UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, ~~September 30,~~ ~~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 of the issuing entity:~~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 ~~Number)~~No.)

~~524210~~

~~(Primary Standard Industrial Code Classification Number)~~

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

(Address of principal executive offices) (Zip Code)

732-380-4600

(~~Address, including zip code, and~~Registrant’s telephone number, including area ~~code of registrant’s principal executive offices)~~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 ~~Yes~~: ☒ ~~No:~~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 ~~Yes~~: ☒ ~~No:~~No ☐

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

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
Emerging ~~Growth Company~~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:~~Yes ☐ ~~No:~~No ☒

At ~~November 14, 2022~~May 18, 2023, the registrant had ~~18,054,469~~1,631,048 shares of common stock, par value $0.086 per share, outstanding.

TABLE OF CONTENTS

PART I
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2420
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	3325
Item 4. Controls and Procedures.	2533
PART II
Item 1. Legal Proceedings.	3326
Item 1A. Risk Factors.	3426
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	3427
Item 3. Defaults Upon Senior Securities.	3427
Item 4. Mine Safety Disclosures.	3427
Item 5. Other Information.	3427
Item 6. Exhibits	3427

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


							March 31,			December 31,
	September 30, 2022			December 31, 2021			2023			2022
Assets
Current assets:
Cash	$	1,615,054		$	4,136,180		$	2,116,333		$	505,410
Restricted cash		1,409,562			484,542			1,437,961			1,404,359
Accounts receivable		1,025,120			1,024,831			970,345			994,321
Accounts receivable, related parties		1,159			7,131			11,616			18,292
Note receivables		-			-
Other receivables		37,674			-			-			11,464
Prepaid expense and other current assets		399,506			2,328,817			164,154			245,535
Current assets - discontinued operations								7,354			85,998
Total current assets		4,488,075			7,981,501			4,707,763			3,265,379

Property and equipment, net		199,030			130,359			155,511			162,767
Right-of-use assets		1,327,361			1,067,734			921,531			1,018,952
Investment in NSURE, Inc.		1,350,000			1,350,000			900,000			900,000
Intangibles, net		14,359,973			7,078,900			12,889,277			9,085,092
Goodwill		33,486,107			10,050,277			14,287,099			14,287,099
Other non-current assets		23,284			16,792			23,285			23,284
Other assets - discontinued operations								-			9,685,156
Total assets	$	55,233,830		$	27,675,563		$	33,884,466		$	38,427,729

Liabilities and stockholders’ equity (deficit)
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and other accrued liabilities	$	1,221,583		$	2,759,160		$	1,076,612		$	951,382
Short term financing agreements								38,312			106,817
Other payables		1,241,341			81,500			1,182,055			1,476,113
Chargeback reserve		1,350,533			-
Short term Financing Agreements		309,993			-
Current portion of long-term debt		1,026,541			913,920			1,235,052			1,118,721
Current portion of leases payable		538,018			276,009			312,549			339,937
Earn-out liability, current portion		2,283,380			3,297,855			1,555,692			2,153,478
Warrant commitment		-			37,652,808
Current liabilities - discontinued operations								50,228			1,647,836
Total current liabilities		7,971,389			44,981,252			5,450,500			7,794,284

Loans payable, related parties, less current portion		1,679,560			353,766			958,743			1,669,515
Long term debt, less current portion		12,640,673			7,085,325			12,035,753			12,349,673
Leases payable, less current portion		833,395			805,326			638,937			714,068
Earn-out liability, less current portion		635,647			516,023			398,000			556,000
Warrant liabilities		3,107,578			-			2,166,919			6,433,150
Non-current liabilities - discontinued operations								-			-
Total liabilities		26,868,242			53,741,692			21,648,852			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; 2,000,000,000 shares authorized and 18,054,469 and 10,956,109 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1,551,358			940,829
Stockholders’ equity:
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of March 31, 2023 and December 31, 2022								-			-
Common stock, $0.086 par value; 133,333,333 shares authorized and 1,566,048 and 1,219,573 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively								134,660			104,883
Additional paid-in capital		34,314,591			26,451,187			40,881,475			35,798,139
Stock subscription receivable		-			(20,000,000	)		-			-
Accumulated deficit		(7,500,361	)		(33,458,145	)		(28,780,521	)		(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								12,235,614			8,911,039
Total liabilities and stockholders’ equity							$	33,884,466		$	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)

	2022			2021			2022			2021			2023			2022
	Three months ended September 30,						Nine months ended September 30,						Three Months Ended March 31,
	2022			2021			2022			2021			2023			2022
Revenue
Commission income	$	4,153,361		$	2,581,636		$	12,596,268		$	7,096,213		$	3,939,103		$	3,058,697
Total revenue		4,153,361			2,581,636			12,596,268			7,096,213			3,939,103			3,058,697

Operating expenses
Commission expense		862,857			660,708			2,617,140			1,748,451			1,083,326			785,611
Salaries and wages		2,114,730			1,188,267			6,373,697			3,217,441			1,712,097			1,631,813
General and administrative expenses		1,253,097			755,130			5,465,384			2,961,881			1,358,254			2,333,795
Marketing and advertising		726,115			65,010			1,922,520			143,110			136,572			89,529
Depreciation and amortization		713,444			387,729			2,077,372			1,090,183			541,873			468,278
Total operating expenses		5,670,243			3,056,844			18,456,113			9,161,066			4,832,122			5,309,026

Loss from operations		(1,516,882	)		(475,208	)		(5,859,845	)		(2,064,853	)		(893,019	)		(2,250,329	)

Other income (expense)
Other income
Other expense, net		(280,340	)		(120,025	)		(580,900	)		(421,192	)		(389,351	)		(107,751	)
Recognition and change in fair value of warrant liabilities		7,919,315			-			32,398,530			-			4,266,231			11,845,964
Total other income (expense)		7,638,975			(120,025	)		31,817,630			(421,192	)
Total other income														3,876,880			11,738,213

Net income (loss)	$	6,122,093		$	(595,233	)	$	25,957,785		$	(2,486,045	)
Income from continuing operations													$	2,983,861			9,487,884
Loss from discontinued operations														(4,772,399	)		(147,884	)
Net (loss) income														(1,788,538	)		9,340,000

Basic earnings (loss) per share	$	0.35		$	(0.05	)	$	1.10		$	(0.25	)
Diluted earnings (loss) per share	$	(0.10	)	$	(0.05	)	$	(0.78	)	$	(0.25	)
Weighted average number of shares outstanding - Basic		17,424,267			10,944,439			17,320,146			9,809,092
Weighted average number of shares outstanding - Diluted		17,424,267			10,944,439			17,320,146			9,809,092
Basic (loss) earnings per share
Continuing operations													$	1.92		$	2.61
Discontinued operations													$	(3.07	)	$	(0.15	)
Basic (loss) earnings per share													$	(1.15	)	$	2.46

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

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

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 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 - $ - 10,956,109 $ 940,829 - $ - $ 26,451,187 $ (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 2,670,892 229,694 - - (230,424 ) 20,000,000 - 20,000,051

Shares issued pursuant to acquisition of Medigap - - 606,037 52,119 - - 4,711,332 - - 4,763,451

Exercise of Series A warrants - - 375,000 32,250 - - 2,442,750 - - 2,475,000

Issuance of prefunded Series C Warrants in exchange for common shares - - (3,276,929 ) (281,815 ) - - 281,815 - - -

Shares issued for vested stock awards - - 6,000 516 - - (516 ) - - -

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

Balance, March 31, 2022 9,076 $ 781 11,337,109 $ 973,593 - $ - $ 34,396,104 $ - $ (24,118,145 ) $ 11,252,333

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

Issuance of common stock for conversion of Series C warrants - - 3,276,929 281,815 - - (280,479 ) - - 1,336

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

Balance, June 30, 2022 9,076 $ 781 14,614,038 $ 1,255,408 - $ - $ 34,294,708 $ - $ (13,622,454 ) $ 21,928,443
��
Share based compensation - - - - - - 314,257 - - 314,257

Issuance of common stock for conversion of Series D warrants - - 1,221,347 105,100 - - (104,305 ) - - 795

Shares issued due to conversion of preferred stock (9,076 ) (781 ) 2,219,084 190,850 - - (190,069 ) - - -

Net Income - - - - - - - - 6,122,093 6,122,093

Balance, September 30, 2022 - $ - 18,054,469 $ 1,551,358 - $ - $ 34,314,591 $ - $ (7,500,361 ) $ 28,365,588

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

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

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

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

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

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

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

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

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

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

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 4,241,028 $ 363,517 23,341 $ 340,000 $ 11,559,239 - $ (12,359,680 ) $ (63,012
)

