 10 Developed technology 230,000 5 Agency relationships 2,585,000 10 Lease liability (122,984 ) Goodwill 4,236,822 Indefinite $ 7,725,000 Goodwill of $4,236,822 arising from the acquisition of Barra consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued.
The preliminary allocation of the purchase price in connection with the acquisition of Barra was calculated as follows: Description Fair Value Weighted Average Useful Life (Years) Acquired accounts receivable $ 92,585 Property, plant and equipment 8,593 7 Right-of-use asset 122,984 Trade names 22,000 4 Customer relationships 550,000 10 Developed technology 230,000 5 Agency relationships 2,585,000 10 Lease liability (122,984 ) Goodwill 4,236,822 Indefinite $ 7,725,000 Goodwill of $4,236,822 arising from the acquisition of Barra consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued.
Items involving significant assumptions, estimates, and judgments include the following: ● Debt, including discount rate and timing of payments; ● Deferred tax assets, including projections of future taxable income and tax rates; ● Fair value of consideration paid or transferred; ● Intangible assets, including valuation methodology, estimations of future revenue and costs, and discount rates; 35 Contingencies: We are subject to the possibility of losses from various contingencies.
Items involving significant assumptions, estimates, and judgments include the following: ● Debt, including discount rate and timing of payments; ● Deferred tax assets, including projections of future taxable income and tax rates; ● Fair value of consideration paid or transferred; ● Intangible assets, including valuation methodology, estimations of future revenue and costs, and discount rates; Contingencies: We are subject to the possibility of losses from various contingencies.
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. Off-balance sheet arrangements We do not have any off-balance sheet arrangements as such term is defined in Regulation S-K.
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. 39 Off-balance sheet arrangements We do not have any off-balance sheet arrangements as such term is defined in Regulation S-K.
Stock-based compensation : Stock-based compensation is estimated at the grant date based on the fair value of the award and is recognized as expense using the straight-line amortization method over the requisite service period. For performance-based stock awards, the expense recognized is dependent on our assessment of the likelihood of the performance measure being achieved.
Equity-based compensation : Equity-based compensation is estimated at the grant date based on the fair value of the award and is recognized as expense using the straight-line amortization method over the requisite service period. For performance-based stock awards, the expense recognized is dependent on our assessment of the likelihood of the performance measure being achieved.
The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties. 31 The acquisition of Barra was accounted for as a business combination in accordance with the acquisition method pursuant to FASB Topic No. 805, Business Combination (ASC 805).
The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties. The acquisition of Barra was accounted for as a business combination in accordance with the acquisition method pursuant to FASB Topic No. 805, Business Combination (ASC 805).
We utilize forecasts of future performance to assess these probabilities and this assessment requires significant judgment. 36 Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the grant date requires significant judgment, including estimating stock price volatility and expected option life.
We utilize forecasts of future performance to assess these probabilities and this assessment requires significant judgment. Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the grant date requires significant judgment, including estimating stock price volatility and expected option life.
(Southwestern Montana or Montana) April 1, 2019 Montana Group Health Insurance Unaffiliated Fortman Insurance Agency, LLC (Fortman or Fortman Insurance) May 1, 2019 Ohio P&C and Health Insurance Unaffiliated Altruis Benefits Consultants, Inc. (Altruis) September 1, 2019 Michigan Health Insurance Unaffiliated UIS Agency, LLC (UIS) August 17, 2020 New York Health Insurance Unaffiliated J.P. Kush and Associates, Inc.
(Southwestern Montana or Montana) April 1, 2019 Montana Group Health Insurance Fortman Insurance Agency, LLC (Fortman or Fortman Insurance) May 1, 2019 Ohio P&C and Health Insurance Altruis Benefits Consultants, Inc. (Altruis) September 1, 2019 Michigan Health Insurance UIS Agency, LLC (UIS) August 17, 2020 New York Health Insurance J.P. Kush and Associates, Inc.
