UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q/A~~10-Q

~~(Amendment No. 1)~~

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

For the quarterly period ended ~~September~~June 30, ~~2022~~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.)

~~Florida~~

~~(State or other jurisdiction of incorporation or organization)~~

~~46-3390293~~

~~I.R.S. Employer Identification Number~~

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”~~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 ~~Rule12b-2~~Rule 12b-2 of the Act).

Yes ☐ No ☒

At ~~November 14, 2022~~August 10, 2023, the registrant had ~~1,203,631~~2,126,348 shares of common stock, par value $0.086 per share, ~~outstanding (after giving effect to the 1-for-15 reverse stock split that became effective on February 23, 2023).~~outstanding.

~~EXPLANATORY NOTE~~

Reliance Global Group, Inc. (the “Company”) filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, with the Securities and Exchange Commission (“SEC”) on November 14, 2022 (the “Original Form 10-Q”). This Amendment No. 1 on Form 10-Q/A (“Amendment No. 1” or “Form 10-Q/A”) This Amendment No. 1 on Form 10-Q/A (“Amendment No. 1” or “Form 10-Q/A”) is being filed to:

~~(i)~~	reflect the restatement of earnings per share (“EPS”) information (the “Restatement”) in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022;
~~(ii)~~	~~insert additional disclosure relating to the Restatement to Note 1;~~
~~(iii)~~	~~replace Note 7 from the Original Form 10-Q in its entirety as a result of the Restatement;~~
~~(iv)~~	~~revise share and per share information throughout the Form 10-Q/A to give effect to the 1-for-15 reverse stock split that became effective on February 23, 2023 (the “Reverse Split”);~~
~~(v)~~	~~revise Part I, Item 4 to indicate that the Company’s disclosure controls and procedures were not effective as of September 30, 2022;~~
~~(vi)~~	~~replace the exhibit index contained in Item 6 in its entirety;~~
~~(vii)~~	~~provide current dated certifications;~~
~~(viii)~~	~~correct certain immaterial errors on the cover sheet to the Form 10-Q/A.~~

The Restatement is due to the Company performing an evaluation of its accounting in connection with the calculation of its basic and diluted EPS for the three and nine months ended September 30, 2022, and identification of errors in such calculations. On May 12, 2023, management concluded its evaluation and determined that the identified errors require the filing of Amendment No. 1, as further discussed in Notes 1 and 7 to the unaudited condensed consolidated financial statements included in this Form 10-Q/A.

~~The following items have been amended in this Amendment No. 1:~~

	●	~~Part I — Item 1. Financial Statements~~
	●	~~Part I – Item 4. Controls and Procedures~~
	●	~~Part II – Item 6. Exhibits~~

Except as described above, no other changes have been made to the Original Form 10-Q, and Amendment No. 1 does not modify, amend or update in any way revenue, expenses, net income (loss), or any of the financial or other information contained in the Original Form 10-Q. Amendment No. 1 does not reflect events that may have occurred subsequent to the filing date of the Original Form 10-Q other than adjusting, in the Items amended herein, common stock share and price per share information for the 1-for-15 reverse stock split that became effective February 23, 2023.

TABLE OF CONTENTS

PART I
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	28
Item 4. Controls and ~~Procedures~~Procedures.	2429
PART II
Item 1. Legal Proceedings.	29
Item 1A. Risk Factors.	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	29
Item 3. Defaults Upon Senior Securities.	30
Item 4. Mine Safety Disclosures.	30
Item 5. Other Information.	30
Item 6. Exhibits	2430
~~Signatures~~	25

~~PART I~~

~~Item 1. Financial Statements~~

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

							June 30 2023			December 31, 2022
	September 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
Assets
Current assets:
Cash	$	1,615,054		$	4,136,180		$	1,274,743		$	505,410
Restricted cash		1,409,562			484,542			1,405,513			1,404,359
Accounts receivable		1,025,120			1,024,831			978,877			994,321
Accounts receivable, related parties		1,159			7,131			19,364			18,292
Note receivables		-			-
Other receivables		37,674			-			2,900,648			11,464
Prepaid expense and other current assets		399,506			2,328,817			553,122			245,535
Current Assets - Discontinued Operations								-			85,998
Total current assets		4,488,075			7,981,501			7,132,267			3,265,379

Property and equipment, net		199,030			130,359			149,084			162,767
Right-of-use assets		1,327,361			1,067,734			976,020			1,018,952
Investment in NSURE, Inc.		1,350,000			1,350,000			-			900,000
Intangibles, net		14,359,973			7,078,900			12,308,697			13,439,369
Goodwill		33,486,107			10,050,277			14,287,099			14,287,099
Other non-current assets		23,284			16,792			23,284			23,284
Other Assets - Discontinued Operations								-			5,330,879
Total assets	$	55,233,830		$	27,675,563		$	34,876,451		$	38,427,729

Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable and other accrued liabilities	$	1,221,583		$	2,759,160		$	911,247		$	951,382
Short term financing agreements								195,024			154,017
Current portion of loans payables, related parties								872,249			1,422,249
Other payables		1,241,341			81,500			217,101			101,113
Chargeback reserve		1,350,533			-
Short term Financing Agreements		309,993			-
Current portion of long-term debt		1,026,541			913,920			1,329,121			1,118,721
Current portion of leases payable		538,018			276,009			370,855			339,937
Earn-out liability, current portion		2,283,380			3,297,855			969,000			2,153,478
Warrant commitment		-			37,652,808
Current Liabilities - Discontinued Operations								-			1,600,636
Total current liabilities		7,971,389			44,981,252			4,864,597			7,841,533

Loans payable, related parties, less current portion		1,679,560			353,766			307,394			122,266
Convertible debt, related parties, less current portion								570,000			1,500,000
Long term debt, less current portion		12,640,673			7,085,325			11,711,780			12,349,673
Leases payable, less current portion		833,395			805,326			635,863			714,068
Earn-out liability, less current portion		635,647			516,023			-			556,000
Warrant liabilities		3,107,578			-			3,759,428			6,433,150
Noncurrent Liabilities - Discontinued Operations								-			-
Total liabilities		26,868,242			53,741,692			21,849,062			29,516,690
Stockholders’ equity (deficit):
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of September 30, 2022 and December 31, 2021		-			-
Common stock, $0.086 par value; 133,333,333 shares authorized and 1,203,630 and 730,407 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		103,512			62,815
Stockholders’ equity:
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively								-			-
Common stock, $0.086 par value; 133,333,333 shares authorized and 2,053,084 and 1,219,573 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively								176,546			104,883
Additional paid-in capital		35,762,437			27,329,201			42,686,651			35,798,139
Stock subscription receivable		-			(20,000,000	)
Accumulated deficit		(7,500,361	)		(33,458,145	)		(29,835,808	)		(26,991,983	)
Total stockholders’ equity (deficit)		28,365,588			(26,066,129	)
Total liabilities and stockholders’ equity (deficit)	$	55,233,830		$	27,675,563
Total stockholders’ equity								13,027,389			8,911,039
Total liabilities and stockholders’ equity							$	34,876,451		$	38,427,729

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

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

Three months ended Three months ended Six months ended Six months ended
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
Revenue
Commission income $ 3,195,905 2,847,149 $ 7,135,008 5,905,846
Total revenue 3,195,905 2,847,149 7,135,008 5,905,846

Operating expenses
Commission expense 822,274 662,932 1,905,600 1,448,543
Salaries and wages 1,742,697 1,637,412 3,454,794 3,269,225
General and administrative expenses 1,703,811 1,630,169 3,062,066 3,963,964
Marketing and advertising 109,860 (4,844 ) 246,432 84,686
Depreciation and amortization 655,449 694,440 1,309,227 1,263,440
Total operating expenses 5,034,091 4,620,109 9,978,119 10,029,858

Loss from operations (1,838,186 ) (1,772,960 ) (2,843,111 ) (4,124,012 )

Other (expense) income
Interest expense (370,905 ) (194,929 ) (722,462 ) (305,095 )
Interest expense, related parties (51,153 ) (1,729 ) (92,629 ) (3,460 )
Other expense, net (16,979 ) (3,605 ) (13,297 ) 541
recognition and change in fair value of warrant liabilities (1,592,509 ) 12,633,251 2,673,723 24,479,215
Total other (expense) income (2,031,546 ) 12,432,988 1,845,335 24,171,201

(Loss) income from continuing operations before tax $ (3,869,732 ) 10,660,028 $ (997,776 ) 20,047,189
Income (loss) from discontinued operations before tax 2,814,445 (164,337 ) (1,846,048 ) (211,497 )
Net (loss) income (1,055,287 ) 10,495,691 (2,843,824 ) 19,835,692

Basic (loss) earnings per share
Continuing operations $ (1.42 ) $ 9.97 $ (0.47 ) $ 12.80
Discontinued operations $ 1.03 $ (0.15 ) $ (0.86 ) $ (0.21 )
Basic (loss) earnings per share $ (0.39 ) $ 9.82 $ (1.33 ) $ 12.59

Diluted (loss) earnings per share
Continuing operations $ (1.42 ) $ 8.74 $ (0.47 ) $ (12.65 )
Discontinued operations $ 1.03 $ (0.13 ) $ (0.86 ) $ (0.19 )
Diluted (loss) earnings per share $ (0.39 ) $ 8.61 $ (1.33 ) $ (12.84 )

Weighted average number of shares outstanding - Basic 2,716,512 1,069,157 2,138,444 1,025,108
Weighted average number of shares outstanding - Diluted 2,716,512 1,219,224 2,138,444 1,068,236
2022 2021 2022 2021

Three months ended
September 30,

Nine months ended
September 30,

2022 2021 2022 2021
Revenue
Commission income $ 4,153,361 $ 2,581,636 $ 12,596,268 $ 7,096,213
Total revenue 4,153,361 2,581,636 12,596,268 7,096,213

Operating expenses
Commission expense 862,857 660,708 2,617,140 1,748,451
Salaries and wages 2,114,730 1,188,267 6,373,697 3,217,441
General and administrative expenses 1,253,097 755,130 5,465,384 2,961,881
Marketing and advertising 726,115 65,010 1,922,520 143,110
Depreciation and amortization 713,444 387,729 2,077,372 1,090,183
Total operating expenses 5,670,243 3,056,844 18,456,113 9,161,066

Loss from operations (1,516,882 ) (475,208 ) (5,859,845 ) (2,064,853 )

Other income (expense)
Other expense, net (280,340 ) (120,025 ) (580,900 ) (421,192 )
Recognition and change in fair value of warrant liabilities 7,919,315 - 32,398,530 -
Total other income (expense) 7,638,975 (120,025 ) 31,817,630 (421,192 )

Net income (loss) $ 6,122,093 $ (595,233 ) $ 25,957,785 $ (2,486,045 )

Basic earnings (loss) per share $ 5.29 $ (0.82 ) $ 17.79 $ (3.80 )
Diluted earnings (loss) per share $ 4.65 $ (0.82 ) $ 15.60 $ (3.80 )
Weighted average number of shares outstanding - Basic 1,156,939 729,629 1,069,534 653,939
Weighted average number of shares outstanding - Diluted 1,304,878 729,629 1,219,822 653,939
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 (Deficit)~~
~~(Unaudited)~~
Shares Amount Shares Amount Shares Amount capital Receivable Deficit Total
Reliance Global Group, Inc.
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 - $ - $ 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

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

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

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 condensed consolidated financial statements~~statements.

54

Reliance Global Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity ~~(Deficit)~~
(Unaudited)
Shares Amount Shares Amount Shares Amount capital Deficit Total
Reliance Global Group, Inc.
Preferred stock Common stock Common stock issuable Additional paid-in Accumulated
Shares Amount Shares Amount Shares Amount capital Deficit Total
Balance, December 31, 2020 395,640 $ 33,912 282,735 $ 24,315 23,341 $ 340,000 $ 11,898,441 - $ (12,359,680 ) $ (63,012
)

Share based compensation - - - - - - 246,966 - 246,966

Shares issued for services - - 1,000 86 - - 90,964 - 91,050

Shares issued due to public offering, net of offering costs of $1,672,852 - - 120,000 10,320 - - 9,098,828 - 9,109,148

Over-allotment shares from offering, net of offering costs of $250,928 - - 18,000 1,548 - - 1,364,825 - 1,366,373

Warrants sold during public offering at quoted price - - - - - 20,700 - 20,700

Shares issued due to conversion of preferred stock (394,493 ) (33,812 ) 262,995 22,618 - - 11,194 - -

Shares issued due to conversion of debt - - 42,222 3,631 - - 3,796,369 - 3,800,000

Rounding shares related to initial public offering - - 126 - (3 ) - - - -

Shares issued pursuant to software purchase - - 1,556 134 (1,556 ) (340,000 ) 339,866 - -

Net loss - - - - - - - - (613,926 ) (613,926 )

Balance, March 31, 2021 1,147 $ 100 728,634 $ 62,652 - $ - $ 26,868,153 - $ (12,973,606 ) $ 13,957,299
Balance 1,147 $ 100 728,634 $ 62,652 - $ - $ 26,868,153 - $ (12,973,606 ) $ 13,957,299

Share based compensation - - - - - - 183,132 - 183,132

Rounding shares related to initial public offering 20 - - - - - - - -

Shares issued pursuant to acquisition of Kush - - 995 86 - - 49,914 - 50,000

Net loss - - - - - - - - (1,276,886 ) (1,276,886 )

Balance, June 30, 2021 1,167 $ 100 729,629 $ 62,738 - $ - $
27,101,199
- $ (14,250,492 ) $
12,913,545

Balance 1,167 $ 100 729,629 $ 62,738 - $ - $
27,101,199
- $ (14,250,492 ) $
12,913,545

