Core Insights - Reliance Global Group, Inc. has launched a next-generation Client Service Center within its RELI Exchange InsurTech platform, enhancing functionality for independent insurance agents to prioritize growth while ensuring high-quality client servicing [1][2] - The new digital Client Service Center allows policyholders to submit service requests through a white-label interface, streamlining the service process and enabling agents to focus on acquiring new business [2] - The enhancements reflect the company's commitment to delivering scalable solutions for agency partners, aiming to expand revenue while keeping service costs lean, positioning RELI Exchange as a leading InsurTech solution in the market [2] Company Developments - The launch of the Client Service Center is a strategic step in integrating service delivery with sales enablement, allowing agents to remain focused on driving new business [2] - The platform's enhancements are expected to improve agent productivity, streamline policy servicing workflows, and drive future revenue growth at RELI Exchange [5] - The company believes that expanded digital self-service capabilities will strengthen its value proposition to independent insurance agents and accelerate platform adoption [5] Market Positioning - RELI Exchange aims to differentiate itself by providing operational leverage and exceptional client support, enhancing transparency and client trust through real-time reporting features [2] - The company is focused on leveraging its scalable InsurTech architecture to create operating leverage and integrate service delivery with sales enablement [5]

Financial Data and Key Metrics Changes - Revenue experienced a slight decline compared to the same period last year, primarily due to shifts within the medical and health client base, but was partially offset by an 8% increase in property and casualty revenue [6][14] - Commission income for the quarter was $3,100,000, down from $3,200,000 in 2024, while commission expense increased to $989,000 from $886,000 [14][15] - Net loss for the quarter was $2,700,000 compared to $1,500,000 in 2024, reflecting changes in commission income and expenses [17] - Adjusted EBITDA was a loss of $382,000 for the quarter, compared to a loss of $178,000 in 2024 [17] Business Line Data and Key Metrics Changes - Property and casualty revenue increased by 8%, which helped offset the decline in overall revenue [6] - Salaries and wages rose to $2,600,000 from $2,000,000 in 2024, primarily due to non-cash share-based compensation [15] - General and administrative expenses increased to $1,500,000 from $1,000,000 in 2024, driven by acquisition-related costs [16] Market Data and Key Metrics Changes - The commercial insurance business is expected to significantly enhance revenue potential, as commercial premiums can be three to ten times higher than personal lines [22] - The commercial InsurTech platform supports multiple lines of business and is actively adding additional carriers [24] Company Strategy and Development Direction - The company is focused on a "One Firm" strategy to unify agency operations, improve efficiency, and enhance client and agent experiences [7][12] - The sale of Fortman Insurance Services was a strategic move to streamline the portfolio and strengthen the balance sheet, with proceeds used to pay down long-term debt [8][9] - The company is optimistic about exploring a different structure for the Spentner acquisition that could create more value for shareholders [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial position after repaying approximately $5,600,000 of long-term debt, reducing annual debt service by over $1,800,000 [7][9] - The outlook remains strong with a focus on disciplined financial management and innovation [9] Other Important Information - The company anticipates recording a gain of approximately $3,000,000 from the Fortman sale in Q3 2025 [9] - The interest in Spentner remains, with ongoing discussions to find a beneficial structure for both parties [11][21] Q&A Session Summary Question: Comments on the Spentner transaction and overall strategy - Management confirmed that the Spentner deal is still viable and they are evaluating different options to ensure it benefits the company without causing harm [20][21] Question: Insights on the commercial insurance business - The commercial insurance business is expected to generate significantly larger revenues due to higher premiums, enhancing the attractiveness of the Reliance Exchange program for agents [22][24]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section provides the administrative details of the Form 10-Q filing for Reliance Global Group, Inc. for the quarterly period ended June 30, 2025, including its registration status, trading symbols, and outstanding common stock shares - The registrant is filing a quarterly report for the period ended June 30, 2025[2](index=2&type=chunk) Trading Symbols and Exchanges | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Stock | RELI | The Nasdaq Capital Market | | Series A Warrants | RELIW | The Nasdaq Capital Market | - As of July 30, 2025, the registrant had **4,346,054 shares of common stock outstanding**[7](index=7&type=chunk) - The registrant is classified as a **Non-accelerated filer** and a **Smaller reporting company**[5](index=5&type=chunk) [TABLE OF CONTENTS](index=3&type=section&id=TABLE%20OF%20CONTENTS) This section presents the table of contents for the Form 10-Q, outlining the report's structure into Part I (Financial Information) and Part II (Other Information) - The report is divided into two main parts: Part I - Financial Information and Part II - Other Information[9](index=9&type=chunk) PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Reliance Global Group, Inc. and its subsidiaries, along with detailed notes explaining significant accounting policies and financial activities [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets present the company's financial position, showing changes in assets, liabilities, and equity between June 30, 2025, and December 31, 2024 Financial Position | Metric | June 30, 2025 | December 31, 2024 | Change | |---|---|---|---| | Cash | $1,957,000 | $372,695 | +$1,584,305 | | Restricted cash | $1,418,211 | $1,424,999 | -$6,788 | | Total current assets | $7,109,752 | $3,989,455 | +$3,120,297 | | Assets held for sale | $2,299,767 | $- | +$2,299,767 | | Total assets | $18,009,715 | $17,315,077 | +$694,638 | | Total current liabilities | $5,020,632 | $3,573,764 | +$1,446,868 | | Current portion of loans payables, related parties | $1,354,093 | $453,177 | +$900,916 | | Liabilities related to assets held for sale | $289,732 | $- | +$289,732 | | Total liabilities | $14,928,097 | $14,317,835 | +$610,262 | | Total stockholders' equity | $3,081,618 | $2,997,242 | +$84,376 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations detail net loss and revenue trends for the three and six months ended June 30, 2025, compared to the prior year Statements of Operations **Three Months Ended June 30:** | Metric | 2025 | 2024 | Change | |---|---|---|---| | Total revenue | $3,086,677 | $3,233,342 | -$146,665 (-5%) | | 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%) | | Net loss | $(2,710,901) | $(1,489,395) | -$1,221,506 (+82%) | | Basic loss per share | $(0.85) | $(2.76) | +$1.91 | **Six Months Ended June 30:** | Metric | 2025 | 2024 | Change | |---|---|---|---| | Total revenue | $7,322,897 | $7,315,780 | +$7,117 (0%) | | 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%) | | Net loss | $(4,447,786) | $(6,836,057) | +$2,388,271 (-35%) | | Basic loss per share | $(1.53) | $(14.77) | +$13.24 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) The statements of stockholders' equity show an increase in total stockholders' equity from December 31, 2024, to June 30, 2025, primarily driven by additional paid-in capital, partially offset by net losses Stockholders' Equity Summary | Metric | December 31, 2024 | June 30, 2025 | Change | |---|---|---|---| | Total Stockholders' Equity | $2,997,242 | $3,081,618 | +$84,376 | | Common shares outstanding | 2,250,210 | 3,098,876 | +848,666 | | Additional Paid-in Capital | $50,877,307 | $55,336,447 | +$4,459,140 | | Accumulated Deficit | $(48,073,549) | $(52,521,332) | -$4,447,783 | - Key contributors to additional paid-in capital during the six months ended June 30, 2025, include **$974,985 from common share-based compensation**, **$141,750 for common shares issued for services**, **$239,425 for common shares issued for acquisition prepayment**, and **$2,148,631 from the Series J Private Placement**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows indicate a significant net increase in cash and restricted cash for the six months ended June 30, 2025, primarily driven by financing activities Cash Flow Summary **Six Months Ended June 30:** | Cash Flow Activity | 2025 | 2024 | Change | |---|---|---|---| | Net cash used in operating activities | $(654,681) | $(889,594) | +$234,913 | | Net cash used in investing activities | $(27,137) | $(36,531) | +$9,394 | | Net cash provided by financing activities | $2,259,335 | $1,002,825 | +$1,256,510 | | Net increase in cash and restricted cash | $1,577,517 | $76,700 | +$1,500,817 | | Cash and restricted cash at end of year | $3,375,211 | $2,815,611 | +$559,600 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, offering crucial context for the reported financial figures [NOTE 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%201.%20SUMMARY%20OF%20BUSINESS%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note summarizes the company's business, basis of financial statement presentation, key accounting policies, and management's assessment of going concern - The company was incorporated in Florida on August 2, 2013, and its financial statements are prepared in accordance with U.S. GAAP for interim financial information[23](index=23&type=chunk)[24](index=24&type=chunk) Financial Position (June 30, 2025) | Metric | Amount | |---|---| | Cash and restricted cash | ~$3,375,000 | | Current assets | ~$7,110,000 | | Current liabilities | ~$5,021,000 | | Working capital | ~$2,089,000 | | Stockholders' equity | ~$3,082,000 | | Loss from operations (six months) | ~$3,779,000 | | Net loss (six months) | ~$4,448,000 | - Management believes its financial position and ability to raise capital are reasonable and sufficient, with no substantial doubt about the Company's ability to continue as a going concern within one year[27](index=27&type=chunk) Revenue Disaggregation and Major Customers **Revenue Disaggregation by Line of Business:** | Period Ended June 30, 2025 | Medical | Life | Property and Casualty | Total | |---|---|---|---|---| | Three months | $2,191,694 | $27,783 | $867,200 | $3,086,677 | | Six months | $5,475,140 | $64,730 | $1,783,027 | $7,322,897 | **Major Insurance Carrier Customers (10% or more of total revenue):** | Insurance Carrier | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | |---|---|---|---|---| | Priority Health | 19% | 22% | 32% | 35% | | BlueCross BlueShield | 13% | 11% | 15% | 12% | [NOTE 2. INTANGIBLE ASSETS](index=11&type=section&id=NOTE%202.