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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2024

 

or

 

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

 

For the transition period from _____ to _____

 

Commission File Number: 001-40020

 

RELIANCE GLOBAL GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Florida   46-3390293

(State or other jurisdiction

of incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

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

(Address of principal executive offices) (Zip Code)

 

732-380-4600

(Registrant’s telephone number, including area code)

 

N/A

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

 

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

 

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

 

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

 

Yes ☒ No ☐

 

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

 

Yes ☒ No ☐

 

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

 

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

 

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

 

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

 

Yes ☐ No ☒

 

At July 25, 2024, the registrant had 1,239,407 shares of common stock, par value $0.086 per share, outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I  
Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 19
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 26
Item 4. Controls and Procedures. 26
PART II  
Item 1. Legal Proceedings. 27
Item 1A. Risk Factors. 27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 27
Item 3. Defaults Upon Senior Securities. 28
Item 4. Mine Safety Disclosures. 28
Item 5. Other Information. 28
Item 6. Exhibits 28

 

2

 

 

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 

   June 30,   December 31, 
   2024   2023 
Assets          
Current assets:          
Cash  $1,405,824   $1,329,016 
Restricted cash   1,409,787    1,409,895 
Accounts receivable   945,823    1,298,863 
Accounts receivable, related parties   7,451    6,603 
Other receivables   167,292    899 
Prepaid expense and other current assets   385,987    333,756 
Total current assets   4,322,164    4,379,032 
           
Property and equipment, net   140,483    139,999 
Right-of-use assets   1,013,703    739,830 
Intangibles, net   6,152,752    11,042,757 
Goodwill   6,693,099    6,693,099 
Other non-current assets   21,791    20,292 
Total assets  $18,343,992   $23,015,009 
           
Current liabilities:          
Accounts payable and other accrued liabilities  $1,420,697   $835,483 
Short term financing agreements   108,525    56,197 
Current portion of loans payables, related parties   443,853    454,953 
Other payables   14,434    7,414 
Current portion of long-term debt   1,471,233    1,390,766 
Current portion of leases payable   263,369    285,171 
Earn-out liability, current portion   -    159,867 
Total current liabilities   3,722,111    3,189,851 
           
Loans payable, related parties, less current portion   660,875    897,529 
Long term debt, less current portion   10,289,853    11,026,971 
Leases payable, less current portion   781,586    484,335 
Warrant liabilities   326    268,993 
Total liabilities   15,454,751    15,867,679 
           
Stockholders’ equity:          
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively   -    - 
Common stock, $0.086 par value; 117,647,059 shares authorized and 1,037,027 and 280,117 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively   89,184    24,089 
Additional paid-in capital   48,638,079    46,125,206 
Accumulated deficit   (45,838,022)   (39,001,965)
Total stockholders’ equity   2,889,241    7,147,330 
Total liabilities and stockholders’ equity  $18,343,992   $23,015,009 

 

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

 

3

 

 

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

   2024   2023   2024   2023 
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
   2024   2023   2024   2023 
Revenue                    
Commission income  $3,233,342   $3,195,905   $7,315,780   $7,135,008 
Total revenue   3,233,342    3,195,905    7,315,780    7,135,008 
                     
Operating expenses                    
Commission expense   886,364    829,274    2,162,905    1,912,600 
Salaries and wages   1,955,152    1,771,064    3,786,814    3,526,957 
General and administrative expenses   991,633    1,125,211    2,366,523    1,962,978 
Marketing and advertising   76,983    109,860    204,025    246,432 
Change in estimated acquisition earn-out payables   -    543,233    47,761    1,019,925 
Depreciation and amortization   469,788    655,449    1,003,941    1,309,227 
Asset impairments   -    -    3,922,110    - 
Total operating expenses   4,379,920    5,034,091    13,494,079    9,978,119 
                     
Loss from operations   (1,146,578)   (1,838,186)   (6,178,299)   (2,843,111)
                     
Other (expense) income                    
Interest expense   (365,970)   (370,905)   (735,646)   (722,462)
Interest expense, related parties   (37,525)   (51,153)   (78,134)   (92,629)
Other income (expense), net   11    (16,979)   22    (13,297)
Recognition and change in fair value of warrant liabilities   60,667    (1,592,509)   156,000    2,673,723 
Total other (expense) income   (342,817)   (2,031,546)   (657,758)   1,845,335 
                     
Loss from continuing operations before tax   (1,489,395)   (3,869,732)   (6,836,057)   (997,776)
Income (loss) from discontinued operations before tax   -    2,814,445    -    (1,846,048)
Net loss  $(1,489,395)  $(1,055,287)  $(6,836,057)  $(2,843,824)
                     
Basic (loss) earnings per share                    
Continuing operations  $ (2.76)  $(24.21)  $ (14.77)  $(7.93)
Discontinued operations  $ -   $17.61   $ -   $(14.68)
Basic (loss) earnings per share  $ (2.76)  $(6.60)  $ (14.77)  $(22.61)
                     
Diluted (loss) earnings per share                    
Continuing operations  $ (2.76)  $(24.21)  $ (14.77

)

  $(7.93)
Discontinued operations  $ -   $17.61  $ -   $(14.68)
Diluted (loss) earnings per share  $ (2.76)  $(6.60)  $ (14.77)  $(22.61)
                     
Weighted average number of shares outstanding - Basic   539,133    159,795    462,773    125,791 
Weighted average number of shares outstanding - Diluted   539,133    159,795    462,773    125,791 

 

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

 

4

 

 

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

 

   Shares   Amount   capital   Deficit   Total 
   Common Stock  

Additional

Paid-in

   Accumulated     
   Shares   Amount   capital   Deficit   Total 
                     
Balance, December 31, 2023   280,117   $24,089   $46,125,206   $(39,001,965)  $7,147,330 
                          
Common share payments for earn-outs   -         17,628    -    17,628 
                   -    - 
Common shares issued for ATM share sales   11,036    949    123,699         124,648 
                   -      
Common shares issued for abeyance share conversions   42,545    3,659    (3,659)        - 
                   -      
Common share-based compensation   1,149    99    18,466    -    18,565 
                          
Net loss   -    -    -    (5,346,663)   (5,346,663)
                          
Balance, March 31, 2024   334,847   $28,796   $46,281,340   $(44,348,628)  $1,961,508 
                          
Common share payments for earn-outs   30,029    2,582    (2,582)   -    - 
                          
Common shares issued for ATM share sales   302,677    26,032    1,917,664    -    1,943,696
                          
Common shares issued for abeyance share conversions   59,471    5,115    (5,115)   -    - 
                          
Common shares issued for Series B warrants   39,569    3,403    109,263    -    112,666 
                          
Common shares issued for Series G warrants   192,236    16,532    (16,532)   -    - 
                          
Common share-based compensation   60,373    5,192    240,574    -    245,766 
                          
Common shares issued for services   17,825    1,533    113,467    -    115,000 
                          
Net loss   -    -    -    (1,489,395)   (1,489,395)
                          
Balance, June 30, 2024   1,037,027   $89,184   $48,638,079   $(45,838,022)  $2,889,241 

 

5

 

 

   Shares   Amount   capital   Deficit   Total 
   Common Stock  

Additional

Paid-in

   Accumulated     
   Shares   Amount   Capital   Deficit   Total 
                     
Balance, December 31, 2022   71,740   $6,170   $35,896,852   $(26,991,983)  $8,911,039 
                          
Common share payments for earn-outs   6,433    553    981,925    -    982,478 
                          
Common share payments for related party convertible debt   3,926    338    644,662    -    645,000 
                          
Common shares issued for reverse stock split round up   902    77    (4,723)   -    (4,646)
                          
Common shares issued in 2023 private placement   9,120    784    3,445,700    -    3,446,484 
                          
Common share-based compensation   -    -    43,797    -    43,797 
                          
Net loss   -    -    -    (1,788,538)   (1,788,538)
                          
Balance, March 31, 2023   92,121   $7,922   $41,008,213   $(28,780,521)  $12,235,614 
                          
Common shares issued for services   6,621    570    377,425    -    377,995 
                          
Common share payments for earn-outs   20,721    1,782    1,431,918    -    1,433,700 
                          
Common shares issued for vested stock awards   1,307    112    (112)   -    - 
                          
Common share-based compensation   -    -    35,367    -    35,367 
                          
Net loss   -    -    -    (1,055,287)   (1,055,287)
                          
Balance, June 30, 2023   120,770   $10,387   $42,852,810   $(29,835,808)  $13,027,389 

 

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

 

6

 

 

Reliance Global Group, Inc. and Subsidiaries and Predecessor

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   2024   2023 
   Six Months Ended June 30, 
   2024   2023 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(6,836,057)  $(2,843,824)
Adjustment to reconcile net income to net cash used in operating activities:          
Depreciation and amortization   1,003,941    1,309,227 
Asset impairments   3,922,110    - 
Amortization of debt issuance costs and accretion of debt discount   23,442    23,442 
Non-cash lease expense (income)   1,574    (4,355)
Equity based compensation expense   264,331    79,164 
Equity based payments to service providers   224,477    377,995 
Recognition and change in fair value of warrant liability   (156,000)   (2,673,723)
Earn-out fair value and write-off adjustments   47,761    1,019,925 
Change in operating assets and liabilities:          
Accounts receivable   353,040    15,444 
Accounts receivable, related parties   (847)   (1,072)
Other receivables   (166,393)   10,816 
Prepaid expense and other current assets   (161,708)   (303,322)
Other non-current assets   (1,500)   - 
Accounts payables and other accrued liabilities   585,215    (40,135)
Other payables   7,020    115,988 
Net cash used in continuing operating activities   (889,594)   (2,914,430)
           
Net cash adjustments for discontinued operating activities   -    907,329 
           
Total net cash used in continuing and discontinued operating activities   (889,594)   (2,007,101)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Proceeds from sale of investment in NSURE   -    900,000 
Purchase of property and equipment   (15,397)   (13,010)
Purchase of intangibles   (21,134)   (151,862)
Net cash (used in) provided by investing activities   (36,531)   735,128 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Principal repayments of debt   (680,093)   (450,935)
Principal repayments of short-term financings   (106,460)     
Proceeds from short-term financings   158,788    58,707 
Payments of loans payable, related parties   (437,754)   (649,870)
Proceeds from common shares issued through an at the market offering   2,068,344    - 
Earn-out liability payments   -    (344,225)
Proceeds from private placement of shares and warrants   -    3,446,484 
Net cash provided by continuing financing activities   1,002,825    2,060,161 
           
Net cash used in discontinued financing activities   -    (17,701)
           
Total net cash provided by continuing and discontinued financing activities   1,002,825    2,042,460 
           
Net increase in cash and restricted cash   76,700    770,487 
Cash and restricted cash at beginning of year   2,738,911    1,909,769 
Cash and restricted cash at end of year  $2,815,611   $2,680,256 

 

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

 

7

 

 

Reliance Global Group, Inc. and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

 

NOTE 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

 

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

 

Basis of Presentation and Principles of Consolidation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of recurring accruals) necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”), as the same may be amended from time to time. Capitalized terms not defined in this Quarterly Report on Form 10-Q refer to capitalized terms as defined in the Form 10-K. Certain prior period accounts and balances in these unaudited condensed consolidated financial statements and notes thereto have been reclassified to conform to the current period’s presentation.

 

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

 

Liquidity

 

As of June 30, 2024, the Company’s reported cash and restricted cash aggregated balance was approximately $2,816,000, current assets were approximately $4,322,000, and current liabilities were approximately $3,722,000. As of June 30, 2024, the Company had working capital of approximately $600,000 and stockholders’ equity of approximately $2,889,000. For the six months ended June 30, 2024, the Company had a loss from operations of approximately $6,178,000, which includes a non-cash asset impairment loss of approximately $3,922,000, and net loss of approximately $6,836,000. During the first quarter of 2024, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with EF Hutton LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time, through the Agent, shares of its common stock having an approximate aggregate remaining offering price of up to $1,728,825 as of the date of filing of this Quarterly Report on Form 10-Q.

 

Although there can be no assurance that debt or equity financing will be available on acceptable terms, or at all, the Company believes its financial position and its ability to raise capital to be reasonable and sufficient. Based on our assessment, we do not believe there are conditions or events that, in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year of filing these unaudited financial statements with the Securities and Exchange Commission (“SEC”).

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

 

8

 

 

Cash and Restricted Cash

 

Cash and restricted cash reported on our condensed consolidated balance sheets are reconciled to the total shown on our condensed consolidated statements of cash flows as follows:

 

   June 30, 2024   June 30, 2023 
Cash  $1,405,824   $1,274,743 
Restricted cash   1,409,787    1,405,513 
Total cash and restricted cash  $2,815,611   $2,680,256 

 

Fair Value of Financial Instruments

 

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

 

Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and

 

Level 3 — Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.

 

Warrant Liabilities: The Company re-measures the fair value of its material Level 3 warrant liabilities at the balance sheet date, or at interim dates as applicable for warrant exercise transactions that may occur, using a binomial option pricing model. The following summarizes the significant unobservable inputs for valuations occurring during the periods ended:

 

   June 30, 2024   December 31, 2023 
Stock price  $3.74   $9.18 
Volatility   135.00%   110.00%
Time to expiry   4.53    4.99 
Dividend yield   0%   0%
Risk free rate   4.30%   3.80%

 

The following reconciles fair value of the liability classified warrants:

 

  

Series B

Warrant

Liabilities

  

Placement

Agent Warrants

   Total 
Beginning balance, December 31, 2023  $268,667   $326   $268,993 
Unrealized gain   (95,333)   -    (95,333)
Warrants exercised or exchanged   -    -    - 
Ending balance, March 31, 2024  $173,334   $326   $173,660 
Unrealized gain   (60,667)   -    (60,667)
Warrants exercised or exchanged   (112,667)   -    (112,667)
Ending balance, June 30, 2024  $-   $326   $326 

 

Earn-out liabilities: The Company utilizes two valuation methods to value its Level 3 earn-out liabilities: (a) the income valuation approach, and (b) the Monte Carlo simulation method. Key valuation and unobservable inputs for the income valuation approach include contingent payment arrangement terms, projected revenues and cash flows, rates of return, discount rates and probability assessments.

 

9

 

 

The following table summarizes the significant unobservable inputs used in the fair value measurements:

   

   June 30, 2024  December 31, 2023
Valuation technique  N/A  Discounted cash flow
Significant unobservable input  N/A  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:

 

The following table reconciles fair value of earn-out liabilities for the periods ended June 30, 2024, and December 31, 2023:

 

   June 30, 2024   December 31, 2023 
Beginning balance – January 1  $159,867   $2,709,478 
           
Acquisitions and settlements   -    (3,260,403)
           
Period adjustments:          
Fair value changes included in earnings*   47,761    1,716,873 
Earn-out payable in common shares   (17,628)   (159,867)
Earn-out transferred to loans payable, related parties   -    (846,214)
Earn-out payments   (190,000)   - 
Ending balance   -    159,867 
Less: Current portion   -    (159,867)
Ending balance, less current portion  $-   $- 

 

* Recorded in the change in estimated acquisition earn-out payables caption on the condensed consolidated statements of operations.

 

Revenue Recognition

 

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

 

Three Months ended June 30, 2024  Medical   Life   Property and Casualty   Disaggregates revenue 
Three Months Ended June 30, 2024  Medical   Life   Property and Casualty   Total 
                 
Three months ended June 30, 2024  $2,389,845   $38,744   $804,753   $3,233,342 
Three months ended June 30, 2023  $2,526,713   $71,980   $597,212   $3,195,905 
Six months ended June 30, 2024  $5,715,662   $94,961   $1,505,157   $7,315,780 
Six months ended June 30, 2023  $5,822,458   $105,604   $1,206,946   $7,135,008 

 

The following are customers representing 10% or more of total revenue:

 

Insurance Carrier  2024   2023 
   Three Months Ended June 30, 
Insurance Carrier  2024   2023 
Priority Health   22%   28%
BlueCross BlueShield   11%   12%

 

10

 

 

Insurance Carrier  2024   2023 
   Six Months Ended June 30, 
Insurance Carrier  2024   2023 
Priority Health   35%   37%
BlueCross BlueShield   12%   13%

 

No other single customer accounted for more than 10% of the Company’s commission revenues during the three and six months ended June 30, 2024 and 2023. The loss of any significant customer could have a material adverse effect on the Company.

 

Income Taxes

 

The Company recorded no income tax expense for the three and six months ended June 30, 2024 and 2023 because the estimated annual effective tax rate was zero. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating loss carry forwards, and available tax planning alternatives.

 

As of June 30, 2024 and December 31, 2023, the Company provided a full valuation allowance against its net deferred tax assets, since the Company believes it is more likely than not that its deferred tax assets will not be realized.

 

Recently Issued Accounting Pronouncements

 

We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements not already disclosed in the Form 10-K.

 

NOTE 2. GOODWILL AND OTHER INTANGIBLE ASSETS

 

The following table rolls forward the Company’s goodwill balance for the periods ended June 30, 2024, and December 31, 2023, adjusted for discontinued operations.

