Form 10-K/A - Annual report [Section 13 and 15(d), not S-K Item 405]: [Amend]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

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

For the fiscal year ended December 31, 2022

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

For the transition period from _____ to _____

Commission file number: 001-40020

RELIANCE GLOBAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Florida		46-3390293
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 Blvd. of the Americas, Suite 105 Lakewood, NJ		08701
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (732) 380-4600

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	Nasdaq Capital Market

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

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

Yes ☒ No ☐

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

Yes ☒ No ☐

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

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

Yes ☐ No ☒

The aggregate market value of the common stock, $0.086 par value per share, held by non-affiliates of the registrant, based on the closing sale price of registrant’s common stock ($31.65) as quoted on the NASDAQ on June 30, 2022 (the last business day of the registrant’s most recently completed second fiscal quarter), was approximately $21 million.

At March 30, 2023, the registrant had 1,566,048 shares of common stock, par value $0.086 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None

EXPLANATORY NOTE

On March 30, 2023, Reliance Global Group, Inc. (the “Company”) filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Original 2022 10-K”), with the Securities and Exchange Commission (“SEC”). This Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) is being filed to:

	(i)	Include the conformed signature of Mazars USA LLP (“Mazars”), the Company’s independent registered public accounting firm, on Mazars’ Report of Independent Registered Public Accounting Firm (the “Audit Report”);
	(ii)	Revise Part II, Item 9A to indicate that the Company’s disclosure controls and procedures and the Company’s internal control over financial reporting were not effective as of December 31, 2022; and
	(iii)	Provide current dated certifications.

With respect to (i) above, although Mazars delivered to the Company a manually signed copy of the Audit Report, the version of the Original 2022 10-K that was filed with the SEC inadvertently omitted Mazar’s conformed signature on the copy of the Audit Report included in Part II, Item 8 of the 2022 10-K. Therefore, in this Amendment No. 1, Part IV, Item 15 has been replaced in its entirety, solely to include Mazars’ conformed signature on the Audit Report. No changes to the financial statements or notes have been made in Amendment No. 1.

With respect to (ii) above, as disclosed by the Company in a Current Report on Form 8-K filed on May 18, 2023 with the SEC, on May 12, 2023, subsequent to the filing of the Original 2022 10-K, the Company determined that the following financial statements should be restated and should no longer be relied upon:

	(i)	The Company’s unaudited consolidated financial statements for the three months ended March 31, 2022 included in the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 16, 2022 (the “Q1 2022 10-Q”);
	(ii)	The Company’s unaudited consolidated financial statements for the three and six months ended June 30, 2022 included in the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 15, 2022 (the “Q2 2022 10-Q”)
	(iii)	The Company’s unaudited consolidated financial statements for the three and nine months ended September 30, 2022 included in the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 14, 2022 (the “Q3 2022 10-Q” and collectively with the Q1 2022 10-Q and the Q2 2022 10-Q, the “10-Qs”).

Subsequent to the Company’s filing with the SEC of the 10-Qs, the Company performed an evaluation of its accounting in connection with the calculation of its basic earnings per share (“EPS”) and diluted EPS and identified errors in such calculations. The errors resulted from improper application of sequencing rules, a miscalculation of the numerator used in the determination of diluted EPS, and a miscalculation of the denominator used in the determination of weighted average shares outstanding for both basic EPS and diluted EPS, and the Company determined that the errors required adjustments of the previously issued financial statements in the 10-Qs.

The Company determined that the reporting effects of the above errors had a material impact to the Company’s unaudited consolidated financial statements included in the 10-Qs. As a result, the unaudited consolidated financial statements for the three months ended March 31, 2022, the unaudited consolidated financial statements for the three and six months ended June 30, 2022, and the unaudited consolidated financial statements for the three and nine months ended September 30, 2022 were restated, and the Company filed an amendment to each of the 10-Qs with the SEC on May 18, 2023.

The Company’s management concluded that in light of the errors mentioned above, a material weakness existed in the Company’s internal control over financial reporting as of March 31, 2022, June 30, 2022 and September 30, 2022, and the Company’s disclosure controls and procedures were not effective as of such dates. The material weakness was disclosed in the amendment to each of the 10-Qs, as filed with the SEC on May 18, 2023, as well as in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023, as filed with the SEC on May 18, 2023.

Although the Company was not aware of any material weaknesses, as of December 31, 2022, in its internal control over financial reporting and in its disclosure controls and procedures as of the filing date of the Original 2022 10-K, in this Amendment No. 1, the Company is replacing Part II, Item 9A (Controls and Procedures) in its entirety to disclose the existence of such material weaknesses as of December 31, 2022.

Amendment No. 1 speaks as of the filing date of the Original 2022 10-K, and does not reflect events that may have occurred subsequent to the filing date of the Original 2022 10-K. Except as described above, no other changes have been made to the Original 2022 10-K, and Amendment No. 1 does not modify, amend or update in any way revenue, expenses, net income (loss), or any of the financial or other information contained in the Original 2022 10-K. Amendment No. 1 should be read in conjunction with the Original 2022 10-K and the Company’s other filings with the SEC. The filing of this Amendment No. 1 is not an admission that the Original 2022 10-K, when filed, included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.

Item 9A. Controls and Procedures

Controls and Procedure Requirements

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this annual report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2022, our disclosure controls and procedures were not effective.

The Company determined it had a material weakness in its disclosure controls and procedures as it pertains to earnings per share (EPS) for the fiscal year ended December 31, 2022. During the quarter ended March 31, 2023, the Company mitigated this deficiency by consulting with qualified advisors that have in-depth EPS expertise. These advisors will assist the Company in the calculations and disclosures of EPS for future reporting periods.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO – 2013) in Internal Control-Integrated Framework. Based on its assessment, management concluded that, as of December 31, 2022, our Company’s internal control over financial reporting was not effective due to the material weakness in disclosure controls and procedures discussed above.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART IV

Item 15. Exhibits and Financial Statement Schedules

a)	The following documents are filed as part of this Annual Report on Form 10-K

	(1)	Financial Statements

		See Index to Financial Statements on page F-1 of this Annual Report on Form 10-K
	(2)	Financial Statement Schedules

		Schedules not listed above have been omitted because they are not required, not applicable, or the required information is otherwise included elsewhere in Annual Report on Form 10-K.

	(3)	Exhibits

Report of Independent Registered Public Accounting Firm PCAOB ID 339

To the Stockholders and the Board of Directors of Reliance Global Group, Inc. and Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Reliance Global Group, Inc. and Subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the two years in the period December 31, 2022 and 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period December 31, 2022 and 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

F-1

Impairment Evaluation of Goodwill

Critical Audit Matter Description

As described in Note 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was approximately $19 million as of December 31, 2022. Management tests goodwill for impairment on October 1 of each year, or more frequently should an event or a change in circumstances occur that would indicate the carrying value may be impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment is recorded equal to the amount by which the carrying value exceeds the fair value, up to the amount of goodwill associated with the reporting unit. As a result of management’s assessment, the Company recognized impairment charges of $14.3 million related to goodwill during the year ended December 31, 2022.

The principal considerations for our determination that the goodwill impairment assessment was a critical audit matter are that there is significant judgment in selection of the valuation methods to use along with assumptions used to estimate the future revenues and cash flows, including revenue growth rates, operating expenses and cash outflows necessary to support the cash flows, weighted average costs of capital and future market conditions as well as the valuation methodologies applied by the Company. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to managements inputs and selection of methods used. In addition, the audit effort involved the use of auditor employed professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

How the Critical Matter Was Addressed in the Audit

The primary audit procedures we performed to address this critical audit matter included:

Obtaining an understanding over the Company’s process for evaluation whether an event of a change in circumstances occur that would indicate the carrying value of goodwill may be impaired.

Utilizing a firm employed valuation specialist with the skills and knowledge to assist in: (i) evaluating and challenging the reasonableness of the valuation methods selected by management to determine the fair value of the Company, (ii) evaluating management’s significant assumptions by comparing inputs to market data (iii) performing a control premium sensitivity study to determine the impact to market approach, and (iv) performing recalculations of the method utilized by management.

Testing the completeness and accuracy of the underlying data utilized by management in their evaluation of goodwill impairment.

We have served as the Company’s auditor since 2020.

/s/ Mazars USA LLP

Fort Washington, Pennsylvania

March 30, 2023

F-2

Reliance Global Group, Inc. and Subsidiaries

Consolidated Balance Sheets

	2022			2021
	December 31			December 31,
	2022			2021
Assets
Current assets:
Cash	$	505,410		$	4,136,180
Restricted cash		1,404,359			484,542
Accounts receivable		1,067,544			1,024,831
Accounts receivable, related parties		21,887			7,131
Other receivables		16,852			-
Prepaid expense and other current assets		249,327			2,328,817
Total current assets		3,265,379			7,981,501
Property and equipment, net		186,883			130,359
Right-of-use assets		1,182,079			1,067,734
Investment in NSURE, Inc.		900,000			1,350,000
Intangibles, net		13,757,370			7,078,900
Goodwill		19,112,733			10,050,277
Other non-current assets		23,284			16,792
Total assets	$	38,427,729		$	27,675,563

Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable and other accrued liabilities	$	1,457,967		$	2,759,160
Short term financing agreements		154,017			-
Chargeback reserve		915,934			-
Other payables		1,476,113			81,500
Current portion of long-term debt		1,118,721			913,920
Current portion of leases payable		518,054			276,009
Earn-out liability, current portion		2,153,478			3,297,855
Warrant commitment		-			37,652,808
Total current liabilities		7,794,284			44,981,252

Loans payable, related parties, less current portion		1,669,514			353,766
Long term debt, less current portion		12,349,673			7,085,325
Leases payable, less current portion		714,068			805,326
Earn-out liability, less current portion		556,000			516,023
Warrant liabilities		6,433,150			-
Total liabilities		29,516,689			53,741,692
Stockholders’ equity (deficit):
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively		-			-
Common stock, $0.086 par value; 133,333,333 shares authorized and 1,219,573 and 730,407 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively		104,883			62,815
Additional paid-in capital		35,798,139			27,329,201
Stock subscription receivable		-			(20,000,000	)
Accumulated deficit		(26,991,983	)		(33,458,145	)
Total stockholders’ equity (deficit)		8,911,039			(26,066,129	)
Total liabilities and stockholders’ equity	$	38,427,729		$	27,675,563

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

F-3

Reliance Global Group, Inc. and Subsidiaries

Consolidated Statements of Operations


	Year ended			Year ended
	December 31, 2022			December 31, 2021
Revenue
Commission income	$	16,755,884		$	9,710,334
Total revenue		16,755,884			9,710,334

Operating expenses
Commission expense		3,384,734			2,427,294
Salaries and wages		8,592,051			4,672,988
General and administrative expenses		6,717,889			3,589,221
Marketing and advertising		2,584,895			325,838
Depreciation and amortization		2,801,824			1,607,313
Goodwill impairment		14,373,374			-
Total operating expenses		38,454,767			12,622,654

Loss from operations		(21,698,883	)		(2,912,320	)

Other income (expense)
Other expense, net		(899,913	)		(533,337	)
Recognition and change in fair value of warrant liabilities		29,064,958			(17,652,808	)
Total other income (expense)		28,165,045			(18,186,145	)

Net income (loss)	$	6,466,162		$	(21,098,465	)

Basic and diluted earnings (loss) per share	$	(0.42	)	$	(31.34	)
Weighted average number of shares outstanding – Basic and diluted		1,094,989			673,137

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

F-4

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)


	Reliance Global Group, Inc.
	Preferred stock						Common stock						Common stock issuable				Additional paid-in			Subscription			Accumulated
	Shares			Amount			Shares			Amount			Shares		Amount		capital			Receivable			Deficit			Total

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

Share based compensation		-			-			-			-			-		-		1,249,873			-			-			1,249,873.00

Shares issued in private placement		9,076			781			178,060			15,313			-		-		(16,043	)		20,000,000			-			20,000,051.00

Shares issued pursuant to acquisition of Medigap		-			-			40,402			3,475			-		-		4,759,976			-			-			4,763,451.00

Series A warrants		-			-			25,000			2,150			-		-		2,472,850			-			-			2,475,000.00

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

Shares issued for vested stock awards		-			-			14,675			1,262			-		-		(1,262	)		-			-			-

Issuance of common stock for conversion of Series C warrants		-			-			218,462			18,788			-		-		(17,452	)		-			-			1,336.00

Issuance of common stock for conversion of Series D warrants		-			-			81,423			7,002			-		-		(6,207	)		-			-			795.00

Issuance of common stock for conversion of Series B warrants		-			-			1,667			143			-		-		12,357			-			-			12,500.00

Warrant liability reclassified to equity upon exercise of Series B Warrants		-			-			-			-			-		-		8,000			-			-			8,000.00

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

Net Income		-			-			-			-			-		-		-			-			6,466,162			6,466,162

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

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

F-5

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

	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, 2020		395,640		$	33,912			282,735	$	24,315		1,556		$	340,000		$	11,898,441		$	-		$	(12,359,680	)	$	(63,012	)
Balance		395,640		$	33,912			282,735	$	24,315		1,556		$	340,000		$	11,898,441		$	-		$	(12,359,680	)	$	(63,012	)

Share based compensation		-			-			-		-		-			-			658,077			-			-			658,077

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

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

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

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

Shares issued due to conversion of preferred stock		(395,660	)		(33,912	)		263,773		22,685		-			-			11,227			-			-			-

