Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 11, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Reliance Global Group, Inc. | |
Entity Central Index Key | 0001812727 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,929,514 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 9,432,070 | $ 45,213 |
Restricted cash | 585,906 | 484,368 |
Accounts receivable | 27,693 | 236,651 |
Accounts receivable, related parties | 7,131 | |
Note receivables | 3,825 | 3,825 |
Other receivables | 1,952 | 1,952 |
Prepaid expense and other current assets | 38,081 | 38,081 |
Total current assets | 10,096,658 | 810,090 |
Property and equipment, net | 326,428 | 375,947 |
Right-of-use asset | 382,299 | 433,529 |
Investment in NSURE, Inc. | 1,350,000 | 1,350,000 |
Intangibles, net | 5,402,082 | 5,685,650 |
Goodwill | 9,265,070 | 9,265,070 |
Other non-current assets | 1,800 | 1,800 |
Total assets | 26,824,337 | 17,922,086 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 250,077 | 1,143,582 |
Loans payable | 14,598 | 14,598 |
Current portion of loans payables, related parties | 588,369 | 4,523,045 |
Other payables | 62,500 | 62,500 |
Current portion of long-term debt | 963,450 | 963,450 |
Current portion of leases payable | 153,574 | 176,897 |
Total current liabilities | 2,032,568 | 6,884,072 |
Loan payables, related parties, less current portion | 145,204 | 143,475 |
Long term debt, less current portion | 7,677,558 | 7,885,830 |
Leases payable, less current portion | 230,293 | 262,904 |
Earn-out liability | 2,631,418 | 2,631,418 |
Total liabilities | 12,717,041 | 17,807,699 |
Stockholders' and members' equity: | ||
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 1,147 and 395,640 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 100 | 33,912 |
Common stock, $0.086 par value; 2,000,000,000 shares authorized and 10,929,514 and 4,241,028 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 938,542 | 363,517 |
Common stock issuable | 482,116 | 822,116 |
Additional paid-in capital | 25,810,147 | 11,377,123 |
Accumulated deficit | (13,123,609) | (12,482,281) |
Total stockholders' equity (deficit) | 14,107,296 | 114,387 |
Total liabilities and stockholders' equity | $ 26,824,337 | $ 17,922,086 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, at par value | $ 0.086 | $ 0.086 |
Preferred stock, shares authorized | 750,000,000 | 750,000,000 |
Preferred stock, shares issued | 1,147 | 395,640 |
Preferred stock, shares outstanding | 1,147 | 395,640 |
Common stock, at par value | $ 0.086 | $ 0.086 |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued | 10,929,514 | 4,241,028 |
Common stock, shares outstanding | 10,929,514 | 4,241,028 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
REVENUE | ||
Commission income | $ 2,296,328 | $ 2,004,314 |
Total revenue | 2,296,328 | 2,004,314 |
OPERATING EXPENSES | ||
Commission expense | 529,472 | 425,585 |
Salaries and wages | 918,545 | 868,274 |
General and administrative expenses | 1,004,401 | 1,121,120 |
Marketing and advertising | 23,079 | 67,762 |
Depreciation and amortization | 333,088 | 329,091 |
Total operating expenses | 2,808,585 | 2,811,832 |
Loss from operations | (512,257) | (807,518) |
Other expense, net | (129,071) | (172,280) |
Total non-operating expenses | (129,071) | (172,280) |
Net loss | $ (641,328) | $ (979,798) |
Basic and diluted loss per share | $ (.09) | $ (.34) |
Weighted average number of shares outstanding | 7,542,377 | 2,916,041 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Common Stock Issuable [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2019 | $ 33,912 | $ 352,743 | $ 822,116 | $ 8,216,829 | $ (8,783,276) | $ 642,324 |
Balance, shares at Dec. 31, 2019 | 395,640 | 4,115,330 | 51,042 | |||
Shares issued pursuant to investment in NSURE, Inc | $ 4,000 | 996,000 | 1,000,000 | |||
Shares issued pursuant to investment in NSURE, Inc, shares | 46,667 | |||||
Share based compensation | 394,719 | 394,719 | ||||
Shares issued due to conversion of debt | ||||||
Net loss | (979,798) | (979,798) | ||||
Balance at Mar. 31, 2020 | $ 33,912 | $ 356,743 | $ 822,116 | 9,607,548 | (9,763,074) | 1,057,245 |
Balance, shares at Mar. 31, 2020 | 395,640 | 4,161,997 | 51,042 | |||
Balance at Dec. 31, 2020 | $ 33,912 | $ 363,517 | $ 822,116 | 11,377,123 | (12,482,281) | 114,387 |
Balance, shares at Dec. 31, 2020 | 395,640 | 4,241,028 | 51,042 | |||
Share based compensation | 246,966 | 246,966 | ||||
Shares issued for services | $ 1,290 | 89,760 | 91,050 | |||
Shares issued for services, shares | 15,000 | |||||
Shares issued due to public offering, net of offering costs | $ 154,800 | 8,954,348 | 9,109,148 | |||
Shares issued due to public offering, net of offering costs, shares | 1,800,000 | |||||
Over-allotment shares from offering, net of offering costs | $ 23,220 | 1,343,153 | 1,366,373 | |||
Over-allotment shares from offering, net of offering costs, shares | 270,000 | |||||
Warrants sold during public offering at quoted price | 20,700 | 20,700 | ||||
Shares issued due to conversion of preferred stock | $ (33,812) | $ 339,264 | (305,452) | |||
Shares issued due to conversion of preferred stock, shares | (394,493) | 3,944,930 | ||||
Shares issued due to conversion of debt | $ 54,467 | 3,745,533 | 3,800,000 | |||
Shares issued due to conversion of debt, shares | 633,333 | |||||
Rounding shares related to initial public offering | ||||||
Rounding shares related to initial public offering, shares | 1,885 | (3) | ||||
Shares issued pursuant to software purchase | $ 1,984 | $ (340,000) | 338,016 | 0 | ||
Shares issued pursuant to software purchase, shares | 23,338 | (23,338) | ||||
Net loss | (614,328) | (641,328) | ||||
Balance at Mar. 31, 2021 | $ 100 | $ 938,542 | $ 482,116 | $ 25,810,147 | $ (13,123,609) | $ 14,107,296 |
Balance, shares at Mar. 31, 2021 | 1,147 | 10,929,514 | 27,701 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Offering costs | $ 1,672,852 |
Over-Allotment Option [Member] | |
Offering costs | $ 250,928 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (641,328) | $ (979,798) |
Adjustment to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 333,088 | 329,091 |
Amortization of debt issuance costs and accretion of debt discount | 5,722 | 5,722 |
Non-cash lease expense | (4,704) | 202 |
Stock compensation expense | 352,299 | 394,719 |
Change in operating assets and liabilities: | ||
Accounts payables and other accrued liabilities | (893,505) | 23,634 |
Accounts payables and other accrued liabilities, related parties | 46,210 | |
Accounts receivable | 208,958 | (49,736) |
Accounts receivable, related parties | (7,131) | |
Other receivables | 7,436 | |
Other payables | 3,835 | |
Prepaid expense and other current assets | (5,011) | |
Net cash used in operating activities | (646,602) | (223,696) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Investment in NSURE, Inc. | (1,000,000) | |
Net cash used in investing activities | (1,000,000) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal repayments of debt | (213,994) | (54,381) |
Proceeds from loans payable, related parties | 177,824 | 373,210 |
Payments of loans payable, related parties | (310,771) | (210) |
Issuance of common stock | 10,481,938 | 1,000,000 |
Net cash provided by financing activities | 10,134,997 | 1,318,409 |
Net increase in cash and restricted cash | 9,488,395 | 94,713 |
Cash and restricted cash at beginning of year | 529,581 | 491,585 |
Cash and restricted cash at end of year | 10,017,976 | 586,298 |
Supplemental disclosure of cash and non-cash investing and financing transactions: | ||
Cash paid for interest | 116,830 | 48,412 |
Conversion of preferred stock into common stock | 339,264 | |
Conversion of debt into equity | 3,800,000 | |
Common stock issued in lieu of services | 91,050 | |
Issuance of common stock pursuant to the purchase of software from The Referral Depot, LLC | $ 340,000 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Reliance Global Group, Inc. (formerly known as Ethos Media Network, Inc.) (“RELI”, “Reliance”, or the “Company”) was incorporated in Florida on August 2, 2013. In September 2018, Reliance Global Holdings, LLC (“Reliance Holdings”, or “Parent Company”), a related party acquired control of the Company (see Note 4). Ethos Media Network, Inc. was then renamed on October 18, 2018. On August 1, 2018, a related party to Reliance Holdings, US Benefits Alliance, LLC (“USBA”) acquired certain properties and assets of the insurance businesses of Family Health Advisors, Inc. and Tri Star Benefits, LLC (see Note 3) (the “USBA Transaction”). Also, on August 1, 2018, Employee Benefits, Solutions, LLC, (“EBS”), related party, acquired certain properties and assets of the insurance business of Employee Benefit Solutions, Inc. (the “EBS Transaction”, and, together with USBA Transaction, the “Common Control Transactions”). On October 24, 2018, a related party of the Company, entered into a purchase agreement to sell assign, and convey membership interest and all other property rights in EBS and USBA to Reliance. USBA is a general agent for various insurance companies and earns override commissions on business placed by other “downstream” agencies. EBS is a retail broker with its revenues mainly sourced from independent contractor brokers. On December 1, 2018, Commercial Coverage Solutions, LLC (“CCS”), a wholly owned subsidiary of Reliance, acquired Commercial Solutions of Insurance Agency, LLC (see Note 3). CCS is a property and casualty insurance agency that specializes in commercial trucking and transportation insurance. On April 1, 2019, Southwestern Montana Insurance Center, LLC (“SWMT”), a wholly owned subsidiary of Reliance, acquired Southwestern Montana Financial Center, Inc. (See Note 3). SWMT is an insurance services firm which specializes in providing personal and commercial lines of insurance. On May 1, 2019, Fortman Insurance Services, LLC (“FIS”), a wholly owned subsidiary of Reliance, acquired Fortman Insurance Agency, LLC (See Note 3). FIS is an insurance services firm which specializes in providing personal and commercial lines of insurance. On September 1, 2019, the Company acquired Altruis Benefits Consulting, Inc. (“ABC”). ABC is an insurance agency and employee benefits provider. On August 17, 2020, the Company acquired UIS Agency, Inc. (“UIS”). UIS is an insurance agency and employee benefits provider. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated and combined financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounting of Reliance Global Group, Inc., and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and noted thereto for the year ended December 31, 2020 included in the Company’s annual report on Form 10-K. Liquidity As of March 31, 2021, the Company’s reported cash balance was approximately $10,018,000, current assets were approximately $10,097,000 while current liabilities were approximately $2,033,000 including loan payable to related party of approximately $734,000. At March 31, 2021, the Company had a working capital of approximately $8,064,000. The Company had stockholders’ equity of $14,107,000 for the period ended March 31, 2021, the Company reported a net loss of approximately $641,000 and negative cash flows from operations of $647,000. The Company also completed an offering in February that raised net proceeds of approximately $10,496,000. Management therefore believes that the Company’s financial position causes no concern about the Company’s liquidity. Use of Estimates The preparation of financial statements in conformity with 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 it estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Cash Cash consists of checking accounts. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted Cash Restricted cash includes cash pledged as collateral to secure obligations and/or all cash whose use is otherwise limited by contractual provisions. The reconciliation of cash and restricted cash reported within the applicable balance sheet that sum to the total of the same such amounts shown in the statement of cash flows is as follows: March 31, 2021 March 31, 2020 Cash $ 9,432,070 $ 232,629 Restricted cash 585,906 353,879 Total cash and restricted cash $ 10,017,976 $ 586,508 Property and Equipment Property and equipment are stated at cost. Depreciation, including assets acquired under capital leases or finance leases, are recorded over the shorter of the estimated useful life or the lease term of the applicable assets using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Maintenance and repairs are charged to expense as incurred. The estimated useful life of the Companies Property and Equipment is as follows: Useful Life (in years) Computer equipment and software 5 Office equipment and furniture 7 Leasehold improvements Shorter of the useful life or the lease term Software 3 Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows: Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets; Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and Level 3 — Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk. The Company’s balance sheet includes certain financial instruments, including cash, notes receivables, accounts payable, notes payables and short and long-term debt. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. The carrying amounts of long-term debt approximate their fair value as the variable interest rates are based on a market index. Deferred Financing Costs The Company has recorded deferred financing costs as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense using the straight-line method which approximates the interest rate method over the term of the related debt. As of March 31, 2021 and December 31, 2020, unamortized deferred financing costs were $180,590, and $186,312, respectively and are netted against the related debt. Business Combinations The Company accounts for its business combinations using the acquisition method of accounting. Under the acquisition method, the assets acquired, the liabilities assumed, and the consideration transferred are recorded at the date of acquisition at their respective fair values. Definite-lived intangible assets are amortized over the expected life of the asset. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. Identifiable Intangible Assets, net Finite-lived intangible assets such as customer relationships assets, trademarks and tradenames are amortized over their estimated useful lives, generally on a straight-line basis for periods ranging from 3 to 20 years. Finite-lived intangible assets are reviewed for impairment or obsolescence whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of intangible assets is measured by a comparison of the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by that asset. If the asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the estimated fair value. No impairment was recognized during the periods presented. Goodwill and other indefinite-lived intangibles The Company records goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. Goodwill is assigned to a reporting unit on the acquisition date and tested for impairment at least annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. Similarly, indefinite-lived intangible assets other than goodwill, such as trade names, are tested annually or more frequently if indicated, for impairment. If impaired, intangible assets are written down to fair value based on the expected discounted cash flows. During the three months ended March 31, 2021 and 2020, the Company recorded no impairment of goodwill. Revenue Recognition The Company’s revenue is primarily comprised of commission paid by health insurance carriers related to insurance plans that have been purchased by a member who used the Company’s service. The Company defines a member as an individual currently covered by an insurance plan, including individual and family, Medicare-related, small business and ancillary plans, for which the Company are entitled to receive compensation from an insurance carrier. The following table disaggregates the Company’s revenue by line of business, showing commissions earned: Three Months ended March 31, 2020 Medical/Life Property and Casualty Contingent commission Total Regular EBS 197,306 197,306 USBA 133,672 133,672 CCS/UIS 93,518 93,518 Montana 489,826 489,826 Fortman 349,226 188,372 537,598 Altruis 552,394 552,394 1,722,424 281,890 - 2,004,314 Three Months ended March 31, 2021 Medical/Life Property and Casualty Contingent commission Total Regular EBS 208,994 - 208,994 USBA 12,225 - 12,225 CCS/UIS - 88,818 88,818 Montana 535,116 - 535,116 Fortman 249,801 207,772 457,573 Altruis 993,602 - 993,602 1,999,738 296,590 - 2,296,328 The core principle of ASC 606 is to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. Accordingly, we recognize revenue for our services in accordance with the following five steps outlined in ASC 606: Identification of the contract, or contracts, with a customer Identification of the performance obligations in the contract Determination of the transaction price Allocation of the transaction price to the performance obligations in the contract Recognition of revenue when, or as, the Company satisfies a performance obligation For individual and family, Medicare supplement, small business and ancillary plans, the Company’s compensation is generally a percentage of the premium amount collected by the carrier during the period that a member maintains coverage under a plan (commissions) and, to a lesser extent, override commissions that health insurance carriers pays the Company for achieving certain objectives. Premium-based commissions are reported to the Company after the premiums are collected by the carrier, generally on a monthly basis. The Company generally continues to receive the commission payment from the relevant insurance carrier until the health insurance plan is cancelled or the Company otherwise does not remain the agent on the policy. The Company recognizes commission revenue for individual and family, Medicare Supplement, small business and ancillary plans when premiums are effective. The Company determines that there is persuasive evidence of an arrangement when the Company has a commission agreement with a health insurance carrier, a carrier reports to the Company that it has approved an application submitted through the Company’s platform, and the applicant starts making payments on the plan. The Company’s services are complete when a carrier has approved an application. The seller’s price is fixed or determinable and collectability is reasonably assured when commission amounts have been reported to the Company by a carrier. Commission revenue from insurance distribution and brokerage operations is recognized when all placement services have been provided, protection is afforded under the insurance policy, and the premium is known or can be reasonably estimated and is billable. In general, two types of billing practices occur as part of our agency contracts, which is direct bill and agency bill. In direct bill scenarios, the insurance carriers that underwrite the insurance policies directly bill and collect the premium for the policy without any involvement from the Company. Upon collection, a commission is then remitted from the insurance carrier to the Company. These commissions have not met the criteria for revenue recognition until the Company receives the commissions, as the Company does not have insight into policy acceptance and premium collections until the commission is received from the insurance carrier, representing that the insurance policy has been bound and therefore commissions have been earned by the Company. The second billing practice where the Company bills the policy holder and collects the premiums (“Agency Bill”) provides greater transparency by the Company into the acceptance of the policy and premium collection. As part of the Agency Bill process, the Company can, at times, net its commissions out of the premiums to be sent to the insurance carriers. For Agency Bill customers, the revenue recognition criteria are considered met when the Agency receives the premiums from the policy holder, with an allowance established against the revenue for policies that may not be bound by the insurance companies. All commission revenue is recorded net of any deductions for estimated commission adjustments due to lapses, policy cancellations, and revisions in coverage. Insurance commissions earned from carriers for life insurance products are recorded gross of amounts due to agents, with a corresponding commission expense for downstream agent commissions being recorded as commission expense within the condensed consolidated statements of operations. The Company earns additional revenue including contingent commissions, profit-sharing, override and bonuses based on meeting certain revenue or profit targets established periodically by the carriers (collectively the Contingent Commissions). The Contingent Commissions are earned when the Company achieves the targets established by the insurance carries. The insurance carriers notify the company when it has achieved the target. The Company recognizes revenue for any additional commissions at the time it is reasonably assured it will receive payment for these commissions, which is generally when the insurance carrier notifies the Company that it has earned the commission typically early in the following fiscal year. General and Administrative General and administrative expenses primarily consist of personnel costs for the Company’s administrative functions, professional service fees, office rent, all employee travel expenses, and other general costs. Marketing and Advertising The Company’s direct channel expenses primarily consist of costs for e-mail marketing and newspaper advertisements. The Company’s online advertising channel expense primarily consist of social media ads. Advertising costs for both direct and online channels are expensed as incurred. Stock-Based Compensation In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. This ASU, which the Company adopted as of January 1, 2019, did not have a material effect on the Company’s consolidated financial statements. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, based on the terms of the awards. The fair value of the stock-based payments to nonemployees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term. As the Reliance Global Group, Inc. Equity Incentive Plan 2019 was adopted in January of 2019, the Company lacks the historical basis to estimate forfeitures and will recognize forfeitures as they occur. Leases On January 1, 2019, the Company adopted Accounting Standards Codification Topic 842, “Leases” (“ASC 842”) to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to previous accounting guidance. The Company adopted ASC 842 utilizing the transition practical expedient added by the Financial Accounting Standards Board (“FASB”), which eliminates the requirement that entities apply the new lease standard to the comparative periods presented in the year of adoption. The Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line items right-of-use asset, lease obligation, current, and lease obligation, long-term in the consolidated balance sheet. Right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the condensed consolidated statement of operations. The Company determines the lease term by agreement with lessor. Income Taxes The Company recognizes deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. In evaluating its ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence, including the expected reversals of taxable temporary differences, projected future taxable income, taxable income available via carryback to prior years, tax planning strategies, and results of recent operations. The Company assesses the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax assets and liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized. Seasonality A greater number of the Company’s Medicare-related health insurance plans are sold in the fourth quarter during the Medicare annual enrollment period when Medicare-eligible individuals are permitted to change their Medicare Advantage. The majority of the Company’s individual and family health insurance plans are sold in the annual open enrollment period as defined under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act. Individuals and families generally are not able to purchase individual and family health insurance outside of these open enrollment periods, unless they qualify for a special enrollment period as a result of certain qualifying events, such as losing employer-sponsored health insurance or moving to another state. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (“ASU 2016-13”), which requires the measurement of expected credit losses for financial instruments carried at amortized cost, such as accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financing Instruments—Credit Losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. On November 15, 2019, the FASB delayed the effective date of FASB ASC Topic 326 for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition. The Company does not currently believe the adoption of this standard will have a significant impact on its financial statements, given its history of minimal bad debt expense relating to trade accounts receivable. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the general principles in Topic 740 and simplifies other areas of the existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted this pronouncement January 1, 2021. |
Strategic Investments and Busin
Strategic Investments and Business Combinations | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Strategic Investments and Business Combinations | NOTE 3. STRATEGIC INVESTMENTS AND BUSINESS COMBINATION To date, we have acquired seven insurance brokerages (see table below), including both acquisitions of affiliated companies ( i.e. Acquired Date Location Line of Business Status U.S. Benefits Alliance, LLC (USBA) October 24, 2018 Michigan Health Insurance Affiliated Employee Benefit Solutions, LLC (EBS) October 24, 2018 Michigan Health Insurance Affiliated Southwestern Montana Insurance Center, Inc. April 1, 2019 Montana Group Health Insurance Unaffiliated Fortman Insurance Agency, LLC May 1, 2019 Ohio P&C Unaffiliated Altruis Benefits Consultants, Inc. September 1, 2019 Michigan Health Insurance Unaffiliated UIS Altruis LLC August 17, 2020 New York Health Insurance Unaffiliated The following table lists our activity in 2021 by number of agents, approximate policies issued and revenue written: Agency Name Number of Agents Number of Aggregate Revenue Recognized March 31 2021 USBA and EBS 6 5,173 $ 221,219 UIS Agency, LLC / Commercial Solutions 2 48 $ 88,818 Southwestern Montana 13 1,212 $ 535,116 Fortman Insurance 14 3,258 $ 457,573 Altruis 8 6,298 $ 993,602 The following table lists our activity in 2020 by number of agents, approximate policies issued and revenue written: Agency Name Number of Agents Number of Aggregate USBA and EBS 6 3,278 $ 330,978 Commercial Solutions 2 32 $ 93,518 Southwestern Montana 13 1,031 $ 489,826 Fortman Insurance 14 3,110 $ 537,598 Altruis 8 5,026 $ 552,394 UIS Transaction On August 17, 2020, the Company entered into a Stock Purchase Agreement with UIS Agency LLC whereby the Company shall purchase the business and certain assets noted within the Purchase Agreement (the “UIS Acquisition”) for a total purchase price of $883,334. The purchase price was paid with a cash payment of $601,696, $200,000 in shares of the Company’s common stock and an earn-out payment. Three cash installment payments totaling $500,000 were due on September 30, 2020, October 31, 2020 and December 31, 2020. Earn-out payment is dependent on the Net Product Line Revenues being equal to or greater than $450,000 for the measurement period. The balance of the earn-out liability as of March 31, 2021 and December 31, 2020 was $81,638 and is included in long term debt on the balance sheet. The UIS Acquisition was accounted for as a business combination in accordance with the acquisition method under the guidance in ASC 805-10 and 805-20. Accordingly, the total purchase consideration was allocated to intangible assets acquired based on their respective estimated fair values. The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing. The allocation of the purchase price in connection with the UIS Acquisition was calculated as follows: Description Fair Value Weighted Average Cash $ 5,772 Trade name and trademarks 35,600 5 Customer relationships 100,000 10 Non-competition agreements 25,500 5 Goodwill 716,462 Indefinite $ 883,334 Goodwill of $716,462 arising from the UIS Acquisition consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the UIS Acquisition is currently expected to be deductible for income tax purposes. Total acquisition costs for the UIS Acquisition incurred were $33,344 recorded as a component of General and administrative expenses. The revenues for the acquired business as a standalone entity per ASC 805 from January 1, 2020 to March 31, 2020 were $173,430. The net loss for the acquired business was not determinable as the business was fully integrated with an existing subsidiary of the Company. |
Investment in NSURE, Inc.