 

   Goodwill 
December 31, 2022  $14,287,099 
Goodwill impairment recognized as of December 31, 2023   (7,594,000)
December 31, 2023   6,693,099 
June 30, 2024  $6,693,099 

 

Asset Impairments:

 

During the quarter ended March 31, 2024, certain intangible assets stemming from discontinued operations which were originally transferred to the Company’s operating entity, were determined to have carrying values exceeding fair value, and thus were considered impaired. These intangible assets consisted of customer relationships, and internally developed and purchased software, with respective net of accumulated amortization asset values of $3,802,438, $65,411, and $54,261. The write-offs resulted in a total asset impairment charge of $3,922,110, recorded in the asset impairment account on the unaudited condensed consolidated statements of operations for the six-month period ended June 30, 2024.

 

11

 

 

The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2024:

 

  

Weighted

Average Remaining Amortization

Period

(Years)

  

Gross

Carrying Amount

  

Accumulated

Amortization

  

Net Carrying

Amount

 
Trade name and trademarks  1.0   $1,807,188   $(1,487,205)  $319,983 
Internally developed software  2.7    1,698,186    (773,371)   924,815 
Customer relationships  6.3    7,372,290    (2,813,315)   4,558,975 
Purchased software  2.0    564,396    (563,074)   1,322 
Video production assets  -    50,000    (50,000)   - 
Non-competition agreements  0.4    3,504,810    (3,157,153)   347,657 
       $14,996,870   $(8,844,118)  $6,152,752 

 

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, 2023:

 

  

Weighted

Average Remaining Amortization

period

(Years)

  

Gross

Carrying Amount

  

Accumulated

Amortization

  

Net Carrying

Amount

 
Trade name and trademarks  1.5   $1,807,189   $(1,320,939)  $486,250 
Internally developed software  3.2    1,798,922    (650,029)   1,148,893 
Customer relationships  8.0    11,922,290    (3,193,629)   8,728,661 
Purchased software  0.3    667,206    (618,418)   48,788 
Video production assets  -    50,000    (50,000)   - 
Non-competition agreements  0.9    3,504,810    (2,874,645)   630,165 
      $19,750,417   $(8,707,660)  $11,042,757 

 

The following table reflects expected amortization expense as of June 30, 2024, for each of the following five years and thereafter:

 

Years Ending December 31,  Amortization Expense 
2024 (remaining six months)  $764,453 
2025   1,397,041 
2026   1,148,216 
2027   807,696 
2028   717,314 
Thereafter   1,318,032 
Total  $6,152,752 

 

12

 

 

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

 

Long-Term Debt

 

The composition of the long-term debt is as follows:

 

  

June 30,

2024

  

December 31,

2023

 
         
Oak Street Funding LLC Term Loan   $338,812   $369,602 
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 $9,060 and $10,069 as of June 30, 2024 and December 31, 2023, respectively  $338,812   $369,602 
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 $11,250 and $12,525 as of June 30, 2024, and December 31, 2023, respectively   557,497    604,830 
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 $6,997 and $7,733 as of June 30, 2024 and December 31, 2023, respectively   646,205    695,758 
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 $28,117 and $31,026 as of June 30, 2024 and December 31, 2023, respectively   1,636,131    1,758,558 
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 $32,409 and $35,649 as of June 30, 2024 and December 31, 2023, respectively   2,712,692    2,899,409 
Oak Street Funding LLC Term Loan for the acquisition of Barra, variable interest of prime rate plus 2.5%, maturing May 2032, net of deferred financing costs of $166,049 and $176,762 as of June 30, 2024 and December 31, 2023, respectively   5,869,749    6,089,580 
 Long term debt gross    11,761,086    12,417,737 
Less: current portion   (1,471,233)   (1,390,766)
Long-term debt  $10,289,853   $11,026,971 

 

Oak Street Funding LLC – Term Loans and Credit Facilities

 

Years Ending December 31, 

Maturities of

Long-Term Debt

 
2024 (remaining six months)  $714,133 
2025   1,552,772 
2026   1,729,160 
2027   1,925,603 
2028   2,106,978 
Thereafter   3,986,322 
Total   12,014,968 
Less: debt issuance costs   (253,882)
Total  $11,761,086 

 

13

 

 

Short-Term Financings

 

The Company has various short-term notes payable for financed items such as insurance premiums. These are normally paid in equal installments over a period of twelve months or less and carry interest rates ranging between 7.95% and 11.95% per annum. As of June 30, 2024, and December 31, 2023, balances outstanding on short-term financings were $108,525 and $56,197, respectively.

 

NOTE 4. WARRANT LIABILITIES

 

Series B Warrants and PAW’s

 

On June 18, 2024, the holder of the remaining Series B Warrants exercised all their remaining 50,980 warrants via cashless exercises, thereby acquiring 39,569 shares of the Company’s common stock, $0.086 par value per share. The Series B Warrants effective exercise price per share as of the date of the exercises was $3.91.

 

For the three and six months ended June 30, 2024, net fair value gains and losses recognized for the Series B Warrants and PAW’s, were gains of $60,667 and $156,000, respectively, whereas for the three and six months ended June 30, 2023, net fair value gains and losses recognized were a loss of $1,592,509 and a gain of $2,673,723, respectively, presented in the recognition and change in fair value of warrant liabilities account in the unaudited consolidated statements of operations.

 

As of June 30, 2024, there were 0 and 959 Series B Warrants and PAW’s outstanding respectively, with respective fair values of $0 and $326, presented in the warrant liability account on the condensed consolidated balance sheets. As of June 30, 2023, there were 78,383 and 959 Series B Warrants and PAW’s outstanding, with respective fair values of $3,741,983 and $326, presented in the warrant liability account on the unaudited condensed consolidated balance sheets.

 

NOTE 5. EQUITY

 

Common Stock

 

The Company is authorized to issue 117,647,059 shares of common stock, $0.086 par value. Each share of issued and outstanding common stock entitles the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the Company upon liquidation or dissolution.

 

During the first quarter of 2024, the Company issued 11,036 shares through its ATM program, 42,545 pursuant to abeyance share conversions and 1,149 shares for equity-based compensation.

 

On July 1, 2024, the Company effectuated a 1-for-17 reverse stock split of the Company’s issued and outstanding common stock (the “Reverse Split-2024”). The par value remained unchanged following the Reverse Split-2024. 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-2024 for all periods presented, unless otherwise indicated. The Reverse Split-2024 resulted in a rounding addition of approximately 110,350 shares valued at par, totaling $9,490 for which shares were issued in July 2024.

 

During the second quarter of 2024, the Company issued 302,677 shares through its ATM program, 59,471 pursuant to abeyance share conversions, 60,373 shares for equity-based compensation, 30,029 shares for repayment of an earn-out liability, 39,569 shares on the exercise of Series B warrants, 192,236 shares for the exercise of Series G warrants, and 17,825 shares for service rendered.

 

As of June 30, 2024, and December 31, 2023, there were 1,037,027 and 280,117 shares of common stock outstanding, respectively.

 

Abeyance Shares

 

During the first and second quarters of 2024 respectively, upon request from an institutional investor, the Company converted 42,545 and 59,471 abeyance shares into common stock, thereby issuing 42,545 and 59,471 common shares, resulting in zero abeyance shares outstanding as of June 30, 2024.

 

Series G Warrants

 

Pursuant to the terms of the Series G Warrants, during the second quarter of 2024, the Series G Warrant exercise price reset from $11.16 per share to $3.96 per share, as a result of sales of our common stock pursuant to the ATM Agreement discussed below. On June 18, 2024, the holder of the Series G Warrants exercised all of its 247,678 warrants, via cashless exercises, thereby acquiring 192,236 shares of the Company’s common stock, which resulted in no remaining Series G Warrants outstanding as of June 30, 2024.

 

14

 

 

At Market Program (the “ATM”)

 

On February 15, 2024, the Company entered into the ATM Agreement with the Agent, pursuant to which the Company may offer and sell, from time to time through the Agent, shares of its common stock having an aggregate maximum offering price as determined by the then in effect prospectus supplement to the base prospectus included in the registration statement (the “ATM Capacity”). Any shares offered and sold in the ATM offering will be issued pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-275190), which was declared effective by the SEC on November 7, 2023, and related prospectus supplements and accompanying base prospectus relating to the ATM offering. Under the Agreement, the Agent may sell shares by any method permitted by law and deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The offering of shares pursuant to the ATM Agreement will terminate upon the earlier of (i) the sale of all of the shares subject to the ATM Agreement, or (ii) the termination of the ATM Agreement by the Agent or the Company, as permitted therein. The Company agreed to pay to the Agent in cash, upon each sale of shares pursuant to the ATM Agreement, an amount equal to 3.5% of the gross proceeds from each such sale. The Company agreed to reimburse the Agent for certain specified expenses in connection with entering into the ATM Agreement.

 

During the six months ended June 30, 2024, the Company sold 313,713 shares of common stock under the ATM Agreement, at an average price of $5.3492, receiving proceeds, net of $141,631 in agent commissions and legal and other fees, of $2,068,344. From the net sale proceeds, $146,174 was received in July 2024 and is recorded in the other receivables account in the unaudited condensed consolidated balance sheets as of June 30, 2024.As of the date of filing of this Quarterly Report on Form 10-Q, the net remaining ATM Capacity was $1,728,825.

 

Equity-based Compensation

 

Total stock-based compensation expense recorded in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2024, and 2023 was $245,766 and $35,367, respectively. Total stock-based compensation expense recorded in the unaudited condensed consolidated statements of operations for the six months ended June 30, 2024 and 2023 was $264,331 and $79,164, respectively.

 

NOTE 6. EARNINGS (LOSS) PER SHARE

 

Basic earnings per common share (“EPS”) applicable to common stockholders is computed by dividing earnings applicable to common stockholders by the weighted-average number of common shares outstanding.

 

If there is a loss from operations, diluted EPS is computed in the same manner as basic EPS is computed. Similarly, if the Company has net income but its preferred dividend adjustment made in computing income available to common stockholders results in a net loss available to common stockholders, diluted EPS would be computed in the same manner as basic EPS.

 

The following calculates basic and diluted EPS:

 

SCHEDULE OF CALCULATIONS OF BASIC AND DILUTED EPS

   Three Months   Three Months 
   Ended   Ended 
   June 30, 2024   June 30, 2023 
Loss from continuing operations  $(1,489,395)  $(3,869,732)
Net loss continuing operations, numerator, basic computation   (1,489,395)   (3,869,732)
Recognition and change in fair value of warrant liabilities   -    - 
Net loss from continuing operations, numerator, diluted computation  $(1,489,395)  $(3,869,732)
           
Weighted average common shares, basic   539,133    159,795 
Effect of Series B Warrants   -    - 
Weighted average common shares, dilutive   539,133    159,795 
Loss per common share – basic  $(2.76)  $(24.21)
Loss per common share – diluted  $(2.76)  $(24.21)

 

15

 

 

   Six Months   Six Months 
   Ended   Ended 
   June 30, 2024   June 30, 2023 
Loss from continuing operations  $(6,836,057)  $(997,776)
Net Loss continuing operations, numerator, basic computation   (6,836,057)   (997,776)
Recognition and change in fair value of warrant liabilities   -    - 
Net loss from continuing operations, numerator, diluted computation  $(6,836,057)  $(997,776)
           
Weighted average common shares, basic   462,773   125,791 
Effect of Series B Warrants   -    - 
Weighted average common shares, dilutive   462,773    125,791 
Loss per common share – basic  $(14.77)  $(7.93)
Loss per common share – diluted  $(14.77)  $(7.93)

 

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

 

SCHEDULE OF DILUTIVE NET LOSS PER COMMON SHARE 

  

June 30, 2024

  

June 30, 2023

 
   For the Three Months Ended 
  

June 30, 2024

  

June 30, 2023

 
Shares subject to outstanding common stock options   510    649 
Shares subject to outstanding Series A warrants   6,647    6,647 
Shares subject to outstanding PAW’s   

959

   

959

Shares subject to outstanding Series F warrants   -    123,840 
Shares subject to PA Warrants   3,096    3,096 
Shares subject to unvested stock awards   52    205 

 

  

June 30, 2024

  

June 30, 2023

 
   For the Six Months Ended 
  

June 30, 2024

  

June 30, 2023

 
Shares subject to outstanding common stock options   510    649 
Shares subject to outstanding Series A warrants   6,647    6,647 
Shares subject to outstanding PAW’s   959    959 
Shares subject to outstanding Series F warrants   -    123,840 
Shares subject to PA Warrants   3,096    3,096 
Shares subject to unvested stock awards   52    205 

 

NOTE 7. LEASES

 

Operating lease expense for the three months ended June 30, 2024, and 2023 was $102,073 and $123,326, respectively. Operating lease expense for the six months ended June 30, 2024, and 2023 was $207,029 and $239,296 respectively. As of June 30, 2024, the weighted average remaining lease term and weighted average discount rate for the operating leases were 5.08 years and 8.35%, respectively.

 

16

 

 

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

 

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT 

Fiscal year ending December 31,  Operating Lease Obligations 
2024 (remaining six months)  $180,322 
2025   265,399 
2026   229,522 
2027   215,325 
2028   182,190 
Thereafter   225,136 
Total undiscounted operating lease payments   1,297,894 
Less: Imputed interest   (252,939)
Present value of operating lease liabilities  $1,044,955 

 

NOTE 8. COMMITMENTS AND CONTINGENCIES

 

Legal Contingencies

 

The Company is subject to various legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations, or cash flows, and accordingly and no legal contingencies are accrued as of June 30, 2024, and December 31, 2023. Litigation relating to the insurance brokerage industry is not uncommon. As such the Company, from time to time has 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, Southwestern Montana Insurance Center, LLC, a Montana limited liability company (the “Subsidiary”), Southwestern Montana Financial Center, Inc., a Montana corporation (the “Seller”), and Julie A. Blockey (the “Holder”, and collectively with the Company, Subsidiary, and Seller, the “Parties”) entered into a purchase agreement on or around April 1, 2019 (the “Purchase Agreement”), whereby the Company purchased the business and certain assets noted within the Purchase Agreement. On September 29, 2023, the Parties entered into a first amendment to the Purchase Agreement (the “First Amendment”). Pursuant to the First Amendment, the Parties agreed to a total remaining earn-out related balance of $500,000 owed under the Purchase Agreement. In satisfaction of such remaining balance, the Company agreed to issue 10,272 shares of the Company’s restricted common stock, par value $0.086 per share (the “Common Stock”), to the Holder. The First Amendment also stated that if the Nasdaq official closing price of the Common Stock is less than $41.31 on March 29, 2024 (the “Calculation Date”), then a determination of the Make-Up Amount (as defined herein) will be made. The “Make-Up Amount” means $425,000 minus the Blockey Shares Value (10,272 multiplied by the Nasdaq official closing price of the Common Stock on the Calculation Date). The First Amendment further stated that the Company shall pay the Make-Up Amount with a combination of cash and Company shares. Accordingly, on the Calculation Date, a total Make-Up Amount of $367,496 was determined, and as agreed upon by the Parties, will be payable, $190,000 in cash, and the remaining balance via the issuance of 30,029 of the Company’s Common Stock, subsequently issued to the Seller during April, 2024. The $190,000 cash balance was paid during the quarter ended June 30, 2024.

 

The following outlines changes to the Company’s earn-out liability balances for the respective periods ended June 30, 2024 and December 31, 2023:

 

SCHEDULE OF EARN-OUT LIABILITY

   Fortman   Montana   Altruis   Kush   Barra   Total 
Ending balance December 31, 2023  $-   $159,867   $-   $-   $-   $159,867 
Payments   -    (190,000

)

         -         -    -    - 
Estimates and fair value adjustments   -    47,761    -    -    -    47,761 
Payable in common stock   -    (17,628)   -    -         -    (17,628)
Ending balance June 30, 2024  $-   $-   $-   $-   $-   $- 

 

   Fortman   Montana   Altruis   Kush   Barra   Total 
Ending balance December 31, 2022  $667,000   $500,001   $834,943   $147,534   $560,000   $2,709,478 
Payments   (1,433,700)   (750,001)   (929,168)   (147,534)   -    (3,260,403)
Estimates and fair value adjustments   1,612,914    569,734    94,225    -    (560,000)   1,716,873 
Payable in common stock   -    (159,867)   -    -    -    (159,867)
Reclass to loans payable, related parties*   (846,214)   -    -    -    -    (846,214)
Ending balance December 31, 2023  $-   $159,867   $-   $-   $-   $159,867 

 

* The Company modified certain contingent earn-out payables by entering into fixed payment arrangements. Thus, remaining open balances are reclassified to the loans payable, related parties account on the consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.

 

17

 

 

Definitive Acquisition Agreements

 

On May 14, 2024, the Company entered into a Stock Exchange Agreement (the “Stock Exchange Agreement”) to acquire Spetner Associates (“Spetner”). Pursuant to the Stock Exchange Agreement, the Company agreed to: (i) acquire 80% of the issued and outstanding shares of common stock, par value $1.00 per share, of Spetner (the “Spetner Common Stock”) for $13,714,286 (which amount was to be paid as $8,000,000 in cash, the issuance of certain shares of the Company’s common stock, and the Company’s issuance of a promissory note); and (ii) have the sole option to acquire the remaining 20% of Spetner common stock for a predetermined amount based on a multiple of EBITDA.