%20INTANGIBLE%20ASSETS) This note details the company's intangible assets, including their gross carrying amounts, accumulated amortization, and net carrying amounts, along with expected amortization expense Intangible Assets and Amortization **Intangible Assets (Net Carrying Amount):** | Category | June 30, 2025 | December 31, 2024 | |---|---|---| | Trade name and trademarks | $145,811 | $221,436 | | Internally developed software | $624,804 | $785,111 | | Customer relationships | $3,126,591 | $4,191,914 | | Purchased software | $1,671 | $2,234 | | Non-competition agreements | $137,700 | $223,202 | | **Total** | **$4,036,577** | **$5,423,897** | **Expected Amortization Expense:** | Years Ending December 31, | Amortization Expense | |---|---| | 2025 (remaining) | $610,720 | | 2026 | $977,056 | | 2027 | $636,427 | | 2028 | $545,606 | | 2029 | $466,272 | | Thereafter | $800,496 | | **Total** | **$4,036,577** | [NOTE 3. LONG-TERM DEBT AND SHORT-TERM FINANCINGS](index=12&type=section&id=NOTE%203.%20LONG-TERM%20DEBT%20AND%20SHORT-TERM%20FINANCINGS) This note details the company's long-term debt, primarily term loans from Oak Street Funding LLC, and short-term financings, including outstanding balances and maturities Debt Overview **Long-Term Debt (Collateralized by commission revenues):** | Lender/Purpose | June 30, 2025 | December 31, 2024 | |---|---|---| | Oak Street Term Loan (EBS and USBA) | $270,758 | $305,996 | | Oak Street Senior Secured (CCS) | $453,657 | $507,307 | | Oak Street Term Loan (SWMT) | $537,007 | $593,527 | | Oak Street Term Loan (FIS) | $1,366,017 | $1,505,894 | | Oak Street Term Loan (ABC) | $2,300,410 | $2,514,031 | | Oak Street Term Loan (Barra & Associates) | $5,374,461 | $5,633,564 | | **Total Long-Term Debt (Gross)** | **$10,302,310** | **$11,060,319** | | Less: Current portion | $(1,671,276) | $(1,591,919) | | **Long-Term Debt (Net)** | **$8,631,034** | **$9,468,400** | **Maturities of Long-Term Debt (as of June 30, 2025):** | Years Ending December 31, | Amount | |---|---| | 2025 (remaining six months) | $813,928 | | 2026 | $1,755,061 | | 2027 | $1,934,939 | | 2028 | $2,096,550 | | 2029 | $1,537,789 | | Thereafter | $2,377,961 | | **Total** | **$10,516,228** | | Less: debt issuance costs | $(213,918) | | **Total (Net)** | **$10,302,310** | - Subsequent to June 30, 2025, the Company prepaid **$4,997,292 of its Oak Street long-term debt** using proceeds from the Fortman sale, reducing the adjusted remaining outstanding balance to **$5,374,461 (net of debt issuance costs)**[39](index=39&type=chunk) **Short-Term Financings:** | Metric | June 30, 2025 | December 31, 2024 | |---|---|---| | Balances outstanding | $106,211 | $58,829 | | Interest rates | Up to 11.95% per annum | Up to 11.95% per annum | [NOTE 4. EQUITY](index=13&type=section&id=NOTE%204.%20EQUITY) This note details changes in the company's equity, including common stock issuances, the impact of a reverse stock split, equity-based compensation, and the Series J Private Placement - A **1-for-17 reverse stock split** was effectuated on July 1, 2024, retroactively adjusting all share and per share information[42](index=42&type=chunk) Common Stock and Equity Compensation **Common Stock Outstanding:** | Date | Shares Outstanding | |---|---| | June 30, 2025 | 3,098,876 | | December 31, 2024 | 2,250,210 | | **Increase** | **848,666** | **Equity-based Compensation Expense:** | Period | 2025 | 2024 | |---|---|---| | Three months ended June 30 | $877,368 | $245,766 | | Six months ended June 30 | $1,852,353 | $264,331 | - The **2025 Equity Incentive Plan** was approved, authorizing **2,000,000 shares for issuance**, with **307,327 shares remaining available** after the July Grant[53](index=53&type=chunk)[55](index=55&type=chunk) - The **Series J Private Placement** on June 18, 2025, generated approximately **$2.5 million in gross proceeds** and **$2.15 million in net proceeds**, through the issuance of pre-funded warrants and warrants to purchase common stock[56](index=56&type=chunk)[57](index=57&type=chunk) [NOTE 5. EARNINGS (LOSS) PER SHARE](index=15&type=section&id=NOTE%205.%20EARNINGS%20(LOSS)%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share (EPS), reflecting a loss from continuing operations for the three and six months ended June 30, 2025 and 2024 Loss Per Share **Basic and Diluted Loss Per Share:** | Period | June 30, 2025 | June 30, 2024 | |---|---|---| | **Three Months Ended:** ||| | Loss per common share – basic | $(0.85) | $(2.76) | | Loss per common share – diluted | $(0.85) | $(2.76) | | Weighted average common shares, basic | 3,198,461 | 539,133 | | **Six Months Ended:** ||| | Loss per common share – basic | $(1.53) | $(14.77) | | Loss per common share – diluted | $(1.53) | $(14.77) | | Weighted average common shares, basic | 2,907,209 | 462,773 | - Anti-dilutive securities, including shares subject to outstanding options, warrants, and unvested stock awards, were excluded from the diluted net loss per common share calculation[66](index=66&type=chunk) [NOTE 6. LEASES](index=17&type=section&id=NOTE%206.