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

Rounding shares related to initial public offering		20			-			126		10		-			-			(10	)		-			-			-

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

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

Stock subscriptions		-			-			-		-		-			-			-			(20,000,000	)		-			(20,000,000	)

Net loss		-			-			-		-		-			-			-			-			(21,098,465	)		(21,098,465	)

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

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

F-6

Reliance Global Group, Inc. and Subsidiaries and Predecessor

Consolidated Statements of Cash Flows

	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	6,466,162		$	(21,098,465	)
Adjustment to reconcile net income to net cash used in operating activities:
Depreciation and amortization		2,801,824			1,607,313
Goodwill impairment		14,373,374
Amortization of debt issuance costs and accretion of debt discount		41,875			22,822
Non-cash lease expense		36,442			7,329
Stock compensation expense		1,249,873			749,127
Earn-out fair value and write-off adjustments		524			(359,470	)
Change in fair value of warrant liability		(29,064,958	)		17,652,808
Change in operating assets and liabilities:
Accounts payables and other accrued liabilities		(1,304,652	)		(531,123	)
Accounts receivable		49,876			(162,234	)
Accounts receivable, related parties		(14,756	)		(7,131	)
Note receivables		-			3,825
Other receivables		(16,852	)		1,952
Other payables		269,613			19,000
Chargeback reserve		(568,539	)		-
Other non-current assets		(6,492	)		(14,992	)
Prepaid expense and other current assets		2,496,689			(144,036	)
Net cash used in operating activities		(3,189,997	)		(2,253,275	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from partial sale of investment in NSURE		450,000
Purchase of property and equipment		(71,212	)		(71,108	)
Business acquisitions, net of cash acquired		(24,138,750	)		(1,608,586	)
Purchase of intangibles		(882,350	)		(619,666	)
Net cash used in investing activities		(24,642,312	)		(2,299,360	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings of debt		-			-
Principal repayments of debt		(875,010	)		(887,455	)
Debt issuance costs		(214,257	)		-
Loans acquired through acquisitions		6,520,000			-
Issuance of common shares in exchange for Series C and D warrants		2,131			-
Proceeds from loans payable, related parties		1,500,000			2,931
Payments of loans payable, related parties		(184,252	)		(515,685	)
Earn-out liability		(1,704,925	)		(452,236	)
Exercise of warrants into common stock		2,475,000			-
Repayments on short term financing		(263,182	)
Private Placement of shares and warrants		17,853,351			10,496,221
Issuance of common shares in exchange for Series B warrants		12,500			-
Net cash provided by financing activities		25,121,356			8,643,776

Net increase (decrease) in cash and restricted cash		(2,710,953	)		4,091,141
Cash and restricted cash at beginning of year		4,620,722			529,581
Cash and restricted cash at end of year		1,909,769			4,620,722

SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:
Cash paid for interest		863,936			456,482
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			340,268
Conversion of debt into equity		-			3,800,000
Cashless conversion of Series D Warrants for 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
Unpaid deferred transaction costs		-			2,146,700
Stock subscriptions		-			20,000,000
Acquisition of business deferred purchase price		1,125,000			-
Warrant liability reclassified to equity upon exercise of Series B Warrants		8,000
Lease assets acquired in exchange for lease liabilities		628,004			861,443

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

F-7

Reliance Global Group, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Reliance Global Group, Inc. (formerly known as Ethos Media Network, Inc.) (“RELI”, “Reliance”, or the “Company”) was incorporated in Florida on August 2, 2013. In September 2018, Reliance Global Holdings, LLC (“Reliance Holdings”), a related party acquired control of the Company. Ethos Media Network, Inc. was then renamed on October 18, 2018.

On May 1, 2021, the Company acquired the assets of J.P. Kush and Associates, Inc., an independent healthcare insurance agency headquartered in Michigan (see Note 3).

On January 10, 2022, the Company acquired the assets of Medigap Healthcare Insurance Company, LLC, an unaffiliated insurance brokerage company headquartered in Florida (see Note 3).

On April 26, 2022, the Company acquired the assets of Barra & Associates, LLC., an unaffiliated full-service insurance agency headquartered in Illinois (see Note 3).

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounting of Reliance Global Group, Inc., and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Liquidity

As of December 31, 2022, the Company’s reported cash and restricted cash aggregated balance was approximately $1,910,000, current assets were approximately $3,265,000, while current liabilities were approximately $7,794,000. As of December 31, 2022, the Company had a working capital deficit of approximately $4,529,000 and stockholders’ equity of approximately $8,911,039. For the year ended December 31, 2022, the Company reported net income of approximately $6,466,162, which includes a non-cash goodwill impairment of approximately $14,373,000, offset by a non-cash, non-operating measurement gain on the warrant commitment of approximately $29,065,000. The Company reported negative cash flows from operations of approximately $3,190,000. The Company completed a capital offering in February 2021 and January 2022 that raised net proceeds of approximately $10,496,000 and $17,853,000, respectively. As noted in Note 17 - Subsequent Events, pursuant to a securities purchase agreement which closed on March 16, 2023, the Company received funds net of transaction costs of approximately $3,446,000, to be used primarily for working capital.

Management believes the company’s financial position and continued ability to raise capital to be reasonable and sufficient. Based on our assessment, we do not believe there are any 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 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 consists of checking accounts. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Restricted cash includes cash pledged as collateral to secure obligations and/or all cash whose use is otherwise limited by contractual provisions.

At times, some cash balances held in banks may exceed the Federal Deposit Insurance Corporation, or FDIC, standard deposit insurance limit of $250,000.

F-8

The reconciliation of cash and restricted cash reported within the applicable balance sheet accounts that sum to the total of cash and restricted cash presented in the statement of cash flows is as follows:

	December 31, 2022		December 31, 2021
Cash	$	505,410	$	4,136,180
Restricted cash		1,404,359		484,542
Total cash and restricted cash	$	1,909,769	$	4,620,722

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is recognized over an asset’s estimated useful life using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Certain capitalized software has been reclassified in the consolidated balance sheet from property and equipment, net to intangibles, net and comparative periods have been adjusted accordingly. Maintenance and repairs are charged to expense as incurred. Estimated useful lives of the Company’s Property and Equipment are as follows:

		Useful Life (in years)
Computer equipment		5
Office equipment and furniture		7
Leasehold improvements		Shorter of the useful life or the lease term

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

Level 1 — Observable inputs that reflect 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.

As of December 31, 2022 and 2021 respectively, the Company’s balance sheet includes certain financial instruments, including cash, notes receivables, accounts payable, and short and long-term debt. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. The carrying amounts of long-term debt approximate their fair value as the variable interest rates are based on a market index.

Warrant Liabilities: The Company’s warrant liabilities (see Note 9, Warrant Liabilities) represent liability-classified derivative financial instruments recorded at fair value on a recurring basis. The fair value of the Warrant Liabilities includes significant inputs unobservable in the market and thus are considered Level 3. The Company measured the fair value of the warrant liabilities at the issuance date, December 22, 2022, and subsequently at the balance sheet date, using a binomial option pricing model. The following summarizes the significant unobservable inputs, not accounting for the Reverse Split-2023:

SCHEDULE OF EARN OUT LIABILITY

	December 22, 2022			December 22, 2021
Stock price	$	0.57		$	6.44
Volatility		105.0	%		90	%
Time to Expiry		4.01			5
Dividend yield		0	%		0	%
Risk free rate		4.1	%		1.10	%

F-9

The following reconciles the warrant liabilities for the years ended December 31, 2022 and 2021:


	Years ended December 31, 2022 and 2021
	Series B Warrant Commitment			Series B warrant liabilities			Placement agent warrants			Total
Beginning balance, December 31, 2020		-			-			-			-
Initial recognition		20,244,497			-			-			20,244,497
Unrealized (gain) loss		17,408,311			-			-			17,408,311
Ending balance, December 31, 2021	$	37,652,808		$	-		$	-		$	37,652,808
Beginning balance, December 31, 2021	$	37,652,808		$	-		$	-		$	37,652,808
Initial recognition		-			55,061,119			1,525,924			56,587,043
Unrealized (gain) loss		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

*	Recognition and change in fair value of warrant liabilities per income statement is $29,064,958. The difference of $3,672,624 is made up of the Warrant issuance costs.

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

	December 31, 2022	December 31, 2021
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

	December 31, 2022
WACC Risk Premium:		14.0	%
Volatility		50.0	%
Credit Spread:		7.7	%
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 approximately $2,967,592 as of December 31, 2022. The following table reconciles fair value of earn-out liabilities for the years ending December 31, 2022 and 2021:

	December 31, 2022			December 31, 2021
Beginning balance – January 1	$	3,813,878		$	2,931,418

Acquisitions and Settlements		(1,104,925	)		1,160,562

Period adjustments:
Fair value changes included in earnings^*		524			(278,102	)

Ending balance	$	2,709,478		$	3,813,878
Less: Current portion		(2,153,478	)		(3,297,855	)
Ending balance, less current portion		556,000			516,023

*	Recorded as a reduction to general and administrative expenses

F-10

Deferred Financing Costs

The Company has recorded deferred financing costs as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense using the straight-line method which approximates the interest rate method over the term of the related debt. As of December 31, 2022, and 2021, unamortized deferred financing costs were $313,829, and $134,528, respectively and are netted against the related debt.

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting. Under the acquisition method, assets acquired, liabilities assumed, and consideration transferred are recorded at the date of acquisition at their respective fair values. Definite-lived intangible assets are amortized over the expected life of the asset. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. If the business combination provides for contingent consideration such as earn-outs, the Company records the contingent consideration at fair value at the acquisition date. The Company remeasures fair value as of each reporting date and changes resulting from events after the acquisition date, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value and accretion costs are recognized in earnings.

Identifiable Intangible Assets, net

Finite-lived intangible assets such as customer relationships assets, trademarks and tradenames are amortized over their estimated useful lives, generally on a straight-line basis for periods ranging from 3 to 20 years. Finite-lived intangible assets are reviewed for impairment or obsolescence whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of intangible assets is measured by a comparison of the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by that asset. If the asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the estimated fair value. No impairment was recognized during the periods presented.

Goodwill and other indefinite-lived intangibles

The Company records goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. Goodwill is assigned on the acquisition date and tested for impairment at least annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. Similarly, indefinite-lived intangible assets (if any) other than goodwill are tested annually or more frequently if indicated, for impairment. If impaired, intangible assets are written down to fair value based on the expected discounted cash flows.

Financial Instruments

The Company evaluates issued financial instruments for classification as either equity or liability based on an assessment of the financial instrument’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the financial instruments issued are freestanding pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and, if applicable whether the financial instruments meet all of the requirements for equity classification under ASC 815, including whether the financial instruments are indexed to the Company’s own Common Stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance and as of each subsequent reporting period end date while the financial instruments are outstanding. Financial instruments that are determined to be liabilities under ASC 480 or ASC 815 are held at their initial fair value and remeasured to fair value at each subsequent reporting date, with changes in fair value recorded as a non-operating, non-cash loss or gain, as applicable.

The Company’s financial instruments consist of derivatives related to the warrants issued with the securities purchase agreement as discussed in Note 9, Warrant Liabilities. The accounting treatment of derivative financial instruments requires that we record the derivatives at their fair values as of the inception date of the debt agreements and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense at each balance sheet date. Upon the determination that an instrument is no longer subject to derivative accounting, the fair value of the derivative instrument at the date of such determination will be reclassified to paid in capital.

F-11

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606 Revenue from Contracts with Customers which at its core, recognizes revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

The Company’s revenue is primarily comprised of agency commissions earned from insurance carriers (the “Customer” or “Carrier”) related to insurance plans produced through brokering, producing and servicing agreements between insurance carriers and members. The Company defines a “Member” as an individual, family or entity currently covered or seeking insurance coverage.

The Company focuses primarily on agency services for insurance products in the “Healthcare” and property and casualty, which includes auto (collectively “P&C”) space, with nominal activity in the life insurance and bond sectors. Healthcare includes plans for individuals and families, Medicare supplements, ancillary and small businesses. The Company also earns revenue in the “Insurance Marketing” space as discussed further below.

Consideration for all agency services typically is based on commissions calculated by applying contractual commission rates to policy premiums. For P&C, commission rates are applied to premiums due, whereas for healthcare, commission rates, including override commissions, are applied to monthly premiums received by the Carrier.

The Company has two forms of billing practices, “Direct Bill” and “Agency Bill”. With Direct Bill, Carriers bill and collect policy premium payments directly from Members without any involvement from the Company. Commissions are paid to the Company by the Carrier in the following month. With Agency Bill, the Company bills Members premiums due and remits them to Carriers net of commission earned.

The following outlines the core principles of ASC 606:

Identification of the contract, or contracts, with a customer. A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance, and (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

Identification of the performance obligations in the contract. Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract.

Determination of the transaction price. The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer.

Allocation of the transaction price to the performance obligations in the contract. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis.

Recognition of revenue when, or as, the Company satisfies a performance obligation. The Company satisfies performance obligations either over time or at a point in time, as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised good or service to the customer.

F-12

Healthcare revenue recognition:

The Company identifies a contract when it has a binding agreement with a Carrier, the Customer, to provide agency services to Members.

