UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
or
For the transition period from _____ to _____
Commission
File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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The
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The
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company, in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
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Smaller
reporting company
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Emerging
growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
☐ No
At July 30, 2025, the registrant had shares of common stock, par value $ per share, outstanding.
TABLE OF CONTENTS
| 2 |
Reliance Global Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ |
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$ |
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| Restricted cash |
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| Accounts receivable |
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| Accounts receivable, related parties |
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| Other receivables |
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| Prepaid expense and other current assets |
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| Assets held for sale |
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| Total current assets |
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| Property and equipment, net |
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| Right-of-use assets |
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| Intangibles, net |
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| Goodwill |
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| Other non-current assets |
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| Total assets | $ |
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$ |
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| Current liabilities: | ||||||||
| Accounts payable and other accrued liabilities | $ |
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$ |
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| Short-term financing agreements |
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| Current portion of loans payables, related parties |
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| Other payables |
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| Current portion of long-term debt |
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| Operating lease liability, current portion |
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| Liabilities related to assets held for sale |
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| Total current liabilities |
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| Loans payable, related parties, less current portion |
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| Long term debt, less current portion |
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| Operating lease liability, less current portion |
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| Warrant liabilities |
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| Total liabilities |
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| Stockholders’ equity | ||||||||
| Preferred stock, $ par value; shares authorized and and issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | ||||||||
| Common stock, $ par value; shares authorized and and issued and outstanding as of June 30, 2025 and December 31, 2024, respectively |
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| Additional paid-in capital |
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| Accumulated deficit |
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| Total stockholders’ equity |
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| Total liabilities and stockholders’ equity | $ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
Reliance Global Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months ended | Six Months Ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Revenue | ||||||||||||||||
| Commission income | $ |
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$ |
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$ |
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| Total revenue |
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| Operating expenses | ||||||||||||||||
| Commission expense |
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| Salaries and wages |
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| General and administrative expenses |
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| Marketing and advertising expenses |
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| Change in estimated acquisition earn-out payables |
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| Depreciation and amortization |
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| Asset impairments |
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| Total operating expenses |
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| Loss from operations |
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| Other income (expense) | ||||||||||||||||
| Interest expense |
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| Interest (expense) related parties |
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| Other income (expense), net |
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| Recognition and change in fair value of warrant liabilities |
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| Total other (expense) income |
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| Loss from continuing operations before tax | $ |
(
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| Net loss |
(
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(
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| Basic (loss) earnings per share | ||||||||||||||||
| Continuing operations | $ |
(
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) | $ |
(
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(
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) | $ |
(
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| Basic loss per share | $ |
(
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) | $ |
(
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(
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) | $ |
(
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| Diluted (loss) earnings per share | ||||||||||||||||
| Continuing operations | $ |
(
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) | $ |
(
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(
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) | $ |
(
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| Diluted loss per share | $ |
(
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(
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(
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| Weighted average number of shares outstanding – Basic |
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| Weighted average number of shares outstanding – Diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
Reliance Global Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
| Common Stock | Additional Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance December 31, 2024 |
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$ |
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$ |
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$ |
(
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) | $ |
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| Common share-based compensation |
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| Common shares issued for services |
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| Common shares issued for acquisition purchase price prepayment |
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| Net loss | - |
(
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(
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| Balance, March 31, 2025 |
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(
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| Common share-based compensation |
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| Common shares issued for services |
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| Series J Private placement | - |
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| Net loss | - |
(
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(
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| Balance, June 30, 2025 |
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$ |
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$ |
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$ |
(
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) | $ |
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| 5 |
| Common Stock |
Additional Paid-in |
Accumulated | ||||||||||||||||||
| Shares | Amount | capital | Deficit | Total | ||||||||||||||||
| Balance, December 31, 2023 |
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$ |
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$ |
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$ |
(
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) | $ |
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| Common share payments for earn-outs |
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| - | - | |||||||||||||||||||
| Common shares issued for ATM share sales |
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| - | ||||||||||||||||||||
| Common shares issued for abeyance share conversions |
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(
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| - | ||||||||||||||||||||
| Common share-based compensation |
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| Net loss | - |
(
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(
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| Balance, March 31, 2024 |
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$ |
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$ |
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$ |
(
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) | $ |
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| Common share payments for earn-outs |
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(
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| Common shares issued for ATM share sales |
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| Common shares issued for abeyance share conversions |
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| Common shares issued for Series B warrants |
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| Common shares issued for Series G warrants |
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(
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| Common share-based compensation |
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| Common shares issued for services |
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| Net loss | - |
(
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(
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| Balance, June 30, 2024 |
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$ |
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$ |
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$ |
(
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) | $ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
Reliance Global Group, Inc. and Subsidiaries and Predecessor
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the 6 months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | $ |
(
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) | $ |
(
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) | ||
| Adjustment to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization |
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| Asset Impairments |
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| Amortization of debt issuance costs and accretion of debt discount |
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| Non-cash lease expense |
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| Equity based compensation expense |
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| Equity based payments to third parties |
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| Recognition and change in fair value of warrant liability |
(
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| Earn-out fair value and write-off adjustments |
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| Change in operating assets and liabilities: | ||||||||
| Accounts receivable |
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| Accounts receivable, related parties |
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(
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| Other receivables |
(
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(
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| Prepaid expense and other current assets |
(
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(
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| Other non-current assets |
(
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| Accounts payables and other accrued liabilities |
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| Other payables |
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| Net cash used in operating activities |
(
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(
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| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment |
(
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(
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| Purchase of intangibles |
(
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(
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| Net cash used in investing activities |
(
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(
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| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Principal repayments of debt |
(
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(
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| Proceeds from short term financings |
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| Principal repayments of short-term financings |
(
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| Proceeds from loans payable, related parties |
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| Payments of loans payable, related parties |
(
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(
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| Proceeds from common shares issued through an at the market offering |
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| Series J Private Placement |
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| Net cash provided by continuing financing activities | $ |
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$ |
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| Net increase in cash and restricted cash |
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| Cash and restricted cash at beginning of year |
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| Cash and restricted cash at end of year | $ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
Reliance Global Group, Inc. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
NOTE 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Reliance Global Group, Inc., formerly known as Ethos Media Network, Inc. (“RELI”, “Reliance”, or the “Company”), was incorporated in Florida on August 2, 2013.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of recurring accruals) necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”), as the same may be amended from time to time. Capitalized terms not defined in this Quarterly Report on Form 10-Q refer to capitalized terms as defined in the Form 10-K. Certain prior period accounts and balances in these unaudited condensed consolidated financial statements and notes thereto may have been reclassified to conform to the current period’s presentation.
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation Current and long-lived assets and liabilities forming the Fortman disposal group, have been reclassified and separately presented on the June 30, 2025, condensed consolidated balance sheet, as current assets held for sale and current liabilities related to assets held for sale. See Note 10 - A ssets and related liabilities held for sale.