Share based compensation - - - - - - 146,225 - 146,225

Rounding shares related to initial public offering - - - - - - - - -

Shares issued pursuant to acquisition of Kush - - - - - - - - -

Net loss - - - - - - - - (595,233 ) (595,233 )
Net income (loss) - - - - - - - - (595,233 ) (595,233 )

Balance, September 30, 2021 1,167 $ 100 729,629 $ 62,738 - $ - $ 27,247,424 - $ (14,845,725 ) $ 12,464,537
Balance 1,167 $ 100 729,629 $ 62,738 - $ - $ 27,247,424 - $ (14,845,725 ) $ 12,464,537

Reliance Global Group, Inc.
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

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

The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.
5
Reliance Global Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
Reliance Global Group, Inc.
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 - $ - $ 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

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

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

Exercise of Series C warrants into common shares - - 218,462 18,788 - - (17,452 ) - - 1,336

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

Balance, June 30, 2022 9,076 781 974,269 83,787 - - 35,466,329 - (13,622,454 ) 21,928,443
Balance 9,076 781 974,269 83,787 - - 35,466,329 - (13,622,454 ) 21,928,443
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)
2022 2021

Nine months ended
September 30,

2022 2021
Cash flows from operating activities:
Net income (loss) $ 25,957,785 $ (2,486,045 )
Adjustment to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 2,077,372 1,090,183
Amortization of debt issuance costs and accretion of debt discount 28,702 37,822
Non-cash lease expense 30,451 2,331
Stock compensation expense 1,233,300 667,373
Earn-out fair value and write-off adjustments 132,445 -
Recognition and change in fair value of warrant liabilities (32,398,530 ) -
Change in operating assets and liabilities:
Accounts payables and other accrued liabilities (1,541,037 ) (314,045 )
Accounts receivable 92,297 (87,058 )
Accounts receivable, related parties 5,972 (7,131 )
Other receivables (37,674 ) 3,825
Other payables 34,841 (112 )
Charge back reserve (133,940 ) -
Other non-current assets (6,492 ) (14,992 )
Prepaid expense and other current assets 2,346,510 (196,471 )
Net cash used in operating activities (2,177,998 ) (1,304,320 )

Cash flows from investing activities:
Purchase of property and equipment (67,906 ) (24,257 )
Business acquisitions, net of cash acquired (24,138,750 ) (1,608,586 )
Purchase of intangibles (775,953 ) (331,054 )
Net cash used in investing activities (24,982,609 ) (1,963,897 )

Cash flows from financing activities:
Principal repayments of debt (663,016 ) (663,907 )
Proceeds from loan for business acquisition 6,520,000 -
Payment of debt issuance costs (214,257 ) -
Payments on earn-out liabilities (1,627,296 ) (452,236 )
Proceeds from loans payable, related parties 1,500,000 2,931
Payments of loans payable, related parties (174,206 ) (504,899 )
Proceeds from exercise of warrants into common stock 2,477,131 -
Repayments on short-term financing (107,206 )
Net proceeds from private placement issuance of shares and warrants 17,853,351 -
Issuance of common stock - 10,496,221
Net cash provided by financing activities 25,564,501 8,878,110

Net (decrease) increase in cash and restricted cash (1,596,106 ) 5,609,893
Cash and restricted cash at beginning of period 4,620,722 529,581
Cash and restricted cash at end of period $ 3,024,616 $ 6,139,474

Supplemental disclosure of cash and non-cash investing and financing transactions:
Cash paid for interest $ 562,800 $ 350,175
Issuance of series D warrants $ 6,930,335 $ -
Issuance of placement agent warrants $ 1,525,923 $ -
Prepaid insurance acquired through short-term financing $ 417,199 $ -
Conversion of preferred stock into common stock $ 190,069 $ 339,264
Conversion of debt into equity $ - $ 3,800,000
Cashless conversion of series D warrants into common stock $
36,761
$ -
Common stock issued pursuant to acquisition $ 4,763,451 $ 50,000
Common stock issued in lieu of services $ - $ 91,050
Issuance of common stock pursuant to the purchase of software $ - $ 340,000
Acquisition of business deferred purchase price $ 1,125,000 $ -
Lease assets acquired in exchange for lease liabilities $ 628,004 $
861,443

2023 2022
Six months ended June 30,
2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (2,843,824 ) $ 19,835,692
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization 1,309,227 1,263,440
Amortization of debt issuance costs and accretion of debt discount 23,442 18,291
Non-cash lease expense (4,355 ) 17,637
Stock compensation expense 79,164 919,043
Common stock issued in lieu of services performed 377,995 -
Earn-out fair value and write-off adjustments 1,019,925 354,963
Change in fair value of warrant liability (2,673,723 ) (24,479,215 )
Change in operating assets and liabilities:
Accounts payables and other accrued liabilities (40,135 ) (1,853,366 )
Accounts receivable 15,444 142,825
Accounts receivable, related parties (1,072 ) (47,283 )
Other receivables 10,816 7,030
Other payables 115,988 126,984
Other non-current assets - (6,493 )
Prepaid expense and other current assets (303,322 ) 2,173,810
Net cash used in operating activities (2,914,430 ) (1,526,642 )

Net cash adjustments for discontinued operating activities 907,329 215,231

Net cash used in discontinued and continuing operating activities (2,007,101 ) (1,311,411 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment in NSURE 900,000
Purchase of property and equipment (13,010 ) (11,959 )
Business acquisitions, net of cash acquired - (6,000,000 )
Purchase of intangibles (151,862 ) (5,096,885 )
Net cash provided by (used in) investing activities 735,128 (11,108,844 )

Net cash adjustments for discontinued investing activities - (13,517,085 )

Net cash provided by (used in) discontinued and continuing investing activities 735,128 (24,625,929 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments of debt (450,935 ) (447,908 )
Debt issuance costs - (214,257 )
Proceeds from loan for business acquisition - 6,520,000
Issuance of common shares in exchange for Series C warrants - 1,336
Payments of loans payable, related parties (649,870 ) (21,541 )
Earn-out liability (344,225 ) (411,408 )
Exercise of warrants into common stock - 2,475,000
Principal repayments on short term financing 58,707 (40,552 )
Private placement of shares and warrants 3,446,484 17,853,351
Net cash provided by continuing financing activities 2,060,161 25,714,021

Net cash used in discontinued financing activities (17,701 ) -
Total net cash provided by continuing and discontinued financing activities 2,042,460 25,714,021

Net increase (decrease) in cash and restricted cash 770,487 (223,319 )
Cash and restricted cash at beginning of year 1,909,769 4,620,722
Cash and restricted cash at end of year $ 2,680,256 $ 4,397,403
SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:
Common stock issuance to settle earn-out liabilities $ 2,416,178 -

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

7

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

NOTE 1. ~~ORGANIZATION AND~~ SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Reliance Global Group, Inc. ~~(formerly~~, formerly known as Ethos Media Network, Inc.) (“RELI”, “Reliance”, or the “Company”), was incorporated in Florida on August 2, 2013. In September 2018, Reliance Global Holdings, LLC (“Reliance Holdings”, or “Parent Company”), a related party acquired control of the Company. Ethos Media Network, Inc. was then renamed on October 18, 2018.
~~On May 1, 2021, the Company acquired J.P. Kush and Associates, Inc. (“Kush”), an independent healthcare insurance agency (See Note 3).~~
~~On January 10, 2022, the Company acquired Medigap Healthcare Insurance Company, LLC (“Medigap”), an independent healthcare agency (see Note 3)~~

Basis of Presentation and Principles of Consolidation

The accompanying unaudited ~~condensed consolidated financial statements included herein~~Condensed Consolidated Financial Statements have been prepared ~~by the Company~~ in accordance with generally accepted accounting principles ~~generally accepted~~ in the United States of America (“U.S. GAAP”)~~. The accompanying unaudited condensed consolidated~~ for interim financial ~~statements~~information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the ~~accounting~~information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of ~~Reliance Global Group, Inc., and its wholly owned subsidiaries. All intercompany transactions and balances~~management, all adjustments (consisting of recurring accruals) necessary for a fair presentation have been ~~eliminated in consolidation. The accompanying~~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, ~~2021 included~~2022. Certain prior period amounts in the ~~Company’s annual report on Form 10-K.~~
~~Restatement of Previously Issued Financial Statements~~
Subsequent to the Company’s filing of its Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, with the Securities and Exchange Commission on November 14, 2022, the Company performed an evaluation of its accounting in connection with the calculation of its basic Earnings Per Share (“EPS”) and diluted EPS for the three and nine months ended September 30, 2022, which concluded on May 12, 2023, and identified errors in such calculations. The errors resulted from improper application of sequencing rules, a miscalculation of the numerator used in the determination of diluted EPS, and a miscalculation of the denominator used in the determination of weighted average shares outstanding for both basic EPS and diluted EPS, and the Company determined that the errors required adjustments of the previously issued financial statements for the three and nine months ended September 30, 2022. Accordingly, the Company restates itscondensed consolidated financial statements ~~for~~and notes thereto have been reclassified to conform to the ~~identified periods in this Form 10-Q/A as outlined further below and in Note 7~~ ~~Earnings (Loss) Per Share.~~
current period’s presentation.

The ~~following table sets forth~~accompanying unaudited condensed consolidated financial statements include the ~~effects~~accounts of ~~the adjustments on affected items within the Company’s previously reported consolidated statements of operations for the three months ended September 30, 2022,~~Reliance Global Group, Inc. and ~~includes an increase to basic earnings per share~~its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in ~~the amount of $0.04~~ ~~includes an increase to diluted earnings (loss) per share in the amount of $6.19, a decrease to weighted average number of shares outstanding – basic of~~ ~~4,679~~ ~~shares, and an increase to weighted average number of shares outstanding - diluted of~~ ~~143,260~~ ~~shares.~~
~~SCHEDULE OF CHANGES IN EARNING PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING~~
As Reported Adjustment As Corrected
Three Months Ended September 30, 2022
As Reported Adjustment As Corrected

Basic earnings (loss) per share 5.25 (0.04 ) 5.29

Diluted earnings (loss) per share (1.50 ) 6.19 4.65

Weighted average number of shares outstanding – Basic 1,161,618 (4,679 ) 1,156,939

Weighted average number of shares outstanding - Diluted 1,161,618 143,260 1,304,878
The following table sets forth the effects of the adjustments on affected items within the Company’s previously reported consolidated statements of operations for the nine months ended September 30, 2022, and includes an increase to basic earnings per share in the amount of $~~1.29, an increase to diluted earnings (loss) per share in the amount of $27.30, a decrease to weighted average number of shares outstanding – basic of~~ ~~85,142~~ ~~shares, and an increase to weighted average number of shares outstanding - diluted of~~ ~~64,146~~ ~~shares.~~
As Reported Adjustment As Corrected
Nine Months Ended September 30, 2022
As Reported Adjustment As Corrected

Basic earnings (loss) per share 16.50 1.29 17.79

Diluted earnings (loss) per share (11.70 ) 27.30 15.60
Weighted average number of shares outstanding – Basic 1,154,676 (85,142 ) 1,069,534

Weighted average number of shares outstanding - Diluted 1,154,676 64,146 1,219,822
~~Additionally, please refer to Note 7.~~ ~~Earnings (Loss) Per Share~~~~, where the Company has corrected and replaced that Note in its entirety.~~consolidation.

Liquidity

As of ~~September~~June 30, ~~2022,~~2023, the Company’s reported cash and restricted cash aggregated balance was approximately $~~3,024,000~~2,680,000, current assets were approximately $~~4,488,000~~7,132,000, while current liabilities were approximately $~~7,971,000~~4,865,000. As of ~~September~~June 30, ~~2022,~~2023, the Company had apositive working capital ~~deficit~~ of approximately $~~3,483,000~~2,268,000 and stockholders’ equity of approximately $~~28,366,000~~13,027,000. For the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company reported loss from operations of approximately $~~5,860,000~~2,843,000, a non-cash, non-operating gain on the recognition and change in fair value of warrant liabilities of approximately $~~32,399,000~~2,674,000, resulting in net loss from continuing operations of approximately $998,000, a net loss from discontinued operations of approximately $1,846,000, resulting in an overall net ~~income~~loss of approximately $~~25,958,000. For the nine months ended September 30, 2022, the Company reported negative cash flows from operations of approximately $2,178,000~~2,844,000. The Company completed a capital offering in ~~January 2022 that raised~~March 2023, raising net proceeds of approximately $~~17,853,000~~3,446,000. ~~Management~~
Although there can be no assurance that debt or equity financing will be available on acceptable terms, the Company believes ~~the Company’s~~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”).
8
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 are reconciled to the total shown on our Condensed Consolidated Statements of Cash Flows as follows:
SCHEDULE OF RESTRICTED CASH IN STATEMENT OF CASH FLOW
September 30, 2022 September 30, 2021 June 30, 2023 June 30, 2022
Cash $ 1,615,054 $ 5,655,103 $ 1,274,743 $ 2,979,769
Restricted cash 1,409,562 484,371 1,405,513 1,417,634
Total cash and restricted cash $ 3,024,616 $ 6,139,474 $ 2,680,256 $ 4,397,403
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 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 LIABILITY
September 30, 2022
December 31,
2021

Stock price $ 0.78 $ 6.44
Volatility 105 % 90 %
Time to expiry 4.26 5
Dividend yield 0 % 0 %
Risk free rate 4.10 % 1.10 %