%20LEASES) This note provides information on the company's operating lease expenses and future minimum lease payments, excluding leases related to Fortman Insurance, LLC Lease Information **Operating Lease Expense:** | Period | 2025 | 2024 | |---|---|---| | Three months ended June 30 | $108,697 | $102,073 | | Six months ended June 30 | $216,362 | $207,029 | **Future Minimum Lease Payments (excluding Fortman Leases):** | Fiscal year ending December 31, | Operating Lease Obligations | |---|---| | 2025 (remainder six months) | $188,204 | | 2026 | $379,175 | | 2027 | $350,029 | | 2028 | $318,383 | | 2029 | $142,195 | | Thereafter | $52,442 | | **Total undiscounted operating lease payments** | **$1,430,428** | | Less: Imputed interest | $(224,233) | | **Present value of operating lease liabilities** | **$1,206,195** | - The weighted average remaining lease term for operating leases was **4.59 years**, and the weighted average discount rate was **9.43%** as of June 30, 2025[67](index=67&type=chunk) [NOTE 7. COMMITMENTS AND CONTINGENCIES](index=18&type=section&id=NOTE%207.%20COMMITMENTS%20AND%20CONTINGENCIES) This note addresses the company's legal contingencies, stating that management does not believe current matters will have a material adverse effect on its financial position or operations - The Company is subject to various legal proceedings and claims arising in the ordinary course of business[71](index=71&type=chunk) - Management does not believe the outcome of any current legal matters will have a material adverse effect on the business, financial position, results of operations, or cash flows[71](index=71&type=chunk) [NOTE 8. RELATED PARTY TRANSACTIONS](index=18&type=section&id=NOTE%208.%20RELATED%20PARTY%20TRANSACTIONS) This note details related party transactions, primarily focusing on the Revolving Credit Facility Agreement with YES Americana Group, LLC, and outstanding loans payable to related parties - The Company entered into a Revolving Credit Facility Agreement with YES Americana Group, LLC for up to **$2,000,000**, bearing interest at **0.1% per annum**, to provide additional working capital[72](index=72&type=chunk) Related Party Loans and Interest **Loans Payable, Related Parties (Current Portion):** | Related Party | June 30, 2025 | December 31, 2024 | |---|---|---| | Deferred Purchase Price Liability | $136,075 | $241,707 | | Asset Purchase Agreement Liability | $194,471 | $208,358 | | Yes Americana Payable | $1,023,547 | $- | | **Total Current Portion** | **$1,354,093** | **$453,177** | **Interest Expense, Related Parties:** | Period | June 30, 2025 | June 30, 2024 | |---|---|---| | Three Months Ended | $21,346 | $37,525 | | Six Months Ended | $46,106 | $78,134 | - Subsequent to June 30, 2025, the Asset Purchase Agreement Liability of **$552,931 was repaid in full**[74](index=74&type=chunk) [NOTE 9. SEGMENT REPORTING](index=20&type=section&id=NOTE%209.%20SEGMENT%20REPORTING) This note provides financial results for the company's Insurance Segment, detailing revenues and significant expenses, which collectively resulted in a net loss Insurance Segment Performance **Insurance Segment Financial Results:** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Total revenues | $3,086,677 | $3,233,342 | $7,322,897 | $7,315,780 | | Insurance Segment Net Loss | $(2,710,901) | $(1,489,395) | $(4,447,786) | $(6,836,057) | [NOTE 10. ASSETS AND RELATED LIABILITIES HELD FOR SALE](index=20&type=section&id=NOTE%2010.%20ASSETS%20AND%20RELATED%20LIABILITIES%20HELD%20FOR%20SALE) This note describes the reclassification of Fortman Insurance Services, LLC assets and liabilities as held for sale, and the expected gain from its sale - The Company committed to a plan to sell Fortman Insurance Services, LLC during Q2 2025 to focus on core operations and pay off long-term debt[76](index=76&type=chunk) - The disposal group was classified as held for sale as of June 30, 2025, but not as a discontinued operation, as it does not represent a strategic shift with a major effect on operations[76](index=76&type=chunk) Fortman Insurance Services, LLC **Assets and Liabilities Classified as Held for Sale (June 30, 2025):** | Category | Amount | |---|---| | Assets held for sale | $2,299,767 | | Liabilities related to assets held for sale | $289,732 | **Fortman Pre-tax Net Income:** | Period | 2025 | 2024 | |---|---|---| | Three months ended June 30 | $25,373 | $9,334 | | Six months ended June 30 | $105,337 | $8,917 | - The Company expects to recognize an estimated **gain on sale of $2.99 million** during the third quarter of 2025[78](index=78&type=chunk) [NOTE 11. SUBSEQUENT EVENTS](index=21&type=section&id=NOTE%2011.%20SUBSEQUENT%20EVENTS) This note outlines significant events occurring after June 30, 2025, including the Fortman sale and the termination of the Spetner Agreement - The sale of Fortman Insurance Services, LLC closed on July 7, 2025, for **$5,000,000 cash**, with an effective date of July 1, 2025[80](index=80&type=chunk) - The Stock Exchange Agreement with Spetner Associates, Inc. was terminated on July 22, 2025, leading to the expensing of **297,064 common shares (valued at $568,855)** previously issued as non-refundable prepayments for the contemplated acquisition[82](index=82&type=chunk)[83](index=83&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results for the period ended June 30, 2025, including strategic initiatives and financial performance analysis [Cautionary Note Regarding Forward-Looking Statements](index=22&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises readers that the report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from projections - All statements other than historical facts, including those regarding strategy, future financial condition, operations, revenues, earnings, business prospects, potential acquisitions, and management plans, are