Liquidity
As
of June 30, 2025, the Company’s reported cash and restricted cash aggregated balance was approximately $
Although there can be no assurance that debt or equity financing will be available on acceptable terms, or at all, the Company believes its financial position and its ability to raise capital to be reasonable and sufficient. Based on our assessment, we do not believe there are conditions or events that, in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year of filing these unaudited financial statements with the Securities and Exchange Commission (“SEC”).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.
| 8 |
Cash and Restricted Cash
Cash and restricted cash (restricted for debt service coverage) reported on our condensed consolidated balance sheets are reconciled to the total shown on our unaudited condensed consolidated statements of cash flows as follows:
| June 30, 2025 | June 30, 2024 | |||||||
| Cash | $ |
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$ |
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| Restricted cash |
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| Total cash and restricted cash | $ |
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$ |
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Revenue Recognition
The following table disaggregates the Company’s revenue by line of business, showing commissions earned:
| Period Ended June 30, 2024 | Medical | Life |
Property
and Casualty |
Total | ||||||||||||
| Three months ended June 30, 2025 | $ |
|
$ |
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$ |
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$ |
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| Three months ended June 30, 2024 | $ |
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$ |
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$ |
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$ |
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| Six months ended June 30, 2025 | $ |
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$ |
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$ |
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$ |
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| Six months ended June 30, 2024 | $ |
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$ |
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$ |
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$ |
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The following are customers representing 10% or more of total revenue:
| Three Months Ended June 30, | ||||||||
| Insurance Carrier | 2025 | 2024 | ||||||
| Priority Health |
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% |
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% | ||||
| BlueCross BlueShield |
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% |
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% | ||||
| Six Months Ended June 30, | ||||||||
| Insurance Carrier | 2025 | 2024 | ||||||
| Priority Health |
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% |
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% | ||||
| BlueCross BlueShield |
|
% |
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% | ||||
No other single customer accounted for more than 10% of the Company’s commission revenues during the three and six months ended June 30, 2025 and 2024. The loss of any significant customer could have a material adverse effect on the Company.
Income Taxes
The
Company recorded
As of June 30, 2025 and December 31, 2024, the Company provided a full valuation allowance against its net deferred tax assets, since the Company believes it is more likely than not that its deferred tax assets will not be realized.
| 9 |
Deferred Financing Costs
The
Company defers specific incremental costs directly attributable to a proposed equity offering of securities and charges them against
the gross equity proceeds of the offering once consummated. Similarly, the Company capitalizes costs directly associated with a
proposed debt financing arrangement to later be presented as a direct deduction to the carrying amount of the related debt liability
once consummated and henceforth amortized using the effective interest method. Such costs may include fees charged by underwriters,
brokers, attorneys, regulators, printers, transfer agents and lenders, respectively. If a proposed share offering or debt financing
is later aborted or withdrawn, these deferred costs are expensed at that time. As of June 30, 2025, and December 31, 2024, deferred
financing costs amounted to $
Recently Issued Accounting Pronouncements
We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements not already disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
NOTE 2. INTANGIBLE ASSETS
The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2025:
|
Weighted Average Remaining Amortization Period (Years) |
Gross Carrying Amount |
Accumulated
Amortization |
Net
Carrying
Amount |
|||||||||||||
| Trade name and trademarks |
|
$ |
|
$ |
(
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) | $ |
|
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| Internally developed software |
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(
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) |
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| Customer relationships |
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(
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) |
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| Purchased software |
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(
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) |
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| Non-competition agreements |
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|
(
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) |
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|||||||||||
| Total | $ |
|
$ |
(
|
) | $ |
|
|||||||||
The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of December 31, 2024:
|
Weighted Average Remaining Amortization period (Years) |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
|||||||||||||
| Trade name and trademarks |
|
$ |
|
$ |
(
|
) | $ |
|
||||||||
| Internally developed software |
|
|
(
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) |
|
|||||||||||
| Customer relationships |
|
|
(
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) |
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|||||||||||
| Purchased software |
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|
(
|
) |
|
|||||||||||
| Non-competition agreements |
|
|
(
|
) |
|
|||||||||||
| Total | $ |
|
$ |
(
|
) | $ |
|
|||||||||
| 10 |
The following table reflects expected amortization expense as of June 30, 2025, for each of the following five years and thereafter:
| Years Ending December 31, | Amortization Expense | |||
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| Thereafter |
|
|||
| Total | $ |
|
||
NOTE 3. LONG-TERM DEBT AND SHORT-TERM FINANCINGS
Long-Term Debt
The composition of long-term debt, collateralized by certain commission revenues, is as follows:
| June 30, 2025 | December 31, 2024 | |||||||
|
Oak
Street Funding LLC (“Oak Street”) Term Loan for the acquisition of EBS and USBA, variable interest of prime rate plus
|
$ |
|
$ |
|
||||
|
Oak
Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, variable interest of prime rate plus
|
|
|
||||||
|
Oak
Street Funding LLC Term Loan for the acquisition of SWMT, variable interest of prime rate plus
|
|
|
||||||
|
Oak
Street Funding LLC Term Loan for the acquisition of FIS, variable interest of prime rate plus
|
|
|
||||||
|
Oak
Street Funding LLC Term Loan for the acquisition of ABC, variable interest of prime rate plus
|
|
|
||||||
|
Oak
Street Funding LLC Term Loan for the acquisition of Barra & Associates, LLC, variable interest of prime rate plus
|
|
|
||||||
|
|
|
|||||||
| Less: current portion |
(
|
) |
(
|
) | ||||
| Long-term debt | $ |
|
$ |
|
||||
The following table depicts the maturities of the Company’s outstanding long-term debt.
| 11 |
| Years Ending December 31, |
Maturities of Long-Term Deb t |
|||
| 2025 (remaining six months) | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| Thereafter |
|
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| Total |
|
|||
| Less: debt issuance costs |
(
|
) | ||
| Total | $ |
|
||
Subsequent to the quarter ended, June 30, 2025, during
July 2025, the Company pre-paid $
Short-Term Financings
The
Company has various short-term notes payable for financed items such as insurance premiums. These are normally paid in equal instalments
over a period of twelve months or less and carry interest rates of up to
NOTE 4. EQUITY
Common Stock
The Company is authorized to issue shares of common stock, $ par value (the “Common Stock”). Each share of issued and outstanding common stock entitles the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the Company upon liquidation or dissolution.
On
July 1, 2024, the Company effectuated a
During the first quarter of 2025, as further described herein under the header, Equity-based compensation, certain directors, executives, and employees were issued shares of common stock pursuant to equity awards granted for the 2024 fiscal year, with a value of $ . An additional shares were issued to two executives pursuant to previously disclosed employment agreements.