June 30, 2023
December 31, 2022

Stock price $ 4.71 $ 8.55
Volatility 105.0 % 105.0 %
Time to expiry 3.51 4.01
Dividend yield 0 % 0 %
Risk free rate 4.4 % 4.1 %
The following reconciles fair value of the liability classified warrants:
SCHEDULE OF RECONCILES WARRANT COMMITMENT
1 2 3 4
Three and Nine Months ended September 30, 2022
Series B Warrant Commitment Series B warrant liabilities Placement agent warrants Total
Beginning balance $ 37,652,808 $ - $ - $ 37,652,808
Initial recognition - 55,061,119 1,525,923 56,587,042
Unrealized (gain) loss 17,408,311 (31,980,437 ) (946,461 ) (15,518,587 )
Warrants exercised or transferred (55,061,119 ) (55,061,119 )
Ending balance, March 31, 2022 $ - $ 23,080,682 $ 579,462 $ 23,660,144
Unrealized (gain) loss - (12,322,737 ) (310,514 ) (12,633,251 )
Ending balance, June 30, 2022 $ - $ 10,757,945 $ 268,948 $ 11,026,893
Beginning balance $ - $ 10,757,945 $ 268,948 $ 11,026,893
Unrealized (gain) loss - (7,726,161 ) (193,154 ) (7,919,315 )
Ending balance, September 30, 2022 - 3,031,784 75,794 3,107,578
Ending balance - 3,031,784 75,794 3,107,578

1 2 Series B Warrant Commitment Series B Warrant Liabilities Placement Agent Warrants Total
December 31, 2021
Series B Warrant Commitment Total
Beginning balance $ - $ -
Initial recognition 20,244,497 20,244,497
Beginning balance, December 31, 2022 $         - $ 6,384,250 $ 48,900 $ 6,433,150
Unrealized (gain) loss 17,408,311 17,408,311 - (4,226,950 ) (39,281 ) (4,266,231 )
Ending balance, March 31, 2023 - 2,157,300 9,619 2,166,919
Beginning balance, - 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
Ending balance $ 37,652,808 $ 37,652,808 $ - $ 3,741,984 $ 17,444 $ 3,759,428
Earn-out liabilities: The Company generally values its Level 3 earn-out liabilities using the income valuation approach. Key valuation inputs include contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments. The following table summarizes the significant unobservable inputs used in the fair value measurements:
SCHEDULE OF FAIR VALUE MEASUREMENTS
~~September~~June 30, ~~2022~~2023 December 31, ~~2021~~2022
Valuation technique Discounted cash flow Discounted cash flow
Significant unobservable input Projected revenue and probability of achievement Projected revenue and probability of achievement

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
~~September~~June 30,
~~2022~~ 2023
WACC Risk Premium: 14.0 ~~14.5~~ %
Volatility ~~Volatility~~50.0 50 %
Credit Spread: 9.6 ~~15.1~~ %
Payment Delay (days) 90 90 %
Risk free rate USD Yield Curve
Discounting Convention: Mid-period
Number of Iterations 100,000 ~~100,000~~
9

Undiscounted remaining earn out payments ~~are~~were approximately $~~3,291,883~~1,147,000 as of ~~September~~June 30, ~~2022.~~2023. The following table reconciles fair value of earn-out liabilities for the ~~period ending September~~periods ended June 30, 2023, and December 31, 2022:
SCHEDULE OF GAIN OR LOSSES RECOGNIZED FAIR VALUE
September 30, 2022 December 31, 2021 June 30, 2023 December 31, 2022
Beginning balance – January 1 $ 3,813,878 $ 2,931,418 $ 2,709,478 $ 3,813,878

Acquisitions and Settlements (1,027,296 ) 1,160,562
Acquisitions and settlements (2,760,403 ) (1,104,925 )

Period adjustments:
Fair value changes included in earnings^* 132,445 (278,102 ) 1,019,925 525

Ending balance $ 2,919,027 $ 3,813,878 969,000 2,709,478
Less: Current portion (2,283,380 ) (3,297,855 ) (969,000 ) (2,153,478 )
Ending balance, less current portion 635,647 516,023 $ - $ 556,000

* Recorded as a reduction to general and administrative expenses

~~Investment in Nsure~~
On February 19, 2020, the Company entered into a securities purchase agreement with NSURE, Inc. (“NSURE”), which was further amended on October 8, 2020, and as amended provides that the Company may invest up to an aggregate of $~~5,700,000~~ ~~in NSURE to be funded in three tranches. In exchange, the Company will receive a total of~~ ~~928,343~~ ~~shares of NSURE’s Class A Common Stock.~~
~~During the course of calendar year 2020 and by October 8, 2020, the Company funded the first tranche, $1,350,000~~ ~~in exchange for~~ ~~394,029~~ ~~shares. The second tranche allowed the Company to acquire an additional~~ ~~209,075~~ ~~shares at a price of $6.457~~ ~~per share by no later than December 30, 2020. The third full tranche allowed the Company to purchase an additional~~ ~~325,239~~ ~~shares at a purchase price of $9.224~~ ~~after December 20, 2020, but no later than March 31, 2021.~~
The Company did not fund tranches two and three in the required timeframes, thus, the Company relinquished its rights under the contract to any additional NSURE shares aside for the ones already acquired with tranche one.
10
The Company measures the NSURE shares subsequent to acquisition in accordance with ASC 321-10-35-2, at cost less impairment since no readily determinable fair value is available to the Company. The investment is reviewed for impairment at each reporting period by qualitatively assessing any indicators demonstrating fair value of the investment is less than carrying value. The Company did not observe any price changes resulting from orderly transactions for identical or similar assets for the periods ended September 30, 2022 or September 30, 2021. ASC 321-10-50-4 further requires an entity to disclose unrealized gains and losses for periods that relate to equity securities held at a reporting date. To-date, the Company has not recognized any unrealized gains or losses on the NSURE security.
In accordance with ACS 321-10-35-3, the Company performed a qualitative assessment to determine if the investment may be impaired. After considering the indicators contained in ASC 321-10-35-3a –3e, the Company determined that the investment was not impaired.
Revenue Recognition

The following table disaggregates the Company’s revenue by line of business, showing commissions earned:
SCHEDULE OF DISAGGREGATION REVENUE
Three Months ended September 30, 2022 Medical/Life Property and Casualty Total
Three Months ended June 30, 2023 Medical Life Property and Casualty Total
Regular
EBS $ 212,384 $ - $ 212,384 $ 206,668 $ 4,471 $ - $ 211,139
USBA 13,732 - 13,732 11,426 658 - 12,084
CCS/UIS - 76,035 76,035 - - 73,402 73,402
Montana 426,591 - 426,591 444,783 3,350 - 448,133
Fortman 259,255 186,860 446,115 288,902 1,680 227,176 517,758
Altruis 896,012 - 896,012 1,200,537 - - 1,200,537
Kush 366,219 - 366,219 322,188 - - 322,188
Medigap 1,331,593 - 1,331,593
Barra 83,615 301,065 384,680 52,209 61,821 296,634 410,664
$ 3,589,401 $ 563,960 $ 4,153,361
Total $ 2,526,713 $ 71,980 $ 597,212 $ 3,195,905

Six Months ended June 30, 2023 Medical Life Property and Casualty Total
Regular
EBS $ 439,949 $ 8,571 $ - $ 448,520
USBA 22,689 1,423 - 24,112
CCS/UIS - - 120,172 120,172
Montana 930,792 8,335 - 939,127
Fortman 596,557 2,073 433,544 1,032,174
Altruis 3,068,673 - - 3,068,673
Kush 642,479 - - 642,479
Barra 121,319 85,202 653,230 859,751
Total $ 5,822,458 $ 105,604 $ 1,206,946 $ 7,135,008
1110

Nine Months ended September 30, 2022 Medical/Life Property and Casualty Total
Three Months ended June 30, 2022 Medical Life Property and Casualty Total
Regular
EBS $ 645,217 $ - $ 645,217 $ 178,936 $ 5,915 $ - $ 184,851
USBA 39,638 - 39,638 12,319 - - 12,319
CCS/UIS - 177,111 177,111 - - 57,195 57,195
Montana 1,385,017 - 1,385,017 450,742 963 - 451,705
Fortman 949,189 589,924 1,539,113 357,334 - 205,804 563,138
Altruis 3,056,257 - 3,056,257 881,337 834 - 882,171
Kush 1,230,259 - 1,230,259 425,449 - - 425,449
Medigap 3,868,654 - 3,868,654
Barra 153,539 501,463 655,002
$ 11,327,770 $ 1,268,498 $ 12,596,268
Reli Exchange 47,661 22,263 200,397 270,321
Total $ 2,353,778 $ 29,975 $ 463,396 $ 2,847,149

Three Months ended September 30, 2021 Medical/Life Property and Casualty Total
Regular
EBS 226,233 - 226,233
USBA 18,241 - 18,241
CCS/UIS - 120,762 120,762
Montana 343,546 - 343,546
Fortman 357,638 194,218 551,856
Altruis 807,775 - 807,775
Kush 513,223 - 513,223
$ 2,266,656 $ 314,980 $ 2,581,636
Nine Months ended September 30, 2021 Medical/Life Property and Casualty Total
Six Months ended June 30, 2022 Medical Life Property and Casualty Total
Regular
EBS $ 642,428 $ - $ 642,428 $ 399,547 $ 6,488 $ - $ 406,035
USBA 45,861 - 45,861 25,906 - - 25,906
CCS/UIS - 274,928 274,928 - - 101,077 101,077
Montana 1,283,402 - 1,283,402 956,329 2,097 - 958,426
Fortman 884,073 628,327 1,512,400 687,060 2,873 403,064 1,092,997
Altruis 2,558,653 - 2,558,653 2,184,367 2,676 - 2,187,043
Kush 778,541 - 778,541 864,040 - - 864,040

$ 6,192,958 $ 903,255 $ 7,096,213
Reli Exchange 47,662 22,263 200,397 270,322
Total $ 5,164,911 $ 36,397 $ 704,538 $ 5,905,846

The following are customers representing 10% or more of total revenue:
SCHEDULE OF CONCENTRATIONS OF REVENUES
Insurance Carrier 2022 2021

For the three months ended September 30,
For the three months ended
June 30,

Insurance Carrier 2022 2021 2023 2022
LTC Global 27 % -%
Priority Health 21 % 27% 28 % 30 %
BlueCross BlueShield 10 % 24% 12 % 13 %
Insurance Carrier 12 % 13 %

12
Insurance Carrier 2022 2021

For the Nine months ended September 30,
For the six months ended
June 30,

Insurance Carrier 2022 2021 2023 2022
LTC Global 27 % - %
Priority Health 24 % 30 % 37 % 36 %
BlueCross BlueShield 10 % 25 % 13 % 14 %
Insurance Carrier 37 % 36 %

No other single ~~Customer~~customer accounted for more than 10% of the Company’s commission ~~revenues.~~revenues during the three and six months ended June 30, 2023 and 2022. The loss of any significant customer ~~including Priority Health, BlueCross BlueShield and LTC Global~~ 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~~six months ended ~~September~~ June 30, ~~2022~~2023 and ~~2021~~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.

As of ~~September~~ June 30, ~~2022~~ 2023 and December 31, ~~2021,~~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.
~~Prior Period Adjustments~~Discontinued Operations

The Company’s board of directors approved the discontinuation and abandonment of Medigap Healthcare Insurance Company, ~~identified certain immaterial adjustments impacting prior reporting periods. Specifically,~~LLC (“Medigap”), a subsidiary of the Company, ~~identified adjustments~~effective April 17, 2023, due to ~~correct certain asset, liability~~Medigap’s sustained recurring losses stemming from amongst other factors, greater than anticipated revenue chargebacks. The Company was unable to divest its interest in Medigap for value, and ~~equity~~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 amortization combined value of approximately $4,300,000, as well as, its short-term financing arrangement of $29,500, and each are respectively classified in the intangible assets and short term financing agreements accounts in ~~relation~~the condensed consolidated balance sheets for the periods ended June 30, 2023 and December 31, 2022. These assets have continued value to ~~historical purchase price allocation accounting, historical accrued revenues~~the Company and ~~true ups~~have not been impaired as the fair value exceeds carrying cost. Medigap’s remaining assets were considered 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 of approximately $10,000, and loss of approximately $4,400,000, presented in income (loss) from discontinued operations in the consolidated statements of operations for the three and six months ended June 30, 2023 respectively. As part of the ~~common stock issuable account.~~abandonment, the Company cancelled third party contracts, settled outstanding vendor and other third-party obligations, ceased to enter into 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.

~~The Company assessed the materiality of the adjustments to prior period financial statements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. (SAB) 99,~~ ~~Materiality~~Settlement Agreement~~, and SAB 108,~~ ~~Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements~~~~, and ASC 250,~~ ~~Accounting Changes and Error Corrections~~.