 

NOTE 9. RELATED PARTY TRANSACTIONS

 

The following table summarizes the loans payable, related parties current and non-current accounts, as of the periods ended June 30, 2024 and December 31, 2023, and the interest expense related parties account for the three and six-month periods ended June 30, 2024 and June 30, 2023, as presented on the condensed consolidated balance sheets and condensed consolidated statements of operations, respectively:

SCHEDULE OF LOANS PAYABLE TO RELATED PARTIES 

   Related Parties Payable   Interest Expense, Related Parties 
   Current Portion   Long Term Portion   for the Three Months Ended   for the Six Months Ended 
Related Party  June 30, 2024   December 31, 2023   June 30, 2024   December 31, 2023   June 30, 2024   June 30, 2023   June 30, 2024   June 30, 2023 
Employee Payables   6,127    25,708    -    -    577    1,730    2,307    3,459 
Deferred Purchase Price Liability   256,173    233,504    111,554    247,055    17,335    49,423    37,167    89,170 
Purchase Agreement Liability   181,553    195,741    549,321    650,475    19,613    -    38,660    - 
Total   443,853    454,953    660,875    897,530    37,525    51,153    78,134    92,629 

 

 

18

 

 

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

 

Overview

 

Reliance Global Group, Inc. (the “Company”) operates as a diversified company engaging in business in the insurance market, as well as other related sectors. Our focus is to grow the Company by pursuing an aggressive acquisition strategy, initially and primarily focused upon wholesale and retail insurance agencies.

 

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

 

As part of our growth and acquisition strategy, we continue to survey the current insurance market for value-add acquisition opportunities. As of June 30, 2024, we have acquired nine insurance agencies.

 

Over the next 12 months, we plan to focus on the expansion and growth of our business through continued asset acquisitions in insurance markets and organic growth of our current insurance operations through geographic expansion and market share growth. To that end, on May 14, 2024, the Company entered into a Stock Exchange Agreement (the “Stock Exchange Agreement”) to acquire Spetner Associates (“Spetner”), a well-established benefits enrollment company that, through its BenManage benefits enrollment company, is a leading provider of voluntary benefits to over 75,000 employees throughout the United States. Pursuant to the Stock Exchange Agreement, the Company agreed to: (i) acquire 80% of Spetner’s issued and outstanding shares of common stock, par value $1.00 per share (the “Spetner Common Stock”) for $13,714,286 (which amount was to be paid as $8,000,000 in cash, the issuance of certain shares of the Company’s common stock, and the Company’s issuance of a promissory note; and (ii) have the sole option to acquire the remaining 20% of the Spetner Common Stock for a predetermined amount based on a multiple of EBITDA

 

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

 

With the acquisition of Barra, we launched RELI Exchange, our business-to-business (“B2B”) InsurTech platform and agency partner network that builds on the artificial intelligence and data mining backbone of 5MinuteInsure.com. Through RELI Exchange we on-board agency partners and provide them with an InsurTech platform white labeled, designed and branded specifically for their business. This combines the best of digital and human capabilities by providing our agency partners and their customers quotes from multiple carriers within minutes. Since its inception, RELI Exchange has increased its agent roster by more than 130%.

 

Business Operations

 

We’ve adopted a “One-Firm” strategy, pursuant to which Company owned and operated agencies come together to operate as one cohesive unit, which allows for efficient and effective cross-selling, cross-collaboration, and the effective deployment of the Company’s human capital. This strategy also aims to enhance the Company’s overall market presence across the U.S., with all business lines operating under the RELI Exchange brand. It’s expected to benefit agents and clients by improving relationships with carriers, leading to better commission and bonus contracts due to higher business volumes. The approach also strengthens the capability of RELI Exchange agency partners in securing diverse insurance policies and fosters increased cross-selling opportunities. This unified strategy positions the Company for rapid scaling and integration of accretive acquisitions, expanding its industry reach.

 

19

 

 

Business Trends and Uncertainties

 

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

 

Financial Instruments

 

During the quarter ended June 30, 2024, the Company’s financial instruments consisted of derivative warrants. These were accounted at fair value as of inception/issuance date, and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, (non-cash) gain or loss. As of June 18, 2024, all of the remaining derivative warrants were exercised and there are currently none outstanding.

 

Insurance Operations

 

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

 

Insurance Acquisitions and Strategic Activities

 

As of the balance sheet date, we have acquired multiple insurance brokerages (see table below). 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. In furtherance of this strategy, on May 14, 2024, the Company entered into a Stock Exchange Agreement to acquire Spetner Associates (“Spetner”) for cash, stock and issuance of a promissory note. Spetner is a well-established benefits enrollment company that, through its BenManage benefits enrollment company, is a leading provider of voluntary benefits to over 75,000 employees throughout the United States. Completion of the transaction is subject to standard and stipulated closing.

 

20

 

 

Acquired  

Reliance 100%

Controlled Entity

   Date   Location   Line of Business
                 
U.S. Benefits Alliance, LLC (USBA)   US Benefits Alliance, LLC   October 24, 2018   Michigan   Health Insurance
                 
Employee Benefit Solutions, LLC (EBS)   Employee Benefits Solutions, LLC   October 24, 2018   Michigan   Health Insurance
                 
Commercial Solutions of Insurance Agency, LLC (CCS or Commercial Solutions)   Commercial Coverage Solutions LLC   December 1, 2018   New Jersey   P&C – Trucking Industry
                 
Southwestern Montana Insurance Center, Inc. (Southwestern Montana or Montana)   Southwestern Montana Insurance Center, LLC   April 1, 2019   Montana   Group Health Insurance
                 
Fortman Insurance Agency, LLC (Fortman or Fortman Insurance)   Fortman Insurance Solutions, LLC   May 1, 2019   Ohio   P&C and Health Insurance
                 
Altruis Benefits Consultants, Inc. (Altruis)   Altruis Benefits Corporation   September 1, 2019   Michigan   Health Insurance
                 
UIS Agency, LLC (UIS)   UIS Agency, LLC   August 17, 2020   New York   P&C – Trucking Industry
                 
J.P. Kush and Associates, Inc. (Kush)   Kush Benefit Solutions, LLC   May 1, 2021   Michigan   Health Insurance
                 
Barra & Associates, LLC   RELI Exchange, LLC   April 26, 2022   Illinois   Health Insurance

 

Recent Developments

 

Reverse Stock Split

 

On July 1, 2024, the Company effectuated a 1-for-17 reverse stock split of the Company’s issued and outstanding common stock (the “Reverse Split-2024”). The par value remained 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-2024 for all periods presented, unless otherwise indicated. The Reverse Split-2024 resulted in a rounding addition of approximately 110,350 shares valued at par, totaling $9,490 for which shares were issued in July 2024.

 

Non-GAAP Measure

 

The Company believes certain financial measures which meet the definition of non-GAAP financial measures, as defined in Regulation G of the SEC rules, provide important supplemental information. Adjusted EBITDA (“AEBITDA”), our key financial performance metric, is a non-GAAP financial measure that is not in accordance with, or an alternative to, measures prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). “AEBITDA” is defined as earnings before interest, taxes, depreciation, and amortization (EBITDA) with additional adjustments as further outlined below. The Company considers AEBITDA an important financial metric because it provides a meaningful financial measure of the quality of the Company’s operational, cash impacted and recurring earnings and operating performance across reporting periods. Other companies may calculate Adjusted EBITDA differently than we do, which might limit its usefulness as a comparative measure to other companies in the industry. AEBITDA is used by management in addition to and in conjunction (and not as a substitute) with the results presented in accordance with GAAP. Management uses AEBITDA to evaluate the Company’s operational performance, including earnings across reporting periods and the merits for implementing cost-cutting measures. We have presented AEBITDA solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations and assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Consistent with Regulation G, a description of such information is provided below herein and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q under “Results of Operations”.

 

21

 

 

We exclude the following items when calculating AEBITDA, and the following items define our non-GAAP financial measure AEBITDA:

 

  ● Interest and related party interest expense: Unrelated to core Company operations and excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.
  ● Depreciation and amortization: Non-cash charge, excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.
  ● Goodwill and/or asset impairments: Non-cash charge, excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.
  ● Equity-based compensation: Non-cash compensation provided to employees and service providers, excluded to provide more meaningful supplemental information regarding the Company’s core cash impacted operational performance.
  ● Change in estimated acquisition earn-out payables: An earn-out liability is a liability to the seller upon an acquisition which is contingent on future earnings. These liabilities are valued at each reporting period and the changes are reported as either a gain or loss in the change in estimated acquisition earn-out payables account in the consolidated statements of operations. The gain or loss is non-cash, can be highly volatile and overall is not deemed relevant to ongoing operations, thus, it’s excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.
  ● Recognition and change in fair value of warrant liabilities: This account includes changes to derivative warrant liabilities which are valued at each reporting period and could result in either a gain or loss. The period changes do not impact cash, can be highly volatile, and are unrelated to ongoing operations, and thus are excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.
  ● Other income (expense), net: Includes non-routine income or expenses and other individually de minimis items and is thus excluded as unrelated to core operations of the company.
  ● Transactional costs: This includes expenses related to mergers, acquisitions, financings and refinancings, and amendments or modification to indebtedness. Thes costs are unrelated to primary Company operations and are excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.
  ● Non-recuring costs: This account includes non-recurring non-operational items, related to costs incurred for a legal suit the Company has filed against one of the third parties involved in the discontinued operations and was excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.
  ● Loss from discontinued operations before tax: This account includes the net results from discontinued operations, and since discontinued, are unrelated to the Company’s ongoing operations and thus excluded to provide more meaningful supplemental information regarding the Company’s core operational performance.

 

Refer to the reconciliation of net (loss) income to AEBITDA, illustrated below in tabular format.

 

22

 

 

Results of Operations

 

RELIANCE GLOBAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS ANALYTICS

 

Comparison of the three months ended June 30, 2024 to the three months ended June 30, 2023

 

   June 30, 2024   June 30, 2023   Value Fluctuation   Percent Fluctuation   Explanations
Commission income  $3,233,342   $3,195,905   $37,437    1%  Increased commission income primarily driven by sustained organic growth.
                        
Commission expense (“CE”)  886,364    829,274    57,090    7%  Increased CE correlated to growth in revenues.
Salaries and wages (“S&W”)  1,955,152    1,771,064    184,088    10%  Increased S&W primarily impacted by equity-based pay.
General and administrative expenses (“G&A”)  991,633    1,125,211    (133,578)   -12%  Decreased G&A was driven by

leaner operations and OneFirm related cost-cutting measures.

Marketing and advertising (“M&A”)  76,983    109,860    (32,877)   -30%  M&A decrease consistent with Company’s current marketing strategy.
Change in estimated acquisition earn-out payables  -    543,233    (543,233)   -100%  Decrease pursuant to the settlement of all earn-out payables.
Depreciation and amortization (“D&A”)  469,788    655,449    (185,661)   -28%  Decrease due to impaired intangible assets no longer incurring D&A.
                        
Total operating expenses   4,379,920    5,034,091    (654,171)   -13%   
              -         
Loss from operations   (1,146,578)   (1,838,186)   691,908    -38%   
              -         
Other income (expense)             -         
Interest expense   (365,970)   (370,905)   4,935    -1%  Decrease was due to periodic paydowns on loan balances.
Interest related parties   (37,525)   (51,153)   13,628    -27%  Decrease was due to periodic paydowns on loan balances.
Other income (expense), net   11    (16,979)   16,990    -100%  Decrease due to certain minor non-recurring and non-significant other income/expense sources.
Recognition and change in fair value of warrant liabilities   60,667    (1,592,509)   1,653,176    -104%  Fluctuation per fair value changes in derivative warrant liabilities and warrants exercised.
Total other income (expense)   (342,817)   (2,031,546)   1,688,729    -83%   
                        
Loss from continuing operations before tax   (1,489,395)   (3,869,732)   2,380,337    -62%   
Income from discontinued operations before tax   -    2,814,445    (2,814,445)   -100%  Discontinued operations did not re-occur during 2024.
Net income (loss)  $(1,489,395)  $(1,055,286)  $(434,109)   41%   
Non-GAAP Measure                       
AEBITDA  $(177,966)  $(178,630)  $663   0%   

 

23

 

 

RELIANCE GLOBAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS ANALYTICS

 

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023

 

   June 30, 2024   June 30, 2023   Value Fluctuation   Percent Fluctuation   Explanations
Commission income  $7,315,780   $7,135,008   $180,772    3%  Increased commission income primarily driven by sustained organic growth.
                        
Commission expense (“CE”)   2,162,905    1,912,600    250,305    13%  Increased CE correlated to growth in revenues.
Salaries and wages (“S&W”)   3,786,814    3,526,957    259,857    7%  Increased S&W primarily impacted by equity-based pay.
General and administrative expenses (“G&A”)   2,366,523    1,962,978    403,545    21%  Increased G&A driven by higher acquisition & legal costs related to M&A activity and regulatory filings.
Marketing and advertising (“M&A”)   204,025    246,432    (42,407)   -17%  M&A decrease consistent with Company’s current marketing strategy
Change in estimated acquisition earn-out payables   47,761    1,019,925    (972,164)   -95%  Decrease pursuant to the settlement of the majority of earn-out payables.
Depreciation and amortization (“D&A”)   1,003,941    1,309,227    (305,286)   -23%  Decrease due to impaired intangible assets no longer incurring D&A.
Asset impairment   3,922,110    -    3,922,110        Increase due to impairment of certain intangible assets.
                        
Total operating expenses   13,494,079    9,978,119    3,515,960    35%   
              -         
Loss from operations   (6,178,299)   (2,843,111)   (3,335,188)   117%   
              -         
Other income (expense)             -         
Interest expense   (735,646)   (722,462)   (13,184)   2%  Increase was primarily due to elevated interest rates.
Interest related parties   (78,134)   (92,629)   14,495    -16%  Decrease was due to periodic paydowns on loan balances.
Other income (expense), net   22    (13,297)   13,319    -100%  Decrease due to certain minor non-recurring and non-significant other income/expense sources.
Recognition and change in fair value of warrant liabilities   156,000    2,673,723    (2,517,723)   -94%  Fluctuation per fair value changes in derivative warrant liabilities.
Total other (expense) income   (657,758)   1,845,335    (2,503,093)   -136%   
                        
Loss from continuing operations before tax   (6,836,057)   (997,776)   (5,838,281)   585%   
Loss from discontinued operations before tax   -    (1,846,048)   1,846,048    -100%  Discontinued operations did not re-occur during 2024.
Net income (loss)  $(6,836,057)  $(2,843,824)  $(3,992,233)   140%   
Non-GAAP Measure                       
AEBITDA  $(251,620)  $(9,288)  $(242,332)   2609%   

 

24

 

 

Non-GAAP Reconciliation from Net (Loss) Income to AEBITDA

 

The following table provides a reconciliation from net loss to AEBITDA for the three and six months ended June 30, 2024 and June 30, 2023.

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2024   2023   2024   2023 
                 
Net loss  $(1,489,395)  $(1,055,286)  $(6,836,057)  $(2,843,824)
Adjustments:                    
Interest and related party interest expense   403,495    422,058    813,780    815,091 
Depreciation and amortization   469,788    655,449    1,003,941    1,309,227 
Asset impairment   -    -    3,922,110    - 
Share-based compensation to employees, directors and service providers   333,897    413,362    488,808    457,158 
Change in estimated acquisition earn-out payables   -    543,233    47,761    1,019,925 
Other (income) expense, net   (11)   16,979    (22)   13,297 
Transactional costs   119,203    -    373,096    - 
Nonrecurring costs   45,724    47,513    90,963    47,513 
Recognition and change in fair value of warrant liabilities   (60,667)   1,592,509    (156,000)   (2,673,723)
(Income) loss from discontinued operations before tax   

-

    (2,814,445)   -    1,846,048 
Total adjustments   1,311,429    876,657    6,584,437    2,834,536 
                     
AEBITDA  $(177,966)  $(178,630)  $(251,620)  $(9,288)

 

Liquidity and capital resources

 

As of June 30, 2024, we had a cash balance of approximately $2,816,000 and working capital of approximately $600,000, compared with a cash balance of approximately $2,739,000 and working capital of approximately $1,189,000 at December 31, 2023. During the first quarter of 2024, the Company entered into an At Market Issuance Sales Agreement with EF Hutton LLC as sales agent (the “ATM Agreement”), pursuant to which the Company may offer and sell, from time to time through the sales agent, shares of its common stock having an aggregate offering price as determined by the then in effect prospectus supplement to the base prospectus included in the registration statement (the “ATM Capacity”).

 

During the six months ended June 30, 2024, the Company sold 313,713 shares of common stock under the ATM Agreement, at an average price of $5.3492, resulting in proceeds, net of $141,631 in agent commissions and legal and other fees, of $2,068,344. From the net sales proceeds, $146,174 was received in July 2024 and was recorded in the other receivables account in the unaudited condensed consolidated balance sheets as of June 30, 2024. As of the date of filing of this Quarterly Report on Form 10-Q, the net remaining ATM Capacity was $1,728,825.

 

Inflation

 

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

 

25

 

 

Off-balance sheet arrangements

 

We did not have any off-balance sheet arrangements, as such term is defined in Regulation S-K, during the six months ended June 30, 2024.

