Reliance Global Group, Inc.

Thanks, Matthew. Good afternoon, and thank you for joining Reliance Global Group's 2022 year-end financial results and business update conference call. On the call with us today are Ezra Bennett, Chairman and Chief Executive Officer of Reliance Global Group, and Joel Markovits, Chief Financial Officer of Reliance. Earlier today, the company announced its operating results for the year-ended December 31, 2022. The press release is posted on the company's website, www.reliance.com. RelianceGlobalGroup.com. In addition, the company filed a Daniel report on Form K with the U.S. Securities and Exchange Commission earlier today, which can also be accessed on the company's website as well as the SEC's website at www.sec.gov. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1021. Before Mr. Bayman reviews the company's operating results for 2022, we would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in this conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations are forward-looking statements. The words anticipate, estimate, expect, project, plan, seek, intend, believe, may, might, will, should, could, likely, continue, design, and the negative of such terms, in other words, in terms of similar expressions are intended to identify forward-looking statements. These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to several risks, uncertainties, and assumptions, as described in the company's Form 10-K filed with the United States Securities and Exchange Commission on March 30, 2023. Because of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements. All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements, as well as others made in this conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. With that, I will now turn the call over to Ezra Bayman. Ezra?

Thank you, Ted. Good afternoon, and thanks to everyone for joining us today. 2022 was a transformative year for the company as evidenced by the 73% increase in revenue for 2022. This growth reflects the acquisitions we've completed, as well as the overall solid performance from our operating subsidiaries. Most importantly, we acquired Baran Associates in April 2022, which became the foundation upon which we built Rely Exchange. As most of you are aware, RELI Exchange is a first-in-class business-to-business insured tech platform and agency partner network for insurance agencies and agencies, agents and agencies, providing independent agents a comprehensive suite of business development tools, enabling them to effectively complete and win against national agencies. The RELI Exchange insured tech platform is a game changer for the company and the industry. The fact that our platform is resonating so well is illustrated by the fact that Rely Exchange has experienced an almost 200% increase in agency partners since its launch in July of 2022. Additionally, we regularly introduce new products to our platform, further enhancing the value we provide to clients. A prime example of this is our exclusive life insurance quotation tool added to the platform in February of 2023, which enables investors agents to quickly compare policy options and pricing in under a minute, as well as streamline policy binding and facilitate more productive client conversations. With this tool, consumers receive complete transparency on available coverage options and the expected cost. Our primary goal is to assist our customers in obtaining the necessary level of insurance to safeguard their assets, while also ensuring that they receive the best possible value for their investments. Moreover, quick and accurate quotes are essential to our agency partners, enabling them to sell more policies and accelerate their business growth. The Reliance Exchange platform was upgraded with an improved artificial intelligence engine in February that automatically fills out 90% of the customer's application, leading to a more efficient process for agents. Along with this, a new custom CRM system was launched, which guides agents through the entire customer engagement, sales, and closing process by providing smart coaching wherever necessary. The system will also aid sales directors in prospect tracking and agency partner support. Despite these AI-based enhancements, agents' experiences are not being replaced, but instead are being elevated, allowing them to compare more quotes in less time while providing an overall enhanced customer experience. These improvements have further strengthened our position as a leader in the insurtech industry. Furthermore, earlier this month, we unveiled Rely University, a groundbreaking communication and training platform that has been specifically developed to support our agency partners. This exclusive training tool is unlike anything else in the independent insurance industry and is provided free of charge to Rely Exchange agency partners. The platform has been designed to offer both new and experienced agents access to a wide range of products, services, and tools, all available through Rely Exchange platform. This service also helps keep agents informed of the latest developments in the insurance industry. With Rely University, our agency partners can maximize their success and increase their productivity regardless of their level of experience. So to wrap it up, as I mentioned earlier, RelyExchange has experienced an almost 200% increase in agency partners since its launch in July of 2022, thanks to the exceptional efforts and unwavering commitment of our team. On that note, a special mention to Grant Barra, Michael Dobek, and Moshe Fishman, who have led this effort. Our business model is both unique and highly scalable, placing us at the forefront of the industry. We are excited about the platform's future growth potential and as we continue to improve and expand its services and capabilities. We anticipate that Rely Exchange will act as a primary driver for organic growth going forward. Meanwhile, we are well capitalized with a strong balance sheet, and our operating subsidiaries are generating positive cash flow on a consolidated basis, which has helped to offset the costs associated with building out and marketing the Rely Exchange platform. On one final note, I want to express my gratitude to all our supportive shareholders. We recognize that the stock market has been very volatile, especially within the micro-cap space, and our stock has been under significant pressure. I have invested millions of my own money into the company and have consistently brought shares in the open market. I can assure that management's interests are completely aligned with shareholders, and we are building the business for the long term. I am committed to establishing Reliance as a major force within the insurance insurtech industry. We have a highly scalable business model with tremendous earnings potential, and I believe 2023 will be another exciting year as we begin to realize the benefits of the investments we've made to date, which I believe will help unlock significant value for our shareholders. I would like to now turn over the call to Joel Markiewicz, our Chief Financial Officer of Reliance Global. who will review the financial results for 2022. Joel.