There typically is one performance obligation in contracts with Carriers, to perform agency services that culminate in monthly premium cash collections by the Carrier. The performance obligation is satisfied through a combination of agency services including, marketing carrier’s insurance plans, soliciting Member applications, binding, executing and servicing insurance policies on a continuous basis throughout a policy’s life cycle which includes and culminates with the Customer’s collection of monthly premiums. No commission is earned if cash is not received by Carrier. Thus, commission revenue is earned only after a month’s cash receipts from Members’ dues is received by the Customer. Each month’s Carrier cash collections is considered a separate unit sold and transferred to the Customer i.e., the satisfaction of that month’s performance obligation.

Transaction price is typically stated in a contract and usually based on a commission rate applied to Member premiums paid and received by Carrier. The Company generally continues to receive commission payments from Carriers until a Member’s plan is cancelled or the Company terminates its agency agreement with the Carrier. Upon termination, the Company normally will no longer receive any commissions from Carriers even on business still in place. In some instances, trailing commissions could occur which would be recognized similar to other Healthcare revenue. With one performance obligation, allocation of transaction price is normally not necessary.

Healthcare typically utilizes the Direct Bill method.

The Company recognizes revenue at a point in time, when it satisfies its monthly performance obligation and control of the service transfers to the Customer. Transfer occurs when Member insurance premium cash payments are received by the Customer. The Customer’s receipt of cash is the culmination and complete satisfaction of the Company’s performance obligation, and the earnings process is complete.

With Direct Bill, since the amount of monthly Customer cash receipts is unknown to the Company until the following month when notice is provided by Customer to Company, the Company accrues revenue at each period end. Any estimated revenue accrued and recognized at a period-end is trued up for financial reporting per actual revenue earned as provided by the Customer during the following month.

P&C revenue recognition:

The Company identifies a contract when it has a binding agreement with a Carrier, the Customer, to provide agency services to Members.

There typically is one performance obligation in contracts with Customers, to perform agency services to solicit, receive proposals and bind insurance policies culminating with policy placement. Commission revenue is earned at the time of policy placement.

Transaction price is typically stated in a contract and usually based on commission rates applied to Member premiums due. With one performance obligation, allocation of transaction price is normally not necessary.

P&C utilizes both the Agency Bill and Direct Bill methods, depending on the Carrier.

The Company recognizes revenue at a point in time when it satisfies its performance obligation and control of the service transfers to the Customer. Transfer occurs when the policy placement process is complete.

With both Direct Bill and Agency Bill, the Company accrues commission revenue in the period policies are placed. With Agency Bill, payment is typically received from Members in the month earned, however with Direct Bill, payment is typically received from Carriers in the month subsequent to the commissions being earned.

F-13

Insurance Marketing revenue recognition:

Medigap, a consolidated wholly owned subsidiary of the Company earns commission revenue by selling bound insurance policies with all renewal rights to insurance marketing organizations (the “IM Customer”). The IM Customers utilize innovative actuarial models to value and price policies purchased based on future projections. IM Customers pay a one-time commission per policy purchased to selling agencies based on a pre-agreed formula outlined in the parties’ contractual agreement. Commission payments are subject to chargeback in the event a policy is cancelled or lapses within 3 months of a policy’s effective date or until the first three payments are received from the insured party, depending on the IM Customer Contract.

The Company identifies a contract when it has a binding agreement to sell issued insurance policies to the IM Customer.

There is one performance obligation in IM Customer contracts, to sell the rights in Company procured issued insurance policies to the IM Customer. The performance obligation is satisfied when the rights to an issued policy have been transferred to the IM Customer.

Transaction price is stated in a contract and is a set range of commission amounts based on each policy sold. There are two variable components to consideration received:

	a)	Commissions are only earned once a policy is “Placed”, defined as, an active policy sold to the IM Customer where the IM Customer has received the initial insurance carrier payment with respect to such policy. The Company requires end-user insured parties to pay the initial premium to the insurance carrier upon issuance of a policy. Insurance carrier in turn pays IM Customer its initial payment soon thereafter. Thus, upon sale of an issued policy to IM Customer, the Company has provided a bound issued policy and ensured first premium payment has been completed by insured party. This results in virtual assurance that the IM Customer will receive its initial insurance carrier payment, and it is more than probable that a significant revenue reversal will not occur. The Company thus considers all policies sold to the IM Customer to be Placed for revenue recognition purposes.

	b)	Commission revenue is subject to chargeback in full if a policy is cancelled or lapses within three months from the policy effective date or if the insured party does not make the first three payments of the policy. The Company uses historical activity as well as current factors to estimate the unconstrained variable consideration for recognition per the expected value method. A chargeback reserve liability is credited for the difference between cash consideration received and variable consideration recognized. At each reporting period, the Company remeasures the chargeback reserve liability and recognizes any change as an increase or decrease to the then current period revenue. As of March 31, 2022 and December 31, 2021, the chargeback reserve liability was $1,585,435 and $0, respectively.

With one performance obligation, allocation of transaction price is normally not necessary.

The Company recognizes revenue at a point in time when it satisfies its performance obligation and control of an insurance policy transfers to the IM Customer. Transfer of control occurs when the Company submits the Policy to the IM Customer.

IM Customers generally pay the Company weekly, and accruals are recorded as necessary at period end.

Other revenue policies: Insurance commissions earned from Carriers for life insurance products are recorded gross of amounts due to agents, with a corresponding commission expense for downstream agent commissions being recorded as commission expense within the condensed consolidated statements of operations.

F-14

When applicable, commission revenue is recognized net of any deductions for estimated commission adjustments due to lapses, policy cancellations, and revisions in coverage.

The Company could earn additional revenue from contingent commissions, profit-sharing, override and bonuses based on meeting certain revenue or profit targets established periodically by the Carriers (collectively, “Contingent Commissions”). Contingent Commissions are earned when the Company achieves targets established by Carriers. The Carriers notify the Company when it has achieved the target. The Company recognizes revenue for any Contingent Commissions at the time it is reasonably assured that a significant revenue reversal is not probable, which is generally when a Carrier notifies the Company that it is on track or has earned a Contingent Commission.

The following table disaggregates the Company’s revenue by line of business, showing commissions earned:

SCHEDULE OF DISAGGREGATION REVENUE

Year ended December 31, 2022	Medical/Life		Property and Casualty		Total
Regular
EBS	$	798,412	$	-	$	798,412
USBA		52,470		-		52,470
CCS/UIS		-		254,325		254,325
Montana		1,868,137		-		1,868,137
Fortman		1,274,649		842,961		2,117,610
Altruis		4,044,449		-		4,044,449
Kush		1,536,456		-		1,536,456
Medigap		4,994,002		-		4,994,002
RELI Exchange		312,239		777,784		1,090,023
Revenue	$	14,880,814	$	1,875,070	$	16,755,884

Year ended December 31, 2021	Medical/Life		Property and Casualty		Total
Regular
EBS	$	799,474	$	-	$	799,474
USBA		60,129		-		60,129
CCS/UIS		-		333,874		333,874
Montana		1,744,515		-		1,744,515
Fortman		1,173,215		958,521		2,131,736
Altruis		3,313,453		-		3,313,453
Kush		1,327,153		-		1,327,153
Revenue	$	8,417,939	$	1,292,395	$	9,710,334

General and Administrative

General and administrative expenses primarily consist of personnel costs for the Company’s administrative functions, professional service fees, office rent, all employee travel expenses, and other general costs.

Marketing and Advertising

The Company’s direct channel expenses primarily consist of costs for e-mail marketing and newspaper advertisements. The Company’s online advertising channel expense primarily consist of social media ads. Advertising costs for both direct and online channels are expensed as incurred.

F-15

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, based on the terms of the awards. The fair value of the stock-based payments to nonemployees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term. To the extent possible, the Company will estimate and recognize expected forfeitures.

Leases

The Company recognizes leases in accordance with Accounting Standards Codification Topic 842, “Leases” (“ASC 842” or “ASU 2016-12”). This standard provides enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases are recognized as a single lease expense, generally on a straight-line basis.

The Company is the lessee in a contract when the Company obtains the right to use an asset. We currently lease real estate and office space under non-cancelable operating lease agreements. When applicable, consideration in a contract is allocated between lease and non-lease components. Lease payments are discounted using the implicit discount rate in the lease. If the implicit discount rate for the lease cannot be readily determined, the Company uses an estimate of its incremental borrowing rate. The Company did not have any contracts accounted for as finance leases as of December 31, 2022, or 2021. Operating leases are included in the line items right-of-use assets, current portion of leases payable, and leases payable, less current portion in the consolidated balance sheets. Right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated statement of operations. The Company determines a lease’s term by agreement with lessor and includes lease extension options and variable lease payments when option and/or variable payments are reasonably certain of being exercised or paid.

Income Taxes

The Company recognizes deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. In evaluating its ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence, including the expected reversals of taxable temporary differences, projected future taxable income, taxable income available via carryback to prior years, tax planning strategies, and results of recent operations. The Company assesses the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax assets and liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized.

Seasonality

A greater number of the Company’s Medicare-related health insurance plans are sold in the fourth quarter during the Medicare annual enrollment period when Medicare-eligible individuals are permitted to change their Medicare Advantage. The majority of the Company’s individual and family health insurance plans are sold in the annual open enrollment period as defined under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act. Individuals and families generally are not able to purchase individual and family health insurance outside of these open enrollment periods, unless they qualify for a special enrollment period as a result of certain qualifying events, such as losing employer-sponsored health insurance or moving to another state.

Prior Period Adjustments

The Company identified certain immaterial adjustments impacting the prior reporting period. Specifically, the Company identified adjustments to correct certain asset and equity accounts in relation to historical purchase price allocation accounting and adjustments to true up retained earnings for certain historical accrued revenues.

F-16

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 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 consolidated financial statements for the year ended December 31, 2021.

Account

12/31/2020

As reported

Adjustment

12/31/2020

Adjusted

Goodwill

9,265,070

(503,345

)

8,761,725

Accumulated Deficit

(12,482,281

)

122,601

(12,359,680

)

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (“ASU 2016-13”), which requires the measurement of expected credit losses for financial instruments carried at amortized cost, such as accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financing Instruments—Credit Losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. On November 15, 2019, the FASB delayed the effective date of FASB ASC Topic 326 for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition. The Company adopted ASU 2020-06 on January 1, 2023, which did not have a material impact on the consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the general principles in Topic 740 and simplifies other areas of the existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted this pronouncement January 1, 2021 which did not have a material effect on the consolidated financial statements.

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The ASU is effective for fiscal years beginning after December 15, 2021. The Company adopted ASU 2020-06 on January 1, 2022, which did not have a material impact on the consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC 805 to require an acquirer to, at the date of acquisition, recognize and measure contract assets and contract liabilities acquired in accordance with ASU 2014-9, Revenue from Contracts with Customers (Topic 606) as if the entity had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2022 with early adoption permitted. The Company elected to early adopt ASU 2021-08 as of January 1, 2022, which did not have a material impact on the consolidated financial statements.

F-17

NOTE 3. STRATEGIC INVESTMENTS AND BUSINESS COMBINATIONS

To date, we have acquired ten 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	Reliance 100% Controlled Entity	Date	Location	Line of Business	Status

U.S. Benefits Alliance, LLC (USBA)	US Benefits Alliance, LLC	October 24, 2018	Michigan	Health Insurance	Affiliated

Employee Benefit Solutions, LLC (EBS)	Employee Benefits Solutions, LLC	October 24, 2018	Michigan	Health Insurance	Affiliated

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

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

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

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

UIS Agency, LLC (UIS)	UIS Agency, LLC	August 17, 2020	New York	Health Insurance	Unaffiliated

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

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

Barra & Associates, LLC (Barra)	RELI Exchange, LLC	April 26, 2022	Illinois	P&C and Health Insurance	Unaffiliated

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.

F-18

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

Trade name and trademarks 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 5.85% and a discount rate of 14.09%.

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 14.09%.

Non-competition agreements 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 14.09%.

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 $500,000 and $219,097, respectively.

Pro Forma Information

The results of operations of Kush will be included in the Company’s consolidated financial statements as of the date of acquisition through the current period end. The following approximate Company combined supplemental pro-forma financial information assumes that the acquisition had occurred at the beginning of the year ended 2021:


	December 31,
	2021
Revenue	$	10,090,683
Net Income (Loss)	$	(20,931,568	)
Earnings (Loss) per common share, basic	$	(31.10	)
Earnings (Loss) per common share, diluted	$	(31.10	)

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 40,402 shares of the Company’s restricted common stock in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties. The shares issued to Medigap as part of the purchase price are 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

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%.

F-19

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 December 31, 2022 was $4,994,002 and a loss of $1,127,088, 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 approximate Company combined supplemental pro-forma financial information assumes that the acquisition had occurred at the beginning of the years ended December 31, 2022 and 2021:

	December 31,			December 31,
	2022			2021
Revenue	$	17,122,459		$	14,823,837
Net Income (Loss)	$	20,853,020		$	(20,910,374	)
Earnings (Loss) per common share, basic	$	(0.41	)	$	(29.31	)
Earnings (Loss) per common share, diluted	$	(0.41	)	$	(29.31	)

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 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 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

F-20

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 December 31, 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 December 31, 2022 was $1,090,023 and a loss of $(393,708), 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 December 31, 2022 and 2021:

	December 31,			December 31,
	2022			2021
Revenue	$	17,303,506		$	11,409,850
Net Income (Loss)	$	6,700,594		$	(20,370,917	)
Earnings (Loss) per common share, basic	$	(0.21	)	$	(30.26	)
Earnings (Loss) per common share, diluted	$	(0.21	)	$	(30.26	)

NOTE 4. INVESTMENT IN NSURE, INC.