As part of our growth and acquisition strategy, we continue to survey the current insurance market for value-add acquisition opportunities. As of December 31, 2022, we have acquired ten insurance agencies, including both affiliated and unaffiliated companies and long term, we seek to conduct all transactions and acquisitions through our direct operations.
As part of our growth and acquisition strategy, we continue to survey the current insurance market for value-add acquisition opportunities. As of December 31, 2023, we have acquired ten insurance agencies, including both affiliated and unaffiliated companies and long term, we seek to conduct all transactions and acquisitions through our direct operations.
Financial Instruments The Company’s financial instruments as of December 31, 2022, 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.
Financial Instruments The Company’s financial instruments as of December 31, 2023, 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.
Benefits Alliance, LLC (USBA) October 24, 2018 Michigan Health Insurance Affiliated Employee Benefit Solutions, LLC (EBS) October 24, 2018 Michigan Health Insurance Affiliated Commercial Solutions of Insurance Agency, LLC (CCS or Commercial Solutions) December 1, 2018 New Jersey P&C – Trucking Industry Unaffiliated Southwestern Montana Insurance Center, Inc.
Benefits Alliance, LLC (USBA) October 24, 2018 Michigan Health Insurance Employee Benefit Solutions, LLC (EBS) October 24, 2018 Michigan Health Insurance Commercial Solutions of Insurance Agency, LLC (CCS or Commercial Solutions) December 1, 2018 New Jersey P&C – Trucking Industry Southwestern Montana Insurance Center, Inc.
As we continue to execute on our acquisition strategy, our reach within the insurance industry can provide us with the ability to offer lower rates, which could boost our competitive position within the industry. 29 Acquired Date Location Line of Business Status U.S.
As we continue to execute on our acquisition strategy, our reach within the insurance industry can provide us with the ability to offer lower rates, which could boost our competitive position within the industry. 34 Acquired Date Location Line of Business U.S.
The platform launched during the summer of 2021 and currently operates in 46 states offering coverage with up to 30 highly rated insurance carriers. With the acquisition of Barra, we launched RELI Exchange, our business-to-business (B2B) InsurTech platform and agency partner network that builds on the artificial intelligence and data mining backbone of 5MinuteInsure.com.
The platform launched during the summer of 2021 and currently operates in 46 states offering coverage with more than 30 highly rated insurance carriers. 33 With the acquisition of Barra, we launched RELI Exchange, our business-to-business (B2B) InsurTech platform and agency partner network that builds on the artificial intelligence and data mining backbone of 5MinuteInsure.com.
Barra & Associates, LLC Transaction On April 26, 2022, we entered into an asset purchase agreement (the “APA”) with Barra & Associates, LLC (“Barra”) pursuant to which the Company purchased all of the assets of Barra & Associates, LLC on April 26, 2022 for a purchase price in the amount of $7,725,000 in cash, with $6,000,000 paid to Barra at closing, $1,125,000 payable in nine months from closing, and a final earnout of $600,000 payable over two years from closing based upon meeting stated milestones.
(Kush) May 1, 2021 Michigan Health Insurance Barra & Associates, LLC April 26, 2022 Illinois Health Insurance 35 Barra & Associates, LLC Transaction On April 26, 2022, we entered into an asset purchase agreement (the “APA”) with Barra & Associates, LLC (“Barra”) pursuant to which the Company purchased all of the assets of Barra & Associates, LLC on April 26, 2022 for a purchase price in the amount of $7,725,000 in cash, with $6,000,000 paid to Barra at closing, $1,125,000 payable in nine months from closing, and a final earnout of $600,000 payable over two years from closing based upon meeting stated milestones.