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

Shares issued for services - - 15,000 1,290 - - 89,760 - 91,050

Shares issued due to public offering, net of offering costs of $1,672,852 - - 1,800,000 154,800 - - 8,954,348 - 9,109,148

Over-allotment shares from offering, net of offering costs of $250,928 - - 270,000 23,220 - - 1,343,153 - 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 ) 3,944,930 339,264 - - (305,452 ) - -

Shares issued due to conversion of debt - - 633,333 54,467 - - 3,745,533 - 3,800,000

Rounding shares related to initial public offering - - 1,885 - (3 ) - - - -

Shares issued pursuant to software purchase - - 23,338 1,984 (23,338 ) (340,000 ) 338,016 - -

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

Balance, March 31, 2021 1,147 $ 100 10,929,514 $ 938,542 - $ - $ 25,992,263 - $ (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 - - 14,925 1,284 - - 48,716 - 50,000

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

Balance, June 30, 2021 1,167 $ 100 10,944,439 $ 939,826 - $ - $
26,224,111
- $ (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 10,944,439 $ 939,826 - $ - $ 26,370,336 - $ (14,845,725 ) $ 12,464,537

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

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

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

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

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

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

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

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

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

Balance, March 31, 2022		9,076	$	781		755,807		$	64,999			0	$	-	$	35,304,698		$	-		$	(24,118,145	)	$	11,252,333
Balance		9,076	$	781		755,807		$	64,999			0	$	-	$	35,304,698		$	-		$	(24,118,145	)	$	11,252,333

The accompanying notes are an integral ~~p9rt~~part of these unaudited condensed consolidated financial ~~statements~~statements.

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

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

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

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

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

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

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

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

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

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

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

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

Reliance Global Group, Inc. and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

NOTE 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Reliance Global Group, Inc., formerly known as Ethos Media Network, Inc. (“RELI”, “Reliance”, or the “Company”), was incorporated in Florida on August 2, 2013.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of recurring accruals) necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

The accompanying unaudited condensed consolidated financial statements include the accounts of Reliance Global Group, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Liquidity

As of ~~September 30, 2022,~~March 31, 2023, the Company’s reported cash and restricted cash aggregated balance was approximately $~~3,024,000~~3,554,000, current assets were approximately $~~4,488,000~~4,708,000, while current liabilities were approximately $~~7,971,000~~5,451,000. As of ~~September 30, 2022,~~March 31, 2023, the Company had a working capital deficit of approximately $~~3,483,000~~742,000 and stockholders’ equity of approximately $~~28,366,000~~12,236,000. For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company reported loss from operations of approximately $~~5,860,000~~893,000, a non-cash, non-operating gain on the recognition and change in fair value of warrant liabilities of approximately $~~32,399,000~~4,266,000, resulting in net income from continuing operations of approximately $2,984,000, a loss from discontinued operations of approximately $4,772,000, resulting in an overall net ~~income~~loss of approximately $~~25,958,000~~1,789,000. For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company reported negative cash flows from continuing and discontinued operations of approximately $~~2,178,000~~.$1,065,000. 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”).

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
Cash $ 1,615,054 $ 5,655,103
Restricted cash 1,409,562 484,371
Total cash and restricted cash $ 3,024,616 $ 6,139,474

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

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			March 31, 2023			December 31, 2022
Stock price	$	0.78		$	6.44		$	3.01		$	8.55
Volatility		105	%		90	%		105.0	%		105.0	%
Time to expiry		4.26			5			3.76			4.01
Dividend yield		0	%		0	%		0	%		0	%
Risk free rate		4.10	%		1.10	%		3.7	%		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

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

1 2
December 31, 2021
Series B Warrant Commitment Total
Beginning balance $ - $ -
Initial recognition 20,244,497 20,244,497
Unrealized (gain) loss 17,408,311 17,408,311
Ending balance $ 37,652,808 $ 37,652,808

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 30, 2022~~March 31, 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

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 30,~~March 31, ~~2022~~2023
WACC Risk Premium:	13.5		~~14.5~~	%
Volatility	50	%
Credit Spread:	~~15.1~~13	%
Payment Delay (days)	90	%
Risk free rate	USD Yield Curve
Discounting Convention:	Mid-period
Number of Iterations	100,000

Undiscounted remaining earn out payments ~~are~~were approximately $~~3,291,883~~2,123,442 as of ~~September 30, 2022.~~March 31, 2023. The following table reconciles fair value of earn-out liabilities for the ~~period ending September 30,~~periods ended March 31, 2023 and December 31, 2022:

SCHEDULE OF GAIN OR LOSSES RECOGNIZED FAIR VALUE

	September 30, 2022			December 31, 2021			March 31, 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								(1,232,478	)		(1,104,925	)

Period adjustments:
Fair value changes included in earnings^*		132,445			(278,102	)		476,692			525

Ending balance	$	2,919,027		$	3,813,878		$	1,953,692		$	2,709,478
Less: Current portion		(2,283,380	)		(3,297,855	)		(1,555,692	)		(2,153,478	)
Ending balance, less current portion		635,647			516,023			398,000			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.

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 March 31, 2023							Medical/Life		Property and Casualty		Total
Regular
EBS	$	212,384	$	-	$	212,384	$	237,380	$	-	$	237,380
USBA		13,732		-		13,732		12,029		-		12,029
CCS/UIS		-		76,035		76,035		-		46,770		46,770
Montana		426,591		-		426,591		490,994		-		490,994
Fortman		259,255		186,860		446,115		306,270		208,145		514,415
Altruis		896,012		-		896,012		1,868,136		-		1,868,136
Kush		366,219		-		366,219		320,291		-		320,291
Medigap		1,331,593		-		1,331,593
Barra		83,615		301,065		384,680		94,707		354,381		449,088
	$	3,589,401	$	563,960	$	4,153,361
Total							$	3,329,807	$	609,296	$	3,939,103

Nine Months ended September 30, 2022 Medical/Life Property and Casualty Total
Regular
EBS $ 645,217 $ - $ 645,217
USBA 39,638 - 39,638
CCS/UIS - 177,111 177,111
Montana 1,385,017 - 1,385,017
Fortman 949,189 589,924 1,539,113
Altruis 3,056,257 - 3,056,257
Kush 1,230,259 - 1,230,259
Medigap 3,868,654 - 3,868,654
Barra 153,539 501,463 655,002
$ 11,327,770 $ 1,268,498 $ 12,596,268

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
Three Months ended March 31, 2022							Medical/Life		Property and Casualty		Total
Regular
EBS	$	642,428	$	-	$	642,428	$	221,184	$	-	$	221,184
USBA		45,861		-		45,861		13,587		-		13,587
CCS/UIS		-		274,928		274,928		-		43,881		43,881
Montana		1,283,402		-		1,283,402		506,721		-		506,721
Fortman		884,073		628,327		1,512,400		332,600		197,260		529,860
Altruis		2,558,653		-		2,558,653		1,304,872		-		1,304,872
Kush		778,541		-		778,541		438,592		-		438,592

	$	6,192,958	$	903,255	$	7,096,213
Revenue							$	2,817,556	$	241,141	$	3,058,697

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,
Insurance Carrier 2022 2021
LTC Global 27 % -%
Priority Health 21 % 27%
BlueCross BlueShield 10 % 24%


	Three Months ended March 31,
Insurance Carrier	2023			2022

Priority Health		43	%		32	%
BlueCross BlueShield		13	%		13	%
Insurance Carrier		13	%		13	%

Insurance Carrier 2022 2021
For the Nine months ended September 30,
Insurance Carrier 2022 2021
LTC Global 27 % - %
Priority Health 24 % 30 %
BlueCross BlueShield 10 % 25 %

No other single ~~Customer~~customer accounted for more than ~~10%~~10% of the Company’s commission revenues. The loss of any significant customer ~~including Priority Health, BlueCross BlueShield and LTC Global~~ could have a material adverse effect on the Company.

Income Taxes

The Company recorded no income tax expense for the three ~~and nine~~ months ended ~~September~~March ~~30,~~31, 2023 and 2022 ~~and 2021~~ 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 30, 2022~~ March 31, 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 identified certain immaterial adjustments impacting prior reporting periods. Specifically, the Company identified adjustments to correct certain asset, liability and equity accounts in relation to historical purchase price allocation accounting, historical accrued revenues and true ups of the common stock issuable account.

~~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~~~~, 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, the Company’s comparative condensed consolidated financial statements and impacted notes have been revised from amounts previously reported to reflect these adjustments. The following table illustrates the impact on previously reported amounts and adjusted balances presented in the condensed consolidated financial statements for the period ended September 30, 2022.