During
the first quarter of 2025, pursuant to a proposed business combination transaction, the Company issued to the selling parties
shares of Common Stock with a value of $
During
the first quarter of 2025, the Company issued
shares of Common Stock with a value of $
During
the second quarter of 2025, the Company issued a service provider,
shares of Common Stock with a value of $
As of June 30, 2025, and December 31, 2024, there were and shares of common stock outstanding, respectively.
| 12 |
Equity-based Compensation
During the first quarter of 2025 certain directors,
executives, and employees were granted
shares of common stock in equity awards for the 2024 fiscal year, with a value of $
Pursuant to the April 2025 second amendment to an employment agreement between the Company and an executive, the executive was awarded shares of the Company’s Common Stock annually over the four-year employment term, where each annual tranche vests equally at shares each quarter, pro-rated for any partial periods. The total value of each annual tranche is $ . For the three and six month periods ended, June 30, 2025, compensation expense on this grant was $ . As of June 30, 2025, shares have been issued under this agreement.
Subsequent to June 30, 2025, the Compensation Committee approved adjustments to the compensation structure for directors
and executives. These included the grant of
restricted shares with a value of $
Total stock-based compensation expense recorded in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2025, and 2024 was $ and $ , respectively, and for the six months ended June 30, 2025 and 2024; $ and $ , respectively.
| 13 |
2025 Equity Incentive Plan
On March 18, 2025, the Board approved, and subsequently the stockholders approved, the 2025 Equity Incentive Plan (the “Plan”). The purpose of the Plan is to provide a means through with 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. The Plan provides for various stock-based incentive awards, including incentive and nonqualified stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units (“RSUs”), and other equity-based or cash-based awards. The total number of shares of common stock authorized for issuance under the Plan is shares. Following the July Grant, there remained shares available for issuance under the Plan.
Administration of the Plan . The Plan is to be administered by the Compensation Committee of the Board. The Compensation Committee is authorized to select from among eligible employees, directors, and service providers those individuals to whom shares and options are to be granted and to determine the number of shares to be subject to, and the terms and conditions of the options. The Compensation Committee is also authorized to prescribe, amend, and rescind terms relating to options granted under the Plans. Generally, the interpretation and construction of any provision of the Plans or any shares and options granted hereunder is within the discretion of the Compensation Committee.
The Plan was approved by the Company’s stockholders on May 29, 2025, becoming effective as of March 18, 2025, and will terminate on March 18, 2035, unless terminated earlier by the Board.
As of June 30, 2025, there remained shares available for issuance under the Company’s various equity incentive plans. Following the July Grant, there remained shares available for issuance under the Company’s various equity incentive plans.
Series J Private Placement
On June 18, 2025, the Company entered into a securities
purchase agreement (the “SPA-2025”) with a certain accredited investor (the “SPA Purchaser”) for the issuance
and sale in a private placement (the “Private Placement-2025”) of (i) pre-funded warrants (the “Series J-PF Warrants”)
to purchase up to
Aggregate gross proceeds to the Company from the Private
Placement-2025 were approximately $
In connection with the Private Placement-2025, the Company entered into a registration rights agreement (the “Registration Rights Agreement”), dated as of June 18, 2025, with the SPA Purchaser, to register for resale the common shares underlying the Series J-PF Warrants and Series J Warrants.
H.C. Wainwright & Co., LLC (“Wainwright”)
acted as the Company’s sole placement agent in connection with the Private Placement-2025. Pursuant to the engagement terms, the
Company paid Wainwright a total cash fee equal to
The Company determined pursuant to the terms of the Series J Warrants, Series J PF Warrants, and Series J PAW’s that they are equity instruments in nature, also because they permit the holder to obtain a fixed number of shares for a fixed monetary amount. The net proceeds were recorded to additional paid in capital on the condensed consolidated balance sheets as of June 30, 2025.
Basic earnings per common share (“EPS”) applicable to common stockholders is computed by dividing earnings applicable to common stockholders by the weighted-average number of common shares outstanding.
If there is a loss from operations, diluted EPS is computed in the same manner as basic EPS is computed. Similarly, if the Company has net income but its preferred dividend adjustment made in computing income available to common stockholders results in a net loss available to common stockholders, diluted EPS would be computed in the same manner as basic EPS.
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Loss from continuing operations | $ |
(
|
) | $ |
(
|
) | ||
| Net loss continuing operations, numerator, basic computation |
(
|
) |
(
|
) | ||||
| Recognition and change in fair value of warrant liabilities | ||||||||
| Net loss from continuing operations, numerator, diluted computation | $ |
(
|
) | $ |
(
|
) | ||
| Weighted average common shares, basic |
|
|
||||||
| Weighted average common shares, dilutive |
|
|
||||||
| Loss per common share – basic | $ |
(
|
) | $ |
(
|
) | ||
| Loss per common share – diluted | $ |
(
|
) | $ |
(
|
) | ||
| 14 |
| Six Months | Six Months | |||||||
| Ended | Ended | |||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Loss from continuing operations | $ |
(
|
) | $ |
(
|
) | ||
| Net Loss continuing operations, numerator, basic computation |
(
|
) |
(
|
) | ||||
| Recognition and change in fair value of warrant liabilities | ||||||||
| Net loss from continuing operations, numerator, diluted computation | $ |
(
|
) | $ |
(
|
) | ||
| Weighted average common shares, basic |
|
|
||||||
| Weighted average common shares, dilutive |
|
|
||||||
| Loss per common share – basic | $ |
(
|
) | $ |
(
|
) | ||
| Loss per common share – diluted | $ |
(
|
) | $ |
(
|
) | ||
| For the Three Months Ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Shares subject to outstanding common stock options |
|
|
||||||
| Shares subject to outstanding Series A warrants |
|
|
||||||
| Shares subject to outstanding PAW’s |
|
|
||||||
| Shares subject to PA Warrants |
|
|
||||||
| Shares subject to unvested stock awards |
|
|
||||||
| Shares subject to Outstanding Series J Warrants |
|
|||||||
| Shares subject to Outstanding Series J PAW’s |
|
|||||||
| For the Six Months Ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Shares subject to outstanding common stock options |
|
|
||||||
| Shares subject to outstanding Series A warrants |
|
|
||||||
| Shares subject to outstanding PAW’s |
|
|
||||||
| Shares subject to PA Warrants |
|
|
||||||
| Shares subject to unvested stock awards |
|
|
||||||
| Shares subject to Outstanding Series J Warrants |
|
|
||||||
| Shares subject to Outstanding Series J PAW’s |
|
|
||||||
Subsequent to June 30, 2025, the Company granted
shares to certain
directors, officers, and employees. The grants had a value of $
NOTE 6. LEASES
Operating
lease expense for the three months ended June 30, 2025, and 2024 was $
Pursuant to Note 10 - Assets and related liabilities held for sale, the Company reclassified its leases pertaining to Fortman Insurance, LLC (“the Fortman Leases”) to assets and liabilities held for sale.