forward-looking statements[85](index=85&type=chunk) - Key risks include the need to raise additional capital, ability to maintain Nasdaq listing, stock price volatility, successful execution of acquisition strategy, retention of key personnel, revenue generation, insurance industry risks, economic conditions, cybersecurity, and legal proceedings[90](index=90&type=chunk) [Overview](index=22&type=section&id=Overview) Reliance Global Group, Inc. operates as a diversified company primarily focused on the insurance market, pursuing an aggressive acquisition strategy of wholesale and retail insurance agencies - Reliance Global Group, Inc. operates as a diversified company in the insurance market, focusing on an aggressive acquisition strategy for wholesale and retail insurance agencies[87](index=87&type=chunk)[88](index=88&type=chunk) - The company launched **5MinuteInsure.com (5MI)** in 2021, an Insurtech platform using AI and data mining to provide instant car and home insurance quotes in 46 states[90](index=90&type=chunk)[91](index=91&type=chunk) - **RELI Exchange**, a B2B InsurTech platform, builds on 5MI's technology, providing white-labeled platforms to agency partners and increasing its agent roster by over **300%** since inception[92](index=92&type=chunk) [Business Operations](index=23&type=section&id=Business%20Operations) The company has adopted a 'OneFirm' strategy to unify its owned and operated agencies, promoting cross-selling, collaboration, and efficient human capital deployment - The **'OneFirm' strategy** unifies company-owned agencies for efficient cross-selling, cross-collaboration, and human capital deployment[93](index=93&type=chunk) - This strategy aims to enhance market presence, improve carrier relationships for better commission/bonus contracts, and facilitate rapid scaling of acquisitions under the RELI Exchange brand[93](index=93&type=chunk) [Business Trends and Uncertainties](index=24&type=section&id=Business%20Trends%20and%20Uncertainties) The insurance intermediary business is highly competitive, facing challenges from numerous firms, direct sales by insurance companies, and technology companies entering the space - The insurance intermediary business is highly competitive, with numerous firms, including those with established carrier relationships or significant niche market presence[95](index=95&type=chunk) - Competition also arises from insurance companies directly selling policies and technology companies entering the insurance intermediary business[95](index=95&type=chunk) [Insurance Operations](index=24&type=section&id=Insurance%20Operations) The company's insurance operations focus on acquiring and managing undervalued wholesale and retail insurance agencies in growing or underserved segments - Insurance operations focus on acquiring and managing undervalued wholesale and retail insurance agencies in growing or underserved segments (e.g., healthcare, Medicare, P&C)[96](index=96&type=chunk) - The strategy is to expand these agencies nationally and improve operational efficiencies to increase revenues, profits, and asset value, while generating cash flows[96](index=96&type=chunk) [Insurance Acquisitions and Strategic Activities](index=24&type=section&id=Insurance%20Acquisitions%20and%20Strategic%20Activities) As of June 30, 2025, the company has acquired multiple insurance brokerages, aiming to leverage these acquisitions to offer lower rates and boost its competitive position - As of June 30, 2025, the company has acquired nine insurance agencies, including US Benefits Alliance, Employee Benefit Solutions, Commercial Solutions of Insurance Agency, Southwestern Montana Insurance Center, Fortman Insurance Agency, Altruis Benefits Consultants, UIS Agency, J.P. Kush and Associates, and Barra & Associates, LLC[97](index=97&type=chunk)[98](index=98&type=chunk) - The acquisition strategy aims to increase the company's reach within the insurance arena, potentially allowing for lower rates and an improved competitive position[97](index=97&type=chunk) [Recent Developments](index=25&type=section&id=Recent%20Developments) Recent developments include the Series J Private Placement, the sale of Fortman Insurance Services, LLC, and the termination of the Spetner Agreement - The **Series J Private Placement**, closed on June 20, 2025, generated approximately **$2.5 million in gross proceeds** and **$2.15 million in net proceeds**[99](index=99&type=chunk) - The sale of Fortman Insurance Services, LLC closed on July 7, 2025, for **$5,000,000 cash consideration**, with an estimated **gain on sale of $2.99 million** expected in Q3 2025[100](index=100&type=chunk)[104](index=104&type=chunk) - The termination of the Spetner Agreement on July 22, 2025, led to the expensing of **297,064 common shares (valued at $568,855)** previously issued as non-refundable prepayments for the contemplated acquisition[107](index=107&type=chunk)[108](index=108&type=chunk) - In July 2025, the Company repaid **$4,997,292 of its Oak Street long-term debt** using proceeds from the Fortman sale, reducing the outstanding balance to **$5,374,461 (net of debt issuance costs)**[106](index=106&type=chunk) [Non-GAAP Financial Measure](index=28&type=section&id=Non-GAAP%20Financial%20Measure) This section defines Adjusted EBITDA (AEBITDA) as a key non-GAAP financial performance metric used by management to evaluate operational performance - **Adjusted EBITDA (AEBITDA)** is a non-GAAP financial measure used by management to evaluate operational performance and compare results across