UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-40020

RELIANCE GLOBAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Florida

46-3390293

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

300 Blvd. of the Americas, Suite 105 Lakewood, NJ 08701

(Address of principal executive offices) (Zip Code)

732-380-4600

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	RELI	The Nasdaq Capital Market
Series A Warrants	RELIW	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company, in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

At ~~May 18,~~November 13, 2023, the registrant had ~~1,631,048~~2,473,859 shares of common stock, par value $0.086 per share, outstanding.

TABLE OF CONTENTS

PART I
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2024
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	2532
Item 4. Controls and Procedures.	2532
PART II
Item 1. Legal Proceedings.	2632
Item 1A. Risk Factors.	2632
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	2733
Item 3. Defaults Upon Senior Securities.	2733
Item 4. Mine Safety Disclosures.	2733
Item 5. Other Information.	2733
Item 6. Exhibits	2733

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

~~(Unaudited)~~


	March 31,			December 31,			September 30, 2023			December 31, 2022
	2023			2022			(Unaudited)
Assets
Current assets:
Cash	$	2,116,333		$	505,410		$	1,777,348		$	505,410
Restricted cash		1,437,961			1,404,359			1,409,909			1,404,359
Accounts receivable		970,345			994,321			1,190,780			994,321
Accounts receivable, related parties		11,616			18,292			21,078			18,292
Accounts receivable								21,078			18,292
Other receivables		-			11,464			813			11,464
Prepaid expense and other current assets		164,154			245,535			299,522			245,535
Current assets - discontinued operations		7,354			85,998			-			85,998
Total current assets		4,707,763			3,265,379			4,699,450			3,265,379
Property and equipment, net		155,511			162,767			145,962			162,767
Right-of-use assets		921,531			1,018,952			878,672			1,018,952
Investment in NSURE, Inc.		900,000			900,000			-			900,000
Intangibles, net		12,889,277			9,085,092			11,675,526			13,439,369
Goodwill		14,287,099			14,287,099			14,287,099			14,287,099
Other non-current assets		23,285			23,284			23,283			23,284
Other assets - discontinued operations		-			9,685,156			-			5,330,879
Total assets	$	33,884,466		$	38,427,729		$	31,709,992		$	38,427,729

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and other accrued liabilities	$	1,076,612		$	951,382		$	999,785		$	951,382
Short term financing agreements		38,312			106,817			114,394			154,017
Current portion of loans payables, related parties								336,479			1,422,249
Other payables		1,182,055			1,476,113			64,101			101,113
Current portion of long-term debt		1,235,052			1,118,721			1,353,961			1,118,721
Current portion of leases payable		312,549			339,937			348,492			339,937
Earn-out liability, current portion		1,555,692			2,153,478
Current portion of earn-out liability								687,197			2,153,478
Current liabilities - discontinued operations		50,228			1,647,836			-			1,600,636
Total current liabilities		5,450,500			7,794,284			3,904,409			7,841,533

Loans payable, related parties, less current portion		958,743			1,669,515			258,785			122,266
Convertible debt, related parties, less current portion								161,855			1,500,000
Long term debt, less current portion		12,035,753			12,349,673			11,380,567			12,349,673
Leases payable, less current portion		638,937			714,068			561,041			714,068
Earn-out liability, less current portion		398,000			556,000			-			556,000
Warrant liabilities		2,166,919			6,433,150			1,580,380			6,433,150
Non-current liabilities - discontinued operations		-			-
Noncurrent liabilities - discontinued operations								-			-
Total liabilities		21,648,852			29,516,690			17,847,037			29,516,690
Stockholders’ equity:
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of March 31, 2023 and December 31, 2022		-			-
Common stock, $0.086 par value; 133,333,333 shares authorized and 1,566,048 and 1,219,573 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		134,660			104,883
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively								-			-
Common stock, $0.086 par value; 133,333,333 shares authorized and 2,304,375 and 1,219,573 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively								198,155			104,883
Additional paid-in capital		40,881,475			35,798,139			43,639,612			35,798,139
Stock subscription receivable		-			-
Accumulated deficit		(28,780,521	)		(26,991,983	)		(29,974,812	)		(26,991,983	)
Total stockholders’ equity		12,235,614			8,911,039			13,862,955			8,911,039
Total liabilities and stockholders’ equity	$	33,884,466		$	38,427,729		$	31,709,992		$	38,427,729

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

2023 2022

Three Months Ended
March 31,

2023 2022
Revenue
Commission income $ 3,939,103 $ 3,058,697
Total revenue 3,939,103 3,058,697

Operating expenses
Commission expense 1,083,326 785,611
Salaries and wages 1,712,097 1,631,813
General and administrative expenses 1,358,254 2,333,795
Marketing and advertising 136,572 89,529
Depreciation and amortization 541,873 468,278
Total operating expenses 4,832,122 5,309,026

Loss from operations (893,019 ) (2,250,329 )

Other income
Other expense, net (389,351 ) (107,751 )
Recognition and change in fair value of warrant liabilities 4,266,231 11,845,964
Total other income 3,876,880 11,738,213

Income from continuing operations $ 2,983,861 9,487,884
Loss from discontinued operations (4,772,399 ) (147,884 )
Net (loss) income (1,788,538 ) 9,340,000

Basic (loss) earnings per share
Continuing operations $
1.92
$ 2.61
Discontinued operations $ (3.07 ) $ (0.15 )
Basic (loss) earnings per share $ (1.15 ) $ 2.46

Diluted loss per share
Continuing operations $
(0.59
) $ (9.57 )
Discontinued operations $
(2.18
) $ (0.12 )
Diluted loss per share $ (2.77 ) $ (9.69 )

Weighted average number of shares outstanding - basic
1,553,953

980,569

Weighted average number of shares outstanding - diluted
2,185,847

1,195,480

Three Months Ended
September 30, 2023

Three Months Ended
September 30, 2022

Nine Months Ended
September 30, 2023

Nine Months Ended
September 30, 2022

Revenue
Commission income $ 3,275,583 $ 2,821,768 $ 10,410,591 $ 8,727,614
Total revenue 3,275,583 2,821,768 10,410,591 8,727,614

Operating expenses
Commission expense 796,001 695,020 2,701,601 2,143,562
Salaries and wages 1,775,919 1,629,947 5,230,871 4,899,171
General and administrative expenses 1,368,126 1,117,027 4,430,177 5,080,991
Marketing and advertising 117,752 63,371 364,184 148,057
Depreciation and amortization 652,839 651,395 1,962,066 1,901,140
Total operating expenses 4,710,637 4,156,760 14,688,899 14,172,921

Loss from operations (1,435,054 ) (1,334,992 ) (4,278,308 ) (5,445,307 )

Other income (expense)
Interest expense (386,562 ) (281,201 ) (1,126,281 ) (586,251 )
Interest related parties (32,475 ) (1,730 ) (125,104 ) (5,189 )
Interest expense (32,475 ) (1,730 ) (125,104 ) (5,189 )
Other (expense) income, net (310 ) (4,909 ) 3,650 (4,414 )
Recognition and change in fair value of warrant liabilities 1,715,397 7,919,315 4,389,120 32,398,530
Total other income 1,296,050 7,631,475 3,141,385 31,802,676

(Loss) income from continuing operations before tax $ (139,004 ) 6,296,483 $ (1,136,922 ) 26,357,370
(Loss) income from discontinued operations before tax - (174,390 ) (1,845,904 ) (399,585 )
Net (loss) income (139,004 ) 6,122,093 (2,982,827 ) 25,957,784

Basic (loss) earnings per share
Continuing operations $ (0.05 ) $ 5.44 $ (0.47 ) $ 18.16
Discontinued Operations $ - $ (0.15 ) $ (0.75 ) $ (0.37 )
Basic (loss) earnings per share $ (0.05 ) $ 5.29 $ (1.22 ) $ 17.79

Diluted (loss) earnings per share
Continuing operations $ (0.05 ) $ 4.83 $ (0.47 ) $ 15.93
Discontinued operations $ - $ (0.14 ) $ (0.75 ) $ (0.33 )
Diluted (loss) earnings per share $ (0.05 ) $ 4.69 $ (1.22 ) $ 15.60

Weighted average number of shares outstanding - Basic 3,021,455 1,156,939 2,436,015 1,069,534
Weighted average number of shares outstanding - Diluted 3,021,455 1,304,878 2,436,015 1,219,822
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

~~Reliance Global Group, Inc. and Subsidiaries~~
~~Condensed Consolidated Statements of Stockholders’ Equity~~
~~(Unaudited)~~
Shares Amount Shares Amount Shares Amount capital Receivable Deficit Total
Preferred stock Common stock Common stock issuable Additional paid-in Subscription Accumulated
Shares Amount Shares Amount Shares Amount capital Receivable Deficit Total

Balance, December 31, 2022 - $ - 1,219,573 $ 104,883 - $ - $ 35,798,139 $ - $ (26,991,983 ) $ 8,911,039

Share-based compensation - - - - 43,797 - - 43,797

Common shares issued for earnout liability - - 109,358 9,404 973,074 - - 982,478

Common shares issued for Yes Americana loan - - 66,743 5,740 - -
639,260
- - 645,000

Share round up due to reverse split
- - 15,336 1,300 - -
(5,946
) - - (4,646 )

Shares issued for private placement
- - 155,038 13,333 - -
3,433,151
- - 3,446,484

Net loss - - - - - - - - (1,788,538 ) (1,788,538 )

Balance, March 31, 2023     -        - 1,566,048 134,660      -       -- 40,881,475              - (28,780,521 ) 12,235,614
Balance     -        - 1,566,048 134,660      -       -- 40,881,475              - (28,780,521 ) 12,235,614
~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~
5
Reliance Global Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

Shares Amount Shares Amount Shares Amount capital Receivable Deficit Total
Preferred stock Common stock Common stock issuable Additional paid-in Subscription Accumulated

Shares Amount Shares Amount Shares Amount capital Receivable Deficit Total

Balance, December 31, 2021 - $ - 730,407 $ 62,815 0 $ - $ 27,329,201 $ (20,000,000 ) $ (33,458,145 ) $ (26,066,129 )
Balance - $ - 730,407 $ 62,815 0 $ - $ 27,329,201 $ (20,000,000 ) $ (33,458,145 ) $ (26,066,129 )

Share-based compensation - - - - - - 739,960 - - 739,960

Shares issued due to private placement 9,076 781 178,059 15,313 - - (16,043 ) 20,000,000 - 20,000,051

Shares issued pursuant to acquisition of Medigap - - 40,402 3,475 - - 4,759,976 - - 4,763,451

Exercise of Series A warrants - - 25,000 2,150 - - 2,472,850 - - 2,475,000

Issuance of prefunded Series C warrants in exchange for common shares - - (218,462 ) (18,788 ) - - 18,788 - - -

Shares issued for vested stock awards - - 400 34 - - (34 ) - - -

Net income - - - - - - - - 9,340,000 9,340,000
Net (loss) income - - - - - - - - 9,340,000 9,340,000

Balance, March 31, 2022 9,076 $ 781 755,807 $ 64,999 0 $ - $ 35,304,698 $ - $ (24,118,145 ) $ 11,252,333
Balance 9,076 $ 781 755,807 $ 64,999 0 $ - $ 35,304,698 $ - $ (24,118,145 ) $ 11,252,333
Shares Amount Shares Amount capital Receivable Deficit Total
Nine Months Ended September 30, 2023
Preferred Stock Common Stock Additional paid-in Subscription Accumulated
Shares Amount Shares Amount capital Receivable Deficit Total

Balance, December 31, 2022     - $           - 1,219,573 $ 104,883 $ 35,798,139 $                    - $ (26,991,983 ) 8,911,039

Common shares issued for earnout liabilities - - 109,358 9,404 973,074 - - 982,478

Conversion of convertible debt, related parties - - 66,743 5,740 639,260 - - 645,000

Round up of shares due to reverse split - - 15,336 1,300 (5,946 ) - - (4,646 )

Shares issued in 2023 private placement - - 155,038 13,333 3,433,151 - - 3,446,484

Share-based compensation - - - - 43,797 - - 43,797

Net loss - - - - - - (1,788,538 ) (1,788,538 )

Balance, March 31, 2023 - - 1,566,048 134,660 40,881,475 - (28,780,521 ) 12,235,614

Common shares issued for services - - 112,557 9,681 368,314 - - 377,995

Common shares issued for earnout liabilities - - 352,260 30,294 1,403,406 - - 1,433,700

Shares issued for vested stock awards - - 22,219 1,911 (1,911 ) - - -

Share-based compensation - - - - 35,367 - - 35,367

Net loss - - - - - - (1,055,287 ) (1,055,287 )

Balance, June 30, 2023 - - 2,053,084 176,546 42,686,651 - (29,835,808 ) 13,027,389

Common shares issued for earnout liabilities 174,610 15,016 463,356 478,372

Common shares issued for vested stock awards 3,017 259 3,510 3,769

Share-based compensation - 27,779 27,779

Common shares issued for services 400 34 966 1,000

Series B warrant exercise 73,264 6,300 457,350 463,650

Net loss - - - - - (139,004 ) (139,004 )

Balance, September 30, 2023 - - 2,304,375 198,155 43,639,612 - (29,974,812 ) 13,862,955

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6 5

Reliance Global Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
Shares Amount Shares Amount capital Receivable Deficit Total
Nine Months Ended September 30, 2022
Preferred Stock Common Stock Additional paid-in Subscription Accumulated
Shares Amount Shares Amount capital Receivable Deficit Total

Balance, December 31, 2021 - $           - 730,407 $ 62,815 $ 27,329,201 $ (20,000,000 ) $ (33,458,145 ) $ (26,066,129 )

Share-based compensation - - - - 739,960 - - 739,960

Shares issued due to private placement 9,076 781 178,059 15,313 (16,043 ) 20,000,000 - 20,000,051

Shares issued pursuant to acquisition of Medigap - - 40,402 3,475 4,759,976 - - 4,763,451

Exercise of Series A warrants - - 25,000 2,150 2,472,850 - - 2,475,000
Exercise of warrants - - 25,000 2,150 2,472,850 - - 2,475,000

Issuance of prefunded Series C Warrants in exchange for common shares - - (218,462 ) (18,788 ) 18,788 - - -

Shares issued for vested stock awards - - 400 34 (34 ) - - -

Net Income - - - - - - 9,340,000 9,340,000

Balance, March 31, 2022 9,076 $ 781 755,806 $ 64,999 $ 35,304,698 $ - $ (24,118,145 ) $ 11,252,333

Share-based compensation - - - - 179,083 - - 179,083

Issuance of common stock for conversion of Series C warrants - - 218,462 18,788 (17,452 ) - - 1,336

Net Income - - - - - - 10,495,691 10,495,691

Balance, June 30, 2022 9,076 $ 781 974,268 $ 83,787 $ 35,466,329 $ - $ (13,622,454 ) $ 21,928,443
Balance 9,076 $ 781 974,268 $ 83,787 $ 35,466,329 $ - $ (13,622,454 ) $ 21,928,443

Share-based compensation - - - - 314,257 - - 314,257

Issuance of common stock for conversion of Series D warrants - - 81,423 7,002 (6,207 ) - - 795
Issuance of common stock for conversion of warrants - - 81,423 7,002 (6,207 ) - - 795

Shares issued due to conversion of preferred stock (9,076 ) (781 ) 147,939 12,723 (11,942 ) - - -

Net Income - - - - - - 6,122,093 6,122,093
Net income (loss) - - - - - - 6,122,093 6,122,093

Balance, September 30, 2022 - $ - 1,203,630 $ 103,512 $ 35,762,437 $ - $ (7,500,361 ) $ 28,365,588
Balance - $ - 1,203,630 $ 103,512 $ 35,762,437 $ - $ (7,500,361 ) $ 28,365,588
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Reliance Global Group, Inc. and Subsidiaries and Predecessor
Condensed Consolidated Statements of Cash Flows
(Unaudited)

For the Nine Months Ended September 30,

2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income (2,982,827 ) $ 25,957,784
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization 1,962,066 1,901,140
Amortization of debt issuance costs and accretion of debt discount 35,163 28,702
Non-cash lease expense (4,192 ) 19,549
Stock compensation expense 106,943 1,233,300
Shares issued for services performed 289,995 -
Recognition and change in fair value of warrant liability (4,389,120 ) (32,398,531 )
Earn-out fair value adjustments 1,291,494 132,445
Change in operating assets and liabilities:
Accounts receivable (196,459 ) 174,025
Accounts receivable, related parties (2,786 ) 5,972
Other receivables 10,651 (31,981 )
Prepaid expense and other current assets 34,136 2,346,510
Other non-current assets - (6,491 )
Accounts payables and other accrued liabilities 48,403 (1,642,938 )
Other payables (37,012 ) 34,841
Net cash used in continuing operating activities (3,833,545 ) (2,245,673 )

