# EDGAR Filing Document

**Accession Number:** 0001812727
**File Stem:** 0001493152-23-009824
**Filing Date:** 2023-3
**Character Count:** 370165
**Document Hash:** 56775b2133a25a6a6df459ab1dd75bf3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-23-009824.hdr.sgml**: 20230330

**ACCESSION NUMBER**: 0001493152-23-009824

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 98

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Reliance Global Group, Inc.
- **CENTRAL INDEX KEY:** 0001812727
- **STANDARD INDUSTRIAL CLASSIFICATION:** INSURANCE AGENTS BROKERS & SERVICES [6411]
- **IRS NUMBER:** 463390293
- **STATE OF INCORPORATION:** FL
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40020
- **FILM NUMBER:** 23781656

**BUSINESS ADDRESS:**
- **STREET 1:** 300 BOULEVARD OF THE AMERICAS,
- **STREET 2:** SUITE 105
- **CITY:** LAKEWOOD
- **STATE:** NJ
- **ZIP:** 08701
- **BUSINESS PHONE:** 732-780-4647

**MAIL ADDRESS:**
- **STREET 1:** 300 BOULEVARD OF THE AMERICAS,
- **STREET 2:** SUITE 105
- **CITY:** LAKEWOOD
- **STATE:** NJ
- **ZIP:** 08701

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K**

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

For the fiscal year ended December 31, 2022

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<br> incorporation or organization) | (I.R.S. Employer<br> Identification No.) |
| **300 Blvd. of the Americas, Suite 105**<br> **Lakewood, NJ** | **08701** |
| (Address of principal executive offices) | (Zip Code) |

---

Registrant's telephone number, including area code: **<u>(732) 380-4600</u>**

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

---

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

---

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

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

Yes ☐ No ☒

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

Yes ☐ No ☒

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

Yes ☒ No ☐

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

Yes ☒ No ☐

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

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

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act).

Yes ☐ No ☒

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

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

DOCUMENTS INCORPORATED BY REFERENCE: None

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [PART I](#sa_001) |  |
| [Item 1. Business](#sa_002) | 1 |
| [Item 1A. Risk Factors](#sa_003) | 15 |
| [Item 1B. Unresolved Staff Comments](#sa_004) | 25 |
| [Item 2. Properties](#sa_005) | 25 |
| [Item 3. Legal Proceedings](#sa_006) | 25 |
| [Item 4. Mine Safety Disclosures](#sa_007) | 25 |
| [PART II](#sa_008) |  |
| [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#sa_009) | 26 |
| [Item 6. RESERVED](#sa_010) | 28 |
| [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](#sa_011) | 28 |
| [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](#sa_012) | 37 |
| [Item 8. Financial Statements and Supplementary Data](#sa_013) | 37 |
| [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](#sa_014) | 37 |
| [Item 9A. Controls and Procedures](#sa_015) | 37 |
| [Item 9B. Other information](#sa_016) | 37 |
| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |  |
| [PART III](#sa_017) |  |
| [Item 10. Directors, Executive Officers and Corporate Governance](#sa_018) | 37 |
| [Item 11. Executive Compensation](#sa_019) | 41 |
| [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#sa_020) | 42 |
| [Item 13. Certain Relationships and Related Transactions, and Director Independence](#sa_021) | 42 |
| [Item 14. Principal Accounting Fees and Services](#sa_022) | 43 |
| [PART IV](#sa_023) |  |
| [Item 15. Exhibits, Financial Statement Schedules](#sa_024) | 43 |
| [Item 16. 10-K Summary](#sa_025) | 43 |
| [Signatures](#je_001) | 45 |

---

**Industry and Market Data**

Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning our industry and the markets in which we operate, including our general expectations and market opportunity and market size, is based on information from various sources, including independent industry publications. In presenting this information, we have also made assumptions based on such data and other similar sources, and on our knowledge of, and our experience to date in the relevant industries and markets. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We believe that the information from these industry publications that is included in this Annual Report on Form 10-K is reliable. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

**PART I**

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

*This Annual Report on Form 10-K contains forward-looking statements (within the meaning of the federal securities law) that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Annual Report on Form 10-K regarding our strategy, future operations, future financial position, future net sales, gross margin expectations, projected costs, projected expenses, prospects and plans and objectives of management are forward-looking statements. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that the expectations underlying any of our forward-looking statements are reasonable, these expectations may prove to be incorrect, and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections, or expectations prove incorrect, our actual results, performance, or financial condition may vary materially and adversely from those anticipated, estimated, or expected. We have included important factors in the cautionary statements included in this Annual Report on Form 10-K, particularly in the section entitled "Risk Factors," that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or terminations of distribution arrangements that we may make. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.*

Unless the context requires otherwise, references to "Reliance Global Group," the "Company," "we," "our," and "us" in this Annual Report on Form 10-K refer to Reliance Global Group, Inc.

**Item 1. BUSINESS**

**About Reliance Global Group, Inc.**

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

We operate as a company managing assets in the insurance markets, 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. We are led and advised by a management team that offers over 100 years of combined business expertise in insurance, real estate and the financial service industry.

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

As part of our growth and acquisition strategy, we are currently in negotiations with several non-affiliated parties and expect to complete a number of material insurance asset transactions throughout the course of 2023 and beyond. As of December 31, 2022, we have acquired ten insurance agencies, including both affiliated and unaffiliated companies. During 2022, the Company acquired multiple insurance entities, most notably, Barra & Associates, LLC., an unaffiliated full-service insurance agency, which we rebranded to RELI Exchange and expanded its footprint nationally.

The Company also developed and launched 5MinuteInsure.com ("5MI"), a proprietary direct to consumer InsurTech platform which went live during the summer of 2021. 5MI is a business to consumer website which enables consumers to compare and purchase car and home insurance in a time efficient and effective manner. The platform is currently live in 44 states and offers coverage with up to 16 carriers.

Over the next 12 months, we plan to expand and grow our footprint and market share both through organic growth, and by expansion through additional acquisitions in various insurance markets.

Our competitive advantage includes the ability to:

● Scale to compete at a national level.

● Capitalize on the consumer shift to 'online' with the personal touch of an agent, as the only InsurTech company with this combination.

● Leverage proprietary agency software & automation to compare carrier prices, for competitive renewal pricing.

● Employ an empowered and scalable insurance agency model.

● Leverage technology that facilitates comparing carriers for the best prices.

The RELI Exchange B2B InsurTech platform and partner network for insurance agents and agencies also:

● Boast being the only white label insurance brokerage agency – New agents can have a multi-million dollar agency look on day 1, with a full suite of back-office support (licensing, compliance, etc).

● Combines the low barriers to entry of an agency network, with state-of-the-art tech.

● Builds on the artificial intelligence and data mining backbone of 5MinuteInsure.com

● Is designed to provide instant and competitive insurance quotes from more than thirty insurance carriers nationwide.

● Reduces back-office burden and expenses by eliminating paperwork.

● Provides agents more time to focus on selling policies.

In addition, we have a vast mentorship program behind the scenes, to keep sales teams active. Once people are registered, we enroll them in our mentorship program, and coach them to bring new business.

RELI Exchange is a complete, private label system where agents have more flexibility in how they choose to brand themselves, compared to competitor platforms that require agents to work under the platform's brand name. In effect, agents have a greater sense of ownership on our platform, and the feeling that comes with a well-financed agency.

***Insurance Market Overview***

There are three main insurance sectors: (1) property/casualty (P/C), which consists mainly of auto, home, and commercial insurance; (2) life/health (L/H), which consists mainly of life insurance and annuity products; and (3) accident and health, which is normally written by insurers whose main business is health insurance. The insurance industry plays a huge role in the U.S. economy (Source: OECD Insurance Statistics).

The U.S. remained the world's largest insurance market, with a 40% market share of global direct premiums written in 2021., with premiums of $2.7 trillion, respectively (Source: *beinsure, Top Ranking the World's Largest Insurance Markets*). "Gross premiums are forecast to grow by as much as six times, to $722 billion by 2030, with China and North America expected to account for more than two-thirds of the global market." "Global life insurance premium growth in real terms is expected to contract slightly (-0.2%) in 2022 (figure 2), primarily due to inflation-driven disposable income pressure and financial market volatility. There is an expectation for a turnaround in 2023 of an estimated 1.9% rise in global premiums in real terms across advanced and emerging markets, as inflation pressures ease and economic conditions improve." (Source: Deloitte's *2023 Insurance Industry Outlook*).

Insurance industry at-a-glance (Sources: *Federal Insurance Office, US Department of the Treasury, Annual Report on the Insurance Industry September 2022;* IBISWorld, Property, Casualty and Direct Insurance in the US - Market Size 2004–2029; Insurance Information Institute, A Firm Foundation: How Insurance Supports the Economy; Zippia, 20+ INTERESTING U.S. INSURANCE INDUSTRY STATISTICS [2023]: INSURANCE FACTS, MARGINS AND MORE; Swiss Re Institute, Inflation may be easing, but claims severity pressures in P&C are likely to remain

● U.S. insurance industry net premiums written totaled $1.4 trillion in 2021, with premiums recorded by property/casualty (P/C) insurers accounting for 53 percent, and premiums by life/annuity insurers accounting for 47 percent, according to S&P Global Market Intelligence.

● The P&C and Direct Insurance industry market size in 2023 is expected to be $873 billion in revenue

● The P&C and Direct Insurance industry is the 5<sup>th</sup> largest Finance and Insurance industry by market size

● The number of motor vehicle registrations in 2023 is expected to increase, which represents an opportunity for growth

● There were 5,929 licensed insurance companies in the US in 2021, including 2,651 P&C, 667 L&H, and 1,321 health insurers.

● Net premiums written for P/C insurance including auto, homeowners and commercial insurance totaled $715.9 billion in 2021.

● Net premiums written for the life/annuity insurance sector including annuities, accident and health, and life insurance totaled $635.8 billion in 2021.

● Total assets held were $8.5 trillion for L&H, $2.6 trillion for P&C, and $735 billion for the Health Sector at the end of 2021.

● High inflation led to an increase in P/C claims of 5-7.5% in 2022 and is expected to drive an additional increase of 3.5-6.5% in 2023.

● The U.S. insurance industry employed 2.8 million people in 2021, according to the U.S. Department of Labor. Of those, 1.6 million worked for insurance companies, including life and health insurers (911,400 workers), P/C insurers (628,600 workers) and reinsurers (26,900 workers). The remaining 1.2 million people worked for insurance agencies, brokers and other insurance-related enterprises.

 ****

**Insurance spending (2001-2021: Global vs. U.S. Total, % of GDP), OECD**

![](form10-k_002.jpg)

***Insurance Agency Industry Overview***

Insurance agencies act as intermediaries between insurance carriers and consumers. Unlike carriers, agencies do not bear insurance risk. The market has grown steadily exploded in 2019 due to macroeconomic growth, beneficial legislation, COVID treatments, and positive trends within the insurance sector. While inflation and other factors have impacted the industry, it has continued to grow with a positive outlook for 2023 as rising interest rates begin to stabilize.

An insurance carrier, on the other hand, is a manufacturer of insurance services and products that the insurance agencies sell. They control the underwriting process, claims process, pricing, and the overall management of the insurance products. Insurance carriers do not sell their products through direct agents, but only through independent agencies. Insurance policies are created and administered by the insurance carrier.

A key operating difference between agencies and carriers is the risk profile. The potential financial risks to the insurance industry caused by unforeseen events such as natural disasters are the responsibility of the carriers (and their re-insurers). Agencies and brokers bear no insurance risk. Furthermore, increased damage caused by natural disasters generally boosts demand for insurance and results in possible premium increases. Since insurance brokers and agents are a central part of the distribution of these products, they normally benefit from this increase in demand and premiums despite damaged profit margins among these upstream underwriters and carriers. (Source: IBISWorld's Insurance Brokers & Agencies Industry in the US, January 2023). Natural disasters are inherently difficult to forecast, but any increase in the frequency of these events has the potential to boost insurance policy volumes, particularly for property and casualty products.

This risk difference is key, especially considering volatile weather patterns and an increased rate of natural disasters. The economic costs of 2022's 421 natural disaster events were estimated at $313 billion, with insurance only covering 42% of the overall total (Source: AON, Testimony of Eric Anderson, President of Aon, before the United States Senate Committee on Budget, Wednesday, March 22, 2023).

Key external drivers for insurance industry performance include factors such as motor vehicle registrations, the homeowner rate, and per capita disposable income. The industry is in a hardening cycle, which leads to growth. There are still effects from the COVID-19 measures, with shifting sales trends expected to boost profitability while lowering marginal costs. Additionally, businesses rebounding from COVID-19 are reported to translate to a consistent stream of new insurance customers (Source: IBISWorld, *Insurance Brokers & Agencies Industry in the US*, January 2023).

In 2022, the global insurance brokerage market had an estimated value of $409 billion, and is forecasted to grow to $551 billion in 2026 (Source: Research and Markets, *Insurance Brokers & Agents Global Market Report 2022*). The growth within the insurance agency market has resulted in strong mergers and acquisition (M&A) activity within this sector. The insurance distribution industry continues to prove its resiliency. Total deal volume in 2022 was 32% lower than in 2021 during the first six months, moving from 374 transactions totaling $22 billion to 254 transactions totaling $16.5 billion. This gap was reduced significantly during the last six months of 2022, when there were 384 deals valued at $1.2 billion, only a 22% volume decrease from the same period in 2021. This was due to a 40-year high in inflation, rising capital costs and tightening budgets. In 2023, the strongest M&A drivers are inflation and interest rates. As rate increases have begun to settle, companies are expected to allocate more capital to acquisitions. Overall M&A activity will happen with lower frequency and prices than the inflationary period in 2021, and the insurance brokerage industry is expected to be the first sector to recover as PE interest suggests that financial buyers view brokerage positively (Source: Deloitte*, 2023 insurance M&A outlook: Balancing uncertainty with optimism*).

"Brokers play an important part in distributing health insurance policies. For example, a significant portion of small companies, which are those between two and 50 workers, purchase health benefits through agents or brokers. Therefore, an increase in health insurance membership tends to be a boon for agents and brokers. The number of people with private health insurance is expected to increase in 2022, posing a potential opportunity to the industry." (Source: IBIS World Insurance Brokers in the US - Market Size 2003–2028, June 23, 2022) The market size of the Online Insurance Brokers industry in the US has grown 4.2% per year on average between 2017 and 2022. (Source: IBIS World Online Insurance Brokers in the US - Market Size 2003–2028, January 30, 2022)

The global InsurTech market size was valued at $5.45 billion in 2022 (Grand View Research, Insurtech Market Size, Share & Trends Analysis Report By Type (Auto, Business, Health, Home, Specialty, Travel), By Service (Consulting, Support & Maintenance, Managed Services), By Technology, By End Use, By Region, And Segment Forecasts, 2023 - 2030). It is expected to expand at a compound annual growth rate (CAGR) of 51.7% from 2022 to 2030. The increasing need for digitization of insurance services is expected to propel the market growth. Insurtech is the usage of technology innovations particularly designed to make the existing insurance model more efficient. By using technologies such as AI and data analytics, InsurTech solutions allow products to be priced more competitively. Insurance companies are widely adopting these solutions to drive cheaper, better, and faster operational results. Hence, the insurance industry is witnessing increased investment in technology. The outbreak of COVID-19 is anticipated to have a positive impact on the market. Numerous insurance companies are reconsidering their long-term strategies and short-term needs. The COVID-19 and its impacts are accelerating the implementation of online platforms and new mobile applications to meet consumer needs. (Sources: Grand View Research Insurtech Market Size, Share & Growth Report, 2021-2028 and 2022 - 2030)

The Company therefore has strategically invested in its RELI Exchange and 5MinuteInsure.com, its online digital platforms as additional steps in expanding its national footprint. As discussed above, RELI Exchange and 5MI are high-tech proprietary tools developed by the Company as business to business or business to consumer portals which enables agents/consumers to compare and purchase car home and life insurance in a time efficient and effective manner. These platforms tap into the growing number of online users and utilize advanced artificial intelligence and data mining techniques, to provide competitive insurance quotes in around 1-5 minutes, with minimal data input needed from the agent/consumer.