~~Accordingly,~~On June 30, 2023, the ~~Company’s comparative condensed consolidated financial statements~~Company entered into a confidential settlement agreement and ~~impacted notes have been revised~~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 ~~amounts previously reported to reflect these adjustments.~~all past and future Medigap obligations and liabilities. The ~~following table illustrates~~settlement payment was received in full by the ~~impact on previously reported amounts~~Company in July 2023 and ~~adjusted balances presented~~is recorded as income from discontinued operations in the condensed consolidated ~~financial~~ statements of operations for the ~~period~~three and six months ended ~~September~~June 30, ~~2022.~~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
June 30, 2023 December 31, 2022
Accounts receivable - $ 73,223
Accounts receivable, related parties - 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:
~~SUMMARIZES THE CHANGES TO THE PREVIOUSLY ISSUED FINANCIAL INFORMATION~~
Account
12/31/2020
As reported
Adjustment
12/31/2020
Adjusted

Earn-out liability 2,631,418 300,000 2,931,418
Goodwill 9,265,070 (503,345 ) 8,761,725
Common stock issuable 822,116 (482,116 ) 340,000
Additional paid-in-capital 11,377,123 182,116 11,559,239
Accumulated Deficit (12,482,281 ) 122,601 (12,359,680 )
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 June 30, 2023

Accounts receivable $ 56,398 $ - $ (56,398 ) $              -
Accounts receivable, related party 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 ) $ -

Account
3/31/2021
As reported
Adjustment
3/31/2021
Adjusted

Common stock issuable 482,116 (482,116 ) 0
Additional paid-in-capital 25,810,147 182,116 25,992,263
Accumulated Deficit (13,123,609 ) 150,003 (12,973,606 )
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 June 30, 2023
Three Months Ended June 30, 2022 Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Three Months Ended June 30, 2023
Income
Commission income $ 11,025
$
1,359,976
$
744,030 $ 2,537,061

Expenses
Commission expense 5,491 187,196 110,639 305,740
Salaries and wages 53,508 539,380 454,823 989,743
General and administrative expenses 10,612 129,048 129,348 248,323
Marketing and advertising 36,544 614,226 426,819 1,111,719
Depreciation and amortization - 61,964 7,283 100,488
Other expenses (income) 267 (7,500 ) (3,902 ) (7,456 )
Total discontinued operations expenses before impairments and write-offs
106,422 1,524,314 1,125,010 2,748,557
Total discontinued operations income / (loss) before impairments and write-offs
$ (95,397 ) $ (164,338 ) $ (380,980 ) $ (211,496 )
Gains and (losses) from recoveries and impairments / write-offs of discontinued operations assets and liabilities

Settlement Recovery $ 2,900,000 - $ 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 - - (119,594 ) -
Intangibles, net - - (312,322 ) -
Goodwill - - (4,825,634 ) -
Total Asset Impairments - - (5,345,309 ) -

Liability write-off gains
Accounts payable and other accrued liabilities - - 4,157 -
Other payables 9,842 - 9,842 -
Chargeback reserve - - 831,725 -
Current portion of leases payable - - 134,517 -
Total liability write-off gains 9,842 - 980,241 -

Discontinued operations net asset and liability impairments / write-offs gains and (losses) 9,842 - (4,365,068 ) -

Net gains and (losses) from recoveries and impairments / write-offs from discontinued operations assets and liabilities 2,909,842 - (1,465,068 ) -

Gain (loss) from discontinued operations before tax 2,814,445 (164,338 ) (1,846,048 ) (211,496 )

Consolidated statement of operations - Income (loss) from discontinued operations before tax
$ 2,814,445 $ (164,338 ) $ (1,846,048 ) $ (211,496 )
Recently Issued Accounting Pronouncements
We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.
~~NOTE 2.~~ ~~STRATEGIC INVESTMENTS AND BUSINESS COMBINATIONS~~
~~Medigap Healthcare Insurance Company, LLC Transaction~~
On January 10, 2022, pursuant to an asset purchase agreement, dated December 21, 2021, the Company completed the acquisition of all of the assets of Medigap Healthcare Insurance Company, LLC (“Medigap”) for a purchase price of $~~20,096,250, consisting of: (i) payment to Medigap of $18,138,750~~ ~~in cash and (ii) the issuance to Medigap of~~ ~~40,402~~ shares of the Company’s restricted common stock in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties. The shares issued to Medigap as part of the purchase price are further subject to lock up arrangements pursuant to which 50% of the shares may be sold after the one-year anniversary of the date of closing of the transaction and the balance of the shares may be sold after the second-year anniversary of the date of closing of the transaction.
The acquisition of Medigap was accounted for as a business combination in accordance with the acquisition method pursuant to FASB Topic No. 805, Business Combination (ASC 805). Accordingly, the total purchase consideration was allocated to the assets acquired, and liabilities assumed based on their respective estimated fair values. The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing.
~~The preliminary allocation of the purchase price in connection with the acquisition of Medigap was calculated as follows:~~
~~SCHEDULE OF ALLOCATION OF PURCHASE PRICE~~
Description Fair Value Weighted Average
Useful Life (Years)
Property, plant and equipment $ 20,666 5
Right-of-use asset 317,787
Trade names 340,000 15
Customer relationships 4,550,000 12
Technology 67,000 3
Backlog 210,000 1
Chargeback reserve (1,484,473 )
Lease liability (317,787 )
Goodwill 19,199,008 Indefinite
$ 22,902,201
Trade name was measured at fair value using the relief-from-royalty method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue from the trade name, a pre-tax royalty rate of ~~0.5%~~ ~~and a discount rate of~~ ~~11.0%~~.
Customer relationships were measured at fair value using the multiple-period excess earnings method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue and costs associated with existing customers, and a discount rate of ~~11.0%~~.
Technology was measured at fair value using the cost replacement method of the cost approach. Significant inputs used to measure the fair value include an estimate of cost to replace, an obsolescence rate of ~~40.3%~~.
14

The value assigned to backlog acquired was estimated based upon the contractual nature of the backlog as of the acquisition date, using the income approach to discount back to present value the cash flows attributable to the backlog, using a discount rate of ~~11.0%~~.
~~Goodwill of $19,199,008~~ arising from the acquisition of Medigap consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the acquisition of Medigap is currently expected to be deductible for income tax purposes. Total acquisition costs for the acquisition of Medigap incurred were $~~94,065~~ ~~recorded as a component of General and administrative expenses.~~
~~The approximate revenue and net profit or loss for the acquired business as a standalone entity per ASC 805 from January 10, 2022 to September 30, 2022 was $3,868,654~~ ~~and a loss of $693,861, respectively.~~
~~Pro Forma Information~~
The results of operations of Medigap will be included in the Company’s consolidated financial statements as of the date of acquisition through the current period end. The following supplemental pro-forma financial information approximate combined financial information assumes that the acquisition had occurred at the beginning of the nine months ended September 30, 2022 and 2021:
~~SCHEDULE OF PRO FORMA INFORMATION RELATED TO ACQUISITION~~
September 30, September 30,
2022 2021
Revenue $ 12,962,843 $ 10,931,340
Net Income (Loss) $ 25,971,268 $ (2,344,977 )
Earnings (Loss) per common share, basic $ 16.50 $ (3.60 )
Earnings (Loss) per common share, diluted $ (11.70 ) $ (3.60 )
~~Barra~~ ~~& Associates, LLC~~ ~~Transaction~~
On April 26, 2022, the Company entered into an asset purchase agreement (the “APA”) with Barra & Associates, LLC (“Barra”) pursuant to which the Company purchased all of the assets of Barra & Associates, LLC on April 26, 2022 for a purchase price in the amount of $~~7,725,000~~ ~~in cash, with $6,000,000~~ ~~paid to Barra at closing, $1,125,000~~ ~~payable in six months from closing, and a final estimated earnout of $600,000~~ ~~payable over two years from closing, based upon meeting stated milestones. The source of the cash payment was $6,520,000~~ in funds borrowed from Oak Street Lending (“Loan”), the Company’s existing lender pursuant to a Fifth Amendment to Credit Agreement and Promissory Note, of even date. The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties.
The acquisition of Barra was accounted for as a business combination in accordance with the acquisition method pursuant to FASB Topic No. 805, Business Combination (ASC 805). Accordingly, the total purchase consideration was allocated to the assets acquired, and liabilities assumed based on their respective estimated fair values. The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing.
15
~~The preliminary allocation of the purchase price in connection with the acquisition of Barra was calculated as follows:~~
~~SCHEDULE OF ALLOCATION OF PURCHASE PRICE~~
Description Fair Value Weighted Average
Useful Life
(Years)
Acquired accounts receivable $ 92,585
Property, plant and equipment 8,593 7
Right-of-use asset 122,984
Trade names 22,000 4
Customer relationships 550,000 10
Agency relationships 2,585,000 10
Developed technology 230,000 5
Lease liability (122,984 )
Goodwill 4,236,822 Indefinite
$ 7,725,000
Trade name was measured at fair value using the relief-from-royalty method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue from the trade name, a pre-tax royalty rate of ~~0.5%~~ ~~and a discount rate of~~ ~~19.5%~~.
Customer and Agency relationships were measured at fair value using the multiple-period excess earnings method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue and costs associated with existing customers, and a discount rate of ~~19.5%~~.
Developed technology was measured at fair value using the cost replacement method of the cost approach. Significant inputs used to measure the fair value include an estimate of cost to replace, an obsolescence rate of ~~28.6%~~.
~~Goodwill of $4,236,822~~ arising from the acquisition of Barra consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the acquisition of Barra is currently expected to be deductible for income tax purposes. Total acquisition costs incurred through September 30, 2022 for the acquisition of Barra were $~~72,793~~ ~~recorded as a component of General and administrative expenses.~~
~~The approximate revenue and net profit or loss for the acquired business as a standalone entity per ASC 805 from April 26, 2022 to September 30, 2022 was $655,002~~ ~~and a loss of $182,603, respectively.~~
~~Pro Forma Information~~
The results of operations of Barra will be included in the Company’s consolidated financial statements as of the date of acquisition through the current period end. The following supplemental pro forma financial information approximate combined financial information assumes that the acquisition had occurred at the beginning of the nine months ended September 30, 2022 and 2021:
~~SCHEDULE OF PRO FORMA INFORMATION RELATED TO ACQUISITION~~
September 30, September 30,
2022 2021
Revenue $ 13,143,889 $ 8,370,850
Net Income (Loss) $ 26,192,218 $ (1,940,384 )
Earnings (Loss) per common share, basic $ 16.65 $ (3.00 )
Earnings (Loss) per common share, diluted $ (11.40 ) $ (3.00 )
16
NOTE 3.2. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table rolls forward the Company’s goodwill balance for the periods ~~ending September~~ended June 30, ~~2022~~2023, and December 31, ~~2021.~~ ~~As discussed in Note 1 -~~ ~~Prior Period Adjustments~~~~, a~~ $~~(503,345)~~ ~~adjustment was identified~~2022, adjusted for goodwill which impacted the closing December 31, 2020 balance in the same amount. Accordingly, the December 31, 2020 balance is adjusted in the following table from the originally reported balance of $~~9,265,070~~ ~~to $8,761,725~~.discontinued operations.
SCHEDULE OF IMPAIRMENT OF GOODWILL
Goodwill
December 31, 2020 $ 8,761,725
Goodwill recognized in connection with Kush acquisition on May 1, 2021 1,288,552
December 31, 2021 10,050,277
Goodwill recognized in connection with Medigap acquisition on January 10, 2022 19,199,008
Goodwill recognized in connection with Barra acquisition on April 26, 2022 4,236,822
September 30, 2022 $ 33,486,107
Goodwill
December 31, 2021 $ 10,050,277
Goodwill recognized in connection with Barra acquisition on April 26, 2022 4,236,822
December 31, 2022 14,287,099
June 30, 2023 $ 14,287,099
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 June 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 six months ended June 30, 2023 (4,825,634 )
June 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 ~~September~~June 30, ~~2022:~~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 4.6 $ 2,141,858 $ (897,390 ) $ 1,244,468
Internally developed software 4.3 1,530,537 (210,443 ) 1,320,094
Customer relationships 9.3 11,922,290 (1,793,319 ) 10,128,971
Purchased software 0.4 665,137 (568,039 ) 97,098
Video Production Assets 0.3 50,000 (36,621 ) 13,379
Non-competition agreements 2.1 3,504,810 (2,003,505 ) 1,501,305
Contracts Backlog 0.3 210,000 (155,342 ) 54,658
$    20,024,632 $     (5,664,659 ) $ 14,359,973

Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trade name and trademarks 2.0 $ 1,807,187 $ (1,144,749 ) $ 662,438
Internally developed software 3.7 1,783,837 (464,372 ) 1,319,465
Customer relationships 8.5 11,922,290 (2,635,325 ) 9,286,965
Purchased software 0.3 667,206 (600,937 ) 66,269
Video production assets - 50,000 (50,000 ) -
Non-competition agreements 1.4 3,504,810 (2,531,250 ) 973,560
$ 19,735,330 $ (7,426,633 ) $ 12,308,697
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, ~~2021:~~2022:

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

Trade name and trademarks 3.5 $ 1,777,475 $ (609,822 ) $ 1,167,653
Internally developed software 4.7 595,351 (28,443 ) 566,908
Customer relationships 7.7 4,237,290 (1,048,726 ) 3,188,564
Purchased software 0.6 562,327 (452,985 ) 109,342
Video Production Assets 1.0 20,000 - 20,000
Non-competition agreements 2.9 3,504,809 (1,478,376 ) 2,026,433
       $ 10,697,252 $ (3,618,352 ) $ 7,078,900
17
Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization
Net
Carrying Amount

Trade name and trademarks 4.4 $ 1,806,188 $ (969,241 ) $ 836,947
Internally developed software 4.1 1,635,178 (287,990 ) 1,347,188
Customer relationships 9.0 11,922,290 (2,076,086 ) 9,846,204
Purchased software 0.4 665,137 (581,497 ) 83,640
Video production assets - 50,000 (50,000 ) -
Non-competition agreements 1.9 3,504,810 (2,179,420 ) 1,325,390
Total $ 19,583,603 $ (6,144,234 ) $ 13,439,369
The following table reflects expected amortization expense as of ~~September~~June 30, ~~2022,~~2023, for each of the following five years and thereafter:
SCHEDULE OF AMORTIZATION EXPENSE OF ACQUIRED INTANGIBLES ASSETS
1
Years ending December 31,
Amortization
Expense

Amortization
Expense

2022 (remainder of year) $ 707,166
2023 2,536,548
2023 (remainder of year) $ 1,279,911
2024 2,158,445 2,190,466
2025 1,764,541 1,796,510
2026 1,504,660 1,527,816
2027 1,194,592
Thereafter 5,688,613 4,319,402
Total $ 14,359,973 $ 12,308,697
15
NOTE 4.3. LONG-TERM DEBT AND SHORT-TERM FINANCINGS

