Acquisitions and Growth Strategy - As of December 31, 2024, the company has acquired nine insurance agencies, enhancing its market presence and operational capabilities[194] - The company plans to focus on asset acquisitions in insurance markets and organic growth through geographic expansion over the next 12 months[195] - The company aims to identify and acquire undervalued insurance agencies in growing or underserved segments, including healthcare and Medicare[202] - The company’s management team has over 100 years of combined experience in real estate, insurance, and financial services, driving its acquisition strategy[192] Revenue and Financial Performance - The company’s revenue is primarily derived from commissions paid by health insurance carriers for plans purchased by members[203] - Commission income for the year ended December 31, 2024, was $14,054,361, representing a 2% increase from $13,731,826 in 2023[223] - Commission expense increased by 12% to $4,189,599 in 2024 from $3,732,939 in 2023, driven by revenue mix changes[223] - Total operating expenses decreased by 21% to $21,749,680 in 2024 from $27,611,018 in 2023[223] - Loss from operations improved by 45%, decreasing to $7,695,319 in 2024 from $13,879,192 in 2023[223] - Net loss for the year ended December 31, 2024, was $9,071,584, a 24% improvement compared to a net loss of $12,009,982 in 2023[223] Cash Flow and Financing - Net cash used in operating activities increased to approximately $2,515,000 in 2024, compared to $847,970 in 2023, representing a 197% increase[231] - Cash balance as of December 31, 2024, was approximately $1,798,000, down from $2,739,000 in 2023[227] - Net cash provided by financing activities was approximately $1,657,000 in 2024, compared to $966,923 in 2023[233] Stock and Equity Management - The company executed a 1-for-15 reverse stock split on February 23, 2023, followed by a 1-for-17 reverse stock split on July 1, 2024[208][209] - The company increased its authorized shares from 117,647,058 to 2,000,000,000 as of February 7, 2025, allowing for greater flexibility in capital raising[211] - Equity-based compensation is recognized as an expense over the service period, with performance-based awards dependent on the likelihood of achieving performance measures[245] - Fair value calculations for stock-based awards require significant judgment, including estimates of stock price volatility and expected option life[246] Operational Metrics and Estimates - The company considers Adjusted EBITDA (AEBITDA) an important financial metric for evaluating operational performance across reporting periods[219] - The company experienced a 97% decrease in estimated acquisition earn-out payables, from $1,716,873 in 2023 to $47,761 in 2024[223] - The company anticipates that inflation may materially impact pricing and operating expenses in future periods[228] - Significant estimates and assumptions, including revenue growth rates and expenses, are used in long-range planning and business forecasting[239] Impairment and Tax Assets - Goodwill is tested for impairment annually, with qualitative factors such as industry performance and financial metrics considered in the assessment[238] - Intangible assets with indefinite lives are tested for impairment annually using discounted cash flow methods, which involve assumptions about future sales and costs[240] - The company benefits from deferred tax assets, with realizability dependent on future taxable income generation, influenced by capital spending and taxable income levels[241] Revenue Recognition - Revenue recognition includes contingent commissions based on achieving specific targets set by insurance carriers, with revenue recognized only when significant reversals are unlikely[244]
Reliance (RELI) - 2024 Q4 - Annual Report