 

***Agencies and Brokers Outlook***

Insurance brokers and agencies play a critical role within the insurance market by distributing policies and consulting insurance underwriters and consumers. This industry is a vital component to the larger insurance sector as industry operators act as intermediaries between insurance providers and downstream consumers. Operators generate income via commissions earned on policies sold. Given the transaction-based nature of the industry, revenue primarily depends on three factors: (1) policy (premium) pricing; (2) demand for insurance; and (3) the popularity of using agents and brokers in the distribution process.

The U.S. insurance broker and agency industry has grown steadily over the five years due to macroeconomic growth, beneficial legislation that has been passed, and positive trends in the insurance sector, achieving approximately $409 billion in revenues in 2022 (BusinessWire, *<u>Insurance Brokers & Agents Global Market Report 2022: Market is Expected to Grow to $551.88 Billion in 2026 - Long-term Forecast to 2031 - ResearchAndMarkets.com</u>)* As macroeconomic conditions improve over the five years to 2026, revenue generated by industry operators is expected to increase as businesses regain confidence in their financial stability, despite increased external competition from online insurance marketplace platforms. (Source: IBISWorld's *Insurance Brokers & Agencies Industry in the US*).

Insurance carriers should not continue to depend on the positive (though uncertain) fundamental economic strength of years past to maintain positive balance sheet momentum. In order to succeed, carriers must address foundational challenges, which include remaining relevant despite systemic economic changes combined with expanding consumer preferences. Some of the issues that insurers must address will fall within the areas of mergers and acquisitions (M&A), technology, product development, talent, regulation, as well as tax reform, as described below.

● M&A. The convergence of market pressures to attain sustainable growth, a persistent wealth of capital and capacity, combined with the upturn in interest rates may demonstrate that insurers should be prepared for an uptick in M&A activity in 2023. As it stands now, fairly rich valuations could dampen activity, however, M&A could offer opportunities to scale and obtain new capabilities, primarily as it relates to technology.

● <u>Proprietary Technology</u>. Advancements in mobile and digital technology are forcing insurers to innovate, which is expected to continue and intensify, where every insurance agency will need to focus on what makes their customer experiences and products unique. They will also need to integrate with technology enablers to bring to their customers a value proposition via a connected ecosystem. Furthermore, to better compete within the industry, those within the distribution system would benefit tremendously by improving the ability to share critical data and analytics between systems. Insurers are seeking to employ the cloud to power advanced analytics, improve data gathering, and grow cognitive applications. In order to keep pace with the industry and prepare for a cloud-enabled future, insurance carriers should prioritize migrating their existing systems to the cloud and launch new applications off-site.

● <u>Product Development</u>. Economic and technological changes create the need for new types of coverage, revamped policies, and alternative distribution platforms; adaptation of this, however, has been slow within the insurance industry. Siloed business lines, legacy processes, and regulatory considerations hinder the rapid and agile product development needed within this highly competitive landscape. Accordingly, insurers would benefit by focusing on creating hybrid policies that cover both commercial and personal risks. They could also supply on-demand coverage options, which provide greater control to customers for their policy terms and time frames. Furthermore, novel and unique micro-experiences could become the foundation for digital expansion as agencies are distinguished by the niche markets they sell to and can better service versus their peers. Digital content campaigns and user interfaces targeting specialized prospects and customer segments are expected to continue to expand. These micro-experiences could allow agencies to have access to a market that can quote, bind, and service insurance online, and where they are focused on commercial lines and specialty insurance for niche markets. In such a scenario, they may be able to offer new opportunities for agencies to expand quickly via digital building blocks that can be easily integrated into existing business and/or workflows.

● <u>Regulation</u>. Regulation will continue to play a significant role in the operations and development of the insurance industry, with three high-priority compliance issues (each with global and domestic implications) facing insurers:

○ <u>Market conduct</u>. "Best interest" standards are being considered at both the federal and state levels to protect consumers who purchase annuities and life insurance. Due to this, insurers should seek to review and adjust their compliance structures to accommodate what could turn into a patchwork oversight system. One possibility could be to integrate new technologies that would allow for continual oversight and management of the sales process.

○ <u>Cyber risk</u>. With New York State's new cybersecurity regulations, insurers are facing compliance deadlines, which have formed the basis of a nationwide model law developed by the National Association of Insurance Commissioners. Going forward, the spotlight is likely to be on how insurers plan to manage third-party risks, given so much importance has been placed on migrating policyholder data and software systems to external hosts.

○ <u>Privacy oversight</u>. Privacy is both a data-security and reputational risk issue given the European Union's General Data Protection Regulation (GDPR) having been implemented along with similar standards set to be imposed in California. Equally as important is how data can be used moving forward, specifically when it comes to disclosure and consumer signoff. In addition to legal and IT experts, insurers should include multiple stakeholders in its compliance efforts. Over the longer term, carriers may reexamine how the vast amounts of alternative data at their disposal may be leveraged for the mutual benefit not only for the carriers but their policyholders, while simultaneously remaining compliant with domestic and global regulations.

● <u>Taxes</u>. The global trend has been to lower corporate income tax rates, with a recent report from the Organization for Economic Co-operation and Development citing significant tax reform packages enacted in Argentina, France, Latvia, and the U.S., with other countries introducing more disjointed reforms. U.S. insurers continue to focus on adapting to the changes introduced in the Tax Cuts and Jobs Act of 2017. The U.S. Department of the Treasury and the Internal Revenue Service (IRS) have issued final and proposed guidance on certain important, newly enacted provisions, such as the application of the base erosion and anti-abuse tax to reinsurance, as well as the taxation of foreign operations owned by U.S. taxpayers. Additional guidance could be imminent on many other important provisions, including how the new loss carryover rules will fit with the old rules in the context of consolidated returns.

While the industry may need to address internal and external pressures, the impact from these issues will continue to fall within the individual insurer. Thus, since insurers control their own destinies, potentially the most significant factor is likely to be how committed and prepared insurers are to quickly adjust to changes in the economy, society, and technology, and respond accordingly.

**Insurance Options**

Single-product platforms limit buyers' choices and often lead to high costs or insufficient coverage. We've partnered with an extensive list of carriers and filter results for buyers according to their needs. This gets them the right coverage at a fair price. From there, they're connected to an agent who onboards them with minimal friction.

**Insurance Buyers**

Insurance buyers want coverage that fits their needs at a fair price. They also want good customer service. We believe the independent insurance agents, combined with the RELI Exchange platform can serve these needs best. Our platform makes it easy to weigh the options and connect with a knowledgeable agent with the buyer's interests in mind.

**Expert Agents**

We train our agents to evaluate coverages based on buyers' needs, and to explain options in simple terms. Furthermore, service doesn't stop there. People's needs change during different life events, and we facilitate adjustments to their coverage when it matters most.

Agents can revolutionize their insurance businesses—or start a new one on RELI Exchange. They have the freedom to offer coverage from a variety of carriers, utilizing our cutting-edge technology, and proven sales system. This is particularly beneficial to captive insurance agents who previously found themselves limited to one carrier and pricing model. By offering more choices, agents now have more chances of closing business with interested buyers. By partnering with us, agents gain access to a variety of carriers, yet are able to streamline their workflows to focus on business development with support from our team and lower marketing costs.

**Top Carriers**

Insurance carriers want to maximize profits without detracting from the customer experience. The challenge is that it's costly to distribute coverage through independent agents with varying levels of expertise. Some carriers choose the Captive Agent route to save on cost, but RELI Exchange offers a better alternative. We reduce overhead and scale distribution for carriers while maintaining good standards with our technology and back office support team.

The performance improvements and lower costs lead to higher customer retention and a better customer experience, which translates to a higher customer lifetime value and more profits for the carrier and the agent.

**Leadership Team**

Our leadership team has over 100 years of combined industry experience.

*Ezra Beyman, Chairman & CEO*, brings nearly three decades of entrepreneurial experience in real estate and fifteen years in insurance. His portfolio of commercial and residential properties at one point consisted of more than 40,000 residential units, as well as several insurance companies. In 1985, he founded his first mortgage brokerage, which rapidly grew into the third largest licensed mortgage brokerage in the United States of America by 2008. He also expanded to real estate acquisition, having grown his portfolio to over three billion dollars.

*Scott Korman, Director,* serves as President of Nashone, Inc., a private equity firm, which he founded in 1984. In this role, Mr. Korman is involved in financial advisory, M&A, and general management assignments. He is a founder and Managing Member and CEO of Illumina Radiopharmaceuticals LLC, CEO of Red Mountain Medical Holdings, Inc. Mr. Korman previously served as Chairman of Da-Tech Corporation, a Pennsylvania based contract electronics manufacturer and as Chairman and CEO of Best Manufacturing Group LLC, a leading manufacturer and distributor of uniforms, napery, service apparel, and hospitality and healthcare textiles. Mr. Korman also served as President and CEO of Welsh Farms Inc., a full-service dairy processor and distributor of milk, ice cream mix and ice cream products.

*Ben Fruchtzweig, Director,* brings decades of executive experience in accounting and financial services. He has served as Chief Comptroller/Financial Analyst at national financial services and investment companies. He received his NYS C.P.A license in 1987 and has worked at Deloitte Haskins and Sells and other leading accounting firms. Currently, Mr. Fruchtzweig lectures on a variety of topics including business ethics. He also serves on a voluntary basis as a trustee of a non-profit private foundation, which serves to provide the needed financial support, services and guidance to qualifying individuals and families.

*Alex Blumenfrucht, CPA, Director,* Mr. Blumenfrucht previously served as CFO for Reliance Global. Before joining Reliance he served as an Audit & Assurance Professional at Deloitte & Touche, LLP where he successfully led audit teams on both public and privately held corporations. He brings extensive experience in internal controls, financial analysis and reporting for both private and publicly traded companies.

*Sheldon Brickman, Director,* has over 25 years of M&A advisory and business development experience, totaling more than $40 billion in deal value. He has worked for numerous multibillion-dollar insurance carriers, including assignments for such companies as AIG, Aetna and National General. Sheldon has assisted international companies (UAE, UK, Asia and Latin America), start-up operations, and regional insurance carriers. Mr. Brickman's experience covers the property casualty and life/health markets, including working with insurance carriers, managing general agencies, wholesalers, retailers and third-party administrators.

*Joel Markovits, CPA, Chief Financial Officer,* Joel joined Reliance Global Group in June 2021, bringing over 12 years of financial and accounting experience in both the public and private sectors. Prior to joining Reliance Global Group, Joel was a senior manager at KPMG LLP from April 2015 through May 2021, where he led some of the larger and more complex audit engagements, including serving as lead audit senior manager on a global $16 billion (annual revenues) enterprise reporting on both US GAAP and IFRS standards. He was also a data & analytics specialist and technology innovation leader at KPMG for its largest US Business Unit, overseeing the development and deployment of technological capabilities that enhance data analyses. Joel has been a Certified Public Accountant in the State of New Jersey since November 2013.

*Yaakov Beyman - Executive Vice President, Insurance Division,* oversees the overall insurance operations of Reliance, including strategy and developing/implementing operational tools. He holds insurance licenses in most of the continental United States, and is involved heavily in marketing, maintaining state of the art technological models, financial management and distributions, and entity creation and maintenance.

*Grant Barra - Senior Vice President of Operations,* brings over 18 years of experience in the insurance industry. In 2008, he founded Barra & Associates, which quickly grew to become a recognized distribution model of both personal and commercial insurance products, including P&C, life, health and other insurance products. Along with founding Barra & Associates, he served in a leadership role for a single life carrier, where he focused on recruitment, development, and motivating independent agents to sell life insurance products. Earlier in his career, he founded Grant Barra Agency, providing all lines of insurance policies under a captive agency agreement.

*Moshe Fishman, Director of Insurtech and Operations,* brings a unique perspective to the insurance sales process. Prior to starting his own insurance agency, Mr. Fishman was a recognized guru in the travel industry leveraging the technology in the travel sector. This tech savviness has been applied into the insurance and financial services industries with the founding of Fishman Insurance Agency as well as Tekeno Financial. Mr. Fishman is one of the driving talents of the RELI Exchange & 5MinuteInsure.com InsurTech platforms.

*Jonathan Fortman, VP of Acquisitions,* brings a wealth of experience to the acquisition process. Prior to joining Reliance, Mr. Fortman spent two decades operating, owning and expanding his family's multiple line insurance agency at Fortman Insurance Services, founded in 1978. Along with being a principal of the agency, he also specializes in sales, retention, growth and service for the agency's large book of Employee Benefit clients. He brings an extensive level of agency management experience as well as providing growth strategies for newly acquired agencies.

***<u>Agency Partner network and InsurTech platform at ReliExchange.com</u>***

**Our Go-to-Market Strategy**

Our Go-to-Market high level goals include:

● Building brand awareness

● Creating inquiries

● Generate agency signups

● Create foundation for new marketing

Specific metrics for success include 50 New Contracted Agents per month, or 600 by mid 2023 and 1,000 by year-end across 3 agency partner types:

Target #1: Captive

● When an agent represents one insurance company, they'll earn multiples of what they make currently due to a broad array of offers.

● Key target agency partners

● They'll earn multiples of what they make currently due to the broad array of offers.

Target #2: Agency Producers/CSRs

● People who want their own agency.

Target #3: New Agency Startups

● People who want to start their own business. Our platform makes it easy for people to start their own agencies - These people have no experience - Its a huge market where the majority of the current audience comes from, though it's the tertiary choice.

**Promotion**

To meet our agency registration objectives, we have engaged in both inbound and outbound marketing. Outbound sales and marketing includes outreach on social media through posts and direct messages using tools on LinkedIn and other platforms, phone, email, and other methods of communication. Inbound marketing is primarily through driving traffic to our website through search engines, social media, and digital publicity campaigns. These combined tactics give us a constant influx of marketing qualified leads (MQL) and sales qualified leads (SQL) to predictably hit our target metrics each month.

*Email Marketing*

 

As we continue to build our database of customers and prospects, we will implement an effective email marketing campaign. This includes newsletters as well as content flows that drip out over time to keep people engaged. This content is pre-programmed to automatically fire at set intervals whenever someone registers for a list. Through automation, we continue to build rapport with people who eventually sign up for the service.

*Public Relations*

 

The digital marketing tactics that we use have the following benefits:

● Increase brand credibility

● Generate leads

● Attract investors and partners

● Make other marketing more effective

● Attract talent

● Improve reputation on Google

● Drive domain authority for SEO

● Differentiate from competitors

● Increase perceived value

● Convert leads faster

*Social Media*

 

As part of our content creation process, we've implemented a system for ongoing posts to social media channels such as LinkedIn. Tactics include:

● Daily social listening – eye-on competitor + industry news + influencer

● Creative design and content planning

● Daily posting schedule

● Real-time events support and live posting

● Daily monitoring comments and discussions

● A content coordinator with approving capabilities to approve/direct.

● Monitoring data, providing monthly reports

● Weekly meetings with updates on new content, industry news approval etc.…

● Daily outreach, engagement, and growth of LinkedIn profile.

● Weekly: 2 posts that demonstrate expertise, experience and thought leadership.

● Monthly: Strategic growth and visibility

Using platforms like LinkedIn, Facebook, and Twitter, we post regular content with the aim of growing our visibility and credibility through social media storytelling. Our goal is to maintain a consistent brand story for customers, prospects, stakeholders, and industry experts.

Planning, writing, creating, and posting a mixture of our available assets, plus curated topics on industry trends and influencer thought leadership to provide validation and exposure outside of our existing followers, to develop the company story.

Our initial focus is on LinkedIn, with expansion to other platforms as it makes sense.

*Podcasts*

 

We have appeared on several podcasts as subject matter experts, and will continue with outreach to increase exposure, visibility, brand awareness, and sales.

*Website Search Engine Optimization*

 

Our goal is to improve the website to drive more organic traffic through Google and other search engines. The two primary objectives are to create engaging content, and to improve the technical SEO of the website.

SEO growth opportunities include:

● SEO Audit and Execution to improve HTML, structured data and other technical issues

● SEO review of any future site migration and platform upgrade plans as part of the M&A process

● Information architecture & internal linking for SEO

● Content topic and structural improvements

● Keyword Tracking

● Competitive analysis

**Product**

Our best-in-class product offerings include the following:

1) An agency partner contract

2) An agent / pro contract

Our value proposition is that we're giving people a complete, white label business. Agents have a fast and easy website presence, get contracts with carriers they wouldn't normally access, and they can get paid for referrals.