Net cash adjustments for discontinued operating activities 3,816,238 67,675

Total net cash used in continuing and discontinued operating activities (17,307 ) (2,177,998 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (21,206 ) (58,149 )
Purchase of intangibles (160,211 ) (5,392,951 )
Proceeds from sale of investment in NSURE 900,000
-

Business acquisitions, net of cash acquired - (6,000,000 )
Net cash provided by (used in) investing activities 718,583 (11,451,100 )

Net cash used in discontinued investing activities - (13,531,509 )

Total net cash provided by (used in) continuing and discontinued investing activities 718,583 (24,982,609 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings of debt - -
Principal repayments of debt (763,840 ) (663,016 )
Debt issuance costs - (214,257 )
Loans acquired through acquisitions - 6,520,000
Issuance of common shares in exchange for Series C warrants 2,131
Principal repayments of short-term financings (21,923 ) (107,206 )
Payments of loans payable, related parties (954,439 ) (174,206 )
Payments of convertible debt, related parties (693,145 ) 1,500,000
Cash payments on earn-out liability (419,225 ) (1,627,296 )
Proceeds from exercise of warrants into common stock - 2,475,000
Private placement of shares and warrants 3,446,484 17,853,351
Net cash provided by continuing financing activities 593,912 25,564,501

Net cash used in discontinued financing activities (17,700 ) -

Total net cash provided by continuing and discontinued financing activities 576,212 25,564,501

Net increase in cash and restricted cash 1,277,488 (1,596,106 )
Cash and restricted cash at beginning of year 1,909,769 4,620,722
Cash and restricted cash at end of year 3,187,257 3,024,616

SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:
Common stock issuance to settle earn-out liabilities 2,894,550
-

2023 2022
For the Three Months Ended March 31,
2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (1,788,538 ) $ 9,340,000
Adjustment to reconcile net income to net cash used in operating activities:
Depreciation and amortization 541,873 468,279
Amortization of debt issuance costs and accretion of debt discount 11,721 6,467
Non-cash lease expense (5,098 ) 2,597
Stock compensation expense 43,797 739,960
Recognition and change in fair value of warrant liability (4,266,231 ) (11,845,964 )
Earn-out fair value and write-off adjustments 476,692 407,071
Change in fair value of warrant liability -
Change in operating assets and liabilities:
Accounts payables and other accrued liabilities 125,229 (1,875,191 )
Accounts receivable 23,976 (48,228 )
Accounts receivable, related parties 6,676 5,489
Other receivables 11,464 (4,361 )
Other payables
(294,058
) (1,998 )
Other non-current assets - (52,992 )
Prepaid expense and other current assets 81,381 2,220,963
Net cash used in continuing operating activities (5,031,116 ) (637,908 )

Net cash adjustments for discontinued operating activities 3,966,238 294,628

Total net cash used in continuing and discontinued operating activities (1,064,878 ) (343,280 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (6,695 ) -
Purchase of intangibles (73,894 ) (249,235 )
Net cash used in investing activities (80,589 ) (249,235 )

Net cash used in discontinued investing activities (15,708 ) (18,142,858 )

Total net cash used in continuing and discontinued investing activities (96,297 ) (18,392,093 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments of debt (207,580 ) (227,172 )
Repayments on short term financing (98,004 ) -
Proceeds from loans payable, related parties 345,000
-

Payments on loans payable, related parties (412,500 ) (10,770 )
Payments of earn-out liabilities (250,000 ) -
Proceeds from exercise of warrants into common stock 2,475,000
Proceeds from private placement of shares and warrants 3,446,484 17,853,351
Net cash provided by continuing financing activities 2,823,400 20,090,409

Net cash used in discontinued financing activities (17,700 ) -

Total net cash provided by continuing and discontinued financing activities 2,805,700 20,090,409

Net increase in cash and restricted cash 1,644,525 1,355,036
Cash and restricted cash at beginning of year 1,909,769 4,620,722
Cash and restricted cash at end of year 3,554,294 5,975,758

SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:
Cash paid for interest 382,410 105,447
Common stock issuance to repay related party liability 645,000 -
Common stock issuance to settle earn-out liabilities 982,478 -
Private placement equity financing costs 552,618 -
Issuance of Series D Warrants - 6,930,335
Issuance of placement agent warrants - 1,525,923
Conversion of common stock into Series C Warrants - 281,815
Common stock issued pursuant to acquisition - 4,763,451
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Reliance Global Group, Inc. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements

NOTE 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Reliance Global Group, Inc., formerly known as Ethos Media Network, Inc. (“RELI”, “Reliance”, or the “Company”), was incorporated in Florida on August 2, 2013.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of recurring accruals) necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2022, as the same may be amended from time to time. Certain prior period amounts in the condensed consolidated financial statements and notes thereto have been reclassified to conform to the current period’s presentation.
The accompanying unaudited condensed consolidated financial statements include the accounts of Reliance Global Group, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Liquidity
As of ~~March 31,~~September 30, 2023, the Company’s reported cash and restricted cash aggregated balance was approximately $~~3,554,000~~3,187,000, current assets were approximately $~~4,708,000~~4,699,000, while current liabilities were approximately $~~5,451,000~~3,904,000. As of ~~March 31,~~September 30, 2023, the Company had apositive working capital ~~deficit~~ of approximately $~~742,000~~ 795,000and stockholders’ equity of approximately $~~12,236,000~~13,863,000. For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, the Company reported loss from operations of approximately $~~893,000~~4,278,000, a non-cash, non-operating gain on the recognition and change in fair value of warrant liabilities of approximately $~~4,266,000~~4,389,000, resulting in net ~~income~~loss from continuing operations of approximately $~~2,984,000~~1,137,000, a net loss from discontinued operations of approximately $~~4,772,000~~1,846,000, resulting in an overall net loss of approximately $~~1,789,000~~2,983,000. ~~For the three months ended March 31, 2023, the Company reported negative cash flows from continuing and discontinued operations of approximately $1,065,000.~~ The Company completed a capital offering in March 2023, raising net proceeds of approximately $3,446,000.
Although there can be no assurance that debt or equity financing will be available on acceptable terms, the Company believes its financial position and its ability to raise capital to be reasonable and sufficient. Based on our assessment, we do not believe there are conditions or events that, in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year of filing these financial statements with the Securities and Exchange Commission (“SEC”).
Use of Estimates
The preparation of financial statements in conformity with U.S. 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 its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.
Cash and Restricted Cash
Cash and restricted cash reported on our ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets are reconciled to the total shown on our ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Cash Flows~~cash flows as follows:
SCHEDULE OF RESTRICTED CASH IN STATEMENT OF CASH FLOW
September 30, 2023 September 30, 2022
Cash $ 1,777,348 $ 1,615,054
Restricted cash 1,409,909 1,409,562
Total cash and restricted cash $ 3,187,257 $ 3,024,616
March 31, 2023 March 31, 2022
Cash $ 2,116,333 $ 5,491,407
Restricted cash 1,437,961 484,351
Total cash and restricted cash $ 3,554,294 $ 5,975,758
8

Fair Value of Financial Instruments

Level 1 — Observable inputs reflecting quoted prices (unadjusted) in active markets for identical assets and liabilities;
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.

Warrant Liabilities: The Company re-measures the fair value of its Level 3 warrant liabilities at the balance sheet date, using a binomial option pricing model. The following summarizes the significant unobservable inputs:
SCHEDULE OF ~~EARN OUT~~WARRANT LIABILITY
March 31, 2023
December 31,
2022
September 30, 2023 December 31, 2022
Stock price $ 3.01 $ 8.55 $ 2.49 $ 8.55
Volatility 105.0 % 105.0 % 105.0 % 105.0 %
Time to expiry 3.76 4.01 3.26 4.01
Dividend yield 0 % 0 % 0.0 % 0.0 %
Risk free rate 3.7 % 4.1 % 4.7 % 4.1 %
Warrants measurement input 4.7 % 4.1 %

The following reconciles fair value of the liability classified warrants:
SCHEDULE OF RECONCILES WARRANT COMMITMENT
Series B Warrant Liabilities Placement Agent Warrants Total
Beginning balance, December 31, 2022 $ 6,384,250 $ 48,900 $ 6,433,150
Unrealized (gain) loss (4,226,950 ) (39,281 ) (4,266,231 )
Ending balance, March 31, 2023 2,157,300 9,619 2,166,919
Unrealized (gain) loss 1,584,684 7,825 1,592,509
Ending balance, June 30, 2023 $ 3,741,984 $ 17,444 $ 3,759,428
Balance $ 3,741,984 $ 17,444 $ 3,759,428
Unrealized (gain) loss $ (1,703,333 ) (12,064 ) (1,715,397 )
Warrants exercised or transferred (463,651 ) - (463,651 )
Ending balance, September 30, 2023 $ 1,575,000 $ 5,380 $ 1,580,380
Balance $ 1,575,000 $ 5,380 $ 1,580,380
Series B Warrant Commitment Series B Warrant Liabilities Placement Agent Warrants Total
Beginning balance, December 31, 2021 $ 37,652,808 $ - $ - $ 37,652,808
Initial recognition - 55,061,119 1,525,924 56,587,043
Unrealized loss (gain) 17,408,311 (48,668,869 ) (1,477,024 ) (32,737,582 )
Warrants exercised or transferred (55,061,119 ) (8,000 ) - (55,069,119 )
Ending balance, December 31, 2022 $ - $ 6,384,250 $ 48,900 $ 6,433,150
Unrealized (gain) loss - $ (4,226,950 ) $ (39,281 ) $ (4,266,231 )
Ending balance, March 31, 2023 $ - $ 2,157,300 $ 9,619 $ 2,166,919
Earn-out liabilities: The Company ~~generally values~~utilizes two valuation methods to value its Level 3 earn-out liabilities, ~~using~~a) the income valuation ~~approach.~~approach and b) the Monte Carlo simulation method. Key valuation and unobservable inputs for the income valuation approach include contingent payment arrangement terms, projected revenues and cash flows, ~~rate~~rates of return, discount rates and probability assessments. ~~The following table summarizes the significant~~Key unobservable inputs ~~used~~for the Monte Carlo simulation methods are summarized by the following (some presented in ~~the fair value measurements:~~ranges):
SCHEDULE OF FAIR VALUE MEASUREMENTS
~~March 31, 2023~~ ~~December 31, 2022~~
~~Valuation technique~~ ~~Discounted cash flow~~ ~~Discounted cash flow~~
~~Significant unobservable input~~ ~~Projected revenue and probability of achievement~~ ~~Projected revenue and probability of achievement~~
September 30, 2023
WACC Risk Premium: 13.5 %
Volatility 50.0% – 105.0 %
Credit Spread: 8.77% -10.4 %
Payment Delay (days) 90
Risk free rate USD Yield Curve or 5.46% - 5.47 %
Discounting Convention: Mid-period
Stock Price $ 2.49
Dividend Yield
0.00
%
Number of Iterations
100,000

9

The Company values its Level 3 earn-out liability related to the Barra Acquisition using a Monte Carlo simulation in a risk-neutral framework (a special case of the Income Approach). The following summarizes the significant unobservable inputs:
~~SCHEDULE OF EARN OUT LIABILITY~~
~~March 31,~~
~~2023~~
~~WACC Risk Premium:~~ ~~13.5~~ %
~~Volatility~~ 50 %
~~Credit Spread:~~ 13 %
~~Payment Delay (days)~~ 90
~~Risk free rate~~ ~~USD Yield Curve~~
~~Discounting Convention:~~ ~~Mid-period~~
~~Number of Iterations~~ ~~100,000~~

Undiscounted remaining earn out payments were approximately $~~2,123,442~~847,854 as of ~~March 31,~~September 30, 2023. The following table reconciles fair value of earn-out liabilities for the periods ended ~~March 31,~~September 30, 2023, and December 31, 2022:
SCHEDULE OF GAIN OR LOSSES RECOGNIZED FAIR VALUE
September 30, 2023 December 31, 2022
Beginning balance – January 1 $ 2,709,478 $ 3,813,878

Acquisitions and settlements (3,260,403 ) (1,104,925 )

Period adjustments:
Fair value changes included in earnings^* 1,291,494 525
Earn-out payable in common shares (53,372 )
-

Ending balance 687,197 2,709,478
Less: Current portion (687,197 ) (2,153,478 )
Ending balance, less current portion $ - $ 556,000
March 31, 2023 December 31, 2022
Beginning balance – January 1 $ 2,709,478 $ 3,813,878

Acquisitions and settlements (1,232,478 ) (1,104,925 )

Period adjustments:
Fair value changes included in earnings^* 476,692 525

Ending balance $ 1,953,692 $ 2,709,478
Less: Current portion (1,555,692 ) (2,153,478 )
Ending balance, less current portion 398,000 556,000
* Recorded ~~as a reduction to~~in the general and administrative expenses caption on the condensed consolidated statements of operations.
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Revenue Recognition

The following table disaggregates the Company’s revenue by line of business, showing commissions earned:
SCHEDULE OF DISAGGREGATION REVENUE
Three Months ended March 31, 2023 Medical/Life Property and Casualty Total
Regular
Three Months Ended September 30, 2023 Medical Life Property and Casualty Total

EBS $ 237,380 $ - $ 237,380 $ 206,308 $ 8,900 $ - $ 215,208
USBA 12,029 - 12,029 11,266 843 - 12,109
CCS/UIS - 46,770 46,770 - - 62,197 62,197
Montana 490,994 - 490,994 453,269 1,770 - 455,039
Fortman 306,270 208,145 514,415 288,969 602 268,704 558,275
Altruis 1,868,136 - 1,868,136 1,200,054 - - 1,200,054
Kush 320,291 - 320,291 331,240 - - 331,240
Barra 94,707 354,381 449,088
Reli Exchange 66,833 18,139 356,489 441,461
Total $ 3,329,807 $ 609,296 $ 3,939,103 $ 2,557,939 $ 30,254 $ 687,390 $ 3,275,583

Three Months ended March 31, 2022 Medical/Life Property and Casualty Total
Regular
Nine Months Ended September 30, 2023 Medical Life Property and Casualty Total

EBS $ 221,184 $ - $ 221,184 $ 646,259 $ 17,470 $ - $ 663,729
USBA 13,587 - 13,587 33,956 2,266 - 36,222
CCS/UIS - 43,881 43,881 - - 182,368 182,368
Montana 506,721 - 506,721 1,384,060 10,105 - 1,394,165
Fortman 332,600 197,260 529,860 887,605 2,675 700,169 1,590,449
Altruis 1,304,872 - 1,304,872 4,268,727 - - 4,268,727
Kush 438,592 - 438,592 973,719 - - 973,719
Revenue $ 2,817,556 $ 241,141 $ 3,058,697
Reli Exchange 182,638 103,341 1,015,233 1,301,212
Total $ 8,376,964 $ 135,857 $ 1,897,770 $ 10,410,591
10
Three Months Ended September 30, 2022 Medical Life Property and Casualty Total

EBS $ 206,906 5,478 $ - $ 212,384
USBA 13,227 505 - 13,732
CCS/UIS - - 76,035 76,035
Montana 422,978 3,613 - 426,591
Fortman 256,791 2,464 186,860 446,115
Altruis 895,905 107 - 896,012
Kush 366,043 176 - 366,219
Reli Exchange 56,232 27,383 301,065 384,680
Total $ 2,218,083 39,725 $ 563,960 $ 2,821,768
Nine Months Ended September 30, 2022 Medical Life Property and Casualty Total

EBS $ 633,252 11,965 $ - $ 645,217
USBA 38,610 1,028 - 39,638
CCS/UIS - - 177,111 177,111
Montana 1,379,307 5,710 - 1,385,017
Fortman 943,852 5,337 589,924 1,539,113
Altruis 3,053,474 2,783 - 3,056,257
Kush 1,229,326 933 - 1,230,259
Reli Exchange 103,893 49,646 501,463 655,002
Revenues $ 7,381,714 77,402 $ 1,268,498 $ 8,727,614

The following are customers representing 10% or more of total revenue:
SCHEDULE OF CONCENTRATIONS OF REVENUES

For the Three Months
Ended
September 30,
Insurance Carrier 2023 2022
Priority Health 44 % 30 %
BlueCross BlueShield 21 % 13 %
Insurance carrier 21 % 13 %

Three Months ended March 31, For the Nine Months
Ended
September 30,
Insurance Carrier 2023 2022 2023 2022

Priority Health 43 % 32 % 37 % 34 %
BlueCross BlueShield 13 % 13 % 14 % 13 %
Insurance Carrier 13 % 13 %
Insurance carrier 14 % 13 %
No other single customer accounted for more than 10% of the Company’s commission ~~revenues.~~revenues during the three and nine months ended September 30, 2023 and 2022. The loss of any significant customer could have a material adverse effect on the Company. Customers from 2022 were adjusted to reflect percentages of revenue from continued operations.