The following table depicts future minimum lease payments for the Company’s operating leases excluding Fortman Leases.
| 15 |
| Fiscal year ending December 31, | Operating Lease Obligations | |||
| 2025 (remainder six months) | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| Thereafter |
|
|||
| Total undiscounted operating lease payments |
|
|||
| Less: Imputed interest |
(
|
) | ||
| Present value of operating lease liabilities | $ |
|
||
NOTE 7. COMMITMENTS AND CONTINGENCIES
Legal Contingencies
The
Company is subject to various legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business.
While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters
will have a material adverse effect on our business, financial position, results of operations, or cash flows, and accordingly
NOTE 8. RELATED PARTY TRANSACTIONS
Americana
Credit Agreement and Revolving Note:
On March 5, 2025, and as amended on June 24, 2025, the Company and YES Americana Group, LLC
(“Americana”) entered into a Revolving Credit Facility Agreement (the “Credit Agreement”) pursuant to which
Americana agreed to extend a revolving credit facility of up to $
The following table summarizes the loans payable, related parties current and non-current accounts, as of the periods ended June 30, 2025 and December 31, 2024, and the interest expense related parties account for the three and six month periods ended June 30, 2025 and June 30, 2024, as presented on the condensed consolidated balance sheets and condensed consolidated statements of operations, respectively:
| Related Parties Payable | Interest Expense, Related Parties |
|
||||||||||||||||||||||||||||||
| Current Portion | Long Term Portion | for the Three Months Ended | for the Six Months Ended | |||||||||||||||||||||||||||||
| Related Party | June 30, 2025 |
December 31, 2024 |
June 30, 2025 |
December 31,2024 |
June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||
| Payables to Employees | $ |
|
$ | $ | $ | $ |
|
$ | $ |
|
||||||||||||||||||||||
| Deferred Purchase Price Liability |
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Asset Purchase Agreement Liability |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
| Yes Americana Payable |
|
|
|
|||||||||||||||||||||||||||||
| Total | $ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||
Subsequent
to June 30, 2025, the Company repaid in full the Asset Purchase Agreement Liability total outstanding balance of $
| 16 |
NOTE 9. SEGMENT REPORTING
The following table provides the financial results of our Insurance Segment:
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Less: Significant and other Insurance Segment expenses | ||||||||||||||||
| Commission expense |
|
|
|
|
||||||||||||
| Salaries and wages |
|
|
|
|
||||||||||||
| General and administrative expenses |
|
|
|
|
||||||||||||
| Marketing and advertising expenses |
|
|
|
|
||||||||||||
| Change in estimated acquisition earn-out payables |
|
|||||||||||||||
| Depreciation and amortization |
|
|
|
|
||||||||||||
| Asset impairments |
|
|||||||||||||||
| Interest expense |
|
|
|
|
||||||||||||
| Interest expense related parties |
|
|
|
|
||||||||||||
| Other expense, net |
|
(
|
) |
|
(
|
) | ||||||||||
| Recognition and change in fair value of warrant liabilities |
(
|
) |
(
|
) | ||||||||||||
| Loss from discontinued operations before tax | ||||||||||||||||
| Insurance Segment Net Loss | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
NOTE 10. ASSETS AND RELATED LIABILITIES HELD FOR SALE
During the second quarter of 2025, the Company committed to a plan to sell the asset group associated with its wholly owned subsidiary Fortman Insurance Services, LLC (“Fortman”) (see Note 11 – Subsequent Events) , as part of its strategy to monetize certain assets to focus and grow core operations and pay-off long term debt. The sale closed on July 7, 2025, with an effective date of July 1, 2025. The disposal group met the criteria to be classified as held for sale under ASC 360-10-45 during the quarter ended, June 30, 2025, but did not qualify as a discontinued operation under ASC 205-20, as it does not represent a strategic shift that has or will have a major effect on the Company’s operations or financial results.
The assets and liabilities of the disposal group have been separately presented on the June 30, 2025, condensed consolidated balance sheet, as current assets held for sale and current liabilities related to assets held for sale. The assets held for sale account includes, accounts receivable, prepaid expenses, property and equipment, intangibles, right of use assets and goodwill. Depreciation and amortization (when material) ceased on long-lived assets within the group effective on the classification date. The liabilities related to assets held for sale account includes the disposal group’s accounts payable and operating lease liabilities. No assets or liabilities were classified as held for sale as of December 31, 2024.
The
Company measured the held for sale disposal group at the lower of, carrying value (“CV”), and fair value less costs to sell
(“FV”), and determined that FV exceeded CV, thus there was no impairment charge. The Company expects to recognize a gain
on sale during the third quarter of 2025, in an estimated amount of $
| 17 |
The following table summarizes the major classes of assets and liabilities classified as held for sale as of June 30, 2025:
| June 30, 2025 | ||||
| Accounts receivable |
|
|||
| Other receivables |
|
|||
| Prepaids and other current assets |
|
|||
| Property and equipment, net |
|
|||
| Right-of-use assets |
|
|||
| Intangibles, net |
|
|||
| Goodwill |
|
|||
| Assets held for sale |
|
|||
| Accounts payable and other accrued liabilities |
|
|||
| Operating lease liabilities |
|
|||
| Liabilities related to assets held for sale |
|
|||
Pre-tax net income for Fortman on a standalone basis was $
NOTE 11. SUBSEQUENT EVENTS
Fortman Insurance Services, LLC Transaction
On
July 7, 2025, the Company, Fortman Insurance Services, LLC, an Ohio limited liability company and wholly owned subsidiary of the
Company (the “Seller”, or “Fortman”), and Fortman Insurance Agency, LLC, an Ohio limited liability company (the
“Purchaser”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), pursuant to which
the Seller agreed to sell substantially all of the assets of its insurance agency business (the “Fortman Business”) to
the Purchaser for aggregate cash consideration of $
The assets sold pursuant to the Asset Purchase Agreement included the Seller’s book of business, accounts, rights to renewal commissions and entitlements arising from new or renewal insurance business after July 1, 2025 (the “Effective Date”), as well as associated goodwill, leasehold interests, intellectual property (including the Fortman Insurance Services and Fortman Insurance Agency names), and other tangible and intangible assets used in the Fortman Business, and certain liabilities were assumed by the Purchaser. The Transaction excluded, among other things, Seller’s pre-Effective Date cash and cash equivalents, and other specified excluded assets and liabilities.
Termination of the Spetner Agreement
On July 22, 2025, the Company received and accepted written notice from Spetner Associates, Inc. (“Spetner”), of the termination of that certain Stock Exchange Agreement, dated as of May 14, 2024, and as amended on September 6, 2024, October 29, 2024, and February 20, 2025 (collectively, the “Stock Exchange Agreement”). There are no material relationships between the Company and the Spetner Parties other than in respect of the Stock Exchange Agreement.