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.

During the fourth quarter of the year ended December 31, 2022, the Company sold 131,345 of its NSURE shares to unaffiliated third parties, receiving cash proceeds of $450,000. The Company’s remaining NSURE share balance as of December 31, 2022 is 262,684.

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 years ended December 31, 2022 or 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.

F-21

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

	December 31, 2022			December 31, 2021
Computer equipment	$	107,195		$	72,110
Office equipment and furniture		51,532			36,157
Leasehold Improvements		127,497			89,819
Property and equipment		286,224			198,086
Less: Accumulated depreciation		(99,341	)		(67,727	)
Property and equipment, net	$	186,883		$	130,359

Depreciation expense associated with property and equipment, is included within depreciation and amortization in the Company’s consolidated statements of operations and is, $43,945 and $19,912 for the years ended December 31, 2022 and 2021, respectively.

NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS

In accordance with ASC 350-20-35-45, all the Company’s goodwill is assigned to a single operating and reporting unit. All of the acquisitions made by the Company are in one general insurance agency industry and operate in a very similar economic and regulatory environment. The Company has one executive who is responsible for the operations of the insurance agencies. This executive reports directly to the Chief Executive Officer (“CEO”) on a quarterly basis. Additionally, the CEO who is responsible for the strategic direction of the Company reviews the operations of the insurance agency business collectively, as opposed to office by office.

For the year ended December 31, 2022, due to a declining market cap, the Company performed a goodwill impairment test utilizing the Market Approach – Traded Market Value Method, concluding that the Company’s fair value and resultant net assets, implied a goodwill balance of $19.1 million vs. our goodwill balance prior to write-down of $33.4 million. Thus, the Company recognized a goodwill impairment loss of $14,373,374 presented in the Statements of Operations as goodwill impairment for the year ended December 31, 2022. For the year ended December 31, 2021, the Company assessed goodwill in accordance with ASC 350-20-35-3, analyzing the relevant qualitative factors. The Company noted that it was not more likely than not that the fair value of the reporting unit is less than its carrying amount, thus determining that the two-step goodwill impairment test was not required. Pursuant to the qualitative assessment, the Company concluded that goodwill was not impaired as of and for the year ended December and 2021.

The following table rolls forward the Company’s goodwill balance for the periods ending December 31, 2022 and 2021.

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
Goodwill Impairment		(14,373,374	)
December 31, 2022	$	19,112,733

The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of December 31, 2022:

	Weighted Average Remaining Amortization period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name and trademarks	4.4	$	2,146,188	$	(991,240	)	$	1,154,948
Internally developed software	4.1		1,635,178		(285,743	)		1,349,435
Customer relationships	9.0		11,922,290		(2,076,086	)		9,846,204
Purchased software	0.4		665,137		(583,744	)		81,393
Video Production Assets	0.0		50,000		(50,000	)		-
Non-competition agreements	1.9		3,504,810		(2,179,420	)		1,325,390
Contracts backlog	0.0		210,000		(210,000	)		-
		$	20,133,603	$	(6,376,233	)	$	13,757,370

F-22

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:

	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

Amortization expense, is, $2,757,879 and $1,587,401 for the years ended December 31, 2022 and 2021, respectively.

The following table reflects expected amortization expense as of December 31, 2022, for each of the following five years and thereafter:


Years ending December 31,	Amortization Expense
2023	$	2,557,940
2024		2,179,838
2025		1,785,882
2026		1,525,785
2027		1,192,530
Thereafter		4,515,395
Total	$	13,757,370

NOTE 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Significant components of accounts payable and accrued liabilities were as follows:

	December 31, 2022		December 31, 2021

Accounts payable,	$	1,221,336	$	547,117
Accrued expenses		131,334		2,170,215
Accrued credit card payables		58,120		36,103
Other accrued liabilities		47,177		5,725
Accounts payable and other accrued liabilities	$	1,457,967	$	2,759,160

F-23

NOTE 8. LONG-TERM DEBT

The composition of the long-term debt follows:

SCHEDULE OF LONG TERM DEBT

	December 31, 2022			December 31, 2021

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 $12,388 and $14,606 as of December 31, 2022 and 2021, respectively	$	426,883		$	485,317
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 $15,076 and $17,626 as of December 31, 2022 and 2021, respectively		693,682			785,826
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 $9,206 and $11,027 as of December 31, 2022 and 2021, respectively		788,596			884,720
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 $36,843 and $42,660 as of December 31, 2022 and 2021, respectively		1,987,846			2,226,628
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 $42,129 and $48,609 as of December 31, 2022 and 2021, respectively		3,249,575			3,616,754
Oak Street Funding LLC Term Loan, variable interest of Prime Rate plus 2.5%, maturing May 2032, for the acquisition of Barra, net of deferred financing costs of $198,188 and $0 as of December 31, 2022 and December 31, 2021, respectively		6,321,812			-
		13,468,394			7,999,245
Less: current portion		(1,118,721	)		(913,920	)
Long-term debt	$	12,349,673		$	7,085,325

Oak Street Funding LLC – Term Loans and Credit Facilities

During the year ended December 31, 2018 the Company entered into two debt agreements with Oak Street Funding LLC. On August 1, 2018, EBS and USBA entered into a Credit Agreement with Oak Street Funding LLC (“Oak Street”) whereby EBS and USBA borrowed $750,000 from Oak Street under a Term Loan. The Term Loan is secured by certain assets of the Company. Interest accrues at 5.00% on the basis of a 360-day year, maturing 120 months from the Amortization Date (September 25, 2018). The Company incurred debt issuance costs associated with the Term Loan in the amount of $22,188. On December 7, 2018, CCS entered into a Facility with Oak Street whereby CCS borrowed $1,025,000 from Oak Street under a senior secured amortizing credit facility. The borrowing rate under the Facility is a variable rate equal to Prime +1.50% and matures 10 years from the closing date. The Company incurred debt issuance costs associated with the Facility in the amount of $25,506, which were deferred and are amortized over the length of the Facility.

During the year ended December 31, 2019 the Company entered in Credit Agreements with Oak Street on April 1, 2019, May 1, 2019 and September 5, 2019 whereby the Company borrowed a total amount of $7,912,000 from Oak Street under the Term Loans. The Term Loans are secured by certain assets of the Company. The borrowing rates under the Facility is a variable rate equal to Prime + 2.00% and matures 10 years from the closing date. The Company recorded debt issuance costs associated with the aforementioned loans in total of $181,125.

On April 26, 2022 the Company entered into a secured promissory note (the Note) with Oak Street Funding LLC subject to the terms of the Master Credit Agreement, whereby the Company borrowed $6,250,000 with a maturity date of May 25, 2032. The Note is secured by certain assets of the Company and subject to certain financial covenants. Interest accrues at the Prime Rate plus an Applicable Margin of 2.500% on the basis of a 360-day year. The Company incurred debt issuance costs associated with the Note of $214,257.

Aggregated cumulative maturities of long-term obligations (including the Term Loan and the Facility), excluding deferred financing costs, as of December 31, 2022 are:

Fiscal year ending December 31,	Maturities of Long-Term Debt
2023	$	1,118,569
2024		1,431,933
2025		1,582,287
2026		1,744,442
2027		1,923,234
Thereafter		5,981,758
Total		13,782,223
Less debt issuance costs		(313,829	)
Total	$	13,468,394

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Short-Term Financings

The Company has various short-term notes payable for financed items such as insurance premiums and CRM software purchases. Total financed for the year ended December 31, 2022 and 2021 respectively was approximately $482,000 and $0. These are normally paid in equal installments over a period of twelve months or less and carry interest rates ranging between 0% and 8% per annum. As of December 31, 2022 and 2021, approximately $154,000 and $0 remains outstanding on short-term financings.

NOTE 9. WARRANT LIABILITIES

Series B Warrants

On December 22, 2021, the Company entered into a securities purchase agreement (SPA) with several institutional buyers for the purchase and sale of (i) warrants to purchase up to an aggregate of 651,997 shares of the Company’s common stock, par value $0.086 per share at an exercise price of $61.35 per share, (ii) an aggregate of 178,060 shares of Common Stock, and (iii) 9,076 shares of the Company’s newly-designated Series B convertible preferred stock, par value $0.086 per share, with a stated value of $1,000 per share, initially convertible into an aggregate of 147,939 shares of Common Stock at a conversion price of $61.35 per share, each a freestanding financial instrument, (the “Private Placement”). The aggregate purchase price for the Common Shares, the Preferred Shares and the Warrants was approximately $20,000,000.

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 on the Initial Closing Date for a fixed price and exercise price, as applicable. The commitment to issue 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 value and will subsequently remeasure the derivative liability, at fair value with changes in fair value recognized in earnings. An option pricing model was utilized to calculate the fair value of the Warrant Commitment. The Company initially recorded $17,408,311 of non-operating unrealized losses within the recognition and change in fair value of warrant liabilities account for the year ended December 31, 2021.

The Private Placement closed on January 4, 2022, at which time the Company remeasured the derivative liability for the warrants issued in the transaction, recognizing $17,408,311 of non-operating unrealized losses and a derivative liability of $55,061,119. The closing of the Private Placement settled the subscription receivable reported on the Company’s balance sheet as of December 31, 2021.

Pursuant to the terms of the SPA, due to a non-Private Placement related dilutive share issuance, effective December 27, 2022, the Series B Warrants outstanding increased to 1,333,333 and the exercise price reset to $7.50. On December 27, 2022, 1,667 Series B Warrants were exercised into 1,667 shares of common stock with cash proceeds to the Company of $12,500. As of December 31, 2022, there remains 1,331,667 Series B Warrants outstanding.

For the years ended December 31, 2022 and 2021, net fair value (gains) and losses recognized for the Series B Warrants were, ($48,668,869) and $0 respectively, presented in the recognition and change in fair value of warrant liabilities account in the consolidated statements of operations. The Series B Warrant liability outstanding as of December 31, 2022 and 2021 is $6,384,250 and $0 respectively, presented in the warrant liability account on the consolidated balance sheets.

Placement Agent Warrants

In connection with the Private Placement, the Company issued 16,303 warrants to the placement agent for the Private Placement. The warrants were issued as compensation for the Placement Agent’s services. The Placement Agent Warrants (PAW) are: (i) exercisable on any day after the six (6) month anniversary of the issue date, (ii) expire five years after the closing of the Private Placement, and (iii) exercisable at $61.35 per share. The Placement Agent Warrants contain terms that may require the Company to transfer assets to settle the warrants. Therefore, the Placement Agent Warrants are classified as a derivative liability, initially measured at fair value of $1,525,923 on the date of issuance and will be remeasured each accounting period with the changes in fair value reported in earnings. The Placement Agent Warrants are considered financing expense fees paid to the Placement Agent in relation to a derivative liability measured at fair value, thus, are included along with non-operating unrealized gains and losses in the recognition and change in fair value of warrant liabilities account in the consolidated statements of operations.

For the years ended December 31, 2022 and 2021, net fair value (gains) and losses recognized for the PAW were, ($1,477,024) and $0 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 December 31, 2022 and 2021 is $48,900 and $0 respectively, presented in the warrant liability account on the consolidated balance sheets.

NOTE 10. SIGNIFICANT CUSTOMERS

Carriers representing 10% or more of total revenue are presented in the table below:

SCHEDULE OF CONCENTRATIONS OF REVENUES

Insurance Carrier	December 31, 2022			December 31, 2021
LTC Global		28	%		-	%
BlueCross BlueShield		9	%		19	%
Priority Health		16	%		28	%

No other single insurance carrier accounted for more than 10% of the Company’s commission revenues. The loss of any significant customer, could have a material adverse effect on the Company.

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NOTE 11. EQUITY

Preferred Stock

The Company has been authorized to issue 750,000,000 shares of $0.086 par value Preferred Stock. The Board of Directors is expressly vested with the authority to divide any or all of the Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of each series so established, within certain guidelines established in the Articles of Incorporation.

Each share of Series A Convertible Preferred Stock shall have ten (10) votes per share and may be converted into ten (10) shares of $0.086 par value common stock. The holders of the Series A Convertible Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of funds legally available therefore, cumulative dividends payable in cash. The annual interest rate at which cumulative preferred dividends will accrue on each share of Series A Convertible Preferred Stock is 0%. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, before any distribution of assets of the Corporation shall be made to or set apart for the holders of the Common Stock and subject and subordinate to the rights of secured creditors of the Company, the holders of Series A Preferred Stock shall receive an amount per share equal to the greater of (i) one dollar ($1.00), adjusted for any recapitalization, stock combinations, stock dividends (whether paid or unpaid), stock options and the like with respect to such shares, plus any accumulated but unpaid dividends (whether or not earned or declared) on the Series A Convertible Preferred Stock, and (ii) the amount such holder would have received if such holder has converted its shares of Series A Convertible Preferred Stock to common stock, subject to but immediately prior to such liquidation.

On February 11, 2021, Reliance Global Holdings, LLC, a related party, converted 394,493 shares of Series A Convertible Preferred Stock into 262,995 shares of common stock.

On November 5, 2021, Reliance Global Holdings, LLC, a related party, converted 1,167 shares of Series A Convertible Preferred Stock into 778 shares of common stock.

As of December 31, 2022 and 2021, all Series A Convertible Preferred Stock have been converted and none remain outstanding.