~~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 )

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 )

The Company’s board of directors approved the discontinuation of Medigap Healthcare Insurance Company, LLC (“Medigap”), a subsidiary of the Company, effective April 17, 2023, due to Medigap’s sustained recurring losses stemming from amongst other factors, greater than anticipated revenue chargebacks. Aside for retaining certain assets of Medigap that have continued use to the Company, Medigap’s assets were considered impaired and the Company recognized a net of estimated liability adjustments loss of $4.4 million, presented in discontinued operations in the consolidated statement of operations for the period ended March 31, 2023. 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.

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~~ ~~606,037~~ 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%~~.

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 $ 1.10 $ (0.24 )
Earnings (Loss) per common share, diluted $ (0.78 ) $ (0.24 )

~~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.

~~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

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 $ 1.11 $ (0.20 )
Earnings (Loss) per common share, diluted $ (0.76 ) $ (0.20 )

NOTE 3.2. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table rolls forward the Company’s goodwill balance for the periods ending ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~ ~~As discussed in Note 1 -~~ ~~Prior Period Adjustments~~~~, a~~ $~~(503,345)~~ adjustment was identified 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~~.2022.

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
March 31, 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 30, 2022:~~March 31, 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		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		2.3	$	1,807,188	$	(1,056,995	)	$	750,193
Internally developed software		4.3		1,530,537		(210,443	)		1,320,094		3.9		1,723,780		(373,580	)		1,350,200
Customer relationships		9.3		11,922,290		(1,793,319	)		10,128,971		7.5		11,922,290		(2,355,705	)		9,566,585
Purchased software		0.4		665,137		(568,039	)		97,098		3.7		665,136		(592,312	)		72,824
Video Production Assets		0.3		50,000		(36,621	)		13,379		0		50,000		(50,000	)		-
Non-competition agreements		2.1		3,504,810		(2,003,505	)		1,501,305		1.6		3,504,810		(2,355,335	)		1,149,475
Contracts Backlog		0.3		210,000		(155,342	)		54,658
			$	20,024,632	$	(5,664,659	)	$	14,359,973			$	19,673,204	$	(6,783,927	)	$	12,889,277

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

	Weighted Average Remaining Amortization period (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name and trademarks		2.5	$	1,806,188	$	(969,241	)	$	836,947
Internally developed software		4.2		1,529,018		(269,786	)		1,259,232
Customer relationships		7.8		7,372,290		(1,708,767	)		5,663,523
Purchased software		0		562,327		(562,327	)		-
Video Production Assets		0		50,000		(50,000	)		-
Non-competition agreements		1.9		3,504,810		(2,179,420	)		1,325,390
			$	14,824,633	$	(5,739,541	)	$	9,085,092

The following table reflects expected amortization expense as of ~~September 30, 2022,~~March 31, 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)			$	1,914,714
2024		2,158,445		2,177,765
2025		1,764,541		1,783,809
2026		1,504,660		1,515,517
2027				1,182,581
Thereafter		5,688,613		4,314,891
Total	$	14,359,973	$	12,889,277

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

	March 31, 2023			December 31, 2022

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

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

2022 (remainder of year) $ 211,904
2023 1,168,585
2024 1,482,266
2025 1,616,891
2026 1,760,367
Thereafter 7,752,474
Total 13,992,487
Less: debt issuance costs (325,273 )
Total $ 13,667,214

Fiscal year ending December 31,	Maturities of Long-Term Debt
2023 (remainder of year)	$	893,877
2024		1,411,275
2025		1,567,542
2026		1,736,878
2027		1,924,523
Thereafter		6,040,548
Total		13,574,643
Less: debt issuance costs		(303,838	)
Total	$	13,270,805

Short-Term Financings

The Company ~~financed certain annual insurance premiums through the use of two~~has various short-term notes payable ~~in nine~~for financed items such as insurance premiums and ~~ten equal monthly installments of~~CRM software purchases. Total financed for the quarters ended March 31, 2023, and 2022, respectively, was approximately $~~42,894~~154,000 ~~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~~. These are normally paid in equal installments over a period of ~~September 30,~~twelve months or less and carry interest rates ranging between 0% and 8% per annum. As of March 31, 2023 and 2022, ~~and December 31, 2021,~~ respectively, ~~were~~approximately $~~309,993~~38,000 and $0.remained outstanding on short-term financings.

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~~ ~~9,779,952~~ ~~shares~~terms of the ~~Company’s common stock, par value $0.086~~ ~~per share at an~~SPA, during the quarter ended March 31, 2023, the Series B Warrants’ effective exercise price reset to $3.55. As of $March 31, 2023, there remain ~~4.09~~1,331,667 ~~per share, (ii) an aggregate of~~ ~~2,670,892~~ ~~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~~ ~~2,219,084~~ ~~shares of Common Stock at a conversion price of $4.09~~ ~~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~~.

~~By entering into the Private Placement on December 22, 2021, the Company entered into a commitment to issue the Common Shares, Preferred Shares and~~ Series B Warrants onoutstanding.

For the ~~Initial Closing Date~~periods ended March 31, 2023 and 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 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 valuewere $4,226,950 and ~~will subsequently remeasure the derivative liability, at fair value with changes~~$12,425,426 respectively, presented 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~~in the ~~year ended~~consolidated statements of operations. The Series B Warrant liability outstanding as of March 31, 2023 and 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~~was $~~7,726,161~~2,157,300 and $~~34,621,024~~6,384,250 ~~of non-operating unrealized gains within~~respectively, presented in the ~~recognition and change in fair value of~~ warrant ~~liabilities~~liability 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.~~sheets.

Placement Agent Warrants

~~In connection with~~

For the ~~Private Placement, the Company issued~~ ~~244,539~~ ~~warrants to the placement agent~~periods ended March 31, 2023 and 2022, net fair value gains and losses recognized 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 $4.09~~ ~~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~~(“PAW”) were, a ~~derivative liability measured at fair value~~gain of $~~1,525,923~~39,281 ~~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~~loss of $~~1,525,923~~579,463,~~, along with non-operating unrealized gains of $193,154~~ ~~and $1,450,129, were included~~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 March 31, 2022 and December 31, 2022 was $9,619 and $48,900, respectively, presented in the warrant liability account on the ~~condensed consolidated statement of operations for the three and nine months ended September 30, 2022, respectively, A corresponding derivative liability of $75,794~~ ~~is included on Company’s condensed~~ consolidated balance ~~sheet as of September 30, 2022.~~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~~ ~~245~~ 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~~ ~~2,219,084~~ ~~shares of common stock.~~

Common Stock

The Company ~~has been~~is authorized to issue ~~2,000,000,000~~133,333,333 shares of common stock, $0.086 par value. Each share of issued and outstanding common stock ~~entitles~~entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the corporation upon liquidation or dissolution.

~~In January 2022,~~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 ~~2,670,892~~15,300 shares valued at par, totaling $1,300.

In March of ~~common stock through the Private Placement for the purpose~~2023 Yes Americana, a related party, converted $645,000 of ~~raising capital. See Note 5 -~~ ~~Warrant Liabilities~~ ~~for proceeds received by the Company.~~

outstanding debt into

~~In January 2022, the Company issued~~ ~~606,037~~66,743 shares ~~of common stock pursuant to the Medigap Acquisition.~~

~~In January 2022, upon agreement with Series A warrant holders,~~ ~~375,000~~ ~~warrants were exercised at a price of $6.60~~ ~~into~~ ~~375,000~~ 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 ~~2022,~~of 2023 the ~~Company~~company issued ~~6,000~~155,038 shares of the Company’s common stock ~~due to~~in conjunction with the ~~vesting of~~ ~~6,000~~ ~~stock awards pursuant to an employee agreement.~~Private Placement-2023 as defined and discussed further below.

~~In May and June 2022,~~ ~~3,276,929~~ ~~Series C prepaid warrants were exchanged for~~ ~~3,276,929~~ ~~shares of the Company’s common stock.~~

~~In July 2022,~~ ~~1,221,347~~ ~~Series D prepaid warrants were exchanged for~~ ~~1,221,347~~ ~~shares of the Company’s common stock.~~

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there were ~~18,054,469~~1,566,048 and ~~10,956,109~~1,219,573 shares of Common Stock outstanding, respectively.

2015

~~Warrants~~

~~Series A Warrants~~

Warrants

Series A Warrants

In conjunction with the Company’s initial public offering, the Company issued ~~2,070,000~~138,000 Series 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 ~~110%~~110% of the public offering price of one share of common stock and accompanying Series A Warrant, or $~~6.00~~99.00. Series A warrant holders exercised ~~375,000~~25,000 Series A warrants in January 2022, resulting in ~~1,695,000~~113,000 of Series A warrants remaining issued and outstanding as of ~~September 30, 2022.~~March 31, 2023.