On
October 29, 2024, and February 20, 2025, the Company issued
shares and
shares of its common stock to the Spetner sellers, representing non-refundable prepayments of approximately $
| 18 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this report, including statements regarding our strategy, future financial condition, future operations, projected revenues, earnings, business prospects, potential acquisitions and plans, and objectives of management, are forward-looking statements. Words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and similar expressions are intended to identify such forward-looking statements.
These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by any forward-looking statements. These risks and uncertainties include, but are not limited to, the following:
| ● | our need to raise additional capital, which may not be available on acceptable terms or at all; | |
| ● | our ability to maintain the listing of our common stock and warrants on the Nasdaq Capital Market; | |
| ● | volatility in the price of our securities due to changes in the capital markets, our industry, or our capital structure; | |
| ● | our ability to execute on our acquisition strategy and integrate acquired businesses successfully; | |
| ● | our ability to retain key personnel and effectively manage growth; | |
| ● | the risk that we and our agency partners are unable to generate expected revenues or margins; | |
| ● | risks associated with the insurance brokerage industry, including carrier concentration, regulation, competition, and cyclicality; | |
| ● | the impact of economic conditions, inflation, and interest rate trends on our operations and customer demand; | |
| ● | potential disruptions due to cybersecurity incidents or system failures; | |
| ● | risks associated with legal proceedings and compliance obligations; | |
| ● | and other risks and uncertainties described in this Quarterly Report on Form 10-Q, including under the section titled “Risk Factors,” and in our other filings with the Securities and Exchange Commission. |
These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
Reliance Global Group, Inc. (the “Company”) operates as a diversified company engaging in business in the insurance market, as well as other related sectors. Our focus is to grow the Company by pursuing an aggressive acquisition strategy, initially and primarily focused upon wholesale and retail insurance agencies.
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. Our primary strategy is to identify specific risk to reward arbitrage opportunities and develop these on a national platform, thereby increasing revenues and returns, and then identify and acquire undervalued wholesale and retail insurance agencies with operations in growing or underserved segments, expand and optimize their operations, and achieve asset value appreciation while generating interim cash flows.
As part of our growth and acquisition strategy, we continue to survey the current insurance market for value-add acquisition opportunities. As of June 30, 2025, we had acquired nine insurance agencies.
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.
Further, we launched our 5MinuteInsure.com (“5MI”) Insurtech platform during 2021, which expanded our national footprint. 5MI is a high-tech proprietary tool developed by us as a business to consumer portal which enables consumers to instantly compare quotes from multiple carriers and purchase their car and home insurance in a time efficient and effective manner. 5MI taps into the growing number of online shoppers and utilizes advanced artificial intelligence and data mining techniques, to provide competitive insurance quotes in around 5 minutes with minimal data input needed from the consumer. The platform currently operates in 46 states offering coverage with up to 30 highly rated insurance carriers.
With the acquisition of Barra & Associates, LLC, 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. Through RELI Exchange we on-board agency partners and provide them with an InsurTech platform white labeled, designed and branded specifically for their business. This combines the best of digital and human capabilities by providing our agency partners and their customers quotes from multiple carriers within minutes. Since its inception, RELI Exchange has increased its agent roster by more than 300%.
Business Operations
We’ve adopted a “OneFirm” strategy, pursuant to which Company owned and operated agencies come together to operate as one cohesive unit, which allows for efficient and effective cross-selling, cross-collaboration, and the effective deployment of the Company’s human capital. This strategy also aims to enhance the Company’s overall market presence across the U.S., with all business lines operating under the RELI Exchange brand. It’s expected to benefit agents and clients by improving relationships with carriers, leading to better commission and bonus contracts due to higher business volumes. The approach also strengthens the capability of RELI Exchange agency partners in securing diverse insurance policies and fosters increased cross-selling opportunities. This unified strategy positions the Company for rapid scaling and integration of accretive acquisitions, expanding its industry reach.
| 19 |
Business Trends and Uncertainties
The insurance intermediary business is highly competitive, and we actively compete with numerous firms for customers and insurance companies, many of which have relationships with insurance companies, or have a significant presence in niche insurance markets that may give them an advantage over us. 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.
Insurance Operations
Our insurance operations focus on the acquisition and management of insurance agencies throughout the U.S. Our primary focus is to pinpoint undervalued wholesale and retail insurance agencies with operations in growing or underserved segments (including healthcare and Medicare, as well as personal and commercial insurance lines). We then focus on expanding their operations on a national platform and improving operational efficiencies to achieve asset value appreciation while generating interim cash flows. In the insurance sector, our management team has over 100 years of experience acquiring and managing insurance portfolios in several states, as well as developing specialized programs targeting niche markets. We plan to accomplish these objectives by acquiring wholesale and retail insurance agencies it deems to represent a good buying opportunity (as opposed to insurance carriers) as insurance agencies bear no insurance risk. Once acquired, we plan to develop them on a national platform to increase revenues and profits through a synergetic structure. The Company is initially focused on segments that are underserved or growing, including healthcare and Medicare, as well as personal and commercial insurance lines.
Insurance Acquisitions and Strategic Activities
As of June 30, 2025, we have acquired multiple insurance brokerages (see table below). As our acquisition strategy continues, our reach within the insurance arena can provide us with the ability to offer lower rates, which could boost our competitive position within the industry.
| Acquired |
Reliance 100% Controlled Entity |
Date | Location | Line of Business | ||||
| U.S. Benefits Alliance, LLC (USBA) | US Benefits Alliance, LLC | October 24, 2018 | Michigan | Health Insurance | ||||
| Employee Benefit Solutions, LLC (EBS) | Employee Benefits Solutions, LLC | October 24, 2018 | Michigan | Health Insurance | ||||
| Commercial Solutions of Insurance Agency, LLC (CCS or Commercial Solutions) | Commercial Coverage Solutions LLC | December 1, 2018 | New Jersey | P&C – Trucking Industry | ||||
| Southwestern Montana Insurance Center, Inc. (Southwestern Montana or Montana) | Southwestern Montana Insurance Center, LLC | April 1, 2019 | Montana | Group Health Insurance | ||||
| Fortman Insurance Agency, LLC (Fortman or Fortman Insurance) | Fortman Insurance Services, LLC | May 1, 2019 | Ohio | P&C and Health Insurance | ||||
| Altruis Benefits Consultants, Inc. (Altruis) | Altruis Benefits Corporation | September 1, 2019 | Michigan | Health Insurance | ||||
| UIS Agency, LLC (UIS) | UIS Agency, LLC | August 17, 2020 | New York | P&C – Trucking Industry | ||||
| J.P. Kush and Associates, Inc. (Kush) | Kush Benefit Solutions, LLC | May 1, 2021 | Michigan | Health Insurance | ||||
| Barra & Associates, LLC | RELI Exchange, LLC | April 26, 2022 | Illinois | P&C and Health Insurance |
| 20 |
Recent Developments
Series J
Private Placement
On June 18, 2025, the Company entered into a securities purchase agreement with one institutional buyer for the purchase and sale of, of (i) pre-funded warrants (the “Series J-PF Warrants”) to purchase up to 1,488,096 shares of the Company’s Common Stock at an exercise price of $0.001 per share, and (ii) warrants (the “Series J Warrants”) to purchase up to 2,976,192 shares of Common Stock at an exercise price of $1.43 per share. The Private Placement-2025 was priced at the market at a combined purchase price per share and accompanying Series J Warrant of $1.68. Additionally, the Company issued a warrant to the Placement Agent (the “Series J PAW’s”), to acquire 104,167 shares of Common Stock at an exercise price of $2.10. The closing of the Private Placement occurred on June 20, 2025.