Investment in NSURE, Inc. | 3 Months Ended |
Mar. 31, 2021 | |
Investments, All Other Investments [Abstract] | |
Investment in NSURE, Inc. | NOTE 4. INVESTMENT IN NSURE, INC. On February 19, 2020, the Company entered into a securities purchase agreement with NSURE, Inc. (“NSURE”) whereas the Company may invest up to an aggregate of $20,000,000 in NSURE which will be funded with three tranches. In exchange, the Company will receive a total of 5,837,462 shares of NSURE’s Class A Common Stock, which represents 35% of the outstanding shares. The first tranche of $1,000,000 was paid immediately upon execution of the agreement. As a result of the first tranche, the Company received 291,873 shares of NSURE’s Class A Common Stock. The second tranche of $3,000,000 and third tranche of $16,000,000 have not occurred as of March 31, 2021. The Company will use the cost method of acquisition for the initial recognition of this investment. Once the Company determines that it can exercise significant influence over NSURE, it will begin to account for its investment under the equity method. On February 10, 2020, the Company issued 46,667 shares of common stock to a third-party individual for the purpose of raising capital to fund the Company’s investment in NSURE, Inc. The Company received proceeds of $1,000,000 for the issuance of these common shares. As of March 31, 2021 and December 31, 2020, the investment balance is $1,350,000. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: Estimated Useful March 31, 2021 December 31, 2020 Computer equipment and software 5 $ 33,774 $ 33,774 Office equipment and furniture 7 36,573 36,573 Leasehold Improvements Shorter of the useful life or the lease term 56,631 56,631 Software 3 562,327 562,327 Property and equipment, gross 689,305 689,305 Less: Accumulated depreciation and amortization (362,877 ) (313,358 ) Property and equipment, net $ 326,428 $ 375,947 Depreciation expense associated with property and equipment is included in depreciation within the Company’s Condensed Consolidated Statements of Operations was $49,519 and $51,825 for the three months ended March 31, 2021 and 2020, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS Effective January 1, 2020 the Company reorganized its reporting structure into a single operating unit. All of the acquisitions made by the Company are in one industry insurance agencies. These agencies operate in a very similar economic and regulatory environment. The Company has one executive who is responsible for the operations of the insurance agencies. This executive reports directly to the Chief Financial Officer (“CFO”) on a quarterly basis. Additionally, the CFO who is responsible for the strategic direction of the Company review the operations of the insurance agency business as opposed to an office by office view. In accordance with guidance in ASC 350-20-35-45 all the Company’s goodwill will be reassigned to a single reporting unit. As of March 31, 2021 and December 31, 2020, the Company’s goodwill balance was $9,265,070. Goodwill December 31, 2019 $ 8,548,608 Goodwill recognized in connection with acquisition on August 17, 2020 716,462 December 31, 2020 $ 9,265,070 March 31, 2021 $ 9,265,070 The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of March 31, 2021: Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade name and trademarks 3.8 $ 1,087,760 $ (360,101 ) $ 727,659 Customer relationships 8.2 3,686,290 (720,424 ) 2,965,867 Non-competition agreements 3.2 2,677,010 (968,455 ) 1,708,556 $ 7,451,060 $ (2,048,979 ) $ 5,402,082 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, 2020: Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade name and trademarks 2.6 $ 1,087,760 $ (307,163 ) $ 780,597 Customer relationships 7.6 3,686,290 (623,649 ) 3,062,641 Non-competition agreements 2.6 2,677,010 (834,598 ) 1,842,412 $ 7,451,060 $ (1,765,410 ) $ 5,685,650 Amortization expense was $283,569 and $277,266 for the three months ended March 31, 2021 and 2020, respectively. The following reflects the expected amortization expense of acquired intangible assets as of March 31, 2021, for each of the following five years and thereafter: Years ending December 31, Amortization Expense 2021 $ 1,117,013 2022 1,124,024 2023 1,101,669 2024 558,187 2025 371,973 Thereafter 1,129,216 Total $ 5,402,082 As of March 31, 2021 and December 31, 2020, the Company was in compliance with the covenants due to start up initiatives that were funded by Reliance Holdings. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | NOTE 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Significant components of accounts payable and accrued liabilities were as follows: March 31, 2021 December 31, 2020 Accounts payable $ 186,653 $ 980,943 Accrued expenses 19,181 35,022 Accrued credit card payables and other liabilities 44,243 127,617 $ 250,077 $ 1,143,582 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | NOTE 8. LONG-TERM DEBT The composition of the long-term debt follows: March 31, 2021 December 31, 2020 Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, net of deferred financing costs of $16,270 and $16,825 as of March 31, 2021 and December 31, 2020, respectively $ 528,616 $ 542,760 Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, net of deferred financing costs of $19,542 and $20,181 as of March 31, 2021 and December 31, 2020, respectively 854,900 877,550 Oak Street Funding LLC Term Loan for the acquisition of SWMT, net of deferred financing costs of $12,359 and $13,080 as of March 31, 2021 and December 31, 2020, respectively 956,671 979,966 Oak Street Funding LLC Term Loan for the acquisition of FIS, net of deferred financing costs of $45,569 and $47,023 as of March 31, 2021 and December 31, 2020, respectively 2,406,843 2,465,410 Oak Street Funding LLC Term Loan for the acquisition of ABC, net of deferred financing costs of $51,850 and $54,023 as of March 31, 2021 and December 31, 2020, respectively 3,893,978 3,983,594 8,641,008 8,849,280 Less: current portion (963,450 ) (963,450 ) Long-term debt $ 7,677,558 $ 7,885,830 Oak Street Funding LLC – Term Loans During the year ended December 31, 2018 the Company entered into two debt agreements with Oak Street Funding LLC. On August 1, 2018, EBS and USBA entered into a Credit Agreement with Oak Street Funding LLC (“Oak Street”) whereby EBS and USBA borrowed $750,000 from Oak Street under a Term Loan. The Term Loan is secured by certain assets of the Company. Interest accrues at 5.00% on the basis of a 360-day year, maturing 120 months from the Amortization Date (September 25, 2018). The Company incurred debt issuance costs associated with the Term Loan in the amount of $22,188. On December 7, 2018, CCS entered into a Facility with Oak Street whereby CCS borrowed $1,025,000 from Oak Street under a senior secured amortizing credit facility. The borrowing rate under the Facility is a variable rate equal to Prime +1.50% and matures 10 years from the closing date. The Company incurred debt issuance costs associated with the Facility in the amount of $25,506, which were deferred and are amortized over the length of the Facility. During the year ended December 31, 2019 the Company entered in Credit Agreements with Oak Street on April 1, 2019, May 1, 2019 and September 5, 2019 whereby the Company borrowed a total amount of $7,912,000 from Oak Street under the Term Loans. The Term Loans are secured by certain assets of the Company. The borrowing rates under the Facility is a variable rate equal to Prime + 2.00% and matures 10 years from the closing date. The Company recorded debt issuance costs associated with the aforementioned loans in total of $181,125. Oak Street Funding LLC – Senior Secured Amortizing Credit Facility (“Facility”) Aggregated cumulative maturities of long-term obligations (including the Term Loan and the Facility), excluding deferred financing costs, as of March 31, 2021 are: Period ending December 31, Maturities of Long-Term Debt 2021 $ 963,450 2022 963,450 2023 963,450 2024 963,450 2025 963,450 Thereafter 4,032,031 Total $ 8,849,281 Loans Payable Paycheck Protection Program On April 4, 2020, the Company entered into a loan agreement with First Financial Bank for a loan of $673,700 pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act enacted on March 27, 2020 (the “CARES Act”). Under the terms of the PPP, up to the entire amount of principal and accrued interest may be forgiven to the extent loan proceeds are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the U.S. Small Business Administration under the PPP. The Company intends to use the entire loan amount for designated qualifying expenses and to apply for forgiveness in accordance with the terms of the PPP. th |
Significant Customers
Significant Customers | 3 Months Ended |
Mar. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Significant Customers | NOTE 9. SIGNIFICANT CUSTOMERS Carriers representing 10% or more of total revenue are presented in the table below: For the three months ended March 31, For the period ended December 31, 2021 2020 2020 2019 BlueCross BlueShield 22 % 25 % 25 % 26 % Priority Health 35 % 24 % 26 % 20 % No other single insurance carrier accounted for more than 10% of the Company’s commission revenues. The loss of any significant customer, including Priority Health and BlueCross BlueShield, could have a material adverse effect on the Company. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Equity | NOTE 10. EQUITY Preferred Stock The Company has been authorized to issue 750,000,000 shares of $0.086 par value Preferred Stock. The Board of Directors is expressly vested with the authority to divide any or all of the Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of each series so established, within certain guidelines established in the Articles of Incorporation. Each share of Series A Convertible Preferred Stock shall have ten (10) votes per share and may be converted into ten (10) shares of $0.086 par value common stock. The holders of the Series A Convertible Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of funds legally available therefore, cumulative dividends payable in cash. The annual interest rate at which cumulative preferred dividends will accrue on each share of Series A Convertible Preferred Stock is 0%. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, before any distribution of assets of the Corporation shall be made to or set apart for the holders of the Common Stock and subject and subordinate to the rights of secured creditors of the Company, the holders of Series A Preferred Stock shall receive an amount per share equal to the greater of (i) one dollar ($1.00), adjusted for any recapitalization, stock combinations, stock dividends (whether paid or unpaid), stock options and the like with respect to such shares, plus any accumulated but unpaid dividends (whether or not earned or declared) on the Series A Convertible Preferred Stock, and (ii) the amount such holder would have received if such holder has converted its shares of Series A Convertible Preferred Stock to common stock, subject to but immediately prior to such liquidation. On February 11, 2021, Reliance Global Holdings, LLC, a related party, converted 394,493 shares of Series A Convertible Preferred Stock into 339,264 shares of common stock. As of March 31, 2021 and December 31, 2020, there were 1,147 and 395,640 shares of Series A Convertible Preferred Stock outstanding, respectively. Common Stock The Company has been authorized to issue 2,000,000,000 shares of common stock, $0.086 par value. Each share of issued and outstanding common stock shall entitle 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 corporation upon liquidation or dissolution. In February 2021, the Company issued 2,070,000 shares of common stock through a stock offering for the purpose of raising capital. The Company received gross proceeds of $12,420,000 for the issuance of these common shares. In February 2021, Reliance Global Holdings, LLC, a related party, converted $3,800,000 of outstanding debt into 633,333 shares of common stock. The conversion considered the fair market value of the stock on the day of conversion of $6.00 for total shares issued as a result of 633,333. Stock Options During the year ended December 31, 2019, the Company adopted the Reliance Global Group, Inc. 2019 Equity Incentive Plan (the “Plan”) under which options exercisable for shares of common stock have been or may be granted to employees, directors, consultants, and service providers. A total of 700,000 shares of common stock are reserved for issuance under the Plan. At March 31, 2020 and December 31, 2020, there were 466,083 shares of common stock reserved for future awards under the Plan. The Company issues new shares of common stock from the shares reserved under the Plan upon exercise of options. The Plan is administered by the Board of Directors (the “Board”). The Board is authorized to select from among eligible employees, directors, and service providers, those individuals to whom 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 Board is also authorized to prescribe, amend, and rescind terms relating to options granted under the Plan. Generally, the interpretation and construction of any provision of the Plan or any options