11
Income Taxes

The Company recorded no income tax expense for the three and nine months ended ~~March~~ ~~31,~~September 30, 2023 and 2022 because the estimated annual effective tax rate was zero. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating loss carry forwards, and available tax planning alternatives.
11

As of ~~March~~September ~~31,~~30, 2023 and December 31, 2022, the Company provided a full valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized.

Discontinued Operations
The Company’s board of directors approved the discontinuation and abandonment of Medigap Healthcare Insurance Company, LLC (“Medigap”), a subsidiary of the Company, effective April 17, 2023, due to Medigap’s sustained recurring losses stemming from amongst other factors, greater than anticipated revenue chargebacks. ~~Aside~~The Company was unable to divest its interest in Medigap for ~~retaining certain~~value, and accordingly, operations were wound down in an orderly manner. In doing so, the Company transferred to its operating entity, Medigap’s customer relationships and internally developed and purchased software intangible assets, with net of ~~Medigap that~~amortization combined value of approximately $4,300,000, as well as, its short-term financing arrangement of $29,500, and each are respectively classified at their adjusted book values in the intangible assets and short term financing agreements accounts in the condensed consolidated balance sheets for the periods ended September 30, 2023 and December 31, 2022. These assets have continued ~~use~~value to the Company and have not been impaired as the fair value exceeds carrying cost. Medigap’s remaining assets were considered ~~impaired~~to have no remaining asset value and were fully impaired. Certain liabilities and estimated liabilities as outlined in the tables herein, were discharged and/or written-off in conjunction with the Settlement Agreement (as defined below) because of them having a net zero dollar estimated liability value. Accordingly, the Company recognized a net of estimated liability adjustments gain/loss of approximately $~~4.4~~ 0, and an impairment loss of approximately $4,400,000~~million,~~, presented in income (loss) from discontinued operations in the consolidated ~~statement~~statements of operations for the ~~period~~three and nine months ended ~~March 31, 2023.~~September 30, 2023, respectively. As part of the abandonment, the Company cancelled third party contracts, settled outstanding vendor and other third-party obligations, ceased to enter new customer contracts via Medigap, and no further customer performance obligations existed. The Company does not expect further continuing involvement with Medigap, and in accordance with ASC 205-20-45-9, no corporate overhead has been allocated to discontinued operations.

Settlement Agreement
On June 30, 2023, the Company entered into a confidential settlement agreement and mutual release (the “Settlement Agreement”) with certain Medigap affiliated entities and persons, and the former owners of Medigap, whereby the Company would receive a settlement payment of $2,900,000 and was released from all past and future Medigap obligations and liabilities. The settlement payment was received in full by the Company in July 2023 and is recorded as income from discontinued operations in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023.
The following tables present the major components of assets and liabilities included in discontinued operations on the condensed consolidated balance sheets.
SCHEDULE OF DISCONTINUED OPERATIONS ON CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS
September 30, 2023 December 31, 2022
Accounts receivable $     - $ 73,223
Accounts receivable, related parties - 3,595
Accounts receivable - 3,595
Other receivables - 5,388
Prepaid expense and other current assets - 3,792
Current Assets - Discontinued Operations $ - $ 85,998

Condensed consolidated balance sheets - Current Assets - Discontinued Operations $ - $ 85,998

Property and equipment, net - $ 24,116
Right-of-use assets - 163,129
Intangibles, net - 318,000
Goodwill - 4,825,634
Other Assets - Discontinued Operations
$
- $ 5,330,879

Condensed consolidated balance sheets - Other Assets - Discontinued Operations $ - $ 5,330,877

Accounts payable and other accrued liabilities - $ 506,585
Chargeback reserve - 915,934
Current portion of leases payable - 178,117
Current Liabilities - Discontinued Operations $ - $ 1,600,636

Condensed consolidated balance sheets - Current Liabilities - Discontinued Operations $ - $ 1,600,636
12
The following table rolls forward Medigap’s assets and liabilities from their carrying values pre-abandonment to their values post abandonment, and presents the impact of reclassifications, impairments, and write-offs:
Medigap Related Assets Carrying Value Prior To Abandonment Asset and Liability Transfers Retained by the Company Asset Impairments and Liability Write-Offs Carrying Value As of September 30, 2023

Accounts receivable $ 56,398 $ - $ (56,398 ) $         -
Accounts receivable, related party 3,595 - (3,595 ) -
Accounts receivable 3,595 - (3,595 ) -
Other receivables 5,388 - (5,388 ) -
Current assets – Medigap $ 65,381 $ - $ (65,381 ) $ -

Property and equipment, net $ 22,378 $ - $ (22,378 ) $ -
Right-of-use assets 119,594 - (119,594 ) -
Intangibles, net 4,570,536 (4,258,214 )¹ (312,322 ) -
Goodwill 4,825,634 - (4,825,634 ) -
Other assets - Medigap $ 9,538,142 $ (4,258,214 ) $ (5,279,928 ) $ -

Total assets - Medigap $ 9,603,523 $ (4,258,214 ) $ (5,345,309 ) $ -

Accounts payable and other accrued liabilities $ 4,157 $ - $ (4,157 ) $ -
Short term financing agreements 29,500 (29,500 ) - -
Chargeback reserve 831,725 - (831,725 )² -
Current portion of leases payable 134,517 - (134,517 )³ -
Other liabilities 9,842 - (9,842 )³ -
Current liabilities - Medigap $ 1,009,741 $ (29,500 ) $ (980,241 ) $ -

Total liabilities - Medigap $ 1,009,741 $ (29,500 ) $ (980,241 ) $ -

Net assets and liabilities - Medigap $ 8,593,782 $ (4,228,714 ) $ (4,365,068 ) $ -
1 Includes customer relationships and internally developed and purchased software intangible assets that have continued value to the Company and have not been impaired as the fair value exceeds carrying cost.
2 Estimated liability write-off per net zero dollar estimated liability value.
3 Liability discharge pursuant to the Settlement Agreement.
13
The following tables disaggregate the major classes of pretax gain and loss as presented in discontinued operations in the condensed consolidated statements of operations.

Three Months
Ended
September 30,
2023

Three Months
Ended
September 30,
2022

Nine Months
Ended
September 30,
2023

Nine Months
Ended
September 30,
2022

Income
Commission income $          - $ 1,331,593 $ 744,030 $ 3,868,654

Expenses
Commission expense - 167,837 110,639 473,578
Salaries and wages - 484,783 454,663 1,474,526
General and administrative expenses - 136,070 129,363 384,393
Marketing and advertising - 662,744 426,818 1,774,463
Depreciation and amortization - 62,048 7,283 176,233
Other expenses (income) - (7,500 ) (3,902 ) (14,954 )
Total discontinued operations expenses before impairments and write-offs - 1,505,982 1,124,864 4,268,239
Total discontinued operations income / (loss) before impairments and write-offs $ - $ (174,390 ) $ (380,834 ) $ (399,585 )
Gains and (losses) from recoveries and impairments / write-offs of discontinued operations assets and liabilities

Settlement Recovery $ - - $ 2,900,000 -

Asset impairment losses
Accounts receivable - - 56,398 -
Accounts receivable, related parties - - 3,595 -
Other receivables - - 5,388 -
Property and equipment, net - - 22,378 -
Right-of-use assets - - 119,593 -
Intangibles, net - - 312,322 -
Goodwill - - 4,825,634 -
Total asset impairments - - 5,345,309 -

Liability write-off gains
Accounts payable and other accrued liabilities - - 4,156 -
Other payables - - 9,842 -
Chargeback reserve - - 831,725 -
Current portion of leases payable - - 134,517 -
Total liability write-off gains - - 980,240 -

Discontinued operations net asset and liability impairments / write-offs gains and (losses) - - 4,365,070 -

Net gains and (losses) from recoveries and impairments / write-offs from discontinued operations assets and liabilities - - (1,465,070 ) -

Gain (loss) from discontinued operations before tax - (174,390 ) (1,845,904 ) (399,585 )

Consolidated statement of operations - Income (loss) from discontinued operations before tax $ - $ (174,390 ) $ (1,845,904 ) $ (399,585 )
Recently Issued Accounting Pronouncements
We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.
14
NOTE 2. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table rolls forward the Company’s goodwill balance for the periods ~~ending March 31,~~ended September 30, 2023, and December 31, ~~2022.~~2022, adjusted for discontinued operations.
SCHEDULE OF IMPAIRMENT OF GOODWILL
Goodwill Goodwill
December 31, 2021 $ 10,050,277 $ 10,050,277
Goodwill recognized in connection with Barra acquisition on April 26, 2022 4,236,822 4,236,822
December 31, 2022 14,287,099 14,287,099
March 31, 2023 $ 14,287,099
September 30, 2023 $ 14,287,099

12
For the year ended December 31, 2022, due to a declining market capitalization attributed to Medigap’s performance, the Company performed a goodwill impairment test utilizing the Market Approach – Traded Market Value Method, concluding that the Company’s fair value and resultant net assets, implied a goodwill balance of $19,100,000 versus our goodwill balance prior to write-down of $33,400,000. Thus, the Company recognized a goodwill impairment loss of $14,373,374. As of June 30, 2023, the Company recognized an additional goodwill impairment of $4,825,634 upon the abandonment of Medigap.
The following table rolls forward the Company’s goodwill balance for the periods ended September 30, 2023, and December 31, 2022 inclusive of discontinued operations.
Goodwill
December 31, 2021 $ 10,050,277
Goodwill recognized in connection with Medigap acquisition 19,199,008
Goodwill recognized in connection with Barra acquisition 4,236,822
Goodwill impairment (Medigap) during the year-ended December 31, 2022 (14,373,374 )
December 31, 2022 19,112,733
Goodwill impairment (Medigap) during the nine months ended September 30, 2023 (4,825,634 )
September 30, 2023 $ 14,287,099
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,~~September 30, 2023:
SCHEDULE OF INTANGIBLE ASSETS AND WEIGHTED-AVERAGE REMAINING AMORTIZATION PERIOD
Weighted Average Remaining Amortization Period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trade name and trademarks 3.6 $ 1,807,187 $ (1,232,982 ) $ 574,205
Internally developed software 3.4 1,792,186 (557,038 ) 1,235,148
Customer relationships 8.26 11,922,290 (2,914,320 ) 9,007,970
Purchased software 1.85 667,206 (609,677 ) 57,529
Video production assets 0.00 50,000 (50,000 ) -
Non-competition agreements 1.14 3,504,810 (2,704,136 ) 800,674
$ 19,743,679 $ (8,068,153 ) $ 11,675,526
Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trade name and trademarks 2.3 $ 1,807,188 $ (1,056,995 ) $ 750,193
Internally developed software 3.9 1,723,780 (373,580 ) 1,350,200
Customer relationships 7.5 11,922,290 (2,355,705 ) 9,566,585
Purchased software 3.7 665,136 (592,312 ) 72,824
Video Production Assets 0 50,000 (50,000 ) -
Non-competition agreements 1.6 3,504,810 (2,355,335 ) 1,149,475
$ 19,673,204 $ (6,783,927 ) $ 12,889,277
15

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, 2022:

Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization
Net
Carrying Amount

Weighted Average
Remaining Amortization
period (Years)
Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trade name and trademarks 2.5 $ 1,806,188 $ (969,241 ) $ 836,947 4.4 $ 1,806,188 $ (969,241 ) $ 836,947
Internally developed software 4.2 1,529,018 (269,786 ) 1,259,232 4.1 1,635,178 (287,990 ) 1,347,188
Customer relationships 7.8 7,372,290 (1,708,767 ) 5,663,523 9.0 11,922,290 (2,076,086 ) 9,846,204
Purchased software 0 562,327 (562,327 ) - 0.4 665,137 (581,497 ) 83,640
Video Production Assets 0 50,000 (50,000 ) -
Video production assets - 50,000 (50,000 ) -
Non-competition agreements 1.9 3,504,810 (2,179,420 ) 1,325,390 1.9 3,504,810 (2,179,420 ) 1,325,390
$ 14,824,633 $ (5,739,541 ) $ 9,085,092
Total $ 19,583,603 $ (6,144,234 ) $ 13,439,369

The following table reflects expected amortization expense as of ~~March 31,~~September 30, 2023, for each of the following five years and thereafter:
SCHEDULE OF AMORTIZATION EXPENSE OF ACQUIRED INTANGIBLES ASSETS
Years ending December 31, Amortization Expense
2023 (remainder of year) $ 639,264
2024 2,193,428
2025 1,799,472
2026 1,530,604
2027 1,196,429
Thereafter 4,316,329
Total $ 11,675,526

Years ending December 31,
Amortization
Expense

2023 (remainder of year) $ 1,914,714
2024 2,177,765
2025 1,783,809
2026 1,515,517
2027 1,182,581
Thereafter 4,314,891
Total $ 12,889,277
13 16

NOTE 3. LONG-TERM DEBT AND SHORT-TERM FINANCINGS

Long-Term Debt

The composition of the long-term debt follows:
SCHEDULE OF LONG TERM DEBT

March 31,
2023

December 31,
2022

Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, net of deferred financing costs of $11,833 and $12,388 as of March 31, 2023 and December 31, 2022, respectively $ 412,763 $ 426,883
Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, variable interest of Prime Rate plus 2.5%, maturing August 2028, net of deferred financing costs of $11,833 and $12,388 as of March 31, 2023 and December 31, 2022, respectively $ 412,763 $ 426,883
Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, variable interest of Prime Rate plus 1.5%, maturing December 2028, net of deferred financing costs of $14,438 and $15,076 as of March 31, 2023 and December 31, 2022, respectively 671,685 693,682
Oak Street Funding LLC Term Loan for the acquisition of SWMT, variable interest of Prime Rate plus 2.0%, maturing April 2029, net of deferred financing costs of $8,837 and $9,206 as of March 31, 2023 and December 31, 2022, respectively 765,592 788,596
Oak Street Funding LLC Term Loan for the acquisition of FIS, variable interest of Prime Rate plus 2.0%, maturing May 2029, net of deferred financing costs of $35,389 and $36,843 as of March 31, 2023 and December 31, 2022, respectively 1,931,005 1,987,846
Oak Street Funding LLC Term Loan for the acquisition of ABC, variable interest of Prime Rate plus 2.0%, maturing September 2029, net of deferred financing costs of $40,509 and $42,129 as of March 31, 2023 and December 31, 2022, respectively 3,162,591 3,249,575
Oak Street Funding LLC Term Loan for the acquisition of Barra, variable interest of Prime Rate plus 2.5%, maturing May 2032, net of deferred financing costs of $192,831 and $198,188 as of March 31, 2023 and December 31, 2022, respectively 6,327,169 6,321,812
13,270,805 13,468,394
Less: current portion (1,235,052 ) (1,118,721 )
Long-term debt $ 12,035,753 $ 12,349,673
September 30, 2023 December 31, 2022

Oak Street Funding LLC Term Loan $ 384,402 $ 426,883
Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, variable interest of Prime Rate plus 2.5%, maturing August 2028, net of deferred financing costs of $10,724 and $12,388 as of September 30, 2023 and December 31, 2022, respectively $ 384,402 $ 426,883
Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, variable interest of Prime Rate plus 1.5%, maturing December 2028, net of deferred financing costs of $13,163 and $15,076 as of September 30, 2023 and December 31, 2022, respectively 627,676 693,682
Oak Street Funding LLC Term Loan for the acquisition of SWMT, variable interest of Prime Rate plus 2.0%, maturing April 2029, net of deferred financing costs of $8,101 and $9,206 as of September 30, 2023 and December 31, 2022, respectively 719,654 788,596
Oak Street Funding LLC Term Loan for the acquisition of FIS, variable interest of Prime Rate plus 2.0%, maturing May 2029, net of deferred financing costs of $32,481 and $36,843 as of September 30, 2023 and December 31, 2022, respectively 1,817,583 1,987,846
Oak Street Funding LLC Term Loan for the acquisition of ABC, variable interest of Prime Rate plus 2.0%, maturing September 2029, net of deferred financing costs of $37,269 and $42,129 as of September 30, 2023 and December 31, 2022, respectively 2,989,482 3,249,575
Oak Street Funding LLC Term Loan for the acquisition of Barra, variable interest of Prime Rate plus 2.5%, maturing May 2032, net of deferred financing costs of $182,118 and $198,188 as of September 30, 2023 and December 31, 2022, respectively 6,195,731 6,321,812
Long term debt gross 12,734,528 13,468,394
Less: current portion (1,353,961 ) (1,118,721 )
Long-term debt $ 11,380,567 $ 12,349,673