Series E and F Warrants

On March 13, 2023, the Company entered into a securities purchase agreement (the “SPA-2023”) with one institutional buyer for the purchase and sale of, (i) an aggregate of 155,038 shares (the “Common Shares”) of the Company’s common stock, par value $0.086 per share (the “Common Stock”) along with accompanying common warrants (the “Common Units”), (ii) prefunded warrants (the “Prefunded Warrants” or “Series E Warrants”) that are exercisable into 897,594 shares of Common Stock (the “Prefunded Warrant Shares”) along with accompanying common warrants (the “Pre-Funded Units”), and (iii) common warrants (the “Common Warrants” or “Series F Warrants”) to initially acquire up to 2,105,264 shares of Common Stock (the “Common Warrant Shares”) (representing 200% of the Common Shares and Prefunded Warrant Shares) in a private placement offering (the “Private Placement-2023”). Additionally, the Company agreed to issue a warrant to the Placement Agent (defined below), to initially acquire 52,632 shares of common stock (the “PA Warrant”) and entered into a registration rights agreement with the buyer to register for resale the common shares underlying the Series E and F Warrants.

The aggregate purchase price for the Common Shares, Prefunded Warrants (Series E Warrants) and the Common Warrants (Series F Warrants) to be purchased by the Buyer shall be equal to (i) $3.80 for each Common Unit purchased by such Buyer, or (ii) $3.799 for each Prefunded Unit purchased by the Buyer, which Prefunded Warrants are exercisable into Prefunded Warrant Shares at the initial Exercise Price (as defined in the Prefunded Warrant) of $0.001 per Prefunded Warrant Share in accordance with the Prefunded Warrant.

The Common Warrant (Series F) has an exercise price of $3.55 per share, subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date of the Private Placement-2023. The Common Warrant will be exercisable six months following the date of issuance and will expire five and a half years from the date of issuance.

~~Series C~~
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 ~~D Warrants~~will expire five years from the date of issuance.

~~In January 2022, as a result~~The closing of the Private ~~Placement~~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 ~~Medigap Acquisition,~~reimbursement of certain Placement Agent fees and customary expenses.

Gross and net proceeds to the Company ~~received a deficiency notification~~ from ~~Nasdaq indicating violation of Listing Rule 5365(a). As part of its remediation plan, in March 2022,~~ 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 ~~entered into Exchange Agreements with the holders of common stock issued in January 2022. Pursuant to the Exchange Agreements, the Company issued~~ ~~3,276,929~~ ~~Series C prepaid warrants in exchange for~~ ~~3,276,929~~ ~~shares of the Company’s common stock. Additionally, as compensation for entering into the Exchange Agreements, the Company issued~~ ~~1,222,498~~ ~~Series D prepaid warrants to the Private Placement investors for no additional consideration. The fair value of~~determined the Series ~~D prepaid warrants was treated as a deemed dividend~~E Warrants, Series F Warrants, 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.~~

~~The Series C and D~~PA 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).

Equity-based Compensation

~~In May and June 2022,~~

During the period ending March 31, 2023, an executive was awarded an annual stock award in conjunction with a promotion agreement, consisting of ~~3,276,929~~2,667 ~~Series C prepaid warrants were converted for~~ ~~3,276,929~~shares of the Company’s common stock per annum, to vest monthly throughout the term of employment. For three months ended March 31, 2023, total stock compensation for ~~a conversion price~~this award is valued at approximately, $5,842, recorded as stock-based compensation.

Total stock-based compensation expense recorded in general and administrative expenses in the condensed consolidated statements of operations for the periods ended March 31, 2023 and 2022 was $~~0.001~~43,797~~. Through September 30, 2022, the Company has received payments of~~ and $~~1,336~~739,960 ~~for these issuances.~~, respectively.

~~In July 2022, the~~ ~~1,222,498~~ ~~Series D prepaid warrants were converted into~~ ~~1,222,082~~ ~~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.~~

~~Equity-based Compensation~~

Between February and May 2022, three existing employees were awarded bonuses consisting of shares of the Company’s common stock to be vested immediately. The shares granted in 2022 were valued at $~~766,250 and treated as compensation expense. As of September 30, 2022, these shares have not been issued.~~

~~In April 2022 , pursuant to an agreement between the Company and an executive, the executive will be compensated with~~ ~~60,000~~ ~~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 months ended September 30, 2022, compensation expense on this grant was $14,850~~ ~~and $25,571, 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 303,143 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 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
September 30,
2022 September 30,
2021
Net income (loss) $ 6,122,093 $ (595,233 )
Deemed dividend
-
-
Net income (loss), numerator, basic computation
6,122,093
(595,233 )
Recognition and change in fair value of Series B warrant liability
(7,726,161
) -
Recognition and change in fair value of Placement Agent warrant liability (193,154 )
Net income (loss), numerator, diluted computation $
(1,797,222
) $ (595,233 )

Weighted average common shares 16,491,942 10,944,439
Effect of series C warrants
-
-
Effect of Series D warrants 623,285 -
Effect of weighted average vested stock awards
309,040

Weighted average shares - denominator basic computation 17,424,267 10,944,439
Effect of dilutive securities
-
-
Weighted average shares, as adjusted - denominator diluted computation 17,424,267 10,944,439
Earnings (loss) per common share – basic $
0.35
$ (0.05 )
Earnings (loss) per common share – diluted
(0.10
) (0.05 )

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 computation 19,027,450 (2,486,045 )
Recognition and change in fair value of Series B warrant liability (32,474,324 )
Net income (loss), numerator, diluted computation $
(13,446,874
) $ (2,486,045 )

Weighted average shares 14,308,069 9,809,092
Effect of series C warrants
1,819,213

Effect of Series D warrants 1,019,803 -
Effect of weighted average vested stock awards
173,061
-
Weighted average shares - denominator basic computation
17,320,146
9,809,092
Effect of dilutive securities
-

-

Weighted average shares, as adjusted - denominator diluted computation 17,320,146 9,809,092
Earnings (loss) per common share - basic $ 1.10 $ (0.25 )
Earnings (loss) per common share - diluted $ (0.78 ) $ (0.25 )

	Three Months			Three Months
	Ended			Ended
	March 31, 2023			March 31, 2022
Income from continuing operations	$	2,983,861		$	9,487,884
Deemed dividend		-			(6,930,335	)
Net income continuing operations, numerator, basic computation		2,983,861			2,557,549
Recognition and change in fair value of warrant liabilities		(4,266,231	)		(13,992,664	)
Net loss continuing operations, numerator, diluted computation	$	(1,282,370	)	$	(11,435,115	)

Weighted average common shares, basic		1,553,953			980,569
Effect of series B warrants		631,894			214,911
Weighted average common shares, dilutive		2,185,847			1,195,480
Earnings (loss) per common share – basic	$	1.92		$	2.61
Earnings (loss) per common share – diluted		(0.59	)		(9.57	)

The reversal of the gain inon the change fair value of the Series B ~~warrants~~warrant liability for the three ~~and nine~~ months ~~September 30,~~March 31, 2023 and 2022 is included in the numerator of the dilutive EPS calculation to eliminate the effects of the warrants ~~that have been recorded in net income~~ as the impact is dilutive. The gain in fair value of the Placement Agent warrants for the three months September 30, 2022 is included in the numerator of the dilutive EPS calculation to eliminate the effects of the warrants that have been recorded in net income as the impact is dilutive. For the nine months ended September 30, 2022, as the fair value change in the Placement Agent warrants is a loss, the addback of the loss would result in anti-dilution and therefore is not included in the numerator of dilutive EPS.

~~The potential impact of the~~ ~~9,779,950~~ ~~and~~ ~~244,539~~ Series B and Placement Agent warrants are excluded from the denominator of the dilutive EPS calculation for the three and nine months ended September 30, 2022 as the average market price for both periods does not exceed the exercise price of the warrants, resulting in anti-dilutive securities.