In January 2022, the Company issued 9,076 shares of its newly designated Series B convertible preferred stock through the Private Placement for the purpose of raising capital. The Series B convertible preferred stock have no voting rights and initially each share may be converted into 16 shares of the Company’s common stock. The holders of the Series B convertible preferred stock are not entitled to receive any dividends other than any dividends paid on account of the common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of common stock would receive if the Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to common stock which amounts shall be paid pari-passu with all holders of common stock.

During August 2022, all 9,076 Series B Convertible Preferred Stock were converted by third parties into 147,939 shares of common stock.

As of December 31, 2022 and 2021, all Series B Convertible Preferred Stock have been converted and none remain outstanding.

Common Stock

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

On January 21, 2021 pursuant to authority granted by the Board of Directors of the Company, the Company implemented a 1-for-85.71 reverse split of the Company’s issued and outstanding common stock simultaneously with its up listing to the Nasdaq Capital Market (the “Reverse Split-2021”). The number of authorized shares remains unchanged. All share and per share information has been retroactively adjusted to reflect the Reverse Split-2021 for all periods presented, unless otherwise indicated.

In February 2021, The Company issued 1,556 shares of common stock pursuant to software purchase, valued at $340,000.

In February 2021, the Company issued 138,000 shares of common stock through a stock offering for the purpose of raising capital. The Company received gross proceeds of $12,420,000 for the issuance of these common shares.

In February 2021, Reliance Global Holdings, LLC, a related party, converted $3,800,000 of outstanding debt into 42,222 shares of common stock. The conversion considered the fair market value of the stock on the day of conversion of $6.00 for total shares issued as a result of 42,222.

In March 2021, the Company issued 1,000 shares of the Company’s common stock to a vendor for services valued at $91,050.

In May 2021, the Company issued 995 shares of common stock pursuant to the acquisition of the Kush Acquisition, valued at $50,000.

In January 2022, the Company issued 178,060 shares of common stock through the Private Placement for the purpose of raising capital. See Note 9 - Warrant Liabilities for proceeds received by the Company.

In January 2022, the Company issued 40,402 shares of common stock pursuant to the Medigap Acquisition.

In January 2022, upon agreement with Series A warrant holders, 25,000 warrants were exercised at a price of $99.00 into 25,000 shares of the Company’s common stock.

F-26

In March 2022, the Company issued 400 shares of the Company’s common stock due to the vesting of 400 stock awards pursuant to an employee agreement.

In May and June 2022, 218,462 Series C prepaid warrants were exchanged for 218,462 shares of the Company’s common stock.

In July 2022, 81,423 Series D prepaid warrants were exchanged for 81,423 shares of the Company’s common stock.

In December 2022, the Company issued 14,275 shares of the Company’s common stock due to the vesting of 14,275 stock awards pursuant to several employee agreements.

In December 2022, upon agreement with Series B warrant holders, 1,667 warrants were exercised at a price of $7.50 into 1,667 shares of the Company’s common stock with cash proceeds to the Company of $12,500.

As of December 31, 2022 and December 31, 2021, there were 1,219,573 and 730,407 shares of Common Stock outstanding, respectively.

Warrants

Series A Warrants

In conjunction with the Company’s initial public offering, the Company issued 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 $0.15. 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% of the public offering price of one share of common stock and accompanying Series A Warrant, $90.00. Series A warrant holders exercised 25,000 Series A warrants in January 2022, resulting in 113,000 of Series A warrants remaining issued and outstanding as of December 31, 2022 and 138,000 as of December 31, 2021.

Series C and D Warrants

In January 2022, as a result of the Private Placement and the Medigap Acquisition, the Company received a deficiency notification from Nasdaq indicating violation of Listing Rule 5365(a). As part of its remediation plan, in March 2022, the Company entered into Exchange Agreements with the holders of common stock issued in January 2022. Pursuant to the Exchange Agreements, the Company issued 218,462 Series C prepaid warrants in exchange for 218,462 shares of the Company’s common stock. Additionally, as compensation for entering into the Exchange Agreements, the Company issued 81,500 Series D prepaid warrants to the Private Placement investors for no additional consideration. The fair value of the Series D prepaid warrants was treated as a deemed dividend 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 Warrants are equity classified pursuant to the warrant agreement provisions that permit holders to 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 expire on the fifth anniversary of the respective issuance dates and are exercisable at a per share exercise price equal to $0.015.

In May and June 2022, the 218,462 Series C prepaid warrants were converted for 218,462 shares of the Company’s common stock for a conversion price of $0.015. Through December 31, 2022, the Company has received payments of $1,336 for these issuances.

In July 2022, the 81,500 Series D prepaid warrants were converted into 81,472 shares of the Company’s common stock for a conversion price of $0.015 through both cash and cashless exercises. Proceeds of $795 were received in conjunction with the cash exercise.

Equity Incentive Plan

During the year ended December 31, 2019, the Company adopted the Reliance Global Group, Inc. 2019 Equity Incentive Plan (the “Plan”) under which various forms of equity awards can be granted to employees, directors, consultants, and service providers. Awards include but are not limited to, restricted stock, restricted stock units, performance shares and stock options. A total of 46,667 shares of common stock were reserved for issuance under the Plan, and as of December 31, 2022, 32,391 shares remain available for issuance. With regards to options, the Company issues new shares of common stock from the shares reserved under the Plan upon exercise of options.

The Plan is administered by the Board of Directors (the “Board”). The Board is authorized to select from among eligible employees, directors, and service providers those individuals to whom shares and options are to be granted and to determine the number of shares to be subject to, and the terms and conditions of the options. The Board is also authorized to prescribe, amend, and rescind terms relating to options granted under the Plan. Generally, the interpretation and construction of any provision of the Plan or any shares and options granted hereunder is within the discretion of the Board.

Stock Options:

The Plan provides that options may or may not be Incentive Stock Options (ISOs) within the meaning of Section 422 of the Internal Revenue Code. Only employees of the Company are eligible to receive ISOs, while employees, non-employee directors, consultants, and service providers are eligible to receive options which are not ISOs, i.e. “Non-Statutory Stock Options.” The options granted by the Board in connection with its adoption of the Plan were Non-Statutory Stock Options.

The fair value of each option granted is estimated on the grant date using the Black-Scholes option pricing model or the value of the services provided, whichever is more readily determinable. The Black-Scholes option pricing model takes into account, as of the grant date, the exercise price and expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock and the risk-free interest rate for the term of the option.

F-27

The following is a summary of the stock options granted, forfeited or expired, and exercised under the Plan for the years ended December 31, 2022 and 2021 respectively:

	Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2021		10,928	$	232.78		2.61	$	-
Granted		-		-		-		-
Forfeited or expired		-		-		-		-
Exercised		-		-		-		-
Outstanding at December 31, 2022		10,928	$	232.78		1.61		-

	Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2020		15,594		$	231.45		3.63	$	-
Granted		-			-		-		-
Forfeited or expired		(4,667	)	$	218.56		2.68		-
Exercised		-			-		-		-
Outstanding at December 31, 2021		10,928		$	232.78		2.61		-

The following is a summary of the Company’s non-vested stock options as of December 31, 2022 and 2021 respectively:

SCHEDULE OF NON - VESTED STOCK OPTIONS

	Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)
Non-vested at December 31, 2021		3,587		$	227.78		0.90
Granted		-			-		-
Vested		(3,315	)		14.89		1.71
Forfeited or expired		-			-		-
Non-vested at December 31, 2022		271		$	18.25		2.27

	Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)
Non-vested at December 31, 2020		10,636		$	200.85		2.53
Granted		-			-		-
Vested		(3,315	)		206.40		0.82
Forfeited or expired		(3,734	)		218.55		2.68
Non-vested at December 31, 2021		3,587		$	227.78		0.90

For the years ended December 31, 2022 and 2021, the Board did not approve any options to be issued pursuant to the Plan.

During the years ended December 31, 2022 and 2021, various employee terminations occurred resulting in option forfeitures of $0 and $70,004 respectively.

As of December 31, 2022, the Company determined that the options granted and outstanding had a total fair value of $2,421,960, which will be amortized in future periods through February 2024. During the year ended December 31, 2022, the Company recognized $178,579 of compensation expense relating to the stock options granted to employees, directors, and consultants. As of December 31, 2022, unrecognized compensation expense totaled $17,166 which will be recognized on a straight-line basis over the vesting period or requisite service period through February 2024.

The intrinsic value is calculated as the difference between the market value and the exercise price of the shares on December 31, 2022. The market value as of December 31, 2022 was $8.55 based on the closing bid price for December 31, 2022.

As of December 31, 2021, the Company determined that the options granted and outstanding had a total fair value of $2,421,960, which will be amortized in future periods through February 2024. During the year ended December 31, 2021, the Company recognized $576,160 of compensation expense relating to the stock options granted to employees, directors, and consultants. As of December 31, 2021, unrecognized compensation expense totaled $195,746 which will be recognized on a straight-line basis over the vesting period or requisite service period through February 2024.

The intrinsic value is calculated as the difference between the market value and the exercise price of the shares on December 31, 2021. The market value as of December 31, 2021 was $96.60 based on the closing bid price for December 31, 2021.

The Company estimated the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-pricing models require the Company to make predictive assumptions regarding future stock price volatility, recipient exercise behavior, and dividend yield. The Company estimated the future stock price volatility using the historical volatility over the expected term of the option. The expected term of the options was computed by taking the mid-point between the vesting date and expiration date. The following assumptions were used in the Black-Scholes option-pricing model, not accounting for the reverse splits:

	Year Ended December 31, 2022			Year Ended December 31, 2021
Exercise price	$	0.16 - $0.26		$	0.16 - $0.26
Expected term		3.25 to 3.75 years			3.25 to 3.75 years
Risk-free interest rate		0.38% - 2.43	%		0.38% - 2.43	%
Estimated volatility		293.07% - 517.13	%		293.07% - 517.13	%
Expected dividend		-			-

F-28

Equity-based Compensation

The Plan provides for various forms of stock awards. Between February and May 2022, three existing employees and/or executives were awarded restricted shares totaling 12,460 shares of the Company’s common stock to be vested immediately. The shares were valued at $766,250, treated as stock-based compensation expense, and were issued in December 2022.

Pursuant to an agreement in April 2022, further amended in October 2022 between the Company and an executive, the executive was granted 7,418 restricted shares of the Company’s common stock which vest quarterly over a three-year period. The shares granted were valued at $180,546 at the date of the grant. For the year ended December 31, 2022, compensation expense on this grant was $32,131. As of December 31, 2022, 667 shares have been issued under this agreement.

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 21,615 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 expense for the year ended December 31, 2022. No shares have been issued for this program as of December 31, 2022.

In 2021, three employees received a signing bonus of shares of the Company’s common stock to be issued after the completion of a service period ranging from one to three years of service. The shares granted in 2021 were valued at $110,240. For the year ended December 31, 2021, compensation expense on these grants totaled $81,917.

Total stock-based compensation expense for the years ended December 31, 2022 and 2021 was $1,249,873 and $749,127, respectively.

NOTE 12. 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:

	2022			2021
	For the Years Ended December 31,
	2022			2021
Net income (loss)	$	6,466,162		$	(21,098,465	)
Deemed dividend		(6,930,335	)		-
Net loss	$	(464,173	)	$	(21,098,465	)

Weighted average common shares		1,094,781			673,137
Effect of weighted average vested stock awards		208			-
Basic and diluted weighted average shares outstanding		1,094,989			673,137
Basic and diluted loss per common share:	$	(0.42	)	$	(31.34	)

Additionally, the following are considered anti-dilutive securities excluded from weighted-average shares used to calculate diluted net loss per common share:

	2022		2021
	For the years ended December 31,
	2022		2021
Shares subject to outstanding common stock options		10,928		10,928
Shares subject to outstanding Series A warrants		113,000		-
Shares subject to outstanding Series B Warrants and PAW		1,347,970		-
Shares subject to unvested stock awards		6,576		-

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NOTE 13. LEASES

Operating Leases

ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. The standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease, initially measured at the present value of the lease payments. The Company’s leases consist of operating leases on buildings and office space.

In accordance with ASU 2016-02, right-of-use assets are amortized over the life of the underlying leases. Lease expense for the years ended December 31, 2022 and 2021 was $598,422 and $307,773 respectively. As of December 31, 2022 and 2021, the weighted average remaining lease term and weighted average discount rates for the operating leases were 3.82 years and 5.67% and 5.28 years and 5.83% respectively.

Future minimum lease payment under these operating leases consisted of the following:


Year ending December 31,	Operating Lease Obligations
2023	$	570,275
2024		269,908
2025		144,124
2026		113,738
2027		117,150
Thereafter		151,053
Total undiscounted operating lease payments		1,366,248
Less: Imputed interest		134,126
Present value of operating lease liabilities	$	1,232,122

NOTE 14. 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 December 31, 2022 and 2021. 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 Company has recognized several earn-out liabilities resulting from contingent consideration provisions included in business combination agreements. Earn-out consideration is normally earned by acquirees when they meet or exceed pre-agreed upon earnings targets.