reporting periods[110](index=110&type=chunk) - AEBITDA excludes interest, depreciation, amortization, asset impairments, equity-based compensation, changes in earn-out payables, warrant liabilities, other income/expense, transactional costs, and non-standard costs[111](index=111&type=chunk)[112](index=112&type=chunk) - AEBITDA for the six months ended June 30, 2025, improved by **16% to $(211,688)** compared to $(251,620) in the prior year, primarily due to OneFirm efficiencies and leaner operations[117](index=117&type=chunk) [Non-GAAP Reconciliation from Net Loss to AEBITDA](index=33&type=section&id=Non-GAAP%20Reconciliation%20from%20Net%20Loss%20to%20AEBITDA) This sub-section provides a tabular reconciliation of net income (loss) to Adjusted EBITDA (AEBITDA) for the three and six months ended June 30, 2025 and 2024 AEBITDA Reconciliation | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net income (loss) | $(2,710,901) | $(1,489,395) | $(4,447,786) | $(6,836,057) | | 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](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly improved as of June 30, 2025, with a substantial increase in cash balance and working capital, bolstered by the Series J Private Placement Liquidity Position | Metric | June 30, 2025 | December 31, 2024 | |---|---|---| | Cash balance | ~$3,375,000 | ~$1,798,000 | | Working capital | ~$2,089,000 | ~$416,000 | - The **Series J Private Placement**, closed around June 20, 2025, provided estimated **net proceeds of $2.15 million**, intended for working capital and general corporate purposes[120](index=120&type=chunk)[121](index=121&type=chunk) [Inflation](index=33&type=section&id=Inflation) The company acknowledges that inflation could materially impact its pricing and operating expenses in future periods, particularly for sensitive costs like labor, employee benefits, and facility leases - Inflation may materially impact pricing and operating expenses in future periods, especially for labor, employee benefits, and facility leases[122](index=122&type=chunk) [Off-balance sheet arrangements](index=33&type=section&id=Off-balance%20sheet%20arrangements) The company reported no off-balance sheet arrangements during the six months ended June 30, 2025 - No off-balance sheet arrangements were in place during the six months ended June 30, 2025[123](index=123&type=chunk) [Cash Flows](index=33&type=section&id=Cash%20Flows) The company experienced a significant net increase in cash and restricted cash for the six months ended June 30, 2025, primarily driven by financing activities Summary of Cash Flows (Six Months Ended June 30) | Activity | 2025 | 2024 | Change | |---|---|---|---| | Net cash used in operating activities | $(654,681) | $(889,594) | +$234,913 | | Net cash used in investing activities | $(27,137) | $(36,531) | +$9,394 | | Net cash provided by financing activities | $2,259,335 | $1,002,825 | +$1,256,510 | | **Net increase in cash, cash equivalents, and restricted cash** | **$1,577,517** | **$76,700** | **+$1,500,817** | - Net cash used in operating activities decreased by approximately **$235,000**, primarily due to non-cash adjustments and a net increase in working capital items[126](index=126&type=chunk) - Net cash provided by financing activities increased by approximately **$1.26 million**, driven by proceeds from related party loans (**$1.1 million**) and private placement offerings (**$2.1 million**), partially offset by debt repayments[128](index=128&type=chunk) [Significant Accounting Policies and Estimates](index=35&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) The company refers to its Annual Report on Form 10-K for a detailed description of its significant accounting policies and critical accounting estimates - No significant changes in accounting policies or critical accounting estimates have occurred since December 31, 2024[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - This item is not applicable to the company[130](index=130&type=chunk) [Item 4. Controls and Procedures.](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and reports no material changes in internal control over financial reporting - The CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and determined them to be effective[132](index=132&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[133](index=133&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings.](index=36&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in various legal proceedings and claims in the ordinary course of business but management does not anticipate any material adverse effect on its financial position or operations - The Company is subject to various legal proceedings and claims arising in the ordinary course of business[134](index=134&type=chunk) - Management does not believe the outcome of any current legal matters will have a material adverse effect on the business, financial position, results of operations, or cash flows, and no legal contingencies are accrued[134](index=134&type=chunk) [Item 1A. Risk Factors.](index=36&type=section&id=Item%201A.