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 months ended
September 30,
2022 September 30,
2021
Shares subject to outstanding common stock options
163,925

163,925

Shares subject to outstanding Series A warrants 1,695,000 2,070,000
Shares subject to preferred stock
2,219,084

11,670

Shares subject to unvested stock awards
61,280

15,655

1 2
For the nine months ended
September 30,
2022 September 30,
2021
Shares subject to outstanding common stock options
163,925

163,925

Shares subject to outstanding Series A warrants 1,695,000 2,070,000
Shares subject to outstanding Placement Agent warrants
244,539
-
Shares subject to preferred stock
2,219,084

11,670

Shares subject to unvested stock awards
61,280

15,655

Diluted net loss per common share
61,280

15,655

	March 31, 2023		March 31, 2022
	For the Three Months Ended
	March 31, 2023		March 31, 2022
Shares subject to outstanding common stock options		10,928		10,928
Shares subject to outstanding Series A warrants		113,000		113,000
Shares subject to outstanding Series F warrants		2,105,264		-
Shares subject to placement agent warrants		52,632		-
Shares subject to unvested stock awards		7,709		661
Shares subject to conversion of Series B preferred stock		-		147,939

NOTE 8.7. LEASES

Operating lease expense for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was $~~159,624~~161,614 and $~~97,265~~145,662, ~~respectively. Operating lease expense for the nine months ended September 30, 2022 and 2021 was $434,798~~ ~~and $220,798~~ respectively. As of ~~September 30, 2022,~~March 31, 2023, the weighted average remaining lease term and weighted average discount rate for the operating leases were ~~3.86~~3.85 years and ~~5.72%~~5.60% 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
2023 570,275
2024 269,908
2025 144,124
2026 113,738
Thereafter 268,202
Total undiscounted operating lease payments 1,523,880
Less: Imputed interest 152,467
Present value of operating lease liabilities $ 1,371,413

Period ending March 31, 2023	Operating Lease Obligations
2023	$	271,267
2024		269,908
2025		144,124
2026		113,738
2027		117,150
Thereafter		151,052
Total undiscounted operating lease payments		1,067,239
Less: Imputed interest		115,753
Present value of operating lease liabilities	$	951,486

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 30, 2022~~March 31, 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 30, 2022~~March 31, 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 payments		-		(250,000	)		(834,943	)		(147,535	)		-			(1,232,478	)
Changes due to fair value adjustments		394,467		150,000			94,225			-			(162,000	)		476,692
Ending balance March 31, 2023	$	1,061,467	$	400,000		$	94,225		$	-		$	398,000		$	1,953,692

	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
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

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 for the principal sum of $1,500,000 (the “Note”). ~~The Note matures on~~ ~~January 15, 2024, bearing interest of~~ 0~~% per annum for~~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 be extended for an additional year until~~Note was amended to January 15, ~~2025,~~2026, (iii) the interest rate under the Note shall not increase after the maturity date, and ~~if necessary, extended again for one additional year through January 15, 2026.~~(iv) the Note can be converted at any time, at the option of Americana, into shares of the Company’s common stock, par value $0.086 per share at an agreed upon conversion price.

On February 13, 2023, Americana effectuated a conversion of $645,000 of the Note into 66,743 shares of the Company’s common stock, $0.086 par value per share, in accordance with the terms of the Amendment. In addition, during the month of March 2023 the Company repaid to Americana $400,000. As of March 31, 2023 the balance owed to Americana was $800,000.

NOTE 10. SUBSEQUENT EVENTS

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 March 31, 2023 and April 30, 2023 was 262,684 and zero, respectively.

2319

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

Overview

Reliance Global Group, Inc. ~~(formerly known as Ethos Media Network, Inc.~~(the “Company”) was incorporated in Florida on August 2, 2013. In September 2018, Reliance Global Holdings, LLC, a related party, purchased a controlling interest in the Company. Ethos Media Network, Inc. was renamed Reliance Global Group, Inc. on October 18, 2018.

~~We operate~~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 ~~September 30, 2022,~~March 31, 2023, we have acquired ~~ten~~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, properties and insurance companies, many of which have relationships with insurance companies, or have a significant presence in niche insurance markets that may give them an advantage over us. Other competitive concerns may include the quality of our products and services, our pricing and the ability of some of our customers to self-insure and the entrance of technology companies into the insurance intermediary business. A number of insurance companies are engaged in the direct sale of insurance, primarily to individuals, and do not pay commissions to agents and brokers.

Financial Instruments

The Company’s financial instruments as of ~~September 30, 2022,~~March 31, 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 in order to achieve asset value appreciation while generating interim cash flows. In the insurance sector, our management team has over 100 years of ~~experiences~~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 ~~ten~~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

~~Medigap Healthcare Insurance Agency, LLC (Medigap)~~	~~January 10, 2022~~	~~Florida~~	~~Health Insurance~~	~~Unaffiliated~~

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

2521

~~J.P. Kush and Associates, Inc. Transaction~~

On May 1, 2021, we entered into a Purchase Agreement with J.P. Kush and Associates, Inc. whereby we purchased the business and certain assets noted within the Purchase Agreement (the “Kush Acquisition”) for a total purchase price of $3,644,166. The purchase price was paid with a cash payment of $1,900,000, $50,000 in restricted shares of our common stock, in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and an earn-out payment.

The Kush Acquisition was accounted for as a business combination in accordance with the acquisition method under the guidance in ASC 805-10 and 805-20. Accordingly, the total purchase consideration was allocated to intangible assets acquired based on their respective estimated fair values. The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing.

~~The allocation of the purchase price in connection with the Kush Acquisition was calculated as follows:~~

Description Fair Value
Weighted Average
Useful Life
(Years)

Accounts receivable $ 291,414
Trade name and trademarks 685,400 5
Customer relationships 551,000 10
Non-competition agreements 827,800 5
Goodwill 1,288,552 Indefinite
$ 3,644,166

Goodwill of $1,288,552 arising from the Kush Acquisition consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the Kush Acquisition is currently expected to be deductible for income tax purposes. Total acquisition costs for the Kush Acquisition incurred were $58,092 recorded as a component of General and administrative expenses. The approximate revenue and net profit for the acquired business as a standalone entity per ASC 805 from January 1, 2021 to April 30, 2021 was $380,349 and $166,667, respectively, and from January 1, 2020 to December 31, 2020, $1,141,047 and $500,000, respectively.

~~Medigap Healthcare Insurance Agency, LLC Transaction~~

On January 10, 2022, pursuant to an asset purchase agreement, dated December 21, 2021, we 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 606,037 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 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 under the guidance in ASC 805-10 and 805-20. Accordingly, the total purchase consideration was allocated to intangible assets acquired based on their respective estimated fair values. The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing.

~~The allocation of the purchase price in connection with the acquisition of Medigap was calculated as follows:~~

Description Fair Value Weighted Average
Useful Life
(Years)
Property, plant and equipment $ 20,666 6
Right-of-use asset 317,787
Trade name and trademarks 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

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.

~~Barra & Associates, LLC Transaction~~

On April 26, 2022, we 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 nine months from closing, and a final earnout of $600,000 payable over two years from closing based upon meeting stated milestones. The APA contains standard, commercial representations and warranties and covenants. The source of the cash payment was $6,520,000 in funds borrowed from Oak Street Lending (“Loan”), our 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 preliminary allocation of the purchase price in connection with the acquisition of Medigap was calculated as follows:~~

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
Developed technology 230,000 5
Agency relationships 2,585,000 10
Lease liability (122,984 )
Goodwill 4,236,822 Indefinite
$ 7,725,000

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.~~

Recent Developments

Private ~~Placement~~Placement-2023

On ~~December 22, 2021, we~~March 13, 2023, the Company entered into a securities purchase agreement (the “SPA-2023”) with ~~several~~one institutional ~~buyers~~buyer for the purchase and sale of (i) ~~warrants to purchase up to~~ an aggregate of ~~9,779,952~~155,038 shares (the “Common Shares”) of the Company’s common stock, par value $0.086 per share (the “Common Stock”) along with accompanying common warrants (the “Common Units”), (ii) prefunded warrants (the “Prefunded Warrants” or “Series E Warrants”) that are exercisable into 897,594 shares of Common Stock (the “Prefunded Warrant Shares”) along with accompanying common warrants (the “Pre-Funded Units”), and (iii) common warrants (the “Common Warrants” or “Series F Warrants”) to initially acquire up to 2,105,264 shares of Common Stock (the “Common Warrant Shares”) (representing 200% of the Common Shares and Prefunded Warrant Shares) in a private placement offering (the “Private Placement-2023”). Additionally, the Company agreed to issue a warrant to the Placement Agent (defined below), to initially acquire 52,632 shares of common stock (the “PA Warrant”) and entered into a registration rights agreement with the buyer to register for resale the common shares underlying the Series E and F Warrants.

The Common Warrant (Series E) has an exercise price of ~~$4.09~~$3.55 per share, ~~(ii) an aggregate of 2,670,892 shares of Common Stock, and (iii) 9,076 shares~~subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date of the ~~Company’s newly-designated Series B convertible preferred stock, par value $0.086~~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, ~~with a stated value~~subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date of ~~$1,000 per share, initially convertible into an aggregate~~the SPA-2023. The PA Warrant will be exercisable six months following the date of ~~2,219,084 shares of Common Stock at a conversion price of $4.09 per share in a private placement (the “Private Placement”).~~

On January 5, 2022, pursuant to the securities purchase agreement dated December 22, 2021, the Private Placement was closed. The Private Placement resulted in aggregate gross proceeds to us of approximately $20,000,000, before deducting placement agent fees and other offering expenses payable by us. The Warrants are exercisable upon issuance and will expire five years from the date of issuance. In connection with the Private Placement, we issued to the placement agent warrants to purchase 244,539 shares of the Company’s Common Stock at an exercise price of $4.09 per share (the “Placement Agent Warrants”). The Placement Agent Warrants have substantially the same terms as the Warrants issued in the Private Placement.