Long-Term Debt

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

September 30,
2022

December 31,
2021

Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, net of deferred financing costs of $12,942 and $14,606 as of September 30, 2022 and December 31, 2021, respectively $ 442,368 $ 485,317
Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, net of deferred financing costs of $15,713 and $17,626 as of September 30, 2022 and December 31, 2021, respectively 715,816 785,826
Oak Street Funding LLC Term Loan for the acquisition of SWMT, net of deferred financing costs of $9,613 and $11,027 as of September 30, 2022 and December 31, 2021, respectively 811,699 884,720
Oak Street Funding LLC Term Loan for the acquisition of FIS, net of deferred financing costs of $38,298 and $42,660 as of September 30, 2022 and December 31, 2021, respectively 2,045,048 2,226,628
Oak Street Funding LLC Term Loan for the acquisition of ABC, net of deferred financing costs of $43,749 and $48,609 as of September 30, 2022 and December 31, 2021, respectively 3,337,241 3,616,754
Oak Street Funding LLC Term Loan for the acquisition of Barra, net of deferred financing costs of $204,958 and $0 as of September 30, 2022 and December 31, 2021, respectively 6,315,042 -
13,667,214 7,999,245
Less: current portion (1,026,541 ) (913,920 )
Long-term debt $ 12,640,673 $ 7,085,325

June 30, 2023

December 31, 2022

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 $11,279 and $12,388 as of June 30, 2023 and December 31, 2022, respectively $ 398,734 $ 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 $11,279 and $12,388 as of June 30, 2023 and December 31, 2022, respectively $ 398,734 $ 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 $13,800 and $15,076 as of June 30, 2023 and December 31, 2022, respectively 649,875 693,682
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 $8,469 and $9,206 as of June 30, 2023 and December 31, 2022, respectively 742,833 788,596
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 $33,935 and $36,843 as of June 30, 2023 and December 31, 2022, respectively 1,874,813 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 $38,889 and $42,129 as of June 30, 2023 and December 31, 2022, respectively 3,076,800 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 $187,475 and $198,188 as of June 30, 2023 and December 31, 2022, respectively 6,297,846 6,321,812
13,040,901 13,468,394
Less: current portion (1,329,121 ) (1,118,721 )
Long-term debt $ 11,711,780 $ 12,349,673

Oak Street Funding LLC – Term Loans and Credit Facilities
SCHEDULE OF CUMULATIVE MATURITIES OF ~~LONG-TERM~~LONG -TERM LOANS AND CREDIT FACILITIES
Fiscal year ending December 31,
Maturities of
Long-Term Debt

Maturities of
Long-Term Debt

2022 (remainder of year) $ 211,904
2023 1,168,585
2023 (remainder of year) $ 647,062
2024 1,482,266 1,401,013
2025 1,616,891 1,560,173
2026 1,760,367 1,733,052
2027 1,925,105
Thereafter 7,752,474 6,068,494
Total 13,992,487 13,334,899
Less: debt issuance costs (325,273 ) (293,998 )
Total $ 13,667,214 $ 13,040,901
Short-Term Financings
The Company has various short-term notes payable for financed items such as insurance premiums and CRM software purchases. These are normally paid in equal installments over a period of twelve months or less and carry interest rates ranging between 0% and 8% per annum. As of June 30, 2023 and 2022, respectively, approximately $195,000 and $377,000 remained outstanding on short-term financings.

1816

~~Short-Term Financings~~
~~The Company financed certain annual insurance premiums through the use of two short-term notes, payable in nine and ten equal monthly installments of $42,894~~ ~~and $4,456~~ ~~at interest rates of~~ ~~7.51%~~ ~~and~~ ~~7.95%, per annum respectively. Policies financed include directors and officers and errors and omissions insurance coverage with premium financing recognized in 2022 and 2021 of $417,199~~ ~~and $~~0~~, respectively. Outstanding balances as of September 30, 2022 and December 31, 2021, respectively were $309,993~~ ~~and $~~0.
NOTE 5.4. WARRANT LIABILITIES
Series B Warrants

~~On December 22, 2021,~~Pursuant to the ~~Company entered into a securities purchase agreement with several institutional buyers for the purchase and sale of (i) warrants to purchase up to an aggregate of~~ ~~651,997~~ ~~shares~~terms of the ~~Company’s common stock, par value $0.086~~ ~~per share at an~~SPA, during the quarter ended June 30, 2023, the Series B Warrants’ effective exercise price reset to $2.63. As of $June 30, 2023, there remain ~~61.35~~1,331,667 ~~per share, (ii) an aggregate of~~ ~~178,059~~ ~~shares of Common Stock, and (iii)~~ ~~9,076~~ ~~shares of the Company’s newly-designated~~ Series B ~~convertible preferred stock, par value $0.086~~ ~~per share, with a stated value of $1,000~~ ~~per share, initially convertible into an aggregate of~~ ~~147,939~~ ~~shares of Common Stock at a conversion price of $61.35~~ ~~per share, each a freestanding financial instrument, (the “Private Placement”). The aggregate purchase price for the Common Shares, the Preferred Shares and the~~ Warrants ~~was approximately $20,000,000~~.outstanding.

~~By entering into~~For the ~~Private Placement on December 22, 2021,~~three and six months ended June 30, 2023, net fair value gains and losses recognized for the ~~Company entered into a commitment to issue the Common Shares, Preferred Shares and~~ Series B Warrants onwere a loss of $1,584,684 and a gain of $2,642,267, respectively. For the ~~Initial Closing Date~~three and six months ended June 30, 2022, net fair value gains and losses recognized for ~~a fixed price and exercise price, as applicable. The commitment to issue~~the Series B Warrants ~~(the “Warrant Commitment”) represents a derivative financial instrument, other than an outstanding share, that, at inception, has both~~were gains of the following characteristics: (i) embodies a conditional obligation indexed to the Company’s equity. The Company classified the commitment to issue the warrants as a derivative liability because it represents a written option that does not qualify for equity accounting The Company initially measured the derivative liability at its fair value and will subsequently remeasure the derivative liability, at fair value with changes in fair value recognized in earnings. An option pricing model was utilized to calculate the fair value of the Warrant Commitment. The Company initially recorded $~~17,652,808~~ of non-operating unrealized losses within the recognition and change in fair value of warrant liabilities account for the year ended December 31, 2021. The Private Placement closed on January 4, 2022, at which time the Company remeasured the derivative liability for the warrants issued in the transaction. The Company recognized $~~7,726,161~~12,322,737 and $~~34,621,024~~24,748,163 of non-operating unrealized gains within the recognition and change in fair value of warrant liabilities account on the condensed consolidated statement of operations for the three and nine months ended September 30, 2022,, respectively, ~~related to the subsequent changes in its fair value through September 30, 2022. A corresponding derivative liability of $3,031,784~~ is included on Company’s condensed consolidated balance sheet as of September 30, 2022. The closing of the Private Placement settled the subscription receivable reported on the Company’s balance sheet as of December 31, 2021.
~~Placement Agent Warrants~~
~~In connection with the Private Placement, the Company issued~~ ~~16,303~~ warrants to the placement agent for the Private Placement. The warrants were issued as compensation for the Placement Agent’s services. The Placement Agent Warrants are: (i) exercisable on any day after the six (6) month anniversary of the issue date, (ii) expire ~~five years~~ ~~after the closing of the Private Placement, and (iii) exercisable at $61.35~~ per share. The Placement Agent Warrants contain terms that may require the Company to transfer assets to settle the warrants. Therefore, the Placement Agent Warrants are classified as a derivative liability measured at fair value of $~~1,525,923~~ on the date of issuance and will be remeasured each accounting period with the changes in fair value reported in earnings. The Placement Agent Warrants are considered financing expense fees paid to the Placement Agent. Since the financing expenses relate to a derivative liability measured at fair value, this financing expense of $~~1,525,923, along with non-operating unrealized gains of $193,154~~ ~~and $1,450,129, were included~~presented in the recognition and change in fair value of warrant liabilities account in the consolidated statements of operations. The Series B Warrant liability outstanding as of June 30, 2023 and December 31, 2022 was $3,741,984 and $6,384,250 respectively, presented in the warrant liability account on the ~~condensed~~ consolidated ~~statement of operations for~~balance sheets.
Placement Agent Warrants
For the three and ~~nine~~six months ended ~~September~~June 30, 2023, net fair value gains and losses recognized for the Placement Agent Warrants (“PAW”) were, a loss of $7,825 and a gain of $31,456, respectively. For the three and six months ended June 30, 2022, ~~respectively, A corresponding derivative liability~~net fair value gains recognized for the PAW were $310,514 and losses of $~~75,794~~268,948, respectively, presented in the recognition and change in fair value of warrant liabilities account in the consolidated statements of operations. The PAW liability outstanding as of June 30, 2023 and December 31, 2022 was $17,444 ~~is included~~and $48,900, respectively, presented in the warrant liability account on ~~Company’s condensed~~the consolidated balance ~~sheet as of September 30, 2022.~~
19
sheets.

NOTE 6.5. EQUITY
~~Preferred Stock~~
~~The Company has been authorized to issue~~ ~~750,000,000~~ ~~shares of $0.086~~ par value Preferred Stock. The Board of Directors is expressly vested with the authority to divide any or all of the Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of each series so established, within certain guidelines established in the Articles of Incorporation.
~~In January 2022, the Company issued~~ ~~9,076~~ ~~shares of its newly designated Series B convertible preferred stock through the Private Placement for the purpose of raising capital.~~ ~~The Series B convertible preferred stock have no voting rights and initially each share may be converted into~~ 16 shares of the Company’s common stock. The holders of the Series B convertible preferred stock are not entitled to receive any dividends other than any dividends paid on account of the common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of common stock would receive if the Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to common stock which amounts shall be paid pari-passu with all holders of common stock.
~~During August 2022, all~~ ~~9,076~~ ~~Series B Convertible Preferred Stock were converted by third parties into~~ ~~147,939 shares of common stock.~~

Common Stock

The Company ~~has been~~is authorized to issue 133,333,333 shares of common stock, $0.086 par value. Each share of issued and outstanding common stock 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 ~~2022,~~2023, the Company issued ~~178,059~~ ~~shares of common stock through the Private Placement for the purpose of raising capital. See Note 5 -~~ ~~Warrant Liabilities~~ ~~for proceeds received by the Company.~~
~~In January 2022, the Company issued~~ ~~40,402~~ ~~shares of common stock pursuant to the Medigap Acquisition.~~
~~In January 2022, upon agreement with Series A warrant holders,~~ ~~25,000~~ ~~warrants were exercised at a price of $99.00~~ ~~into~~ ~~25,000~~ ~~of the Company’s common stock.~~
~~In March 2022, the Company issued~~ ~~400~~109,358 shares of the Company’s common stock ~~due~~ to ~~the vesting of~~ settle two earn-out liabilities.
~~400~~ ~~stock awards~~
On February 23, 2023, pursuant to ~~an employee agreement.~~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 ~~May and June 2022,~~ March 2023, Yes Americana, a related party, converted $~~218,462~~645,000 ~~Series C prepaid warrants were exchanged for~~of outstanding debt into ~~218,462~~ ~~shares of the Company’s common stock.~~
~~In July 2022,~~ ~~81,423~~ ~~Series D prepaid warrants were exchanged for~~ ~~81,423~~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 2023, the 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 112,557 shares of the Company’s common stock in lieu of services provided.
In May 2023, the Company issued 352,260 shares of the Company’s common stock to settle an earn-out liability.
In May 2023, the Company issued 22,219 shares of the Company’s common stock pursuant to vested restricted stock awards earned by agents through an equity-based compensation program at one of the Company’s subsidiaries.

As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, there were ~~1,203,630~~2,053,084 and ~~730,407~~1,219,573 shares of Common Stock outstanding, respectively.

2017

Warrants

Series A Warrants
In conjunction with the Company’s initial public offering, the Company issued 138,000Series A Warrants which were classified as equity warrants because of provisions, pursuant to the warrant agreement, that permit the holder obtain a fixed number of shares for a fixed monetary amount. The warrants are standalone equity securities that are transferable without the Company’s consent or knowledge. The warrants were recorded at a value per the offering of $~~0.01~~0.15. The warrants may be exercised at any point from the effective date until the 5-year anniversary of issuance and are not subject to standard antidilution provisions. ~~The Series A Warrants are exercisable at a per share exercise price equal to~~After taking into account warrant exercises, there were ~~110%~~ 113,000~~of the public offering price of one share of common stock and accompanying Series A Warrant, $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 ~~September~~June 30, 2023 and December 31, 2022.

Series CE and DF Warrants
In January 2022, as a result of the Private Placement and the Medigap Acquisition, the Company received a deficiency notification from Nasdaq indicating violation of Listing Rule 5365(a). As part of its remediation plan, inOn March ~~2022,~~13, 2023, the Company entered into ~~Exchange Agreements~~a securities purchase agreement (the “SPA-2023”) with one institutional buyer for the ~~holders~~purchase and sale of, ~~common stock issued in January 2022. Pursuant to the Exchange Agreements, the Company issued~~(i) an aggregate of ~~218,462~~ ~~Series C prepaid warrants in exchange for~~ ~~218,462~~155,038 shares (the “Common Shares”) of the Company’s common ~~stock.~~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, ~~as compensation for entering into the Exchange Agreements,~~ the Company ~~issued~~ ~~81,500~~ ~~Series D prepaid warrants~~agreed to issue a warrant to the ~~Private~~ Placement ~~investors~~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 ~~no additional consideration. The fair value of~~resale the common shares underlying the Series ~~D prepaid warrants was treated as a deemed dividend~~E and ~~accordingly treated as a reduction from income available to common stockholders in the calculation of earnings per share. Refer to Note 7,~~ ~~Earnings (Loss) Per Share~~ ~~for additional information.~~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.
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 CE Warrants, Series F Warrants, and DPA Warrants are equity ~~classified~~in nature because of provisions, pursuant to the warrant ~~agreement provisions~~agreements, that permit ~~holders~~the holder to obtain a fixed number of shares for a fixed monetary amount. The ~~warrants are standalone equity securities that are transferable without~~values offset to $0 in additional paid-in capital in the Company’s ~~consent or knowledge. The warrants expire on the fifth anniversary~~condensed consolidated statements of ~~the respective issuance dates and are exercisable at a per share exercise price equal to $0.001~~stockholders’ equity (deficit).