![](form10-k_003.jpg)

**Price**

Costs are very low. Access is approximately $90/month for agents, and $190/month for agency partners. This is a singular solution that gives people an all-in-one insurance agency.

For comparison, people used to pay about $50,000 to build out an insurance agency. Additionally, licensing can be around $750, with $100-200 in monthly expenditures. RELI Exchange removes these costly barriers to entry through technology.

With the RELI Exchange platform, our vision is to remove all barriers and activate contracted agents at scale. Being cost efficient for these agencies is key to our success. Unlike the franchise model, RELI Exchange is designed with low barriers to entry and a compelling value proposition. In addition, RELI Exchange significantly enhances competitive advantages through provided agency partners.

**People (Target Audience)**

We have identified several highly receptive target audiences, including:

● Existing insurance agents & agency leadership/owners

● People looking for a career change (GenX, older Millennials)

● Experienced salespeople

● Younger "quiet quitters" and "Great Resigners" who want more purposeful, lucrative work & flexibility

● Recent college graduates with debt & unmarketable degrees with few career options

● Captive Agents who feel trapped

**The RELI Exchange Platform**

The RELI Exchange platform is a revolutionary way to get insurance quotes without requiring users to undergo a complicated process of manually completing lengthy forms. With basic contact information, our proprietary tool can generate accurate home auto and life insurance quotes from credible providers in under 5 minutes, for free. Then, our platform connects each user with a fully trained and knowledgeable agent who guides them through the rest of the process to deliver the best coverage at the best price.

RELI Exchange is at the forefront of the digital transformation of the insurance industry. Our platform leverages unique technology, a proprietary database, and expert methodologies from experienced insurance agents to deliver a quality experience to agents and people looking to get insured.

In addition to providing customers with a great experience, RELI Exchange automates many processes for agents to free up their time to sell to new customers. The result is higher profitability with less work. Most importantly, mentorship is part of the RELI Exchange model, so that agents always receive the support they need to be successful.

**System for Agent and Agency Partner Success**

RELI Exchange agents have a distinct advantage over their captive counterparts when it comes to serving clients. They have access to multiple carriers in their markets, to provide more choices and solutions that fit their customers' needs. Additionally, our automations and back-office support eliminate time spent on service requests and renewals, so agents can focus on sales growth.

We spent years developing our proprietary sales processes, backed up by an engaging mentorship program to maximize agent success. We provide every agent with comprehensive training, product and carrier knowledge, and cutting-edge technology. Plus, our back-office support team is readily available to train and assist agents at every step.

We actively recruit agents who are passionate about owning their own business and have a proven track record in business development. Our revenues are tied directly to their success, creating an environment that delivers consistent results.

Agents benefit from low startup costs and minimal overhead—no employees or physical location is required. In contrast, captive agents are often burdened with immediate hiring requirements, storefront leases, and advertising budgets. Moreover, our software platform delivers economies of scale so that fixed and variable costs are reduced for greater profitability.

***<u>Online Insurance and 5MinuteInsure.com</u>***

In August 2021, we launched 5MinuteInsure.com, which is a licensed online insurance agency that utilizes state of the art digital technology and seek to use this platform to develop business in the online insurance business which we believe represents an underutilized opportunity.

While 90% of customers are open to purchasing insurance online, 75% of the people who attempt to make online purchases report problems (Source: J.D. Power, *Direct-to-Consumer Auto Insurers Take Top Honors in Shopping Study as New Normal Arrives for P&C Industry, J.D. Power Finds*; Invoca, *36 Insurance Marketing Statistics You Need to Know in 2023*). Moreover, the current insurance purchasing processes is time consuming and lacks transparency. There are over 96 insurance companies paying thousands of affiliates to generate leads, paying as much as $120 per lead (Source: The Insurance Marketer, *Best Life Insurance Affiliate Programs: How Much Can You Earn?*; Lasso, *The 96 Best Insurance Affiliate Programs of 2023*). Consequently, most of the current online sites are simply lead generators, which result in false insurance quotes, constant spam and aggressive sales pitches. We believe consumers are looking for an online platform that will replicate the services they could obtain from a traditional brick and mortar insurance agency, thus driving business toward the online site as we all migrate to online in this post COVID world.

Another key benefit to online insurance is the ability to combine seamlessly with electronic capabilities in processing, such as 5MinuteInsure.com's proprietary backend processing technology to support our traditional agency business. 5MinuteInsure.com will be used internally by all the Reliance Global Group affiliated agencies to offer more products to our existing client base. By implementing artificial intelligence, robotic process automation and automatic shopping for best rates at renewals, we believe we can dramatically reduce costs, and allow our agents to focus on selling new policies, creating a digitally empowered and scalable insurance agency model.

Specific benefits of the 5MinuteInsure.com platform include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● First, a simplified application process

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Second, 5MinuteInsure.com has real-time connections with over 15 top-rated insurance companies, which allows consumers to transparently compare real live quotes from multiple insurers side-by-side.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Third, 5MinuteInsure.com provides instant accurate coverage recommendations for home, auto and life insurance, providing consumers confidence they are not under or over-insured.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Fourth, 5MinuteInsure.com provides in-house insurance buying and policy binding capabilities, meaning no redirection to other websites and the ability to finalize purchases on 5MinuteInsure.com in as little as five minutes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Fifth, coming soon is 5MinuteInsure's free and secure account enables 24/7 access to previous quotes, policies and other documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● And finally, when it's time for a policy renewal, 5MinuteInsure.com can populate the best offers in the market before their policy expires.

Thus, we believe in the specific benefits of the online insurance business, and we believe that 5MinuteInsure.com provides the platform to transform this segment of the industry.

***Insurance M&A Overview***

The solid growth within the insurance agency market has resulted in strong mergers and acquisition (M&A) activity within this sector. Mergers and acquisitions from insurance agents and brokers jumped from 795 in 2020 to over 1,000 in 2021, and remained consistently high in 2022 at almost 1000 new acquisitions, 24% over the 2020 totals. (Source: Optis, *Partners Agent & Broker 2022 Year-end Merger & Acquisition Report*).

![](form10k_001.jpg)

"Mergers and acquisitions (M&A) activity in the insurance sector shows no signs of slowing over the next 12 months. Given the optimistic forecast, executives should evaluate market opportunities that can safeguard future enterprise value now. Discover the insurance M&A trends and drivers that can help identify profitable moves and shape M&A strategies to ride the wave of growth in 2022." <u>(Source: Deloitte, 2022 midyear insurance M&A outlook, 2022)</u>

The COVID-19 crisis may have an impact on the insurance industry for quite some time. Some factors to consider are:

**Strain on investment portfolios** – Insurance companies rely on their investment portfolios to generate returns. Markets have been in turmoil and, as a result, insurers' investment portfolios may be significantly impacted.

**Delayed payments** – Regulators are urging insurance companies to accept late premium payments with no penalty, putting a strain on cash flow. Despite liquidity being impacted, insurance companies are still being expected to pay out claims.

**Decreased premium volume** – Full or partial closing of businesses coupled with social distancing has led to decreased demand for insurance. Lower payroll levels lead to lower payroll-based premiums, such as those in workers' compensation, and an uptick in layoffs results in fewer people buying houses, cars, and other insurable purchases. A decrease in premium volume means a decrease in income for insurers.

**Coverage disputes** – Pandemics are generally excluded from insurance policy coverage and therefore policy premium has not included the necessary charges to provide such coverage. A number of states are attempting to legislate to force insurance companies to provide insurance coverage for business interruption and other losses for claims resulting from the COVID-19 pandemic. There is uncertainty regarding which party will ultimately incur the additional cost for these adjustments.

We cannot presently estimate the full financial impact of the unprecedented COVID-19 pandemic on our business or predict the related federal, state and local civil authority actions, which are highly dependent on the severity and duration of the pandemic; however, we see opportunities which may arise as to changes in the markets. Due to the uncertainties associated with the COVID-19 pandemic and the indeterminate length of time it will affect, we have taken proactive measures to secure our liquidity position to be able to meet our obligations for the foreseeable future.

<sup>5</sup> https://optisins.com/wp/2023/01/2022-ma-report/

**Insurance Agency Brand Acquisitions as of 1Q 2023**

● RELI Exchange

● 5 Minute Insure

● Altruis Benefits

● J.P. Kush & Associates

● US Benefits Alliance

● Employee Benefits Solutions

● Fortman Insurance Solutions

● Medigap Healthcare

● Southwestern Montana Insurance Center

● UIS Agency

● Commercial Coverage Solutions

**Acquisition History**

● In October 2018, announced first two acquisitions: Employee Benefits Solutions and U.S. Benefits Alliance; Michigan-based agencies specializing in the sale of health insurance products in the wholesale and retail industry

● In December 2018, acquired Commercial Coverage Solutions, LLC, a commercial property and casualty insurance company specializing in commercial trucking and transportation insurance

● In September 2019, two agencies transferred ownership from Reliance Global Holdings, LLC, a private company affiliated with Reliance Global Group:

○ Southwestern Montana Insurance, a group health insurance agency providing personal and commercial lines of insurance

○ Fortman Insurance Agency, LLC, an agency providing multiple lines of insurance in the property/casualty and life/health insurance sectors

● In September 2019, acquired Altruis Benefit Consulting; serves customers throughout the entire State of Michigan, specializing in providing individual and group health insurance

● In September 2020, acquired the assets of UIS Agency, LLC (UIS), a premier regional insurance agency serving the commercial transportation industry

● In May 2021, acquired J.P. Kush and Associates, Inc., a premier healthcare insurance agency with operations in 10 states, headquartered in Troy, Michigan

● In January 2022, Medigap Health Insurance Company, an insurance brokerage company headquartered in Florida, specializing in Medicare supplement insurance

● In April 2022, acquired Barra & Associates, (changed to RELI Exchange following acquisition) a recognized provider of both personal and commercial insurance products, including P&C insurance, life insurance, health insurance and other insurance products.

**Insurance Agency Acquisition Strategy**

● Numerous acquisition targets within a highly fragmented market

○ Reliance's access to capital supports the growth of the acquired companies

● Ownership and management remain engaged

● Focus on acquiring growing and profitable businesses, for below-market prices

○ Ability to leverage cash flow of acquiree through low-cost debt financing and provide earnouts as part of consideration

● Economies of scale through first class technology infrastructure and national sales/marketing platform

○ Few insurance agencies have the size and scale to compete at a national level

● Management expertise in acquisitions, operations, and financial management

**Digitizing Bricks & Mortar Agencies**

● Capitalizing on consumer shift to 'online'

○ More and more customers search for insurance online, but consumers prefer the personal touch of an agent

● Proprietary backend processing technology to support Reliance's agency business

● Strategy to acquire traditional 'offline' home, auto and life agencies, and utilize technology to more cost effectively service the acquired policies

● By implementing artificial intelligence, robotic process automation (RPA) and automatic shopping for best rates at renewals, Reliance can:

○ Dramatically reduce cost

○ Allow agents to focus on selling new policies,

○ Create a digitally empowered and scalable insurance agency model

● Ability to rapidly expand Reliance's agency network nationwide and drive margin expansion through the combination of digital backend and continued M&A of cash flow positive and accretive acquisitions

**Employees**

As of March 30, 2023, we employed 78 employees across all Company subsidiaries.

We believe that a diverse workforce is important to our success. We will continue to focus on the hiring, retention and advancement of underrepresented populations, and to cultivate an inclusive and diverse corporate culture. In the future, we intend to continue to evaluate our use of human capital measures or objectives in managing our business such as the factors we employ or seek to employ in the development, attraction and retention of personnel and maintenance of diversity in our workforce.

The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety and wellness of our employees. We provide our employees and their families with access to a variety of innovative, flexible and convenient health and wellness programs, including benefits that provide protection and security so they can have peace of mind concerning events that may require time away from work or that impact their financial well-being; that support their physical and mental health by providing tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors; and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families.

We also provide robust compensation and benefits programs to help meet the needs of our employees. We believe that we maintain a satisfactory working relationship with our employees and have not experienced any labor disputes.

**Competition**

The insurance brokerage business is highly competitive, and numerous firms actively compete with us for customers and insurance markets. Competition is largely based upon innovation, knowledge, terms and conditions of coverage, quality of service and price. We believe that we're well positioned to be highly competitive and continuously gain market share. Additionally, our focus on InsurTech is a game-changer in the industry and helps us stand-out vs. the compention.

The Merger and Acquisition of Insurance Agencies is a highly competitive industry, as well. Competition is due to many well-established companies having extensive experience in identifying and effecting business combinations who possess great technical, human, and financial resources. Several firms and banks with substantially greater resources and market presence compete with us. While we believe that there are numerous potential target businesses that we could acquire, our ability to compete in acquiring certain sizable target businesses might be limited.

**Government Regulation**

The business practices and compensation arrangements of the insurance intermediary industry, including our practices and arrangements, are regulated by various governmental authorities. Certain of our offices are parties to profit-sharing contingent commission agreements with certain insurance companies, including agreements providing for potential payment of revenue-sharing commissions by insurance companies based primarily on the overall profitability of the aggregate business written with those insurance companies and/or additional factors such as retention ratios and the overall volume of business that an office or offices place with those insurance companies. The legislatures of various states may adopt new laws addressing contingent commission arrangements, including laws prohibiting such arrangements, and addressing disclosure of such arrangements to insureds.

We and our employees must be licensed to act as brokers, intermediaries, or third-party administrators by state regulatory authorities in the locations in which we conduct business. Regulations and licensing laws vary by individual state and are often complex. The applicable licensing laws and regulations in all states are subject to amendment or reinterpretation by regulatory authorities, and such authorities are vested in most cases with relatively broad discretion as to the granting, revocation, suspension, and renewal of licenses. We believe that we are in compliance with the applicable licensing laws and regulations of all states in which we currently operate. However, the possibility still exists that we or our employees could be excluded or temporarily suspended from carrying on some or all of our activities in, or could otherwise be subjected to penalties by, a particular jurisdiction.

Nearly all states have insurance laws requiring personal property and casualty insurers to file rating plans, policy or coverage forms, and other information with the state's regulatory authority. In many cases, such rating plans, policy, or coverage forms, must be approved prior to use and the regulator has the authority to disapprove a rate filing. While we are not an insurer, and thus not required to comply with state laws and regulations regarding insurance rates, our commissions are derived from a percentage of the premium rates set by insurers in conjunction with state law.

**Item 1a.** **RISK FACTORS**

*The following important factors, among others, could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Annual Report on Form 10-K or presented elsewhere by management from time to time. Investors should carefully consider the risks described below before making an investment decision. The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently believe are not material may also significantly impair our business operations. Our business could be harmed by any of these risks. The trading price of our common stock could decline due to any of these risks, and investors may lose all or part of their investment.*

**Risks Related to Our Business**

***We may experience significant fluctuations in our quarterly and annual results.***

Fluctuations in our quarterly and annual financial results have resulted and will continue to result from numerous factors, including:

● The Company having a limited operating history

● The Company has limited resources and there is significant competition for business combination opportunities. Therefore, the Company may not be able to acquire other assets or businesses

● The Company may be unable to obtain additional financing, if required, to complete an acquisition, or to complement the operations and growth of existing and target business, which could compel the Company to restructure a potential business transaction or abandon a particular business combination

● Our inability to retain or hire qualified employees, as well as the loss of any of our executive officers, could negatively impact our ability to retain existing business and generate new business

● Our growth strategy depends, in part, on the acquisition of other insurance intermediaries, which may not be available on acceptable terms in the future or which, if consummated, may not be advantageous to us

● A cybersecurity attack, or any other interruption in information technology and/or data security and/or outsourcing relationships, could adversely affect our business, financial condition and reputation

● Rapid technological change may require additional resources and time to adequately respond to dynamics, which may adversely affect our business and operating results

● Changes in data privacy and protection laws and regulations, or any failure to comply with such laws and regulations, could adversely affect our business and financial results

● Because our insurance business is highly concentrated in Michigan, New Jersey, Montana and Ohio, adverse economic conditions, natural disasters, or regulatory changes in these regions could adversely affect our financial condition

● If we fail to comply with the covenants contained in certain of our agreements, our liquidity, results of operations and financial condition may be adversely affected

● Certain of our agreements contain various covenants that limit the discretion of our management in operating our business and could prevent us from engaging in certain potentially beneficial activities

● There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with United States Generally Accepted Accounting Principles (U.S. GAAP). Any changes in estimates, judgments and assumptions could have a material adverse effect on our financial position and results of operations and therefore our business

● Improper disclosure of confidential information could negatively impact our business

● Our business, results of operations, financial condition and liquidity may be materially adversely affected by certain actual and potential claims, regulatory actions and proceedings

These factors, some of which are not within our control, may cause the price of our common stock to fluctuate substantially. If our operating results fail to meet or exceed the expectations of securities analysts or investors, our stock price could drop suddenly and significantly. Due to the Company's limited operating history, we believe period to period comparisons of our financial results are not always meaningful and should not be relied upon as an indication of future performance.