Oak Street Funding LLC – Term Loans and Credit Facilities
SCHEDULE OF CUMULATIVE MATURITIES OF LONG -TERM LOANS AND CREDIT FACILITIES
Fiscal year ending December 31, Maturities of Long-Term Debt
2023 (remainder of year) $ 326,783
2024 1,390,766
2025 1,552,772
2026 1,729,160
2027 1,925,603
Thereafter 6,093,302
Total 13,018,386
Less: debt issuance costs (283,858 )
Total $ 12,734,528
Fiscal year ending December 31,
Maturities of
Long-Term Debt

2023 (remainder of year) $ 893,877
2024 1,411,275
2025 1,567,542
2026 1,736,878
2027 1,924,523
Thereafter 6,040,548
Total 13,574,643
Less: debt issuance costs (303,838 )
Total $ 13,270,805
17

Short-Term Financings
The Company has various short-term notes payable for financed items such as insurance premiums and CRM software purchases. ~~Total financed for the quarters ended March 31, 2023, and 2022, respectively, was approximately $154,000~~ ~~and $~~0. These are normally paid in equal installments over a period of twelve months or less and carry interest rates ~~ranging between~~ 0~~% and~~up to 8% per annum. As of ~~March 31,~~September 30, 2023, and December 31, 2022, ~~respectively, approximately $38,000~~ ~~and $~~0 ~~remained~~balances outstanding on short-term ~~financings.~~financings were $114,394 and $154,017, respectively.
14

NOTE 4. WARRANT LIABILITIES
Series B Warrants

Pursuant to the terms of the ~~SPA,~~Sales and Purchase Agreement (SPA), during the quarter ended ~~March 31,~~September 30, 2023, the Series B Warrants’ effective exercise price reset to $~~3.55~~2.43. As of ~~March 31,~~September 30, 2023, there remain ~~1,331,667~~1,166,667 Series B Warrants outstanding.
For the ~~periods~~three and nine months ended ~~March 31,~~September 30, 2023, net fair value gains and losses recognized for the Series B Warrants were gains of $1,703,333 and $4,345,599, respectively. For the three and nine months ended September 30, 2022, net fair value gains and losses recognized for the Series B Warrants were gains of $~~4,226,950~~7,726,161 and $~~12,425,426~~34,621,024, respectively, presented in the recognition and change in fair value of warrant liabilities account in the condensed consolidated statements of operations. The Series B Warrant liability outstanding as of ~~March 31,~~September 30, 2023 and December 31, 2022 was $~~2,157,300~~1,575,000 and $6,384,250 respectively, presented in the warrant liability account on the condensed consolidated balance sheets.

Placement Agent Warrants

For the ~~periods~~three and nine months ended ~~March 31,~~September 30, 2023, ~~and 2022,~~ net fair value gains and losses recognized for the Placement Agent Warrants (“PAW”) were ~~a gain~~gains of $~~39,281~~12,064 and ~~a loss of~~ $43,520, respectively. For the three and nine months ended September 30, 2022, net fair value gains recognized for the PAW were $~~579,463,~~193,154 and $1,450,129, respectively, presented in the recognition and change in fair value of warrant liabilities account in the condensed consolidated statements of operations. The PAW liability outstanding as of ~~March 31, 2022~~September 30, 2023 and December 31, 2022 was $~~9,619~~5,380 and $48,900, respectively, presented in the warrant liability account on the condensed consolidated balance sheets.
As of September 30, 2023, there remain 16,303 PAW’s outstanding.
NOTE 5. EQUITY
Common Stock

The Company is authorized to issue 133,333,333 shares of common stock, $0.086 par value. Each share of issued and outstanding common stock ~~entitle~~entitles 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 January 2023, the Company issued 109,358 shares of the Company’s common stock to settle two earn-out liabilities.
On February 23, 2023, pursuant to authority granted by the Board of Directors of the Company, the Company implemented a 1-for-15 reverse split of the Company’s authorized and issued and outstanding common stock (the “Reverse Split-2023”). The par value remains unchanged. All share and per share information as well as common stock and additional paid-in capital have been retroactively adjusted to reflect the Reverse Split-2023 for all periods presented, unless otherwise indicated. The split resulted in a rounding addition of approximately 15,300 shares valued at par, totaling $1,300.
In March of 2023, Yes Americana, a related party, converted $645,000 of its outstanding convertible debt into 66,743 shares of the Company’s common stock. The conversion considered the fair market value of the stock on the day of conversion of $9.67 for the total of 66,743 shares.
In March of 2023, the ~~company~~Company issued 155,038 shares of the Company’s common stock in conjunction with the Private Placement-2023 as defined and discussed further below.
During the second quarter of 2023, the Company issued from its common stock, 112,557 shares in lieu of services provided, 352,260 shares to settle an earn-out liability and 22,219 shares pursuant to vested restricted stock awards earned by agents through an equity-based compensation program at one of the Company’s subsidiaries.
18

During the third quarter of 2023, the Company issued from its common stock, 174,610 shares to settle an earn-out liability, 400 shares in lieu of services provided, and 3,017 shares to employees for vested stock awards.
As of ~~March 31,~~September 30, 2023 and December 31, 2022, there were ~~1,566,048~~2,304,375 and 1,219,573 shares of ~~Common Stock~~common stock outstanding, respectively.

15
Warrants
~~Warrants~~
Series A Warrants
In conjunction with the Company’s initial public offering, the Company issued ~~138,000~~2,070,000 Series A Warrants, ~~which were~~ classified as equity warrants ~~because of~~per its provisions, ~~pursuant~~which permit holders to ~~the warrant agreement, that permit the holder~~ obtain a fixed number of shares for a fixed monetary ~~amount.~~value. 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 $~~0.15~~0.01~~. The warrants~~, and may be exercised at any point from the effective date at an exercise price $6.60until the ~~5-year~~5^th-year anniversary offrom issuance (effectively, February 8, 2026) and are not subject to ~~standard~~ antidilution provisions. ~~The~~Considering 375,000 warrant exercises through September 30, 2023, there remain 1,695,000Series A Warrants issued and outstanding as of September 30, 2023 and December 31, 2022. Pursuant to the Reverse Split-2023, the outstanding Series A Warrants are exercisable ~~at a per share~~into 113,000 common shares for an effective exercise price ~~equal to~~ ~~110~~% of ~~the public offering price of one share of common stock and accompanying Series A Warrant, or~~ $99.00. ~~Series A warrant holders exercised~~ ~~25,000~~ ~~Series A warrants in January 2022, resulting in~~ ~~113,000~~ ~~of Series A warrants remaining issued and outstanding as of March 31, 2023.~~
Series E and F Warrants
On March 13, 2023, the Company entered into a securities purchase agreement (the “SPA-2023”) with one institutional buyer for the purchase and sale of, (i) an aggregate of 155,038 shares (the “Common Shares”) of the Company’s common stock, par value $0.086 per share (the “Common Stock”) along with accompanying common warrants (the “Common Units”), (ii) prefunded warrants (the “Prefunded Warrants” or “Series E Warrants”) that are exercisable into 897,594 shares of Common Stock (the “Prefunded Warrant Shares”) along with accompanying common warrants (the “Pre-Funded Units”), and (iii) common warrants (the “Common Warrants” or “Series F Warrants”) to initially acquire up to 2,105,264 shares of Common Stock (the “Common Warrant Shares”) (representing 200% of the Common Shares and Prefunded Warrant Shares) in a private placement offering (the “Private Placement-2023”). Additionally, the Company agreed to issue a warrant to the Placement Agent (defined below), to initially acquire 52,632 shares of common stock (the “PA Warrant”) and entered into a registration rights agreement with the buyer to register for resale the common shares underlying the Series E and F Warrants.
The aggregate purchase price for the Common Shares, Prefunded Warrants (Series E Warrants) and the Common Warrants (Series F Warrants) to be purchased by the Buyer shall be equal to (i) $3.80 for each Common Unit purchased by such Buyer, or (ii) $3.799 for each Prefunded Unit purchased by the Buyer, which Prefunded Warrants are exercisable into Prefunded Warrant Shares at the initial Exercise Price (as defined in the Prefunded Warrant) of $0.001 per Prefunded Warrant Share in accordance with the Prefunded Warrant.
The Common Warrant (Series F) has an exercise price of $3.55 per share, subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date of the Private Placement-2023. The Common Warrant will be exercisable six months following the date of issuance and will expire five and a half years from the date of issuance.

The PA Warrant has an exercise price of $3.91 per share, subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date of the SPA-2023. The PA Warrant will be exercisable six months following the date of issuance and will expire five years from the date of issuance.
19
The closing of the Private Placement-2023 occurred on March 16, 2023. EF Hutton, a division of Benchmark Investments, LLC (the “Placement Agent”) acted as the sole placement agent and was entitled to an 8% of gross proceeds cash fee and the reimbursement of certain Placement Agent fees and customary expenses.
Gross and net proceeds to the Company from the Private Placement-2023 were approximately $4million and $3.4million respectively, to be utilized primarily for general working capital and administrative purposes. Direct financing fees approximated $553,000.
The Company determined the Series E Warrants, Series F Warrants, and PA Warrants are equity in nature because of provisions, pursuant to the warrant agreements, that permit the holder to obtain a fixed number of shares for a fixed monetary amount. The values offset to $0 in additional paid-in capital in the Company’s condensed consolidated statements of stockholders’ equity (deficit).
~~Equity~~~~-based Compensation~~

As of September 30, 2023, no exercises have occurred and there remain 897,594, 2,105,264 and 52,632 Series E Warrants, Series F Warrants and PA Warrants outstanding respectively.
Equity-based Compensation
During the nine-month period ~~ending March 31,~~ended September 30, 2023, an executive was awarded an annual stock award in conjunction with a promotion agreement, consisting of 2,667shares of the Company’s common stock per annum, to vest monthly throughout the term of employment. For the three and nine months ended ~~March 31,~~September 30, 2023, total stock compensation for this award iswas valued at approximately $~~5,842~~5,601, and $17,044, respectively, recorded as stock-based compensation.
Total stock-based compensation expense recorded in general and administrative expenses in the condensed consolidated statements of operations for the ~~periods~~three and nine months ended ~~March 31,~~September 30, 2023 ~~and 2022 was~~ is $~~43,797~~27,779 and $~~739,960~~106,943, respectively.

16
NOTE 6. 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.
The following calculates basic and diluted EPS:
SCHEDULE OF CALCULATIONS OF BASIC AND DILUTED EPS
Three Months Three Months
Ended Ended

March 31,
2023

March 31,
2022

Income from continuing operations
$ 2,983,861 $ 9,487,884
Deemed dividend -
(6,930,335
)
Net income continuing operations, numerator, basic computation
2,983,861 2,557,549
Recognition and change in fair value of warrant liabilities
(4,266,231 )
(13,992,664
)
Net loss continuing operations, numerator, diluted computation

$
(1,282,370 ) $ (11,435,115 )

Weighted average common shares, basic
1,553,953 980,569
Effect of series B warrants
631,894
214,911

Weighted average common shares, dilutive
2,185,847 1,195,480
Earnings (loss) per common share – basic

$
1.92
$
2.61
Earnings (loss) per common share – diluted

(0.59
) (9.57 )

The reversal of the gain on the change fair value of the Series B warrant liability for the three months March 31, 2023 and 2022 is included in the numerator of the dilutive EPS calculation to eliminate the effects the warrants as the impact is dilutive.

Three Months
Ended
September 30, 2023

Three Months
Ended
September 30, 2022

(Loss) income from continuing operations, numerator, basic and diluted computation $ (139,004 ) $ 6,296,483
Deemed dividend - -
Net income continuing operations, numerator, basic computation
Recognition and change in fair value of warrant liabilities
Net loss continuing operations, numerator, diluted computation

Weighted average common shares, basic 3,021,455 1,156,939
Effect of series B warrants - 147,939
Non-vested stock awards
Weighted average common shares, dilutive 3,021,455 1,304,878
(Loss) earnings per common share – basic $ (0.05 ) $ 5.44
(Loss) earnings per common share – diluted $ (0.05 ) 4.83

17 20

Nine Months
Ended
September 30, 2023

Nine Months
Ended
September 30, 2022

(Loss) income from continuing operations $ (1,136,922 ) $ 26,357,370
Deemed dividend - (6,930,335 )
Net (loss) income from continuing operations, numerator, diluted computation $ (1,136,922 ) $ 19,427,035

Weighted average common shares, basic 2,436,015 1,069,534
Effect of series B warrants - 147,939
Non-vested stock awards - 2,349
Weighted average common shares, dilutive 2,436,015 1,219,822
Loss per common share – basic (0.47 ) 18.16
Loss per common share – diluted $ (0.47 ) $ 15.93
Additionally, the following are considered anti-dilutive securities excluded from weighted-average shares used to calculate diluted net loss per common share:
SCHEDULE OF DILUTIVE NET LOSS PER COMMON SHARES

For the Three and Nine Months Ended
September 30, 2023 September 30, 2022
Shares subject to outstanding common stock options 10,298 10,928
Shares subject to Series A warrants 113,000 113,000
Shares subject to Series B warrants 1,182,969 668,297
Shares subject to Series E warrants 887,594 -
Shares subject to series F warrants 2,105,264 -
Shares subject to placement agent warrants
52,632 -
Shares subject to vested and unvested stock awards 5,756 4,085

March 31,
2023

March 31,
2022

For the Three Months Ended

March 31,
2023

March 31,
2022

Shares subject to outstanding common stock options 10,928 10,928
Shares subject to outstanding Series A warrants 113,000 113,000
Shares subject to outstanding Series F warrants 2,105,264 -
Shares subject to placement agent warrants 52,632 -
Shares subject to unvested stock awards 7,709 661
Shares subject to conversion of Series B preferred stock
-

147,939

NOTE 7. LEASES

Operating lease expense for the three months ended ~~March 31,~~September 30, 2023 and 2022 was $~~161,614~~123,508 and $118,653, respectively. Operating lease expense for the nine months ended September 30, 2023 and 2022 was $~~145,662,~~362,804 and $337,876 respectively. As of ~~March 31,~~September 30, 2023, the weighted average remaining lease term and weighted average discount rate for the operating leases were ~~3.85~~3.82 years and ~~5.60~~6.14% respectively.

Future minimum lease payment under these operating leases consisted of the following:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT
Period ending September 30, 2023 Operating Lease Obligations
2023 $ 391,173
2024 210,106
2025 112,904
2026 116,291
2027 119,780
Thereafter 60,774
Total undiscounted operating lease payments 1,011,028
Less: Imputed interest 101,495
Present value of operating lease liabilities $ 909,533
Period ending March 31, 2023
Operating Lease
Obligations

2023 $ 271,267
2024 269,908
2025 144,124
2026 113,738
2027 117,150
Thereafter 151,052
Total undiscounted operating lease payments 1,067,239
Less: Imputed interest 115,753
Present value of operating lease liabilities $
951,486

21
NOTE 8. 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,~~September 30, 2023 and December 31, 2022. 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.