 

Cash Flows

 

  

Six Months Ended

June 30,

 
   2024   2023 
Net cash used in operating activities  $(889,594)   (2,007,101)
Net cash (used in) provided by investing activities   (36,531)   735,128 
Net cash provided by financing activities   1,002,825    2,042,460 
Net increase in cash, cash equivalents, and restricted cash  $

76,700

   $770,487 

 

Operating Activities

 

Net cash used in operating activities for the six months ended June 30, 2024, was approximately $890,000, compared to net cash flows used in operating activities of approximately $2.0 million for the six months ended June 30, 2023. The cash used includes a net loss of approximately $6,836,000, decreased by approximate non-cash adjustments of $5,332,000 related to asset impairments of approximately $3,922,000, gain from recognition and change in fair value of warrant liabilities of approximately $156,000, depreciation and amortization of approximately $1,004,000, other adjustments totaling approximately $562,000, as well as a net increase in cash due to changes of net working capital items of approximately $615,000.

 

Investing Activities

 

During the six months ended June 30, 2024, cash flows used in investing activities approximated $36,500 compared to cash flows used in investing activities of approximately $735,000 for the six months ended June 30, 2023. The cash used is primarily related to the purchase of fixed tangible and intangible assets.

 

Financing Activities

 

During the six months ended June 30, 2024, approximate cash used in financing activities was $1.0 million, as compared to approximately $2.0 million provided for the six months ended June 30, 2023. Net cash used in financing activities relates to proceeds from common shares issued pursuant to the ATM Agreement totaling approximately $2,068,000, offset by net debt principal, net short-term financings, and related party payables repayments of approximately $1,066,000.

 

Significant Accounting Policies and Estimates

 

We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements, and our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. There have been no significant changes in our significant accounting policies or critical accounting estimates since the end of fiscal year 2023.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

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

 

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2024, and determined them to be effective as of June 30, 2024.

 

26

 

 

Changes in Internal Control over Financial Reporting

 

During fiscal year 2024, the Company revised its internal controls over its goodwill evaluation process to ensure that any testing performed at interim dates are rolled forward to the reporting date of the relevant financial statements. Aside from the foregoing, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

 

Item 1. Legal Proceedings.

 

We are subject to various legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations, or cash flows, and accordingly, no legal contingencies are accrued as of June 30, 2024. Litigation relating to the insurance brokerage industry is not uncommon. As such we, from time to time have been, subject to such litigation. No assurances can be given with respect to the extent or outcome of any such litigation in the future.

 

Item 1A. Risk Factors.

 

Investing in our common stock involves a high degree of risk. You should consider carefully the information disclosed in Part I, Item 1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2023. Except as disclosed below, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, as amended from time to time.

 

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

 

As previously disclosed in the Current Report on Form 8-K filed on January 16, 2024 by the Company on January 12, 2024, the Company received written notice from Nasdaq’s Listing Qualifications Department notifying the Company that for the preceding 30 consecutive business days (November 29, 2023 to January 11, 2024), the Company’s common stock did not maintain a minimum closing bid price of $1.00 per share as required by Nasdaq Listing Rule 5550(a)(2). The notice has no immediate effect on the listing or trading of the Company’s common stock and the common stock continued to trade on Nasdaq under the symbol “RELI.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until July 10, 2024, to regain compliance with Nasdaq Listing Rule 5550(a) (2).

 

On July 16, 2024 Nasdaq’s Listing Qualifications Department notified the Company that it had regained compliance with Nasdaq Listing Rule 5550(a)(2).

 

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

 

The following table displays the unregistered sales of equity securities and use of proceeds.

 

Date of

Transaction

 

Transaction type

(e.g. new issuance,

cancellation,

shares returned to

treasury) and all

under Section

4(a)(2) of the

Securities
Act of 1933

 

Number of

Securities

Issued (or

cancelled) (1)

   Class of Securities  Value of Securities issued ($/per share) at Issuance   Were the Securities issued at a discount to market price at the time of issuance? (Yes/No) 

Individual/

Entity Securities

were issued to

(entities must have

individual

with voting /

investment

control

disclosed).

 

Reason for

Securities

issuance (e.g. for

cash or debt

conversion) OR

Nature of

Services

Provided (if

applicable)

 

Restricted or

Unrestricted

as of this

filing?

   Exemption or Registration Type? 
4/25/2024  New   30,029   Common   5.91   No  Julie A. Blockey  Acquisition   

Restricted

        4(a)(2)
5/21/2024  New   17,825   Common   5.61   No  Outside The Box Capital Inc.  Services   

Restricted

    4(a)(2)

 

(1) Gives effect to a 1:17 reverse stock split effective as of July 1, 2024

 

27

 

 

Item 3. Defaults Upon Senior Securities.

 

Not applicable.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

(a) None.

 

(b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the Company last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K.

 

(c) During the quarter ended June 30, 2024, no director or officer adopted or terminated: (i) any contract, instruction or written plan for the purchase or sale of securities of the registrant intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (a “Rule 10b5-1 trading arrangement”); and/or (ii) any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K

 

Item 6. Exhibits

 

The following exhibits are filed or furnished with this Quarterly Report on Form 10-Q.

 

Exhibit No.   Description
     
10.1   Reliance Global Group, Inc. 2024 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to the registrant’s registration statement on Form S-8 filed with the Securities and Exchange Commission on April 18, 2024).
     
10.2   Stock Exchange Agreement by and among Reliance Global Group, Inc., Jonathan S. Spetner, Michelle Spetner and Spetner Associates, Inc. dated May 14, 2024 (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 15, 2024).
     
10.3   Certificate of Amendment to the registrant’s Amended and Restated Articles of Incorporation, as amended, dated June 26, 2024 (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 26, 2024).
     
31.1*   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2*   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1**   Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer
     
101.INS*   Inline XBRL Instance Document
101.CAL*   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*   Inline XBRL Taxonomy Extension Schema Document
101.DEF*   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*   Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104   Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

 

*Filed herewith

**Furnished herewith

 

28

 

 

SIGNATURES

 

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

 

  Reliance Global Group, Inc.
     
Date: July 25, 2024 By:  /s/ Ezra Beyman
    Ezra Beyman
    Chief Executive Officer
    (principal executive officer)
     
Date: July 25, 2024 By: /s/ Joel Markovits
    Joel Markovits
    Chief Financial Officer
    (principal financial officer and principal accounting officer)

 

29

 

 

Exhibit 31.1

 

CERTIFICATIONS

 

I, Ezra Beyman, certify that:

 

1. I have reviewed the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 for Reliance Global Group, Inc.;

 

2. Based on my knowledge, this 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: July 25, 2024 By: /s/ Ezra Beyman
    Ezra Beyman
    Chief Executive Officer (Principal Executive Officer)

 

 

 

 

Exhibit 31.2

 

CERTIFICATIONS

 

I, Joel Markovits, certify that:

 

1. I have reviewed the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 for Reliance Global Group, Inc.;

 

2. Based on my knowledge, this 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.

 

Date: July 25, 2024 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)

 

Each of the undersigned officers of Reliance Global Group, Inc. (the “Company”), does hereby certify, that:

 

The Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: July 25, 2024 By: /s/ Ezra Beyman
    Ezra Beyman
    Chief Executive Officer (Principal Executive Officer)
     
Date: July 25, 2024 By: /s/ Joel Markovits
    Joel Markovits
    Chief Financial Officer
    (Principal Financial Officer)

 

 

 

v3.24.2
Cover - $ / shares
 6 Months Ended
Jun. 30, 2024
Jul. 25, 2024
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Jun. 30, 2024  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
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, City or Town Suite 105 Lakewood  
Entity Address, State or Province NJ  
Entity Address, Postal Zip Code 08701  
City Area Code 732  
Local Phone Number 380-4600  
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 Common Stock, Shares Outstanding   1,239,407
Entity Listing, Par Value Per Share $ 0.086  
Common Stock [Member]    
Title of 12(b) Security Common Stock  
Trading Symbol RELI  
Security Exchange Name NASDAQ  
Series A Warrants [Member]    
Title of 12(b) Security Series A Warrants  
Trading Symbol RELIW  
Security Exchange Name NASDAQ  
v3.24.2
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Current assets:    
Cash $ 1,405,824 $ 1,329,016
Restricted cash 1,409,787 1,409,895
Other receivables 167,292 899
Prepaid expense and other current assets 385,987 333,756
Total current assets 4,322,164 4,379,032
Property and equipment, net 140,483 139,999
Right-of-use assets 1,013,703 739,830
Intangibles, net 6,152,752 11,042,757
Goodwill 6,693,099 6,693,099
Other non-current assets 21,791 20,292
Total assets 18,343,992 23,015,009
Current liabilities:    
Accounts payable and other accrued liabilities 1,420,697 835,483
Short term financing agreements 108,525 56,197
Other payables 14,434 7,414
Current portion of long-term debt 1,471,233 1,390,766
Current portion of leases payable 263,369 285,171
Earn-out liability, current portion 159,867
Total current liabilities 3,722,111 3,189,851
Long term debt, less current portion 10,289,853 11,026,971
Leases payable, less current portion 781,586 484,335
Warrant liabilities 326 268,993
Total liabilities 15,454,751 15,867,679
Stockholders’ equity:    
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
Common stock, $0.086 par value; 117,647,059 shares authorized and 1,037,027 and 280,117 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively 89,184 24,089
Additional paid-in capital 48,638,079 46,125,206
Accumulated deficit (45,838,022) (39,001,965)
Total stockholders’ equity 2,889,241 7,147,330
Total liabilities and stockholders’ equity 18,343,992 23,015,009
Nonrelated Party [Member]    
Current assets:    
Accounts receivable 945,823 1,298,863
Related Party [Member]    
Current assets:    
Accounts receivable 7,451 6,603
Current liabilities:    
Current portion of loans payables, related parties 443,853 454,953
Loans payable, related parties, less current portion $ 660,875 $ 897,529
v3.24.2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2024
Dec. 31, 2023
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 117,647,059 117,647,059
Common stock, shares issued 1,037,027 280,117
Common stock, shares outstanding 1,037,027 280,117
v3.24.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Revenue        
Commission income $ 3,233,342 $ 3,195,905 $ 7,315,780 $ 7,135,008
Total revenue 3,233,342 3,195,905 7,315,780 7,135,008
Operating expenses        
Commission expense 886,364 829,274 2,162,905 1,912,600
Salaries and wages 1,955,152 1,771,064 3,786,814 3,526,957
General and administrative expenses 991,633 1,125,211 2,366,523 1,962,978
Marketing and advertising 76,983 109,860 204,025 246,432
Change in estimated acquisition earn-out payables 543,233 47,761 1,019,925
Depreciation and amortization 469,788 655,449 1,003,941 1,309,227
Asset impairments 3,922,110
Total operating expenses 4,379,920 5,034,091 13,494,079 9,978,119
Loss from operations (1,146,578) (1,838,186) (6,178,299) (2,843,111)
Other (expense) income        
Other income (expense), net 11 (16,979) 22 (13,297)
Recognition and change in fair value of warrant liabilities 60,667 (1,592,509) 156,000 2,673,723
Total other (expense) income (342,817) (2,031,546) (657,758) 1,845,335
Loss from continuing operations before tax (1,489,395) (3,869,732) (6,836,057) (997,776)
Income (loss) from discontinued operations before tax 2,814,445 (1,846,048)
Net loss $ (1,489,395) $ (1,055,287) $ (6,836,057) $ (2,843,824)
Basic (loss) earnings per share        
Continuing operations $ (2.76) $ (24.21) $ (14.77) $ (7.93)
Discontinued operations 17.61 (14.68)
Basic (loss) earnings per share (2.76) (6.60) (14.77) (22.61)
Diluted (loss) earnings per share        
Continuing operations (2.76) (24.21) (14.77) (7.93)
Discontinued operations 17.61 (14.68)
Diluted (loss) earnings per share $ (2.76) $ (6.60) $ (14.77) $ (22.61)
Weighted average number of shares outstanding - Basic 539,133 159,795 462,773 125,791
Weighted average number of shares outstanding - Diluted 539,133 159,795 462,773 125,791
Nonrelated Party [Member]        
Other (expense) income        
Interest expense $ (365,970) $ (370,905) $ (735,646) $ (722,462)
Related Party [Member]        
Other (expense) income        
Interest expense $ (37,525) $ (51,153) $ (78,134) $ (92,629)
v3.24.2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance at Dec. 31, 2022 $ 6,170 $ 35,896,852 $ (26,991,983) $ 8,911,039
Balance, shares at Dec. 31, 2022 71,740      
Common share payments for earn-outs $ 553 981,925 982,478
Common shares payments for earn-outs, shares 6,433      
Common share-based compensation 43,797 43,797
Net loss (1,788,538) (1,788,538)
Common share payments for related party convertible debt $ 338 644,662 645,000
Common shares payments for related party convertible debt, shares 3,926      
Common shares issued for reverse stock split round up $ 77 (4,723) (4,646)
Common shares issued for reverse stock split round up, shares 902      
Common shares issued in 2023 private placement $ 784 3,445,700 3,446,484
Common shares issued in 2023 private placement, shares 9,120      
Balance at Mar. 31, 2023 $ 7,922 41,008,213 (28,780,521) 12,235,614
Balance, shares at Mar. 31, 2023 92,121      
Balance at Dec. 31, 2022 $ 6,170 35,896,852 (26,991,983) 8,911,039
Balance, shares at Dec. 31, 2022 71,740      
Net loss       (2,843,824)
Balance at Jun. 30, 2023 $ 10,387 42,852,810 (29,835,808) 13,027,389
Balance, shares at Jun. 30, 2023 120,770      
Balance at Mar. 31, 2023 $ 7,922 41,008,213 (28,780,521) 12,235,614
Balance, shares at Mar. 31, 2023 92,121      
Common share payments for earn-outs $ 1,782 1,431,918 1,433,700
Common shares payments for earn-outs, shares 20,721      
Common share-based compensation 35,367 35,367
Net loss (1,055,287) (1,055,287)
Common shares issued for services $ 570 377,425 377,995
Common shares issued for services, shares 6,621      
Common shares issued for vested stock awards $ 112 (112)
Common shares issued for vested stock awards, shares 1,307      
Balance at Jun. 30, 2023 $ 10,387 42,852,810 (29,835,808) 13,027,389
Balance, shares at Jun. 30, 2023 120,770      
Balance at Dec. 31, 2023 $ 24,089 46,125,206 (39,001,965) 7,147,330
Balance, shares at Dec. 31, 2023 280,117      
Common share payments for earn-outs   17,628 17,628
Common shares payments for earn-outs, shares      
Common shares issued for ATM share sales $ 949 123,699   124,648
Common shares issued for ATM share sales, shares 11,036      
Common shares issued for abeyance share conversions $ 3,659 (3,659)  
Common shares issued for Abeyance Share conversions, shares 42,545      
Common share-based compensation $ 99 18,466 18,565
Common share based compensation, shares 1,149      
Net loss (5,346,663) (5,346,663)
Balance at Mar. 31, 2024 $ 28,796 46,281,340 (44,348,628) 1,961,508
Balance, shares at Mar. 31, 2024 334,847      
Balance at Dec. 31, 2023 $ 24,089 46,125,206 (39,001,965) 7,147,330
Balance, shares at Dec. 31, 2023 280,117      
Net loss       (6,836,057)
Balance at Jun. 30, 2024 $ 89,184 48,638,079 (45,838,022) 2,889,241
Balance, shares at Jun. 30, 2024 1,037,027      
Balance at Mar. 31, 2024 $ 28,796 46,281,340 (44,348,628) 1,961,508
Balance, shares at Mar. 31, 2024 334,847      
Common share payments for earn-outs $ 2,582 (2,582)
Common shares payments for earn-outs, shares 30,029      
Common shares issued for ATM share sales $ 26,032 1,917,664 1,943,696
Common shares issued for ATM share sales, shares 302,677      
Common shares issued for abeyance share conversions $ 5,115 (5,115)
Common shares issued for Abeyance Share conversions, shares 59,471      
Common share-based compensation $ 5,192 240,574 245,766
Common share based compensation, shares 60,373      
Net loss (1,489,395) (1,489,395)
Common shares issued for Series B warrants $ 3,403 109,263 112,666
Common shares issued for series B warrant, shares 39,569      
Common shares issued for Series G warrants $ 16,532 (16,532)
Common shares issued for series G warrant, shares 192,236      
Common shares issued for services $ 1,533 113,467 115,000
Common shares issued for services, shares 17,825      
Balance at Jun. 30, 2024 $ 89,184 $ 48,638,079 $ (45,838,022) $ 2,889,241
Balance, shares at Jun. 30, 2024 1,037,027      
v3.24.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (6,836,057) $ (2,843,824)
Adjustment to reconcile net income to net cash used in operating activities:    
Depreciation and amortization 1,003,941 1,309,227
Asset impairments 3,922,110
Amortization of debt issuance costs and accretion of debt discount 23,442 23,442
Non-cash lease expense (income) 1,574 (4,355)
Equity based compensation expense 264,331 79,164
Equity based payments to service providers 224,477 377,995
Recognition and change in fair value of warrant liability (156,000) (2,673,723)
Earn-out fair value and write-off adjustments 47,761 1,019,925
Change in operating assets and liabilities:    
Accounts receivable 353,040 15,444
Accounts receivable, related parties (847) (1,072)
Other receivables (166,393) 10,816
Prepaid expense and other current assets (161,708) (303,322)
Other non-current assets (1,500)
Accounts payables and other accrued liabilities 585,215 (40,135)
Other payables 7,020 115,988
Net cash used in continuing operating activities (889,594) (2,914,430)
Net cash adjustments for discontinued operating activities 907,329
Total net cash used in continuing and discontinued operating activities (889,594) (2,007,101)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from sale of investment in NSURE 900,000
Purchase of property and equipment (15,397) (13,010)
Purchase of intangibles (21,134) (151,862)
Net cash (used in) provided by investing activities (36,531) 735,128
CASH FLOWS FROM FINANCING ACTIVITIES:    
Principal repayments of debt (680,093) (450,935)
Principal repayments of short-term financings (106,460)  
Proceeds from short-term financings 158,788 58,707
Payments of loans payable, related parties (437,754) (649,870)
Proceeds from common shares issued through an at the market offering 2,068,344
Earn-out liability payments (344,225)
Proceeds from private placement of shares and warrants 3,446,484
Net cash provided by continuing financing activities 1,002,825 2,060,161
Net cash used in discontinued financing activities (17,701)
Total net cash provided by continuing and discontinued financing activities 1,002,825 2,042,460
Net increase in cash and restricted cash 76,700 770,487
Cash and restricted cash at beginning of year 2,738,911 1,909,769
Cash and restricted cash at end of year $ 2,815,611 $ 2,680,256
v3.24.2
Pay vs Performance Disclosure - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Pay vs Performance Disclosure [Table]            
Net Income (Loss) $ (1,489,395) $ (5,346,663) $ (1,055,287) $ (1,788,538) $ (6,836,057) $ (2,843,824)
v3.24.2
Insider Trading Arrangements
 3 Months Ended
Jun. 30, 2024
Trading Arrangements, by Individual [Table]  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.2
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

 

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

 

Basis of Presentation and Principles of Consolidation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of recurring accruals) necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”), as the same may be amended from time to time. Capitalized terms not defined in this Quarterly Report on Form 10-Q refer to capitalized terms as defined in the Form 10-K. Certain prior period accounts and balances in these unaudited condensed consolidated financial statements and notes thereto have been reclassified to conform to the current period’s presentation.