%20Risk%20Factors.) This section directs readers to the company's Annual Report on Form 10-K for a comprehensive discussion of risk factors - Investing in the common stock involves a high degree of risk, and readers should refer to the Annual Report on Form 10-K for a detailed discussion of risk factors[135](index=135&type=chunk) - As a smaller reporting company, the Company is not required to disclose material changes to risk factors in this Form 10-Q[135](index=135&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section reports unregistered sales of equity securities during the quarter ended June 30, 2025, detailing common shares issued for services as prepayments Unregistered Sales of Equity Securities (Quarter Ended June 30, 2025) | Date of Transaction | Number of Securities Issued | Class of Securities | Value of Securities issued ($/per share) | Securities issued at a discount to market price at the time of issuance? | Securities were issued to | Reason for issuance | Restricted or Unrestricted as of this filing? | Exemption or Registration Type? | |---|---|---|---|---|---|---|---|---| | 5/30/2025 | 41,322 | Common | 1.21 | No | Outside the Box Capital, Inc. | Prepayment for services | Restricted | 4(2) | | 5/30/2025 | 82,645 | Common | 1.21 | No | Tie Out Investments Inc. | Prepayment for services | Restricted | 4(2) | [Item 3. Defaults Upon Senior Securities.](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This section states that there are no applicable defaults upon senior securities for the company - This item is not applicable to the company[137](index=137&type=chunk) [Item 4. Mine Safety Disclosures.](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This section states that there are no applicable mine safety disclosures for the company - This item is not applicable to the company[138](index=138&type=chunk) [Item 5. Other Information.](index=37&type=section&id=Item%205.%20Other%20Information.) This section confirms no material changes to procedures for recommending Board nominees and no adoption or termination of Rule 10b5-1 trading arrangements by directors or officers - No material changes to procedures for recommending Board nominees have occurred[139](index=139&type=chunk) - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[140](index=140&type=chunk) [Item 6. Exhibits.](index=37&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed or furnished with the Quarterly Report on Form 10-Q, including corporate governance documents, financial agreements, and regulatory certifications - The exhibits include various corporate governance documents (Articles of Incorporation, Bylaws), financial agreements (Revolving Credit Facility Agreement), and regulatory certifications (CEO/CFO certifications)[141](index=141&type=chunk)[142](index=142&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) This section contains the official signatures of Reliance Global Group, Inc.'s Chief Executive Officer, Ezra Beyman, and Chief Financial Officer, Joel Markovits, certifying the report's filing - The report was signed on behalf of Reliance Global Group, Inc. by Ezra Beyman, Chief Executive Officer, and Joel Markovits, Chief Financial Officer, on July 30, 2025[145](index=145&type=chunk)[146](index=146&type=chunk)

Core Insights - Reliance Global Group has made significant progress in its long-term strategic objectives, despite a modest decline in overall revenue due to a shift in its medical/health client base, which was offset by an 8% increase in property and casualty (P&C) revenue [3][4] - The company has successfully reduced its long-term debt by approximately 50%, repaying around $5.6 million, which has lowered its annual debt service obligations by over $1.8 million and improved cash flow [3][5] - The launch of RELI Auto Leasing is expected to create new revenue streams for agency partners and enhance customer convenience, further strengthening the company's value proposition [3][5] Financial Performance - Commission income for Q2 2025 was $3.1 million, slightly down from $3.2 million in Q2 2024, primarily due to changes in the medical/health client base, while P&C revenue increased by 8% [4] - The net loss for Q2 2025 was $2.7 million, compared to a loss of $1.5 million in Q2 2024, influenced by non-cash equity compensation and acquisition-related costs [4] - Adjusted EBITDA (AEBITDA) loss for the quarter was $382,000, worsening from a loss of $178,000 in Q2 2024, driven by fluctuations in commission income and expenses [4][16] Strategic Initiatives - The sale of Fortman Insurance Services is a key step in streamlining the company's portfolio, expected to yield a gain of approximately $3.0 million in Q3 2025 [5] - The OneFirm strategy aims to unify agency operations, enhancing internal efficiency and collaboration, which is believed to position the company for sustainable growth and margin expansion [3][5] - Reliance Global Group continues to focus on tech-enabled, high-growth areas that align with its long-term vision for innovation-driven growth [3][5]

Core Viewpoint - Reliance Global Group, Inc. will host a conference call on July 30, 2025, to discuss its financial results for Q2 2025 and provide a business update [1]. Company Overview - Reliance Global Group, Inc. is an InsurTech pioneer utilizing artificial intelligence (AI) and cloud-based technologies to enhance efficiencies in the insurance agency and brokerage industry [4]. - The company's B2B InsurTech platform, RELI Exchange, offers independent insurance agencies a comprehensive suite of business development tools, enabling them to compete with larger national agencies while reducing back-office costs [4]. - The B2C platform, 5minuteinsure.com, employs AI and data mining to deliver competitive online insurance quotes for auto, home, and life insurance within minutes [4]. - Reliance also operates a portfolio of retail insurance agencies across the United States, providing a diverse range of insurance products [4].