18
Earn-out liabilities

The following outlines changes to the Company’s earn-out liability balances for the respective periods ended ~~March 31,~~September 30, 2023 and December 31, 2022:
SCHEDULE OF EARN-OUT LIABILITY
Fortman Montana Altruis Kush Barra Total Fortman Montana Altruis Kush Barra Total
Ending balance December 31, 2022 $ 667,000 $ 500,000 $ 834,943 $ 147,535 $ 560,000 $ 2,709,478 $ 667,000 $ 500,000 $ 834,943 $ 147,535 $ 560,000 $ 2,709,478
Changes due to business combinations
Changes due to payments - (250,000 ) (834,943 ) (147,535 ) - (1,232,478 ) (1,433,700 ) (750,000 ) (929,168 ) (147,535 ) - (3,260,403 )
Changes due to fair value adjustments 394,467 150,000 94,225 - (162,000 ) 476,692 1,152,525 356,744 94,225 - (312,000 ) 1,291,494
Ending balance March 31, 2023 $ 1,061,467 $ 400,000 $ 94,225 $ - $ 398,000 $ 1,953,692
Changes due to amount payable in common shares
-
(53,372 )
-

-

-
(53,372 )
Ending balance September 30, 2023 $ 385,825 $ 53,372 $ - $ - $ 248,000 $ 687,197

Fortman Montana Altruis Kush Barra Total Fortman Montana Altruis Kush Barra Total
Ending balance December 31, 2021 $ 515,308 $ 615,969 $ 992,868 $ 1,689,733 $ - $ 3,813,878 $ 515,308 $ 615,969 $ 992,868 $ 1,689,733 $ - $ 3,813,878
Beginning balance $ 515,308 $ 615,969 $ 992,868 $ 1,689,733 $ - $ 3,813,878

Changes due to business combinations - - - - 600,000 600,000 - - - - 600,000 600,000
Changes due to payments (34,430 ) (326,935 ) (84,473 ) (1,259,087 ) - (1,704,925 ) (34,430 ) (326,935 ) (84,473 ) (1,259,087 ) - (1,704,925 )
Changes due to fair value adjustments 186,122 210,966 (73,452 ) (283,111 ) (40,000 ) 525 186,122 210,966 (73,452 ) (283,111 ) (40,000 ) 525
Ending balance December 31, 2022 $ 667,000 $ 500,000 $ 834,943 $ 147,535 $ 560,000 $ 2,709,478 $ 667,000 $ 500,000 $ 834,943 $ 147,535 $ 560,000 $ 2,709,478
Ending balance $ 667,000 $ 500,000 $ 834,943 $ 147,535 $ 560,000 $ 2,709,478
22
NOTE 9. RELATED PARTY TRANSACTIONS
On September 13, 2022, the Company issued a promissory note to YES Americana Group, LLC ~~(Americana)~~(“Americana”) a related party entity beneficially owned by the Company’s Chief Executive Officer, for the principal sum of $1,500,000 (the “Note”)., accruing monthly interest of 5% per annum beginning nine months after Note issuance. On February 7, 2023 , the Company and Americana entered into an amendment to the Note pursuant to which (i) the principal amount of the Note was increased to $1,845,000, (ii) the maturity date of the Note was amended to January 15, 2026, (iii) the interest rate under the Note shall not increase after the maturity date, and (iv) the Note can be converted at any time, at the option of Americana, into shares of the Company’s common stock, par value $0.086 per share at an agreed upon conversion price.
On February 13, 2023, Americana effectuated a conversion of $645,000 of the Note into 66,743 shares of the Company’s common stock, $0.086 par value per share, in accordance with the terms of the Amendment. In addition, ~~during~~throughout the ~~month~~year of ~~March~~ 2023 the Company repaid principal to Americana of $~~400,000~~693,145. As of ~~March~~September 30, 2023, and December 31, ~~2023~~2022 respectively, the balance owed to Americana was $~~800,000~~161,855 and $1,500,000, reclassified and recorded in the convertible debt, related parties, less current portion account in the condensed consolidated balance sheets. Interest expense for both the three and nine months ended September 30, 2023, was $4,355, recorded to interest expense, related parties in the condensed consolidated statements of operations.
The Company has amounts payable to Reliance Global Holdings, LLC, a related party beneficially owned by the Company’s Chief Executive Officer stemming from funds loaned to the Company for various subsidiary acquisitions. These loans do not bear interest and there is no term. Repayment will be made at the Company’s discretion. The open balance is considered non-current and classified to the related parties, less current portion account in the condensed consolidated balance sheets with open balances of $25,479 and $100,724 as of September 30, 2023 and December 31, 2022, respectively.
The Company incurred a payable of $200,000 to an employee for a software purchased in July of 2019. The payable was issued with a $27,673 discount, utilizing a 7.5% discount rate. There are monthly payment terms of $4,167 through June 2024, the date of final settlement. The balance is carried at present value on the condensed consolidated balance sheets. The Company classifies amounts planned to be settled within twelve months from the balance sheet date to current liabilities. Accordingly, the Company presents current balances of $36,479 and $47,249 in the current portion of loans payables, related parties account in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022. Non-current amounts are classified to the loans payable, related parties, less current portion account in the condensed consolidated balance sheets and amounted to $0 and $21,541 as of September 30, 2023, and December 31, 2022, respectively. Amortization expense to bring the payable to present value for the three and nine months ended September 30, 2023 respectively, was $1,730 and $5,189, and is classified to the interest expense, related parties account in the condensed consolidated statements of operations.
Pursuant to the first amendment to the April 26, 2022 asset purchase agreement between the Company and Barra & Associates, LLC, a related party entity beneficially owned by a senior vice president of the Company, the Company agreed to pay a deferred purchase price (the “DPP”) of $1,375,000 by January 31, 2023, and all amounts unpaid thereafter will accrue interest at a rate of 1.5% per month until paid. The Company intends to fully repay all unpaid amounts inclusive of interest over the next two years. The Company classifies amounts planned to be settled within twelve months from the balance sheet date to current liabilities. Accordingly, the Company reclassifies and presents current balances of $300,000 and $1,375,000 respectively, in the current portion of loans payables, related parties account in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022. Non-current amounts are classified to the loans payable, related parties, less current portion account in the condensed consolidated balance sheets and amounted to $233,306 and $0 as of September 30, 2023, and December 31, 2022 respectively. Interest expense for the three and nine months ended September 30, 2023 respectively, was $26,390 and $115,560, recorded to interest expense, related parties in the condensed consolidated statements of operations.
NOTE 10. INVESTMENT IN NSURE
During April 2023, the Company sold its remaining 262,684 of NSURE shares to unaffiliated third parties, receiving the shares’ cost basis and cash proceeds of $900,000. The Company’s remaining NSURE share balance as of September 30, 2023, was $0.
NOTE ~~10.~~11. SUBSEQUENT EVENTS

~~During April~~On October 3, 2023, ~~the Company sold its remaining~~ ~~262,684~~168,594 pre-funded Series E Warrants were exercised into 168,594 common shares at an exercise price of $0.001, resulting in $729 of ~~NSURE shares to unaffiliated third parties, receiving the shares cost basis and~~ cash proceeds to the Company. Subsequently, the issued and outstanding balance of $Series E Warrants is ~~900,000~~729,000. ~~The Company’s remaining NSURE share balance as of March 31, 2023 and April 30, 2023 was~~ ~~262,684~~ ~~and~~ ~~zero, respectively.~~
19 23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Reliance Global Group, Inc. (the “Company”) operates as a diversified company engaging in business in the insurance market, as well as other related sectors. Our focus is to grow the Company by pursuing an aggressive acquisition strategy, initially and primarily focused upon wholesale and retail insurance agencies. The Company is controlled by the same management team as Reliance Global Holdings, LLC (“Reliance Holdings”), a New York based firm that is the owner and operator of numerous companies with core interests in real estate and insurance. Our relationship with Reliance Holdings provides us with significant benefits: (1) experience, knowledge, and industry relations; (2) a source of acquisition targets currently under Reliance Holdings’ control; and (3) financial and logistics assistance. We are led and advised by a management team that offers over 100 years of combined business expertise in real estate, insurance, and the financial service industry.

In the insurance sector, our management has extensive experience acquiring and managing insurance portfolios in several states, as well as developing specialized programs targeting niche markets. Our primary strategy is to identify specific risk to reward arbitrage opportunities and develop these on a national platform, thereby increasing revenues and returns, and then identify and acquire undervalued wholesale and retail insurance agencies with operations in growing or underserved segments, expand and optimize their operations, and achieve asset value appreciation while generating interim cash flows.

As part of our growth and acquisition strategy, we continue to survey the current insurance market for value-add acquisition opportunities. As of ~~March 31,~~September 30, 2023, we have acquired nine insurance ~~agencies, including both affiliated and unaffiliated companies and long term, we seek to conduct all transactions and acquisitions through our direct operations.~~agencies.

Over the next 12 months, we plan to focus on the expansion and growth of our business through continued asset acquisitions in insurance markets and organic growth of our current insurance operations through geographic expansion and market share growth.

Further, we launched our 5MinuteInsure.com (“5MI”) Insurtech platform during 2021 which expanded our national footprint. 5MI is a high-tech proprietary tool developed by us as a business to consumer portal which enables consumers to instantly compare quotes from multiple carriers and purchase their car and home insurance in a time efficient and effective manner. 5MI taps into the growing number of online shoppers and utilizes advanced artificial intelligence and data mining techniques, to provide competitive insurance quotes in around 5 minutes with minimal data input needed from the consumer. The platform launched during the summer of 2021 and currently operates in 46 states offering coverage with up to 30 highly rated insurance carriers.

With the acquisition of Barra, we launched RELI Exchange, our business-to-business (B2B) InsurTech platform and agency partner network that builds on the artificial intelligence and data mining backbone of 5MinuteInsure.com. Through RELI Exchange we on-board agency partners and provide them with an InsurTech platform white labeled, designed and branded specifically for their business. This combines the best of digital and human capabilities by providing our agency partners and their customers quotes from multiple carriers within minutes. Since its inception, RELI Exchange has increased its agent roster by more than 30%.

Business Trends and Uncertainties

The insurance intermediary business is highly competitive, and we actively compete with numerous firms for customers ~~properties~~ and insurance companies, many of which have relationships with insurance companies, or have a significant presence in niche insurance markets that may give them an advantage over us. Other competitive concerns may include the quality of our products and services, our pricing and the ability of some of our customers to self-insure and the entrance of technology companies into the insurance intermediary business. ~~A number of~~Several insurance companies are engaged in the direct sale of insurance, primarily to individuals, and do not pay commissions to agents and brokers.
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Financial Instruments

The Company’s financial instruments as of ~~March 31,~~September 30, 2023, consist of derivative warrants. These are accounted at fair value as of inception/issuance date, and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, (non-cash) gain or loss.
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Insurance Operations

Our insurance operations focus on the acquisition and management of insurance agencies throughout the U.S. Our primary focus is to pinpoint undervalued wholesale and retail insurance agencies with operations in growing or underserved segments (including healthcare and Medicare, as well as personal and commercial insurance lines). We then focus on expanding their operations on a national platform and improving operational efficiencies ~~in order~~ to achieve asset value appreciation while generating interim cash flows. In the insurance sector, our management team has over 100 years of experience acquiring and managing insurance portfolios in several states, as well as developing specialized programs targeting niche markets. We plan to accomplish these objectives by acquiring wholesale and retail insurance agencies it deems to represent a good buying opportunity (as opposed to insurance carriers) as insurance agencies bear no insurance risk. Once acquired, we plan to develop them on a national platform to increase revenues and profits through a synergetic structure. The Company is initially focused on segments that are underserved or growing, including healthcare and Medicare, as well as personal and commercial insurance lines.

Insurance Acquisitions and Strategic Activities

As of the balance sheet date, we have acquired multiple insurance brokerages (see table below), including both acquisitions of affiliated companies (i.e., owned by Reliance Holdings before the acquisition) and unaffiliated companies. As our acquisition strategy continues, our reach within the insurance arena can provide us with the ability to offer lower rates, which could boost our competitive position within the industry.
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

Commercial Solutions of Insurance Agency, LLC (CCS or Commercial Solutions) December 1, 2018 New Jersey P&C – Trucking Industry Unaffiliated

Southwestern Montana Insurance Center, Inc. (Southwestern Montana or Montana) April 1, 2019 Montana Group Health Insurance Unaffiliated

Fortman Insurance Agency, LLC (Fortman or Fortman Insurance) May 1, 2019 Ohio
P&C and
Health Insurance
Unaffiliated

Altruis Benefits Consultants, Inc. (Altruis) September 1, 2019 Michigan Health Insurance Unaffiliated

UIS Agency, LLC (UIS) August 17, 2020 New York ~~Health Insurance~~
P&C – Trucking Industry
Unaffiliated

J.P. Kush and Associates, Inc. (Kush) May 1, 2021 Michigan Health Insurance Unaffiliated

Barra & Associates, LLC April 26, 2022 Illinois Health Insurance Unaffiliated
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Recent Developments

~~Private Placement-2023~~
On March 13, 2023, the Company entered into a securities purchase agreement (the “SPA-2023”) with one institutional buyer for the purchase and sale of (i) an aggregate of 155,038 shares (the “Common Shares”) of the Company’s common stock, par value $0.086 per share (the “Common Stock”) along with accompanying common warrants (the “Common Units”), (ii) prefunded warrants (the “Prefunded Warrants” or “Series E Warrants”) that are exercisable into 897,594 shares of Common Stock (the “Prefunded Warrant Shares”) along with accompanying common warrants (the “Pre-Funded Units”), and (iii) common warrants (the “Common Warrants” or “Series F Warrants”) to initially acquire up to 2,105,264 shares of Common Stock (the “Common Warrant Shares”) (representing 200% of the Common Shares and Prefunded Warrant Shares) in a private placement offering (the “Private Placement-2023”). Additionally, the Company agreed to issue a warrant to the Placement Agent (defined below), to initially acquire 52,632 shares of common stock (the “PA Warrant”) and ~~entered into a registration rights agreement with the buyer to register for resale the common shares underlying the Series E and F Warrants.~~
The aggregate purchase price for the Common Shares, Prefunded Warrants (Series E Warrants) and the Common Warrants (Series F Warrants) to be purchased by the Buyer shall be equal to (i) $3.80 for each Common Unit purchased by such Buyer, or (ii) $3.799 for each Prefunded Unit purchased by the Buyer, which Prefunded Warrants are exercisable into Prefunded Warrant Shares at the initial Exercise Price (as defined in the Prefunded Warrant) of $0.001 per Prefunded Warrant Share in accordance with the Prefunded Warrant.
The Common Warrant (Series E) has an exercise price of $3.55 per share, subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date of the ~~Private Placement-2023. The Common Warrant will be exercisable six months following the date of issuance and will expire five and a half years from the date of issuance.~~