 

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

 

Liquidity

 

As of June 30, 2024, the Company’s reported cash and restricted cash aggregated balance was approximately $2,816,000, current assets were approximately $4,322,000, and current liabilities were approximately $3,722,000. As of June 30, 2024, the Company had working capital of approximately $600,000 and stockholders’ equity of approximately $2,889,000. For the six months ended June 30, 2024, the Company had a loss from operations of approximately $6,178,000, which includes a non-cash asset impairment loss of approximately $3,922,000, and net loss of approximately $6,836,000. During the first quarter of 2024, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with EF Hutton LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time, through the Agent, shares of its common stock having an approximate aggregate remaining offering price of up to $1,728,825 as of the date of filing of this Quarterly Report on Form 10-Q.

 

Although there can be no assurance that debt or equity financing will be available on acceptable terms, or at all, the Company believes its financial position and its ability to raise capital to be reasonable and sufficient. Based on our assessment, we do not believe there are conditions or events that, in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year of filing these unaudited financial statements with the Securities and Exchange Commission (“SEC”).

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

 

 

Cash and Restricted Cash

 

Cash and restricted cash reported on our condensed consolidated balance sheets are reconciled to the total shown on our condensed consolidated statements of cash flows as follows:

 

   June 30, 2024   June 30, 2023 
Cash  $1,405,824   $1,274,743 
Restricted cash   1,409,787    1,405,513 
Total cash and restricted cash  $2,815,611   $2,680,256 

 

Fair Value of Financial Instruments

 

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

 

Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and

 

Level 3 — Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.

 

Warrant Liabilities: The Company re-measures the fair value of its material Level 3 warrant liabilities at the balance sheet date, or at interim dates as applicable for warrant exercise transactions that may occur, using a binomial option pricing model. The following summarizes the significant unobservable inputs for valuations occurring during the periods ended:

 

   June 30, 2024   December 31, 2023 
Stock price  $3.74   $9.18 
Volatility   135.00%   110.00%
Time to expiry   4.53    4.99 
Dividend yield   0%   0%
Risk free rate   4.30%   3.80%

 

The following reconciles fair value of the liability classified warrants:

 

  

Series B

Warrant

Liabilities

  

Placement

Agent Warrants

   Total 
Beginning balance, December 31, 2023  $268,667   $326   $268,993 
Unrealized gain   (95,333)   -    (95,333)
Warrants exercised or exchanged   -    -    - 
Ending balance, March 31, 2024  $173,334   $326   $173,660 
Unrealized gain   (60,667)   -    (60,667)
Warrants exercised or exchanged   (112,667)   -    (112,667)
Ending balance, June 30, 2024  $-   $326   $326 

 

Earn-out liabilities: The Company utilizes two valuation methods to value its Level 3 earn-out liabilities: (a) the income valuation approach, and (b) the Monte Carlo simulation method. Key valuation and unobservable inputs for the income valuation approach include contingent payment arrangement terms, projected revenues and cash flows, rates of return, discount rates and probability assessments.

 

 

The following table summarizes the significant unobservable inputs used in the fair value measurements:

   

   June 30, 2024  December 31, 2023
Valuation technique  N/A  Discounted cash flow
Significant unobservable input  N/A  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:

 

The following table reconciles fair value of earn-out liabilities for the periods ended June 30, 2024, and December 31, 2023:

 

   June 30, 2024   December 31, 2023 
Beginning balance – January 1  $159,867   $2,709,478 
           
Acquisitions and settlements   -    (3,260,403)
           
Period adjustments:          
Fair value changes included in earnings*   47,761    1,716,873 
Earn-out payable in common shares   (17,628)   (159,867)
Earn-out transferred to loans payable, related parties   -    (846,214)
Earn-out payments   (190,000)   - 
Ending balance   -    159,867 
Less: Current portion   -    (159,867)
Ending balance, less current portion  $-   $- 

 

* Recorded in the change in estimated acquisition earn-out payables caption on the condensed consolidated statements of operations.

 

Revenue Recognition

 

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

 

Three Months ended June 30, 2024  Medical   Life   Property and Casualty   Disaggregates revenue 
Three Months Ended June 30, 2024  Medical   Life   Property and Casualty   Total 
                 
Three months ended June 30, 2024  $2,389,845   $38,744   $804,753   $3,233,342 
Three months ended June 30, 2023  $2,526,713   $71,980   $597,212   $3,195,905 
Six months ended June 30, 2024  $5,715,662   $94,961   $1,505,157   $7,315,780 
Six months ended June 30, 2023  $5,822,458   $105,604   $1,206,946   $7,135,008 

 

The following are customers representing 10% or more of total revenue:

 

Insurance Carrier  2024   2023 
   Three Months Ended June 30, 
Insurance Carrier  2024   2023 
Priority Health   22%   28%
BlueCross BlueShield   11%   12%

 

 

Insurance Carrier  2024   2023 
   Six Months Ended June 30, 
Insurance Carrier  2024   2023 
Priority Health   35%   37%
BlueCross BlueShield   12%   13%

 

No other single customer accounted for more than 10% of the Company’s commission revenues during the three and six months ended June 30, 2024 and 2023. The loss of any significant customer could have a material adverse effect on the Company.

 

Income Taxes

 

The Company recorded no income tax expense for the three and six months ended June 30, 2024 and 2023 because the estimated annual effective tax rate was zero. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating loss carry forwards, and available tax planning alternatives.

 

As of June 30, 2024 and December 31, 2023, the Company provided a full valuation allowance against its net deferred tax assets, since the Company believes it is more likely than not that its deferred tax assets will not be realized.

 

Recently Issued Accounting Pronouncements

 

We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements not already disclosed in the Form 10-K.

 
v3.24.2
GOODWILL AND OTHER INTANGIBLE ASSETS
 6 Months Ended
Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 2. GOODWILL AND OTHER INTANGIBLE ASSETS

 

The following table rolls forward the Company’s goodwill balance for the periods ended June 30, 2024, and December 31, 2023, adjusted for discontinued operations.

 

   Goodwill 
December 31, 2022  $14,287,099 
Goodwill impairment recognized as of December 31, 2023   (7,594,000)
December 31, 2023   6,693,099 
June 30, 2024  $6,693,099 

 

Asset Impairments:

 

During the quarter ended March 31, 2024, certain intangible assets stemming from discontinued operations which were originally transferred to the Company’s operating entity, were determined to have carrying values exceeding fair value, and thus were considered impaired. These intangible assets consisted of customer relationships, and internally developed and purchased software, with respective net of accumulated amortization asset values of $3,802,438, $65,411, and $54,261. The write-offs resulted in a total asset impairment charge of $3,922,110, recorded in the asset impairment account on the unaudited condensed consolidated statements of operations for the six-month period ended June 30, 2024.

 

 

The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2024:

 

  

Weighted

Average Remaining Amortization

Period

(Years)

  

Gross

Carrying Amount

  

Accumulated

Amortization

  

Net Carrying

Amount

 
Trade name and trademarks  1.0   $1,807,188   $(1,487,205)  $319,983 
Internally developed software  2.7    1,698,186    (773,371)   924,815 
Customer relationships  6.3    7,372,290    (2,813,315)   4,558,975 
Purchased software  2.0    564,396    (563,074)   1,322 
Video production assets  -    50,000    (50,000)   - 
Non-competition agreements  0.4    3,504,810    (3,157,153)   347,657 
       $14,996,870   $(8,844,118)  $6,152,752 

 

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, 2023:

 

  

Weighted

Average Remaining Amortization

period

(Years)

  

Gross

Carrying Amount

  

Accumulated

Amortization

  

Net Carrying

Amount

 
Trade name and trademarks  1.5   $1,807,189   $(1,320,939)  $486,250 
Internally developed software  3.2    1,798,922    (650,029)   1,148,893 
Customer relationships  8.0    11,922,290    (3,193,629)   8,728,661 
Purchased software  0.3    667,206    (618,418)   48,788 
Video production assets  -    50,000    (50,000)   - 
Non-competition agreements  0.9    3,504,810    (2,874,645)   630,165 
      $19,750,417   $(8,707,660)  $11,042,757 

 

The following table reflects expected amortization expense as of June 30, 2024, for each of the following five years and thereafter:

 

Years Ending December 31,  Amortization Expense 
2024 (remaining six months)  $764,453 
2025   1,397,041 
2026   1,148,216 
2027   807,696 
2028   717,314 
Thereafter   1,318,032 
Total  $6,152,752 

 

 
v3.24.2
LONG-TERM DEBT AND SHORT-TERM FINANCINGS
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
LONG-TERM DEBT AND SHORT-TERM FINANCINGS

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

 

Long-Term Debt

 

The composition of the long-term debt is as follows:

 

  

June 30,

2024

  

December 31,

2023

 
         
Oak Street Funding LLC Term Loan   $338,812   $369,602 
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 $9,060 and $10,069 as of June 30, 2024 and December 31, 2023, respectively  $338,812   $369,602 
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 $11,250 and $12,525 as of June 30, 2024, and December 31, 2023, respectively   557,497    604,830 
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 $6,997 and $7,733 as of June 30, 2024 and December 31, 2023, respectively   646,205    695,758 
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 $28,117 and $31,026 as of June 30, 2024 and December 31, 2023, respectively   1,636,131    1,758,558 
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 $32,409 and $35,649 as of June 30, 2024 and December 31, 2023, respectively   2,712,692    2,899,409 
Oak Street Funding LLC Term Loan for the acquisition of Barra, variable interest of prime rate plus 2.5%, maturing May 2032, net of deferred financing costs of $166,049 and $176,762 as of June 30, 2024 and December 31, 2023, respectively   5,869,749    6,089,580 
 Long term debt gross    11,761,086    12,417,737 
Less: current portion   (1,471,233)   (1,390,766)
Long-term debt  $10,289,853   $11,026,971 

 

Oak Street Funding LLC – Term Loans and Credit Facilities

 

Years Ending December 31, 

Maturities of

Long-Term Debt

 
2024 (remaining six months)  $714,133 
2025   1,552,772 
2026   1,729,160 
2027   1,925,603 
2028   2,106,978 
Thereafter   3,986,322 
Total   12,014,968 
Less: debt issuance costs   (253,882)
Total  $11,761,086 

 

 

Short-Term Financings

 

The Company has various short-term notes payable for financed items such as insurance premiums. These are normally paid in equal installments over a period of twelve months or less and carry interest rates ranging between 7.95% and 11.95% per annum. As of June 30, 2024, and December 31, 2023, balances outstanding on short-term financings were $108,525 and $56,197, respectively.

 
v3.24.2
WARRANT LIABILITIES
 6 Months Ended
Jun. 30, 2024
Warrant Liabilities  
WARRANT LIABILITIES

NOTE 4. WARRANT LIABILITIES

 

Series B Warrants and PAW’s

 

On June 18, 2024, the holder of the remaining Series B Warrants exercised all their remaining 50,980 warrants via cashless exercises, thereby acquiring 39,569 shares of the Company’s common stock, $0.086 par value per share. The Series B Warrants effective exercise price per share as of the date of the exercises was $3.91.

 

For the three and six months ended June 30, 2024, net fair value gains and losses recognized for the Series B Warrants and PAW’s, were gains of $60,667 and $156,000, respectively, whereas for the three and six months ended June 30, 2023, net fair value gains and losses recognized were a loss of $1,592,509 and a gain of $2,673,723, respectively, presented in the recognition and change in fair value of warrant liabilities account in the unaudited consolidated statements of operations.

 

As of June 30, 2024, there were 0 and 959 Series B Warrants and PAW’s outstanding respectively, with respective fair values of $0 and $326, presented in the warrant liability account on the condensed consolidated balance sheets. As of June 30, 2023, there were 78,383 and 959 Series B Warrants and PAW’s outstanding, with respective fair values of $3,741,983 and $326, presented in the warrant liability account on the unaudited condensed consolidated balance sheets.

 
v3.24.2
EQUITY
 6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
EQUITY

NOTE 5. EQUITY

 

Common Stock

 

The Company is authorized to issue 117,647,059 shares of common stock, $0.086 par value. Each share of issued and outstanding common stock entitles the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the Company upon liquidation or dissolution.

 

During the first quarter of 2024, the Company issued 11,036 shares through its ATM program, 42,545 pursuant to abeyance share conversions and 1,149 shares for equity-based compensation.

 

On July 1, 2024, the Company effectuated a 1-for-17 reverse stock split of the Company’s issued and outstanding common stock (the “Reverse Split-2024”). The par value remained unchanged following the Reverse Split-2024. 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-2024 for all periods presented, unless otherwise indicated. The Reverse Split-2024 resulted in a rounding addition of approximately 110,350 shares valued at par, totaling $9,490 for which shares were issued in July 2024.

 

During the second quarter of 2024, the Company issued 302,677 shares through its ATM program, 59,471 pursuant to abeyance share conversions, 60,373 shares for equity-based compensation, 30,029 shares for repayment of an earn-out liability, 39,569 shares on the exercise of Series B warrants, 192,236 shares for the exercise of Series G warrants, and 17,825 shares for service rendered.

 

As of June 30, 2024, and December 31, 2023, there were 1,037,027 and 280,117 shares of common stock outstanding, respectively.

 

Abeyance Shares

 

During the first and second quarters of 2024 respectively, upon request from an institutional investor, the Company converted 42,545 and 59,471 abeyance shares into common stock, thereby issuing 42,545 and 59,471 common shares, resulting in zero abeyance shares outstanding as of June 30, 2024.

 

Series G Warrants

 

Pursuant to the terms of the Series G Warrants, during the second quarter of 2024, the Series G Warrant exercise price reset from $11.16 per share to $3.96 per share, as a result of sales of our common stock pursuant to the ATM Agreement discussed below. On June 18, 2024, the holder of the Series G Warrants exercised all of its 247,678 warrants, via cashless exercises, thereby acquiring 192,236 shares of the Company’s common stock, which resulted in no remaining Series G Warrants outstanding as of June 30, 2024.

 

 

At Market Program (the “ATM”)

 

On February 15, 2024, the Company entered into the ATM Agreement with the Agent, pursuant to which the Company may offer and sell, from time to time through the Agent, shares of its common stock having an aggregate maximum offering price as determined by the then in effect prospectus supplement to the base prospectus included in the registration statement (the “ATM Capacity”). Any shares offered and sold in the ATM offering will be issued pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-275190), which was declared effective by the SEC on November 7, 2023, and related prospectus supplements and accompanying base prospectus relating to the ATM offering. Under the Agreement, the Agent may sell shares by any method permitted by law and deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The offering of shares pursuant to the ATM Agreement will terminate upon the earlier of (i) the sale of all of the shares subject to the ATM Agreement, or (ii) the termination of the ATM Agreement by the Agent or the Company, as permitted therein. The Company agreed to pay to the Agent in cash, upon each sale of shares pursuant to the ATM Agreement, an amount equal to 3.5% of the gross proceeds from each such sale. The Company agreed to reimburse the Agent for certain specified expenses in connection with entering into the ATM Agreement.