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.

~~During August 2022, all 9,076 Series B Convertible Preferred Stock~~ Gross and net proceeds to the Company from the Private Placement-2023 were ~~converted by third parties into 2,219,084 shares of common stock.~~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.

~~Nasdaq Notification~~The Company determined the Series E Warrants, Series F Warrants, and ~~Warrant Exchange~~

~~On January 31, 2022, we received a deficiency notification from Nasdaq regarding the issuance of shares~~PA Warrants are equity in nature and their value is included in the ~~Medigap Acquisition and Private Placement in violation~~Company’s condensed consolidated statements of ~~Listing Rule 5635(a)~~stockholders’ equity (deficit). This rule requires an issuer to obtain shareholder approval with respect to an acquisition paid for from the proceeds of a sale of common stock of the issuer which equals or exceeds 20% of the shares of the issuer, issued and outstanding prior to the acquisition. The Company submitted a remediation plan under which the Nasdaq granted us an extension to implement the required changes until May 10, 2022.

As part of its remediation plan, on March 22, 2022 we entered into Exchange Agreements with the holders of common stock issued in January 2022 resulting from the Medigap Acquisition and Private Placement. Pursuant to the Exchange Agreements, we issued 3,276,929 Series C prepaid warrants in exchange for 3,276,929 shares of our common stock that were previously issued. Additionally, to compensate the Private Placement investors for entering into the Exchange Agreements, we issued 1,222,498 Series D prepaid warrants to such investors for no additional consideration on the same date. The fair value of the Series D prepaid warrants upon issuance was $6,930,335; such amount was treated as a deemed dividend and accordingly reduced income available to common stockholders for the period. Shares of common stock underlying the Series C and D prepaid warrants are treated as outstanding for purposes of calculating basic and diluted earnings per share. The Series C warrants were exercised during the quarter ended June 30, 2022. The Series D warrants were exercised during the quarter ended September 30, 2022.

~~Stock Split~~

Reverse Stock Split

On ~~January 21, 2021 we effected~~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 ~~shares of~~ common stock ~~in a ratio of 1:85.71 which simultaneously occurred with the Company’s uplisting to the Nasdaq Capital Market.~~(the “Reverse Split-2023”). The ~~Company has adjusted all of~~par value remains unchanged. All share and per share ~~numbers~~information as well as common stock and additional paid-in capital have been retroactively adjusted to ~~take into account this reverse stock split.~~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.

Results of Operations

Comparison of the three months ended ~~September 30, 2022~~March 31, 2023 to the three months ended ~~September 30, 2021~~March 31, 2022

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

	September 30, 2022			September 30, 2021			March 31, 2023			March 31, 2022
Revenue
Commission income	$	4,153,361		$	2,581,636		$	3,939,103			3,058,697
Total revenue		4,153,361			2,581,636			3,939,103			3,058,697

Operating expenses
Commission expense		862,857			660,708			1,083,326			785,611
Salaries and wages		2,114,730			1,188,267			1,712,097			1,631,813
General and administrative expenses		1,253,097			755,130			1,358,254			2,333,795
Marketing and advertising		726,115			65,010			136,572			89,529
Depreciation and amortization		713,444			387,729			541,873			468,278
Total operating expenses		5,670,243			3,056,844			4,832,122			5,309,026

Loss from operations		(1,516,882	)		(475,208	)		(893,019	)		(2,250,329	)

Other income (expense)
Other expense, net		7,638,975			(120,025	)		(389,351	)		(107,751	)
Recognition and change in fair value of warrant liabilities								4,266,231			11,845,964
Total other income								3,876,880			11,738,213

Total Other income (expense)		7,638,975			(120,025	)

Net income (loss)		6,122,093			(595,233	)
Income from continuing operations							$	2,983,861			9,487,884
Loss from discontinued operations								(4,772,399	)		(147,884	)
Net (loss) income								(1,788,538	)		9,340,000

Revenues

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

WeThe Company had revenues of ~~$4.2~~approximately $3.9 million for the three months ended ~~September 30, 2022,~~March 31, 2023, as compared to ~~$2.6~~approximately $3.0 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase of ~~$1.6 million~~approximately $880,000 or ~~61%~~29% is primarily driven by organic growth and the additional insurance ~~agencies~~agency acquired in the second quarter of 2022.

Commission expense

The Company had total commission expense of ~~$863,000~~approximately $1.0 million for the three months ended ~~September 30, 2022~~March 31, 2023, compared to ~~$661,000~~approximately $785,000 for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase of ~~$202,000~~approximately $297,000 or ~~31%~~38% is primarily driven by organic growth and the additional insurance ~~agencies~~agency acquired in the second quarter of 2022.

Salaries and wages

WeThe Company reported ~~$2.1~~approximately $1.7 million of salaries and wages expense for the three months ended ~~September 30, 2022~~March 31, 2023, compared to ~~$1.2~~approximately $1.6 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase of ~~$926,000~~approximately $80,000 or ~~78%~~5% is a result of the Company’s growth driven by expanded operations, both organic and due to the additional insurance ~~agencies~~agency acquired in the second quarter of 2022.

General and administrative expenses

WeThe Company had total general and administrative expenses of ~~$1.3~~approximately $1.4 million for the three months ended ~~September 30, 2022,~~March 31, 2023, as compared to ~~$755,000~~approximately $2.3 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The ~~increase~~decrease in expense of ~~$498,000~~approximately $975,000 or ~~66%~~42% 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 $137,000 of marketing and advertising expense for the three months ended March 31, 2023 compared to approximately $90,000 for the three months ended March 31, 2022. The increase of approximately $47,000 or 53% is a result of the Company’s growth driven by expanded operations, both organic and due to the additional insurance ~~agencies~~agency acquired in ~~2022.~~

~~Marketing and advertising~~

~~We reported $726,000 of marketing and advertising expense for the three months ended September 30,~~ 2022, compared to $65,000 for the three months ended September 30, 2021. The increase of $661,000 or 1,017% is primarily a result of Medigap’s direct business to consumer marketing model deployed through social media platforms, in addition toas well as overall increased branding and outreach efforts to achieve greater industry presence.

Depreciation and amortization

WeThe Company reported ~~$713,000~~approximately $542,000 of depreciation and amortization expense for the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$388,000~~approximately $468,000 for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase of ~~$326,000~~approximately $74,000 or ~~84%~~16% is primarily a result of our acquired tangible and intangible assets through business combinations.

Other income and expense

WeThe Company reported ~~$7.6~~approximately $3.9 million of other income for the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$120,000~~approximately $11.7 million of other ~~expense~~income for the three months ended ~~September 30, 2021.~~March 31, 2022. The ~~increase~~decrease of ~~$7.8~~approximately $7.9 million or ~~6,464%~~67% is attributable primarily to the change in fair value of warrant liabilities, ~~of $7.9 million driven by various factors including the Company’s stock price as of the period close,~~ offset by interest expense.

3023

~~Comparison of the Nine months ended September 30, 2022 to the Nine months ended September 30, 2021~~

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

September 30,
2022 September 30,
2021
Revenue
Commission income $ 12,596,268 $ 7,096,213
Total revenue 12,596,268 7,096,213

Operating expenses
Commission expense
2,617,140
1,748,451
Salaries and wages
6,373,697
3,217,441
General and administrative expenses
5,465,384
2,961,881
Marketing and advertising 1,922,520 143,110
Depreciation and amortization
2,077,372
1,090,183
Total operating expenses
18,456,113
9,161,066

Loss from operations (5,859,845 ) (2,064,853 )

Total Other income (expense) 31,817,630 (421,192 )

Net income (loss) $ 25,957,785 $ (2,486,045 )

~~Revenues~~

We had revenues of $12.6 million for the nine months ended September 30, 2022, as compared to $7.1 for the nine months ended September 30, 2021. The increase of $5.5 million or 78% is primarily driven by organic growth and the additional insurance agencies acquired in 2022.

~~Commission expense~~

We had total commission expense of $2.6 million for the nine months ended September 30, 2022 compared to $1.7 million for the nine months ended September 30, 2021. The increase of $0.9 million or 50% is primarily driven by organic growth and the additional insurance agencies acquired in 2022.