Thank you very much, Ezra, and good afternoon all. It's wonderful to be here today, and I'm excited to share the following financial results with you. Please note that all figures presented are approximates. The company's revenue for the end of December 31, 2022 was $16.8 million. This represents a phenomenal 73% increase, as Ezra mentioned, from $9.7 million in 2021. This substantial increase is primarily attributable to organic growth, as well as the new agencies we acquired in 2022. On the expense side, commission expense amounts to $3.4 million compared to $2.4 million in 2021, Salaried wages totaled 8.6 million versus 4.7 million in the prior year. General and administrative expenses, they totaled 6.8 million versus 3.6 million in 2021. Marketing and advertising totaled 2.6 million compared to 326,000 in the prior year. Increases in the aforementioned expenses are primarily driven by our expanded operations, both organic and from our additional 2022 agency acquisitions. With regards to depreciation and amortization, we reported $2.8 million in 2022 compared to $1.6 million in 2021. Increase primarily is due to activity within our fixed assets. Property planning equipment increased by $26,000 and intangible assets increased by $6.7 million. The growth of fixed assets stems from the company's business combinations and resulting acquired tangible and intangible assets during 2022. We reported a $14.4 million goodwill impairment charge versus $0 in the previous year. This was a result of a goodwill evaluation performed by the company. The charge to the P&L has no impact on cash or liquidity of the company. With regards to other income or other expense, we reported $28.2 million of net other income during the current year compared to a net loss of $18.2 million in the prior year. The fluctuation of 46.4 million primarily stems from swings in the fair value of our derivative warrant liabilities. Net income for the year ended December 31, 2022, was 6.5 million compared to a net loss of 21.1 million in the prior year. The positive swing is explained by the P&L narrative just provided on a line-by-line basis. This concludes our prepared remarks. We'll be happy to answer questions or discuss any comments you may have. Operator, kindly open the lines, please.

Certainly. At this time, we'll be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset, if you're listening on speakerphone, to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Please hold while we poll for questions. Your first question is coming from Ed Riley from EF Hutton. Your line is live.

Hey, guys. Congrats on the strong top line growth during the year. I'm wondering if you're able to break down what the organic growth rate was for the agencies during the year.

If we can go agency by agency, I think maybe... We don't really have it offhand, but I know... Is it 10%? In the round numbers, I think organic growth, I believe, was about... I'm not sure on every single agency, but I think on the main ones, I think I remember hearing at least 10%.

Okay, great. And then on the partnership growth on the exchange platform, could you maybe provide us with some color on the marketing strategy and how you're able to grow partners on that platform.

Right. We're proud to share that. As opposed to typical insured tech companies that have to spend fortunes, hundreds of millions of dollars, we're spending almost nothing on marketing because, remember, we have a very targeted audience. We're not going after 300 million Americans or 350 or so. We're going after the relatively very targeted audience of existing agents, whether they're captives or existing independent agents. So our marketing cost is really close to zero, actually. And exactly that's the way it's working, and that's why we're able to build. We've actually given a directive to add, it's only the recruiting cost, the recruiting staff, which we've added, we've given the approval to go up to like 10 recruiters from two or so, and we want to go after now, a big emphasis on experienced agents who bring revenue to the table almost immediately. So we're proud of that concept of not having to spend fortunes in marketing, just recruiting, and once, as you see, once they get wind of what we're doing compared to what they're doing wherever they are, they're really jumping. And we're proud of that, and the concept is working. Now we hope to be able to go to the bottom line Fantastic. And there's no franchise fee, so we don't have that threshold or barrier of joining us. They can join pretty quickly.

Okay, gotcha. And then you added life insurance as a product recently. What other types of products are you looking to add to the exchange in the future? And maybe if you could share some of your top strategic priorities for the 2023 fiscal year, that would be great.