F-30

The following outlines changes to the Company’s earn-out liability balances for the respective years ended December 31, 2022 and 2021:

SCHEDULE OF EARN-OUT LIABILITY


	CCS		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 business combinations		-		-			-			-			-			600,000			600,000
Changes due to payments		-		(34,430	)		(326,935	)		(84,473	)		(1,259,087	)					(1,704,925	)
Changes due to fair value adjustments		-		186,122			210,967			(73,452	)		(283,112	)		(40,000	)		525
Ending balance December 31, 2022	$	-	$	667,000		$	500,000		$	834,943		$	147,534		$	560,000		$	2,709,478


	CCS			Fortman		Montana		Altruis			Kush			Total
Ending balance December 31, 2020	$	81,368		$	432,655	$	522,553	$	1,894,842		$	-		$	2,931,418
Changes due to business combinations		-			-		-		-			1,694,166			1,694,166
Changes due to payments		-			-		-		(452,236	)		-			(452,236	)
Changes due to fair value adjustments		-			82,653		93,416		(449,738	)		(4,433	)		(278,102	)
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

COVID-19 pandemic contingencies

The spread of the coronavirus (COVID-19) outbreak in the United States has resulted in economic uncertainties which may negatively impact the Company’s business operations. While the disruption is expected to be temporary, there is uncertainty surrounding the duration and extent of the impact.

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

Management is actively monitoring the global situation on its financial condition, liquidity, operations, industry and workforce.

NOTE 15. INCOME TAXES

The difference between the actual income tax rate versus the tax computed at the Federal Statutory rate follows:

SCHEDULE OF ACTUAL INCOME TAX RATE

	December 31, 2022			December 31, 2021
Federal rate		21.0	%		21.0	%
State net of federal		-7.9	%		0.3	%
Non-taxable change in fair value of warrant commitment		-106.3	%		0.0	%
Goodwill impairment		46.7	%		-	%
Rate Change		-4.1	%		0.4	%
Other		2.2	%		0.0	%
Valuation allowance		48.5	%		(-21.6	)%
Effective income tax rate		0.0	%		0.0	%

The Company did not have any material uncertain tax positions. The Company’s policy is to recognize interest and penalties accrued related to unrecognized benefits as a component income tax expense (benefit). The Company did not recognize any interest or penalties, nor did it have any interest or penalties accrued as of December 31, 2022 and 2021.

F-31

Deferred income tax assets and (liabilities) consist of the following:

	December 31, 2022			December 31, 2021
Deferred tax assets (liabilities)
Net operating loss carryforward	$	4,938,164		$	1,900,194
Stock based compensation		1,148,836			725,546
Goodwill		(771,631	)		(199,086	)
Intangibles		745,227			459,441
Fixed assets		(99,002	)		(56,691	)
Right of use assets		(300,616	)		(333,347	)
Lease liabilities		313,342			337,671
Other		1,525			1,336
Total deferred tax assets		5,975,846			2,835,065
Valuation allowance		(5,975,846	)		(2,835,065	)
Net deferred tax assets	$	-		$	-

The Company has approximately $19,784,000 of Federal Net Operating Loss Carry forwards, of which $1.3 million will begin to expire beginning 2031 and $18.5 million will not expire but are limited to use of 80% of current year taxable income.

The Company has approximately $15,264,000 of state net operation loss carry forward to offset future taxable income in the states in which it currently operates. These carryforwards start expiring in 2029.

Internal Revenue Code Section 382 limits the ability to utilize net operating losses if a 50% change in ownership occurs over a three-year period. Such limitation of the net operating losses may have occurred, but we have not analyzed it at this time as the deferred tax asset is fully reserved.

During the year ended December 31, 2022 and 2021, the valuation allowance increased $3,140,780 and $742,884, respectively.

The tax periods ending December 31, 2019, 2020 and 2021 are open for examination.

NOTE 16. RELATED PARTY TRANSACTIONS

The Company entered into a Loan Agreement with Reliance Global Holdings, LLC, a related party under common control. There is no term to the loan, and it bears no interest. Repayment will be made as the Company has business cash flows. The proceeds from the various loans were utilized to fund the acquisitions of USBA, EBS, CCS, SWMT Acquisition, Fortman, Altruis, and UIS.

As of December 31, 2022, and the 2021 the related party loan payable was $100,724 and $353,766 respectively.

At December 31, 2022 and 2021, Reliance Holdings owned approximately 24% and 33%, respectively, of the common stock of the Company.

On September 13, 2022, the Company issued a promissory note to YES Americana Group, LLC, 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 the first six months, and 5% per annum thereafter, payable monthly. In the event the Note is not paid by the maturity date, the loan will automatically be extended for an additional year until January 15, 2025, and if necessary, extended again for one additional year through January 15, 2026.

NOTE 17. SUBSEQUENT EVENTS

Effective January 1, 2023, the Company’s Board of Directors promoted its then-current Chief Accounting Officer, Joel Markovits, to the position of Chief Financial Officer. Pursuant to the terms of the promotion letter entered into by the Company and Mr. Markovits on December 28, 2022, Mr. Markovits will receive an annual base salary of $275,000. Mr. Markovits was also granted 40,000 shares, per annum, of the Company’s common stock, with an effective grant date of December 28, 2022, which will vest monthly each year during the duration of his employment.

As previously disclosed, 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”). On February 7, 2023, the Company and Americana entered into an amendment to the Note pursuant to which (i) the principal amount of the Note was increased to $1,845,000 as a result of Americana’s funding of an additional $345,000 to the Company during the period of January 23, 2023 through February 2, 2023, (ii) the maturity date of the Note was amended to January 15, 2026, (iii) the interest rate under the Note shall not increase after the maturity date, and (iv) the Note can be converted at any time, at the option of Americana, into shares of the Company’s common stock, par value $0.086 per share (the “Common Stock”). The conversion price under the Note is equal to the Nasdaq minimum price, which is the lower of: (i) the closing price of the Common Stock (as reflected on Nasdaq.com) immediately preceding the signing of the Amendment; or (ii) the average closing price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Amendment. On February 13, 2023, Americana effectuated a conversion of $645,000 of the Note into 1,001,148 shares of the Company’s common stock, $0.086 par value per share, in accordance with the terms of the Amendment.

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.

On March 13, 2023, the Company entered into a securities purchase agreement with one institutional buyer for the purchase and sale of, subject to customary closing conditions, (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”) 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”) 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”). 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”). The closing of the Private Placement occurred on March 16, 2023. EF Hutton, a division of Benchmark Investments, LLC (the “Placement Agent”) acted as the sole placement agent for the Company in connection with the Private Placement. Pursuant to that certain Engagement Letter, dated as of January 30, 2023, between the Company and the Placement Agent, the Placement Agent is entitled to a cash fee of 8% of the gross proceeds of the Private Placement and the reimbursement of certain Placement Agent fees and expenses, including, but not limited to, up to $95,000 for fees and expenses including “road show”, diligence, and reasonable legal fees and disbursements for the Placement Agent’s counsel.

F-32

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed or furnished with this Annual Report on Form 10-K.

Exhibit No.		Description
3.1		Articles of Incorporation of Eye on Media Network, Inc. (now, Reliance Global Group, Inc.) as amended through October 19, 2018 (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 8, 2020 (File No. 333-249381)).

3.2		Bylaws of Eye on Media Network, Inc. (now, Reliance Global Group, Inc.) (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 8, 2020 (File No. 333-249381)).

3.3		Articles of Amendment to the Articles of Incorporation of Reliance Global Group, Inc. dated February 3, 2021 (incorporated herein by reference to Exhibit 3.9 to Amendment No. 4 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 5, 2021 (SEC File No. 333-249381)).

3.4		Articles of Amendment to the Articles of Incorporation of Reliance Global Group, Inc. dated December 23, 2021 (incorporated herein by reference to Exhibit 3.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2022 (SEC File No. 001-40020)).

3.5		Articles of Amendment to the Articles of Incorporation of Reliance Global Group, Inc. dated February 16, 2023 (incorporated herein by reference to Exhibit 3.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on February 22, 2023 (SEC File No. 001-40020)).

4.1		Form of Series C Warrant (incorporated herein by reference to Exhibit 4.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2022 (SEC File No. 001-40020)).

4.2		Form of Series D Warrant (incorporated herein by reference to Exhibit 4.2 to Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2022 (SEC File No. 001-40020)).

10.1		Securities Purchase Agreement between Reliance Global Group, Inc. and Nsure, Inc. dated February 19, 2020 (incorporated herein by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 8, 2020 (SEC File No. 333-249381)).

10.2		Irrevocable Assignment & Acquisition Agreement between Reliance Global Holdings, LLC and Ezra Beyman effective as of June 3, 2020 (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 8, 2020 (File No. 333-249381)).

10.3		Lease between Coverage Consultants Unlimited, Inc. and Commercial Coverage Solutions, LLC dated August 17, 2020 (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (Amendment No. 3) filed with the Securities and Exchange Commission on January 28, 2021 (File No. 333-249381)).

10.4		Master Credit Agreement between Southwestern Montana Insurance Center, LLC and Oak Street Funding LLC dated April 3, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (Amendment No. 1) filed with the Securities and Exchange Commission on December 4, 2020 (File No. 333-249381)).

10.5†		Reliance Global Group Inc. 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (Amendment No. 3) filed with the Securities and Exchange Commission on January 28, 2021 (File No. 333-249381)).

10.6		Amendment No. 1 to Securities Purchase Agreement between Nsure Inc. and Reliance Global Group, Inc. dated October 8, 2020 (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (Amendment No. 3) filed with the Securities and Exchange Commission on January 28, 2021 (File No. 333-249381)).

10.7		Form of Warrant Agent Agreement between Reliance Global Group, Inc. and VStock Transfer, LLC (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (Amendment No. 3) filed with the Securities and Exchange Commission on January 28, 2021 (File No. 333-249381)).

10.8		Purchase Agreement among Kush Benefit Solutions, LLC, J.P. Kush and Associates, Inc. and Joshua Kushnereit dated May 12, 2021 (incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).

10.9		Form of Securities Purchase Agreement among Reliance Global Group, Inc. and the investors identified on the signature pages thereto dated as of December 22, 2021 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).

10.10		Form of Registration Rights Agreement 2021 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).

10.11		Form of Series B Warrant (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).

10.12		Form of Certificate of Designation for Series B Convertible Preferred Stock (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).

10.13		Asset Purchase Agreement between Reliance Global Group, Inc. and Medigap Healthcare Insurance Company, LLC and the sole member thereof entered into agreement as of December 21, 2021 (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2022 (SEC File No. 001-40020)).

10.14		Form of Investor Exchange Agreement between Reliance Global Group, Inc. and the parties signatory to the agreement dated as of March 23, 2022 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2022 (SEC File No. 001-40020)).

10.15		Form of Medigap Exchange Agreement between Reliance Global Group, Inc. and the parties signatory to the agreement dated as of March 23, 2022 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2022 (SEC File No. 001-40020)).

10.16		Asset Purchase Agreement between RELI Exchange, LLC and Barra & Associates, LLC dated April 26, 2022 (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 May 2, 2022 (File Number 001-40020)).

10.17		Security Agreement between Medigap Healthcare Insurance Agency, LLC and Oak Street Funding LLC dated April 26, 2022 (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 May 2, 2022 (File Number 001-40020))

10.18†		Employment Agreement between Reliance Global Group, Inc. and Grant Barra dated April 26, 2022 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 May 2, 2022 (File Number 001-40020))Ex. 10.3

10.19		Promissory Note issued by Reliance Global Group, Inc. to YES Americana Group LLC on September 13, 2022 (incorporated herein by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2022 (SEC File No. 001-40020)).

10.20		Amendment No. 1 to the Promissory Note between Reliance Global Group, Inc. and YES Americana Group, LLC, dated as of February 7, 2023 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2023 (SEC File No. 001-40020)).

10.21†		Promotion Letter by and between Reliance Global Group, Inc. and Joel Markovits dated as of December 28, 2022 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2023 (SEC File No. 001-40020)).

10.22#		Securities Purchase Agreement, dated March 13, 2023, between Reliance Global Group, Inc. and Investor (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020)).

10.23		Form of Warrant (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020)).

10.24		Form of Pre-Funded Warrant (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020)).

10.25		Form of Placement Agent Warrant (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020)).

10.26		Form of Registration Rights Agreement (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020))..

14.1		Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2022).

21.1		List of subsidiaries (incorporated by reference to exhibits to the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2022).

23.1*		Consent of Mazars USA LLP.

24.1*		Power of Attorney (included on the signature page to the original Annual Report on Form 10-K filed with the SEC on March 30, 2023).

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

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

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

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith
**	Furnished herewith
†	Includes management contracts and compensation plans and arrangements
#	Certain schedules and exhibits have been omitted pursuant to Item 601(A)(5) of Regulation S-K. The Company will furnish supplementally copies of omitted schedules and exhibits to the Securities and Exchange Commission or its staff upon its request.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 10, 2023.

Reliance Global Group, Inc.

By:	/s/ Ezra Beyman
	Ezra Beyman
	Chief Executive Officer and Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Ezra Beyman	Chief Executive Officer and Executive Chairman and Director	August 10, 2023
Ezra Beyman	(Principal Executive Officer)

/s/ Joel Markovits	Chief Financial Officer	August 10, 2023
Joel Markovits	(Principal Financial and Accounting Officer)

*	Director	August 10, 2023
Scott Korman

*	Director	August 10, 2023
Sheldon Brickman

*	Director	August 10, 2023
Ben Fruchtzweig

*	Director	August 10, 2023
Alex Blumenfrucht

* By:	/s/ Ezra Beyman
	Ezra Beyman
	Attorney-in-fact*

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-267799) pertaining to the Reliance Global Group, Inc. 2019 Equity Incentive Plan of our reports dated March 30, 2023 on (i) the consolidated financial statements of Reliance Global Group, Inc as of December 31, 2022 and 2021 and for each of the two years in the two-year period ended December 31, 2022 and 2021, all of which appear in the Annual Report on Form 10-K of Reliance Global Group, Inc. for the year ended December 31, 2022.