Recent Developments Private Placements On March 13, 2023, the Company entered into a securities purchase agreement with one institutional buyer for the purchase and sale of, (i) an aggregate of 155,038 shares (the “Common Shares”) of the Company’s common stock, par value $0.086 per share (the “Common Stock”) along with accompanying common warrants (the “Common Units”), (ii) prefunded warrants (the “Prefunded Warrants”) that are exercisable into 897,594 shares of Common Stock (the “Prefunded Warrant Shares”) along with accompanying common warrants (the “Pre-Funded Units”), and (iii) common warrants (the “Common Warrants”) to initially acquire up to 2,105,264 shares of Common Stock (the “Common Warrant Shares”) (representing 200% of the Common Shares and Prefunded Warrant Shares) in a private placement offering (the “Private Placement”).
Total acquisition costs incurred through December 31, 2022 for the acquisition of Barra were 72,793 recorded as a component of General and administrative expenses. 36 Recent Developments Private Placements On March 13, 2023, the Company entered into a securities purchase agreement with one institutional buyer for the purchase and sale of, (i) an aggregate of 155,038 shares (the “Common Shares”) of the Company’s common stock, par value $0.086 per share (the “Common Stock”) along with accompanying common warrants (the “Common Units”), (ii) prefunded warrants (the “Prefunded Warrants”) that are exercisable into 897,594 shares of Common Stock (the “Prefunded Warrant Shares”) along with accompanying common warrants (the “Pre-Funded Units”), and (iii) common warrants (the “Common Warrants”) to initially acquire up to 2,105,264 shares of Common Stock (the “Common Warrant Shares”) (representing 200% of the Common Shares and Prefunded Warrant Shares) in a private placement offering (the “Private Placement”).
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. 28 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.
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.
Additionally, the Company agreed to issue a warrant to the Placement Agent (defined below), to initially acquire 52,632 shares of common stock (the “PA Warrant”).
Additionally, the Company agreed to issue a warrant to the Placement Agent (defined below), to initially acquire 52,632 shares of common stock (the “PA Warrant”). The closing of the Private Placement occurred on March 16, 2023.
In recent periods, our results of operations have benefited from increases in the amount of deferred taxes we expect to realize, primarily from the levels of capital spending and increases in the amount of taxable income we expect to realize.
Realization of deferred tax assets is dependent on our ability to generate future taxable income. In recent periods, our results of operations have benefited from increases in the amount of deferred taxes we expect to realize, primarily from the levels of capital spending and increases in the amount of taxable income we expect to realize.
These estimates involve significant judgment and interpretations of regulations and are inherently complex. Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of the applicable year. We are also required to evaluate the realizability of our deferred tax assets on an ongoing basis in accordance with U.S.
Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of the applicable year. We are also required to evaluate the realizability of our deferred tax assets on an ongoing basis in accordance with U.S. GAAP, which requires the assessment of our performance and other relevant factors.
Business acquisitions : Accounting for acquisitions requires us to estimate the fair value of consideration paid and the individual assets and liabilities acquired, which involves a number of judgments, assumptions, and estimates that could materially affect the amount and timing of costs recognized in subsequent periods.
Our management believes the accounting policies below are critical in the portrayal of our financial condition and results of operations and require management’s most difficult, subjective, or complex judgments. 40 Business acquisitions : Accounting for acquisitions requires us to estimate the fair value of consideration paid and the individual assets and liabilities acquired, which involves a number of judgments, assumptions, and estimates that could materially affect the amount and timing of costs recognized in subsequent periods.
All share and per share information as well as common stock and additional paid-in capital have been retroactively adjusted to reflect the Reverse Split-2023 for all periods presented, unless otherwise indicated.
All share and per share information as well as common stock and additional paid-in capital have been retroactively adjusted to reflect the Reverse Split-2023 for all periods presented, unless otherwise indicated. Non-GAAP Measure 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.
We test intangible assets with indefinite lives annually for impairment using a fair value method such as discounted cash flows. Estimating fair values involves significant assumptions, including future sales prices, sales volumes, costs, and discount rates.
We test intangible assets with indefinite lives annually for impairment using a fair value method such as discounted cash flows.
GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and judgments may vary under different assumptions or conditions.
Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and judgments may vary under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.
Cash Flows Year Ended December 31, 2022 2021 Net cash used in operating activities $ (3,189,997 ) $ (2,253,275 ) Net cash used in investing activities (24,642,312 ) (2,299,360 ) Net cash provided by financing activities 25,121,356 8,643,776 Net increase (decrease) in cash, cash equivalents, and restricted cash $ (2,710,953 ) $ 4,091,141 Operating Activities Net cash used in operating activities for the year ended December 31, 2022 was $3,189,997, compared to cash used in operating activities of $2,253,275 for the year ended December 31, 2021.
Cash Flows Year Ended December 31, 2023 2022 Net cash used in operating activities $ (847,970 ) $ (3,189,997 ) Net cash provided and used in investing activities 710,189 (24,642,312 ) Net cash provided by financing activities 966,923 25,121,356 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 829,142 $ (2,710,953 ) Operating Activities Net cash used in continuing and discontinued operating activities for the year ended December 31, 2023 was approximately $848,000, compared to approximately $3,190,000 for the year ended December 31, 2022 representing a decrease of cash used in operations of $2,342,000, or 73%.
The 2022 cash used relates to cash paid for the acquisitions of $24,138,750, the purchase of property and equipment of approximately $71,000 and approximately $882,000 cash paid for intangible assets, offset by cash received from proceeds of the sale of investment in NSURE of $450,000. Financing Activities .
The 2023 net cash provided comprises $900,000 in cash proceeds from the sale of the NSURE investment, offset by approximately $190,000 of cash spend for the purchase of property, equipment and intangible assets. Financing Activities .
In the insurance sector, our management has extensive experience acquiring and managing insurance portfolios in several states, as well as developing specialized programs targeting niche markets.
We are led and advised by a management team that offers over 100 years of combined business expertise in real estate, insurance, and the financial service industry. In the insurance sector, our management has extensive experience acquiring and managing insurance portfolios in several states, as well as developing specialized programs targeting niche markets.
The Company defines a member as an individual currently covered by an insurance plan, including individual and family, Medicare-related, small business, and ancillary plans, for which the Company is entitled to receive compensation from an insurance carrier. 33 The Company had revenues of $16,755,884 for the year ended December 31, 2022, as compared to $9,710,334 for the year ended December 31, 2021.
The Company defines a member as an individual currently covered by an insurance plan, including individual and family, Medicare-related, small business, and ancillary plans, for which the Company is entitled to receive compensation from an insurance carrier. Insurance Acquisitions and Strategic Activities As of the date of this filing, we have acquired nine insurance brokerages (see table below).
The Company is initially focused on segments that are underserved or growing, including healthcare and Medicare, as well as personal and commercial insurance lines.
The Company is initially focused on segments that are underserved or growing, including healthcare and Medicare, as well as personal and commercial insurance lines. Revenues The Company’s revenue is primarily comprised of commission paid by health insurance carriers related to insurance plans that have been purchased by a member who used the Company’s service.
Goodwill recognized pursuant to the Kush Acquisition is currently expected to be deductible for income tax purposes. Total acquisition costs for the Kush Acquisition incurred were $58,092 recorded as a component of General and administrative expenses.
Goodwill recognized pursuant to the acquisition of Barra is currently expected to be deductible for income tax purposes.
Investing Activities . During the year ended December 31, 2022, cash flows used in investing activities were $24,642,312 compared to cash flow used in investing activities of $2,299,360 for the year ended December 31, 2021.
Investing Activities Net cash flows provided from continuing and discontinued investing activities for the year ended December 31, 2023, was approximately $710,000 compared to net cash flows used in investing activities of approximately $24,642,000 for the year ended December 31, 2022.
Results of Operations Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 The following table sets forth our revenue and operating expenses for each of the years presented.