granted hereunder is within the discretion of the Board. The Plan provides that options may or may not be Incentive Stock Options (ISOs) within the meaning of Section 422 of the Internal Revenue Code. Only employees of the Company are eligible to receive ISOs, while employees, non-employee directors, consultants, and service providers are eligible to receive options which are not ISOs, i.e. “Non-Statutory Stock Options.” The options granted by the Board in connection with its adoption of the Plan were Non-Statutory Stock Options. The fair value of each option granted is estimated on the grant date using the Black-Scholes option pricing model or the value of the services provided, whichever is more readily determinable. The Black-Scholes option pricing model takes into account, as of the grant date, the exercise price and expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock and the risk-free interest rate for the term of the option. The following is a summary of the stock options granted, forfeited or expired, and exercised under the Plan for the three months ended March 31, 2021: Options Weighted Weighted Aggregate Outstanding at December 31, 2020 233,917 $ 15.43 3.63 $ - Granted - - - - Forfeited or expired - - - - Exercised - - - - Outstanding at March 31, 2021 233,917 $ 15.22 3.38 $ - The following is a summary of the stock options granted, forfeited or expired, and exercised under the Plan for the three months ended March 31, 2020: Options Weighted Average Weighted Aggregate Outstanding at December 31, 2019 229,833 $ 15.43 4.62 $ 2,995,640 Granted 23,333 33.43 4.28 - Forfeited or expired - - - - Exercised - - - - Outstanding at March 31, 2020 253,166 $ 17.14 4.42 $ 2,558,300 The following is a summary of the Company’s non-vested stock options as of March 31, 2021, and changes during the three months ended March 31, 2021: Options Weighted Average Weighted Average Remaining Contractual Life (Years) Non-vested at December 31, 2020 159,542 $ 13.39 2.53 Granted - - - Vested - - - Forfeited or expired - - - Non-vested at March 31, 2021 159,542 $ 14.87 2.34 The following is a summary of the Company’s non-vested stock options as of March 31, 2020, and changes during the three months ended March 31, 2020: Options Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life (Years) Non-vested at December 31, 2019 212,333 $ 15.43 4.30 Granted 23,333 33.43 4.98 Vested (17,500 ) 17.14 3.96 Forfeited or expired - - - Non-vested at March 31, 2020 218,166 $ 17.14 3.88 During the three months ended March 31, 2021, the Board did not approved any options to be issued pursuant to the Plan. During the three months ended March 31, 2020, the Board approved options to be issued pursuant to the Plan to a certain current employee, during the period, totaling 23,333 shares. These options have been granted with an exercise price greater than the market value of the common stock on the date of grant and have a contractual term of 5 years. The options vest ratably over a 4-year period through February 2024 and remain subject to forfeiture if vesting conditions are not met. Compensation cost is recognized on a straight-line basis over the vesting period or requisite service period. Subsequent to March 31, 2020 the employee was terminated and the options were forfeited. The Company determined that the options granted had a total fair value for the period ending on March 31, 2020 of $3,967,480 which will be amortized in future periods through November 2023. During the three months ending March 31, 2020, the Company recognized $394,719 of compensation expense relating to the stock options granted to employees, directors, and consultants. As of March 31, 2020, unrecognized compensation expense totaled $2,525,385 which will be recognized on a straight-line basis over the vesting period or requisite service period through November 2023. The intrinsic value is calculated as the difference between the market value and the exercise price of the shares on March 31, 2020. The market values as of March 31, 2020 was $17.14 based on the closing bid price for March 31, 2020. As of March 31, 2021 the Company determined that the options granted had a total fair value of $3,386,156. During the three months ended March 31, 2021, the Company recognized $232,684 of compensation expense relating to the stock options granted to employees, directors, and consultants. As of March 31, 2021, unrecognized compensation expense totaled $801,698. The intrinsic value is calculated as the difference between the market value and the exercise price of the shares on March 31, 2021. The market values as of March 31, 2021 was $4.36 based on the closing bid price for March 31, 2021. The Company estimated the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-pricing models requires the Company to make predictive assumptions regarding future stock price volatility, recipient exercise behavior, and dividend yield. The Company estimated the future stock price volatility using the historical volatility over the expected term of the option. The expected term of the options was computed by taking the mid-point between the vesting date and expiration date. The following assumptions were used in the Black-Scholes option-pricing model: Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 Exercise price $0.16 - $0.26 $ 0.39 Expected term 3.25 to 3.75 years 3.75 years Risk-free interest rate 0.38% - 2.43 % 0.38 % Estimated volatility 293.07% - 517.13 % 318.00 % Expected dividend - - Option price at valuation date $0.12 - $0.31 $ 0.31 Warrants As a part of the Company’s offering, the Company issued 2,070,000 Series A Warrants. These warrants are classified as equity warrants because of provisions, pursuant to the warrant agreement, that permit the holder obtain a fixed number of shares for a fixed monetary amount. The warrants are standalone equity securities that are transferable without the Company’s consent or knowledge. The warrants were recorded at a value per the offering of $0.01. The warrants may be exercised at any point from the effective date until the 5 year anniversary of issuance and are not subject to standard anti-dilution provisions. The Series A Warrants are exercisable at a per share exercise price equal to 110% of the public offering price of one share of common stock and accompanying Series A Warrant, $6.00. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | NOTE 11. EARNINGS (LOSS) PER SHARE 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. Accordingly, the outstanding Series A Convertible Preferred Stock is considered anti-dilutive in which 100,000 and 395,640 were issued and outstanding at March 31, 2021 and 2020, respectively. Series A Convertible Preferred Stock is convertible into common stock on a 10 for 1 basis. The outstanding stock options are considered anti-dilutive in which 233,917 and 253,170 were issued and outstanding at March 31, 2021 and 2020, respectively. The calculations of basic and diluted EPS, are as follows: March 31, 2021 March 31, 2020 Basic and diluted loss per common share: Net loss $ (641,328 ) $ (979,798 ) Basic weighted average shares outstanding 7,542,377 2,916,041 Basic and diluted loss per common share: $ (0.09 ) $ (0.34 ) |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Leases | NOTE 12. LEASES Operating Leases The Company adopted ASU 2016-02, Leases, effective January 1, 2019. The standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease, initially measured at the present value of the lease payments. As a result, we recorded right-of-use assets aggregating $684,083 as of January 1, 2019, utilizing a discount rate of 7.45%. That amount consists of operating leases on buildings and office space. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. As of March 31, 2021 the Company reflected accumulated amortization of right of use assets of $382,299 related to these leases, resulting in a net asset balance of $383,867. In accordance with ASU 2016-02, the right-of-use assets are being amortized over the life of the underlying leases. As of March 31, 2021 the weighted average remaining lease term for the operating leases is 2.51 years. The weighted average discount rate for the operating leases is 7.45%. Future minimum lease payment under these operating leases consisted of the following: Year ending December 31, Operating Lease Obligations 2021 $ 139,244 2022 164,660 2023 85,440 2024 32,999 Thereafter - Total undiscounted operating lease payments 422,343 Less: Imputed interest (38,476 ) Present value of operating lease liabilities $ 383,867 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 13. 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, no legal contingencies are accrued as of March 31, 2021 and December 31, 2020. Litigation relating to the insurance brokerage industry is not uncommon. As such the Company, 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. We may have unforeseen risks as a result of the COVID-19 pandemic The spread of the coronavirus (COVID-19) outbreak in the United States has resulted in economic uncertainties which may negatively impact the Company’s business operations. While the disruption is expected to be temporary, there is uncertainty surrounding the duration and extent of the impact. The impact of the coronavirus outbreak on the financial statements cannot be reasonably estimated at this time. Adverse events such as health-related concerns about working in our offices, the inability to travel and other matters affecting the general work environment could harm our business and our business strategy. While we do not anticipate any material impact to our business operations as a result of the coronavirus, in the event of a major disruption caused by the outbreak of pandemic diseases such as coronavirus, we may lose the services of our employees or experience system interruptions, which could lead to diminishment of our business operations. Any of the foregoing could harm our business and delay the implementation of our business strategy and we cannot anticipate all the ways in which the current global health crisis and financial market conditions could adversely impact our business. Management is actively monitoring the global situation on its financial condition, liquidity, operations, industry and workforce. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 14. INCOME TAXES The Company did not have any material uncertain tax positions. The Company’s policy is to recognize interest and penalties accrued related to unrecognized benefits as a component income tax expense (benefit). The Company did not recognize any interest or penalties, nor did it have any interest or penalties accrued as of March 31, 2021 and December 31, 2020. The Company’s income tax provision for interim periods is generally determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising in the quarter. For the three months ended March 31, 2021, however, the Company calculates its income tax expense by applying to any pre-tax loss/income an effective tax rate determined as if the year to date period is the annual period. Using this method, for the three months ended March 31, 2021, its estimated annual effective tax rate from continuing operation was 0% and the resulting income tax expense was $0. We believe that, at this time, this method for determining the effective tax rate is more reliable than projecting an annual effective tax rate due to the uncertainty of estimating annual pre-tax loss/income under the impact of the COVID-19 pandemic. The Company’s estimated annual effective tax rate differs from the U.S. statutory tax rate primarily due to a valuation allowance recorded against the deferred tax assets. Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax basis of assets and liabilities using applicable tax rates. A valuation allowance is recorded against deferred tax assets if it is not more likely than not that some or all of the deferred tax assets will not be realized. Due to the uncertainty surrounding the realization of the deferred tax assets in future, the Company has recorded a full valuation allowance against its net deferred tax assets. The calculation of the Company’s tax liabilities also involves assessment of uncertainties in the application of complex tax laws and regulations in the applicable jurisdictions, and a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of technical merits. The Company’s policy is to record interest and penalties accrued related to unrecognized benefits as a component of income tax expense (benefit). The Company did not have any material uncertain tax positions, and there were no amounts for penalties or interest recorded as of March 31, 2021. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its positions. On March 11, 2021, The American Rescue Plan Act of 2021 (“ARPA Act”) was signed into law. We evaluated the applicable provisions of the ARPA Act and determined that there is no material impact expected to our financial results. We will continue to monitor future guidance issued regarding the ARPA Act to determine any future impacts to our financial results. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 15. RELATED PARTY TRANSACTIONS The Company has entered into a Loan Agreement with Reliance Global Holdings, LLC, a related party under common control. There is no term to the loan, and it bears no interest. Repayment will be made as the Company has business cash flows. The proceeds from the various loans were utilized to fund the USBA Acquisition, the EBS Acquisition, CCS Acquisition, SWMT Acquisition, FIS Acquisition, ABC Acquisition, and UIS Agency LLC. As of March 31, 2021 and December 31, 2020 the related party loan payable was $733,573 and $4,666,520 respectively. At March 31, 2021 and December 31, 2020, Reliance Holdings owned approximately 50.32% and 25.58%, respectively, of the common stock of the Company. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 16. SUBSEQUENT EVENTS On May 12, 2021, the Company acquired J.P. Kush and Associates, Inc., a premier healthcare insurance agency with operations in 10 states, headquartered in Troy, Michigan. The acquisition price was $1,950,000 which includes upfront cash provided by the Company in the amount of $1,900,000 and RELI stock of $50,000. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated and combined financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounting of Reliance Global Group, Inc., and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and noted thereto for the year ended December 31, 2020 included in the Company’s annual report on Form 10-K. |