/s/ Mazars USA LLP

Mazars USA LLP

Fort Washington, Pennsylvania

March 30, 2023

Exhibit 31.1

CERTIFICATIONS

I, Ezra Beyman, certify that:

1. I have reviewed this Amendment No. 1 to annual report on Form 10-K/A for the fiscal year ended December 31, 2022 of Reliance Global Group, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 10, 2023	By:	/s/ Ezra Beyman
		Ezra Beyman
		Chief Executive Officer and Executive Chairman (Principal Executive Officer)

Exhibit 31.2

CERTIFICATIONS

I, Joel Markovits, certify that:

1. I have reviewed this Amendment No. 1 to annual report on Form 10-K/A for the fiscal year ended December 31, 2022 of Reliance Global Group, Inc.;

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 10, 2023	By:	/s/ Joel Markovits
		Joel Markovits
		Chief Financial Officer (Principal Financial Officer)

Exhibit 32.1

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002

(Subsections (A) And (B) Of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Reliance Global Group, Inc. (the “Company”), does hereby certify, that:

Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Form 10-K/A”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2023	By:	/s/ Ezra Beyman
		Ezra Beyman
		Chief Executive Officer and Executive Chairman (Principal Executive Officer)

Date: August 10, 2023	By:	/s/ Joel Markovits
		Joel Markovits
		Chief Financial Officer (Principal Financial Officer)

Cover - USD ($) $ in Millions	12 Months Ended
Cover - USD ($) $ in Millions	Dec. 31, 2022	Mar. 30, 2023	Jun. 30, 2022
Document Type	10-K/A
Amendment Flag	true
Amendment Description	On March 30, 2023, Reliance Global Group, Inc. (the “Company”) filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Original 2022 10-K”), with the Securities and Exchange Commission (“SEC”). This Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) is being filed to:
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2022
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	001-40020
Entity Registrant Name	RELIANCE GLOBAL GROUP, INC.
Entity Central Index Key	0001812727
Entity Tax Identification Number	46-3390293
Entity Incorporation, State or Country Code	FL
Entity Address, Address Line One	300 Blvd. of the Americas
Entity Address, Address Line Two	Suite 105
Entity Address, City or Town	Lakewood
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08701
City Area Code	732
Local Phone Number	380-4600
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 21
Entity Common Stock, Shares Outstanding		1,566,048
ICFR Auditor Attestation Flag	false
Auditor Firm ID	339
Auditor Name	Mazars USA LLP
Auditor Location	Washington, Pennsylvania
Common Stock [Member]
Title of 12(b) Security	Common Stock
Trading Symbol	RELI
Security Exchange Name	NASDAQ
Series Warrants [Member]
Title of 12(b) Security	Series A Warrants
Trading Symbol	RELIW
Security Exchange Name	NASDAQ

Consolidated Balance Sheets - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash	$ 505,410	$ 4,136,180
Restricted cash	1,404,359	484,542
Accounts receivable	1,067,544	1,024,831
Accounts receivable, related parties	21,887	7,131
Other receivables	16,852
Prepaid expense and other current assets	249,327	2,328,817
Total current assets	3,265,379	7,981,501
Property and equipment, net	186,883	130,359
Right-of-use assets	1,182,079	1,067,734
Investment in NSURE, Inc.	900,000	1,350,000
Intangibles, net	13,757,370	7,078,900
Goodwill	19,112,733	10,050,277
Other non-current assets	23,284	16,792
Total assets	38,427,729	27,675,563
Current liabilities:
Accounts payable and other accrued liabilities	1,457,967	2,759,160
Short term financing agreements	154,017
Chargeback reserve	915,934
Other payables	1,476,113	81,500
Current portion of long-term debt	1,118,721	913,920
Current portion of leases payable	518,054	276,009
Earn-out liability, current portion	2,153,478	3,297,855
Warrant commitment		37,652,808
Total current liabilities	7,794,284	44,981,252
Loans payable, related parties, less current portion	1,669,514	353,766
Long term debt, less current portion	12,349,673	7,085,325
Leases payable, less current portion	714,068	805,326
Earn-out liability, less current portion	556,000	516,023
Warrant liabilities	6,433,150
Total liabilities	29,516,689	53,741,692
Stockholders’ equity (deficit):
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively
Common stock, $0.086 par value; 133,333,333 shares authorized and 1,219,573 and 730,407 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively	104,883	62,815
Additional paid-in capital	35,798,139	27,329,201
Stock subscription receivable		(20,000,000)
Accumulated deficit	(26,991,983)	(33,458,145)
Total stockholders’ equity (deficit)	8,911,039	(26,066,129)
Total liabilities and stockholders’ equity	$ 38,427,729	$ 27,675,563

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.086	$ 0.086
Preferred stock, shares authorized	750,000,000	750,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.086	$ 0.086
Common stock, shares authorized	133,333,333	133,333,333
Common stock, shares issued	1,219,573	730,407
Common stock, shares outstanding	1,219,573	730,407

Consolidated Statements of Operations - USD ($)	12 Months Ended
Consolidated Statements of Operations - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Revenue
Commission income	$ 16,755,884	$ 9,710,334
Total revenue	16,755,884	9,710,334
Operating expenses
Commission expense	3,384,734	2,427,294
Salaries and wages	8,592,051	4,672,988
General and administrative expenses	6,717,889	3,589,221
Marketing and advertising	2,584,895	325,838
Depreciation and amortization	2,801,824	1,607,313
Goodwill impairment	14,373,374
Total operating expenses	38,454,767	12,622,654
Loss from operations	(21,698,883)	(2,912,320)
Other income (expense)
Other expense, net	(899,913)	(533,337)
Recognition and change in fair value of warrant liabilities	29,064,958	(17,652,808)
Total other income (expense)	28,165,045	(18,186,145)
Net income (loss)	$ 6,466,162	$ (21,098,465)
Basic and diluted earnings (loss) per share	$ (0.42)	$ (31.34)
Weighted average number of shares outstanding – Basic and diluted	1,094,989	673,137

Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Common Stock Issuable [Member]	Additional Paid-in Capital [Member]	Subscription Receivable [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2020	$ 33,912	$ 24,315	$ 340,000	$ 11,898,441		$ (12,359,680)	$ (63,012)
Balance, shares at Dec. 31, 2020	395,640	282,735	1,556
Share based compensation				658,077			658,077
Shares issued due to public offering, net of offering costs of $1,672,852		$ 10,320		9,098,828			9,109,148
Shares issued due to public offering, shares		120,000
Shares issued pursuant to acquisition of Kush		$ 86		49,914			$ 50,000
Shares issued pursuant to acquisition of Kush, shares		995
Shares issued for vested stock awards, shares
Net loss						(21,098,465)	$ (21,098,465)
Shares issued for services		$ 86		90,964			91,050
Shares issued for services, shares		1,000
Over-allotment shares from offering, net of offering costs of $250,928		$ 1,548		1,364,825			1,366,373
Over-allotment shares from offering, shares		18,000
Warrants sold during public offering at quoted price				20,700			20,700
Shares issued due to conversion of preferred stock	$ (33,912)	$ 22,685		11,227
Shares issued due to conversion of preferred stock, shares	(395,660)	263,773
Shares issued due to conversion of debt		$ 3,631		3,796,369			3,800,000
Shares issued due to conversion of debt, shares		42,222
Rounding shares related to initial public offering		$ 10		(10)
Rounding shares related to initial public offering, shares	20	126
Shares issued pursuant to software purchase		$ 134	$ (340,000)	339,866
Shares issued pursuant to software purchase, shares		1,556	(1,556)
Stock subscriptions					(20,000,000)		(20,000,000)
Balance at Dec. 31, 2021		$ 62,815		27,329,201	(20,000,000)	(33,458,145)	(26,066,129)
Balance, shares at Dec. 31, 2021		730,407
Share based compensation				1,249,873			1,249,873.00
Shares issued due to public offering, net of offering costs of $1,672,852	$ 781	$ 15,313		(16,043)	20,000,000		20,000,051.00
Shares issued due to public offering, shares	9,076	178,060
Shares issued pursuant to acquisition of Kush		$ 3,475		4,759,976			4,763,451.00
Shares issued pursuant to acquisition of Kush, shares		40,402
Series A warrants		$ 2,150		2,472,850			2,475,000.00
Series A warrants, shares		25,000
Issuance of Series C warrants in exchange for common shares		$ (18,788)		18,788
Issuance of prefunded Series C Warrants in exchange for common shares, shares		(218,462)
Shares issued for vested stock awards		$ 1,262		(1,262)
Shares issued for vested stock awards, shares		14,675
Issuance of common stock for conversion of Series C warrants		$ 18,788		(17,452)			$ 1,336.00
Issuance of common stock for conversion of Series C warrants, shares		218,462
Issuance of common stock for conversion of Series D warrants		$ 7,002		(6,207)			795.00
Issuance of common stock for conversion of Series D warrants, shares		81,423
Issuance of common stock for conversion of Series B warrants		$ 143		12,357			12,500.00
Issuance of common stock for conversion of Series B warrants, shares		1,667
Warrant liability reclassified to equity upon exercise of Series B Warrants				8,000			8,000.00
Shares issued due to conversion of preferred stock	$ (781)	$ 12,723		(11,942)
Shares issued due to conversion of preferred stock, shares	(9,076)	147,939
Net loss						6,466,162	6,466,162
Balance at Dec. 31, 2022		$ 104,883		$ 35,798,139		$ (26,991,983)	$ 8,911,039
Balance, shares at Dec. 31, 2022		1,219,573

Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical)	12 Months Ended
	Dec. 31, 2021 USD ($)
Subsidiary, Sale of Stock [Line Items]
Payments of stock issuance costs	$ 1,672,852
Over-Allotment Option [Member]
Subsidiary, Sale of Stock [Line Items]
Payments of stock issuance costs	$ 250,928

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Dec. 31, 2022	Dec. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 6,466,162	$ (21,098,465)
Adjustment to reconcile net income to net cash used in operating activities:
Depreciation and amortization	2,801,824	1,607,313
Goodwill impairment	14,373,374
Amortization of debt issuance costs and accretion of debt discount	41,875	22,822
Non-cash lease expense	36,442	7,329
Stock compensation expense	1,249,873	749,127
Earn-out fair value and write-off adjustments	524	(359,470)
Change in fair value of warrant liability	(29,064,958)	17,652,808
Change in operating assets and liabilities:
Accounts payables and other accrued liabilities	(1,304,652)	(531,123)
Accounts receivable	49,876	(162,234)
Accounts receivable, related parties	(14,756)	(7,131)
Note receivables		3,825
Other receivables	(16,852)	1,952
Other payables	269,613	19,000
Chargeback reserve	(568,539)
Other non-current assets	(6,492)	(14,992)
Prepaid expense and other current assets	2,496,689	(144,036)
Net cash used in operating activities	(3,189,997)	(2,253,275)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from partial sale of investment in NSURE	450,000
Purchase of property and equipment	(71,212)	(71,108)
Business acquisitions, net of cash acquired	(24,138,750)	(1,608,586)
Purchase of intangibles	(882,350)	(619,666)
Net cash used in investing activities	(24,642,312)	(2,299,360)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings of debt
Principal repayments of debt	(875,010)	(887,455)
Debt issuance costs	(214,257)
Loans acquired through acquisitions	6,520,000
Issuance of common shares in exchange for Series C and D warrants	2,131
Proceeds from loans payable, related parties	1,500,000	2,931
Payments of loans payable, related parties	(184,252)	(515,685)
Earn-out liability	(1,704,925)	(452,236)
Exercise of warrants into common stock	2,475,000
Repayments on short term financing	(263,182)
Private Placement of shares and warrants	17,853,351	10,496,221
Issuance of common shares in exchange for Series B warrants	12,500
Net cash provided by financing activities	25,121,356	8,643,776
Net increase (decrease) in cash and restricted cash	(2,710,953)	4,091,141
Cash and restricted cash at beginning of year	4,620,722	529,581
Cash and restricted cash at end of year	1,909,769	4,620,722
SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:
Cash paid for interest	863,936	456,482
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	340,268
Conversion of debt into equity		3,800,000
Cashless conversion of Series D Warrants for 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
Unpaid deferred transaction costs		2,146,700
Stock subscriptions		20,000,000
Acquisition of business deferred purchase price	1,125,000
Warrant liability reclassified to equity upon exercise of Series B Warrants	8,000
Lease assets acquired in exchange for lease liabilities	$ 628,004	$ 861,443

ORGANIZATION AND DESCRIPTION OF BUSINESS

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

On May 1, 2021, the Company acquired the assets of J.P. Kush and Associates, Inc., an independent healthcare insurance agency headquartered in Michigan (see Note 3).

On January 10, 2022, the Company acquired the assets of Medigap Healthcare Insurance Company, LLC, an unaffiliated insurance brokerage company headquartered in Florida (see Note 3).

On April 26, 2022, the Company acquired the assets of Barra & Associates, LLC., an unaffiliated full-service insurance agency headquartered in Illinois (see Note 3).

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

Liquidity

Use of Estimates

Cash and Restricted Cash

Cash consists of checking accounts. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Restricted cash includes cash pledged as collateral to secure obligations and/or all cash whose use is otherwise limited by contractual provisions.

At times, some cash balances held in banks may exceed the Federal Deposit Insurance Corporation, or FDIC, standard deposit insurance limit of $250,000.