***The Company has limited resources and there is significant competition for business combination opportunities. Therefore, the Company may not be able to acquire other assets or businesses.***

The Company expects to encounter intense competition from other entities having a business objective similar to ours, which are also competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human, financial and other resources. While the Company believes that there are numerous potential target businesses that it could acquire, the Company's ability to compete in acquiring certain sizable target businesses might be limited if the Company's limited financial resources are less than that of its competitors. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.

***The Company may be unable to obtain additional financing, if required, to complete an acquisition, or to Company the operations and growth of existing and target business, which could compel the Company to restructure a potential business transaction or abandon a particular business combination.***

To date, much of our capital for acquiring and operating insurance agencies comes from funds provided by Reliance Global Holdings our affiliate, loans from unaffiliated lenders, or from direct market capital raises. We may be required to seek additional financing. We cannot assure you that such financing would be available on acceptable terms, if at all. If additional financing proves to be unavailable, we would be compelled to restructure or existing business, or abandon a proposed acquisition or acquisitions. In addition, if we consummate additional acquisitions, we may require additional financing to complement the operations or growth of that business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of our business.

 **

***We hold our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts that could be adversely affected if the financial institution holding such funds fail.***

 **

We hold our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts at one financial institution. The balance held in these accounts exceeds the Federal Deposit Insurance Corporation, or FDIC, standard deposit insurance limit of $250,000. If the financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of such uninsured funds. Any such loss or lack of access to these funds could adversely impact our short-term liquidity and ability to meet our operating expense obligations, including payroll obligations.

For example, on March 10, 2023, Silicon Valley Bank, or SVB, and Signature Bank, were closed by state regulators and the FDIC was appointed receiver for each bank. The FDIC created successor bridge banks and all deposits of SVB and Signature Bank were transferred to the bridge banks under a systemic risk exception approved by the United States Department of the Treasury, the Federal Reserve and the FDIC. If the financial institution in which we hold funds for working capital and operating expenses were to fail, we cannot provide any assurances that such governmental agencies would take action to protect our uninsured deposits or investments in a similar manner.

***Our inability to retain or hire qualified employees, as well as the loss of any of our executive officers, could negatively impact our ability to retain existing business and generate new business.***

Our success depends on our ability to attract and retain skilled and experienced personnel. There is significant competition from within the insurance industry and from businesses outside the industries for exceptional employees, especially in key positions. If we are not able to successfully attract, retain and motivate our employees, our business, financial results and reputation could be materially and adversely affected.

Losing employees who manage or support substantial customer relationships or possess substantial experience or expertise could adversely affect our ability to secure and complete customer engagements, which would adversely affect our results of operations. Also, if any of our key personnel were to join an existing competitor or form a competing company, some of our customers could choose to use the services of that competitor instead of our services. While our key personnel are generally prohibited by contract from soliciting our employees and customers for a two-year period following separation from employment with us, they are not prohibited from competing with us.

In addition, we could be adversely affected if we fail to adequately plan for the succession of our senior leaders and key executives. We cannot guarantee that the services of these executives will continue to be available to us. The loss of our senior leaders or other key personnel, or our inability to continue to identify, recruit and retain such personnel, or to do so at reasonable compensation levels, could materially and adversely affect our business, results of operations, cash flows and financial condition.

***Our growth strategy depends, in part, on the acquisition of other insurance intermediaries, which may not be available on acceptable terms in the future or which, if consummated, may not be advantageous to us.***

Our growth strategy partially includes the acquisition of other insurance intermediaries. Our ability to successfully identify suitable acquisition candidates, complete acquisitions, integrate acquired businesses into our operations, and expand into new markets requires us to implement and continuously improve our operations and our financial and management information systems. Integrated, acquired businesses may not achieve levels of revenues or profitability comparable to our existing operations, or otherwise perform as expected. In addition, we compete for acquisition and expansion opportunities with firms and banks that may have substantially greater resources than we do. Acquisitions also involve a number of special risks, such as diversion of management's attention; difficulties in the integration of acquired operations and retention of personnel; increase in expenses and working capital requirements, which could reduce our return on invested capital; entry into unfamiliar markets or lines of business; unanticipated problems or legal liabilities; estimation of the acquisition earn-out payables; and tax and accounting issues, some or all of which could have a material adverse effect on our results of operations, financial condition and cash flows. Post-acquisition deterioration of operating performance could also result in lower or negative earnings contribution and/or goodwill impairment charges.

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***A cybersecurity attack, or any other interruption in information technology and/or data security and/or outsourcing relationships, could adversely affect our business, financial condition and reputation.***

We rely on information technology and third-party vendors to provide effective and efficient service to our customers, process claims, and timely and accurately report information to carriers and which often involves secure processing of confidential sensitive, proprietary and other types of information. Cybersecurity breaches of any of the systems we rely on may result from circumvention of security systems, denial-of-service attacks or other cyber-attacks, hacking, "phishing" attacks, computer viruses, ransomware, malware, employee or insider error, malfeasance, social engineering, physical breaches or other actions, any of which could expose us to data loss, monetary and reputational damages and significant increases in compliance costs. An interruption of our access to, or an inability to access, our information technology, telecommunications or other systems could significantly impair our ability to perform such functions on a timely basis. If sustained or repeated, such a business interruption, system failure or service denial could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. We have from time-to-time experienced cybersecurity breaches, such as computer viruses, unauthorized parties gaining access to our information technology systems and similar incidents, which to date have not had a material impact on our business.

Additionally, we are an acquisitive organization and the process of integrating the information systems of the businesses we acquire is complex and exposes us to additional risk as we might not adequately identify weaknesses in the targets' information systems, which could expose us to unexpected liabilities or make our own systems more vulnerable to attack. In the future, any material breaches of cybersecurity, or media reports of the same, even if untrue, could cause us to experience reputational harm, loss of clients and revenue, loss of proprietary data, regulatory actions and scrutiny, sanctions or other statutory penalties, litigation, liability for failure to safeguard clients' information or financial losses. Such losses may not be insured against or not fully covered through insurance we maintain.

***Rapid technological change may require additional resources and time to adequately respond to dynamics, which may adversely affect our business and operating results.***

Frequent technological changes, new products and services and evolving industry standards are influencing the insurance businesses. The Internet, for example, is increasingly used to securely transmit benefits, property and personal information, and related information to customers and to facilitate business-to-business information exchange and transactions.

We are continuously taking steps to upgrade and expand our information systems capabilities. Maintaining, protecting and enhancing these capabilities to keep pace with evolving industry and regulatory standards, and changing customer preferences, requires an ongoing commitment of significant resources. If the information we rely upon to run our businesses was found to be inaccurate or unreliable or if we fail to effectively maintain our information systems and data integrity, we could experience operational disruptions, regulatory or other legal problems, increases in operating expenses, loss of existing customers, difficulty in attracting new customers, or suffer other adverse consequences.

***Changes in data privacy and protection laws and regulations, or any failure to comply with such laws and regulations, could adversely affect our business and financial results.***

We are subject to a variety of continuously evolving and developing laws and regulations globally regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. Significant uncertainty exists as privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements. These laws apply to transfers of information among our affiliates, as well as to transactions we enter into with third party vendors. These and similar initiatives around the world could increase the cost of developing, implementing or securing our servers and require us to allocate more resources to improved technologies, adding to our information technology and compliance costs. In addition, enforcement actions and investigations by regulatory authorities related to data security incidents and privacy violations continue to increase. The enactment of more restrictive laws, rules, regulations or future enforcement actions or investigations could impact us through increased costs or restrictions on our business, and noncompliance could result in regulatory penalties and significant legal liability.

***Because our insurance business is highly concentrated in Michigan, New York, Montana and Ohio, Florida, and Illinois adverse economic conditions, natural disasters, or regulatory changes in these regions could adversely affect our financial condition.***

A significant portion of our insurance business is concentrated in Michigan, New York, Montana, Ohio, Florida, and Illinois. For the years ended December 31, 2022, and 2021 we derived $16,755,884 and $9,710,334 respectively or 100%, of our annual revenue, respectively, from our operations located in these regions (FYE 2022 - Michigan – 38%, New York – 2%, Montana – 11%, Ohio – 13%, Florida – 30%, and Illinois – 7%. FYE 2021 - Michigan – 56.64%, New Jersey – 3.44%, Montana – 17.97% and Ohio – 21.95%). The insurance business is primarily a state-regulated industry, and therefore, state legislatures may enact laws that adversely affect the insurance industry. Because our business is concentrated in these four states, we face greater exposure to unfavorable changes in regulatory conditions in those states than insurance intermediaries whose operations are more diversified through a greater number of states. In addition, the occurrence of adverse economic conditions, natural or other disasters, or other circumstances specific to or otherwise significantly impacting these states could adversely affect our financial condition, results of operations and cash flows. We are susceptible to losses and interruptions caused by hurricanes or other weather conditions, and other possible events such as terrorist acts and other natural or man-made disasters. Our insurance coverage with respect to natural disasters is limited and is subject to deductibles and coverage limits. Such coverage may not be adequate or may not continue to be available at commercially reasonable rates and terms.

***If we fail to comply with the covenants contained in certain of our agreements, our liquidity, results of operations and financial condition may be adversely affected.***

The Oak Street credit agreements, in the aggregate principal amount of $13,782,223 and $8,133,925, as of December 31, 2022 and 2021, that govern our debt contain various covenants and other limitations with which we must comply including a debt to EBITDA ratio covenant and a covenant that at all times that the loans are outstanding: (i) Ezra Beyman, our chief executive officer, Debra Beyman, Mr. Beyman's wife, or Yaakov Beyman, son of Mr. and Ms. Beyman, or someone else approved by Oak Street, as applicable, will be the manager of the current subsidiaries of the Company, (ii) Mr. Ezra Beyman will be President and Chairperson of the Board of the Company, and (iii) Reliance Holdings will continue to remain a shareholder of the Company's equity and Ezra and Debra will be the sole owners of Reliance Holdings as tenants in entirety. The credit agreements also contain provisions which cause a "cross default" if we default our obligations under other material contracts to which we are parties. The credit agreements contain customary and usual events of default, including, subject to certain specified cure periods and notice requirements, the Company's or one of its subsidiaries' failure to comply with the covenants therein. Upon an event of default, the lender has customary and usual remedies to cure these defaults including, but not limited to, the ability to accelerate the indebtedness.

The credit agreements contain financial covenants including debt service coverage ratio and debt to EBIDTA tests. As of December 31, 2022, the Company passes the debt service coverage test and slightly exceeds the debt to EBITDA limit. Oak Street has committed to providing the Company with a waiver for the debt to EBITDA test and will increase the limit for the first three quarters of 2023 so that the Company remains in compliance. As of December 31, 2021, the Company was in compliance with all financial covenants.

***Certain of our agreements contain various covenants that limit the discretion of our management in operating our business and could prevent us from engaging in certain potentially beneficial activities.***

The restrictive covenants in our debt agreements may impact how we operate our business and prevent us from engaging in certain potentially beneficial activities. In particular, among other covenants, our debt agreements require us to maintain a minimum ratio of Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted for certain transaction-related items ("Consolidated EBITDA"), to consolidated interest expense and a maximum ratio of consolidated net indebtedness to Consolidated EBITDA. Our compliance with these covenants could limit management's discretion in operating our business and could prevent us from engaging in certain potentially beneficial activities.

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***There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with U.S. GAAP. Any changes in estimates, judgments and assumptions could have a material adverse effect on our financial position and results of operations and therefore our business.***

The preparation of financial statements in accordance with U.S. GAAP involves making estimates, judgments and assumptions that affect reported amounts of assets (including intangible assets), liabilities and related reserves, revenues, expenses, and income. Estimates, judgments and assumptions are inherently subject to change in the future, and any such changes could result in corresponding changes to the values of assets, liabilities, revenues, expenses and income, and could have a material adverse effect on our financial position, results of operations and cash flows.

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***Improper disclosure of confidential information could negatively impact our business.***

We are responsible for maintaining the security and privacy of our customers' confidential and proprietary information and the personal data of their employees. We have put in place policies, procedures and technological safeguards designed to protect the security and privacy of this information; however, we cannot guarantee that this information will not be improperly disclosed or accessed. Disclosure of this information could harm our reputation and subject us to liability under our contracts and laws that protect personal data, resulting in increased costs or loss of revenues.

***Our business, results of operations, financial condition and liquidity may be materially adversely affected by certain actual and potential claims, regulatory actions and proceedings.***

We are subject to various actual and potential claims, regulatory actions and other proceedings including those relating to alleged errors and omissions in connection with the placement or servicing of insurance and/or the provision of services in the ordinary course of business, of which we cannot, and likely will not be able to, predict the outcome with certainty. Because we often assist customers with matters involving substantial amounts of money, including the placement of insurance and the handling of related claims that customers may assert, errors and omissions claims against us may arise alleging potential liability for all or part of the amounts in question. Also, the failure of an insurer with whom we place business could result in errors and omissions claims against us by our customers, which could adversely affect our results of operations and financial condition. Claimants may seek large damage awards, and these claims may involve potentially significant legal costs, including punitive damages. Such claims, lawsuits and other proceedings could, for example, include claims for damages based upon allegations that our employees or sub-agents failed to procure coverage, report claims on behalf of customers, provide insurance companies with complete and accurate information relating to the risks being insured or appropriately apply funds that we hold for our customers on a fiduciary basis. In addition, given the long-tail nature of professional liability claims, errors and omissions matters can relate to matters dating back many years. Where appropriate, we have established provisions against these potential matters that we believe to be adequate in the light of current information and legal advice, and we adjust such provisions from time to time according to developments.

While most of the errors and omissions claims made against us (subject to our self-insured deductibles) have been covered by our professional indemnity insurance, our business, results of operations, financial condition and liquidity may be adversely affected if, in the future, our insurance coverage proves to be inadequate or unavailable, or if there is an increase in liabilities for which we self-insure. Our ability to obtain professional indemnity insurance in the amounts and with the deductibles we desire in the future may be adversely impacted by general developments in the market for such insurance or our own claims experience. In addition, regardless of monetary costs, these matters could have a material adverse effect on our reputation and cause harm to our carrier, customer or employee relationships, or divert personnel and management resources.

***Our business could be adversely impacted by inflation.***

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Increases in inflation may have an adverse effect on our business. Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies. Continuing increases in inflation could impact the overall demand for our products, our costs for labor, material and services, and the margins we are able to realize on our products, all of which could have an adverse impact on our business, financial position, results of operations and cash flows. Inflation may also result in higher interest rates, which in turn would result in higher interest

**Risks Related to the Insurance Industry**

***We may experience increased competition from insurance companies, technology companies and the financial services industry, as well as the shift away from traditional insurance markets.***

The insurance intermediary business is highly competitive and we actively compete with numerous firms for customers, properties and insurance companies, many of which have relationships with insurance companies, or have a significant presence in niche insurance markets that may give them an advantage over us. Other competitive concerns may include the quality of our products and services, our pricing and the ability of some of our customers to self-insure and the entrance of technology companies into the insurance intermediary business. A number of insurance companies are engaged in the direct sale of insurance, primarily to individuals, and do not pay commissions to agents and brokers. In addition, and to the extent that banks, securities firms, private equity companies, and insurance companies affiliate, the financial services industry may experience further consolidation, and we therefore may experience increased competition from insurance companies and the financial services industry, as a growing number of larger financial institutions increasingly, and aggressively, offer a wider variety of financial services, including insurance intermediary services.

***Worsening of Current U.S. economic conditions as a result of the COVID-19 pandemic and the Russian Federation Military Action may adversely affect our business.***

Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company's financial position or results of its operations, the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements and the specific impact on the Company's financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.