~~In May and June 2022, the~~ ~~218,462~~ ~~Series C prepaid warrants were converted for~~ ~~218,462~~ ~~shares of the Company’s common stock for a conversion price of $0.001. Through September 30, 2022, the Company has received payments of $1,336~~ ~~for these issuances.~~
~~In July 2022, the~~ ~~81,500~~ ~~Series D prepaid warrants were converted into~~ ~~81,472~~ ~~shares of the Company’s common stock for a conversion price of $0.001~~ ~~through both cash and cashless exercises. Proceeds of $795~~ ~~were received in conjunction with the cash exercise.~~
18

Equity-based Compensation

~~Between February and May 2022, three existing employees were~~During the six month period ended June 30, 2023, an executive was awarded ~~bonuses~~an annual stock award in conjunction with a promotion agreement, consisting of2,667 shares of the Company’s common stock per annum, to ~~be vested immediately. The shares granted in 2022 were~~vest monthly throughout the term of employment. For the three and six months ended June 30, 2023, total stock compensation for this award was valued at approximately $~~766,250~~5,601, and ~~treated~~$11,443, respectively, recorded as ~~compensation expense. As of September 30, 2022, these shares have not been issued.~~stock-based compensation.

~~In April 2022 , pursuant to an agreement between~~Total stock-based compensation expense recorded in general and administrative expenses in the ~~Company and an executive,~~condensed consolidated statements of operations for the ~~executive will be compensated with~~ ~~4,000~~ ~~shares of the Company’s common stock. These shares vest quarterly over a three-year period. The shares granted were valued at $178,200~~ ~~at the date of the grant. For the~~ three and ~~nine~~six months ended ~~September~~June 30, ~~2022, compensation expense on this grant~~2023 was $~~14,850~~35,367 and $~~25,571~~79,163, respectively. ~~As of September 30, 2022, no shares were issued under this contract.~~
Pursuant to an equity-based compensation program at one of the Company’s subsidiaries which provides agents the ability to earn and receive restricted stock awards upon completion of agreed upon service requirements, the Company granted ~~20,210~~ ~~restricted stock awards which were immediately vested. Stocks earned are restricted for twelve months. The stocks were valued at $249,650~~ ~~and recognized as stock-based compensation for the three and nine months ended September 30, 2022.~~

NOTE 7.6. EARNINGS (LOSS) PER SHARE

Basic ~~EPS~~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
June 30, 2023 June 30, 2022
(Loss) income from continuing operations, numerator, basic and diluted computation $ (3,869,732 ) $ 10,660,028

Weighted average common shares, basic 2,716,512 1,069,157
Effect of series B warrants - -
Effect of stock awards - 2,128
Effect of preferred stock - 147,939
Weighted average common shares, dilutive 2,716,512 1,219,224
(Loss) earnings per common share – basic $ (1.42 ) $ 9.97
(Loss) earnings per common share – diluted $ (1.42 ) 8.74
2119

Six Months Six Months
Ended Ended
June 30, 2023 June 30, 2022
(Loss) income from continuing operations $ (997,776 ) $ 20,047,189
Deemed dividend - (6,930,335 )
Net income continuing operations, numerator, basic computation (997,776 ) 13,116,854
Recognition and change in fair value of warrant liabilities - (26,625,915 )
Net loss continuing operations, numerator, diluted computation $ (997,776 ) $ (13,509,061 )

Weighted average common shares, basic 2,138,444 1,025,108
Effect of series B warrants - 43,128
Weighted average common shares, dilutive 2,138,444 1,068,236
Loss per common share – basic (0.47 ) 12.80
Loss per common share – diluted $ (0.47 ) $ (12.65 )
The ~~following calculates basic and diluted EPS:~~reversal of the gain on the change fair value of the Series B warrant liability for the six months June 30, 2022 is included in the numerator of the dilutive EPS calculation to eliminate the effects the warrants as the impact is dilutive.
~~SCHEDULE OF CALCULATIONS OF BASIC AND DILUTED EPS~~
Three Months Three Months
Ended Ended
September 30,
2022 September 30,
2021
Net income (loss), numerators, basic and diluted computation $ 6,122,093 $ (595,233 )

Weighted average shares - denominator basic computation 1,156,939 729,629
Effect of series B convertible preferred shares
147,939
-
Weighted average shares, as adjusted - denominator diluted computation 1,304,878 729,629
Earnings (loss) per common share – basic $
5.29
$ (0.82 )
Earnings (loss) per common share – diluted
4.69
(0.82 )
Nine Months Nine Months
Ended Ended
September 30,
2022 September 30,
2021
Net income (loss) $ 25,957,785 $ (2,486,045 )
Deemed dividend (6,930,335 ) -
Net income (loss), numerator, basic and diluted computation $ 19,027,450 $ (2,486,045 )

Weighted average shares - denominator basic computation
1,069,534
653,939
Effect of series B convertible preferred stock
147,939

-

Non-vested stock awards
2,349
-
Weighted average shares - denominator diluted computation 1,219,822 653,939
Earnings (loss) per common share - basic $ 17.79 $ (3.80 )
Earnings (loss) per common share - diluted $ 15.60 $ (3.80 )
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
1 2
For the Three and Nine Months Ended
September 30,
2022 September 30,
2021
Shares subject to outstanding common stock options
10,928

10,928

Shares subject to outstanding Series A warrants 113,000 138,000
Shares subject to unvested stock awards
4,085

1,044

June 30, 2023 June 30, 2022
For the Three Months Ended
June 30, 2023 June 30, 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 3,471 -
Shares subject to conversion of Series B preferred stock - -
Shares subject to warrant liability - 668,299

22
June 30, 2023 June 30, 2022
For the Six Months Ended
June 30, 2023 June 30, 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 3,471 4,621
Shares subject to conversion of Series B preferred stock - 147,939
Shares subject to warrant liability - -

NOTE 8.7. LEASES

Operating lease expense for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was $~~159,624~~123,326 and $~~97,265~~111,900, respectively. Operating lease expense for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was $~~434,798~~239,296 and $~~220,798~~219,223 respectively. As of ~~September~~June 30, ~~2022,~~2023, the weighted average remaining lease term and weighted average discount rate for the operating leases were ~~3.86~~3.89 years and ~~5.72%~~6.20% respectively.

Future minimum lease payment under these operating leases consisted of the following:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT
Year ending December 31,
Operating Lease
Obligations

2022 $ 157,633
Period ending June 30, 2023
Operating Lease
Obligations

2023 570,275 $ 216,833
2024 269,908 357,688
2025 144,124 166,384
2026 113,738 113,738
2027 117,150
Thereafter 268,202 151,052
Total undiscounted operating lease payments 1,523,880 1,122,845
Less: Imputed interest 152,467 116,127
Present value of operating lease liabilities $ 1,371,413 $ 1,006,718
20

NOTE 9.8. 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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~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.

Earn-out liabilities

The following outlines changes to the Company’s earn-out liability balances for the respective periods ended ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:
SCHEDULE OF EARN-OUT LIABILITY
Fortman Montana Altruis Kush Barra Total
Ending balance December 31, 2021 $ 515,308 $ 615,969 $ 992,868 $ 1,689,733 $ - $ 3,813,878
Changes due to acquisitions - - - - 600,000 600,000
Changes due to payments (34,430 ) (326,935 ) (84,473 ) (1,181,458 ) - (1,627,296 )
Changes due to fair value adjustments 186,122 37,741 (212,609 ) 201,191 (80,000 ) 132,445
Ending balance September 30, 2022 $ 667,000 $ 326,775 $ 695,786 $
709,466
$ 520,000 $ 2,919,027
Fortman Montana Altruis Kush Barra Total
Ending balance December 31, 2022 $ 667,000 $ 500,000 $ 834,943 $ 147,535 $ 560,000 $ 2,709,478
Changes due to business combinations - - - - - -
Changes due to payments $ (1,433,700 ) $ (250,000 ) $ (929,168 ) $ (147,535 ) - (2,760,403 )
Changes due to fair value adjustments 766,700 150,000 94,225 - 9,000 1,019,925
Ending balance June 30, 2023 $ - $ 400,000 $ - $ - $ 569,000 $ 969,000

CCS Fortman Montana Altruis Kush Total Fortman Montana Altruis Kush Barra Total
Ending balance December 31, 2020 $ 81,368 $ 432,655 $ 522,553 $ 1,894,842 $ - $ 2,931,418
Ending balance December 31, 2021 $ 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 - - - - 1,694,166 1,694,166 - - - - 600,000 600,000
Changes due to payments - - - (452,236 ) - (452,236 ) (34,430 ) (326,935 ) (84,473 ) (1,259,087 ) - (1,704,925 )
Changes due to fair value adjustments - 82,653 93,416 (449,738 ) (4,433 ) (278,102 ) 186,122 210,966 (73,452 ) (283,111 ) (40,000 ) 525
Changes due to write-offs (81,368 ) - - - - (81,368 )
Ending balance December 31, 2021 $ - $ 515,308 $ 615,969 $ 992,868 $ 1,689,733 $ 3,813,878
Ending balance December 31, 2022 $ 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
NOTE ~~10.~~9. RELATED PARTY TRANSACTIONS
On September 13, 2022, the Company issued a promissory note to YES Americana Group, LLC (“Americana”) a related party entity beneficially owned by the Company’s Chief Executive Officer, for the principal sum of $1,500,000 (the “Note”)~~. The Note matures on~~ ~~January 15, 2024~~, ~~bearing~~accruing monthly interest of 05%% per annum ~~for~~beginning nine months after Note issuance. On February 7, 2023 , the ~~first six months,~~Company and ~~5% per annum thereafter, payable monthly. In the event~~Americana entered into an amendment to the Note ~~is not paid by~~pursuant to which (i) the principal amount of the Note was increased to $1,845,000, (ii) the maturity date of the ~~loan will automatically~~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 ~~extended for~~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 the month of March 2023 the Company repaid to Americana $400,000. During the months of April and June of 2023 the company repaid to Americana an additional ~~year until January 15, 2025,~~$230,000. As of June 30, 2023 and ~~if necessary, extended again~~December 31, 2022 respectively, the balance owed to Americana was $570,000 and $1,500,000, reclassified and recorded in the convertible debt, related parties, less current portion account in the condensed consolidated balance sheets.
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 ~~one additional year through January 15, 2026.~~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 June 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 $47,249 in the current portion of loans payables, related parties account in the condensed consolidated balance sheets as of June 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 June 30, 2023, and December 31, 2022, respectively. Amortization expense to bring the payable to present value for the three and six months ended June 30, 2023 respectively, was $1,730 and $3,459, 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 twenty-four months. 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 $825,000 and $1,375,000 respectively, in the current portion of loans payables, related parties account in the condensed consolidated balance sheets as of June 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 $281,916 and $0 as of June 30, 2023, and December 31, 2022 respectively. Interest expense for the three and six months ended June 30, 2023 respectively, was $49,423 and $89,170, 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 June 30, 2023, was zero.
NOTE 11. SUBSEQUENT EVENTS
Pursuant to the terms of the SPA, on July 7, 2023, the Series B Warrants’ effective exercise price reset to $2.50, and on July 14, 2023, 165,000 Series B Warrants were exercised into 73,264 shares of common stock in a cashless exercise. Accordingly, the adjusted balance of Series B Warrants outstanding as of the exercise date is 1,166,667.
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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 June 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.
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 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. 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 June 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.
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 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 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
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.
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”).
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.
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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.
Results of Operations
Comparison of the three months ended June 30, 2023 to the three months ended June 30, 2022
The following table sets forth our revenue and operating expenses for each of the years presented.

June 30, 2023

June 30, 2022

Revenue
Commission income $ 3,195,905 2,847,149
Total revenue 3,195,905 2,847,149

Operating expenses
Commission expense 822,274 662,932
Salaries and wages 1,742,697 1,637,412
General and administrative expenses 1,703,811 1,630,169
Marketing and advertising 109,860 (4,844 )
Depreciation and amortization 655,449 694,440
Total operating expenses 5,034,091 4,620,109

Loss from operations (1,838,186 ) (1,772,960 )

Other income (expense)
Other expense, net (439,037 ) (200,263 )
Recognition and change in fair value of warrant liabilities (1,592,509 ) 12,633,251
Total other income (expense) (2,031,546 ) 12,432,988

Income from continuing operations $ (3,869,732 ) 10,660,028
Loss from discontinued operations 2,814,445 (164,337 )
Net (loss) income (1,055,287 ) 10,495,691
Revenues
The Company’s revenue is primarily comprised of commissions paid by 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 $3.2 million for the three months ended June 30, 2023, as compared to approximately $2.8 million for the three months ended June 30, 2022. The increase of approximately $349 thousand or 12% is primarily driven by organic growth and the addition of RELI Exchange.
Commission expense
The Company had total commission expense of approximately $822 thousand for the three months ended June 30, 2023, compared to approximately $663 thousand for the three months ended June 30, 2022. The increase of approximately $159 thousand or 24% is primarily driven by organic growth and the addition of RELI Exchange.
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Salaries and wages
The Company reported approximately $1.7 million of salaries and wages expense for the three months ended June 30, 2023, compared to approximately $1.6 million for the three months ended June 30, 2022. The increase of approximately $105 thousand or 6% is a result of the Company’s growth driven by expanded operations.
General and administrative expenses
The Company had total general and administrative expenses of approximately $1.7 million for the three months ended June 30, 2023, as compared to approximately $1.6 million for the three months ended June 30, 2022. The increase in expense of approximately $74 thousand or 5% is a result of the Company’s growth driven by expanded operations.
Marketing and advertising
The Company reported approximately $110 thousand of marketing and advertising expense for the three months ended June 30, 2023 compared to approximately a credit of approximately $5 thousand for the three months ended June 30, 2022. The 2022 credit is comprised of marketing expense of $29,663 and marketing allowances received, totaling $(34,506) which net to $4,844. The net increase of approximately $115 thousand is a result of increased branding and outreach efforts to achieve greater industry presence as well as marketing allowances received in 2022 to offset marketing expense but not received in 2023.
Depreciation and amortization
The Company reported approximately $655 thousand of depreciation and amortization expense for the three months ended June 30, 2023 compared to approximately $694 thousand for the three months ended June 30, 2022. The decrease of approximately $39 thousand or 6% is primarily a result of fully depreciated assets no longer incurring amortization charges.
Other income and expense
The Company reported approximately $2 million of other expense for the three months ended June 30, 2023 compared to approximately $12 million of other income for the three months ended June 30, 2022. The decrease of approximately $14 million is attributable primarily to the change in fair value of warrant liabilities, offset by interest expense.
Comparison of the six months ended June 30, 2022 to the six months ended June 30, 2021
The following table sets forth our revenue and operating expenses for each of the periods presented.