	December 31, 2022		December 31, 2021
Cash	$	505,410	$	4,136,180
Restricted cash		1,404,359		484,542
Total cash and restricted cash	$	1,909,769	$	4,620,722

Property and Equipment

		Useful Life (in years)
Computer equipment		5
Office equipment and furniture		7
Leasehold improvements		Shorter of the useful life or the lease term

Fair Value of Financial Instruments

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

SCHEDULE OF EARN OUT LIABILITY

	December 22, 2022			December 22, 2021
Stock price	$	0.57		$	6.44
Volatility		105.0	%		90	%
Time to Expiry		4.01			5
Dividend yield		0	%		0	%
Risk free rate		4.1	%		1.10	%

The following reconciles the warrant liabilities for the years ended December 31, 2022 and 2021:


	Years ended December 31, 2022 and 2021
	Series B Warrant Commitment			Series B warrant liabilities			Placement agent warrants			Total
Beginning balance, December 31, 2020		-			-			-			-
Initial recognition		20,244,497			-			-			20,244,497
Unrealized (gain) loss		17,408,311			-			-			17,408,311
Ending balance, December 31, 2021	$	37,652,808		$	-		$	-		$	37,652,808
Beginning balance, December 31, 2021	$	37,652,808		$	-		$	-		$	37,652,808
Initial recognition		-			55,061,119			1,525,924			56,587,043
Unrealized (gain) loss		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

*	Recognition and change in fair value of warrant liabilities per income statement is $29,064,958. The difference of $3,672,624 is made up of the Warrant issuance costs.

SCHEDULE OF FAIR VALUE MEASUREMENTS

	December 31, 2022	December 31, 2021
Valuation technique	Discounted cash flow	Discounted cash flow
Significant unobservable input	Projected revenue and probability of achievement	Projected revenue and probability of achievement

SCHEDULE OF EARN OUT LIABILITY

	December 31, 2022
WACC Risk Premium:		14.0	%
Volatility		50.0	%
Credit Spread:		7.7	%
Payment Delay (days)		90
Risk free rate		USD Yield Curve
Discounting Convention:		Mid-period
Number of Iterations		100,000

	December 31, 2022			December 31, 2021
Beginning balance – January 1	$	3,813,878		$	2,931,418

Acquisitions and Settlements		(1,104,925	)		1,160,562

Period adjustments:
Fair value changes included in earnings^*		524			(278,102	)

Ending balance	$	2,709,478		$	3,813,878
Less: Current portion		(2,153,478	)		(3,297,855	)
Ending balance, less current portion		556,000			516,023

*	Recorded as a reduction to general and administrative expenses

Deferred Financing Costs

Business Combinations

Identifiable Intangible Assets, net

Goodwill and other indefinite-lived intangibles

Financial Instruments

Revenue Recognition

The following outlines the core principles of ASC 606:

Determination of the transaction price. The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer.

Healthcare revenue recognition:

The Company identifies a contract when it has a binding agreement with a Carrier, the Customer, to provide agency services to Members.

Healthcare typically utilizes the Direct Bill method.

P&C revenue recognition:

The Company identifies a contract when it has a binding agreement with a Carrier, the Customer, to provide agency services to Members.

P&C utilizes both the Agency Bill and Direct Bill methods, depending on the Carrier.

Insurance Marketing revenue recognition:

The Company identifies a contract when it has a binding agreement to sell issued insurance policies to the IM Customer.

Transaction price is stated in a contract and is a set range of commission amounts based on each policy sold. There are two variable components to consideration received:

	a)	Commissions are only earned once a policy is “Placed”, defined as, an active policy sold to the IM Customer where the IM Customer has received the initial insurance carrier payment with respect to such policy. The Company requires end-user insured parties to pay the initial premium to the insurance carrier upon issuance of a policy. Insurance carrier in turn pays IM Customer its initial payment soon thereafter. Thus, upon sale of an issued policy to IM Customer, the Company has provided a bound issued policy and ensured first premium payment has been completed by insured party. This results in virtual assurance that the IM Customer will receive its initial insurance carrier payment, and it is more than probable that a significant revenue reversal will not occur. The Company thus considers all policies sold to the IM Customer to be Placed for revenue recognition purposes.

	b)	Commission revenue is subject to chargeback in full if a policy is cancelled or lapses within three months from the policy effective date or if the insured party does not make the first three payments of the policy. The Company uses historical activity as well as current factors to estimate the unconstrained variable consideration for recognition per the expected value method. A chargeback reserve liability is credited for the difference between cash consideration received and variable consideration recognized. At each reporting period, the Company remeasures the chargeback reserve liability and recognizes any change as an increase or decrease to the then current period revenue. As of March 31, 2022 and December 31, 2021, the chargeback reserve liability was $1,585,435 and $0, respectively.

With one performance obligation, allocation of transaction price is normally not necessary.

IM Customers generally pay the Company weekly, and accruals are recorded as necessary at period end.

When applicable, commission revenue is recognized net of any deductions for estimated commission adjustments due to lapses, policy cancellations, and revisions in coverage.

The following table disaggregates the Company’s revenue by line of business, showing commissions earned:

SCHEDULE OF DISAGGREGATION REVENUE

Year ended December 31, 2022	Medical/Life		Property and Casualty		Total
Regular
EBS	$	798,412	$	-	$	798,412
USBA		52,470		-		52,470
CCS/UIS		-		254,325		254,325
Montana		1,868,137		-		1,868,137
Fortman		1,274,649		842,961		2,117,610
Altruis		4,044,449		-		4,044,449
Kush		1,536,456		-		1,536,456
Medigap		4,994,002		-		4,994,002
RELI Exchange		312,239		777,784		1,090,023
Revenue	$	14,880,814	$	1,875,070	$	16,755,884

Year ended December 31, 2021	Medical/Life		Property and Casualty		Total
Regular
EBS	$	799,474	$	-	$	799,474
USBA		60,129		-		60,129
CCS/UIS		-		333,874		333,874
Montana		1,744,515		-		1,744,515
Fortman		1,173,215		958,521		2,131,736
Altruis		3,313,453		-		3,313,453
Kush		1,327,153		-		1,327,153
Revenue	$	8,417,939	$	1,292,395	$	9,710,334

General and Administrative

Marketing and Advertising

Stock-Based Compensation

Leases

Income Taxes

Seasonality

Prior Period Adjustments

Account

12/31/2020

As reported

Adjustment

12/31/2020

Adjusted

Goodwill

9,265,070

(503,345

)

8,761,725

Accumulated Deficit

(12,482,281

)

122,601

(12,359,680

)

Recently Issued Accounting Pronouncements

STRATEGIC INVESTMENTS AND BUSINESS COMBINATIONS

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

STRATEGIC INVESTMENTS AND BUSINESS COMBINATIONS

NOTE 3. STRATEGIC INVESTMENTS AND BUSINESS COMBINATIONS

Acquired	Reliance 100% Controlled Entity	Date	Location	Line of Business	Status

U.S. Benefits Alliance, LLC (USBA)	US Benefits Alliance, LLC	October 24, 2018	Michigan	Health Insurance	Affiliated

Employee Benefit Solutions, LLC (EBS)	Employee Benefits Solutions, LLC	October 24, 2018	Michigan	Health Insurance	Affiliated

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

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

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

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

UIS Agency, LLC (UIS)	UIS Agency, LLC	August 17, 2020	New York	Health Insurance	Unaffiliated

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

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

Barra & Associates, LLC (Barra)	RELI Exchange, LLC	April 26, 2022	Illinois	P&C and Health Insurance	Unaffiliated

J.P. Kush and Associates, Inc. Transaction

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

Pro Forma Information


	December 31,
	2021
Revenue	$	10,090,683
Net Income (Loss)	$	(20,931,568	)
Earnings (Loss) per common share, basic	$	(31.10	)
Earnings (Loss) per common share, diluted	$	(31.10	)

Medigap Healthcare Insurance Agency, LLC Transaction

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

Pro Forma Information

	December 31,			December 31,
	2022			2021
Revenue	$	17,122,459		$	14,823,837
Net Income (Loss)	$	20,853,020		$	(20,910,374	)
Earnings (Loss) per common share, basic	$	(0.41	)	$	(29.31	)
Earnings (Loss) per common share, diluted	$	(0.41	)	$	(29.31	)

Barra & Associates, LLC Transaction

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

Pro Forma Information

	December 31,			December 31,
	2022			2021
Revenue	$	17,303,506		$	11,409,850
Net Income (Loss)	$	6,700,594		$	(20,370,917	)
Earnings (Loss) per common share, basic	$	(0.21	)	$	(30.26	)
Earnings (Loss) per common share, diluted	$	(0.21	)	$	(30.26	)

INVESTMENT IN NSURE, INC

12 Months Ended

Dec. 31, 2022

Investments, All Other Investments [Abstract]

INVESTMENT IN NSURE, INC

NOTE 4. INVESTMENT IN NSURE, INC.

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

	December 31, 2022			December 31, 2021
Computer equipment	$	107,195		$	72,110
Office equipment and furniture		51,532			36,157
Leasehold Improvements		127,497			89,819
Property and equipment		286,224			198,086
Less: Accumulated depreciation		(99,341	)		(67,727	)
Property and equipment, net	$	186,883		$	130,359

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table rolls forward the Company’s goodwill balance for the periods ending December 31, 2022 and 2021.

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
Goodwill Impairment		(14,373,374	)
December 31, 2022	$	19,112,733

The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of December 31, 2022:

	Weighted Average Remaining Amortization period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name and trademarks	4.4	$	2,146,188	$	(991,240	)	$	1,154,948
Internally developed software	4.1		1,635,178		(285,743	)		1,349,435
Customer relationships	9.0		11,922,290		(2,076,086	)		9,846,204
Purchased software	0.4		665,137		(583,744	)		81,393
Video Production Assets	0.0		50,000		(50,000	)		-
Non-competition agreements	1.9		3,504,810		(2,179,420	)		1,325,390
Contracts backlog	0.0		210,000		(210,000	)		-
		$	20,133,603	$	(6,376,233	)	$	13,757,370

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:

	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

Amortization expense, is, $2,757,879 and $1,587,401 for the years ended December 31, 2022 and 2021, respectively.

The following table reflects expected amortization expense as of December 31, 2022, for each of the following five years and thereafter:


Years ending December 31,	Amortization Expense
2023	$	2,557,940
2024		2,179,838
2025		1,785,882
2026		1,525,785
2027		1,192,530
Thereafter		4,515,395
Total	$	13,757,370

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

NOTE 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Significant components of accounts payable and accrued liabilities were as follows:

	December 31, 2022		December 31, 2021

Accounts payable,	$	1,221,336	$	547,117
Accrued expenses		131,334		2,170,215
Accrued credit card payables		58,120		36,103
Other accrued liabilities		47,177		5,725
Accounts payable and other accrued liabilities	$	1,457,967	$	2,759,160

LONG-TERM DEBT

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

LONG-TERM DEBT

NOTE 8. LONG-TERM DEBT

The composition of the long-term debt follows:

SCHEDULE OF LONG TERM DEBT

	December 31, 2022			December 31, 2021

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 $12,388 and $14,606 as of December 31, 2022 and 2021, respectively	$	426,883		$	485,317
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 $15,076 and $17,626 as of December 31, 2022 and 2021, respectively		693,682			785,826
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 $9,206 and $11,027 as of December 31, 2022 and 2021, respectively		788,596			884,720
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 $36,843 and $42,660 as of December 31, 2022 and 2021, respectively		1,987,846			2,226,628
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 $42,129 and $48,609 as of December 31, 2022 and 2021, respectively		3,249,575			3,616,754
Oak Street Funding LLC Term Loan, variable interest of Prime Rate plus 2.5%, maturing May 2032, for the acquisition of Barra, net of deferred financing costs of $198,188 and $0 as of December 31, 2022 and December 31, 2021, respectively		6,321,812			-
		13,468,394			7,999,245
Less: current portion		(1,118,721	)		(913,920	)
Long-term debt	$	12,349,673		$	7,085,325

Oak Street Funding LLC – Term Loans and Credit Facilities

Aggregated cumulative maturities of long-term obligations (including the Term Loan and the Facility), excluding deferred financing costs, as of December 31, 2022 are:

Fiscal year ending December 31,	Maturities of Long-Term Debt
2023	$	1,118,569
2024		1,431,933
2025		1,582,287
2026		1,744,442
2027		1,923,234
Thereafter		5,981,758
Total		13,782,223
Less debt issuance costs		(313,829	)
Total	$	13,468,394

Short-Term Financings

WARRANT LIABILITIES

12 Months Ended

Dec. 31, 2022

Warrant Liabilities

WARRANT LIABILITIES

NOTE 9. WARRANT LIABILITIES

Series B Warrants

Placement Agent Warrants

SIGNIFICANT CUSTOMERS

12 Months Ended

Dec. 31, 2022

Risks and Uncertainties [Abstract]

SIGNIFICANT CUSTOMERS

NOTE 10. SIGNIFICANT CUSTOMERS

Carriers representing 10% or more of total revenue are presented in the table below:

SCHEDULE OF CONCENTRATIONS OF REVENUES

Insurance Carrier	December 31, 2022			December 31, 2021
LTC Global		28	%		-	%
BlueCross BlueShield		9	%		19	%
Priority Health		16	%		28	%

No other single insurance carrier accounted for more than 10% of the Company’s commission revenues. The loss of any significant customer, could have a material adverse effect on the Company.

EQUITY

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

EQUITY