The PA Warrant has an exercise price of $3.91 per share, subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date of the SPA-2023. The PA Warrant will be exercisable six months following the date of issuance and will expire five years from the date of issuance.
The closing of the Private Placement-2023 occurred on March 16, 2023. EF Hutton, a division of Benchmark Investments, LLC (the “Placement Agent”) acted as the sole placement agent and was entitled to an 8% of gross proceeds cash fee and the reimbursement of certain Placement Agent fees and customary expenses.
~~Gross and net proceeds to the Company from the~~ ~~Private Placement-2023~~ ~~were approximately $4 million and $3.4 million, respectively, to be utilized primarily for general working capital and administrative purposes. Direct financing fees approximated $553,000.~~
The Company determined the Series E Warrants, Series F Warrants, and PA Warrants are equity in nature and their value is included in the Company’s condensed consolidated statements of stockholders’ equity (deficit).
Reverse Stock Split
On February 23, 2023, pursuant to authority granted by the Board of Directors of the Company, the Company implemented a 1-for-15 reverse split of the Company’s authorized and issued and outstanding common stock (the “Reverse Split-2023”). The par value remains unchanged. All share and per share information as well as common stock and additional paid-in capital have been retroactively adjusted to reflect the Reverse Split-2023 for all periods presented, unless otherwise indicated. The split resulted in a rounding addition of approximately 15,300 shares valued at par, totaling $1,300.
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Second Amendment to Fortman Purchase Agreement
As previously disclosed, the Company, Fortman Insurance Services, LLC, Fortman Insurance Agency, LLC, Jonathan Fortman, and Zachary Fortman (collectively, the “Parties”) entered into a purchase agreement on or around May 1, 2019 (the “Purchase Agreement”), whereby the Company purchased the business and certain assets noted within the Purchase Agreement. On May 18, 2023, the Parties entered into that certain second amendment to the Purchase Agreement (the “Second Amendment”). Pursuant to the Second Amendment, the Parties agreed to a total remaining balance of $716,850 owed to both Jonathan Fortman and Zachary Fortman under the Purchase Agreement for a combined total amount owed of $1,433,700. In satisfaction of such remaining balances, the Company agreed to issue 176,130 shares of the Company’s restricted common stock, par value $0.086 per share (the “Common Stock”), to both Jonathan Fortman and Zachary Fortman (collectively, the “Shares”), for a total issuance of 352,260 shares of Common Stock. Following the issuance of the Shares, the Company’s issued and outstanding Common Stock count will be 1,983,308. If the Nasdaq official closing price of the Common Stock is less than $4.07 on November 18, 2023, then the Company shall pay both Jonathan Fortman and Zachary Fortman an amount equal to the Make-Up Payment (as defined herein) within 15 business days thereafter. Pursuant to the Second Amendment, the “Make-Up Payment” means an amount in cash equal to $616,850 minus First Holder Shares Value (as defined herein) to Jonathan Fortman, and $616,850 minus Second Holder Shares Value (as defined herein) to Zachary Fortman. Further, under the Second Amendment, the “First Holder Shares Value” and “Second Holder Shares Value” means 176,130 and 176,130 respectively (subject to appropriate adjustments for any stock dividend, stock split, stock combination, rights offerings, reclassification or similar transaction that proportionately decreases or increases the Common Stock) multiplied by the Nasdaq official closing price of the Common Stock on November 18, 2023.
Settlement Agreement
On June 30, 2023, the Company entered into a Confidential Settlement Agreement and Mutual Release (the “Settlement Agreement”) by and between the Company, Medigap Healthcare Insurance Agency, LLC, a wholly owned subsidiary of the Company (the “Agency” and together with the Company, the “Reliance Parties”), Pagidem, LLC f/k/a Medigap Healthcare Insurance Company, LLC (“Pagidem”), Joseph J. Bilotti, III (together with Pagidem, the “Bilotti Parties”), Kyle Perrin, Zachary Lewis, T65 Health Insurance Solutions, Inc. f/k/a T65 Health Solutions, Inc. (“T65”), and Seniors First Life, LLC (collectively with Mr. Lewis and T65, the “Lewis Parties”).
The Company, Pagidem, and Mr. Bilotti previously entered into that certain Asset Purchase Agreement dated December 21, 2021 (the “APA”), pursuant to which the Company acquired, and the Bilotti Parties sold, certain assets and liabilities of Pagidem to the Company. As part of the transactions contemplated by the APA, the Company entered into that certain Employment Agreement, dated as of January 10, 2022, by and between the Company and Mr. Perrin (the “Employment Agreement”). The Company later assigned the assets and liabilities it acquired pursuant to the APA, and the Employment Agreement, to Agency. Mr. Perrin previously served as the Chief Operating Officer and Chief Executive Officer of Agency pursuant to the Employment Agreement. The Company and Mr. Lewis entered into that certain Non-Disclosure Agreement, effective as of January 24, 2022 (the “NDA”).
The Company, pursuant to the APA, previously filed a claim with the American Arbitration Association (“AAA”), Case No. 01-23-0002-3404 (the “Bilotti Arbitration”), wherein the Company purports to assert claims against the Bilotti Parties for fraudulent inducement, intentional and negligent misrepresentation, breach of contract, breach of restrictive covenants, conversion, civil theft, tortious interference, and conspiracy (the “Bilotti Claim”). The Company also filed, pursuant to the Employment Agreement, a claim with the AAA, Case No. 01-23-0002-2048(the “Perrin Arbitration”), wherein the Company purports to assert claims against Mr. Perrin for conversion, civil conspiracy, fraud, breach of fiduciary duty, and breach of duty of loyalty and good faith. (the “Perrin Claim”). In the Perrin Arbitration, Mr. Perrin filed counterclaims against the Company for breaches of employment agreement, unjust enrichment, and breach of the covenant of good faith and fair dealing (the “Perrin Counterclaim”).
The Reliance Parties have filed a complaint in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, Case No. 50-2023-CA-010777-XXXXMB, Div. AA (the “Lewis Litigation,” and collectively with the Bilotti Arbitration and the Perrin Arbitration, the “Medigap Disputes”), wherein the Reliance Parties purport to assert claims against the Lewis Parties for tortious interference with business relationship, civil conspiracy, breach of contract, conversion, and unjust enrichment (the “Lewis Claim”).
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The parties to the Settlement Agreement have each disputed and continue to dispute the claims asserted and allegations made against them.
United Insurance Group Agency, Inc. and/or LTC Global, Inc. or those entities’ assignees, affiliates, subsidiaries, partners or parent companies (collectively, the “Factor”), allege the Reliance Parties owe the Factor a debt, which the Reliance Parties dispute.
Pursuant to the terms of the Settlement Agreement, the Medigap Parties agreed to pay to the Company an amount equal to $2,900,000 (the “Settlement Payment”) within five business days of the effective date of the Settlement Agreement. The Company received the Settlement Payment on July 6, 2023.
Upon receipt of the Settlement Payment, the Reliance Parties agreed to release and discharge each and all of the Bilotti Parties, Mr. Perrin, and the Lewis Parties, and each of their present and former agents, servants, or employees, members, owners, shareholders, officers, managers, partners, directors, trustees, representatives, attorneys, contractors, predecessor and successor entities and assigns, parents, subsidiaries and affiliates (collectively, the “Medigap Released Parties”) of and from any and all past, existing, and/or future suits, liabilities, claims, demands, fees, costs, expenses, payments, judgments, damages, actions and rights or causes of action of any kind or nature, from the beginning of the world to the effective date of the Settlement Agreement, including but not limited to (A) any matters that were or could have been alleged in the: (i) the Bilotti Arbitration; (ii) the Perrin Arbitration; (iii) the Lewis Litigation; and (B) (i) any and all claims to additional money, distributions, or compensation of any kind from the Medigap Released Parties; provided, however, that nothing in the Settlement Agreement will serve to release any claims the Reliance Parties may have against the Factor.
In addition, upon receipt of the Settlement Payment, the Medigap Parties agreed to release and discharge each and all of the Reliance Parties, and each of their present and former agents, servants, or employees, members, owners, shareholders, officers, managers, partners, directors, trustees, representatives, attorneys, contractors, predecessor and successor entities and assigns, parents, subsidiaries and affiliates (collectively, the “Reliance Released Parties”) of and from any and all past, existing, and/or future suits, liabilities, claims, demands, fees, costs, expenses, payments, judgments, damages, actions and rights or causes of action of any kind or nature, from the beginning of the world to the effective date of the Settlement Agreement, including but not limited to (A) any matters that were or could have been alleged in the: (i) the Bilotti Arbitration; (ii) the Perrin Arbitration; (iii) the Lewis Litigation; and (B) (i) any and all claims to additional money, distributions, or compensation of any kind from the Medigap Released Parties.
Also, pursuant to the terms of the Settlement Agreement, Mr. Perrin agreed to release the Reliance Parties from all claims arising under any federal, state or local law or statute, including without limitation, the Fair Labor Standards Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family Medical Leave Act, Title VII of the Civil Rights Act of 1964, Employee Retirement Income Security Act, the Equal Pay Act, the Worker Adjustment and Retraining Notification Act, the law of contract and tort, any claim for attorneys’ fees, claims for unpaid wages or other employment compensation, and claims of personal injury, including mental and physical pain and suffering or intentional infliction of emotional distress. Additionally, Mr. Perrin expressly waived any right to recover any type of personal relief from the Reliance Parties, including monetary damages or reinstatement, in any administrative action or proceeding, whether state or federal, and whether brought by Mr. Perrin or on his behalf by an administrative agency, related in any way to the matters herein.
Pursuant to the terms of the Settlement Agreement, all of the parties thereto agreed that, upon receipt of the Settlement Payment by the Reliance Parties, they would discharge any obligations under the APA, the Employment Agreement, the NDA and all ancillary documents and agreements referenced or contemplated therein. In addition, within five business days of receipt of the Settlement Payment: (i) the Company will cause the Bilotti Arbitration to be dismissed, with prejudice; (ii) the Reliance Parties and Mr. Perrin will cause the Perrin Arbitration to be dismissed, with prejudice; and (iii) the Reliance Parties will cause the Lewis Litigation to be dismissed, with prejudice.
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Results of Operations

Comparison of the three months ended ~~March 31,~~September 30, 2023 to the three months ended ~~March 31,~~September 30, 2022

The following table sets forth our revenue and operating expenses for each of the years presented.

March 31,
2023

March 31,
2022

Revenue
Commission income $ 3,939,103 3,058,697
Total revenue 3,939,103 3,058,697

Operating expenses
Commission expense 1,083,326 785,611
Salaries and wages 1,712,097 1,631,813
General and administrative expenses 1,358,254 2,333,795
Marketing and advertising 136,572 89,529
Depreciation and amortization 541,873 468,278
Total operating expenses 4,832,122 5,309,026

Loss from operations (893,019 ) (2,250,329 )

Other income (expense)
Other expense, net (389,351 ) (107,751 )
Recognition and change in fair value of warrant liabilities 4,266,231 11,845,964
Total other income 3,876,880 11,738,213

Income from continuing operations $ 2,983,861 9,487,884
Loss from discontinued operations (4,772,399 ) (147,884 )
Net (loss) income (1,788,538 ) 9,340,000
22
September 30, 2023 September 30, 2022
Revenue
Commission income $ 3,275,583 $ 2,821,768
Total revenue 3,275,583 2,821,768

Operating expenses
Commission expense 796,001 695,020
Salaries and wages 1,775,919 1,629,947
General and administrative expenses 1,368,126 1,117,027
Marketing and advertising 117,752 63,371
Depreciation and amortization 652,839 651,395
Total operating expenses 4,710,637 4,156,760

Loss from operations (1,435,054 ) (1,334,992 )

Other income (expense)
Interest expense (386,562 ) (281,201 )
Interest related parties (32,475 ) (1,730 )
Other income (expense), net (310 ) (4,909 )
Recognition and change in fair value of warrant liabilities 1,715,397 7,919,315
Total other income (expense) 1,296,050 7,631,475
Loss (income) from continuing operations before tax (139,004 ) 6,296,483
Loss (income) from discontinued operations before tax - (174,390 )
Net income (loss) $ (139,004 ) $ 6,122,093
Revenues

The Company’s revenue is primarily comprised of ~~commission~~commissions paid by ~~health~~ insurance carriers or their representatives related to insurance plans that have been purchased by a member who used our services. We define a member as an individual or entity currently covered by an insurance plan, including individual and family, Medicare-related, small business, and ancillary plans, as well as property and casualty coverage, including auto, home and life, for which the Company is entitled to receive compensation from an insurance carrier.

The Company had revenues of approximately ~~$3.9~~$3.3 million for the three months ended ~~March 31,~~September 30, 2023, as compared to approximately ~~$3.0~~$2.8 million for the three months ended ~~March 31,~~September 30, 2022. The increase of approximately ~~$880,000~~$454,000 or ~~29%~~16% is primarily driven by organic ~~growth and the additional insurance agency acquired in the second quarter of 2022.~~
growth.
Commission expense

The Company had total commission expense of approximately ~~$1.0 million~~$796,000 for the three months ended ~~March 31,~~September 30, 2023, compared to approximately ~~$785,000~~$695,000 for the three months ended ~~March 31,~~September 30, 2022. The increase of approximately ~~$297,000~~$101,000 or ~~38%~~15% is primarily driven by organic growth and in-line with the ~~additional insurance agency acquired in the second quarter of 2022.~~revenue increase.
Salaries and wages
The Company reported approximately ~~$1.7~~$1.8 million of salaries and wages expense for the three months ended ~~March 31,~~September 30, 2023, compared to approximately $1.6 million for the three months ended ~~March 31,~~September 30, 2022. The increase of approximately ~~$80,000~~$146,000 or 5%9% is a result of the Company’s growth driven by expanded ~~operations, both organic and due to the additional insurance agency acquired in the second quarter of 2022.~~operations.
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General and administrative expenses
The Company had total general and administrative expenses of approximately $1.4 million for the three months ended ~~March 31,~~September 30, 2023, as compared to approximately ~~$2.3~~ $1.1 million for the three months ended ~~March 31,~~September 30, 2022. The ~~decrease in expense~~increase of approximately ~~$975,000~~$251,000, or ~~42%~~22% is ~~a result~~primarily driven by the approximate $270,000 loss in fair value change of the ~~Company’s focus on leaner operations and~~estimated earn-out liability compared to the ~~implementation~~same period in the prior year which had an approximate gain of ~~cost cutting measures.~~
$223,000.

Marketing and advertising

The Company reported approximately ~~$137,000~~$118,000 of marketing and advertising expense for the three months ended ~~March 31,~~September 30, 2023 compared to approximately ~~$90,000~~ $63,000 for the three months ended ~~March 31,~~September 30, 2022. The increase of approximately ~~$47,000~~$54,000, or ~~53%~~86% is a result of ~~the Company’s growth driven by expanded operations, both organic and due to the additional insurance agency acquired in 2022, as well as overall~~ increased branding and outreach efforts to ~~achieve greater industry presence.~~drive the higher organic revenue growth.

Depreciation and amortization
The Company reported approximately ~~$542,000~~ $653,000 of depreciation and amortization expense for the three months ended ~~March 31,~~September 30, 2023 compared to approximately ~~$468,000~~ $651,000 for the three months ended ~~March 31,~~September 30, 2022. The increase of approximately ~~$74,000~~$1,000 or ~~16%~~0.2% is primarily a result of ~~our acquired tangible and intangible~~additional assets ~~through business combinations.~~placed in service.
Other income and expense
The Company reported approximately ~~$3.9~~$1.3 million of other income for the three months ended ~~March 31,~~September 30, 2023 compared to approximately ~~$11.7~~ $7.9 million of other income for the three months ended ~~March 31,~~September 30, 2022. The decrease of approximately ~~$7.9~~$6.2 million, or ~~67%~~78%, is attributable primarily to the change in fair value of warrant liabilities, offset by interest expense.
Comparison of the nine months ended September 30, 2023 to the nine months ended September 30, 2022
The following table sets forth our revenue and operating expenses for each of the periods presented.
September 30, 2023 September 30, 2022
Revenue
Commission income $ 10,410,591 $ 8,727,614
Total revenue 10,410,591 8,727,614

Operating expenses
Commission expense 2,701,601 2,143,562
Salaries and wages 5,230,871 4,899,171
General and administrative expenses 4,430,177 5,080,991
Marketing and advertising 364,184 148,057
Depreciation and amortization 1,962,066 1,901,140
Total operating expenses 14,688,899 14,172,921

Loss from operations (4,278,308 ) (5,445,307 )

Other income (expense)
Interest expense (1,126,281 ) (586,251 )
Interest related parties (125,104 ) (5,189 )
Other income (expense), net 3,650 (4,414 )
Recognition and change in fair value of warrant liabilities 4,389,120 32,398,530
Total other income (expense) 3,141,385 31,802,676

Income (loss) from continuing operations before tax (1,136,922 ) 26,357,370
Income (loss) from discontinued operations before tax (1,845,904 ) (399,585 )
Net (loss) income $ (2,982,827 ) $ 25,957,784
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Revenues
The Company had revenues of approximately $10.4 million for the nine months ended September 30, 2023, as compared to approximately $8.7 million for the nine months ended September 30, 2022. The increase of approximately $1.7 million or 19% is primarily driven by organic growth and the addition of RELI Exchange during the second quarter of 2022.
Commission expense
The Company had total commission expense of approximately $2.7 million for the nine months ended September 30, 2023, compared to approximately $2.1 million for the nine months ended September 30, 2022. The increase of approximately $558,000 or 26% is primarily driven by organic growth and the addition of RELI Exchange during the second quarter of 2022.
Salaries and wages
The Company reported approximately $5.2 million of salaries and wages expense for the nine months ended September 30, 2023, compared to approximately $4.9 million for the nine months ended September 30, 2022. The increase of approximately $331,000 or 7% is a result of the Company’s growth driven by expanded operations and the addition of RELI Exchange during the second quarter of 2022.
General and administrative expenses
The Company had total general and administrative expenses of approximately $4.4 million for the nine months ended September 30, 2023, as compared to approximately $5.1 million for the nine months ended September 30, 2022. The decrease in expense of approximately $651,000, or 13%, is a result of the Company’s focus on leaner operations and the implementation of cost-cutting measures.
Marketing and advertising
The Company reported approximately $364,000 of marketing and advertising expense for the nine months ended September 30, 2023, compared to approximately $148 million for the nine months ended September 30, 2022. The increase of approximately $216,000 or 146% is a result of the Company increasing its branding and outreach efforts to drive the higher organic revenue growth.
Depreciation and amortization
The Company reported approximately $2.0 million of depreciation and amortization expense for the nine months ended September 30, 2023, compared to approximately $1.9 million for the nine months ended September 30, 2022. The increase of approximately $60,000, or 3%, is primarily a result of our acquired tangible and intangible assets through business combinations.
Other income and expense
The Company reported approximately $3.1 million of other income for the nine months ended September 30, 2023, compared to approximately $32.4 million of other income for the nine months ended September 30, 2022. The decrease of approximately $28 million, or 86%, is attributable primarily to the change in the fair value of warrant liabilities, offset by interest expense.
Liquidity and capital resources

As of ~~March 31,~~September 30, 2023, we had a cash balance of approximately ~~$3.6~~$3.2 million and a working capital ~~deficit~~ of approximately ~~$743,000,~~$795,000, compared with a cash balance of approximately $1.9 million and working capital deficit of approximately ~~$4.5~~$4.6 million at December 31, 2022. The improved working capital is primarily attributable to cash proceeds from the issuance of stock with a private placement, other receivables related to discontinued operations recoveries/settlements, and the repayment of ~~current~~ liabilities.
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Inflation

