Reliance Global Group, Inc. (RELI) - Q2 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2025. Reliance Global Group, Inc. operates as a diversified insurance intermediary, pursuing an aggressive acquisition strategy focused on wholesale and retail insurance agencies. The company utilizes a "OneFirm" strategy to integrate acquired agencies and operates proprietary InsurTech platforms, including 5MinuteInsure.com and RELI Exchange. As of June 30, 2025, the company had acquired nine insurance agencies.
Key Financial Metrics
| Metric | Q2 2025 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) |
|---|---|---|---|
| Total Revenue | $3,086,677 | $7,322,897 | $7,315,780 |
| Net Loss | $(2,710,901) | $(4,447,786) | $(6,836,057) |
| Loss Per Share (Basic/Diluted) | $(0.85) | $(1.53) | $(14.77) |
| Adjusted EBITDA (AEBITDA) | $(381,690) | $(211,688) | $(251,620) |
| Cash and Restricted Cash | $3,375,211 (Balance) | Net Increase: $1,577,517 (YTD) | |
| Working Capital | $2,089,000 (Balance) | N/A | |
| Total Debt (Long-term + Current) | $10,302,310 (Gross) | N/A |
Note: Revenue is derived primarily from commission income. The company reported no income tax expense due to a full valuation allowance against deferred tax assets.
Material Changes vs. Prior Period
- Revenue Stability: YTD revenue remained flat compared to the prior year ($7.32M vs $7.32M). This was driven by an 18% increase in Property & Casualty (P&C) revenues offsetting a 4% decline in Medical commission revenues.
- Expense Growth: Operating expenses increased 25% QoQ and decreased 18% YTD compared to 2024. The YTD decrease is largely due to the absence of a $3.9M asset impairment charge recorded in Q2 2024. However, Salaries and Wages increased 27% YTD, primarily due to non-cash share-based compensation.
- Improved Loss Profile: The Net Loss for the six months ended June 30, 2025, improved by 35% compared to the same period in 2024, driven by the elimination of prior-year impairments and warrant liability fluctuations.
- Debt Reduction: Subsequent to the quarter end, the company prepaid approximately $5.0M of long-term debt using proceeds from a subsidiary sale.
Guidance, Outlook, and Material Events
- Asset Sale (Fortman): The company sold substantially all assets of its Fortman Insurance Services subsidiary for $5.0 million. The transaction closed July 7, 2025. The company expects to recognize a gain of approximately $2.99 million in Q3 2025.
- Capital Raise: In June 2025, the company completed a Series J Private Placement, raising approximately $2.15 million in net proceeds through the sale of pre-funded warrants and warrants.
- Debt Paydown: Proceeds from the Fortman sale were used to prepay $4,997,292 of Oak Street long-term debt in July 2025, reducing the outstanding balance to approximately $5.37 million (net of issuance costs).
- Termination of Spetner Agreement: A proposed stock exchange agreement with Spetner Associates was terminated in July 2025. The company expensed approximately $569,000 in previously issued shares related to this failed transaction.
- Liquidity: Management believes current cash balances and the ability to raise capital are sufficient to continue as a going concern for the next 12 months.
Investor Verification Checklist
- Revenue Concentration: Verify reliance on top carriers; Priority Health and BlueCross BlueShield accounted for 32% and 15% of YTD revenue, respectively.
- Non-GAAP Reconciliation: Review the reconciliation of Net Loss to Adjusted EBITDA, noting significant add-backs for share-based compensation ($2.5M YTD) and transactional costs.
- Debt Covenants: Confirm compliance with debt covenants following the recent $5M prepayment and the remaining $5.37M debt balance.
- Share Dilution: Assess the impact of the Series J Private Placement (pre-funded warrants and warrants) and recent equity grants on future earnings per share.
- Asset Sale Accounting: Monitor Q3 2025 filings for the recognition of the expected $2.99M gain on the Fortman sale.