June 30, 2023

June 30, 2022

Revenue
Commission income $ 7,135,008 5,905,846
Total revenue 7,135,008 5,905,846

Operating expenses
Commission expense 1,905,600 1,448,543
Salaries and wages 3,454,794 3,269,225
General and administrative expenses 3,062,066 3,963,964
Marketing and advertising 246,432 84,686
Depreciation and amortization 1,309,227 1,263,440
Total operating expenses 9,978,119 10,029,858

Loss from operations (2,843,111 ) (4,124,012 )

Other income (expense)
Other expense, net (828,388 ) (308,014 )
Recognition and change in fair value of warrant liabilities 2,673,723 24,479,215
Total other income (expense) 1,845,335 24,171,201

Income from continuing operations $ (997,776 ) 20,047,189
Loss from discontinued operations (1,846,048 ) (211,497 )
Net (loss) income (2,843,824 ) 19,835,692
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Revenues
The Company had revenues of approximately $7.1 million for the six months ended June 30, 2023, as compared to approximately $5.9 million for the six months ended June 30, 2022. The increase of approximately $1.2 million or 21% is primarily driven by organic growth and the addition of RELI Exchange.
Commission expense
The Company had total commission expense of approximately $1.9 million for the six months ended June 30, 2023, compared to approximately $1.4 million for the six months ended June 30, 2022. The increase of approximately $457 thousand or 32% is primarily driven by organic growth and the addition of RELI Exchange.
Salaries and wages
The Company reported approximately $3.5 million of salaries and wages expense for the six months ended June 30, 2023, compared to approximately $3.3 million for the six months ended June 30, 2022. The increase of approximately $186 thousand or 6% is a result of the Company’s growth driven by expanded operations.
General and administrative expenses
The Company had total general and administrative expenses of approximately $3.1 million for the six months ended June 30, 2023, as compared to approximately $4.0 million for the six months ended June 30, 2022. The decrease in expense of approximately $902 thousand or 23% 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 $246 thousand of marketing and advertising expense for the six months ended June 30, 2023, compared to approximately $85 thousand for the six months ended June 30, 2022. The increase of approximately $162 thousand or 191% is a result of the Company increasing its branding and outreach efforts to achieve greater industry presence as well as marketing allowances received in 2022 to offset marketing expense but not in 2023.
Depreciation and amortization
The Company reported approximately $1.30 million of depreciation and amortization expense for the six months ended June 30, 2023, compared to approximately $1.26 million for the six months ended June 30, 2022. The increase of approximately $46 thousand or 4% is primarily a result of our acquired tangible and intangible assets through business combinations.
Other income and expense
The Company reported approximately $1.8 million of other income for the six months ended June 30, 2023, compared to approximately $24.2 million of other income for the six months ended June 30, 2022. The decrease of approximately $22.3 million or 92% is attributable primarily to the change in the fair value of warrant liabilities, offset by interest expense.
Liquidity and capital resources
As of June 30, 2023, we had a cash balance of approximately $2.7 million and working capital of approximately $2.3 million, compared with a cash balance of approximately $1.9 million and working capital deficit of approximately $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, and the repayment of liabilities.
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.
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Cash Flows

Six Months Ended
June 30,

2023 2022
Net cash used in operating activities $ (2,007,101 ) $ (1,311,411 )
Net cash provided and used in investing activities 735,128 (24,625,929 )
Net cash provided by financing activities 2,042,460 25,714,021
Net increase in cash, cash equivalents, and restricted cash $ 770,487 $ (223,319 )
Operating Activities
Net cash used in operating activities for the six months ended June 30, 2023 was approximately $2.0 million, compared to net cash flows used in operating activities of approximately $1.3 million for the six months ended June 30, 2022. The cash used includes net loss of approximately $2.8 million, increased by approximate non-cash adjustments of $2.0 million principally related to a loss of recognition and change in fair value of warrant liabilities of $2.7 million, offset by earn-out fair value adjustments and depreciation and amortization of $1.0 million and $1.2 million, respectively, as well as a net decrease in cash due to changes of net working capital items in the amount of $274 thousand and offset by net cash adjustments for discontinued operating activities of $1.0 million.
Investing Activities
During the six months ended June 30, 2023, cash flows provided in investing activities approximated $735 thousand compared to cash flows used in investing activities of approximately $24.6 million for the six months ended June 30, 2022. The cash provided is primarily related to the sale of the Company’s shares in NSURE stock. Total proceeds received in 2023 were $900,000.
Financing Activities
During the six months ended June 30, 2023, approximate cash provided by financing activities was $2.0 million as compared to approximately $25.7 million for the six months ended June 30, 2022. Net cash provided by financing activities primarily relates to proceeds from private placement offerings of approximately $3.4 million, offset by net debt principal proceeds and repayments of $451 thousand, related party loan repayments of $650 thousand, and earn out payments of $344 thousand.
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
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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.
~~The~~During fiscal year 2022, the Company determined it had a material weakness in its disclosure controls and procedures ~~as it pertains~~relating to earnings per share ~~(EPS) for the three and nine months ended September 30, 2022.~~(“EPS”). During the ~~quarter~~quarters ended March 31 and June 30, 2023, the Company mitigated ~~this~~the deficiency by consulting with qualified advisors that have in-depth EPS expertise. These advisors ~~will assist~~assisted the Company in the calculations and disclosures of EPS for ~~future reporting periods. Pursuant to~~ the ~~above, our~~three and six months ended June 30, 2023.
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2022, concluding them to be ineffective~~2023, and concluded that they were not effective as of ~~such date.~~June 30, 2023 due to the material weakness 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 six months ended June 30, 2023. Aside for the foregoing, there have ~~not~~ been ~~any~~no other changes in our internal ~~control~~controls 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.
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 June 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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None that have not been previously disclosed in our filings with the SEC.
29
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

~~4.1~~10.1
~~YES Americana~~Second Amendment to the Purchase Agreement, dated as of May 18, 2023, by and between Reliance Global Group, Inc., Fortman Insurance Services, LLC, ~~Promissory Note~~ ~~(incorporated~~Fortman Insurance Agency, LLC, Jonathan Fortman, and Zachary Fortman (incorporated by reference to Exhibit ~~4.1~~10.1 to the ~~registrant’s Quarterly~~Registrant’s Current Report on Form ~~10-Q~~8-K filed with the Securities and Exchange Commission on ~~November 14, 2022)~~May 24, 2023).
10.2 Confidential Settlement and Mutual General Release Agreement, dated as of June 30, 2023, by and among the registrant, Medigap Healthcare Insurance Agency, LLC, Pagidem, LLC f/k/a Medigap Healthcare Insurance Company, LLC, Joseph J. Bilotti, III, Kyle Perrin, Zachary Lewis, T65 Health Insurance Solutions, Inc. f/k/a T65 Health Solutions, Inc., and Seniors First Life, LLC. (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 July 6, 2023).
31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002
31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 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*104 Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).
*Filed herewith
**Furnished herewith

2430

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,~~ August 10, 2023 By: /s/ Ezra Beyman
Ezra Beyman

Chief Executive Officer
(principal executive officer)

Date: ~~May 18,~~ August 10, 2023 By: /s/ Joel Markovits
Joel Markovits
Chief Financial Officer
(principal financial officer and principal accounting officer)

2531

	Three months ended			Three months ended			Six months ended			Six months ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Revenue
Commission income	$	3,195,905			2,847,149		$	7,135,008			5,905,846
Total revenue		3,195,905			2,847,149			7,135,008			5,905,846

Operating expenses
Commission expense		822,274			662,932			1,905,600			1,448,543
Salaries and wages		1,742,697			1,637,412			3,454,794			3,269,225
General and administrative expenses		1,703,811			1,630,169			3,062,066			3,963,964
Marketing and advertising		109,860			(4,844	)		246,432			84,686
Depreciation and amortization		655,449			694,440			1,309,227			1,263,440
Total operating expenses		5,034,091			4,620,109			9,978,119			10,029,858

Loss from operations		(1,838,186	)		(1,772,960	)		(2,843,111	)		(4,124,012	)

Other (expense) income
Interest expense		(370,905	)		(194,929	)		(722,462	)		(305,095	)
Interest expense, related parties		(51,153	)		(1,729	)		(92,629	)		(3,460	)
Other expense, net		(16,979	)		(3,605	)		(13,297	)		541
recognition and change in fair value of warrant liabilities		(1,592,509	)		12,633,251			2,673,723			24,479,215
Total other (expense) income		(2,031,546	)		12,432,988			1,845,335			24,171,201

(Loss) income from continuing operations before tax	$	(3,869,732	)		10,660,028		$	(997,776	)		20,047,189
Income (loss) from discontinued operations before tax		2,814,445			(164,337	)		(1,846,048	)		(211,497	)
Net (loss) income		(1,055,287	)		10,495,691			(2,843,824	)		19,835,692

Basic (loss) earnings per share
Continuing operations	$	(1.42	)	$	9.97		$	(0.47	)	$	12.80
Discontinued operations	$	1.03		$	(0.15	)	$	(0.86	)	$	(0.21	)
Basic (loss) earnings per share	$	(0.39	)	$	9.82		$	(1.33	)	$	12.59

Diluted (loss) earnings per share
Continuing operations	$	(1.42	)	$	8.74		$	(0.47	)	$	(12.65	)
Discontinued operations	$	1.03		$	(0.13	)	$	(0.86	)	$	(0.19	)
Diluted (loss) earnings per share	$	(0.39	)	$	8.61		$	(1.33	)	$	(12.84	)

Weighted average number of shares outstanding - Basic		2,716,512			1,069,157			2,138,444			1,025,108
Weighted average number of shares outstanding - Diluted		2,716,512			1,219,224			2,138,444			1,068,236

	2022			2021			2022			2021
	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
Revenue
Commission income	$	4,153,361		$	2,581,636		$	12,596,268		$	7,096,213
Total revenue		4,153,361			2,581,636			12,596,268			7,096,213

Operating expenses
Commission expense		862,857			660,708			2,617,140			1,748,451
Salaries and wages		2,114,730			1,188,267			6,373,697			3,217,441
General and administrative expenses		1,253,097			755,130			5,465,384			2,961,881
Marketing and advertising		726,115			65,010			1,922,520			143,110
Depreciation and amortization		713,444			387,729			2,077,372			1,090,183
Total operating expenses		5,670,243			3,056,844			18,456,113			9,161,066

Loss from operations		(1,516,882	)		(475,208	)		(5,859,845	)		(2,064,853	)

Other income (expense)
Other expense, net		(280,340	)		(120,025	)		(580,900	)		(421,192	)
Recognition and change in fair value of warrant liabilities		7,919,315			-			32,398,530			-
Total other income (expense)		7,638,975			(120,025	)		31,817,630			(421,192	)

Net income (loss)	$	6,122,093		$	(595,233	)	$	25,957,785		$	(2,486,045	)

Basic earnings (loss) per share	$	5.29		$	(0.82	)	$	17.79		$	(3.80	)
Diluted earnings (loss) per share	$	4.65		$	(0.82	)	$	15.60		$	(3.80	)
Weighted average number of shares outstanding - Basic		1,156,939			729,629			1,069,534			653,939
Weighted average number of shares outstanding - Diluted		1,304,878			729,629			1,219,822			653,939

	Shares			Amount			Shares			Amount			Shares		Amount		capital			Receivable			Deficit			Total
	Reliance Global Group, Inc.
	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			-	$	-	$	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

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

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

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

	2023			2022
	Six months ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(2,843,824	)	$	19,835,692
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		1,309,227			1,263,440
Amortization of debt issuance costs and accretion of debt discount		23,442			18,291
Non-cash lease expense		(4,355	)		17,637
Stock compensation expense		79,164			919,043
Common stock issued in lieu of services performed		377,995			-
Earn-out fair value and write-off adjustments		1,019,925			354,963
Change in fair value of warrant liability		(2,673,723	)		(24,479,215	)
Change in operating assets and liabilities:
Accounts payables and other accrued liabilities		(40,135	)		(1,853,366	)
Accounts receivable		15,444			142,825
Accounts receivable, related parties		(1,072	)		(47,283	)
Other receivables		10,816			7,030
Other payables		115,988			126,984
Other non-current assets		-			(6,493	)
Prepaid expense and other current assets		(303,322	)		2,173,810
Net cash used in operating activities		(2,914,430	)		(1,526,642	)

Net cash adjustments for discontinued operating activities		907,329			215,231

Net cash used in discontinued and continuing operating activities		(2,007,101	)		(1,311,411	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment in NSURE		900,000
Purchase of property and equipment		(13,010	)		(11,959	)
Business acquisitions, net of cash acquired		-			(6,000,000	)
Purchase of intangibles		(151,862	)		(5,096,885	)
Net cash provided by (used in) investing activities		735,128			(11,108,844	)

Net cash adjustments for discontinued investing activities		-			(13,517,085	)