Refer to the reconciliation of net (loss) income to AEBITDA, illustrated below in tabular format. 37 Results of Operations Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 The following table sets forth our revenue and expenses for each of the years presented and provides insight into the value and percentage changes: RELIANCE GLOBAL GROUP, INC.
Pursuant to a securities purchase agreement which closed on March 16, 2023, the Company received funds net of transaction costs of approximately $3,446,000, to be used primarily for working capital. 34 Inflation The Company generally may be impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases.
The 2023 increase in working capital is primarily attributable to increases in current assets stemming from the 17% increase in top line revenue, an equity private placement, cash received from warrant exercises and decreases to current liabilities. Inflation The Company generally may be impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases.
Pursuant to the qualitative assessment, the Company concluded that goodwill was not impaired as of and for the year ended December and 2021. Income taxes : We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions around the world.
Estimating fair values involves significant assumptions, including future sales prices, sales volumes, costs, and discount rates. 41 Income taxes : We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions around the world. These estimates involve significant judgment and interpretations of regulations and are inherently complex.
Removed
The Company is controlled by the same management team as Reliance Global Holdings, LLC (“Reliance Holdings”), a New York based firm that is the owner and operator of numerous companies with core interests in real estate and insurance.
Added
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.
Removed
Our relationship with Reliance Holdings provides us with significant benefits: (1) experience, knowledge, and industry relations; (2) a source of acquisition targets currently under Reliance Holdings’ control; and (3) financial and logistics assistance. We are led and advised by a management team that offers over 100 years of combined business expertise in real estate, insurance, and the financial service industry.
Added
Business Operations 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.
Removed
Insurance Acquisitions and Strategic Activities As of the date of this filing, we have acquired ten insurance brokerages (see table below), including both acquisitions of affiliated companies ( i.e. , owned by Reliance Holdings before the acquisition) and unaffiliated companies.
Added
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.
Removed
(Kush) May 1, 2021 Michigan Health Insurance Unaffiliated Medigap Healthcare Insurance Agency, LLC (Medigap) January 10, 2022 Florida Health Insurance Unaffiliated Barra & Associates, LLC April 26, 2022 Illinois Health Insurance Unaffiliated J.P. Kush and Associates, Inc. Transaction On May 1, 2021, we entered into a Purchase Agreement with J.P.
Added
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.
Removed
Kush and Associates, Inc. whereby we purchased the business and certain assets noted within the Purchase Agreement (the “Kush Acquisition”) for a total purchase price of $3,644,166.
Added
Nasdaq Notification On January 12, 2024, the Company received written notice from Nasdaq’s Listing Qualifications Department notifying the Company that for the preceding 30 consecutive business days (November 29, 2023 to January 11, 2024), the Company’s common stock did not maintain a minimum closing bid price of $1.00 per share as required by Nasdaq Listing Rule 5550(a)(2).
Removed
The purchase price was paid with a cash payment of $1,900,000, $50,000 in restricted shares of our common stock, in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and an earn-out payment.
Added
The notice has no immediate effect on the listing or trading of the Company’s common stock and the common stock continued to trade on Nasdaq under the symbol “RELI.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until July 10, 2024, to regain compliance with Nasdaq Listing Rule 5550(a)(2).
Removed
The Kush Acquisition was accounted for as a business combination in accordance with the acquisition method under the guidance in ASC 805-10 and 805-20. Accordingly, the total purchase consideration was allocated to intangible assets acquired based on their respective estimated fair values.
Added
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 (“AEBITDA”).
Removed
The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date.
Added
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.
Removed
On November 9, 2022, per an amendment to the purchase agreement, the earn-out amount was amended from 10,605 shares of our common stock to an amount equal to $77,629. Additionally, we agreed to issue 16,586 shares of our common stock to the seller as soon as practicable, which is expected to be within six months of this amendment.
Added
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.