If economic conditions were to worsen, a number of negative effects on our business could result, including declines in values of insurable exposure units, declines in insurance premium rates, the financial insolvency of insurance companies, the reduced ability of customers to pay, declines in the stock of residential housing or declines in property values. Also, if general economic conditions are poor, some of our customers may cease operations completely or be acquired by other companies, which could have an adverse effect on our results of operations and financial condition. If these customers are affected by poor economic conditions, but yet remain in existence, they may face liquidity problems or other financial difficulties that could result in delays or defaults in payments owed to us, which could have a significant adverse impact on our consolidated financial condition and results of operations. Any of these effects could decrease our net revenues and profitability.

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***Our business, and therefore our results of operations and financial condition, may be adversely affected by conditions that result in reduced insurer capacity.***

Our results of operations depend on the continued capacity of insurance carriers to underwrite risk and provide coverage, which depends in turn on those insurance companies' ability to procure reinsurance. Capacity could also be reduced by insurance companies failing or withdrawing from writing certain coverages that we offer to our customers. We have no control over these matters. To the extent that reinsurance becomes less widely available or significantly more expensive, we may not be able to procure the amount or types of coverage that our customers desire and the coverage we are able to procure for our customers may be more expensive or limited.

***Quarterly and annual variations in our commissions that result from the timing of policy renewals and the net effect of new and lost business production may have unexpected effects on our results of operations.***

Our commission income (including profit-sharing contingent commissions and override commissions) can vary quarterly or annually due to the timing of policy renewals and the net effect of new and lost business production. We do not control the factors that cause these variations. Specifically, customers' demand for insurance products can influence the timing of renewals, new business and lost business (which includes policies that are not renewed), and cancellations. In addition, we rely on insurance companies for the payment of certain commissions. Because these payments are processed internally by these insurance companies, we may not receive a payment that is otherwise expected from a particular insurance company in a particular quarter or year until after the end of that period, which can adversely affect our ability to forecast these revenues and therefore budget for significant future expenditures. Quarterly and annual fluctuations in revenues based upon increases and decreases associated with the timing of new business, policy renewals and payments from insurance companies may adversely affect our financial condition, results of operations and cash flows.

Profit-sharing contingent commissions are special revenue-sharing commissions paid by insurance companies based upon the profitability, volume and/or growth of the business placed with such companies generally during the prior year. Override commissions are paid by insurance companies based upon the volume of business that we place with them and are generally paid over the course of the year. Because profit-sharing contingent commissions and override commissions affect our revenues, any decrease in their payment to us could adversely affect our results of operations, profitability, and our financial condition.

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***Our business practices and compensation arrangements are subject to uncertainty due to potential changes in regulations.***

The business practices and compensation arrangements of the insurance intermediary industry, including our practices and arrangements, are subject to uncertainty due to investigations by various governmental authorities. Certain of our offices are parties to profit-sharing contingent commission agreements with certain insurance companies, including agreements providing for potential payment of revenue-sharing commissions by insurance companies based primarily on the overall profitability of the aggregate business written with those insurance companies and/or additional factors such as retention ratios and the overall volume of business that an office or offices place with those insurance companies. Additionally, to a lesser extent, some of our offices are parties to override commission agreements with certain insurance companies, which provide for commission rates in excess of standard commission rates to be applied to specific lines of business, such as group health business, and which are based primarily on the overall volume of business that such office or offices placed with those insurance companies. The legislatures of various states may adopt new laws addressing contingent commission arrangements, including laws prohibiting such arrangements, and addressing disclosure of such arrangements to insureds. Various state departments of insurance may also adopt new regulations addressing these matters which could adversely affect our results of operations.

***We may have unforeseen risks as a result of the COVID-19 pandemic***

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

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

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

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***Risk of lack of knowledge in distant geographic markets***

Although the Company intends to focus its investments in locations with which we are generally familiar, the Company runs a risk of experiencing underwriting challenges or issues associated with a lack of familiarity in some markets. Each market has nuances and idiosyncrasies that affect values, marketability, desirability, and demand for individual assets that may not be easily understood from afar. While we believe we can effectively mitigate these risks in a myriad of ways, there is no guarantee that investments in any geographic market will perform as expected.

***Potential liability or other expenditures associated with potential environmental contamination may be costly.***

Various federal, state and local laws subject multifamily residential community owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present in the land or buildings of a multifamily residential community. Potentially hazardous materials may include polychlorinated biphenyls, petroleum-based fuels, lead-based paint or asbestos, among other materials. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the presence of such materials. The presence of, or the failure to manage or remediate properly, these materials may adversely affect occupancy at such apartment communities as well as the ability to sell or finance such apartment communities. In addition, governmental agencies may bring claims for costs associated with investigation and remediation actions, damages to natural resources and for potential fines or penalties in connection with such damage or with respect to the improper management of hazardous materials. Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur or personal injury, disease, disability or other infirmities related to the alleged presence of hazardous materials at a multifamily residential community. In addition to potential environmental liabilities or costs associated with our current multifamily residential communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or multifamily residential communities we no longer own or operate.

***We compete in a highly regulated industry, which may result in increased expenses or restrictions on our operations.***

We conduct business in several states of the United States of America and are subject to comprehensive regulation and supervision by government agencies in each of those states. The primary purpose of such regulation and supervision is to provide safeguards for policyholders rather than to protect the interests of our shareholders, and it is difficult to anticipate how changes in such regulation would be implemented and enforced. As a result, such regulation and supervision could reduce our profitability or growth by increasing compliance costs, technology compliance, restricting the products or services we may sell, the markets we may enter, the methods by which we may sell our products and services, or the prices we may charge for our services and the form of compensation we may accept from our customers, carriers and third parties. The laws of the various state jurisdictions establish supervisory agencies with broad administrative powers with respect to, among other things, licensing of entities to transact business, licensing of agents, admittance of assets, regulating premium rates, approving policy forms, regulating unfair trade and claims practices, determining technology and data protection requirements, establishing reserve requirements and solvency standards, requiring participation in guarantee funds and shared market mechanisms, and restricting payment of dividends. Also, in response to perceived excessive cost or inadequacy of available insurance, states have from time to time created state insurance funds and assigned risk pools, which compete directly, on a subsidized basis, with private insurance providers. We act as agents and brokers for such state insurance funds and assigned risk pools in Michigan as well as certain other states. These state funds and pools could choose to reduce the sales or brokerage commissions we receive. Any such reductions, in a state in which we have substantial operations could affect the profitability of our operations in such state or cause us to change our marketing focus. Further, state insurance regulators and the National Association of Insurance Commissioners continually re-examine existing laws and regulations, and such re-examination may result in the enactment of insurance-related laws and regulations, or the issuance of interpretations thereof, that adversely affect our business. Certain federal financial services modernization legislation could lead to additional federal regulation of the insurance industry in the coming years, which could result in increased expenses or restrictions on our operations. Other legislative developments that could adversely affect us include: changes in our business compensation model as a result of regulatory developments (for example, the Affordable Care Act); and federal and state governments establishing programs to provide health insurance or, in certain cases, property insurance in catastrophe-prone areas or other alternative market types of coverage, that compete with, or completely replace, insurance products offered by insurance carriers. Also, as climate change issues become more prevalent, the U.S. and foreign governments are beginning to respond to these issues. This increasing governmental focus on climate change may result in new environmental regulations that may negatively affect us and our customers. This could cause us to incur additional direct costs in complying with any new environmental regulations, as well as increased indirect costs resulting from our customers incurring additional compliance costs that get passed on to us. These costs may adversely impact our results of operations and financial condition.

Although we believe that we are in compliance in all material respects with applicable local, state and federal laws, rules and regulations, there can be no assurance that more restrictive laws, rules, regulations or interpretations thereof, will not be adopted in the future that could make compliance more difficult or expensive.

**Risks Related to Investing in our Securities**

***We may experience volatility in our stock price that could affect your investment.***

The market price of our common stock may be subject to significant fluctuations in response to various factors, including: quarterly fluctuations in our operating results; changes in securities analysts' estimates of our future earnings; changes in securities analysts' predictions regarding the short-term and long-term future of our industry; changes to the tax code; and our loss of significant customers or significant business developments relating to us or our competitors. Our common stock's market price also may be affected by our inability to meet stock analysts' earnings and other expectations. Any failure to meet such expectations, even if minor, could cause the market price of our common stock to decline. In addition, stock markets have generally experienced a high level of price and volume volatility, and the market prices of equity securities of many listed companies have experienced wide price fluctuations not necessarily related to the operating performance of such companies. These broad market fluctuations may adversely affect our common stock's market price. In the past, securities class action lawsuits frequently have been instituted against companies following periods of volatility in the market price of such companies' securities. If any such litigation is initiated against us, it could result in substantial costs and a diversion of management's attention and resources, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

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

Our shares of common stock are currently listed on 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 September 29, 2022 by the Company on September 27, 2022, the Company received written notice from Nasdaq's Listing Qualifications Department notifying the Company that for the preceding 30 consecutive business days (August 15, 2022 through September 26, 2022), 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 had 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 had a compliance period of 180 calendar days, or until March 27, 2023, to regain compliance with Nasdaq Listing Rule 5550(a)(2).

On March 9, 2023, Nasdaq's Listing Qualifications Department notified the Company that it had regained compliance with Nasdaq Listing Rule 5550(a)(2).

Any perception that we may not comply with Nasdaq continued listing requirements or a delisting of our common stock by Nasdaq could adversely affect our ability to attract new investors, decrease the liquidity of the outstanding shares of our common stock, reduce the price at which such shares trade and increase the transaction costs inherent in trading such shares with overall negative effects for our stockholders. In addition, delisting of our common stock from Nasdaq could deter broker-dealers from making a market in or otherwise seeking or generating interest in our common stock, and might deter certain institutions and persons from investing in our common stock.

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***The Company's CEO has a significant common stock equity interest.***

As of March 30, 2023, our CEO, Ezra Beyman, is the beneficial owner of approximately 25% of the common stock, consisting of 394,402 common shares. As of December 31, 2022, the outstanding loan balances due from affiliated entities to our CEO, Reliance Global Holdings LLC and YES Americana Group, LLC, were approximately $100,724 and $1,500,000.

Under our credit agreements with Oak Street, the Company has agreed that at all times that the loans are outstanding: (i) Ezra Beyman, our chief executive officer, Debra Beyman, Mr. Beyman's wife, or Yaakov Beyman, son of Mr. and Ms. Beyman, or someone else approved by Oak Street, as applicable, will be the manager of the current subsidiaries of the Company, (ii) Mr. Ezra Beyman will be President and Chairperson of the Board of the Company, and (iii) Reliance Holdings will continue to remain a shareholder of the Company's equity and Ezra and Debra will be the sole owners of Reliance Holdings as tenants in entirety. The loans by Oak Street, immediately mature and become due and payable if the Company fails to comply with these provisions, subject to certain notice and/or cure periods.

***Broad discretion of management***

Any person who invests in the Company's common stock will do so without an opportunity to evaluate the specific merits or risks of any prospective acquisition. As a result, investors will be entirely dependent on the broad discretion and judgment of management in connection with the selection of acquisitions. There can be no assurance that determinations made by the Company's management will permit us to achieve the Company's business objectives.

***Future sales or other dilution of our equity could adversely affect the market price of our common stock.***

We grow our business organically as well as through acquisitions. One method of acquiring companies or otherwise Companying our corporate activities is through the issuance of additional equity securities. The issuance of any additional shares of common or of preferred stock or convertible securities could be substantially dilutive to holders of our common stock. Moreover, to the extent that we issue restricted stock units, performance stock units, options or warrants to purchase shares of our common stock in the future and those options or warrants are exercised or as the restricted stock units or performance stock units vest, our stockholders may experience further dilution. Holders of our common stock have no preemptive rights that entitle holders to purchase their pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in increased dilution to our stockholders. The market price of our common stock could decline as a result of sales of shares of our common stock or the perception that such sales could occur.

***The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell shares of common stock owned by you at times or at prices you find attractive.***

The trading price of our common stock may fluctuate widely as a result of a number of factors, including the risk factors described above many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have adversely affected and may continue to adversely affect the market price of our common stock. Among the factors that could affect our stock price are:

● General economic and political conditions such as recessions, economic downturns and acts of war or terrorism;

● Quarterly variations in our operating results;

● Seasonality of our business cycle;

● Changes in the market's expectations about our operating results;

● Our operating results failing to meet the expectation of securities analysts or investors in a particular period;

● Changes in financial estimates and recommendations by securities analysts concerning us or the insurance brokerage or financial services industries in general;

● Operating and stock price performance of other companies that investors deem comparable to us;

● News reports relating to trends in our markets, including any expectations regarding an upcoming "hard" or "soft" market;

● Cyberattacks and other cybersecurity incidents;

● Changes in laws and regulations affecting our business;

● Material announcements by us or our competitors;

● The impact or perceived impact of developments relating to our investments, including the possible perception by securities analysts or investors that such investments divert management attention from our core operations;

● Market volatility;

● A negative market reaction to announced acquisitions;

● Competitive pressures in each of our divisions;

● General conditions in the insurance brokerage and insurance industries;

● Legal proceedings or regulatory investigations;

● Sales of substantial amounts of common shares by our directors, executive officers or significant stockholders or the perception that such sales could occur.

Stockholder class action lawsuits may be instituted against us following a period of volatility in our stock price. Any such litigation could result in substantial cost and a diversion of management's attention and resources.

***We can provide no assurance that our common stock or the warrants will always meet the Nasdaq continued listing standards.***

Our common stock is currently quoted on the Nasdaq. We can provide no assurance that that an active trading market on Nasdaq for our common stock and the warrants will develop and continue. If our common stock remains quoted on or reverts to an over-the-counter system rather than being listed on a national securities exchange, you may find it more difficult to dispose of shares of our common stock or obtain accurate quotations as to the market value of our common stock.

***Possible issuance of additional securities.***

Our Articles of Incorporation authorize the issuance of 133,333,333 shares of common stock, par value $0.086 per share. As of December 31, 2022 we had 1,219,573 shares issued and outstanding. We may be expected to issue additional shares in connection with our pursuit of new business opportunities and new business operations. To the extent that additional shares of common stock are issued, our shareholders would experience dilution of their respective ownership interests. If we issue shares of common stock in connection with our intent to pursue new business opportunities, a change in control of the Company may be expected to occur. The issuance of additional shares of common stock may adversely affect the market price of our common stock, in the event that an active trading market commences.

***We could be negatively impacted by cybersecurity attacks.***

We may use a variety of information technology systems in the ordinary course of business, which are potentially vulnerable to unauthorized access, computer viruses and cyberattacks, including cyberattacks to our information technology infrastructure and attempts by others to gain access to our propriety or sensitive information, and ranging from individual attempts to advanced persistent threats. The risk of such a security breach or disruption has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased and will likely continue to increase in the future. The procedures and controls we use to monitor these threats and mitigate our exposure may not be sufficient to prevent cyber security incidents. The results of these incidents could include disrupted operations, misstated or unreliable financial data, theft of trade secrets or other intellectual property, liability for disclosure of confidential customer, supplier or employee information, increased costs arising from the implementation of additional security protective measures, regulatory enforcement litigation and reputational damage, which could materially adversely affect our financial condition, business and results of operations. These risks require continuous and likely increasing attention and other resources from us to, among other actions, identify and quantify these risks, upgrade and expand our technologies, systems and processes to adequately address them and provide periodic training for employees to assist them in detecting phishing, malware and other schemes. Such attention diverts time and other resources from other activities and there is no assurance that our efforts will be effective. Additionally, the cost of maintaining and improving such systems and processes, procedures and internal controls may increase from its current level. Potential sources for disruption, damage or failure of our information technology systems include, without limitation, computer viruses, security breaches, human error, cyberattacks, natural disasters and defects in design. Additionally, we rely on third party service providers for certain aspects of our business. We can provide no assurance that the networks and systems that our third party vendors have established or use will be effective. Even if we are not targeted directly, cyberattacks on the U.S. and foreign governments, financial markets, financial institutions, or other businesses, including vendors, software creators, cybersecurity service providers, and other third parties with whom we do business, may occur, and such events could disrupt our normal business operations and networks in the future.

***We are subject to a variety of federal, state and international laws and other obligations regarding data protection.***

We are subject to a variety of federal, state and international laws and other obligations regarding data protection. Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing domestic and international requirements may cause us or our businesses to incur substantial costs or require us or one of our businesses to change its business practices. Any failure by us to comply with our own privacy policy, applicable association rules, or with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against us by governmental entities or others.