~~Salaries and wages~~

We reported $6.4 million of salaries and wages expense for the nine months ended September 30, 2022 compared to $3.2 million for the nine months ended September 30, 2021. The increase of $3.2 million or 98% is primarily driven by expanded operations, both organic and due to the additional insurance agencies acquired in 2022.

~~General and administrative expenses~~

We had total general and administrative expenses of $5.5 million for the nine months ended September 30, 2022, as compared to $3.0 million for the nine months ended September 30, 2021. The increase in expense of $2.5 million or 85% is primarily driven by expanded operations, both organic and due to the additional insurance agencies acquired in 2022.

~~Marketing and advertising~~

We reported $1.9 million of marketing and advertising expense for the nine months ended September 30, 2022 compared to $143,000 for the nine months ended September 30, 2021. The increase of $1.8 million or 1,243% is primarily a result of Medigap’s direct business to consumer marketing model deployed through social media platforms, in addition to overall increased branding and outreach efforts to achieve greater industry presence.

~~Depreciation and amortization~~

We reported $2.1 million of depreciation and amortization expense for the nine months ended September 30, 2022 compared to $1.1 million for the nine months ended September 30, 2021. The increase of $1.0 million or 91% is a result of the assets we acquired through business combinations.

~~Other income and expense~~

We reported $31.8 million of other income for the nine months ended September 30, 2022 compared to a loss of $421,000 for the nine months ended September 30, 2021. The increase of $32.2 million or 7,654% is attributable primarily to the recognition and change in fair value of warrant liabilities of $32.4 million driven by various factors including the Company’s stock price as of the period close, offset by interest expense.

Liquidity and capital resources

As of ~~September 30, 2022,~~March 31, 2023, we had a cash balance of ~~$3.0~~approximately $3.6 million and a working capital deficit of ~~$3.5 million~~approximately $743,000, compared with a cash balance of ~~$4.6~~approximately $1.9 million and working capital deficit of ~~$37~~approximately $4.5 million at December 31, ~~2021.~~2022. The ~~increase in~~improved working capital is primarily attributable to the issuance of stock with a private placement and the ~~derivative warrant liability commitments, effectively reclassifying them from~~repayment of current ~~to non-current~~ liabilities.

The spread of the coronavirus (COVID-19) outbreak in the United States has resulted in economic uncertainties which may negatively impact our business operations. While the disruption is expected to be temporary, there is uncertainty surrounding the duration and extent of the impact. Currently we have not seen any material financial impact as a result of the coronavirus outbreak. However, management is actively monitoring the global situation on its financial condition, liquidity, operations, industry and workforce.Inflation

Adverse events such as health-related concerns about working in our offices, the inability to travel and other matters affecting the general work environment could harm our business and our business strategy. While we do not anticipate any material impact to our business operations as a result of the coronavirus, in the event of a major disruption caused by the outbreak of pandemic diseases such as coronavirus, we may lose the services of our employees or experience system interruptions, which could lead to diminishment of our business operations. Any of the foregoing could harm our business and delay the implementation of our business strategy and we cannot anticipate all the ways in which the current global health crisis and financial market conditions could adversely impact our business.

~~Inflation~~

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

Off-balance sheet arrangements

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

Cash Flows

Nine Months Ended
September 30,

2022 2021
Net cash used in operating activities $ (2,177,998 ) $ (1,304,320 )
Net cash used in investing activities (24,982,609 ) (1,963,897 )
Net cash provided by financing activities 25,564,501 8,878,110
Net (decrease) increase in cash, cash equivalents, and restricted cash $ (1,596,106 ) $ 5,609,893

	Three Months Ended March 31,
	2023			2022
Net cash used in operating activities	$	(1,064,878	)		(482,906	)
Net cash used in investing activities		(96,297	)		(18,252,467	)
Net cash provided by financing activities		2,805,700			20,090,409
Net increase in cash, cash equivalents, and restricted cash	$	1,644,525		$	1,355,036

Operating Activities

Net cash used in operating activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was ~~$2.2~~approximately $1.0 million, ~~which~~compared to net cash flows used in operating activities of approximately $483,000 for the three months ended March 31, 2022. The cash used includes net ~~income~~loss of ~~$26.0~~approximately $1.8 million, ~~offset~~increased by approximate non-cash ~~income~~adjustments of ~~$28.9~~$3.2 million principally related to recognition and change in fair value of warrant liabilities of ~~$32.4~~$4.3 million, offset by an earn-out fair value ~~adjustment of $132,445, share based compensation expense of $1.2 million,~~adjustments and depreciation and amortization of ~~$2.1 million,~~$477,000 and $542,000, respectively, as well as a net decrease in cash due to changes of net working capital items in the amount of ~~$760,000 principally due to a decrease in accounts receivable of $92,000, a decrease in prepaid expense~~$45,000 and ~~other current assets of $2.3 million, an increase in other payables of $35,000,~~ offset by ~~decreases in accounts payable and accrued expenses~~net cash adjustments for discontinued operating activities of ~~$1.5 million and decrease of the chargeback reserve of $134,000.~~$4.0 million.

Investing Activities

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, cash flows used in investing activities ~~were $25.0 million~~approximated $96,000 compared to cash ~~flow~~flows used in investing activities of ~~$2.0 million~~approximately $249,000 for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The cash used ~~relates to~~reflects cash paid for ~~the acquisition of Medigap and Barra of $24.1 million,~~ the purchase of property and equipment ~~of $68,000~~ and ~~cash paid of $776,000 for~~ intangible assets.

~~Financing Activities~~

Financing Activities

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, approximate cash provided by financing activities was ~~$25.6~~$2.8 million as compared to ~~$8.9~~approximately $20.1 million for the ~~nine~~three months ended ~~September 30, 2021. The net~~March 31, 2022. Net cash provided by financing activities is primarily ~~related~~relates to proceeds from private placement offerings of approximately $3.4 million and $17.9 million respectively for the Private Placement offering in January 2022. The net proceeds from the issuance of these shares was $17.9 million. Additionally, we received proceeds of $2.5 million from the exercise of Series A warrants, $6.5 million through loan proceeds received for a business acquisitionthree month periods ended March 31, 2023 and ~~$1.5 million through a related party loan. These were~~2022, offset by net debt principal proceeds and repayments of ~~$663,000, payment of debt issuance costs of $214,000, payment of a related party loan of $174,000, payments on the earn out liability of $1.6 million and short term financing of $107,000.~~$623,000.

Significant Accounting Policies and Estimates

We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements, and our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. There have been no significant changes in our significant accounting policies or critical accounting estimates since the end of fiscal year ~~2021.~~2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

~~Our~~During fiscal year 2022, the Company determined it had a material weakness in its disclosure controls and procedures for specifically earnings per share (EPS). During the quarter ended March 31, 2023, the Company mitigated the deficiency by consulting with qualified advisors that have in-depth EPS expertise. These advisors assisted the Company in the calculations and disclosures of EPS for the three months ended, March 31, 2023.

Pursuant to the above, our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2022. Based on~~March 31, 2023, and although appropriate mitigation and remedial action have been taken, will continue to disclose a material weakness and a conclusion of ineffective controls over EPS for the ~~evaluation, management has concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2022.~~period ended March 31, 2023.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter which is the subject of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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 ~~September 30, 2022.~~March 31, 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, ~~Item1A,~~Item 1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, ~~2021. Except as set forth below, there~~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, ~~2021.~~

2022.

~~Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our common stock.~~

Our shares of common stock are currently listed on The Nasdaq Capital Market. If we fail to satisfy the continued listing requirements of The Nasdaq Capital Market, such as the corporate governance requirements, minimum bid price requirement or the minimum stockholder’s equity requirement, The Nasdaq Stock Market LLC may take steps to delist our common stock. Any delisting would likely have a negative effect on the price of our common stock and would impair stockholders’ ability to sell or purchase their common stock when they wish to do so.

On September 27, 2022, we received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC notifying us that for the preceding 30 consecutive business days (August 15, 2022 through September 26, 2022), our common stock did not maintain a minimum closing bid price of $1.00 per share (“Minimum Bid Price Requirement”) as required by Nasdaq Listing Rule 5550(a)(2). The notice has no immediate effect on the listing or trading of our common stock which will continue to trade on The Nasdaq Capital Market under the symbol “RELI”. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we initially have a compliance period of 180 calendar days, or until March 27, 2023, to regain compliance with Nasdaq Listing Rules. Compliance can be achieved automatically and without further action if the closing bid price of our common stock is at or above $1.00 for a minimum of ten consecutive business days at any time during the compliance period, in which case Nasdaq will notify us of our compliance and the matter will be closed. If, however, we do not achieve compliance with the Minimum Bid Price Requirement by March 27, 2023, we may be eligible for additional time to comply; however, such additional time is not guaranteed and is subject to the discretion of Nasdaq. In order to be eligible for such additional time, we will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and must notify Nasdaq in writing of our intention to cure the deficiency during the second compliance period

We intend to attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any action taken by us would result in our common stock meeting The Nasdaq listing requirements, or that any such action would stabilize the market price or improve the liquidity of our common stock. Any perception that we may not regain compliance or a delisting of our common stock by Nasdaq could adversely affect our ability to attract new investors, decrease the liquidity of the outstanding shares of our common stock, reduce the price at which such shares trade and increase the transaction costs inherent in trading such shares with overall negative effects for our stockholder. In addition, delisting of our common stock from Nasdaq could deter broker-dealers from making a market in or otherwise seeking or generating interest in our common stock, and might deter certain institutions and persons from investing in our common stock.