The Company generally may be impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases. The Company believes inflation could have a material impact to pricing and operating expenses in future periods due to the state of the economy and current inflation rates.
Off-balance sheet arrangements

We do not have any off-balance sheet arrangements as such term is defined in Regulation S-K.
Cash Flows

Three Months Ended
March 31,

Nine Months Ended
September 30,

2023 2022 2023 2022
Net cash used in operating activities $ (1,064,878 )
(482,906
) $ (17,307 ) $ (2,177,998 )
Net cash used in investing activities (96,297 )
(18,252,467
)
Net cash provided and used in investing activities 718,583 (24,982,609 )
Net cash provided by financing activities 2,805,700 20,090,409 576,212 25,564,501
Net increase in cash, cash equivalents, and restricted cash $ 1,644,525 $ 1,355,036 $ 1,277,488 $ (1,596,106 )

Operating Activities

Net cash used in operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2023 was approximately ~~$1.0 million,~~$17,000, compared to net cash flows used in operating activities of approximately ~~$483,000~~ $2.2 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The cash used includes net loss of approximately ~~$1.8~~$2.98 million, ~~increased~~decreased by approximate non-cash adjustments of ~~$3.2 million~~$855,000 principally related to income of recognition and change in fair value of warrant liabilities of ~~$4.3~~$4.4 million, offset by earn-out fair value adjustments and depreciation and amortization of ~~$477,000~~$1.3 million and ~~$542,000,~~$1.96 million, respectively, as well as a net ~~decrease~~increase in cash due to changes of net working capital items in the amount of ~~$45,000~~$285,000 and offset by net cash adjustments for discontinued operating activities of ~~$4.0~~$3.8 million.
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Investing Activities

During the ~~three~~nine months ended ~~March 31,~~September 30, 2023, cash flows ~~used~~provided in investing activities approximated ~~$96,000~~$719,000 compared to cash flows used in investing activities of approximately ~~$249,000~~ $25 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The cash ~~used reflects cash paid for~~provided is primarily related to the ~~purchase~~sale of ~~property and equipment and intangible assets.~~ the Company’s shares in NSURE stock. Total proceeds received in 2023 were $900,000.
Financing Activities

~~Financing Activities~~
During the ~~three~~nine months ended ~~March 31,~~September 30, 2023, approximate cash provided by financing activities was ~~$2.8 million~~$576,000 as compared to approximately ~~$20.1~~ $25.6 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. Net cash provided by financing activities primarily relates to proceeds from private placement offerings of approximately $3.4 million, ~~and $17.9 million respectively for the three month periods ended March 31, 2023 and 2022,~~ offset by net debt principal ~~proceeds and~~ repayments of ~~$623,000.~~$786,000, related party loan and related party convertible debt repayments of $1.6 million, and earn out payments of $419,000.

Significant Accounting Policies and Estimates

We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements, and our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no significant changes in our significant accounting policies or critical accounting estimates since the end of fiscal year 2022.
31
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

During fiscal year 2022, the Company determined it had a material weakness in its disclosure controls and procedures ~~for specifically~~relating to earnings per share ~~(EPS)~~(“EPS”). During the ~~quarter~~quarters ended March 31, June 30 and September 30, 2023, the Company mitigated the deficiency by consulting with qualified advisors that have in-depth EPS expertise. These advisors assisted the Company in the calculations and disclosures of EPS for the three and nine months ended ~~March 31,~~September 30, 2023.
~~Pursuant to the above, our~~Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of ~~March 31,~~September 30, 2023, and ~~although appropriate mitigation and remedial action have been taken, will continue~~concluded that they were not effective as of September 30, 2023 due to ~~disclose a~~the material weakness ~~and a conclusion of ineffective controls over EPS for the period ended March 31, 2023.~~discussed above.
Changes in Internal Control over Financial Reporting

~~There~~During fiscal year 2022, the Company retained subject matter expert advisors to prepare the accounting and disclosures over Earnings per Share. These advisors assisted the Company in the calculations and disclosures of EPS for the three and nine months ended September 30, 2023. Aside for the foregoing, there have ~~not~~ been ~~any~~no other changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter which is the subject of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
25
PART II

Item 1. Legal Proceedings.

We are 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,~~September 30, 2023. Litigation relating to the insurance brokerage industry is not uncommon. As such we, 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.

Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. You should consider carefully the information disclosed in Part I, Item 1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2022, as amended from time to time.
26 32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None that have not been previously disclosed in our filings with the SEC.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.
Item 6. Exhibits

The following exhibits are filed with this Form 10-K.

Exhibit No. Description

~~3.1~~ ~~Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 22, 2023).~~
10.1
~~10.1~~ ~~Promotion Letter~~Amendment #1 to the Purchase Agreement, dated as of September 29, 2023, by and between Reliance Global Group, Inc., Southwestern Montana Insurance Center, LLC, Southwestern Montana Financial Center, Inc., and ~~Joel Markovits dated as of December 28, 2022~~Julie A. Blockey (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on ~~January~~October 4, 2023).

~~10.2~~ Amendment No. 1 to the Promissory Note, by and between Reliance Global Group, Inc. and YES Americana Group, LLC, dated as of February 7, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2023).
31.1*
~~10.3~~ Securities Purchase Agreement, dated March 13, 2023, between Midori Group, Inc and Investor (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).
~~10.4~~ ~~Form of Warrant (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).~~
~~10.5~~ ~~Form of Pre-Funded Warrant (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).~~
~~10.6~~ ~~Form of Placement Agent Warrant (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).~~
~~10.7~~ ~~Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).~~
31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1** Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer

101.INS* Inline XBRL Instance Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).
*Filed herewith
**Furnished herewith

27 33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Reliance Global Group, Inc.

Date: ~~May 18,~~ November 13, 2023 By: /s/ Ezra Beyman
Ezra Beyman
Chief Executive Officer
(principal executive officer)

Date: ~~May 18,~~ November 13, 2023 By: /s/ Joel Markovits
Joel Markovits
Chief Financial Officer
(principal financial officer and principal accounting officer)
28 34

	2023			2022
	Three Months Ended March 31,
	2023			2022
Revenue
Commission income	$	3,939,103		$	3,058,697
Total revenue		3,939,103			3,058,697

Operating expenses
Commission expense		1,083,326			785,611
Salaries and wages		1,712,097			1,631,813
General and administrative expenses		1,358,254			2,333,795
Marketing and advertising		136,572			89,529
Depreciation and amortization		541,873			468,278
Total operating expenses		4,832,122			5,309,026

Loss from operations		(893,019	)		(2,250,329	)

Other income
Other expense, net		(389,351	)		(107,751	)
Recognition and change in fair value of warrant liabilities		4,266,231			11,845,964
Total other income		3,876,880			11,738,213

Income from continuing operations	$	2,983,861			9,487,884
Loss from discontinued operations		(4,772,399	)		(147,884	)
Net (loss) income		(1,788,538	)		9,340,000

Basic (loss) earnings per share
Continuing operations	$	1.92		$	2.61
Discontinued operations	$	(3.07	)	$	(0.15	)
Basic (loss) earnings per share	$	(1.15	)	$	2.46

Diluted loss per share
Continuing operations	$	(0.59	)	$	(9.57	)
Discontinued operations	$	(2.18	)	$	(0.12	)
Diluted loss per share	$	(2.77	)	$	(9.69	)

Weighted average number of shares outstanding - basic		1,553,953			980,569
Weighted average number of shares outstanding - diluted		2,185,847			1,195,480

	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Revenue
Commission income	$	3,275,583		$	2,821,768		$	10,410,591		$	8,727,614
Total revenue		3,275,583			2,821,768			10,410,591			8,727,614

Operating expenses
Commission expense		796,001			695,020			2,701,601			2,143,562
Salaries and wages		1,775,919			1,629,947			5,230,871			4,899,171
General and administrative expenses		1,368,126			1,117,027			4,430,177			5,080,991
Marketing and advertising		117,752			63,371			364,184			148,057
Depreciation and amortization		652,839			651,395			1,962,066			1,901,140
Total operating expenses		4,710,637			4,156,760			14,688,899			14,172,921

Loss from operations		(1,435,054	)		(1,334,992	)		(4,278,308	)		(5,445,307	)

Other income (expense)
Interest expense		(386,562	)		(281,201	)		(1,126,281	)		(586,251	)
Interest related parties		(32,475	)		(1,730	)		(125,104	)		(5,189	)
Interest expense		(32,475	)		(1,730	)		(125,104	)		(5,189	)
Other (expense) income, net		(310	)		(4,909	)		3,650			(4,414	)
Recognition and change in fair value of warrant liabilities		1,715,397			7,919,315			4,389,120			32,398,530
Total other income		1,296,050			7,631,475			3,141,385			31,802,676

(Loss) income from continuing operations before tax	$	(139,004	)		6,296,483		$	(1,136,922	)		26,357,370
(Loss) income from discontinued operations before tax		-			(174,390	)		(1,845,904	)		(399,585	)
Net (loss) income		(139,004	)		6,122,093			(2,982,827	)		25,957,784

Basic (loss) earnings per share
Continuing operations	$	(0.05	)	$	5.44		$	(0.47	)	$	18.16
Discontinued Operations	$	-		$	(0.15	)	$	(0.75	)	$	(0.37	)
Basic (loss) earnings per share	$	(0.05	)	$	5.29		$	(1.22	)	$	17.79

Diluted (loss) earnings per share
Continuing operations	$	(0.05	)	$	4.83		$	(0.47	)	$	15.93
Discontinued operations	$	-		$	(0.14	)	$	(0.75	)	$	(0.33	)
Diluted (loss) earnings per share	$	(0.05	)	$	4.69		$	(1.22	)	$	15.60

Weighted average number of shares outstanding - Basic		3,021,455			1,156,939			2,436,015			1,069,534
Weighted average number of shares outstanding - Diluted		3,021,455			1,304,878			2,436,015			1,219,822

	Shares		Amount		Shares		Amount		Shares		Amount		capital			Receivable		Deficit			Total
	Preferred stock				Common stock				Common stock issuable				Additional paid-in			Subscription		Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		capital			Receivable		Deficit			Total

Balance, December 31, 2022		-	$	-		1,219,573	$	104,883		-	$	-	$	35,798,139		$	-	$	(26,991,983	)	$	8,911,039

Share-based compensation		-		-						-		-		43,797			-		-			43,797

Common shares issued for earnout liability		-		-		109,358		9,404						973,074			-		-			982,478

Common shares issued for Yes Americana loan		-		-		66,743		5,740		-		-		639,260			-		-			645,000

Share round up due to reverse split		-		-		15,336		1,300		-		-		(5,946	)		-		-			(4,646	)

Shares issued for private placement		-		-		155,038		13,333		-		-		3,433,151			-		-			3,446,484

Net loss		-		-		-		-		-		-		-			-		(1,788,538	)		(1,788,538	)

Balance, March 31, 2023		-		-		1,566,048		134,660		-		--		40,881,475			-		(28,780,521	)		12,235,614
Balance		-		-		1,566,048		134,660		-		--		40,881,475			-		(28,780,521	)		12,235,614


	For the Nine Months Ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income		(2,982,827	)	$	25,957,784
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		1,962,066			1,901,140
Amortization of debt issuance costs and accretion of debt discount		35,163			28,702
Non-cash lease expense		(4,192	)		19,549
Stock compensation expense		106,943			1,233,300
Shares issued for services performed		289,995			-
Recognition and change in fair value of warrant liability		(4,389,120	)		(32,398,531	)
Earn-out fair value adjustments		1,291,494			132,445
Change in operating assets and liabilities:
Accounts receivable		(196,459	)		174,025
Accounts receivable, related parties		(2,786	)		5,972
Other receivables		10,651			(31,981	)
Prepaid expense and other current assets		34,136			2,346,510
Other non-current assets		-			(6,491	)
Accounts payables and other accrued liabilities		48,403			(1,642,938	)
Other payables		(37,012	)		34,841
Net cash used in continuing operating activities		(3,833,545	)		(2,245,673	)

Net cash adjustments for discontinued operating activities		3,816,238			67,675

Total net cash used in continuing and discontinued operating activities		(17,307	)		(2,177,998	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(21,206	)		(58,149	)
Purchase of intangibles		(160,211	)		(5,392,951	)
Proceeds from sale of investment in NSURE		900,000			-
Business acquisitions, net of cash acquired		-			(6,000,000	)
Net cash provided by (used in) investing activities		718,583			(11,451,100	)

Net cash used in discontinued investing activities		-			(13,531,509	)

Total net cash provided by (used in) continuing and discontinued investing activities		718,583			(24,982,609	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings of debt		-			-
Principal repayments of debt		(763,840	)		(663,016	)
Debt issuance costs		-			(214,257	)
Loans acquired through acquisitions		-			6,520,000
Issuance of common shares in exchange for Series C warrants					2,131
Principal repayments of short-term financings		(21,923	)		(107,206	)
Payments of loans payable, related parties		(954,439	)		(174,206	)
Payments of convertible debt, related parties		(693,145	)		1,500,000
Cash payments on earn-out liability		(419,225	)		(1,627,296	)
Proceeds from exercise of warrants into common stock		-			2,475,000
Private placement of shares and warrants		3,446,484			17,853,351
Net cash provided by continuing financing activities		593,912			25,564,501

Net cash used in discontinued financing activities		(17,700	)		-

Total net cash provided by continuing and discontinued financing activities		576,212			25,564,501

Net increase in cash and restricted cash		1,277,488			(1,596,106	)
Cash and restricted cash at beginning of year		1,909,769			4,620,722
Cash and restricted cash at end of year		3,187,257			3,024,616

SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:
Common stock issuance to settle earn-out liabilities		2,894,550			-

	2023			2022
	For the Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(1,788,538	)	$	9,340,000
Adjustment to reconcile net income to net cash used in operating activities:
Depreciation and amortization		541,873			468,279
Amortization of debt issuance costs and accretion of debt discount		11,721			6,467
Non-cash lease expense		(5,098	)		2,597
Stock compensation expense		43,797			739,960
Recognition and change in fair value of warrant liability		(4,266,231	)		(11,845,964	)
Earn-out fair value and write-off adjustments		476,692			407,071
Change in fair value of warrant liability		-
Change in operating assets and liabilities:
Accounts payables and other accrued liabilities		125,229			(1,875,191	)
Accounts receivable		23,976			(48,228	)
Accounts receivable, related parties		6,676			5,489
Other receivables		11,464			(4,361	)
Other payables		(294,058	)		(1,998	)
Other non-current assets		-			(52,992	)
Prepaid expense and other current assets		81,381			2,220,963
Net cash used in continuing operating activities		(5,031,116	)		(637,908	)

Net cash adjustments for discontinued operating activities		3,966,238			294,628

Total net cash used in continuing and discontinued operating activities		(1,064,878	)		(343,280	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(6,695	)		-
Purchase of intangibles		(73,894	)		(249,235	)
Net cash used in investing activities		(80,589	)		(249,235	)

Net cash used in discontinued investing activities		(15,708	)		(18,142,858	)

Total net cash used in continuing and discontinued investing activities		(96,297	)		(18,392,093	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments of debt		(207,580	)		(227,172	)
Repayments on short term financing		(98,004	)		-
Proceeds from loans payable, related parties		345,000			-
Payments on loans payable, related parties		(412,500	)		(10,770	)
Payments of earn-out liabilities		(250,000	)		-
Proceeds from exercise of warrants into common stock					2,475,000
Proceeds from private placement of shares and warrants		3,446,484			17,853,351
Net cash provided by continuing financing activities		2,823,400			20,090,409

Net cash used in discontinued financing activities		(17,700	)		-

Total net cash provided by continuing and discontinued financing activities		2,805,700			20,090,409

Net increase in cash and restricted cash		1,644,525			1,355,036
Cash and restricted cash at beginning of year		1,909,769			4,620,722
Cash and restricted cash at end of year		3,554,294			5,975,758

SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:
Cash paid for interest		382,410			105,447
Common stock issuance to repay related party liability		645,000			-
Common stock issuance to settle earn-out liabilities		982,478			-
Private placement equity financing costs		552,618			-
Issuance of Series D Warrants		-			6,930,335
Issuance of placement agent warrants		-			1,525,923
Conversion of common stock into Series C Warrants		-			281,815
Common stock issued pursuant to acquisition		-			4,763,451

	September 30, 2023		September 30, 2022
Cash	$	1,777,348	$	1,615,054
Restricted cash		1,409,909		1,409,562
Total cash and restricted cash	$	3,187,257	$	3,024,616