Removed
The allocation of the purchase price in connection with the Kush Acquisition was calculated as follows: Description Fair Value Weighted Average Useful Life (Years) Accounts receivable $ 291,414 Trade name and trademarks 685,400 5 Customer relationships 551,000 10 Non-competition agreements 827,800 5 Goodwill 1,288,552 Indefinite $ 3,644,166 30 Goodwill of $1,288,552 arising from the Kush Acquisition consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued.
Added
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.
Removed
Medigap Healthcare Insurance Agency, LLC Transaction On January 10, 2022, pursuant to an asset purchase agreement, dated December 21, 2021, we completed the acquisition of all of the assets of Medigap Healthcare Insurance Company, LLC (“Medigap”) for a purchase price of $20,096,250 consisting of: (i) payment to Medigap of $18,138,750 in cash and (ii) the issuance to Medigap of 40,402 shares of the Company’s restricted common stock in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
Added
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 Annual Report on Form 10-K under “Results of Operations”.
Removed
The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties.
Added
We exclude the following items, and the following items define our non-GAAP financial measure AEBITDA: ● Interest and related party interest expense: Unrelated to core Company operations and excluded to provide more meaningful supplemental information regarding the Company’s core operational performance. ● Depreciation and amortization: Non-cash charge, excluded to provide more meaningful supplemental information regarding the Company’s core operational performance. ● Goodwill impairment: Non-cash charge, excluded to provide more meaningful supplemental information regarding the Company’s core operational performance. ● Equity-based compensation: Non-cash compensation provided to employees and service providers, excluded to provide more meaningful supplemental information regarding the Company’s core cash impacted operational performance. ● Change in estimated acquisition earn-out payables: An Earn-out liability is a liability to the seller upon an acquisition which is contingent on future earnings.
Removed
The shares issued to Medigap as part of the purchase price are subject to lock up arrangements pursuant to which 50% of the shares may be sold after the one-year anniversary of the date of closing of the transaction and the balance of the shares may be sold after the second-year anniversary of the date of closing of the transaction.
Added
These liabilities are valued at each reporting period and the changes are reported as either a gain or loss in the change in estimated acquisition earn-out payables account in the consolidated statements of operations.
Removed
The acquisition of Medigap was accounted for as a business combination in accordance with the acquisition method under the guidance in ASC 805-10 and 805-20. Accordingly, the total purchase consideration was allocated to intangible assets acquired based on their respective estimated fair values.
Added
The gain or loss is non-cash, can be highly volatile and overall is not deemed relevant to ongoing operations, thus, it’s excluded to provide more meaningful supplemental information regarding the Company’s core operational performance. ● Recognition and change in fair value of warrant liabilities: This account includes changes to derivative warrant liabilities which are valued at each reporting period and could result in either a gain or loss.
Removed
The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date.
Added
The period changes do not impact cash, can be highly volatile, and are unrelated to ongoing operations, and thus are excluded to provide more meaningful supplemental information regarding the Company’s core operational performance. ● Other income (expense), net: This account includes non-routine income or expenses and other individually de minimis items and is thus excluded as unrelated to core operations of the company. ● Loss from discontinued operations before tax: This account includes the net results from discontinued operations and since discontinued, are unrelated to the Company’s ongoing operations and thus excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.
Removed
The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing.
Added
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ANALYTICS Year Ended December 31, 2023 Year Ended December 31, 2022 $ Change % Change Change Description Commission Income $ 13,731,826 $ 11,761,882 $ 1,969,944 17 % Commission income increase of 17% primarily driven by sustained organic growth (67%) coupled with acquisition related expansion (33%).
Removed
The allocation of the purchase price in connection with the acquisition of Medigap was calculated as follows: Description Fair Value Weighted Average Useful Life (Years) Property, plant and equipment $ 20,666 6 Right-of-use asset 317,787 Trade name and trademarks 340,000 15 Customer relationships 4,550,000 12 Technology 67,000 3 Backlog 210,000 1 Chargeback reserve (1,484,473 ) Lease liability (317,787 ) Goodwill 19,199,008 Indefinite $ 22,902,201 Goodwill of $19,199,008 arising from the acquisition of Medigap consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued.