***Dividends unlikely.***

The Company does not expect to pay dividends for the foreseeable future. The payment of dividends will be contingent upon the Company's future revenues and earnings, if any, capital requirements and overall financial conditions. The payment of any future dividends will be within the discretion of the Company's board of directors as then constituted. It is the Company's expectation that future management following a business combination will determine to retain any earnings for use in its business operations and accordingly, the Company does not anticipate declaring any dividends in the foreseeable future.

***Speculative Nature of Warrants.***

The warrants offered in our February 2021 offering do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Series A Warrants may exercise their right to acquire the common stock and pay an exercise price of $99.00 per share (110% of the public offering price of our common stock and warrants in the February-2021 offering), prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value.

By entering into the Private Placement (as hereinunder defined in this Annual Report on From 10-K), on December 22, 2021, we entered into a commitment to issue B Warrants on the Initial Closing Date for a fixed price and exercise price, as applicable. The commitment to issue Series B Warrants (the "Warrant Commitment") represents a financial instrument, other than an outstanding share, that, at inception, has both of the following characteristics: (i) embodies a conditional obligation indexed to the Company's equity shares and (ii) may require the Company to settle the obligation by transferring assets. Under ASC 480, Distinguishing Liabilities from Equity, it was required to be initially measured and subsequently remeasured, at fair value as an asset or liability with changes in fair value recognized in earnings. The Series B Warrant has an exercise price of $61.35 per share, subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a "full ratchet" basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for, Common Stock at a price below the then-applicable exercise price (subject to certain exceptions, including a floor price of $57.60 per share of Common Stock, until the Company has received shareholder approval for the sale of securities in the Private Placement). The Series B Warrants are exercisable commencing on the date of issuance, and will expire five years from the date of issuance.

Moreover, following these offerings, the market value of the warrants is uncertain and there can be no assurance that the market value of the warrants will equal or exceed their public offering price. There can be no assurance that the market price of the common stock will ever equal or exceed the exercise price of the warrants, and consequently, whether it will ever be profitable for holders of the warrants to exercise the warrants.

***State blue sky registration; potential limitations on resale of the Company's common stock***

The holders of the Company's shares of common stock registered under the Securities Exchange Act of 1934, as amended (the "Securities Act") and those persons who desire to purchase them in any trading market that may develop in the future, should be aware that there may be state blue-sky law restrictions upon the ability of investors to resell the Company's securities. Accordingly, investors should consider the secondary market for the Company's securities to be a limited one.

***Changes in tax laws could materially affect our financial condition, results of operations and cash flows.***

The tax regimes we are subject to or operate under, including income and non-income taxes, are unsettled and may be subject to significant change. For example, the Inflation Reduction Act (the "IRA") was signed into law on August 16, 2022 and was effective beginning in fiscal 2023. The IRA imposes a 15% minimum tax for large corporations on global adjusted financial statement income for tax years beginning after December 31, 2022, and a 1% excise tax on certain share repurchases occurring after December 31, 2022. We do not currently expect that the IRA will have a material impact on our income tax liability, but will continue to monitor this change in future periods. We are unable to predict what changes to the tax laws of the U.S. and other jurisdictions may be proposed or enacted in the future or what effect such changes would have on our business. Any significant increase in our future effective tax rate could have a material adverse impact on our business, financial condition, results of operations, or cash flows.

***Expectations of our company relating to environmental, social and governance factors may impose additional costs and expose us to new risks.***

There is an increasing focus from certain investors, customers and other key stakeholders concerning corporate responsibility, specifically related to environmental, social and governance ("ESG") factors. We expect that an increased focus on ESG considerations will affect some aspects of our operations, particularly as we expand into new geographic markets. There are a number of constituencies that are involved in a range of ESG issues, including investors, special interest groups, public and consumer interest groups and third-party service providers. As a result, there is an increased emphasis on corporate responsibility ratings and a number of third parties provide reports on companies in order to measure and assess corporate responsibility performance. In addition, the ESG factors by which companies' corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. Alternatively, if we are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are inadequate. We risk damage to our brand and reputation in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies. In the future, we may be required to make substantial investments in matters related to ESG which could require significant investment and impact our results of operations. Any failure in our decision-making or related investments in this regard could affect consumer perceptions as to our brand. Furthermore, if our competitors' corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead. In addition, in the event that we communicate certain initiatives and goals regarding ESG matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals. If we fail to satisfy the expectations of investors and other key stakeholders or our initiatives are not executed as planned, our reputation and financial results could be materially and adversely affected.

**Item 1B. Unresolved Staff Comments**

Not applicable.

**Item 2. Properties**

Below is a schedule of the properties we currently occupy:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Entity Name** | **Location** | **Own/Lease** | **Description** | **Approx. Sq. Footage** | **Lease Term** | **Monthly <br> Rent in USD** |
| Employee Benefits Solutions | Cadillac, Michigan | Lease | Office Building | 3024 | 10/2019– 9/2024 | $2400 |
| Southwestern Montana Insurance Center | Helena, Montana | Lease | Office Building | 1500 | Monthly | 1500 |
| Southwestern Montana Insurance Center | Belgrade, Montana | Lease | Office Building | 6000 | 4/2019– 3/2023<br> Lease renewal expected | 7000 |
| Fortman Insurance Center | Bluffton, Ohio | Lease | Office Building | 990 | 9/2020 – 8/2023 | 555 |
| Fortman Insurance Center | Ottawa, Ohio | Lease | Office Building | 2386 | 5/2019– 4/2024 | 2400 |
| Commercial Coverage Solutions/UIS | Pomona, New York | Lease | Office Building | 1000 | 8/2020– 8/2023 | 3667 |
| Altruis Benefits Consultants | Bingham Farms, MI | Lease | Office Building | 1767 | 6/2021– 5/2024 | 4855 |
| Reliance Global Group, Inc. | Lakewood, NJ | Lease | Office Building | 4436 | 6/2021 – 3/2029 | 9174 |
| J.P. Kush and Associates | Troy, MI | Lease | Office Building | 1400 | 4/2022– 4/2025 | 2980 |
| Medigap Health Insurance Company, LLC | Boca Raton, FL | Lease | Office Building |  | 2/2022 – 12/2023 | 15215 |
| Barra & Associates, LLC | Schaumburg, IL | Lease | Office Building |  | 4/2022 – 05/2025 | 3608 |
| Reliance Global Group, Inc. | Suffern, NY | Lease | Office Building |  | 9/2022 – 8/2024 | 2000 |

---

**Item 3. Legal Proceedings**

From time to time, 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. Litigation relating to the insurance brokerage industry is not uncommon. As such the Company, from time to time have been, subject to such litigation. No assurances can be given with respect to the extent or outcome of any such litigation in the future.

**Item 4. Mine Safety Disclosures**

Not applicable.

**PART II**

**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**

As of December 31, 2022, there were approximately 495 holders of record of our ordinary shares, although there is a much larger number of beneficial owners.

**Dividends**

The Company has never paid any cash dividends and does not expect to pay dividends for the foreseeable future. We anticipate that we will retain funds and future earnings to support operations and to finance the growth and development of our business. The payment of dividends will be contingent upon the Company's future revenues and earnings, if any, capital requirements, overall financial condition, and other factors that our board of directors deems relevant. The payment of any future dividends will be within the discretion of the Company's board of directors as then constituted. It is the Company's expectation that future management following a business combination will determine to retain any earnings for use in its business operations and accordingly, the Company does not anticipate declaring any dividends in the foreseeable future.

**Issuer Purchases of Equity Securities**

There have been no equity securities repurchased by the Company for the years ending December 31, 2022 and 2021.

**Market Information**

Our common stock is listed on the NASDAQ Capital Market under the symbol "RELI", and our warrants to purchase common stock are listed on the NASDAQ Capital Market under the symbol "RELIW."

**Holders of Record**

On March 29, 2023, the closing price per share of our common stock was $2.94 as reported on the NASDAQ.

**Securities Authorized for Issuance under Equity Compensation Plans**

**2019 Equity Incentive Plans**

On January 29, 2019, our board of directors and stockholders adopted the 2019 Equity Incentive Plan, pursuant to which 46,667 shares of our common stock are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. The following table gives information about the Company's common stock that may be issued upon the exercise of options granted to employees, directors and consultants under its 2019 Equity Incentive Plans as of December 31, 2022 which had outstanding grants and remaining unissued shares, taking into account issuance of restricted stock to officers and directors, as follows:

**Equity Compensation Plan Information**

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| | | | |
|:---|:---|:---|:---|
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|  | (a) | (b) | (c) |
| Equity compensation plans approved by security holders | 10928 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 232.78 | 21463 |
| Equity compensation plans not approved by security holders |  |  |  |
| Total | 10928 | $232.78 | 21463 |

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**Recent Sales of Unregistered Securities**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Date of**<br> **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 Shares Issued (or cancelled)** | **Class of Securities** | **Value of shares issued ($/per share) at Issuance** | **Were the shares issued at a discount to market price at the time of issuance? (Yes/No)** | **Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed).** | **Reason for share 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?** |
| 1/3/2022 | New | 1000 | Common |  | Yes | Warberg | Exercise of Series A warrants | Restricted | 4(a) (2) |
| 1/4/2022 | New | 16000 | Common |  | Yes | Clear Street LLC | Exercise of Series A warrants | Restricted | 4(a) (2) |
| 1/5/2022 | New | 4000 | Common |  | Yes | Clear Street LLC | Exercise of Series A warrants | Restricted | 4(a) (2) |
| 1/5/2022 | New | 178060 | Common |  | Yes | Hudson Bay Master Fund Ltd. and Armistice Capital Master Fund, LTD. | Cash | Restricted | 4(a) (2) |
| 1/5/2022 | New | 9076 | Preferred |  | Yes | Hudson Bay Master Fund Ltd. and Armistice Capital Master Fund, LTD. | Cash | Restricted | 4(a) (2) |
| 1/10/2022 | New | 40402 | Common |  | Yes | Pagidem, LLC | Acquisition | Restricted | 4(a) (2) |
| 1/18/2022 | New | 4000 | Common |  | Yes | Clear Street LLC and Warberg | Exercise of Series A warrants | Restricted | 4(a) (2) |
| 3/22/2022 | New | (218462) | Common |  | Yes | Hudson Bay Master Fund Ltd., Pagidem, LLC and Armistice Capital Master Fund, LTD. | Exchange of common shares for series C and D warrants | Restricted | 4(a) (2) |
| 5/24/2022 | New | 89030 | Common |  | Yes | Hudson Bay Master Fund Ltd. | Exercise of Series C warrants | Restricted | 4(a) (2) |
| 5/24/2022 | New | 40402 | Common |  | Yes | Pagidem, LLC | Exercise of Series C warrants | Restricted | 4(a) (2) |
| 6/14/2022 | New | 88963 | Common |  | Yes | Armistice Capital Master Fund, LTD. | Exercise of Series C warrants | Restricted | 4(a) (2) |
| 8/4/2022 | New | 122869 | Common |  | Yes | Armistice Capital Master Fund, LTD. | Conversion of preferred shares | Restricted | 4(a) (2) |
| 8/15/2022 | New | 28497 | Common |  | Yes | Hudson Bay Master Fund Ltd. | Exercise of Series D warrants | Restricted | 4(a) (2) |
| 8/18/2022 | New | 52926 | Common |  | Yes | Armistice Capital Master Fund, LTD. | Exercise of Series D warrants | Restricted | 4(a) (2) |
| 8/24/2022 | New | 25070 | Common |  | Yes | Hudson Bay Master Fund Ltd. | Conversion of preferred shares | Restricted | 4(a) (2) |

---

**Use of Proceeds from Registered Securities**

Not applicable

**Issuer Purchases of Equity Securities**

Not applicable.

**Item 6. Selected Financial Data**

RESERVED

**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations**

***Overview***

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

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

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

As part of our growth and acquisition strategy, we continue to survey the current insurance market for value-add acquisition opportunities. As of December 31, 2022, we have acquired ten insurance agencies, including both affiliated and unaffiliated companies and long term, we seek to conduct all transactions and acquisitions through our direct operations.

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

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

With the acquisition of Barra, we launched RELI Exchange, our business-to-business (B2B) InsurTech platform and agency partner network that builds on the artificial intelligence and data mining backbone of 5MinuteInsure.com. Through RELI Exchange we on-board agency partners and provide them 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 close to 130%.

**Business Trends and Uncertainties**

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

**Financial Instruments**

The Company's financial instruments as of December 31, 2022, consist of derivative warrants. These are accounted at fair value as of inception/issuance date, and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, (non-cash) gain or loss.

**Insurance Operations**

Our insurance operations focus on the acquisition and management of insurance agencies throughout the U.S. Our primary focus is to pinpoint undervalued wholesale and retail insurance agencies with operations in growing or underserved segments (including healthcare and Medicare, as well as personal and commercial insurance lines). We then focus on expanding their operations on a national platform and improving operational efficiencies in order to achieve asset value appreciation while generating interim cash flows. In the insurance sector, our management team has over 100 years of experiences 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 date of this filing, we have acquired ten insurance brokerages (see table below), including both acquisitions of affiliated companies (*i.e.*, owned by Reliance Holdings before the acquisition) and unaffiliated companies. As we continue to execute on our acquisition strategy, our reach within the insurance industry can provide us with the ability to offer lower rates, which could boost our competitive position within the industry.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Acquired** | **Date** | **Location** | **Line of Business** | **Status** |
| U.S. Benefits Alliance, LLC (USBA) | October 24, 2018 | Michigan | Health Insurance | Affiliated |
| Employee Benefit Solutions, LLC (EBS) | October 24, 2018 | Michigan | Health Insurance | Affiliated |
| Commercial Solutions of Insurance Agency, LLC (CCS or Commercial Solutions) | December 1, 2018 | New Jersey | P&C – Trucking Industry | Unaffiliated |
| Southwestern Montana Insurance Center, Inc. (Southwestern Montana or Montana) | April 1, 2019 | Montana | Group Health Insurance | Unaffiliated |
| Fortman Insurance Agency, LLC (Fortman or Fortman Insurance) | May 1, 2019 | Ohio | P&C and<br> Health Insurance | Unaffiliated |
| Altruis Benefits Consultants, Inc. (Altruis) | September 1, 2019 | Michigan | Health Insurance | Unaffiliated |
| UIS Agency, LLC (UIS) | August 17, 2020 | New York | Health Insurance | Unaffiliated |
| J.P. Kush and Associates, Inc. (Kush) | May 1, 2021 | Michigan | Health Insurance | Unaffiliated |
| Medigap Healthcare Insurance Agency, LLC (Medigap) | January 10, 2022 | Florida | Health Insurance | Unaffiliated |
| Barra & Associates, LLC | April 26, 2022 | Illinois | Health Insurance | Unaffiliated |

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

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

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

On November 9, 2022, per an amendment to the purchase agreement, the earn-out amount was amended from 10,605 shares of our common stock to an amount equal to $77,629. Additionally, we agreed to issue 16,586 shares of our common stock to the seller as soon as practicable, which is expected to be within six months of this amendment.

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

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| | | |
|:---|:---|:---|
| **Description** | **Fair Value** | **Weighted Average Useful Life (Years)** |
| Accounts receivable | $291414 |  |
| Trade name and trademarks | 685400 | 5 |
| Customer relationships | 551000 | 10 |
| Non-competition agreements | 827800 | 5 |
| Goodwill | 1288552 | Indefinite |
|  | $3644166 |  |

---

Goodwill of $1,288,552 arising from the Kush Acquisition consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the Kush Acquisition is currently expected to be deductible for income tax purposes. Total acquisition costs for the Kush Acquisition incurred were $58,092 recorded as a component of General and administrative expenses.

**Medigap Healthcare Insurance Agency, LLC Transaction**

On January 10, 2022, pursuant to an asset purchase agreement, dated December 21, 2021, we completed the acquisition of all of the assets of Medigap Healthcare Insurance Company, LLC ("Medigap") for a purchase price of $20,096,250 consisting of: (i) payment to Medigap of $18,138,750 in cash and (ii) the issuance to Medigap of 40,402 shares of the Company's restricted common stock in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties. The shares issued to Medigap as part of the purchase price are subject to lock up arrangements pursuant to which 50% of the shares may be sold after the one-year anniversary of the date of closing of the transaction and the balance of the shares may be sold after the second-year anniversary of the date of closing of the transaction.