 

During the six months ended June 30, 2024, the Company sold 313,713 shares of common stock under the ATM Agreement, at an average price of $5.3492, receiving proceeds, net of $141,631 in agent commissions and legal and other fees, of $2,068,344. From the net sale proceeds, $146,174 was received in July 2024 and is recorded in the other receivables account in the unaudited condensed consolidated balance sheets as of June 30, 2024.As of the date of filing of this Quarterly Report on Form 10-Q, the net remaining ATM Capacity was $1,728,825.

 

Equity-based Compensation

 

Total stock-based compensation expense recorded in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2024, and 2023 was $245,766 and $35,367, respectively. Total stock-based compensation expense recorded in the unaudited condensed consolidated statements of operations for the six months ended June 30, 2024 and 2023 was $264,331 and $79,164, respectively.

 
v3.24.2
EARNINGS (LOSS) PER SHARE
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
EARNINGS (LOSS) PER SHARE

NOTE 6. EARNINGS (LOSS) PER SHARE

 

Basic earnings per common share (“EPS”) applicable to common stockholders is computed by dividing earnings applicable to common stockholders by the weighted-average number of common shares outstanding.

 

If there is a loss from operations, diluted EPS is computed in the same manner as basic EPS is computed. Similarly, if the Company has net income but its preferred dividend adjustment made in computing income available to common stockholders results in a net loss available to common stockholders, diluted EPS would be computed in the same manner as basic EPS.

 

The following calculates basic and diluted EPS:

 

SCHEDULE OF CALCULATIONS OF BASIC AND DILUTED EPS

   Three Months   Three Months 
   Ended   Ended 
   June 30, 2024   June 30, 2023 
Loss from continuing operations  $(1,489,395)  $(3,869,732)
Net loss continuing operations, numerator, basic computation   (1,489,395)   (3,869,732)
Recognition and change in fair value of warrant liabilities   -    - 
Net loss from continuing operations, numerator, diluted computation  $(1,489,395)  $(3,869,732)
           
Weighted average common shares, basic   539,133    159,795 
Effect of Series B Warrants   -    - 
Weighted average common shares, dilutive   539,133    159,795 
Loss per common share – basic  $(2.76)  $(24.21)
Loss per common share – diluted  $(2.76)  $(24.21)

 

 

   Six Months   Six Months 
   Ended   Ended 
   June 30, 2024   June 30, 2023 
Loss from continuing operations  $(6,836,057)  $(997,776)
Net Loss continuing operations, numerator, basic computation   (6,836,057)   (997,776)
Recognition and change in fair value of warrant liabilities   -    - 
Net loss from continuing operations, numerator, diluted computation  $(6,836,057)  $(997,776)
           
Weighted average common shares, basic   462,773   125,791 
Effect of Series B Warrants   -    - 
Weighted average common shares, dilutive   462,773    125,791 
Loss per common share – basic  $(14.77)  $(7.93)
Loss per common share – diluted  $(14.77)  $(7.93)

 

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

 

SCHEDULE OF DILUTIVE NET LOSS PER COMMON SHARE 

  

June 30, 2024

  

June 30, 2023

 
   For the Three Months Ended 
  

June 30, 2024

  

June 30, 2023

 
Shares subject to outstanding common stock options   510    649 
Shares subject to outstanding Series A warrants   6,647    6,647 
Shares subject to outstanding PAW’s   

959

   

959

Shares subject to outstanding Series F warrants   -    123,840 
Shares subject to PA Warrants   3,096    3,096 
Shares subject to unvested stock awards   52    205 

 

  

June 30, 2024

  

June 30, 2023

 
   For the Six Months Ended 
  

June 30, 2024

  

June 30, 2023

 
Shares subject to outstanding common stock options   510    649 
Shares subject to outstanding Series A warrants   6,647    6,647 
Shares subject to outstanding PAW’s   959    959 
Shares subject to outstanding Series F warrants   -    123,840 
Shares subject to PA Warrants   3,096    3,096 
Shares subject to unvested stock awards   52    205 

 
v3.24.2
LEASES
 6 Months Ended
Jun. 30, 2024
Leases  
LEASES

NOTE 7. LEASES

 

Operating lease expense for the three months ended June 30, 2024, and 2023 was $102,073 and $123,326, respectively. Operating lease expense for the six months ended June 30, 2024, and 2023 was $207,029 and $239,296 respectively. As of June 30, 2024, the weighted average remaining lease term and weighted average discount rate for the operating leases were 5.08 years and 8.35%, respectively.

 

 

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

 

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT 

Fiscal year ending December 31,  Operating Lease Obligations 
2024 (remaining six months)  $180,322 
2025   265,399 
2026   229,522 
2027   215,325 
2028   182,190 
Thereafter   225,136 
Total undiscounted operating lease payments   1,297,894 
Less: Imputed interest   (252,939)
Present value of operating lease liabilities  $1,044,955 

 
v3.24.2
COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 8. COMMITMENTS AND CONTINGENCIES

 

Legal Contingencies

 

The Company is subject to various legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations, or cash flows, and accordingly and no legal contingencies are accrued as of June 30, 2024, and December 31, 2023. Litigation relating to the insurance brokerage industry is not uncommon. As such the Company, from time to time has 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, Southwestern Montana Insurance Center, LLC, a Montana limited liability company (the “Subsidiary”), Southwestern Montana Financial Center, Inc., a Montana corporation (the “Seller”), and Julie A. Blockey (the “Holder”, and collectively with the Company, Subsidiary, and Seller, the “Parties”) entered into a purchase agreement on or around April 1, 2019 (the “Purchase Agreement”), whereby the Company purchased the business and certain assets noted within the Purchase Agreement. On September 29, 2023, the Parties entered into a first amendment to the Purchase Agreement (the “First Amendment”). Pursuant to the First Amendment, the Parties agreed to a total remaining earn-out related balance of $500,000 owed under the Purchase Agreement. In satisfaction of such remaining balance, the Company agreed to issue 10,272 shares of the Company’s restricted common stock, par value $0.086 per share (the “Common Stock”), to the Holder. The First Amendment also stated that if the Nasdaq official closing price of the Common Stock is less than $41.31 on March 29, 2024 (the “Calculation Date”), then a determination of the Make-Up Amount (as defined herein) will be made. The “Make-Up Amount” means $425,000 minus the Blockey Shares Value (10,272 multiplied by the Nasdaq official closing price of the Common Stock on the Calculation Date). The First Amendment further stated that the Company shall pay the Make-Up Amount with a combination of cash and Company shares. Accordingly, on the Calculation Date, a total Make-Up Amount of $367,496 was determined, and as agreed upon by the Parties, will be payable, $190,000 in cash, and the remaining balance via the issuance of 30,029 of the Company’s Common Stock, subsequently issued to the Seller during April, 2024. The $190,000 cash balance was paid during the quarter ended June 30, 2024.

 

The following outlines changes to the Company’s earn-out liability balances for the respective periods ended June 30, 2024 and December 31, 2023:

 

SCHEDULE OF EARN-OUT LIABILITY

   Fortman   Montana   Altruis   Kush   Barra   Total 
Ending balance December 31, 2023  $-   $159,867   $-   $-   $-   $159,867 
Payments   -    (190,000

)

         -         -    -    - 
Estimates and fair value adjustments   -    47,761    -    -    -    47,761 
Payable in common stock   -    (17,628)   -    -         -    (17,628)
Ending balance June 30, 2024  $-   $-   $-   $-   $-   $- 

 

   Fortman   Montana   Altruis   Kush   Barra   Total 
Ending balance December 31, 2022  $667,000   $500,001   $834,943   $147,534   $560,000   $2,709,478 
Payments   (1,433,700)   (750,001)   (929,168)   (147,534)   -    (3,260,403)
Estimates and fair value adjustments   1,612,914    569,734    94,225    -    (560,000)   1,716,873 
Payable in common stock   -    (159,867)   -    -    -    (159,867)
Reclass to loans payable, related parties*   (846,214)   -    -    -    -    (846,214)
Ending balance December 31, 2023  $-   $159,867   $-   $-   $-   $159,867 

 

* The Company modified certain contingent earn-out payables by entering into fixed payment arrangements. Thus, remaining open balances are reclassified to the loans payable, related parties account on the consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.

 

 

Definitive Acquisition Agreements

 

On May 14, 2024, the Company entered into a Stock Exchange Agreement (the “Stock Exchange Agreement”) to acquire Spetner Associates (“Spetner”). Pursuant to the Stock Exchange Agreement, the Company agreed to: (i) acquire 80% of the issued and outstanding shares of common stock, par value $1.00 per share, of Spetner (the “Spetner Common Stock”) for $13,714,286 (which amount was to be paid as $8,000,000 in cash, the issuance of certain shares of the Company’s common stock, and the Company’s issuance of a promissory note); and (ii) have the sole option to acquire the remaining 20% of Spetner common stock for a predetermined amount based on a multiple of EBITDA.

 
v3.24.2
RELATED PARTY TRANSACTIONS
 6 Months Ended
Jun. 30, 2024
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 9. RELATED PARTY TRANSACTIONS

 

The following table summarizes the loans payable, related parties current and non-current accounts, as of the periods ended June 30, 2024 and December 31, 2023, and the interest expense related parties account for the three and six-month periods ended June 30, 2024 and June 30, 2023, as presented on the condensed consolidated balance sheets and condensed consolidated statements of operations, respectively:

SCHEDULE OF LOANS PAYABLE TO RELATED PARTIES 

   Related Parties Payable   Interest Expense, Related Parties 
   Current Portion   Long Term Portion   for the Three Months Ended   for the Six Months Ended 
Related Party  June 30, 2024   December 31, 2023   June 30, 2024   December 31, 2023   June 30, 2024   June 30, 2023   June 30, 2024   June 30, 2023 
Employee Payables   6,127    25,708    -    -    577    1,730    2,307    3,459 
Deferred Purchase Price Liability   256,173    233,504    111,554    247,055    17,335    49,423    37,167    89,170 
Purchase Agreement Liability   181,553    195,741    549,321    650,475    19,613    -    38,660    - 
Total   443,853    454,953    660,875    897,530    37,525    51,153    78,134    92,629 

 
v3.24.2
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies)
 6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of recurring accruals) necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”), as the same may be amended from time to time. Capitalized terms not defined in this Quarterly Report on Form 10-Q refer to capitalized terms as defined in the Form 10-K. Certain prior period accounts and balances in these unaudited condensed consolidated financial statements and notes thereto have been reclassified to conform to the current period’s presentation.

 

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

 
Liquidity

Liquidity

 

As of June 30, 2024, the Company’s reported cash and restricted cash aggregated balance was approximately $2,816,000, current assets were approximately $4,322,000, and current liabilities were approximately $3,722,000. As of June 30, 2024, the Company had working capital of approximately $600,000 and stockholders’ equity of approximately $2,889,000. For the six months ended June 30, 2024, the Company had a loss from operations of approximately $6,178,000, which includes a non-cash asset impairment loss of approximately $3,922,000, and net loss of approximately $6,836,000. During the first quarter of 2024, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with EF Hutton LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time, through the Agent, shares of its common stock having an approximate aggregate remaining offering price of up to $1,728,825 as of the date of filing of this Quarterly Report on Form 10-Q.

 

Although there can be no assurance that debt or equity financing will be available on acceptable terms, or at all, the Company believes its financial position and its ability to raise capital to be reasonable and sufficient. Based on our assessment, we do not believe there are conditions or events that, in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year of filing these unaudited financial statements with the Securities and Exchange Commission (“SEC”).

 
Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

 

 
Cash and Restricted Cash

Cash and Restricted Cash

 

Cash and restricted cash reported on our condensed consolidated balance sheets are reconciled to the total shown on our condensed consolidated statements of cash flows as follows:

 

   June 30, 2024   June 30, 2023 
Cash  $1,405,824   $1,274,743 
Restricted cash   1,409,787    1,405,513 
Total cash and restricted cash  $2,815,611   $2,680,256 

 
Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

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

 

Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and

 

Level 3 — Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.

 

Warrant Liabilities: The Company re-measures the fair value of its material Level 3 warrant liabilities at the balance sheet date, or at interim dates as applicable for warrant exercise transactions that may occur, using a binomial option pricing model. The following summarizes the significant unobservable inputs for valuations occurring during the periods ended:

 

   June 30, 2024   December 31, 2023 
Stock price  $3.74   $9.18 
Volatility   135.00%   110.00%
Time to expiry   4.53    4.99 
Dividend yield   0%   0%
Risk free rate   4.30%   3.80%

 

The following reconciles fair value of the liability classified warrants:

 

  

Series B

Warrant

Liabilities

  

Placement

Agent Warrants

   Total 
Beginning balance, December 31, 2023  $268,667   $326   $268,993 
Unrealized gain   (95,333)   -    (95,333)
Warrants exercised or exchanged   -    -    - 
Ending balance, March 31, 2024  $173,334   $326   $173,660 
Unrealized gain   (60,667)   -    (60,667)
Warrants exercised or exchanged   (112,667)   -    (112,667)
Ending balance, June 30, 2024  $-   $326   $326 

 

Earn-out liabilities: The Company utilizes two valuation methods to value its Level 3 earn-out liabilities: (a) the income valuation approach, and (b) the Monte Carlo simulation method. Key valuation and unobservable inputs for the income valuation approach include contingent payment arrangement terms, projected revenues and cash flows, rates of return, discount rates and probability assessments.

 

 

The following table summarizes the significant unobservable inputs used in the fair value measurements:

   

   June 30, 2024  December 31, 2023
Valuation technique  N/A  Discounted cash flow
Significant unobservable input  N/A  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:

 

The following table reconciles fair value of earn-out liabilities for the periods ended June 30, 2024, and December 31, 2023:

 

   June 30, 2024   December 31, 2023 
Beginning balance – January 1  $159,867   $2,709,478 
           
Acquisitions and settlements   -    (3,260,403)
           
Period adjustments:          
Fair value changes included in earnings*   47,761    1,716,873 
Earn-out payable in common shares   (17,628)   (159,867)
Earn-out transferred to loans payable, related parties   -    (846,214)
Earn-out payments   (190,000)   - 
Ending balance   -    159,867 
Less: Current portion   -    (159,867)
Ending balance, less current portion  $-   $- 

 

* Recorded in the change in estimated acquisition earn-out payables caption on the condensed consolidated statements of operations.

 
Revenue Recognition

Revenue Recognition

 

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

 

Three Months ended June 30, 2024  Medical   Life   Property and Casualty   Disaggregates revenue 
Three Months Ended June 30, 2024  Medical   Life   Property and Casualty   Total 
                 
Three months ended June 30, 2024  $2,389,845   $38,744   $804,753   $3,233,342 
Three months ended June 30, 2023  $2,526,713   $71,980   $597,212   $3,195,905 
Six months ended June 30, 2024  $5,715,662   $94,961   $1,505,157   $7,315,780 
Six months ended June 30, 2023  $5,822,458   $105,604   $1,206,946   $7,135,008 

 

The following are customers representing 10% or more of total revenue:

 

Insurance Carrier  2024   2023 
   Three Months Ended June 30, 
Insurance Carrier  2024   2023 
Priority Health   22%   28%
BlueCross BlueShield   11%   12%

 

 

Insurance Carrier  2024   2023 
   Six Months Ended June 30, 
Insurance Carrier  2024   2023 
Priority Health   35%   37%
BlueCross BlueShield   12%   13%

 

No other single customer accounted for more than 10% of the Company’s commission revenues during the three and six months ended June 30, 2024 and 2023. The loss of any significant customer could have a material adverse effect on the Company.

 
Income Taxes

Income Taxes

 

The Company recorded no income tax expense for the three and six months ended June 30, 2024 and 2023 because the estimated annual effective tax rate was zero. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating loss carry forwards, and available tax planning alternatives.

 

As of June 30, 2024 and December 31, 2023, the Company provided a full valuation allowance against its net deferred tax assets, since the Company believes it is more likely than not that its deferred tax assets will not be realized.