Fortman Sale and Assets/Liabilities Held for Sale
On July 7, 2025, the Company, Fortman Insurance Services, LLC, an Ohio limited liability company and wholly owned subsidiary of the Company (the “Seller” or “Fortman”), and Fortman Insurance Agency, LLC, an Ohio limited liability company (the “Purchaser”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), pursuant to which the Seller agreed to sell substantially all of the assets of its insurance agency business (the “Fortman Business”) to the Purchaser for aggregate cash consideration of $5,000,000 (the “Transaction”). The Transaction closed on July 7, 2025, and was effective as of 12:01 a.m. Eastern Time on July 1, 2025.
The assets sold pursuant to the Asset Purchase Agreement included the Seller’s book of business, accounts, rights to renewal commissions and entitlements arising from new or renewal insurance business after July 1, 2025 (the “Effective Date”), as well as associated goodwill, leasehold interests, intellectual property (including the Fortman Insurance Services and Fortman Insurance Agency names), and other tangible and intangible assets used in the Fortman Business, and certain liabilities were assumed by the Purchaser. The Transaction excluded, among other things, Seller’s pre-Effective Date cash and cash equivalents, and other specified excluded assets and liabilities.
Pursuant to the foregoing, during the second quarter of 2025, the Company committed to a plan to sell the asset group associated with Fortman as part of its strategy to monetize certain assets to focus and grow its core operations and pay-off its long-term debt. The disposal group met the criteria to be classified as held for sale under ASC 360-10-45 during the quarter ended, June 30, 2025, but did not qualify as a discontinued operation under ASC 205-20, as it does not represent a strategic shift that has or will have a major effect on the Company’s operations or financial results.
The assets and liabilities of the disposal group have been separately presented on the June 30, 2025, condensed consolidated balance sheet, as current assets held for sale and current liabilities related to assets held for sale. The assets held for sale account includes accounts receivable, prepaid expenses, property and equipment, intangibles, right of use assets and goodwill. Depreciation and amortization (when material) ceased on long-lived assets within the group effective on the classification date. The liabilities related to assets held for sale account includes the disposal group’s accounts payable and operating lease liabilities. No assets or liabilities were classified as held for sale as of December 31, 2024.
The Company measured the held for sale disposal group at the lower of, carrying value (“CV”), and fair value less costs to sell (“FV”), and determined that FV exceeded CV, thus there was no impairment charge. The Company expects to recognize a gain on sale during the third quarter of 2025, in an estimated amount of $2.99 million.
The following table summarizes the major classes of assets and liabilities classified as held for sale as of June 30, 2025:
| June 30, 2025 | ||||
| Accounts receivable | 142,324 | |||
| Other receivables | 32,229 | |||
| Prepaids and other current assets | 6,895 | |||
| Property and equipment, net | 14,864 | |||
| Right-of-use assets | 257,599 | |||
| Intangibles, net | 714,400 | |||
| Goodwill | 1,131,456 | |||
| Assets held for sale | 2,299,767 | |||
| Accounts payable and other accrued liabilities | 29,662 | |||
| Operating lease liabilities | 260,070 | |||
| Liabilities related to assets held for sale | 289,732 | |||
| 21 |
Oak Street Debt Payments
During July 2025, the Company repaid $4,997,292 of its Oak Street long-term debt. These pre-payments were funded through proceeds from the asset sale of Fortman and did not incur any pre-payment penalties. The remaining outstanding long-term Oak Street loan balance after posting these pre-payments, net of debt issuance costs, was $5,374,461.
Termination of the Spetner Agreement
On July 22, 2025, the Company accepted written notice from Spetner Associates, Inc. (“Spetner”), terminating the Stock Exchange Agreement, dated as of May 14, 2024, and as amended on September 6, 2024, October 29, 2024, and February 20, 2025 (collectively, the “Stock Exchange Agreement”). There are no material relationships between the Company and the Spetner Parties other than in respect of the Stock Exchange Agreement.
On October 29, 2024, and February 20, 2025, the Company issued 140,064 shares and 157,000 shares of its common stock to the Spetner sellers, representing non-refundable prepayments of approximately $329,430 and $239,425, respectively, as partial consideration for the contemplated acquisition. These were initially recorded by the Company in the prepaid expense and other current assets account on the consolidated balance sheets as of December 31, 2024, and March 31, 2025, respectively. However, pursuant to the termination of the Stock Exchange Agreement, the Company does not expect to recover these shares issued and thus has expensed them to the general and administrative account in the condensed consolidated statements of operations for the period ended, June 30 2025.
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Non-GAAP Financial 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. Adjusted EBITDA (“AEBITDA”), our key financial performance metric, is a non-GAAP financial measure that is not in accordance with, or an alternative to, measures prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). “AEBITDA” is defined as earnings before interest, taxes, depreciation, and amortization (EBITDA) with additional adjustments as further outlined below. The Company considers AEBITDA an important financial metric because it provides a meaningful financial measure of the quality of the Company’s operational, cash impacted and recurring earnings and operating performance across reporting periods. Other companies may calculate Adjusted EBITDA differently than we do, which might limit its usefulness as a comparative measure to other companies in the industry. AEBITDA is used by management in addition to and in conjunction (and not as a substitute) with the results presented in accordance with GAAP. Management uses AEBITDA to evaluate the Company’s operational performance, including earnings across reporting periods and the merits for implementing cost-cutting measures. We have presented AEBITDA solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations and assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Consistent with Regulation G, a description of such information is provided below herein and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q under “Results of Operations”.