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

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

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| | | |
|:---|:---|:---|
| **Description** | **Fair Value** | **Weighted Average<br> Useful Life<br> (Years)** |
| Property, plant and equipment | $20666 | 6 |
| Right-of-use asset | 317787 |  |
| Trade name and trademarks | 340000 | 15 |
| Customer relationships | 4550000 | 12 |
| Technology | 67000 | 3 |
| Backlog | 210000 | 1 |
| Chargeback reserve | (1484473) |  |
| Lease liability | (317787) |  |
| Goodwill | 19199008 | Indefinite |
|  | $22902201 |  |

---

Goodwill of $19,199,008 arising from the acquisition of Medigap consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the acquisition of Medigap is currently expected to be deductible for income tax purposes. Total acquisition costs for the acquisition of Medigap incurred were $94,065 recorded as a component of General and administrative expenses.

**Barra & Associates, LLC Transaction**

On April 26, 2022, we entered into an asset purchase agreement (the "APA") with Barra & Associates, LLC ("Barra") pursuant to which the Company purchased all of the assets of Barra & Associates, LLC on April 26, 2022 for a purchase price in the amount of $7,725,000 in cash, with $6,000,000 paid to Barra at closing, $1,125,000 payable in nine months from closing, and a final earnout of $600,000 payable over two years from closing based upon meeting stated milestones. The APA contains standard, commercial representations and warranties and covenants. The source of the cash payment was $6,520,000 in funds borrowed from Oak Street Lending ("Loan"), our existing lender pursuant to a Fifth Amendment to Credit Agreement and Promissory Note, of even date. The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties.

The acquisition of Barra was accounted for as a business combination in accordance with the acquisition method pursuant to FASB Topic No. 805, Business Combination (ASC 805). Accordingly, the total purchase consideration was allocated to the assets acquired, and liabilities assumed based on their respective estimated fair values. The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing.

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

---

| | | |
|:---|:---|:---|
| **Description** | **Fair Value** | **Weighted**<br> **Average Useful**<br> **Life (Years)** |
| Acquired accounts receivable | $92585 |  |
| Property, plant and equipment | 8593 | 7 |
| Right-of-use asset | 122984 |  |
| Trade names | 22000 | 4 |
| Customer relationships | 550000 | 10 |
| Developed technology | 230000 | 5 |
| Agency relationships | 2585000 | 10 |
| Lease liability | (122984) |  |
| Goodwill | 4236822 | Indefinite |
|  | $7725000 |  |

---

Goodwill of $4,236,822 arising from the acquisition of Barra consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the acquisition of Barra is currently expected to be deductible for income tax purposes. Total acquisition costs incurred through December 31, 2022 for the acquisition of Barra were 72,793 recorded as a component of General and administrative expenses.

***Recent Developments***

**Private Placements**

On March 13, 2023, the Company entered into a securities purchase agreement with one institutional buyer for the purchase and sale of, (i) an aggregate of 155,038 shares (the "Common Shares") of the Company's common stock, par value $0.086 per share (the "Common Stock") along with accompanying common warrants (the "Common Units"), (ii) prefunded warrants (the "Prefunded Warrants") that are exercisable into 897,594 shares of Common Stock (the "Prefunded Warrant Shares") along with accompanying common warrants (the "Pre-Funded Units"), and (iii) common warrants (the "Common Warrants") to initially acquire up to 2,105,264 shares of Common Stock (the "Common Warrant Shares") (representing 200% of the Common Shares and Prefunded Warrant Shares) in a private placement offering (the "Private Placement"). Additionally, the Company agreed to issue a warrant to the Placement Agent (defined below), to initially acquire 52,632 shares of common stock (the "PA Warrant"). The closing of the Private Placement occurred on March 16, 2023.

**Nasdaq Notification and Warrant Exchange**

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

As part of its remediation plan, on March 22, 2022 we entered into Exchange Agreements with the holders of common stock issued in January 2022 resulting from the Medigap Acquisition and Private Placement. Pursuant to the Exchange Agreements, we issued 218,462 Series C prepaid warrants in exchange for 218,462 shares of our common stock that were previously issued. Additionally, to compensate the Private Placement investors for entering into the Exchange Agreements, we issued 81,500 Series D prepaid warrants to such investors for no additional consideration on the same date. The fair value of the Series D prepaid warrants upon issuance was $6,930,335; such amount was treated as a deemed dividend and accordingly reduced income available to common stockholders for the period. Shares of common stock underlying the Series C and D prepaid warrants are treated as outstanding for purposes of calculating basic and diluted earnings per share. The Series C warrants were exercised during the quarter ended June 30, 2022. The Series D warrants were exercised during the quarter ended September 30, 2022.

**Stock Splits**

On February 23, 2023, pursuant to authority granted by the Board of Directors of the Company, the Company implemented a 1-for-15 reverse split of the Company's authorized and issued and outstanding common stock (the "Reverse Split-2023"). The par value remains unchanged. All share and per share information as well as common stock and additional paid-in capital have been retroactively adjusted to reflect the Reverse Split-2023 for all periods presented, unless otherwise indicated.

**Results of Operations**

***Comparison of the year ended December 31, 2022 to the year ended December 31, 2021***

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

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| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
| **Revenue** |  |  |
| Commission income | $16755884 | $9710334 |
| Total revenue | 16755884 | 9710334 |
| **Operating expenses** |  |  |
| Commission expense | 3384734 | 2427294 |
| Salaries and wages | 8592051 | 4672988 |
| General and administrative expenses | 6717889 | 3589221 |
| Marketing and advertising | 2584895 | 325838 |
| Depreciation and amortization | 2801824 | 1607313 |
| Goodwill impairment | 14373374 | - |
| Total operating expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;38454767 | 12622654 |
| Loss from operations | (21698883) | (2912320) |
| Other expense, net | (899913) | (533337) |
| Recognition and change in fair value of warrant commitment | 29064958 | (17652808) |
| Total Other income (expense) | 28165045 | (18186145) |
| Net income (loss) | $6466162 | $(21098465) |

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**<u>Revenues</u>**

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

The Company had revenues of $16,755,884 for the year ended December 31, 2022, as compared to $9,710,334 for the year ended December 31, 2021. The increase of $7,045,550 or 73% is primarily driven by organic growth and the additional insurance agencies acquired in 2022.

**<u>Commission expense</u>**

The Company had total commission expense of $3,384,734 for the year ending December 31, 2022, compared to $2,427,294 for the year ending December 31, 2021. The increase of $957,440 or 39% is primarily driven by organic growth and the additional insurance agencies acquired in 2022.

**<u>Salaries and wages</u>**

The Company reported $8,592,051 of salaries and wages expense for the year ending December 31, 2022, compared to $4,672,988 for the year ending December 31, 2021. The increase of $3,919,063 or 84% is primarily driven by expanded operations, both organic and due to the additional insurance agencies acquired in 2022.

**<u>General and administrative expenses</u>**

The Company had total general and administrative expenses of $6,717,889 for the year ending December 31, 2022, as compared to $3,589,221 for the year ending December 31, 2021. The increase in expense of $3,128,668 or 87% is primarily driven by expanded operations, both organic and due to the additional insurance agencies acquired in 2022.

**<u>Marketing and advertising</u>**

The Company reported $2,584,895 of marketing and advertising expense for the year ending December 31, 2022, compared to $325,838 for the year ending December 31, 2021. The increase of $2,259,057 or 693% is primarily a result of Medigap's direct business to consumer marketing model deployed through social media platforms, in addition to overall increased branding and outreach efforts to achieve greater industry presence.

**<u>Depreciation and amortization</u>**

The Company reported $2,801,824 of depreciation and amortization expense for the year ending December 31, 2022, compared to $1,607,313 for the year ending December 31, 2021. The increase of $1,194,511 or 74% is a result of the Company's acquired assets through business combinations.

**<u>Goodwill impairment</u>**

The company reported $14,373,374 of goodwill impairment expense for the year ended December 31, 2022, compared with $0 for the year ended December 31, 2021. The increase of $14,373,374 was due to an evaluation performed indicating that goodwill was impaired by this amount.

**<u>Other income and expense</u>**

The Company reported $28,165,045 of other income for the year ending December 31, 2022 compared to $18,186,145 of other expense for the year ending December 31, 2021. The increase of $46,351,190 or 255% is attributable primarily to the recognition and change in fair value of warrant liabilities account which had an approximate gain of $29 million in the current year versus an approximate loss of $18 million in the prior year.

*Liquidity and capital resources*

As of December 31, 2022, the Company had a cash balance of $1,909,769, of which $1,404,359 was restricted and working capital deficit of $4,528,905 compared with a cash balance of $4,620,722, of which $484,542 was restricted and a working capital deficit of $36,999,751 on December 31, 2021. The increase in working capital is primarily attributable to the issuance of the derivative warrant liability commitments of $37,652,808 and reclassifying them from current to non-current liabilities. Pursuant to a securities purchase agreement which closed on March 16, 2023, the Company received funds net of transaction costs of approximately $3,446,000, to be used primarily for working capital.

***Inflation***

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

 ****

***Off-balance sheet arrangements***

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

***Cash Flows***

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
| Net cash used in operating activities | $(3189997) | $(2253275) |
| Net cash used in investing activities | (24642312) | (2299360) |
| Net cash provided by financing activities | 25121356 | 8643776 |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | $(2710953) | $4091141 |

---

***Operating Activities***

Net cash used in operating activities for the year ended December 31, 2022 was $3,189,997, compared to cash used in operating activities of $2,253,275 for the year ended December 31, 2021. The 2022 cash used relates to a net gain of $6,466,162, offset by non-cash adjustments of $10,561,046 principally related to depreciation and amortization of $2,801,824, goodwill impairment of $14,373,374, amortization of debt issuance costs of $41,875, share based compensation expense of $1,249,873, and non-cash lease expense of $36,442, offset by a recognition and change in fair value of warrant commitment of $29,064,958 as well as changes of net working capital items in the amount of approximately $905,000 principally due to a decrease in accounts payable and accrued expenses of $1,304,652, a decrease in the chargeback reserve of $568,539, offset by a decrease in prepaid expense and other current assets of $2,496,689, and an increase in other payables of approximately $270,000.

 ****

***Investing Activities*.**

During the year ended December 31, 2022, cash flows used in investing activities were $24,642,312 compared to cash flow used in investing activities of $2,299,360 for the year ended December 31, 2021. The 2022 cash used relates to cash paid for the acquisitions of $24,138,750, the purchase of property and equipment of approximately $71,000 and approximately $882,000 cash paid for intangible assets, offset by cash received from proceeds of the sale of investment in NSURE of $450,000.

 ****

***Financing Activities*.**

During the year ended December 31, 2022, cash provided by financing activities was $25,121,356 as compared to $8,643,776 for the year ended December 31, 2021. The 2022 net cash provided by financing activities is primarily related to proceeds from the Private Placement offering in January 2022. The net proceeds from the issuance of these shares was $17,853,351. Additionally, we received proceeds of $2,475,000 from the exercise of Series A warrants, $6,520,000 through loan proceeds received for a business acquisition and $1,500,000 million through a related party loan. These were offset by debt principal repayments of approximately $875,000, payment of debt issuance costs of $214,000, payment of a related party loan of approximately $184,000, payments on earn-out liabilities of approximately $1,705,000, and payments for short term financing of approximately $263,000.

**Critical Accounting Policies and Estimates**

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and judgments may vary under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis. Our management believes the accounting policies below are critical in the portrayal of our financial condition and results of operations and require management's most difficult, subjective, or complex judgments.

***Business acquisitions*:** Accounting for acquisitions requires us to estimate the fair value of consideration paid and the individual assets and liabilities acquired, which involves a number of judgments, assumptions, and estimates that could materially affect the amount and timing of costs recognized in subsequent periods. Accounting for acquisitions can also involve significant judgment to determine when control of the acquired entity is transferred. We typically obtain independent third-party valuation studies to assist in determining fair values, including assistance in determining future cash flows, discount rates, and comparable market values. Items involving significant assumptions, estimates, and judgments include the following:

● Debt, including discount rate and timing of payments;

● Deferred tax assets, including projections of future taxable income and tax rates;

● Fair value of consideration paid or transferred;

● Intangible assets, including valuation methodology, estimations of future revenue and costs, and discount rates;

***Contingencies:*** We are subject to the possibility of losses from various contingencies. Significant judgment is necessary to estimate the probability and amount of a loss, if any, from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired, and the amount of loss can be reasonably estimated. In accounting for the resolution of contingencies, significant judgment may be necessary to estimate amounts pertaining to periods prior to the resolution that are charged to operations in the period of resolution and amounts related to future periods.

***Goodwill and intangible assets*:** We test goodwill for impairment in our fourth quarter each year, or more frequently if indicators of an impairment exist, to determine whether it is more likely than not that the fair value of the reporting unit with goodwill is less than its carrying value. For reporting units for which this assessment concludes that it is more likely than not that the fair value is more than its carrying value, goodwill is considered not impaired and we are not required to perform the goodwill impairment test. Qualitative factors considered in this assessment include industry and market considerations, overall financial performance, and other relevant events and factors affecting the fair value of the reporting unit. For reporting units for which this assessment concludes that it is more likely than not that the fair value is below the carrying value, goodwill is tested for impairment by determining the fair value of each reporting unit and comparing it to the carrying value of the net assets assigned to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, goodwill is considered not impaired. If the carrying value of the reporting unit exceeds its fair value, we would record an impairment loss up to the difference between the carrying value and implied fair value.

Determining when to test for impairment, the reporting units, the assets and liabilities of the reporting unit, and the fair value of the reporting unit requires significant judgment and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates, and expenses and are developed as part of our long-range planning process. The same estimates are used in business planning, forecasting, and capital budgeting. We test the reasonableness of the output of our long-range planning process by calculating an implied value per share and comparing that to current stock prices, analysts' consensus pricing, and management's expectations. These estimates and assumptions are used to calculate projected future cash flows for the reporting unit, which are discounted using a risk-adjusted rate to estimate a fair value. The discount rate requires determination of appropriate market comparables. We base fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

We test other identified intangible assets with definite useful lives when events and circumstances indicate the carrying value may not be recoverable by comparing the carrying amount to the sum of undiscounted cash flows expected to be generated by the asset. We test intangible assets with indefinite lives annually for impairment using a fair value method such as discounted cash flows. Estimating fair values involves significant assumptions, including future sales prices, sales volumes, costs, and discount rates.

For the year ended December 31, 2022 the Company performed a goodwill impairment test utilizing the Market Approach – Traded Market Value Method, concluding that goodwill was overvalued by $14,373,374. As a result, the Company recognized goodwill impairment of same amount in the goodwill impairment account on the Statements of Operations for the year ended December 31, 2022. For the year ended December 31, 2021, the Company assessed goodwill in accordance with ASC 350-20-35-3, analyzing the relevant qualitative factors. The Company noted that it was not more likely than not that the fair value of the reporting unit is less than its carrying amount, thus determining that the two-step goodwill impairment test was not required. Pursuant to the qualitative assessment, the Company concluded that goodwill was not impaired as of and for the year ended December and 2021.

***Income taxes*:** We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions around the world. These estimates involve significant judgment and interpretations of regulations and are inherently complex. Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of the applicable year. We are also required to evaluate the realizability of our deferred tax assets on an ongoing basis in accordance with U.S. GAAP, which requires the assessment of our performance and other relevant factors. Realization of deferred tax assets is dependent on our ability to generate future taxable income. In recent periods, our results of operations have benefited from increases in the amount of deferred taxes we expect to realize, primarily from the levels of capital spending and increases in the amount of taxable income we expect to realize. Our income tax provision or benefit is dependent, in part, on our ability to forecast future taxable income in these and other jurisdictions. Such forecasts are inherently difficult and involve significant judgments including, among others, projecting future average selling prices and sales volumes, manufacturing and overhead costs, levels of capital spending, and other factors that significantly impact our analyses of the amount of net deferred tax assets that are more likely than not to be realized.

***Revenue recognition*:**

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

The Company earns additional revenue including contingent commissions, profit-sharing, override and bonuses based on meeting certain revenue or profit targets established periodically by the carriers (collectively the Contingent Commissions). The Contingent Commissions are earned when the Company achieves the targets established by the insurance carries. The insurance carriers notify the company when it has achieved the target. The Company only recognizes revenue to the extent that it is probable that a significant reversal of the revenue will not occur.