Liquidity | Liquidity As of March 31, 2021, the Company’s reported cash balance was approximately $10,018,000, current assets were approximately $10,097,000 while current liabilities were approximately $2,033,000 including loan payable to related party of approximately $734,000. At March 31, 2021, the Company had a working capital of approximately $8,064,000. The Company had stockholders’ equity of $14,107,000 for the period ended March 31, 2021, the Company reported a net loss of approximately $641,000 and negative cash flows from operations of $647,000. The Company also completed an offering in February that raised net proceeds of approximately $10,496,000. Management therefore believes that the Company’s financial position causes no concern about the Company’s liquidity. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with 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 it estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. |
Cash | Cash Cash consists of checking accounts. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash includes cash pledged as collateral to secure obligations and/or all cash whose use is otherwise limited by contractual provisions. The reconciliation of cash and restricted cash reported within the applicable balance sheet that sum to the total of the same such amounts shown in the statement of cash flows is as follows: March 31, 2021 March 31, 2020 Cash $ 9,432,070 $ 232,629 Restricted cash 585,906 353,879 Total cash and restricted cash $ 10,017,976 $ 586,508 |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation, including assets acquired under capital leases or finance leases, are recorded over the shorter of the estimated useful life or the lease term of the applicable assets using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Maintenance and repairs are charged to expense as incurred. The estimated useful life of the Companies Property and Equipment is as follows: Useful Life (in years) Computer equipment and software 5 Office equipment and furniture 7 Leasehold improvements Shorter of the useful life or the lease term Software 3 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows: Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets; Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and Level 3 — Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk. The Company’s balance sheet includes certain financial instruments, including cash, notes receivables, accounts payable, notes payables and short and long-term debt. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. The carrying amounts of long-term debt approximate their fair value as the variable interest rates are based on a market index. |
Deferred Financing Costs | Deferred Financing Costs The Company has recorded deferred financing costs as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense using the straight-line method which approximates the interest rate method over the term of the related debt. As of March 31, 2021 and December 31, 2020, unamortized deferred financing costs were $180,590, and $186,312, respectively and are netted against the related debt. |
Business Combinations | Business Combinations The Company accounts for its business combinations using the acquisition method of accounting. Under the acquisition method, the assets acquired, the liabilities assumed, and the consideration transferred are recorded at the date of acquisition at their respective fair values. Definite-lived intangible assets are amortized over the expected life of the asset. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. |
Identifiable Intangible Assets, Net | Identifiable Intangible Assets, net Finite-lived intangible assets such as customer relationships assets, trademarks and tradenames are amortized over their estimated useful lives, generally on a straight-line basis for periods ranging from 3 to 20 years. Finite-lived intangible assets are reviewed for impairment or obsolescence whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of intangible assets is measured by a comparison of the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by that asset. If the asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the estimated fair value. No impairment was recognized during the periods presented. |
Goodwill and Other Indefinite-lived Intangibles | Goodwill and other indefinite-lived intangibles The Company records goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. Goodwill is assigned to a reporting unit on the acquisition date and tested for impairment at least annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. Similarly, indefinite-lived intangible assets other than goodwill, such as trade names, are tested annually or more frequently if indicated, for impairment. If impaired, intangible assets are written down to fair value based on the expected discounted cash flows. During the three months ended March 31, 2021 and 2020, the Company recorded no impairment of goodwill. |
Revenue Recognition | Revenue Recognition The Company’s revenue is primarily comprised of commission paid by health insurance carriers related to insurance plans that have been purchased by a member who used the Company’s service. The Company defines a member as an individual currently covered by an insurance plan, including individual and family, Medicare-related, small business and ancillary plans, for which the Company are entitled to receive compensation from an insurance carrier. The following table disaggregates the Company’s revenue by line of business, showing commissions earned: Three Months ended March 31, 2020 Medical/Life Property and Casualty Contingent commission Total Regular EBS 197,306 197,306 USBA 133,672 133,672 CCS/UIS 93,518 93,518 Montana 489,826 489,826 Fortman 349,226 188,372 537,598 Altruis 552,394 552,394 1,722,424 281,890 - 2,004,314 Three Months ended March 31, 2021 Medical/Life Property and Casualty Contingent commission Total Regular EBS 208,994 - 208,994 USBA 12,225 - 12,225 CCS/UIS - 88,818 88,818 Montana 535,116 - 535,116 Fortman 249,801 207,772 457,573 Altruis 993,602 - 993,602 1,999,738 296,590 - 2,296,328 The core principle of ASC 606 is to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. Accordingly, we recognize revenue for our services in accordance with the following five steps outlined in ASC 606: Identification of the contract, or contracts, with a customer Identification of the performance obligations in the contract Determination of the transaction price Allocation of the transaction price to the performance obligations in the contract Recognition of revenue when, or as, the Company satisfies a performance obligation For individual and family, Medicare supplement, small business and ancillary plans, the Company’s compensation is generally a percentage of the premium amount collected by the carrier during the period that a member maintains coverage under a plan (commissions) and, to a lesser extent, override commissions that health insurance carriers pays the Company for achieving certain objectives. Premium-based commissions are reported to the Company after the premiums are collected by the carrier, generally on a monthly basis. The Company generally continues to receive the commission payment from the relevant insurance carrier until the health insurance plan is cancelled or the Company otherwise does not remain the agent on the policy. The Company recognizes commission revenue for individual and family, Medicare Supplement, small business and ancillary plans when premiums are effective. The Company determines that there is persuasive evidence of an arrangement when the Company has a commission agreement with a health insurance carrier, a carrier reports to the Company that it has approved an application submitted through the Company’s platform, and the applicant starts making payments on the plan. The Company’s services are complete when a carrier has approved an application. The seller’s price is fixed or determinable and collectability is reasonably assured when commission amounts have been reported to the Company by a carrier. Commission revenue from insurance distribution and brokerage operations is recognized when all placement services have been provided, protection is afforded under the insurance policy, and the premium is known or can be reasonably estimated and is billable. In general, two types of billing practices occur as part of our agency contracts, which is direct bill and agency bill. In direct bill scenarios, the insurance carriers that underwrite the insurance policies directly bill and collect the premium for the policy without any involvement from the Company. Upon collection, a commission is then remitted from the insurance carrier to the Company. These commissions have not met the criteria for revenue recognition until the Company receives the commissions, as the Company does not have insight into policy acceptance and premium collections until the commission is received from the insurance carrier, representing that the insurance policy has been bound and therefore commissions have been earned by the Company. The second billing practice where the Company bills the policy holder and collects the premiums (“Agency Bill”) provides greater transparency by the Company into the acceptance of the policy and premium collection. As part of the Agency Bill process, the Company can, at times, net its commissions out of the premiums to be sent to the insurance carriers. For Agency Bill customers, the revenue recognition criteria are considered met when the Agency receives the premiums from the policy holder, with an allowance established against the revenue for policies that may not be bound by the insurance companies. All commission revenue is recorded net of any deductions for estimated commission adjustments due to lapses, policy cancellations, and revisions in coverage. Insurance commissions earned from carriers for life insurance products are recorded gross of amounts due to agents, with a corresponding commission expense for downstream agent commissions being recorded as commission expense within the condensed consolidated statements of operations. The Company earns additional revenue including contingent commissions, profit-sharing, override and bonuses based on meeting certain revenue or profit targets established periodically by the carriers (collectively the Contingent Commissions). The Contingent Commissions are earned when the Company achieves the targets established by the insurance carries. The insurance carriers notify the company when it has achieved the target. The Company recognizes revenue for any additional commissions at the time it is reasonably assured it will receive payment for these commissions, which is generally when the insurance carrier notifies the Company that it has earned the commission typically early in the following fiscal year. |
General and Administrative | General and Administrative General and administrative expenses primarily consist of personnel costs for the Company’s administrative functions, professional service fees, office rent, all employee travel expenses, and other general costs. |
Marketing and Advertising | Marketing and Advertising The Company’s direct channel expenses primarily consist of costs for e-mail marketing and newspaper advertisements. The Company’s online advertising channel expense primarily consist of social media ads. Advertising costs for both direct and online channels are expensed as incurred. |
Stock-Based Compensation | Stock-Based Compensation In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. This ASU, which the Company adopted as of January 1, 2019, did not have a material effect on the Company’s consolidated financial statements. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, based on the terms of the awards. The fair value of the stock-based payments to nonemployees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term. As the Reliance Global Group, Inc. Equity Incentive Plan 2019 was adopted in January of 2019, the Company lacks the historical basis to estimate forfeitures and will recognize forfeitures as they occur. |