I think one of the biggest, as you mentioned before, one of the largest and biggest goals is now really ramp up. Going to 200 agents was really a tiny step for us. We spoke about before going to 1,000 and beyond in agents, but I think it's important to know that that would go right to the bottom line, pretty much, is going after the experienced agents. In other words, we have also the rookies, but the experience agents who are not happy with their existing, you know, relationships in many ways. And I'm very simple. We've mentioned this metric before, but a captive who has a, you know, whatever he has his existing captive relationship with his old state, state farm, whoever, when he goes and gives a quote to a customer, typically he has maybe a one to two chance out of 10 getting that customer. In our case, when we're giving them quotes from 30 carriers, we have, it's unbelievable the difference. We're talking about 8 to 10 out of 10 chance. So when they see that and they see the technology and we see the independence we give them with our white labeling and quick response, it's unbelievable. The tech infrastructure in place, so now we're just scaling, really. And really going forward, we've already spent the technology cost So it's pretty much going forward. It goes to the bottom line. Just as we add agents and add agents, the thousand number is just a very conservative number. The experience has told us there's a lot of runway here to go.

I'm curious as to maybe your internal goal for the timeline of hitting that thousand mark.

I'd like to say within a year from now, I can't commit to that, but I'd like to say that. But part of that is ramping up more recruiters. We're in the process of hiring more and more recruiters. So, I don't know, a year to 18 months.

Okay, great. That's it for me.

Thank you.

Okay. Thank you, Ed.

Thank you. Your next question is coming from Elon Friedman from BKC Capital. Your line is live.

Thank you, and congratulations on the revenue growth. Given that Relia Exchange is a largely SaaS model, I would imagine most of the investment was on the upfront end and the incremental margin should be pretty high. Would it be correct to say that this business should start generating meaningful cash flow on the standalone basis?

Yes, that is a very smart and good assumption. We've already pretty much the technology cost is done. The infrastructure is there. Remember, we also... bought an existing operation from, you know, the bar associates was already existing operation. So we didn't have to reinvent the wheel. It's in place. And now with the technology we added and everything that we've done, we're just now we're on the runway, ready, taking off in a big way. What we've done now is just as kids stuff. Now we really look to, to grow. And there's not, except for the recruiter costs, which is how you can, you can realize is minimal compared to the, The potential here, there's no major marketing cost. It's all just recruiting and time. And, yes, you're right. The growth should go to the bottom line. That's correct for the most part.

Good. Thank you.

Thank you. Your next question is coming from James Englander. Your line is live.

Hi. I'm a shareholder and a warrant holder. I wanted to ask the company if it's possible now with the reverse stock split, if you can do a reverse on the warrants and bring the strike price back down to the original $6,060. Sure, Ken.

Thanks for that question. It's something that we are considering. We're in active discussions with counsel to see what the most efficient way would be to do that. But yes, it's a great question and we are considering it.

Okay. And I'm saying you understand all the advantages because then once we're in the money, then there's an incentive to exercise and then you don't have to go to the street to raise money if you have warrant holders. Okay. Appreciate you working on it.

We get it and you're on the money and we want to be in the money for you. So we're good with that.

Thank you. And keep up your great work.

Thank you. Thank you.

Thank you. Your next question is coming from Emmanuel Kramer. Your line is live.

Thank you for a good quarter and the new ending. Do you have any guidance for the current quarter that's just ending?

I guess that's a Joel question.

Yeah, it's a great question. I'm hesitant, you know, to give, you know, I guess potentially non-material, non-public material information. But I'd say that we're having a good quarter overall. And, yeah, as soon as we're able to give guidance substantively, we will. Right.

Now, a follow-up question. It was reported today in the Wall Street Journal that the AI, they want to pause and slow down. How would that affect you?

That doesn't really affect... We're already in place. And the beauty of our AI, and we mentioned that in my comments, I think I should reiterate that, we're not getting rid of the humans. We're just helping the humans. Much of AI... I know something came out recently that they're expecting could impact like 80% of the population of AI. we actually pride ourselves in not just, we're actually helping humans use technology. So we're not worried about that at all, and our AI is already done. We're not waiting for more. If we make it too easy, the customer would have to just call and breathe into the phone, and the rest would be filled out. Right now, they're giving very minimal information to... What we've done essentially is we've empowered the agents with the AI instead of using it against them. It's a win-win for everyone.

You just recently raised $4 million. Did you get the close on that? You got the full $4 million or does it have to do with exercising the warrants to get the full $4 million?

Yes, we got the full $4 million minus any cost to raise the funds. But no, there were warrants attached to the overall offering, but that didn't impact the cash that we received when we closed.

Yeah, nothing to do with the cash we received.

Thank you very much.

You're very welcome.

Thank you. That concludes our Q&A session. I will now hand the conference back to management for closing remarks. Please go ahead.

Thank you all. So on behalf of Ezra and the entire Reliance team, we'd like to thank you for your participation in this business update and 2022 financial results conference call. We are very excited about the company's future and its growth prospects. We look forward to providing further updates as developments unfold. Thank you. Have a great rest of the day.

Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.