We exclude the following items when calculating AEBITDA, 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 and/or asset impairments: 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. 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. 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. 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: Includes certain non-routine income or expenses and other individually de minimis items and is thus excluded as unrelated to core operations of the company. | |
| ● | Transactional costs: This includes expenses related to mergers, acquisitions, financings and refinancings, and amendments or modification to indebtedness. These costs are unrelated to primary Company operations and are excluded to provide more meaningful supplemental information regarding the Company’s core operational performance. | |
| ● | Non-standard costs: This account includes non-recurring non-operational items, related to costs incurred for a legal suit the Company has filed against one of the third parties involved in previously discontinued operations and was excluded to provide more meaningful supplemental information regarding the Company’s core operational performance. |
Refer to the reconciliation of net (loss) income to AEBITDA, illustrated below in tabular format.
| 23 |
Results of Operations
RELIANCE GLOBAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS ANALYTICS
Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024
| Three Months Ended | ||||||||||||||||||
| June 30, 2025 | June 30, 2024 | Value Fluctuation | Percent Fluctuation | Explanations | ||||||||||||||
| Commission Income (“CI”) | $ | 3,086,677 | $ | 3,233,342 | $ | (146,665 | ) | -5 | % |
CI change primarily driven by 8% lower medical commission revenues, offset by 8% growth in P&C revenues. |
||||||||
| Commission Expense (“CE”) | 988,774 | 886,364 | 102,410 | 12 | % | Increased CE primarily influenced by the 8% growth in P&C revenue. | ||||||||||||
| Salaries and wages (“S&W”) | 2,563,519 | 1,955,152 | 608,367 | 31 | % | Increased S&W primarily due to non-cash share-based compensation offset by OneFirm efficiencies and overall leaner operations. | ||||||||||||
| General and administrative expenses (“G&A”) | 1,492,839 | 991,633 | 501,206 | 51 | % | Increased G&A substantially driven by acquisition related cash and non-cash costs offset by OneFirm efficiencies and overall leaner operations. | ||||||||||||
| Marketing and advertising expenses (“M&A”) | 67,207 | 76,983 | (9,776 | ) | -13 | % | M&A decrease consistent with Company’s current marketing strategy. | |||||||||||
| Depreciation and amortization (“D&A”) | 346,151 | 469,788 | (123,637 | ) | -26 | % | Decrease pursuant to passage of time as assets become fully amortized. | |||||||||||
| Total operating expenses | 5,458,490 | 4,379,920 | 1,078,570 | 25 | % | |||||||||||||
| - | ||||||||||||||||||
| Loss from operations | (2,371,813 | ) | (1,146,578 | ) | (1,225,235 | ) | 107 | % | ||||||||||
| - | ||||||||||||||||||
| Other income (expense) | - | |||||||||||||||||
| Interest expense | (297,642 | ) | (365,970 | ) | 68,328 | -19 | % | Decrease per periodic paydowns on loan balances | ||||||||||
| Interest (expense) related parties | (21,346 | ) | (37,525 | ) | 16,179 | -43 | % |
Decrease per periodic paydowns on loan balances |
||||||||||
| Other income (expense), net | (20,100 | ) | 11 | (20,111 | ) | -182827 | % | Decrease pursuant to other non-operating miscellaneous expenditures. | ||||||||||
| Recognition and change in fair value of warrant liabilities | - | 60,667 | (60,667 | ) | -100 | % | Decrease pursuant to the settlement of all material derivative warrant liabilities. | |||||||||||
| Total other (expense) income | (339,088 | ) | (342,817 | ) | 3,729 | -1 | % | |||||||||||
| Net loss | (2,710,901 | ) | (1,489,395 | ) | (1,221,506 | ) | 82 | % | ||||||||||
| Non-GAAP Measure | ||||||||||||||||||
| AEBITDA | (381,690 | ) | (177,966 | ) | (203,724 | ) | 114 | % | Primarily lower due to fluctuations discussed above in the revenue and commission expense accounts offset by improvements in other expense accounts. | |||||||||
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Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024
| Six Months Ended | ||||||||||||||||||
| June 30, 2025 | June 30, 2024 | Value Fluctuation | Percent Fluctuation | Explanations | ||||||||||||||
| Commission Income (“CI”) | $ | 7,322,897 | $ | 7,315,780 | $ | 7,117 | 0 | % |
CI flat, primarily driven by 4% lower medical commission revenues, offset by 18% growth in P&C revenues. |
|||||||||
| Commission Expense (“CE”) | 2,458,202 | 2,162,905 | 295,297 | 14 | % | Increased CE primarily influenced by the 18% growth in P&C revenue as well as general market related increased commission rates. | ||||||||||||
| Salaries and wages (“S&W”) | 4,793,357 | 3,786,814 | 1,006,543 | 27 | % | Increased S&W primarily due to non-cash share-based compensation offset by OneFirm efficiencies and overall leaner operations. | ||||||||||||
| General and administrative expenses (“G&A”) | 3,009,067 | 2,366,523 | 642,544 | 27 | % | Increased G&A substantially driven by acquisition related cash and non-cash costs as well as non-cash share-based payments, offset by OneFirm efficiencies and overall leaner operations. | ||||||||||||
| Marketing and advertising expenses (“M&A”) | 134,483 | 204,025 | (69,542 | ) | -34 | % | M&A decrease consistent with Company’s current marketing strategy | |||||||||||
| Change in estimated acquisition earn-out payables | - | 47,761 | (47,761 | ) | -100 | % | Decrease pursuant to the settlement of earn-out payables. | |||||||||||
| Depreciation and amortization (“D&A”) | 706,746 | 1,003,941 | (297,195 | ) | -30 | % | Decrease pursuant to passage of time as assets become fully amortized, as well as impaired intangible assets no longer incurring D&A. | |||||||||||
| Asset impairment | - | 3,922,110 | (3,922,110 | ) |
-100 |
% | No impaired assets during the current period. | |||||||||||
| Total operating expenses | 11,101,855 | 13,494,079 | (2,392,224 | ) | -18 | % | ||||||||||||
| - | ||||||||||||||||||
| Loss from operations | (3,778,958 | ) | (6,178,299 | ) | 2,399,341 | -39 | % | |||||||||||
| - | ||||||||||||||||||
| Other income (expense) | - | |||||||||||||||||
| Interest expense | (598,124 | ) | (735,646 | ) | 137,522 | -19 | % | Decrease per periodic paydowns on loan balances | ||||||||||
| Interest (expense) related parties | (46,106 | ) | (78,134 | ) | 32,028 | -41 | % | Decrease per periodic paydowns on loan balances | ||||||||||
| Other income (expense), net | (24,598 | ) | 22 | (24,620 | ) | -111909 | % | Decrease pursuant to other non-operating miscellaneous expenditures. | ||||||||||
| Recognition and change in fair value of warrant liabilities | - | 156,000 | (156,000 | ) | -100 | % | Fluctuation per fair value changes in derivative warrant liabilities. | |||||||||||
| Total other (expense) income | (668,828 | ) | (657,758 | ) | (11,070 | ) | 2 | % | ||||||||||
| Loss from continuing operations before tax | (4,447,786 | ) | (6,836,057 | ) | 2,388,271 | -35 | % | Fluctuation explained on an account basis above. | ||||||||||
| Non-GAAP Measure | ||||||||||||||||||
| AEBITDA | (211,688 | ) | (251,620 | ) | 39,932 | -16 | % | Improved AEBITDA results primarily due to OneFirm efficiencies and overall leaner operations. | ||||||||||
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Non-GAAP Reconciliation from Net Loss to AEBITDA
The following table provides a reconciliation from net income (loss) to AEBITDA for the periods ended June 30, 2025 and June 30, 2024