Leases | Leases On January 1, 2019, the Company adopted Accounting Standards Codification Topic 842, “Leases” (“ASC 842”) to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to previous accounting guidance. The Company adopted ASC 842 utilizing the transition practical expedient added by the Financial Accounting Standards Board (“FASB”), which eliminates the requirement that entities apply the new lease standard to the comparative periods presented in the year of adoption. The Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line items right-of-use asset, lease obligation, current, and lease obligation, long-term in the consolidated balance sheet. Right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the condensed consolidated statement of operations. The Company determines the lease term by agreement with lessor. |
Income Taxes | Income Taxes The Company recognizes deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. In evaluating its ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence, including the expected reversals of taxable temporary differences, projected future taxable income, taxable income available via carryback to prior years, tax planning strategies, and results of recent operations. The Company assesses the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax assets and liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized. |
Seasonality | Seasonality A greater number of the Company’s Medicare-related health insurance plans are sold in the fourth quarter during the Medicare annual enrollment period when Medicare-eligible individuals are permitted to change their Medicare Advantage. The majority of the Company’s individual and family health insurance plans are sold in the annual open enrollment period as defined under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act. Individuals and families generally are not able to purchase individual and family health insurance outside of these open enrollment periods, unless they qualify for a special enrollment period as a result of certain qualifying events, such as losing employer-sponsored health insurance or moving to another state. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (“ASU 2016-13”), which requires the measurement of expected credit losses for financial instruments carried at amortized cost, such as accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financing Instruments—Credit Losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. On November 15, 2019, the FASB delayed the effective date of FASB ASC Topic 326 for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition. The Company does not currently believe the adoption of this standard will have a significant impact on its financial statements, given its history of minimal bad debt expense relating to trade accounts receivable. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the general principles in Topic 740 and simplifies other areas of the existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted this pronouncement January 1, 2021. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Restricted Cash | The reconciliation of cash and restricted cash reported within the applicable balance sheet that sum to the total of the same such amounts shown in the statement of cash flows is as follows: March 31, 2021 March 31, 2020 Cash $ 9,432,070 $ 232,629 Restricted cash 585,906 353,879 Total cash and restricted cash $ 10,017,976 $ 586,508 |
Schedule of Estimated Useful Life of Property Plant and Equipment | The estimated useful life of the Companies Property and Equipment is as follows: Useful Life (in years) Computer equipment and software 5 Office equipment and furniture 7 Leasehold improvements Shorter of the useful life or the lease term Software 3 |
Schedule of Disaggregation Revenue | The following table disaggregates the Company’s revenue by line of business, showing commissions earned: Three Months ended March 31, 2020 Medical/Life Property and Casualty Contingent commission Total Regular EBS 197,306 197,306 USBA 133,672 133,672 CCS/UIS 93,518 93,518 Montana 489,826 489,826 Fortman 349,226 188,372 537,598 Altruis 552,394 552,394 1,722,424 281,890 - 2,004,314 Three Months ended March 31, 2021 Medical/Life Property and Casualty Contingent commission Total Regular EBS 208,994 - 208,994 USBA 12,225 - 12,225 CCS/UIS - 88,818 88,818 Montana 535,116 - 535,116 Fortman 249,801 207,772 457,573 Altruis 993,602 - 993,602 1,999,738 296,590 - 2,296,328 |
Strategic Investments and Bus_2
Strategic Investments and Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Summary of Business Acquired and Revenue Recognized | The following table lists our activity in 2021 by number of agents, approximate policies issued and revenue written: Agency Name Number of Agents Number of Aggregate Revenue Recognized March 31 2021 USBA and EBS 6 5,173 $ 221,219 UIS Agency, LLC / Commercial Solutions 2 48 $ 88,818 Southwestern Montana 13 1,212 $ 535,116 Fortman Insurance 14 3,258 $ 457,573 Altruis 8 6,298 $ 993,602 The following table lists our activity in 2020 by number of agents, approximate policies issued and revenue written: Agency Name Number of Agents Number of Aggregate USBA and EBS 6 3,278 $ 330,978 Commercial Solutions 2 32 $ 93,518 Southwestern Montana 13 1,031 $ 489,826 Fortman Insurance 14 3,110 $ 537,598 Altruis 8 5,026 $ 552,394 |
Schedule of Allocation of Purchase Price | The allocation of the purchase price in connection with the UIS Acquisition was calculated as follows: Description Fair Value Weighted Average Cash $ 5,772 Trade name and trademarks 35,600 5 Customer relationships 100,000 10 Non-competition agreements 25,500 5 Goodwill 716,462 Indefinite |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following: Estimated Useful March 31, 2021 December 31, 2020 Computer equipment and software 5 $ 33,774 $ 33,774 Office equipment and furniture 7 36,573 36,573 Leasehold Improvements Shorter of the useful life or the lease term 56,631 56,631 Software 3 562,327 562,327 Property and equipment, gross 689,305 689,305 Less: Accumulated depreciation and amortization (362,877 ) (313,358 ) Property and equipment, net $ 326,428 $ 375,947 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Impairment of Goodwill | As of March 31, 2021 and December 31, 2020, the Company’s goodwill balance was $9,265,070. Goodwill December 31, 2019 $ 8,548,608 Goodwill recognized in connection with acquisition on August 17, 2020 716,462 December 31, 2020 $ 9,265,070 March 31, 2021 $ 9,265,070 |
Schedule of Intangible Assets and Weighted-Average Remaining Amortization Period | The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of March 31, 2021: Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade name and trademarks 3.8 $ 1,087,760 $ (360,101 ) $ 727,659 Customer relationships 8.2 3,686,290 (720,424 ) 2,965,867 Non-competition agreements 3.2 2,677,010 (968,455 ) 1,708,556 $ 7,451,060 $ (2,048,979 ) $ 5,402,082 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, 2020: Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade name and trademarks 2.6 $ 1,087,760 $ (307,163 ) $ 780,597 Customer relationships 7.6 3,686,290 (623,649 ) 3,062,641 Non-competition agreements 2.6 2,677,010 (834,598 ) 1,842,412 $ 7,451,060 $ (1,765,410 ) $ 5,685,650 |
Schedule of Amortization Expense of Acquired Intangibles Assets | The following reflects the expected amortization expense of acquired intangible assets as of March 31, 2021, for each of the following five years and thereafter: Years ending December 31, Amortization Expense 2021 $ 1,117,013 2022 1,124,024 2023 1,101,669 2024 558,187 2025 371,973 Thereafter 1,129,216 Total $ 5,402,082 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | Significant components of accounts payable and accrued liabilities were as follows: March 31, 2021 December 31, 2020 Accounts payable $ 186,653 $ 980,943 Accrued expenses 19,181 35,022 Accrued credit card payables and other liabilities 44,243 127,617 $ 250,077 $ 1,143,582 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | The composition of the long-term debt follows: March 31, 2021 December 31, 2020 Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, net of deferred financing costs of $16,270 and $16,825 as of March 31, 2021 and December 31, 2020, respectively $ 528,616 $ 542,760 Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, net of deferred financing costs of $19,542 and $20,181 as of March 31, 2021 and December 31, 2020, respectively 854,900 877,550 Oak Street Funding LLC Term Loan for the acquisition of SWMT, net of deferred financing costs of $12,359 and $13,080 as of March 31, 2021 and December 31, 2020, respectively 956,671 979,966 Oak Street Funding LLC Term Loan for the acquisition of FIS, net of deferred financing costs of $45,569 and $47,023 as of March 31, 2021 and December 31, 2020, respectively 2,406,843 2,465,410 Oak Street Funding LLC Term Loan for the acquisition of ABC, net of deferred financing costs of $51,850 and $54,023 as of March 31, 2021 and December 31, 2020, respectively 3,893,978 3,983,594 8,641,008 8,849,280 Less: current portion (963,450 ) (963,450 ) Long-term debt $ 7,677,558 $ 7,885,830 |
Schedule of Cumulative Maturities of Long-Term Obligations | Aggregated cumulative maturities of long-term obligations (including the Term Loan and the Facility), excluding deferred financing costs, as of March 31, 2021 are: Period ending December 31, Maturities of Long-Term Debt 2021 $ 963,450 2022 963,450 2023 963,450 2024 963,450 2025 963,450 Thereafter 4,032,031 Total $ 8,849,281 |
Significant Customers (Tables)
Significant Customers (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Schedule of Concentrations of Revenues | Carriers representing 10% or more of total revenue are presented in the table below: For the three months ended March 31, For the period ended December 31, 2021 2020 2020 2019 BlueCross BlueShield 22 % 25 % 25 % 26 % Priority Health 35 % 24 % 26 % 20 % |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Summary of Stock Options | The following is a summary of the stock options granted, forfeited or expired, and exercised under the Plan for the three months ended March 31, 2021: Options Weighted Weighted Aggregate Outstanding at December 31, 2020 233,917 $ 15.43 3.63 $ - Granted - - - - Forfeited or expired - - - - Exercised - - - - Outstanding at March 31, 2021 233,917 $ 15.22 3.38 $ - The following is a summary of the stock options granted, forfeited or expired, and exercised under the Plan for the three months ended March 31, 2020: Options Weighted Average Weighted Aggregate Outstanding at December 31, 2019 229,833 $ 15.43 4.62 $ 2,995,640 Granted 23,333 33.43 4.28 - Forfeited or expired - - - - Exercised - - - - Outstanding at March 31, 2020 253,166 $ 17.14 4.42 $ 2,558,300 |
Summary of Non-Vested Stock Options | The following is a summary of the Company’s non-vested stock options as of March 31, 2021, and changes during the three months ended March 31, 2021: Options Weighted Average Weighted Average Remaining Contractual Life (Years) Non-vested at December 31, 2020 159,542 $ 13.39 2.53 Granted - - - Vested - - - Forfeited or expired - - - Non-vested at March 31, 2021 159,542 $ 14.87 2.34 The following is a summary of the Company’s non-vested stock options as of March 31, 2020, and changes during the three months ended March 31, 2020: Options Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life (Years) Non-vested at December 31, 2019 212,333 $ 15.43 4.30 Granted 23,333 33.43 4.98 Vested (17,500 ) 17.14 3.96 Forfeited or expired - - - Non-vested at March 31, 2020 218,166 $ 17.14 3.88 |
Schedule of Assumption of Black-Scholes Option Pricing Model | The following assumptions were used in the Black-Scholes option-pricing model: Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 Exercise price $0.16 - $0.26 $ 0.39 Expected term 3.25 to 3.75 years 3.75 years Risk-free interest rate 0.38% - 2.43 % 0.38 % Estimated volatility 293.07% - 517.13 % 318.00 % Expected dividend - - Option price at valuation date $0.12 - $0.31 $ 0.31 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Calculations of Basic and Diluted EPS | The calculations of basic and diluted EPS, are as follows: March 31, 2021 March 31, 2020 Basic and diluted loss per common share: Net loss $ (641,328 ) $ (979,798 ) Basic weighted average shares outstanding 7,542,377 2,916,041 Basic and diluted loss per common share: $ (0.09 ) $ (0.34 ) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payment | Future minimum lease payment under these operating leases consisted of the following: Year ending December 31, Operating Lease Obligations 2021 $ 139,244 2022 164,660 2023 85,440 2024 32,999 Thereafter - Total undiscounted operating lease payments 422,343 Less: Imputed interest (38,476 ) Present value of operating lease liabilities $ 383,867 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Feb. 28, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash | $ 10,018,000 | $ 530,000 | |||
Current assets | 10,096,658 | 810,090 | |||