Added
Commission Expense 3,732,939 3,140,725 592,214 19 % Commission expense increase primarily directly correlates to the organic and acquisition related growth in commission income. Salaries and wages 7,503,052 7,508,312 (5,260 ) 0 % Moderate decrease in salaries & wages indicates the ability for the Company to effectively leverage its in place talent (human capital) despite robust increase in top-line revenue.
Removed
Goodwill recognized pursuant to the acquisition of Medigap is currently expected to be deductible for income tax purposes. Total acquisition costs for the acquisition of Medigap incurred were $94,065 recorded as a component of General and administrative expenses.
Added
General and administrative (“G&A”) 4,089,989 4,959,151 (869,162 ) -18 % Decreased G&A is driven by the Company’s adoption of OneFirm, our strategy to operate leaner and streamline costs across all agencies, coupled with lower acquisition related costs.
Removed
The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing.
Added
Marketing and advertising (“M&A”) 364,974 170,311 194,663 114 % M&A increase is a result of spiked branding and marketing outreach as we continue to rigorously grow our market share. Change in estimated acquisition earn-out payables 1,716,873 524 1,716,349 327,548 % Estimated acquisition earn-out payables increase due to adjustments of estimated terminal payments and fair value thereof.
Removed
Goodwill recognized pursuant to the acquisition of Barra is currently expected to be deductible for income tax purposes. Total acquisition costs incurred through December 31, 2022 for the acquisition of Barra were 72,793 recorded as a component of General and administrative expenses.
Added
Depreciation and amortization 2,609,191 2,563,518 45,673 2 % Depreciation and amortization increase primarily relates to acquisition related additional fixed tangible and intangible assets. Goodwill impairment 7,594,000 - 7,594,000 Goodwill impairment increase reflects the results from our annual impairment test of goodwill.
Removed
The closing of the Private Placement occurred on March 16, 2023. 32 Nasdaq Notification and Warrant Exchange On January 31, 2022, we received a deficiency notification from Nasdaq regarding the issuance of shares in the Medigap Acquisition and Private Placement in violation of Listing Rule 5635(a).
Added
Total operating expenses 27,611,018 18,342,541 Loss from operations (13,879,192 ) (6,580,659 ) Other income (expense) Interest expense (1,506,186 ) (911,106 ) (595,080 ) 65 % Interest expense increase primarily due to overall increased interest rate environment and new acquisition related debt financing.
Removed
This rule requires an issuer to obtain shareholder approval with respect to an acquisition paid for from the proceeds of a sale of common stock of the issuer which equals or exceeds 20% of the shares of the issuer, issued and outstanding prior to the acquisition.
Added
Interest related parties (150,067 ) (6,920 ) (143,147 ) 2,069 % Interest related parties increase primarily due to a seller financing note which began accruing interest in 2023. Other income (expense), net 6,530 (4,341 ) 10,871 -250 % Other income (expense) increase primarily due to certain non-recurring and non-significant other income sources.
Removed
The Company submitted a remediation plan under which the Nasdaq granted us an extension to implement the required changes until May 10, 2022. As part of its remediation plan, on March 22, 2022 we entered into Exchange Agreements with the holders of common stock issued in January 2022 resulting from the Medigap Acquisition and Private Placement.
Added
Recognition and change in fair value of warrant liabilities 5,503,647 29,064,958 (23,561,311 ) -81 % Decrease in gain due to fair value changes in derivative warrant liabilities carried at fair value.
Removed
Pursuant to the Exchange Agreements, we issued 218,462 Series C prepaid warrants in exchange for 218,462 shares of our common stock that were previously issued. Additionally, to compensate the Private Placement investors for entering into the Exchange Agreements, we issued 81,500 Series D prepaid warrants to such investors for no additional consideration on the same date.

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