	March 31, 2023		March 31, 2022
Cash	$	2,116,333	$	5,491,407
Restricted cash		1,437,961		484,351
Total cash and restricted cash	$	3,554,294	$	5,975,758

	March 31, 2023			December 31, 2022			September 30, 2023			December 31, 2022
Stock price	$	3.01		$	8.55		$	2.49		$	8.55
Volatility		105.0	%		105.0	%		105.0	%		105.0	%
Time to expiry		3.76			4.01			3.26			4.01
Dividend yield		0	%		0	%		0.0	%		0.0	%
Risk free rate		3.7	%		4.1	%		4.7	%		4.1	%
Warrants measurement input								4.7	%		4.1	%

	Series B Warrant Liabilities			Placement Agent Warrants			Total
Beginning balance, December 31, 2022	$	6,384,250		$	48,900		$	6,433,150
Unrealized (gain) loss		(4,226,950	)		(39,281	)		(4,266,231	)
Ending balance, March 31, 2023		2,157,300			9,619			2,166,919
Unrealized (gain) loss		1,584,684			7,825			1,592,509
Ending balance, June 30, 2023	$	3,741,984		$	17,444		$	3,759,428
Balance	$	3,741,984		$	17,444		$	3,759,428
Unrealized (gain) loss	$	(1,703,333	)		(12,064	)		(1,715,397	)
Warrants exercised or transferred		(463,651	)		-			(463,651	)
Ending balance, September 30, 2023	$	1,575,000		$	5,380		$	1,580,380
Balance	$	1,575,000		$	5,380		$	1,580,380

	Series B Warrant Commitment			Series B Warrant Liabilities			Placement Agent Warrants			Total
Beginning balance, December 31, 2021	$	37,652,808		$	-		$	-		$	37,652,808
Initial recognition		-			55,061,119			1,525,924			56,587,043
Unrealized loss (gain)		17,408,311			(48,668,869	)		(1,477,024	)		(32,737,582	)
Warrants exercised or transferred		(55,061,119	)		(8,000	)		-			(55,069,119	)
Ending balance, December 31, 2022	$	-		$	6,384,250		$	48,900		$	6,433,150
Unrealized (gain) loss		-		$	(4,226,950	)	$	(39,281	)	$	(4,266,231	)
Ending balance, March 31, 2023	$	-		$	2,157,300		$	9,619		$	2,166,919

	~~March 31, 2023~~		~~December 31, 2022~~
~~Valuation technique~~		~~Discounted cash flow~~	~~Discounted cash flow~~
~~Significant unobservable input~~		~~Projected revenue and probability of achievement~~	~~Projected revenue and probability of achievement~~

	September 30, 2023
WACC Risk Premium:		13.5	%
Volatility		50.0% – 105.0	%
Credit Spread:		8.77% -10.4	%
Payment Delay (days)		90
Risk free rate		USD Yield Curve or 5.46% - 5.47	%
Discounting Convention:		Mid-period
Stock Price	$	2.49
Dividend Yield		0.00	%
Number of Iterations		100,000

	~~March 31,~~ ~~2023~~
~~WACC Risk Premium:~~		~~13.5~~	%
~~Volatility~~		50	%
~~Credit Spread:~~		13	%
~~Payment Delay (days)~~		90
~~Risk free rate~~		~~USD Yield Curve~~
~~Discounting Convention:~~		~~Mid-period~~
~~Number of Iterations~~		~~100,000~~

	September 30, 2023			December 31, 2022
Beginning balance – January 1	$	2,709,478		$	3,813,878

Acquisitions and settlements		(3,260,403	)		(1,104,925	)

Period adjustments:
Fair value changes included in earnings^*		1,291,494			525
Earn-out payable in common shares		(53,372	)		-

Ending balance		687,197			2,709,478
Less: Current portion		(687,197	)		(2,153,478	)
Ending balance, less current portion	$	-		$	556,000

	March 31, 2023			December 31, 2022
Beginning balance – January 1	$	2,709,478		$	3,813,878

Acquisitions and settlements		(1,232,478	)		(1,104,925	)

Period adjustments:
Fair value changes included in earnings^*		476,692			525

Ending balance	$	1,953,692		$	2,709,478
Less: Current portion		(1,555,692	)		(2,153,478	)
Ending balance, less current portion		398,000			556,000

Three Months ended March 31, 2023	Medical/Life		Property and Casualty		Total
Regular
Three Months Ended September 30, 2023							Medical		Life		Property and Casualty		Total

EBS	$	237,380	$	-	$	237,380	$	206,308	$	8,900	$	-	$	215,208
USBA		12,029		-		12,029		11,266		843		-		12,109
CCS/UIS		-		46,770		46,770		-		-		62,197		62,197
Montana		490,994		-		490,994		453,269		1,770		-		455,039
Fortman		306,270		208,145		514,415		288,969		602		268,704		558,275
Altruis		1,868,136		-		1,868,136		1,200,054		-		-		1,200,054
Kush		320,291		-		320,291		331,240		-		-		331,240
Barra		94,707		354,381		449,088
Reli Exchange								66,833		18,139		356,489		441,461
Total	$	3,329,807	$	609,296	$	3,939,103	$	2,557,939	$	30,254	$	687,390	$	3,275,583

Three Months ended March 31, 2022	Medical/Life		Property and Casualty		Total
Regular
Nine Months Ended September 30, 2023							Medical		Life		Property and Casualty		Total

EBS	$	221,184	$	-	$	221,184	$	646,259	$	17,470	$	-	$	663,729
USBA		13,587		-		13,587		33,956		2,266		-		36,222
CCS/UIS		-		43,881		43,881		-		-		182,368		182,368
Montana		506,721		-		506,721		1,384,060		10,105		-		1,394,165
Fortman		332,600		197,260		529,860		887,605		2,675		700,169		1,590,449
Altruis		1,304,872		-		1,304,872		4,268,727		-		-		4,268,727
Kush		438,592		-		438,592		973,719		-		-		973,719
Revenue	$	2,817,556	$	241,141	$	3,058,697
Reli Exchange								182,638		103,341		1,015,233		1,301,212
Total							$	8,376,964	$	135,857	$	1,897,770	$	10,410,591

Three Months Ended September 30, 2022	Medical		Life		Property and Casualty		Total

EBS	$	206,906		5,478	$	-	$	212,384
USBA		13,227		505		-		13,732
CCS/UIS		-		-		76,035		76,035
Montana		422,978		3,613		-		426,591
Fortman		256,791		2,464		186,860		446,115
Altruis		895,905		107		-		896,012
Kush		366,043		176		-		366,219
Reli Exchange		56,232		27,383		301,065		384,680
Total	$	2,218,083		39,725	$	563,960	$	2,821,768

Nine Months Ended September 30, 2022	Medical		Life		Property and Casualty		Total

EBS	$	633,252		11,965	$	-	$	645,217
USBA		38,610		1,028		-		39,638
CCS/UIS		-		-		177,111		177,111
Montana		1,379,307		5,710		-		1,385,017
Fortman		943,852		5,337		589,924		1,539,113
Altruis		3,053,474		2,783		-		3,056,257
Kush		1,229,326		933		-		1,230,259
Reli Exchange		103,893		49,646		501,463		655,002
Revenues	$	7,381,714		77,402	$	1,268,498	$	8,727,614


	For the Three Months Ended September 30,
Insurance Carrier	2023			2022
Priority Health		44	%		30	%
BlueCross BlueShield		21	%		13	%
Insurance carrier		21	%		13	%


	Three Months ended March 31,						For the Nine Months Ended September 30,
Insurance Carrier	2023			2022			2023			2022

Priority Health		43	%		32	%		37	%		34	%
BlueCross BlueShield		13	%		13	%		14	%		13	%
Insurance Carrier		13	%		13	%
Insurance carrier								14	%		13	%

Medigap Related Assets	Carrying Value Prior To Abandonment		Asset and Liability Transfers Retained by the Company			Asset Impairments and Liability Write-Offs			Carrying Value As of September 30, 2023

Accounts receivable	$	56,398	$	-		$	(56,398	)	$	-
Accounts receivable, related party		3,595		-			(3,595	)		-
Accounts receivable		3,595		-			(3,595	)		-
Other receivables		5,388		-			(5,388	)		-
Current assets – Medigap	$	65,381	$	-		$	(65,381	)	$	-

Property and equipment, net	$	22,378	$	-		$	(22,378	)	$	-
Right-of-use assets		119,594		-			(119,594	)		-
Intangibles, net		4,570,536		(4,258,214 )¹			(312,322	)		-
Goodwill		4,825,634		-			(4,825,634	)		-
Other assets - Medigap	$	9,538,142	$	(4,258,214	)	$	(5,279,928	)	$	-

Total assets - Medigap	$	9,603,523	$	(4,258,214	)	$	(5,345,309	)	$	-

Accounts payable and other accrued liabilities	$	4,157	$	-		$	(4,157	)	$	-
Short term financing agreements		29,500		(29,500	)		-			-
Chargeback reserve		831,725		-			(831,725 )²			-
Current portion of leases payable		134,517		-			(134,517 )³			-
Other liabilities		9,842		-			(9,842 )³			-
Current liabilities - Medigap	$	1,009,741	$	(29,500	)	$	(980,241	)	$	-

Total liabilities - Medigap	$	1,009,741	$	(29,500	)	$	(980,241	)	$	-

Net assets and liabilities - Medigap	$	8,593,782	$	(4,228,714	)	$	(4,365,068	)	$	-

	1	Includes customer relationships and internally developed and purchased software intangible assets that have continued value to the Company and have not been impaired as the fair value exceeds carrying cost.
	2	Estimated liability write-off per net zero dollar estimated liability value.
	3	Liability discharge pursuant to the Settlement Agreement.

	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022			Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Income
Commission income	$	-	$	1,331,593		$	744,030		$	3,868,654

Expenses
Commission expense		-		167,837			110,639			473,578
Salaries and wages		-		484,783			454,663			1,474,526
General and administrative expenses		-		136,070			129,363			384,393
Marketing and advertising		-		662,744			426,818			1,774,463
Depreciation and amortization		-		62,048			7,283			176,233
Other expenses (income)		-		(7,500	)		(3,902	)		(14,954	)
Total discontinued operations expenses before impairments and write-offs		-		1,505,982			1,124,864			4,268,239
Total discontinued operations income / (loss) before impairments and write-offs	$	-	$	(174,390	)	$	(380,834	)	$	(399,585	)
Gains and (losses) from recoveries and impairments / write-offs of discontinued operations assets and liabilities

Settlement Recovery	$	-		-		$	2,900,000			-

Asset impairment losses
Accounts receivable		-		-			56,398			-
Accounts receivable, related parties		-		-			3,595			-
Other receivables		-		-			5,388			-
Property and equipment, net		-		-			22,378			-
Right-of-use assets		-		-			119,593			-
Intangibles, net		-		-			312,322			-
Goodwill		-		-			4,825,634			-
Total asset impairments		-		-			5,345,309			-

Liability write-off gains
Accounts payable and other accrued liabilities		-		-			4,156			-
Other payables		-		-			9,842			-
Chargeback reserve		-		-			831,725			-
Current portion of leases payable		-		-			134,517			-
Total liability write-off gains		-		-			980,240			-

Discontinued operations net asset and liability impairments / write-offs gains and (losses)		-		-			4,365,070			-

Net gains and (losses) from recoveries and impairments / write-offs from discontinued operations assets and liabilities		-		-			(1,465,070	)		-

Gain (loss) from discontinued operations before tax		-		(174,390	)		(1,845,904	)		(399,585	)

Consolidated statement of operations - Income (loss) from discontinued operations before tax	$	-	$	(174,390	)	$	(1,845,904	)	$	(399,585	)

	Goodwill		Goodwill
December 31, 2021	$	10,050,277	$	10,050,277
Goodwill recognized in connection with Barra acquisition on April 26, 2022		4,236,822		4,236,822
December 31, 2022		14,287,099		14,287,099
March 31, 2023	$	14,287,099
September 30, 2023			$	14,287,099

	Weighted Average Remaining Amortization Period (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name and trademarks		3.6	$	1,807,187	$	(1,232,982	)	$	574,205
Internally developed software		3.4		1,792,186		(557,038	)		1,235,148
Customer relationships		8.26		11,922,290		(2,914,320	)		9,007,970
Purchased software		1.85		667,206		(609,677	)		57,529
Video production assets		0.00		50,000		(50,000	)		-
Non-competition agreements		1.14		3,504,810		(2,704,136	)		800,674
			$	19,743,679	$	(8,068,153	)	$	11,675,526

Years ending December 31,		Amortization Expense
2023 (remainder of year)	$	639,264
2024		2,193,428
2025		1,799,472
2026		1,530,604
2027		1,196,429
Thereafter		4,316,329
Total	$	11,675,526


Years ending December 31,	Amortization Expense
2023 (remainder of year)	$	1,914,714
2024		2,177,765
2025		1,783,809
2026		1,515,517
2027		1,182,581
Thereafter		4,314,891
Total	$	12,889,277

	March 31, 2023			December 31, 2022

Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, net of deferred financing costs of $11,833 and $12,388 as of March 31, 2023 and December 31, 2022, respectively	$	412,763		$	426,883
Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, variable interest of Prime Rate plus 2.5%, maturing August 2028, net of deferred financing costs of $11,833 and $12,388 as of March 31, 2023 and December 31, 2022, respectively	$	412,763		$	426,883
Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, variable interest of Prime Rate plus 1.5%, maturing December 2028, net of deferred financing costs of $14,438 and $15,076 as of March 31, 2023 and December 31, 2022, respectively		671,685			693,682
Oak Street Funding LLC Term Loan for the acquisition of SWMT, variable interest of Prime Rate plus 2.0%, maturing April 2029, net of deferred financing costs of $8,837 and $9,206 as of March 31, 2023 and December 31, 2022, respectively		765,592			788,596
Oak Street Funding LLC Term Loan for the acquisition of FIS, variable interest of Prime Rate plus 2.0%, maturing May 2029, net of deferred financing costs of $35,389 and $36,843 as of March 31, 2023 and December 31, 2022, respectively		1,931,005			1,987,846
Oak Street Funding LLC Term Loan for the acquisition of ABC, variable interest of Prime Rate plus 2.0%, maturing September 2029, net of deferred financing costs of $40,509 and $42,129 as of March 31, 2023 and December 31, 2022, respectively		3,162,591			3,249,575
Oak Street Funding LLC Term Loan for the acquisition of Barra, variable interest of Prime Rate plus 2.5%, maturing May 2032, net of deferred financing costs of $192,831 and $198,188 as of March 31, 2023 and December 31, 2022, respectively		6,327,169			6,321,812
		13,270,805			13,468,394
Less: current portion		(1,235,052	)		(1,118,721	)
Long-term debt	$	12,035,753		$	12,349,673

	September 30, 2023			December 31, 2022


Oak Street Funding LLC Term Loan	$	384,402		$	426,883
Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, variable interest of Prime Rate plus 2.5%, maturing August 2028, net of deferred financing costs of $10,724 and $12,388 as of September 30, 2023 and December 31, 2022, respectively	$	384,402		$	426,883
Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, variable interest of Prime Rate plus 1.5%, maturing December 2028, net of deferred financing costs of $13,163 and $15,076 as of September 30, 2023 and December 31, 2022, respectively		627,676			693,682
Oak Street Funding LLC Term Loan for the acquisition of SWMT, variable interest of Prime Rate plus 2.0%, maturing April 2029, net of deferred financing costs of $8,101 and $9,206 as of September 30, 2023 and December 31, 2022, respectively		719,654			788,596
Oak Street Funding LLC Term Loan for the acquisition of FIS, variable interest of Prime Rate plus 2.0%, maturing May 2029, net of deferred financing costs of $32,481 and $36,843 as of September 30, 2023 and December 31, 2022, respectively		1,817,583			1,987,846
Oak Street Funding LLC Term Loan for the acquisition of ABC, variable interest of Prime Rate plus 2.0%, maturing September 2029, net of deferred financing costs of $37,269 and $42,129 as of September 30, 2023 and December 31, 2022, respectively		2,989,482			3,249,575
Oak Street Funding LLC Term Loan for the acquisition of Barra, variable interest of Prime Rate plus 2.5%, maturing May 2032, net of deferred financing costs of $182,118 and $198,188 as of September 30, 2023 and December 31, 2022, respectively		6,195,731			6,321,812
Long term debt gross		12,734,528			13,468,394
Less: current portion		(1,353,961	)		(1,118,721	)
Long-term debt	$	11,380,567		$	12,349,673