| The Period Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net income (loss) | (2,710,901 | ) | (1,489,395 | ) | (4,447,786 | ) | (6,836,057 | ) | ||||||||
| Adjustments: | ||||||||||||||||
| Interest and related party interest expense | 318,988 | 403,495 | 644,230 | 813,780 | ||||||||||||
| Depreciation and amortization | 346,151 | 469,788 | 706,746 | 1,003,941 | ||||||||||||
| Asset impairment | - | - | - | 3,922,110 | ||||||||||||
| Goodwill Impairment | - | - | ||||||||||||||
| Share based compensation employees directors and third parties | 1,479,557 | 333,897 | 2,504,542 | 488,808 | ||||||||||||
| Change in estimated acquisition earn-out payables | - | - | - | 47,761 | ||||||||||||
| Other (income) expense, net | - | (11 | ) | 24,598 | (22 | ) | ||||||||||
| Transactional costs | 248,049 | 119,203 | 391,236 | 373,096 | ||||||||||||
| Non-standard costs | (63,534 | ) | 45,724 | (35,254 | ) | 90,963 | ||||||||||
| Recognition and change in fair value of warrant liabilities | - | (60,667 | ) | - | (156,000 | ) | ||||||||||
| Total adjustments | 2,329,211 | 1,311,429 | 4,236,098 | 6,584,437 | ||||||||||||
| AEBITDA | (381,690 | ) | (177,966 | ) | (211,688 | ) | (251,620 | ) | ||||||||
Liquidity and capital resources
As of June 30, 2025, we had a cash balance of approximately $3,375,000 and working capital of approximately $2,089,000, compared with a cash balance of approximately $1,798,000 and working capital of approximately $416,000 at December 31, 2024.
On June 18, 2025, the Company entered into a securities purchase agreement (the “SPA-2025”) with a certain accredited investor (the “SPA Purchaser”) for the issuance and sale in a private placement (the “Private Placement-2025”) of (i) pre-funded warrants (the “Series J-PF Warrants”) to purchase up to 1,488,096 shares of the Company’s Common Stock at an exercise price of $0.001 per share, and (ii) warrants (the “Series J Warrants”) to purchase up to 2,976,192 shares of Common Stock at an exercise price of $1.43 per share. The Private Placement-2025 was priced at the market at a combined purchase price per share and accompanying Series J Warrant of $1.68. The closing of the Private Placement-2025 occurred on or about June 20, 2025.
Aggregate gross proceeds to the Company from the Private Placement-2025 were approximately $2.5 million, prior to deducting placement agent fees and other offering expenses payable by the Company, estimated at around $351,000, which resulted in estimated net proceeds of $2.15 million. The Company would receive an additional approximate $4.25 million in aggregate gross proceeds if all of the Series J Warrants were exercised via a cash exercise.
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 Company believes inflation could have a material impact on pricing and operating expenses in future periods due to the state of the economy and current inflation rates.
Off-balance sheet arrangements
We did not have any off-balance sheet arrangements, as such term is defined in Regulation S-K, during the six months ended June 30, 2025.
Cash Flows
|
Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (654,681 | ) | (889,594 | ) | |||
| Net cash (used in) provided by investing activities | (27,137 | ) | (36,531 | ) | ||||
| Net cash provided by financing activities | 2,259,335 | 1,002,825 | ||||||
| Net increase in cash, cash equivalents, and restricted cash | $ | 1,577,517 | $ | 76,700 | ||||
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Operating Activities
Net cash used in operating activities for the six months ended June 30, 2025, was approximately $655,000, compared to net cash flows used in operating activities of approximately $890,000 for the six months ended June 30, 2024. The cash used includes a net loss of approximately $4,448,000, decreased by approximate non-cash adjustments of $3,224,000 related to depreciation and amortization of approximately $707,000, share based compensation of approximately $2,505,000, and amortization of debt costs and non cash lease expense of approximately $13,000 as well as a net increase in cash due to changes of net working capital items of approximately $569,000.
Investing Activities
During the six months ended June 30, 2025, cash flows used in investing activities approximated $27,000 compared to cash flows used by investing activities of approximately $36,500 for the six months ended June 30, 2024. The cash used during the six months ended June 30, 2025 is primarily related to the purchase of fixed tangible and intangible assets.
Financing Activities
During the six months ended June 30, 2025, approximate cash provided by financing activities was $2.3 million, as compared to approximately $1.0 million for the six months ended June 30, 2024. Net cash provided by financing activities during the six months ended June 30, 2025, relates to proceeds from related party loans payable of approximately $1.1 million and from private placement offerings of approximately 2.1 million, offset by debt principal, short-term financings, and related party payables repayments of approximately $1.0 million.
Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements, and our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no significant changes in our significant accounting policies or critical accounting estimates since the end of fiscal year 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2025, and determined them to be effective as of June 30, 2025.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 27 |
PART II
Item 1. Legal Proceedings.
We are subject to various legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations, or cash flows, and accordingly, no legal contingencies are accrued as of June 30, 2025. Litigation relating to the insurance brokerage industry is not uncommon. As such we, from time to time have been subject to such litigation. No assurances can be given with respect to the extent or outcome of any such litigation in the future.
Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. You should consider carefully the information disclosed in Part I, Item 1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2024, as the same may be updated from time to time. As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as updated from time to time.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
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? (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? | |||||||||||||||
| 5/30/2025 | New | 41,322 | Common | 1.21 | No | Outside the Box Capital, Inc. | Prepayment for services | Restricted | 4 | (a)(2) | ||||||||||||||
| 5/30/2025 | New | 82,645 | Common | 1.21 | No | Tie Out Investments Inc. | Prepayment for services | Restricted | 4 | (a)(2) | ||||||||||||||
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
| 28 |
Item 5. Other Information.
(a) None.
(b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the Company last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K.
(c)
During the quarter ended June 30, 2025, no director or officer
Item 6. Exhibits
The following exhibits are filed or furnished with this Quarterly Report on Form 10-Q.
*Filed herewith
**Furnished herewith
† Management contract, compensation plan or arrangement.
| 29 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Reliance Global Group, Inc. | ||
| Date: July 30, 2025 | By: | /s/ Ezra Beyman |
| Ezra Beyman | ||
| Chief Executive Officer | ||
| (principal executive officer) | ||
| Date: July 30, 2025 | By: | /s/ Joel Markovits |
| Joel Markovits | ||
| Chief Financial Officer | ||
| (principal financial officer and principal accounting officer) | ||
| 30 |