Net cash provided by (used in) discontinued and continuing investing activities		735,128			(24,625,929	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments of debt		(450,935	)		(447,908	)
Debt issuance costs		-			(214,257	)
Proceeds from loan for business acquisition		-			6,520,000
Issuance of common shares in exchange for Series C warrants		-			1,336
Payments of loans payable, related parties		(649,870	)		(21,541	)
Earn-out liability		(344,225	)		(411,408	)
Exercise of warrants into common stock		-			2,475,000
Principal repayments on short term financing		58,707			(40,552	)
Private placement of shares and warrants		3,446,484			17,853,351
Net cash provided by continuing financing activities		2,060,161			25,714,021

Net cash used in discontinued financing activities		(17,701	)		-
Total net cash provided by continuing and discontinued financing activities		2,042,460			25,714,021

Net increase (decrease) in cash and restricted cash		770,487			(223,319	)
Cash and restricted cash at beginning of year		1,909,769			4,620,722
Cash and restricted cash at end of year	$	2,680,256		$	4,397,403
SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:
Common stock issuance to settle earn-out liabilities	$	2,416,178			-

	As Reported			Adjustment			As Corrected
	Three Months Ended September 30, 2022
	As Reported			Adjustment			As Corrected

Basic earnings (loss) per share		5.25			(0.04	)		5.29

Diluted earnings (loss) per share		(1.50	)		6.19			4.65

Weighted average number of shares outstanding – Basic		1,161,618			(4,679	)		1,156,939

Weighted average number of shares outstanding - Diluted		1,161,618			143,260			1,304,878

	September 30, 2022		September 30, 2021		June 30, 2023		June 30, 2022
Cash	$	1,615,054	$	5,655,103	$	1,274,743	$	2,979,769
Restricted cash		1,409,562		484,371		1,405,513		1,417,634
Total cash and restricted cash	$	3,024,616	$	6,139,474	$	2,680,256	$	4,397,403

	September 30, 2022			December 31, 2021
Stock price	$	0.78		$	6.44
Volatility		105	%		90	%
Time to expiry		4.26			5
Dividend yield		0	%		0	%
Risk free rate		4.10	%		1.10	%

	June 30, 2023			December 31, 2022
Stock price	$	4.71		$	8.55
Volatility		105.0	%		105.0	%
Time to expiry		3.51			4.01
Dividend yield		0	%		0	%
Risk free rate		4.4	%		4.1	%

		1			2			3			4
	Three and Nine Months ended September 30, 2022
	Series B Warrant Commitment			Series B warrant liabilities			Placement agent warrants			Total
Beginning balance	$	37,652,808		$	-		$	-		$	37,652,808
Initial recognition		-			55,061,119			1,525,923			56,587,042
Unrealized (gain) loss		17,408,311			(31,980,437	)		(946,461	)		(15,518,587	)
Warrants exercised or transferred		(55,061,119	)								(55,061,119	)
Ending balance, March 31, 2022	$	-		$	23,080,682		$	579,462		$	23,660,144
Unrealized (gain) loss		-			(12,322,737	)		(310,514	)		(12,633,251	)
Ending balance, June 30, 2022	$	-		$	10,757,945		$	268,948		$	11,026,893
Beginning balance	$	-		$	10,757,945		$	268,948		$	11,026,893
Unrealized (gain) loss		-			(7,726,161	)		(193,154	)		(7,919,315	)
Ending balance, September 30, 2022		-			3,031,784			75,794			3,107,578
Ending balance		-			3,031,784			75,794			3,107,578

	~~September~~June 30, ~~2022~~2023	December 31, ~~2021~~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~~June 30, ~~2022~~ 2023
WACC Risk Premium:	14.0	~~14.5~~	%
Volatility	~~Volatility~~50.0	50	%
Credit Spread:	9.6	~~15.1~~	%
Payment Delay (days)	90	90	%
Risk free rate	USD Yield Curve
Discounting Convention:	Mid-period
Number of Iterations	100,000	~~100,000~~

	September 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
Beginning balance – January 1	$	3,813,878		$	2,931,418		$	2,709,478		$	3,813,878

Acquisitions and Settlements		(1,027,296	)		1,160,562
Acquisitions and settlements								(2,760,403	)		(1,104,925	)

Period adjustments:
Fair value changes included in earnings^*		132,445			(278,102	)		1,019,925			525

Ending balance	$	2,919,027		$	3,813,878			969,000			2,709,478
Less: Current portion		(2,283,380	)		(3,297,855	)		(969,000	)		(2,153,478	)
Ending balance, less current portion		635,647			516,023		$	-		$	556,000

Three Months ended September 30, 2022	Medical/Life		Property and Casualty		Total
Three Months ended June 30, 2023							Medical		Life		Property and Casualty		Total
Regular
EBS	$	212,384	$	-	$	212,384	$	206,668	$	4,471	$	-	$	211,139
USBA		13,732		-		13,732		11,426		658		-		12,084
CCS/UIS		-		76,035		76,035		-		-		73,402		73,402
Montana		426,591		-		426,591		444,783		3,350		-		448,133
Fortman		259,255		186,860		446,115		288,902		1,680		227,176		517,758
Altruis		896,012		-		896,012		1,200,537		-		-		1,200,537
Kush		366,219		-		366,219		322,188		-		-		322,188
Medigap		1,331,593		-		1,331,593
Barra		83,615		301,065		384,680		52,209		61,821		296,634		410,664
	$	3,589,401	$	563,960	$	4,153,361
Total							$	2,526,713	$	71,980	$	597,212	$	3,195,905

Six Months ended June 30, 2023	Medical		Life		Property and Casualty		Total
Regular
EBS	$	439,949	$	8,571	$	-	$	448,520
USBA		22,689		1,423		-		24,112
CCS/UIS		-		-		120,172		120,172
Montana		930,792		8,335		-		939,127
Fortman		596,557		2,073		433,544		1,032,174
Altruis		3,068,673		-		-		3,068,673
Kush		642,479		-		-		642,479
Barra		121,319		85,202		653,230		859,751
Total	$	5,822,458	$	105,604	$	1,206,946	$	7,135,008

Nine Months ended September 30, 2022	Medical/Life		Property and Casualty		Total
Three Months ended June 30, 2022							Medical		Life		Property and Casualty		Total
Regular
EBS	$	645,217	$	-	$	645,217	$	178,936	$	5,915	$	-	$	184,851
USBA		39,638		-		39,638		12,319		-		-		12,319
CCS/UIS		-		177,111		177,111		-		-		57,195		57,195
Montana		1,385,017		-		1,385,017		450,742		963		-		451,705
Fortman		949,189		589,924		1,539,113		357,334		-		205,804		563,138
Altruis		3,056,257		-		3,056,257		881,337		834		-		882,171
Kush		1,230,259		-		1,230,259		425,449		-		-		425,449
Medigap		3,868,654		-		3,868,654
Barra		153,539		501,463		655,002
	$	11,327,770	$	1,268,498	$	12,596,268
Reli Exchange								47,661		22,263		200,397		270,321
Total							$	2,353,778	$	29,975	$	463,396	$	2,847,149

Three Months ended September 30, 2021	Medical/Life		Property and Casualty		Total
Regular
EBS		226,233		-		226,233
USBA		18,241		-		18,241
CCS/UIS		-		120,762		120,762
Montana		343,546		-		343,546
Fortman		357,638		194,218		551,856
Altruis		807,775		-		807,775
Kush		513,223		-		513,223
	$	2,266,656	$	314,980	$	2,581,636

Nine Months ended September 30, 2021	Medical/Life		Property and Casualty		Total
Six Months ended June 30, 2022							Medical		Life		Property and Casualty		Total
Regular
EBS	$	642,428	$	-	$	642,428	$	399,547	$	6,488	$	-	$	406,035
USBA		45,861		-		45,861		25,906		-		-		25,906
CCS/UIS		-		274,928		274,928		-		-		101,077		101,077
Montana		1,283,402		-		1,283,402		956,329		2,097		-		958,426
Fortman		884,073		628,327		1,512,400		687,060		2,873		403,064		1,092,997
Altruis		2,558,653		-		2,558,653		2,184,367		2,676		-		2,187,043
Kush		778,541		-		778,541		864,040		-		-		864,040

	$	6,192,958	$	903,255	$	7,096,213
Reli Exchange								47,662		22,263		200,397		270,322
Total							$	5,164,911	$	36,397	$	704,538	$	5,905,846

Insurance Carrier	2022	2021

	For the three months ended September 30,		For the three months ended June 30,
Insurance Carrier	2022	2021	2023			2022
LTC Global	27 %	-%
Priority Health	21 %	27%		28	%		30	%
BlueCross BlueShield	10 %	24%		12	%		13	%
Insurance Carrier				12	%		13	%

Account	12/31/2020 As reported			Adjustment			12/31/2020 Adjusted
Earn-out liability		2,631,418			300,000			2,931,418
Goodwill		9,265,070			(503,345	)		8,761,725
Common stock issuable		822,116			(482,116	)		340,000
Additional paid-in-capital		11,377,123			182,116			11,559,239
Accumulated Deficit		(12,482,281	)		122,601			(12,359,680	)

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 June 30, 2023

Accounts receivable	$	56,398	$	-		$	(56,398	)	$	-
Accounts receivable, related party		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	)	$	-

Account	3/31/2021 As reported			Adjustment			3/31/2021 Adjusted
Common stock issuable		482,116			(482,116	)		0
Additional paid-in-capital		25,810,147			182,116			25,992,263
Accumulated Deficit		(13,123,609	)		150,003			(12,973,606	)

	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.

Description	Fair Value			Weighted Average Useful Life (Years)
Property, plant and equipment	$	20,666			5
Right-of-use asset		317,787
Trade names		340,000			15
Customer relationships		4,550,000			12
Technology		67,000			3
Backlog		210,000			1
Chargeback reserve		(1,484,473	)
Lease liability		(317,787	)
Goodwill		19,199,008			Indefinite
	$	22,902,201

	September 30,			September 30,
	2022			2021
Revenue	$	12,962,843		$	10,931,340
Net Income (Loss)	$	25,971,268		$	(2,344,977	)
Earnings (Loss) per common share, basic	$	16.50		$	(3.60	)
Earnings (Loss) per common share, diluted	$	(11.70	)	$	(3.60	)

Description	Fair Value			Weighted Average Useful Life (Years)
Acquired accounts receivable	$	92,585
Property, plant and equipment		8,593			7
Right-of-use asset		122,984
Trade names		22,000			4
Customer relationships		550,000			10
Agency relationships		2,585,000			10
Developed technology		230,000			5
Lease liability		(122,984	)
Goodwill		4,236,822			Indefinite
	$	7,725,000

	Goodwill
December 31, 2020	$	8,761,725
Goodwill recognized in connection with Kush acquisition on May 1, 2021		1,288,552
December 31, 2021		10,050,277
Goodwill recognized in connection with Medigap acquisition on January 10, 2022		19,199,008
Goodwill recognized in connection with Barra acquisition on April 26, 2022		4,236,822
September 30, 2022	$	33,486,107

	Weighted Average Remaining Amortization period (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name and trademarks		4.6	$	2,141,858	$	(897,390	)	$	1,244,468
Internally developed software		4.3		1,530,537		(210,443	)		1,320,094
Customer relationships		9.3		11,922,290		(1,793,319	)		10,128,971
Purchased software		0.4		665,137		(568,039	)		97,098
Video Production Assets		0.3		50,000		(36,621	)		13,379
Non-competition agreements		2.1		3,504,810		(2,003,505	)		1,501,305
Contracts Backlog		0.3		210,000		(155,342	)		54,658
			$	20,024,632	$	(5,664,659	)	$	14,359,973

	Weighted Average Remaining Amortization period (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name and trademarks		3.5	$	1,777,475	$	(609,822	)	$	1,167,653
Internally developed software		4.7		595,351		(28,443	)		566,908
Customer relationships		7.7		4,237,290		(1,048,726	)		3,188,564
Purchased software		0.6		562,327		(452,985	)		109,342
Video Production Assets		1.0		20,000		-			20,000
Non-competition agreements		2.9		3,504,809		(1,478,376	)		2,026,433
			$	10,697,252	$	(3,618,352	)	$	7,078,900

		1
Years ending December 31,		Amortization Expense	Amortization Expense
2022 (remainder of year)	$	707,166
2023		2,536,548
2023 (remainder of year)			$	1,279,911
2024		2,158,445		2,190,466
2025		1,764,541		1,796,510
2026		1,504,660		1,527,816
2027				1,194,592
Thereafter		5,688,613		4,319,402
Total	$	14,359,973	$	12,308,697

	September 30, 2022			December 31, 2021

Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, net of deferred financing costs of $12,942 and $14,606 as of September 30, 2022 and December 31, 2021, respectively	$	442,368		$	485,317
Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, net of deferred financing costs of $15,713 and $17,626 as of September 30, 2022 and December 31, 2021, respectively		715,816			785,826
Oak Street Funding LLC Term Loan for the acquisition of SWMT, net of deferred financing costs of $9,613 and $11,027 as of September 30, 2022 and December 31, 2021, respectively		811,699			884,720
Oak Street Funding LLC Term Loan for the acquisition of FIS, net of deferred financing costs of $38,298 and $42,660 as of September 30, 2022 and December 31, 2021, respectively		2,045,048			2,226,628
Oak Street Funding LLC Term Loan for the acquisition of ABC, net of deferred financing costs of $43,749 and $48,609 as of September 30, 2022 and December 31, 2021, respectively		3,337,241			3,616,754
Oak Street Funding LLC Term Loan for the acquisition of Barra, net of deferred financing costs of $204,958 and $0 as of September 30, 2022 and December 31, 2021, respectively		6,315,042			-
		13,667,214			7,999,245
Less: current portion		(1,026,541	)		(913,920	)
Long-term debt	$	12,640,673		$	7,085,325