Current liabilities | 2,032,568 | 6,884,072 | |||
Loan payable to related party | 588,369 | 4,523,045 | |||
Working capital deficiency | 8,064,000 | 6,074,000 | |||
Stockholder's equity | 14,107,296 | $ 1,057,245 | 114,387 | $ 642,324 | |
Net loss | (641,328) | (979,798) | |||
Net cash used in operating activities | (646,602) | (223,696) | |||
Net proceeds from offering | $ 12,420,000 | 10,481,938 | 1,000,000 | ||
Unamortized deferred financing costs | 180,590 | $ 186,312 | |||
Goodwill impairment | |||||
Minimum [Member] | |||||
Estimated useful lives of intangible assets | 3 years | ||||
Maximum [Member] | |||||
Estimated useful lives of intangible assets | 20 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Cash and Restricted Cash (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Accounting Policies [Abstract] | |||
Cash | $ 9,432,070 | $ 45,213 | $ 232,629 |
Restricted cash | 585,906 | $ 484,368 | 353,879 |
Total cash and restricted cash | $ 10,017,976 | $ 586,508 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Estimated Useful Life of Property Plant and Equipment (Details) | 3 Months Ended | 27 Months Ended |
Mar. 31, 2021 | Mar. 31, 2021 | |
Computer Equipment and Software [Member] | ||
Estimated useful life | 5 years | 5 years |
Office Equipment and Furniture [Member] | ||
Estimated useful life | 7 years | |
Leasehold Improvements [Member] | ||
Estimated useful life description | Shorter of the useful life or the lease term | |
Software [Member] | ||
Estimated useful life | 3 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Disaggregation Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue | $ 2,296,328 | $ 2,004,314 |
Employee Benefits, Solutions, LLC [Member] | ||
Revenue | 208,994 | 197,306 |
US Benefits Alliance, LLC [Member] | ||
Revenue | 12,225 | 133,672 |
Commercial Coverage Solutions LLC [Member] | ||
Revenue | 88,818 | 93,518 |
Southwestern Montana Financial Center, Inc. [Member] | ||
Revenue | 535,116 | 489,826 |
Fortman Insurance Services, LLC [Member] | ||
Revenue | 457,573 | 537,598 |
Altruis Benefits Consulting, LLC [Member] | ||
Revenue | 993,602 | 552,394 |
Contingent Commision [Member] | ||
Revenue | ||
Contingent Commision [Member] | Employee Benefits, Solutions, LLC [Member] | ||
Revenue | ||
Contingent Commision [Member] | US Benefits Alliance, LLC [Member] | ||
Revenue | ||
Contingent Commision [Member] | Commercial Coverage Solutions LLC [Member] | ||
Revenue | ||
Contingent Commision [Member] | Southwestern Montana Financial Center, Inc. [Member] | ||
Revenue | ||
Contingent Commision [Member] | Fortman Insurance Services, LLC [Member] | ||
Revenue | ||
Contingent Commision [Member] | Altruis Benefits Consulting, LLC [Member] | ||
Revenue | ||
Medical/Life [Member] | Regular [Member] | ||
Revenue | 1,999,738 | 1,722,424 |
Medical/Life [Member] | Regular [Member] | Employee Benefits, Solutions, LLC [Member] | ||
Revenue | 208,994 | 197,306 |
Medical/Life [Member] | Regular [Member] | US Benefits Alliance, LLC [Member] | ||
Revenue | 12,225 | 133,672 |
Medical/Life [Member] | Regular [Member] | Commercial Coverage Solutions LLC [Member] | ||
Revenue | ||
Medical/Life [Member] | Regular [Member] | Southwestern Montana Financial Center, Inc. [Member] | ||
Revenue | 535,116 | 489,826 |
Medical/Life [Member] | Regular [Member] | Fortman Insurance Services, LLC [Member] | ||
Revenue | 249,801 | 349,226 |
Medical/Life [Member] | Regular [Member] | Altruis Benefits Consulting, LLC [Member] | ||
Revenue | 993,602 | 552,394 |
Property and Casualty [Member] | Regular [Member] | ||
Revenue | 296,590 | 281,890 |
Property and Casualty [Member] | Regular [Member] | Employee Benefits, Solutions, LLC [Member] | ||
Revenue | ||
Property and Casualty [Member] | Regular [Member] | US Benefits Alliance, LLC [Member] | ||
Revenue | ||
Property and Casualty [Member] | Regular [Member] | Commercial Coverage Solutions LLC [Member] | ||
Revenue | 88,818 | 93,518 |
Property and Casualty [Member] | Regular [Member] | Southwestern Montana Financial Center, Inc. [Member] | ||
Revenue | ||
Property and Casualty [Member] | Regular [Member] | Fortman Insurance Services, LLC [Member] | ||
Revenue | 207,772 | 188,372 |
Property and Casualty [Member] | Regular [Member] | Altruis Benefits Consulting, LLC [Member] | ||
Revenue |
Strategic Investments and Bus_3
Strategic Investments and Business Combinations (Details Narrative) - USD ($) | Aug. 17, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Aug. 17, 2019 |
Shares issued during acquisition, value | $ 1,000,000 | |||||
Goodwill | $ 9,265,070 | $ 9,265,070 | $ 8,548,608 | |||
Revenue from the acquired business | 2,296,328 | 2,004,314 | ||||
UIS Agency, LLC [Member] | ||||||
Total purchase price | $ 883,334 | |||||
Purchase price paid in cash | 601,696 | |||||
Shares issued during acquisition, value | 200,000 | |||||
Cash | 500,000 | |||||
Earn-out liability | $ 81,638 | $ 81,638 | ||||
Goodwill | 716,462 | $ 716,462 | ||||
Acquisition costs | 33,344 | |||||
Revenue from the acquired business | $ 173,430 | |||||
UIS Agency, LLC [Member] | Minimum [Member] | ||||||
Earn-out liability | $ 450,000 |
Strategic Investments and Bus_4
Strategic Investments and Business Combinations - Summary of Business Acquired and Revenue Recognized (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021USD ($)AgentPolicy | Dec. 31, 2020USD ($)AgentPolicy | |
USBA and EBS [Member] | ||
Number of Agents | Agent | 6 | 6 |
Number of Policies issued | Policy | 5,173 | 3,278 |
Aggregate Revenue Recognized | $ | $ 221,219 | $ 330,978 |
UIS Agency, LLC / Commercial Solutions [Member] | ||
Number of Agents | Agent | 2 | 2 |
Number of Policies issued | Policy | 48 | 32 |
Aggregate Revenue Recognized | $ | $ 88,818 | $ 93,518 |
Southwestern Montana [Member] | ||
Number of Agents | Agent | 13 | 13 |
Number of Policies issued | Policy | 1,212 | 1,031 |
Aggregate Revenue Recognized | $ | $ 535,116 | $ 489,826 |
Fortman Insurance [Member] | ||
Number of Agents | Agent | 14 | 14 |
Number of Policies issued | Policy | 3,258 | 3,110 |
Aggregate Revenue Recognized | $ | $ 457,573 | $ 537,598 |
Altruis [Member] | ||
Number of Agents | Agent | 8 | 8 |
Number of Policies issued | Policy | 6,298 | 5,026 |
Aggregate Revenue Recognized | $ | $ 993,602 | $ 552,394 |
Strategic Investments and Bus_5
Strategic Investments and Business Combinations - Schedule of Allocation of Purchase Price (Details) - USD ($) | Aug. 17, 2019 | Mar. 31, 2021 | Dec. 31, 2020 | Aug. 17, 2020 | Dec. 31, 2019 |
Goodwill | $ 9,265,070 | $ 9,265,070 | $ 8,548,608 | ||
Customer Relationships [Member] | |||||
Weighted Average Useful Life (Years) | 8 years 2 months 12 days | 7 years 7 months 6 days | |||
UIS Agency, LLC [Member] | |||||
Cash | $ 5,772 | ||||
Trade name and trademarks | 35,600 | ||||
Customer relationships | 100,000 | ||||
Non-competition agreements | 25,500 | ||||
Goodwill | 716,462 | $ 716,462 | |||
Purchase consideration allocated | $ 883,334 | ||||
UIS Agency, LLC [Member] | TradeNameAndTrademarksMember | |||||
Weighted Average Useful Life (Years) | 5 years | ||||
UIS Agency, LLC [Member] | Customer Relationships [Member] | |||||
Weighted Average Useful Life (Years) | 10 years | ||||
UIS Agency, LLC [Member] | Non-competition Agreements [Member] | |||||
Weighted Average Useful Life (Years) | 5 years | ||||
UIS Agency, LLC [Member] | Goodwill [Member] | |||||
Weighted Average Useful Life (Years) description | Indefinite |
Investment in NSURE, Inc. (Deta
Investment in NSURE, Inc. (Details Narrative) - USD ($) | Feb. 19, 2020 | Feb. 10, 2020 | Feb. 28, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Investments | $ 1,350,000 | $ 1,350,000 | ||||
Number of shares of common stock, shares | 2,070,000 | |||||
Proceeds from issuance of common stock | $ 12,420,000 | 10,481,938 | $ 1,000,000 | |||
NSURE, Inc. [Member] | Third-Party Individual [Member] | ||||||
Number of shares of common stock, shares | 46,667 | |||||
Proceeds from issuance of common stock | $ 1,000,000 | |||||
Securities Purchase Agreement [Member] | NSURE, Inc. [Member] | First Tranche [Member] | ||||||
Investments | $ 1,000,000 | |||||
Securities Purchase Agreement [Member] | NSURE, Inc. [Member] | Second Tranche [Member] | ||||||
Investments | 3,000,000 | |||||
Securities Purchase Agreement [Member] | NSURE, Inc. [Member] | Third Tranche [Member] | ||||||
Investments | $ 16,000,000 | |||||
Securities Purchase Agreement [Member] | NSURE, Inc. [Member] | Class A Common Stock [Member] | ||||||
Investments | $ 1,350,000 | $ 1,350,000 | ||||
Number of shares of common stock, shares | 5,837,462 | |||||
Securities Purchase Agreement [Member] | NSURE, Inc. [Member] | Class A Common Stock [Member] | First Tranche [Member] | ||||||
Number of shares of common stock, shares | 291,873 | |||||
Securities Purchase Agreement [Member] | NSURE, Inc. [Member] | Maximum [Member] | ||||||
Investments | $ 20,000,000 | |||||
Ownership interest | 35.00% |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 49,519 | $ 51,825 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 3 Months Ended | 27 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | |
Property and equipment, gross | $ 689,305 | $ 689,305 | $ 689,305 |
Less: Accumulated depreciation and amortization | (362,877) | (362,877) | (313,358) |
Property and equipment, net | $ 326,428 | $ 326,428 | 375,947 |
Computer Equipment and Software [Member] | |||
Property and equipment, useful life | 5 years | 5 years | |
Property and equipment, gross | $ 33,774 | $ 33,774 | 33,774 |
Office Equipment and Furniture [Member] | |||
Property and equipment, useful life | 7 years | ||
Property and equipment, gross | $ 36,573 | 36,573 | 36,573 |
Leasehold Improvements [Member] | |||
Property and equipment, useful lives | Shorter of the useful life or the lease term | ||
Property and equipment, gross | $ 56,631 | 56,631 | 56,631 |
Software [Member] | |||
Property and equipment, useful life | 3 years | ||
Property and equipment, gross | $ 562,327 | $ 562,327 | $ 562,327 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 283,569 | $ 277,266 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Schedule of Impairment of Goodwill (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning balance | $ 9,265,070 | $ 8,548,608 |
Goodwill recognized in connection with acquisition | 716,462 | |
Goodwill, ending balance | $ 9,265,070 | $ 9,265,070 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Schedule of Intangible Assets and Weighted-Average Remaining Amortization Period (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Gross Carrying Amount | $ 7,451,060 | $ 7,451,060 |
Accumulated Amortization | (2,048,979) | (1,765,410) |
Intangibles, net | $ 5,402,082 | $ 5,685,650 |
Trade Name and Trademarks [Member] | ||
Finite-lived intangible asset, useful life | 3 years 9 months 18 days | 2 years 7 months 6 days |
Gross Carrying Amount | $ 1,087,760 | $ 1,087,760 |
Accumulated Amortization | (360,101) | (307,163) |
Intangibles, net | $ 727,659 | $ 780,597 |
Customer Relationships [Member] | ||
Finite-lived intangible asset, useful life | 8 years 2 months 12 days | 7 years 7 months 6 days |
Gross Carrying Amount | $ 3,686,290 | $ 3,686,290 |
Accumulated Amortization | (720,424) | (623,649) |
Intangibles, net | $ 2,965,867 | $ 3,062,641 |
Non-competition Agreements [Member] | ||
Finite-lived intangible asset, useful life | 3 years 2 months 12 days | 2 years 7 months 6 days |
Gross Carrying Amount | $ 2,677,010 | $ 2,677,010 |
Accumulated Amortization | (968,455) | (834,598) |
Intangibles, net | $ 1,708,556 | $ 1,842,412 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Schedule of Amortization Expense of Acquired Intangibles Assets (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 | $ 1,117,013 | |
2022 | 1,124,024 | |
2023 | 1,101,669 | |
2024 | 558,187 | |
2025 | 371,973 | |
Thereafter | 1,129,216 | |
Intangibles, net | $ 5,402,082 | $ 5,685,650 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 186,653 | $ 980,943 |
Accrued expenses | 19,181 | 35,022 |
Accrued credit card payables and other liabilities | 44,243 | 127,617 |
Accounts payable and accrued liabilities | $ 250,077 | $ 1,143,582 |
Long-Term Debt (Details Narrati
Long-Term Debt (Details Narrative) - USD ($) | Apr. 04, 2020 | Dec. 07, 2018 | Aug. 02, 2018 | Mar. 31, 2021 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2018 |
Senior Secured Amortizing Credit Facility [Member] | |||||||
Debt issuance costs | $ 19,542 | $ 20,181 | |||||
Loan Agreement [Member] | First Financial Bank [Member] | |||||||
Principal and interest | $ 37,913 | ||||||
Repayment of loans | 165,000 | ||||||
Loan Agreement [Member] | First Financial Bank [Member] | Paycheck Protection Program [Member] | |||||||
Debt instrument, interest rate | 1.00% | ||||||
Loans | $ 673,700 | ||||||
Debt instrument term | 2 years | ||||||
Employee Benefits, Solutions, LLC, and US Benefits Alliance [Member] | |||||||
Debt issuance costs | $ 16,270 | $ 16,825 | |||||
Employee Benefits, Solutions, LLC, and US Benefits Alliance [Member] | Credit Agreement [Member] | Oak Street Funding LLC [Member] | |||||||
Borrowings | $ 750,000 | ||||||
Debt description | Interest accrues at 5.00% on the basis of a 360-day year, maturing 120 months from the Amortization Date (September 25, 2018). | ||||||