 
Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements not already disclosed in the Form 10-K.
v3.24.2
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Tables)
 6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
SCHEDULE OF RESTRICTED CASH IN STATEMENT OF CASH FLOW

Cash and restricted cash reported on our condensed consolidated balance sheets are reconciled to the total shown on our condensed consolidated statements of cash flows as follows:

 

   June 30, 2024   June 30, 2023 
Cash  $1,405,824   $1,274,743 
Restricted cash   1,409,787    1,405,513 
Total cash and restricted cash  $2,815,611   $2,680,256 
SCHEDULE OF WARRANT LIABILITY

   June 30, 2024   December 31, 2023 
Stock price  $3.74   $9.18 
Volatility   135.00%   110.00%
Time to expiry   4.53    4.99 
Dividend yield   0%   0%
Risk free rate   4.30%   3.80%
SCHEDULE OF RECONCILES FAIR VALUE OF LIABILITY CLASSIFIED WARRANTS

The following reconciles fair value of the liability classified warrants:

 

  

Series B

Warrant

Liabilities

  

Placement

Agent Warrants

   Total 
Beginning balance, December 31, 2023  $268,667   $326   $268,993 
Unrealized gain   (95,333)   -    (95,333)
Warrants exercised or exchanged   -    -    - 
Ending balance, March 31, 2024  $173,334   $326   $173,660 
Unrealized gain   (60,667)   -    (60,667)
Warrants exercised or exchanged   (112,667)   -    (112,667)
Ending balance, June 30, 2024  $-   $326   $326 
SCHEDULE OF FAIR VALUE MEASUREMENTS

The following table summarizes the significant unobservable inputs used in the fair value measurements:

   

   June 30, 2024  December 31, 2023
Valuation technique  N/A  Discounted cash flow
Significant unobservable input  N/A  Projected revenue and probability of achievement
SCHEDULE OF GAIN OR LOSSES RECOGNIZED FAIR VALUE

The following table reconciles fair value of earn-out liabilities for the periods ended June 30, 2024, and December 31, 2023:

 

   June 30, 2024   December 31, 2023 
Beginning balance – January 1  $159,867   $2,709,478 
           
Acquisitions and settlements   -    (3,260,403)
           
Period adjustments:          
Fair value changes included in earnings*   47,761    1,716,873 
Earn-out payable in common shares   (17,628)   (159,867)
Earn-out transferred to loans payable, related parties   -    (846,214)
Earn-out payments   (190,000)   - 
Ending balance   -    159,867 
Less: Current portion   -    (159,867)
Ending balance, less current portion  $-   $- 

 

* Recorded in the change in estimated acquisition earn-out payables caption on the condensed consolidated statements of operations.
SCHEDULE OF DISAGGREGATION REVENUE

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

 

Three Months ended June 30, 2024  Medical   Life   Property and Casualty   Disaggregates revenue 
Three Months Ended June 30, 2024  Medical   Life   Property and Casualty   Total 
                 
Three months ended June 30, 2024  $2,389,845   $38,744   $804,753   $3,233,342 
Three months ended June 30, 2023  $2,526,713   $71,980   $597,212   $3,195,905 
Six months ended June 30, 2024  $5,715,662   $94,961   $1,505,157   $7,315,780 
Six months ended June 30, 2023  $5,822,458   $105,604   $1,206,946   $7,135,008 
SCHEDULE OF CONCENTRATIONS OF REVENUES

The following are customers representing 10% or more of total revenue:

 

Insurance Carrier  2024   2023 
   Three Months Ended June 30, 
Insurance Carrier  2024   2023 
Priority Health   22%   28%
BlueCross BlueShield   11%   12%

 

 

Insurance Carrier  2024   2023 
   Six Months Ended June 30, 
Insurance Carrier  2024   2023 
Priority Health   35%   37%
BlueCross BlueShield   12%   13%
v3.24.2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)
 6 Months Ended
Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
SCHEDULE OF IMPAIRMENT OF GOODWILL

The following table rolls forward the Company’s goodwill balance for the periods ended June 30, 2024, and December 31, 2023, adjusted for discontinued operations.

 

   Goodwill 
December 31, 2022  $14,287,099 
Goodwill impairment recognized as of December 31, 2023   (7,594,000)
December 31, 2023   6,693,099 
June 30, 2024  $6,693,099 
SCHEDULE OF INTANGIBLE ASSETS AND WEIGHTED-AVERAGE REMAINING AMORTIZATION PERIOD

The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2024:

 

  

Weighted

Average Remaining Amortization

Period

(Years)

  

Gross

Carrying Amount

  

Accumulated

Amortization

  

Net Carrying

Amount

 
Trade name and trademarks  1.0   $1,807,188   $(1,487,205)  $319,983 
Internally developed software  2.7    1,698,186    (773,371)   924,815 
Customer relationships  6.3    7,372,290    (2,813,315)   4,558,975 
Purchased software  2.0    564,396    (563,074)   1,322 
Video production assets  -    50,000    (50,000)   - 
Non-competition agreements  0.4    3,504,810    (3,157,153)   347,657 
       $14,996,870   $(8,844,118)  $6,152,752 

 

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, 2023:

 

  

Weighted

Average Remaining Amortization

period

(Years)

  

Gross

Carrying Amount

  

Accumulated

Amortization

  

Net Carrying

Amount

 
Trade name and trademarks  1.5   $1,807,189   $(1,320,939)  $486,250 
Internally developed software  3.2    1,798,922    (650,029)   1,148,893 
Customer relationships  8.0    11,922,290    (3,193,629)   8,728,661 
Purchased software  0.3    667,206    (618,418)   48,788 
Video production assets  -    50,000    (50,000)   - 
Non-competition agreements  0.9    3,504,810    (2,874,645)   630,165 
      $19,750,417   $(8,707,660)  $11,042,757 
SCHEDULE OF AMORTIZATION EXPENSE OF ACQUIRED INTANGIBLES ASSETS

The following table reflects expected amortization expense as of June 30, 2024, for each of the following five years and thereafter:

 

Years Ending December 31,  Amortization Expense 
2024 (remaining six months)  $764,453 
2025   1,397,041 
2026   1,148,216 
2027   807,696 
2028   717,314 
Thereafter   1,318,032 
Total  $6,152,752 
v3.24.2
LONG-TERM DEBT AND SHORT-TERM FINANCINGS (Tables)
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
SCHEDULE OF LONG TERM DEBT

The composition of the long-term debt is as follows:

 

  

June 30,

2024

  

December 31,

2023

 
         
Oak Street Funding LLC Term Loan   $338,812   $369,602 
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 $9,060 and $10,069 as of June 30, 2024 and December 31, 2023, respectively  $338,812   $369,602 
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 $11,250 and $12,525 as of June 30, 2024, and December 31, 2023, respectively   557,497    604,830 
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 $6,997 and $7,733 as of June 30, 2024 and December 31, 2023, respectively   646,205    695,758 
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 $28,117 and $31,026 as of June 30, 2024 and December 31, 2023, respectively   1,636,131    1,758,558 
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 $32,409 and $35,649 as of June 30, 2024 and December 31, 2023, respectively   2,712,692    2,899,409 
Oak Street Funding LLC Term Loan for the acquisition of Barra, variable interest of prime rate plus 2.5%, maturing May 2032, net of deferred financing costs of $166,049 and $176,762 as of June 30, 2024 and December 31, 2023, respectively   5,869,749    6,089,580 
 Long term debt gross    11,761,086    12,417,737 
Less: current portion   (1,471,233)   (1,390,766)
Long-term debt  $10,289,853   $11,026,971 
SCHEDULE OF CUMULATIVE MATURITIES OF LONG -TERM LOANS AND CREDIT FACILITIES

Years Ending December 31, 

Maturities of

Long-Term Debt

 
2024 (remaining six months)  $714,133 
2025   1,552,772 
2026   1,729,160 
2027   1,925,603 
2028   2,106,978 
Thereafter   3,986,322 
Total   12,014,968 
Less: debt issuance costs   (253,882)
Total  $11,761,086 
v3.24.2
EARNINGS (LOSS) PER SHARE (Tables)
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
SCHEDULE OF CALCULATIONS OF BASIC AND DILUTED EPS

The following calculates basic and diluted EPS:

 

SCHEDULE OF CALCULATIONS OF BASIC AND DILUTED EPS

   Three Months   Three Months 
   Ended   Ended 
   June 30, 2024   June 30, 2023 
Loss from continuing operations  $(1,489,395)  $(3,869,732)
Net loss continuing operations, numerator, basic computation   (1,489,395)   (3,869,732)
Recognition and change in fair value of warrant liabilities   -    - 
Net loss from continuing operations, numerator, diluted computation  $(1,489,395)  $(3,869,732)
           
Weighted average common shares, basic   539,133    159,795 
Effect of Series B Warrants   -    - 
Weighted average common shares, dilutive   539,133    159,795 
Loss per common share – basic  $(2.76)  $(24.21)
Loss per common share – diluted  $(2.76)  $(24.21)

 

 

   Six Months   Six Months 
   Ended   Ended 
   June 30, 2024   June 30, 2023 
Loss from continuing operations  $(6,836,057)  $(997,776)
Net Loss continuing operations, numerator, basic computation   (6,836,057)   (997,776)
Recognition and change in fair value of warrant liabilities   -    - 
Net loss from continuing operations, numerator, diluted computation  $(6,836,057)  $(997,776)
           
Weighted average common shares, basic   462,773   125,791 
Effect of Series B Warrants   -    - 
Weighted average common shares, dilutive   462,773    125,791 
Loss per common share – basic  $(14.77)  $(7.93)
Loss per common share – diluted  $(14.77)  $(7.93)
SCHEDULE OF DILUTIVE NET LOSS PER COMMON SHARE

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

 

SCHEDULE OF DILUTIVE NET LOSS PER COMMON SHARE 

  

June 30, 2024

  

June 30, 2023

 
   For the Three Months Ended 
  

June 30, 2024

  

June 30, 2023

 
Shares subject to outstanding common stock options   510    649 
Shares subject to outstanding Series A warrants   6,647    6,647 
Shares subject to outstanding PAW’s   

959

   

959

Shares subject to outstanding Series F warrants   -    123,840 
Shares subject to PA Warrants   3,096    3,096 
Shares subject to unvested stock awards   52    205 

 

  

June 30, 2024

  

June 30, 2023

 
   For the Six Months Ended 
  

June 30, 2024

  

June 30, 2023

 
Shares subject to outstanding common stock options   510    649 
Shares subject to outstanding Series A warrants   6,647    6,647 
Shares subject to outstanding PAW’s   959    959 
Shares subject to outstanding Series F warrants   -    123,840 
Shares subject to PA Warrants   3,096    3,096 
Shares subject to unvested stock awards   52    205 
v3.24.2
LEASES (Tables)
 6 Months Ended
Jun. 30, 2024
Leases  
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT

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

 

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT 

Fiscal year ending December 31,  Operating Lease Obligations 
2024 (remaining six months)  $180,322 
2025   265,399 
2026   229,522 
2027   215,325 
2028   182,190 
Thereafter   225,136 
Total undiscounted operating lease payments   1,297,894 
Less: Imputed interest   (252,939)
Present value of operating lease liabilities  $1,044,955 
v3.24.2
COMMITMENTS AND CONTINGENCIES (Tables)
 6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
SCHEDULE OF EARN-OUT LIABILITY

The following outlines changes to the Company’s earn-out liability balances for the respective periods ended June 30, 2024 and December 31, 2023:

 

SCHEDULE OF EARN-OUT LIABILITY

   Fortman   Montana   Altruis   Kush   Barra   Total 
Ending balance December 31, 2023  $-   $159,867   $-   $-   $-   $159,867 
Payments   -    (190,000

)

         -         -    -    - 
Estimates and fair value adjustments   -    47,761    -    -    -    47,761 
Payable in common stock   -    (17,628)   -    -         -    (17,628)
Ending balance June 30, 2024  $-   $-   $-   $-   $-   $- 

 

   Fortman   Montana   Altruis   Kush   Barra   Total 
Ending balance December 31, 2022  $667,000   $500,001   $834,943   $147,534   $560,000   $2,709,478 
Payments   (1,433,700)   (750,001)   (929,168)   (147,534)   -    (3,260,403)
Estimates and fair value adjustments   1,612,914    569,734    94,225    -    (560,000)   1,716,873 
Payable in common stock   -    (159,867)   -    -    -    (159,867)
Reclass to loans payable, related parties*   (846,214)   -    -    -    -    (846,214)
Ending balance December 31, 2023  $-   $159,867   $-   $-   $-   $159,867 

 

* The Company modified certain contingent earn-out payables by entering into fixed payment arrangements. Thus, remaining open balances are reclassified to the loans payable, related parties account on the consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.
v3.24.2
RELATED PARTY TRANSACTIONS (Tables)
 6 Months Ended
Jun. 30, 2024
Related Party Transactions [Abstract]  
SCHEDULE OF LOANS PAYABLE TO RELATED PARTIES

The following table summarizes the loans payable, related parties current and non-current accounts, as of the periods ended June 30, 2024 and December 31, 2023, and the interest expense related parties account for the three and six-month periods ended June 30, 2024 and June 30, 2023, as presented on the condensed consolidated balance sheets and condensed consolidated statements of operations, respectively:

SCHEDULE OF LOANS PAYABLE TO RELATED PARTIES 

   Related Parties Payable   Interest Expense, Related Parties 
   Current Portion   Long Term Portion   for the Three Months Ended   for the Six Months Ended 
Related Party  June 30, 2024   December 31, 2023   June 30, 2024   December 31, 2023   June 30, 2024   June 30, 2023   June 30, 2024   June 30, 2023 
Employee Payables   6,127    25,708    -    -    577    1,730    2,307    3,459 
Deferred Purchase Price Liability   256,173    233,504    111,554    247,055    17,335    49,423    37,167    89,170 
Purchase Agreement Liability   181,553    195,741    549,321    650,475    19,613    -    38,660    - 
Total   443,853    454,953    660,875    897,530    37,525    51,153    78,134    92,629 
v3.24.2
SCHEDULE OF RESTRICTED CASH IN STATEMENT OF CASH FLOW (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Jun. 30, 2023
Accounting Policies [Abstract]      
Cash $ 1,405,824 $ 1,329,016 $ 1,274,743
Restricted cash 1,409,787 $ 1,409,895 1,405,513
Total cash and restricted cash $ 2,815,611   $ 2,680,256
v3.24.2
SCHEDULE OF WARRANT LIABILITY (Details)
Jun. 30, 2024
Dec. 31, 2023
Measurement Input, Share Price [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Warrants measurement input 3.74 9.18
Measurement Input, Price Volatility [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Warrants measurement input 135.00 110.00
Measurement Input, Expected Term [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Time to expiry 4 years 6 months 10 days 4 years 11 months 26 days
Measurement Input, Expected Dividend Rate [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Warrants measurement input 0 0
Measurement Input, Risk Free Interest Rate [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Warrants measurement input 4.30 3.80
v3.24.2
SCHEDULE OF RECONCILES FAIR VALUE OF LIABILITY CLASSIFIED WARRANTS (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Offsetting Assets [Line Items]    
Balance $ 173,660 $ 268,993
Unrealized gain (60,667) (95,333)
Warrants exercised or exchanged (112,667)
Balance 326 173,660
Series B Warrant Liabilities [Member]    
Offsetting Assets [Line Items]    
Balance 173,334 268,667
Unrealized gain (60,667) (95,333)
Warrants exercised or exchanged (112,667)
Balance 173,334
Placement Agent Warrants [Member]    
Offsetting Assets [Line Items]    
Balance 326 326
Unrealized gain
Warrants exercised or exchanged
Balance $ 326 $ 326
v3.24.2
SCHEDULE OF FAIR VALUE MEASUREMENTS (Details) - Fair Value, Inputs, Level 3 [Member]
 12 Months Ended
Dec. 31, 2023
Platform Operator, Crypto Asset [Line Items]  
Valuation technique Discounted cash flow
Significant unobservable input Projected revenue and probability of achievement
v3.24.2
SCHEDULE OF GAIN OR LOSSES RECOGNIZED FAIR VALUE (Details) - USD ($)
 6 Months Ended 12 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Accounting Policies [Abstract]    
Beginning balance – January 1 $ 159,867 $ 2,709,478
Acquisitions and settlements (3,260,403)
Fair value changes included in earnings [1] 47,761 1,716,873
Earn-out payable in common shares (17,628) (159,867)
Earn-out transferred to loans payable, related parties (846,214)
Earn-out payments (190,000)
Ending balance 159,867
Less: Current portion (159,867)
Ending balance, less current portion
[1] Recorded in the change in estimated acquisition earn-out payables caption on the condensed consolidated statements of operations.
v3.24.2
SCHEDULE OF DISAGGREGATION REVENUE (Details) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Product Information [Line Items]        
Disaggregates revenue $ 3,233,342 $ 3,195,905 $ 7,315,780 $ 7,135,008
Medical [Member] | Regular [Member]        
Product Information [Line Items]        
Disaggregates revenue 2,389,845 2,526,713 5,715,662 5,822,458
Life [Member] | Regular [Member]        
Product Information [Line Items]        
Disaggregates revenue 38,744 71,980 94,961 105,604
Property and Casualty [Member] | Regular [Member]        
Product Information [Line Items]        
Disaggregates revenue $ 804,753 $ 597,212 $ 1,505,157 $ 1,206,946
v3.24.2
SCHEDULE OF CONCENTRATIONS OF REVENUES (Details) - Customer Concentration Risk [Member] - Revenue Benchmark [Member]
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Priority Health [Member]        
Product Information [Line Items]        
Insurance carrier 22.00% 28.00% 35.00% 37.00%
BlueCross BlueShield [Member]        
Product Information [Line Items]        
Insurance carrier 11.00% 12.00% 12.00% 13.00%
v3.24.2
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Mar. 31, 2024
Dec. 31, 2023
Mar. 31, 2023
Dec. 31, 2022
Accounting Policies [Abstract]                
Cash and restricted cash $ 2,816,000   $ 2,816,000          
Assets current 4,322,164   4,322,164     $ 4,379,032    
Liabilities current 3,722,111   3,722,111     3,189,851    
Working capital deficiency 600,000   600,000          
Stockholders equity 2,889,241 $ 13,027,389 2,889,241 $ 13,027,389 $ 1,961,508 $ 7,147,330 $ 12,235,614 $ 8,911,039
Operating income loss 1,146,578 1,838,186 6,178,299 2,843,111        
Impairment losses 3,922,110        
Net loss     6,836,000          
Aggregate offering price 1,728,825   1,728,825          
Income tax benefit $ 0 $ 0 $ 0 $ 0        
v3.24.2
SCHEDULE OF IMPAIRMENT OF GOODWILL (Details) - USD ($)
 12 Months Ended
Dec. 31, 2023
Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]    
Goodwill December 31, 2022 $ 14,287,099  
Goodwill impairment loss (7,594,000)  
Goodwill December 31, 2023 6,693,099  
Goodwill June 30, 2024 $ 6,693,099 $ 6,693,099
v3.24.2
SCHEDULE OF INTANGIBLE ASSETS AND WEIGHTED-AVERAGE REMAINING AMORTIZATION PERIOD (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]    
Gross Carrying Amount $ 14,996,870 $ 19,750,417
Accumulated Amortization (8,844,118) (8,707,660)
Net Carrying Amount $ 6,152,752 $ 11,042,757
Trademarks and Trade Names [Member]    
Finite-Lived Intangible Assets [Line Items]    
Weighted average remaining amortization period 1 year 1 year 6 months
Gross Carrying Amount $ 1,807,188 $ 1,807,189
Accumulated Amortization (1,487,205) (1,320,939)
Net Carrying Amount $ 319,983 $ 486,250
Internally Developed Software [Member]    
Finite-Lived Intangible Assets [Line Items]    
Weighted average remaining amortization period 2 years 8 months 12 days 3 years 2 months 12 days
Gross Carrying Amount $ 1,698,186 $ 1,798,922
Accumulated Amortization (773,371) (650,029)
Net Carrying Amount $ 924,815 $ 1,148,893
Customer Relationships [Member]    
Finite-Lived Intangible Assets [Line Items]    
Weighted average remaining amortization period 6 years 3 months 18 days 8 years
Gross Carrying Amount $ 7,372,290 $ 11,922,290
Accumulated Amortization (2,813,315) (3,193,629)
Net Carrying Amount $ 4,558,975 $ 8,728,661
Purchased Software [Member]    
Finite-Lived Intangible Assets [Line Items]    
Weighted average remaining amortization period 2 years 3 months 18 days
Gross Carrying Amount $ 564,396 $ 667,206
Accumulated Amortization (563,074) (618,418)
Net Carrying Amount 1,322 48,788
Video Production Assets [Member]    
Finite-Lived Intangible Assets [Line Items]    
Gross Carrying Amount 50,000 50,000
Accumulated Amortization (50,000) (50,000)
Net Carrying Amount
Non-competition Agreements [Member]    
Finite-Lived Intangible Assets [Line Items]    
Weighted average remaining amortization period 4 months 24 days 10 months 24 days
Gross Carrying Amount $ 3,504,810 $ 3,504,810
Accumulated Amortization (3,157,153) (2,874,645)
Net Carrying Amount $ 347,657 $ 630,165
v3.24.2
SCHEDULE OF AMORTIZATION EXPENSE OF ACQUIRED INTANGIBLES ASSETS (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]    
2024 (remaining six months) $ 764,453  
2025 1,397,041  
2026 1,148,216  
2027 807,696  
2028 717,314  
Thereafter 1,318,032  
Total $ 6,152,752 $ 11,042,757
v3.24.2
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]          
Intangible assets accumulated amortization asset $ (8,844,118)   $ (8,844,118)   $ (8,707,660)
Asset impairment charge 3,922,110  
Customer Relationships [Member]          
Finite-Lived Intangible Assets [Line Items]          
Intangible assets accumulated amortization asset (2,813,315)   (2,813,315)   (3,193,629)
Customer Relationships [Member] | Discontinued Operations [Member]          
Finite-Lived Intangible Assets [Line Items]          
Intangible assets accumulated amortization asset 3,802,438   3,802,438    
Developed Technology Rights [Member] | Discontinued Operations [Member]          
Finite-Lived Intangible Assets [Line Items]          
Intangible assets accumulated amortization asset 65,411   65,411    
Purchased Software [Member]          
Finite-Lived Intangible Assets [Line Items]          
Intangible assets accumulated amortization asset (563,074)   (563,074)   $ (618,418)
Purchased Software [Member] | Discontinued Operations [Member]          
Finite-Lived Intangible Assets [Line Items]          
Intangible assets accumulated amortization asset $ 54,261   $ 54,261    
v3.24.2
SCHEDULE OF LONG TERM DEBT (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Line of Credit Facility [Line Items]    
 Long term debt gross $ 11,761,086 $ 12,417,737
Less: current portion (1,471,233) (1,390,766)
Long-term debt 10,289,853 11,026,971
SWMT [Member]    
Line of Credit Facility [Line Items]    
 Long term debt gross 646,205 695,758
FIS [Member]    
Line of Credit Facility [Line Items]    
 Long term debt gross 1,636,131 1,758,558
ABC [Member]    
Line of Credit Facility [Line Items]    
 Long term debt gross 2,712,692 2,899,409
Barra [Member]    
Line of Credit Facility [Line Items]    
 Long term debt gross 5,869,749 6,089,580
EBS and USBA [Member]    
Line of Credit Facility [Line Items]    
 Long term debt gross 338,812 369,602
CCS [Member]    
Line of Credit Facility [Line Items]    
 Long term debt gross $ 557,497 $ 604,830
v3.24.2
SCHEDULE OF LONG TERM DEBT (Details) (Parenthetical) - USD ($)
 6 Months Ended
Jun. 30, 2024
Dec. 31, 2023
SWMT [Member]    
Line of Credit Facility [Line Items]    
Variable interest of prime rate plus 2.00%  
Maturity date April 2029  
Net of deferred financing cost $ 6,997 $ 7,733
FIS [Member]    
Line of Credit Facility [Line Items]    
Variable interest of prime rate plus 2.00%  
Maturity date May 2029  
Net of deferred financing cost $ 28,117 31,026
ABC [Member]    
Line of Credit Facility [Line Items]    
Variable interest of prime rate plus 2.00%  
Maturity date September 2029  
Net of deferred financing cost $ 32,409 35,649
Barra [Member]    
Line of Credit Facility [Line Items]    
Variable interest of prime rate plus 2.50%  
Maturity date May 2032  
Net of deferred financing cost $ 166,049 176,762
EBS and USBA [Member]    
Line of Credit Facility [Line Items]    
Variable interest of prime rate plus 2.50%  
Maturity date August 2028  
Net of deferred financing cost $ 9,060 10,069
CCS [Member]    
Line of Credit Facility [Line Items]    
Variable interest of prime rate plus 1.50%  
Maturity date December 2028  
Net of deferred financing cost $ 11,250 $ 12,525
v3.24.2
SCHEDULE OF CUMULATIVE MATURITIES OF LONG -TERM LOANS AND CREDIT FACILITIES (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Debt Disclosure [Abstract]    
2024 (remaining six months) $ 714,133  
2025 1,552,772  
2026 1,729,160  
2027 1,925,603  
2028 2,106,978  
Thereafter 3,986,322  
Total 12,014,968  
Less: debt issuance costs (253,882)  
Total $ 11,761,086 $ 12,417,737
v3.24.2
LONG-TERM DEBT AND SHORT-TERM FINANCINGS (Details Narrative) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Debt Disclosure [Abstract]    
Interest rates 7.95% 11.95%
Outstanding short-term financings $ 108,525 $ 56,197
v3.24.2
WARRANT LIABILITIES (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Jun. 18, 2024
Common Stock [Member]          
Offsetting Assets [Line Items]          
Number of shares acquired         39,569
Series B Warrants [Member]          
Offsetting Assets [Line Items]          
Warrants exercised         50,980
Warrant exercise price         $ 3.91
Warrant recognized gain (loss) $ 60,667 $ 1,592,509 $ 156,000 $ 2,673,723  
Series B Warrant Liability [Member]          
Offsetting Assets [Line Items]          
Class of warrant or right, outstanding 0 78,383 0 78,383  
Fair value of warrant liability     $ 0 $ 3,741,983  
PAW [Member]          
Offsetting Assets [Line Items]          
Class of warrant or right, outstanding 959 959 959 959  
Fair value of warrant liability     $ 326 $ 326  
v3.24.2
EQUITY (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended 6 Months Ended
Jun. 28, 2024
Jul. 31, 2024
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Jun. 18, 2024
Dec. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Common stock, shares authorized     117,647,059       117,647,059     117,647,059
Common stock, par value     $ 0.086       $ 0.086     $ 0.086
Stockholders' Equity, Reverse Stock Split 1-for-17 reverse stock split                  
Shares issued           $ (4,646)        
Common stock, shares outstanding     1,037,027       1,037,027     280,117
Stock compensation expense     $ 245,766   $ 35,367   $ 264,331 $ 79,164    
Series G Warrants [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Common shares issued for series G warrant, shares     192,236              
Warrants exercised                 247,678  
Warrants outstanding     0       0      
Series G Warrants [Member] | Maximum [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Warrant exercise price     $ 11.16       $ 11.16      
Series G Warrants [Member] | Minimum [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Warrant exercise price     $ 3.96       $ 3.96      
Board of Directors [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Stock Issued During Period, Shares, Reverse Stock Splits 110,350                  
Shares issued $ 9,490                  
Common Stock [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Shares issued     302,677 11,036            
Share conversions     59,471 42,545            
Equity based compensation     60,373 1,149            
Stock Issued During Period, Shares, Reverse Stock Splits           902        
Shares issued           $ 77        
Common share payments for earnouts, shares             $ 30,029      
Common shares issued for series B warrant, shares     39,569              
Common shares issued for series G warrant, shares     192,236              
Issuance of shares for services     17,825   6,621          
Number of shares acquired                 39,569  
Common Stock [Member] | ATM Agreement [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Shares issued             313,713      
Average price     $ 5.3492       $ 5.3492      
Net proceeds             $ 141,631      
Legal and other fees             2,068,344      
Sale of stock, consideration received on transaction             $ 1,728,825      
Common Stock [Member] | ATM Agreement [Member] | Subsequent Event [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Sale of stock, consideration received on transaction   $ 146,174                
Common Stock [Member] | Investor [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Shares issued     59,471 42,545            
Share conversions     59,471 42,545            
Common Stock [Member] | Series G Warrants [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Number of shares acquired                 192,236  
v3.24.2
SCHEDULE OF CALCULATIONS OF BASIC AND DILUTED EPS (Details) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Earnings Per Share [Abstract]        
Loss from continuing operations $ (1,489,395) $ (3,869,732) $ (6,836,057) $ (997,776)
Net Loss continuing operations, numerator, basic computation (1,489,395) (3,869,732) (6,836,057) (997,776)
Recognition and change in fair value of warrant liabilities
Net loss from continuing operations, numerator, diluted computation $ (1,489,395) $ (3,869,732) $ (6,836,057) $ (997,776)
Weighted average common shares, basic 539,133 159,795 462,773 125,791
Effect of Series B Warrants
Weighted average common shares, dilutive 539,133 159,795 462,773 125,791
Loss per common share – basic $ (2.76) $ (24.21) $ (14.77) $ (7.93)
Loss per common share – diluted $ (2.76) $ (24.21) $ (14.77) $ (7.93)
v3.24.2
SCHEDULE OF DILUTIVE NET LOSS PER COMMON SHARE (Details) - shares
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Share-Based Payment Arrangement, Option [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares subject to unvested stock awards 510 649 510 649
Series A Warrants [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares subject to unvested stock awards 6,647 6,647 6,647 6,647
PAW [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares subject to unvested stock awards 959 959 959 959
Series F Warrants [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares subject to unvested stock awards 123,840    
Placement Agent Warrants [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares subject to unvested stock awards 3,096 3,096 3,096 3,096
Series B Preferred Stock [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares subject to unvested stock awards 52 205 52 205
Series G Warrants [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares subject to unvested stock awards     123,840
v3.24.2
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT (Details)
Jun. 30, 2024
USD ($)
Leases  
2024 (remaining six months) $ 180,322
2025 265,399
2026 229,522
2027 215,325
2028 182,190
Thereafter 225,136
Total undiscounted operating lease payments 1,297,894
Less: Imputed interest (252,939)
Present value of operating lease liabilities $ 1,044,955
v3.24.2
LEASES (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Leases        
Lease expense $ 102,073 $ 123,326 $ 207,029 $ 239,296
Weighted average remaining lease term 5 years 29 days   5 years 29 days  
Weighted average discount rate 8.35%   8.35%  
v3.24.2
SCHEDULE OF EARN-OUT LIABILITY (Details) - USD ($)
 6 Months Ended 12 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Restructuring Cost and Reserve [Line Items]    
Beginning balance – January 1 $ 159,867 $ 2,709,478
Payments (3,260,403)
Estimates and fair value adjustments 47,761 1,716,873
Payable in common stock (17,628) (159,867)
Ending balance 159,867
Transfers to loans payable, related parties [1]   (846,214)
Fortman Insurance Agency LLC [Member]    
Restructuring Cost and Reserve [Line Items]    
Beginning balance – January 1 667,000
Payments (1,433,700)
Estimates and fair value adjustments 1,612,914
Payable in common stock
Ending balance
Transfers to loans payable, related parties [1]   (846,214)
Southwestern Montana Insurance Center Inc [Member]    
Restructuring Cost and Reserve [Line Items]    
Beginning balance – January 1 159,867 500,001
Payments (190,000) (750,001)
Estimates and fair value adjustments 47,761 569,734
Payable in common stock (17,628) (159,867)
Ending balance 159,867
Transfers to loans payable, related parties [1]  
Altruis Benefits Consultants Inc [Member]    
Restructuring Cost and Reserve [Line Items]    
Beginning balance – January 1 834,943
Payments (929,168)
Estimates and fair value adjustments 94,225
Payable in common stock
Ending balance
Transfers to loans payable, related parties [1]  
JP Kush and Associates Inc [Member]    
Restructuring Cost and Reserve [Line Items]    
Beginning balance – January 1 147,534
Payments (147,534)
Estimates and fair value adjustments
Payable in common stock
Ending balance
Transfers to loans payable, related parties [1]  
Barra [Member]    
Restructuring Cost and Reserve [Line Items]    
Beginning balance – January 1 560,000
Payments
Estimates and fair value adjustments (560,000)
Payable in common stock
Ending balance
Transfers to loans payable, related parties [1]  
[1] The Company modified certain contingent earn-out payables by entering into fixed payment arrangements. Thus, remaining open balances are reclassified to the loans payable, related parties account on the consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.
v3.24.2
COMMITMENTS AND CONTINGENCIES (Details Narrative)
 3 Months Ended
May 14, 2024
USD ($)
$ / shares
Apr. 30, 2024
USD ($)
Mar. 29, 2024
$ / shares
Sep. 29, 2023
USD ($)
$ / shares
shares
Jun. 30, 2024
USD ($)
$ / shares
Mar. 31, 2024
USD ($)
Dec. 31, 2023
USD ($)
$ / shares
Jun. 30, 2023
USD ($)
Dec. 31, 2022
USD ($)
Loss Contingencies [Line Items]                  
Legal contingencies         $ 0   $ 0    
Remaining balance           $ 159,867   $ 2,709,478
Common stock, par value | $ / shares         $ 0.086   $ 0.086    
Cash         $ 1,405,824   $ 1,329,016 $ 1,274,743  
Stock issued during period, value, new issues         1,943,696 $ 124,648      
Assets [Member]                  
Loss Contingencies [Line Items]                  
Stock issued during period, value, new issues         $ 190,000        
Stock Exchange Agreement [Member] | Spetner Associates [Member]                  
Loss Contingencies [Line Items]                  
Acquire percentage 0.80                
Business Acquisition, Share Price | $ / shares $ 1.00                
Business Combination, Consideration Transferred $ 13,714,286                
Payments to Acquire Businesses, Gross $ 8,000,000                
Acquire remaining percentage 0.20                
Employee [Member] | Purchase Agreement [Member]                  
Loss Contingencies [Line Items]                  
Remaining balance       $ 500,000          
Agreed to issued shares | shares       10,272          
Common stock, par value | $ / shares     $ 41.31 $ 0.086          
Related party transaction, description of transaction     The “Make-Up Amount” means $425,000 minus the Blockey Shares Value (10,272 multiplied by the Nasdaq official closing price of the Common Stock on the Calculation Date)            
Other liabilities, current   $ 367,496              
Cash   190,000              
Stock issued during period, value, new issues   $ 30,029              
v3.24.2
SCHEDULE OF LOANS PAYABLE TO RELATED PARTIES (Details) - Related Party [Member] - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Related Party Transaction [Line Items]          
Current portion of related parties payable $ 443,853   $ 443,853   $ 454,953
Current portion of related parties payable 660,875   660,875   897,530
Interest related parties 37,525 $ 51,153 78,134 $ 92,629  
Employee Payables [Member]          
Related Party Transaction [Line Items]          
Current portion of related parties payable 6,127   6,127   25,708
Current portion of related parties payable    
Interest related parties 577 1,730 2,307 3,459  
Deferred Purchase Price Liability [Member]          
Related Party Transaction [Line Items]          
Current portion of related parties payable 256,173   256,173   233,504
Current portion of related parties payable 111,554   111,554   247,055
Interest related parties 17,335 49,423 37,167 89,170  
Purchase Agreement Liability [Member]          
Related Party Transaction [Line Items]          
Current portion of related parties payable 181,553   181,553   195,741
Current portion of related parties payable 549,321   549,321   $ 650,475
Interest related parties $ 19,613 $ 38,660  
Reliance Global (NASDAQ:RELI)
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