Core Insights - Reliance Global Group has successfully repaid approximately $5.55 million, reducing its long-term debt by about 50%, which enhances its financial flexibility and strengthens its balance sheet [1][2] - The debt repayment was funded through a $5.0 million asset sale of Fortman Insurance Services and the release of cash collateral, leading to a significant reduction in annual debt service payments from approximately $2.95 million to $1.1 million, a decrease of over $1.8 million or 61% [1][2] - The company aims to leverage its improved cash flow to support strategic initiatives, including the planned acquisition of Spetner Associates [2] Financial Position - The repayment of debt marks a transformative milestone for Reliance, reflecting the strength of its cash position and commitment to long-term financial health [2] - The reduction in annual debt service obligations enhances the company's cash flow profile, allowing for greater flexibility in funding strategic initiatives [2] Business Operations - Reliance Global Group is an InsurTech pioneer utilizing AI and cloud-based technologies to improve efficiencies in the insurance agency and brokerage industry [3] - The company's InsurTech platform, RELI Exchange, provides independent insurance agencies with business development tools to compete effectively, while its consumer platform, 5minuteinsure.com, offers competitive online insurance quotes [3]

Core Insights - Reliance Global Group, Inc. has completed the sale of its subsidiary Fortman Insurance Services for $5 million, which is part of a strategic initiative to monetize non-core assets and strengthen its financial position [1][2][4] - The sale price exceeds the initial purchase price of Fortman, indicating effective capital deployment and a focus on maximizing shareholder returns [2][4] - The company expects to finalize the acquisition of Spetner Associates, Inc., which has shown consistent growth and healthy cash flow, aligning with Reliance's business model and long-term value creation strategy [3][4] Financial Position - The proceeds from the Fortman sale will enhance the company's balance sheet and provide flexibility to advance strategic priorities [1][4] - The transaction is viewed as a key milestone in Reliance's strategic roadmap, reinforcing its commitment to enhancing and monetizing value within its portfolio [4] Strategic Initiatives - Reliance is focused on executing initiatives that streamline operations and support sustainable growth, aiming to transform into a tech-enabled insurance organization [4] - The company leverages AI and cloud-based technologies through its InsurTech platform, RELI Exchange, to improve efficiencies in the insurance agency/brokerage industry [5]

Core Insights - Spetner Associates, Inc. reported a 95% year-over-year revenue growth to approximately $5.16 million in Q1 2025, compared to $2.64 million in Q1 2024 [6] - Net income increased by 220% to approximately $2.98 million, more than tripling from approximately $0.9 million in Q1 2024 [6] - Operating income margin grew by 29% year-over-year to 74% from 46% in Q1 2024 [6] - Cash flows from operating activities increased by 112% to $2.6 million, more than double the $1.2 million generated in Q1 2024 [6] Company Overview - Reliance Global Group, Inc. is an InsurTech pioneer utilizing AI and cloud-based technologies to enhance efficiencies in the insurance agency and brokerage industry [4] - The company's platform, RELI Exchange, provides independent insurance agencies with a suite of business development tools to compete effectively with larger national agencies [4] - Reliance also operates a consumer platform, 5minuteinsure.com, which offers competitive online insurance quotes using AI and data mining [4] Strategic Direction - The CEO of Reliance expressed enthusiasm for Spetner's results, indicating alignment with the strategy of acquiring high-performing, cash-generating insurance distribution platforms [3] - The combined organization is expected to be well-positioned to generate consistent significant profits, returns, and cash flows [3] - Reliance aims to pursue disciplined, accretive growth opportunities across the InsurTech and insurance agency sectors [7]

Group 1 - Reliance Global Group, Inc. has announced a private placement for the issuance and sale of 1,488,096 shares of common stock and short-term warrants to purchase up to 2,976,192 shares at a price of $1.68 per share, with expected gross proceeds of approximately $2.5 million [1][3] - The short-term warrants will be exercisable at an exercise price of $1.43 per share and will expire two years from the effective date of the Resale Registration Statement [1][3] - The company intends to use the net proceeds from the offering for working capital and general corporate purposes [3] Group 2 - H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering [2] - The securities offered in the private placement are not registered under the Securities Act and are only available to accredited investors [4] - The company has agreed to file registration statements with the SEC covering the resale of the shares and shares issuable upon exercise of the warrants [4] Group 3 - Reliance Global Group, Inc. is an InsurTech pioneer utilizing AI and cloud-based technologies to enhance efficiencies in the insurance agency and brokerage industry [6] - The company's platform, RELI Exchange, provides independent insurance agencies with business development tools to compete effectively with larger agencies [6] - Reliance also operates a consumer platform, 5minuteinsure.com, which offers competitive online insurance quotes for auto, home, and life insurance [6]

Core Viewpoint - Reliance Global Group, Inc. has signed a non-binding Letter of Intent to sell Fortman Insurance Agency for $5 million, indicating a strategic move to unlock capital for the acquisition of Spetner Associates, which is expected to enhance shareholder value and operational efficiency [1][3][4]. Group 1: Transaction Details - The sale price of $5 million represents a significant premium over the original acquisition cost of Fortman, showcasing the company's ability to enhance and monetize its assets [1][3]. - Proceeds from the sale are intended to support the acquisition of Spetner Associates, a rapidly growing insurance platform that is expected to generate strong cash flow [3][4]. Group 2: Operational Enhancements - Since its acquisition, Reliance has made operational improvements at Fortman, including upgrading internal systems and establishing a strong leadership team, resulting in a well-capitalized agency with a growing customer base [2]. - The company aims to replace Fortman with Spetner to align with its long-term vision for scale, synergy, and sustained cash flow generation [4]. Group 3: Strategic Vision - The CEO of Reliance emphasized that the potential sale of Fortman reflects a disciplined capital allocation strategy and a commitment to value creation, highlighting the underlying value across the company's broader portfolio [3]. - Reliance's strategy focuses on pursuing transformative and accretive growth opportunities within the InsurTech and insurance agency industries [4].