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

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

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits

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

Exhibit No.		Description

3.1		Articles of ~~Incorporation of Issuer~~Amendment (incorporated by reference to ~~exhibit 3.1 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))~~

~~3.2~~		~~Bylaws of Issuer (incorporated by reference to exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))~~

~~3.3~~		Articles of Formation of Southwestern Montana Insurance Center, LLC(incorporated by reference to exhibit 3.3 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))

~~3.4~~		Certificate of Formation of Commercial Coverage Solutions LLC(incorporated by reference to exhibit 3.4 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))

~~3.5~~		Articles of Organization of Employee Benefits Solutions, LLC(incorporated by reference to exhibit 3.5 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))

~~3.6~~		Articles of Organization of Fortman Insurance Solutions, LLC (incorporated by reference to exhibit 3.6 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))

~~3.7~~		Articles of Organization of US Benefits Alliance, LLC (incorporated by reference to exhibit 3.7 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))

~~3.8~~		Articles of Incorporation of Altruis Benefits Corporation (incorporated by reference to exhibit 3.8 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))

~~3.9~~		Articles of Incorporation of Kush Benefit Solutions, LLC Corporation (incorporated by reference to exhibit 3.9 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))

~~3.10~~		Articles of Amendment to the Articles of Incorporation (incorporated by reference to exhibit 3.9 to Amendment No.4 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 5, 2021)(File Number 333-249381))

~~3.11~~		~~Amendment to Articles of Incorporation(incorporated by reference to exhibit~~Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on ~~January 6, 2022 (File Number 001-40020))~~

~~3.12~~		Medigap Healthcare Insurance Agency LLC Formation and Assignment Documents(incorporated by reference to exhibit 3.11 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2021 (File Number 001-40020))February 22, 2023).

~~3.13~~10.1		~~Articles~~Promotion Letter by and between Reliance Global Group, Inc. and Joel Markovits dated as of ~~Organization of RELI~~December 28, 2022 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange ~~LLC~~Commission on January 4, 2023).

4.1*10.2		~~YES Americanna LLC~~Amendment No. 1 to the Promissory Note, by and between Reliance Global Group, Inc. and YES Americana Group, LLC, dated as of February 7, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2023).

10.3		Securities Purchase Agreement, dated March 13, 2023, between Midori Group, Inc and Investor (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).

10.4		Form of Warrant (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).

10.5		Form of Pre-Funded Warrant (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).

10.6		Form of Placement Agent Warrant (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).

10.7		Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023).

31.1*		Certification of Chief Executive Officer pursuant to ~~Section302~~Section 302 of the Sarbanes-Oxley Act 2002*2002

31.2*		Certification of Chief Financial Officer pursuant to ~~Section302~~Section 302 of the Sarbanes-Oxley Act 2002*2002

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

32.2*		Section 1350 Certification of the Chief Financial Officer and Chief Financial Officer*
101.INS*		Inline XBRL Instance Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

*Filed herewith

**Furnished herewith

3527

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this ~~Form 10-Q statement~~report to be signed on its behalf by the undersigned thereunto duly ~~authorized, in the City of Lakewood, State of New Jersey on November 14, 2022.~~authorized.

		Reliance Global Group, Inc.

Date:	May 18, 2023	By:	/s/ Ezra Beyman
	~~Ezra Beyman~~
	~~Chief Executive Officer and Chairman of the Board~~
	~~(Principal Executive Officer)~~

~~Date: November 14, 2022~~

~~Reliance Global Group, Inc.~~
			Ezra Beyman
			Chief Executive Officer
			(principal executive officer)

Date:	May 18, 2023	By:	/s/ ~~Willian Lebovics~~Joel Markovits
	~~William Lebovics~~		Joel Markovits
			Chief Financial Officer
	~~(Principal Financial Officer)~~		(principal financial officer and principal accounting officer)

~~Date: November 14, 2022~~

3628

	September 30, 2022		September 30, 2021
Cash	$	1,615,054	$	5,655,103
Restricted cash		1,409,562		484,371
Total cash and restricted cash	$	3,024,616	$	6,139,474

		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

Nine Months ended September 30, 2022	Medical/Life		Property and Casualty		Total
Regular
EBS	$	645,217	$	-	$	645,217
USBA		39,638		-		39,638
CCS/UIS		-		177,111		177,111
Montana		1,385,017		-		1,385,017
Fortman		949,189		589,924		1,539,113
Altruis		3,056,257		-		3,056,257
Kush		1,230,259		-		1,230,259
Medigap		3,868,654		-		3,868,654
Barra		153,539		501,463		655,002
	$	11,327,770	$	1,268,498	$	12,596,268

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

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	)

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	)

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	$	1.10		$	(0.24	)
Earnings (Loss) per common share, diluted	$	(0.78	)	$	(0.24	)

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		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

	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

	Three Months			Three Months
	ended			ended
	September 30, 2022			September 30, 2021
Net income (loss)	$	6,122,093		$	(595,233	)
Deemed dividend		-			-
Net income (loss), numerator, basic computation		6,122,093			(595,233	)
Recognition and change in fair value of Series B warrant liability		(7,726,161	)		-
Recognition and change in fair value of Placement Agent warrant liability		(193,154	)
Net income (loss), numerator, diluted computation	$	(1,797,222	)	$	(595,233	)

Weighted average common shares		16,491,942			10,944,439
Effect of series C warrants		-			-
Effect of Series D warrants		623,285			-
Effect of weighted average vested stock awards		309,040
Weighted average shares - denominator basic computation		17,424,267			10,944,439
Effect of dilutive securities		-			-
Weighted average shares, as adjusted - denominator diluted computation		17,424,267			10,944,439
Earnings (loss) per common share – basic	$	0.35		$	(0.05	)
Earnings (loss) per common share – diluted		(0.10	)		(0.05	)

	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 computation		19,027,450			(2,486,045	)
Recognition and change in fair value of Series B warrant liability		(32,474,324	)
Net income (loss), numerator, diluted computation	$	(13,446,874	)	$	(2,486,045	)

Weighted average shares		14,308,069			9,809,092
Effect of series C warrants		1,819,213
Effect of Series D warrants		1,019,803			-
Effect of weighted average vested stock awards		173,061			-
Weighted average shares - denominator basic computation		17,320,146			9,809,092
Effect of dilutive securities		-			-
Weighted average shares, as adjusted - denominator diluted computation		17,320,146			9,809,092
Earnings (loss) per common share - basic	$	1.10		$	(0.25	)
Earnings (loss) per common share - diluted	$	(0.78	)	$	(0.25	)

		1		2
	For the nine months ended
	September 30, 2022		September 30, 2021
Shares subject to outstanding common stock options		163,925		163,925
Shares subject to outstanding Series A warrants		1,695,000		2,070,000
Shares subject to outstanding Placement Agent warrants		244,539		-
Shares subject to preferred stock		2,219,084		11,670
Shares subject to unvested stock awards		61,280		15,655
Diluted net loss per common share		61,280		15,655

Year ending December 31,	Operating Lease Obligations
2022	$	157,633
2023		570,275
2024		269,908
2025		144,124
2026		113,738
Thereafter		268,202
Total undiscounted operating lease payments		1,523,880
Less: Imputed interest		152,467
Present value of operating lease liabilities	$	1,371,413

Description	Fair Value		Weighted Average Useful Life (Years)
Accounts receivable	$	291,414
Trade name and trademarks		685,400		5
Customer relationships		551,000		10
Non-competition agreements		827,800		5
Goodwill		1,288,552		Indefinite
	$	3,644,166

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
Developed technology		230,000			5
Agency relationships		2,585,000			10
Lease liability		(122,984	)
Goodwill		4,236,822			Indefinite
	$	7,725,000

	Nine Months Ended September 30,
	2022			2021
Net cash used in operating activities	$	(2,177,998	)	$	(1,304,320	)
Net cash used in investing activities		(24,982,609	)		(1,963,897	)
Net cash provided by financing activities		25,564,501			8,878,110
Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(1,596,106	)	$	5,609,893