Debt instrument, interest rate | 5.00% | ||||||
Debt issuance costs | $ 22,188 | ||||||
Commercial Coverage Solutions, LLC [Member] | Oak Street Funding LLC [Member] | Senior Secured Amortizing Credit Facility [Member] | |||||||
Borrowings | $ 1,025,000 | ||||||
Debt description | The borrowing rate under the Facility is a variable rate equal to Prime +1.50% and matures 10 years from the closing date. | ||||||
Debt issuance costs | $ 25,506 | ||||||
Debt instrument term | 10 years | ||||||
Commercial Coverage Solutions, LLC [Member] | Oak Street Funding LLC [Member] | Term Loan [Member] | |||||||
Borrowings | $ 7,912,000 | ||||||
Debt description | The borrowing rates under the Facility is a variable rate equal to Prime + 2.00% and matures 10 years from the closing date. | ||||||
Debt issuance costs | $ 181,125 | ||||||
Debt instrument term | 10 years | ||||||
Commercial Coverage Solutions, LLC [Member] | Oak Street Funding LLC [Member] | Prime Plus [Member] | Senior Secured Amortizing Credit Facility [Member] | |||||||
Debt instrument, interest rate | 1.50% | 2.00% |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Long-term debt total | $ 8,641,008 | $ 8,849,280 |
Less: current portion | (963,450) | (963,450) |
Long-term debt | 7,677,558 | 7,885,830 |
Senior Secured Amortizing Credit Facility [Member] | ||
Long-term debt total | 854,900 | 877,550 |
Employee Benefits, Solutions, LLC, and US Benefits Alliance [Member] | ||
Long-term debt total | 528,616 | 542,760 |
Southwestern Montana Financial Center, Inc. [Member] | ||
Long-term debt total | 956,671 | 979,966 |
Fortman Insurance Agency, LLC [Member] | ||
Long-term debt total | 2,406,843 | 2,465,410 |
Altruis Benefits Consulting, LLC [Member] | ||
Long-term debt total | $ 3,893,978 | $ 3,983,594 |
Long-Term Debt - Schedule of _2
Long-Term Debt - Schedule of Long-Term Debt (Details) (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Senior Secured Amortizing Credit Facility [Member] | ||
Net of deferred financing costs | $ 19,542 | $ 20,181 |
Employee Benefits, Solutions, LLC, and US Benefits Alliance [Member] | ||
Net of deferred financing costs | 16,270 | 16,825 |
Southwestern Montana Financial Center, Inc. [Member] | ||
Net of deferred financing costs | 12,359 | 13,080 |
Fortman Insurance Agency, LLC [Member] | ||
Net of deferred financing costs | 45,569 | 47,023 |
Altruis Benefits Consulting, LLC [Member] | ||
Net of deferred financing costs | $ 51,850 | $ 54,023 |
Long-Term Debt - Schedule of Cu
Long-Term Debt - Schedule of Cumulative Maturities of Long-Term Obligations (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
2021 | $ 963,450 | |
2022 | 963,450 | |
2023 | 963,450 | |
2024 | 963,450 | |
2025 | 963,450 | |
Thereafter | 4,032,031 | |
Long-term debt total | $ 8,641,008 | $ 8,849,280 |
Significant Customers - Schedul
Significant Customers - Schedule of Concentrations of Revenues (Details) - Revenue [Member] | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
BlueCross BlueShield [Member] | ||||
Concentration of risk percentage | 22.00% | 35.00% | 25.00% | 26.00% |
Priority Health [Member] | ||||
Concentration of risk percentage | 25.00% | 24.00% | 26.00% | 20.00% |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | Feb. 11, 2021 | Feb. 28, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Preferred stock authorized | 750,000,000 | 750,000,000 | |||
Preferred stock par value | $ 0.086 | $ 0.086 | |||
Preferred stock voting rights description | Each share of Series A Convertible Preferred Stock shall have ten (10) votes per share and may be converted into ten (10) shares of $0.086 par value common stock. The holders of the Series A Convertible Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of funds legally available therefore, cumulative dividends payable in cash. The annual interest rate at which cumulative preferred dividends will accrue on each share of Series A Convertible Preferred Stock is 0%. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, before any distribution of assets of the Corporation shall be made to or set apart for the holders of the Common Stock and subject and subordinate to the rights of secured creditors of the Company, the holders of Series A Preferred Stock shall receive an amount per share equal to the greater of (i) one dollar ($1.00), adjusted for any recapitalization, stock combinations, stock dividends (whether paid or unpaid), stock options and the like with respect to such shares, plus any accumulated but unpaid dividends (whether or not earned or declared) on the Series A Convertible Preferred Stock, and (ii) the amount such holder would have received if such holder has converted its shares of Series A Convertible Preferred Stock to common stock, subject to but immediately prior to such liquidation. | ||||
Preferred stock issued | 1,147 | 395,640 | |||
Preferred stock outstanding | 1,147 | 395,640 | |||
Common stock authorized | 2,000,000,000 | 2,000,000,000 | |||
Common stock par value | $ 0.086 | $ 0.086 | |||
Number of shares of common stock, shares | 2,070,000 | ||||
Proceeds from issuance of common stock | $ 12,420,000 | $ 10,481,938 | $ 1,000,000 | ||
Options issued | 23,333 | ||||
Share based compensation contractual term | 3 years 7 months 17 days | 4 years 7 months 13 days | |||
Share based compensation | $ 352,299 | $ 394,719 | |||
Unrecognized compensation expense | $ 801,698 | $ 2,525,385 | |||
Market value of share | $ 4.36 | $ 17.14 | |||
Number of securities called by warrants | 2,070,000 | ||||
Warrants term | 5 years | ||||
Warrants description | The warrants were recorded at a value per the offering of $0.01. The warrants may be exercised at any point from the effective date until the 5 year anniversary of issuance and are not subject to standard anti-dilution provisions. The Series A Warrants are exercisable at a per share exercise price equal to 110% of the public offering price of one share of common stock and accompanying Series A Warrant, $6.00. | ||||
Warrants exercise price | $ 6 | ||||
Employees, Directors, and Consultants [Member] | |||||
Share based compensation | $ 232,684 | $ 394,719 | |||
2019 Equity Incentive Plan [Member] | |||||
Number of shares authorized to issuance | 700,000 | ||||
Common stock reserved for issuance | 466,083 | 466,083 | |||
2019 Equity Incentive Plan [Member] | Current Employees [Member] | |||||
Options issued | 23,333 | ||||
Share based compensation contractual term | 5 years | ||||
Vesting period | 4 years | ||||
2019 Equity Incentive Plan [Member] | Service Provider [Member] | |||||
Fair value of options grants | $ 3,386,156 | $ 3,967,480 | |||
Common Stock [Member] | |||||
Number of shares of common stock, shares | 1,800,000 | ||||
Debt conversion, conversion of stock | 633,333 | ||||
Reliance Global Holdings, LLC [Member] | |||||
Debt conversion principal amount | $ 3,800,000 | ||||
Debt conversion, conversion of stock | 633,333 | ||||
Conversion price per share | $ 6 | ||||
Reliance Global Holdings, LLC [Member] | Common Stock [Member] | |||||
Shares issued upon conversion | 339,264 | ||||
Reliance Global Holdings, LLC [Member] | Series A Convertible Preferred Stock [Member] | |||||
Shares converted | 394,493 |
Equity - Summary of Stock Optio
Equity - Summary of Stock Options (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Equity [Abstract] | ||
Number of Stock Options Outstanding, Outstanding at Beginning of Period | 233,917 | 229,833 |
Number of Stock Options Outstanding, Granted | 23,333 | |
Number of Stock Options Outstanding, Forfeited or expired | ||
Number of Stock Options Outstanding, Exercised | ||
Number of Stock Options Outstanding, Outstanding at End of Period | 233,917 | 253,166 |
Weighted Average Exercise Price Per Share, Outstanding at Beginning of Period | $ 13.39 | $ 15.43 |
Weighted Average Exercise Price Per Share, Granted | 33.43 | |
Weighted Average Exercise Price Per Share, Forfeited or expired | ||
Weighted Average Exercise Price Per Share, Exercised | ||
Weighted Average Exercise Price, Outstanding at End of Period | $ 14.87 | $ 17.14 |
Weighted Average Remaining Contractual Life (years), Outstanding at Beginning of Period | 3 years 7 months 17 days | 4 years 7 months 13 days |
Weighted Average Remaining Contractual Life (years), Granted | 0 years | 4 years 3 months 11 days |
Weighted Average Remaining Contractual Life (years), Forfeited or expired | 0 years | 0 years |
Weighted Average Remaining Contractual Life (years), Exercised | 0 years | 0 years |
Weighted Average Remaining Contractual Life (years), Outstanding at End of Period | 3 years 4 months 17 days | 4 years 5 months 1 day |
Aggregate Intrinsic Value, Outstanding at Beginning of Period | $ 2,995,640 | |
Aggregate Intrinsic Value, Granted | ||
Aggregate Intrinsic Value, Forfeited or expired | ||
Aggregate Intrinsic Value, Exercised | ||
Aggregate Intrinsic Value, Outstanding at End of Period | $ 2,558,300 |
Equity - Summary of Non-Vested
Equity - Summary of Non-Vested Stock Options (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Equity [Abstract] | ||
Number of Non-vested Stock Options Outstanding, Outstanding at Beginning of Period | 159,542 | 212,333 |
Number of Non-vested Stock Options Outstanding, Granted | 23,333 | |
Number of Non-vested Stock Options Outstanding, Vested | (17,500) | |
Number of Non-vested Stock Options Outstanding, Forfeited or expired | ||
Number of Non-vested Stock Options Outstanding, Outstanding at End of Period | 159,542 | 218,166 |
Weighted Average Exercise Price Per Share, Outstanding at Beginning of Period | $ 13.39 | $ 15.43 |
Weighted Average Exercise Price Per Share, Granted | 33.43 | |
Weighted Average Exercise Price Per Share, Vested | 17.14 | |
Weighted Average Exercise Price Per Share, Forfeited or expired | ||
Weighted Average Exercise Price, Outstanding at End of Period | $ 14.87 | $ 17.14 |
Weighted Average Remaining Contractual Life (years), Outstanding at Beginning of Period | 2 years 6 months 10 days | 4 years 3 months 19 days |
Weighted Average Remaining Contractual Life (years), Granted | 0 years | 4 years 11 months 23 days |
Weighted Average Remaining Contractual Life (years), Vested | 0 years | 3 years 11 months 15 days |
Weighted Average Remaining Contractual Life (years), Forfeited or expired | 0 years | 0 years |
Weighted Average Remaining Contractual Life (years), Outstanding at End of Period | 2 years 4 months 2 days | 3 years 10 months 17 days |
Equity - Schedule of Assumption
Equity - Schedule of Assumption of Black-Scholes Option Pricing Model (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Exercise price | $ 0.39 | |
Expected term | 3 years 9 months | |
Risk-free interest rate | 0.38% | |
Estimated volatility | 318.00% | |
Expected dividend | 0.00% | 0.00% |
Option price at valuation date | $ 0.31 | |
Minimum [Member] | ||
Exercise price | $ .16 | |
Expected term | 3 years 2 months 30 days | |
Risk-free interest rate | 0.38% | |
Estimated volatility | 293.07% | |
Option price at valuation date | $ .12 | |
Maximum [Member] | ||
Exercise price | $ 0.26 | |
Expected term | 3 years 9 months | |
Risk-free interest rate | 2.43% | |
Estimated volatility | 517.13% | |
Option price at valuation date | $ 0.31 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details Narrative) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Common stock conversion basis | 10 for 1 basis | |
Stock Options [Member] | ||
Anti-dilutive securities | $ 233,917 | $ 253,170 |
Series A Convertible Preferred Stock [Member] | ||
Anti-dilutive securities | $ 100,000 | $ 395,640 |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule of Calculations of Basic and Diluted EPS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (641,328) | $ (979,798) |
Basic weighted average shares outstanding | 7,542,377 | 2,916,041 |
Basic and diluted loss per common share: | $ (.09) | $ (.34) |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | Jan. 02, 2019 | |
Right-of-use assets | $ 382,299 | $ 433,529 | |
Accumulated amortization of right of use assets | 382,299 | ||
Net right-of-use assets | $ 383,867 | ||
Weighted average remaining lease term | 2 years 6 months 3 days | ||
Weighted average discount rate | 7.45% | ||
ASU 2016-02 [Member] | |||
Right-of-use assets | $ 684,083 | ||
Operating lease discount rate | 7.45% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payment (Details) | Mar. 31, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 139,244 |
2022 | 164,660 |
2023 | 85,440 |
2024 | 32,999 |
Thereafter | |
Total undiscounted operating lease payments | 422,343 |
Less: Imputed interest | (38,476) |
Present value of operating lease liabilities | $ 383,867 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Income Tax Disclosure [Abstract] | |
Annual effective tax rate from continuing operation | 0.00% |
Income tax expense | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Related Party Transactions [Abstract] | ||
Related party loan payable | $ 588,369 | $ 4,523,045 |
Percentage of common stock owned | 50.32% | 25.58% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - J.P. Kush and Associates, Inc [Member] | May 12, 2021USD ($) |
Acquisition price | $ 1,950,000 |
Payments for acquisition | 1,900,000 |
RELI Stock [Member] | |
Payments for acquisition | $ 50,000 |