***Stock-based compensation*:** Stock-based compensation is estimated at the grant date based on the fair value of the award and is recognized as expense using the straight-line amortization method over the requisite service period. For performance-based stock awards, the expense recognized is dependent on our assessment of the likelihood of the performance measure being achieved. We utilize forecasts of future performance to assess these probabilities and this assessment requires significant judgment.

Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the grant date requires significant judgment, including estimating stock price volatility and expected option life. We develop these estimates based on historical data and market information which can change significantly over time. A small change in the estimates used can result in a relatively large change in the estimated valuation. We use the Black-Scholes option valuation model to value employee stock options and awards granted under our employee stock purchase plan. We estimate stock price volatility based on our historical volatility implied volatility derived from traded options on our stock.

**Item 7A. Quantitative and Qualitative Disclosure about Market Risk**

Not applicable.

**Item 8. Financial Statements and Supplementary Data**

See the financial statements filed as part of this Annual Report on Form 10-K as listed under Item 15 below.

**Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

Not Applicable.

**Item 9A. Controls and Procedures**

***Controls and Procedure Requirements***

*Evaluation of Disclosure Controls and Procedures*

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this annual report, is recorded, processed, summarized, and reported within the time period specified in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our "Certifying Officers"), the effectiveness of our disclosure controls and procedures as of December 31, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2022, our disclosure controls and procedures were effective in all material respects.

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

*Management's Report on Internal Control Over Financial Reporting*

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

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

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2022. In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO – 2013) in Internal Control-Integrated Framework. Based on its assessment, management concluded that, as of December 31, 2022, our Company's internal control over financial reporting was effective in all material respects.

*Changes in Internal Control over Financial Reporting*

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

**Item 9B. Other Information**

None.

**Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

**PART III**

**Item 10. Directors, Executive Officers and Corporate Governance**

Listed below are the names of the directors and executive officers of the Company, their ages as of the date of this Form 10-K, their positions held, and all commenced service with the Company in 2022.

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s) Held** |
| Ezra Beyman | 68 | Chief Executive Officer (CEO) and Chairman of the Board of Directors |
| Alex Blumenfrucht | 34 | Chief Financial Officer and Director (Resigned) |
| William Lebovics | 39 | Chief Financial Officer, (Transferred on January 1, 2023 to non-officer role) |
| Joel Markovits | 42 | Chief Financial Officer (CFO) as of January 1, 2023, Chief Accounting Officer (CAO) and Financial Reporting Manager |
| Yaakov Beyman | 40 | Executive Vice President, Insurance Division |
| Scott Korman | 68 | Director and Chair of the Audit Committee (Audit Committee Financial Expert), and Member of the Compensation and Nominating and Governance Committees |
| Ben Fruchtzweig | 58 | Director and Chair of the Compensation Committee and Member of the Audit and Nominating and Governance Committees |
| Sheldon Brickman | 57 | Director and Chair of the Nominating and Governance Committee and Member of the Audit and Compensation Committees |

---

**Ezra Beyman:**

**Director of Reliance Global Group, Inc.**

**2018 – Present: Chief Executive Officer of Reliance Global Group, Inc.**

**1985- Present: Chairman of Reliance Global Holdings, LLC and Affiliates**

Ezra Beyman has served as the Chairman of our Board of Directors and our Chief Executive Officer since 2018. Mr. Beyman is the central force leading the success and growth of Reliance Global Group, Inc. Drawing on his nearly three decades of entrepreneurial experience in real estate and ten years in insurance, he has set his vision and acuity on one integrated goal: integrity and success. At one point in time Mr. Beyman's portfolio of commercial and residential properties comprised of approximately 40,000 units, as well as several insurance agencies. In 1985, he founded a small mortgage brokerage, together with his wife, which he operated in his basement. From there, his company rapidly grew into a dynamic force on the market. By 2008, he owned the third largest licensed mortgage brokerage in the U.S., having acquired numerous mortgage companies in the interim. He also expanded to real estate acquisition, having grown his portfolio to over three billion dollars. In expanding his investments, Mr. Beyman began exploring opportunities in other markets, acquiring several insurance agencies in both Florida and New Jersey. His ventures included entering the domains of warrantee and insurance carriers. Raised in the New York metropolitan area, Mr. Beyman spent his secondary and post-secondary school years at Mesivta Tifereth Yerushalayim, where he advanced his analytic abilities while mastering various areas of Talmudic studies, earning a position as one of the closest students of the Dean. He earned his First Talmudic degree in 1975.

**Joel Markovits:**

**2021 - Present: Chief Financial Officer of Reliance Global Group, Inc.**

**2015 – 2021: Senior Manager (Audit) at KPMG LLP**

Joel Markovits, our current Chief Financial Officer as of January 1, 2023, joined the Company in June 2021 as financial reporting manager and subsequently was appointed Chief Accounting Officer (CAO) in February 2022. Joel brings over 12 years' financial, accounting and reporting experience in both the public and private sectors. Prior to joining Reliance Global Group, Joel was a senior manager at KPMG LLP from April 2015 through May 2021, where he led some of the larger and more complex audit engagements, including serving as lead audit senior manager on a global $16 billion (annual revenues) enterprise reporting on both US GAAP and IFRS. He was also a data & analytics specialist and technology innovation leader at KPMG for its largest US Business Unit, overseeing the development and deployment of technological capabilities that enhance data analyses. Joel is a Certified Public Accountant in the State of New Jersey since November 2013.

**Yaakov Beyman:**

**2018 – Present: Executive VP of Insurance Division, Reliance Global Group, Inc.**

**2012 – 2018: Executive VP of Insurance Division, Empire Insurance Holdings**

Yaakov Beyman, son of Mr. Ezra Beyman has served as the Executive Vice President of the Insurance Divisions since July 2018. Mr. Beyman oversees the insurance operations of Reliance Global Group, Inc. From December 2012 – July 2018, he was Executive VP of Insurance Division, of Empire Insurance Holdings. He works from a platform that includes both strategizing the future vision of the insurance division and developing and implementing operational tools on a more granular level to grow the various insurance businesses. In his role as a strategist, Mr. Beyman has mapped a clear future: expand the various insurance products that RELI offers both geographically and in category. On the more hands-on level, Mr. Beyman (who holds insurance licenses in most of the continental U.S.) is heavily involved in marketing, maintaining state of the art technological models, financial management and distribution, and entity creation and maintenance. Combining his roles as the idea-generator and implementer, he is well-equipped to take the lead role in growing the Company."

**Alex Blumenfrucht:**

**Director of Reliance Global Group, Inc.** 

**2018 - 2022: Former CFO of Reliance Global Group, Inc.**

**2015 – 2018: Audit senior at Deloitte and Touché.**

Alex Blumenfrucht has served as member of our board of directors since 2018 and served as our Chief Financial Officer (CFO) from 2018 until June 1, 2022, at which time he resigned as our Chief Financial Officer and accepted employment as CFO of an unaffiliated company. Prior to joining our Company, Mr. Blumenfrucht served as an Audit & Assurance Professional at Deloitte & Touché, LLP from September 2015 until May 2018, where he successfully led audit teams on both public and privately held corporations. The Board determined that Mr. Blumenfrucht's extensive experience in internal control, financial analysis, and reporting for both private and publicly traded companies is central to the Company's management of finances, reporting, and controls and makes him an ideal director.

**William Lebovics:**

**2022 Former CFO of Reliance Global Group, Inc.**

**2019 - 2021: Director of Business Development at IDT Corporation**

William Lebovics was appointed by the Company to serve as Chief Financial Officer (CFO) effective June 1, 2022.Effective January 1, 2023, William transitioned out of the CFO role into the role of Senior Vice President of Acquisitions. Prior to joining the Company, William served as Head of Business Development at IDT Corporation (NYSE: IDT), from November 2021- May 2022, where he worked closely with Chairman Howard Jonas on two new lines of business for the company. From January 2019- November 2021, William served as Finance Manager of IDW Media Holdings (NYSE: IDW) where he was responsible for dealing with financial reporting, financing, and M&A, as well as other finance related operations. From 2016-2018, Mr. Lebovics was Partner and Product Owner of a mobile tech company overseen by T5 Capital. William has extensive corporate finance experience, including prior roles as a Portfolio Manager of Alternative Investments at Nippon Life Global Investors and as a Real Estate Consultant in PwC's Real Assets Group. William has an MS in Accounting from Fairleigh Dickenson University, an MS in Real Estate with a concentration in Finance and Investment from NYU, and a BS in Business Management from Touro College.

**Scott Korman:**

**Director - Joined Board in 2019**

**1984 – Present: President of Nashone, Inc**

**2019 – Present: CEO, Illumina Radiopharmaceuticals LLC**

Mr. Korman has served on our board of directors since December 2019 and he currently serves as President of Nashone, Inc., a private equity firm, which he founded in 1984. In this role, Mr. Korman is involved in financial advisory, M&A, and general management assignments. He is a founder and Managing Member and CEO of Innervate Radiopharmaceuticals LLC since May 2019, CEO of Sentry Laboratories LLC since February 2020 and CFO and board member of Adenocyte LLC since 2018. Mr. Korman previously served as Chairman and CEO of Best Manufacturing Group LLC, a leading manufacturer and distributor of uniforms, napery, service apparel, and hospitality and healthcare textiles. Mr. Korman also served as President and CEO of Welsh Farms Inc., a full-service dairy processor and distributor of milk, ice cream mix and ice cream products. Mr. Korman received a B.S. degree in Economics from the University of Pennsylvania Wharton School. He has served as a member of the Board of Directors of Tofutti Brands, Inc. since December 2011. He also serves on the boards of various not-for-profit groups. The Board determined that Mr. Korman's business experience makes him an ideal director for the Company.

**Ben Fruchtzweig:**

**Joined Board in 2019**

**2013 – Current: Mosdos Beis Abba**

Mr. Fruchtzweig has served on our board of directors since December 2019 and brings decades of executive experience in accounting and financial services. He currently serves on the board of Mosdos Beis Abba since June 2013. He has served as Chief Comptroller/Financial Analyst at national financial services and investment companies. He received his NYS C.P.A license in 1987 and has worked at Deloitte Haskins and Sells and other leading accounting firms. Currently, Mr. Fruchtzweig lectures on a variety of topics including business ethics. He also serves on a voluntary basis as a trustee of a non-profit private foundation, which serves to provide the needed financial support, services and guidance to qualifying individuals and families. Mr. Fruchtzweig graduated Magna Cum Laude from Queens College/C.U.N.Y. in June 1985. The Board believes that Mr. Fruchtzweig's strong accounting and finance background makes him a strong director.

**Sheldon Brickman:**

**Joined Board in 2020**

**2013 – Present: President of Rockshore Advisors LLC**

Mr. Brickman has served on our board of directors since August 2020 and has been President of Rockshore Advisors LLC since May, 2013. Sheldon has over 25 years of M&A advisory and business development experience, totaling more than $40 billion in deal value. Additionally, he has served as Chief Financial Officer of InfinT Acquisition Corporation since May 2021. Sheldon has worked for numerous multibillion-dollar insurance carriers, including assignments for such companies as AIG, Aetna and National General. He has assisted international companies (in the UAE, UK, Asia and Latin America), start-up operations, and regional insurance carriers. Mr. Brickman's experience covers the property casualty and life/health markets, including working with insurance carriers, managing general agencies, wholesalers, retailers and third-party administrators. The Board determined that Mr. Brickman's M&A and insurance industry experience makes him an ideal director for the Company.

**Family Relationships**

There are no arrangements between our directors and any other person pursuant to which our directors were nominated or elected for their positions. Except for Ezra Beyman and Yaakov Beyman (father and son), there are no family relationships between any of our directors or executive officers.

**Committees of the Board of Directors**

Our Board has established three standing committees: an Audit Committee, a Nominating and Governance Committee and a Compensation Committee, which are described below. Members of these committees are elected annually at a regular meeting of the Board of Directors held in conjunction with the annual stockholders' meeting. The charter of each committee is available on our website at www.relianceglobalgroup.com, and our committee appointments are set forth above.

*Audit Committee*

The Audit Committee has authority to review our financial records, deal with our independent auditors, recommend to the Board policies with respect to financial reporting, and investigate all aspects of our business. All of the members of the Audit Committee currently satisfy the independence requirements and other established criteria of NASDAQ.

The Audit Committee has sole authority for the appointment, compensation and oversight of the work of our independent registered public accounting firm, and responsibility for reviewing and discussing with management and our independent registered public accounting firm our audited consolidated financial statements included in our Annual Report on Form 10-K, our interim financial statements and our earnings press releases. The Audit Committee also reviews the independence and quality control procedures of our independent registered public accounting firm, reviews management's assessment of the effectiveness of internal controls, discusses with management the Company's policies with respect to risk assessment and risk management and will review the adequacy of the Audit Committee charter on an annual basis.

Scott Korman, Ben Fruchtzweig and Sheldon Brickman who are all independent directors and sit on this Committee, with Scott Korman being the Chair and Audit Committee Financial Expert.

*Nominating and Governance Committee*

The Nominating and Corporate Governance Committee has the following responsibilities: (a) setting qualification standards for director nominees; (b) identifying, considering and nominating candidates for membership on the Board; (c) developing, recommending and evaluating corporate governance standards and a code of business conduct and ethics applicable to the Company; (d) implementing and overseeing a process for evaluating the Board, Board committees (including the Committee) and overseeing the Board's evaluation of the Chairman and Chief Executive Officer of the Company; (e) making recommendations regarding the structure and composition of the Board and Board committees; (f) advising the Board on corporate governance matters and any related matters required by the federal securities laws; and (g) assisting the Board in identifying individuals qualified to become Board members; recommending to the Board the director nominees for the next annual meeting of shareholders; and recommending to the Board director nominees to fill vacancies on the Board.

The Nominating and Governance Committee determines the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director (the "Director Criteria"); identifies and screens individuals qualified to become members of the Board, consistent with the Director Criteria. The Nominating and Governance Committee considers any director candidates recommended by the Company's shareholders pursuant to the procedures described in the Company's proxy statement, and any nominations of director candidates validly made by shareholders in accordance with applicable laws, rules and regulations and the provisions of the Company's charter documents. The Nominating and Governance Committee makes recommendations to the Board regarding the selection and approval of the nominees for director to be submitted to a shareholder vote at the Annual Meeting of shareholders, subject to approval by the Board. The Nominating and Governance Committee does not have a set policy or process for considering diversity in identifying nominees, but strives to identity and recruit nominees with a broad diversity of experience, talents, professions, backgrounds, perspective, age, gender, ethnicity and country of citizenship, and who possess the commitment necessary to make a significant contribution to the Company. Board nominees should be committed to enhancing long-term stockholder value and should possess high standards of integrity and ethical behavior.

Scott Korman, Ben Fruchtzweig and Sheldon Brickman sit on this Committee with Sheldon Brickman being the Chair.

*Compensation Committee*

The Compensation Committee oversees our executive compensation and recommends various incentives for key employees to encourage and reward increased corporate financial performance, productivity and innovation.

The Compensation Committee is responsible for: (a) assisting our Board in fulfilling its fiduciary duties with respect to the oversight of the Company's compensation plans, policies and programs, including assessing our overall compensation structure, reviewing all executive compensation programs, incentive compensation plans and equity-based plans, and determining executive compensation; and (b) reviewing the adequacy of the Compensation Committee charter on an annual basis. The Compensation Committee, among other things, reviews and approves the Company's goals and objectives relevant to the compensation of the Chief Executive Officer, evaluate the Chief Executive Officer's performance with respect to such goals, and set the Chief Executive Officer's compensation level based on such evaluation. The Compensation Committee also considers the Chief Executive Officer's recommendations with respect to other executive officers and evaluates the Company's performance both in terms of current achievements and significant initiatives with long-term implications. It assesses the contributions of individual executives and recommend to the Board levels of salary and incentive compensation payable to executive officers of the Company; compares compensation levels with those of other leading companies in similar or related industries; reviews financial, human resources and succession planning within the Company; recommend to the Board the establishment and administration of incentive compensation plans and programs and employee benefit plans and programs; recommends to the Board the payment of additional year-end contributions by the Company under certain of its retirement plans; grants stock incentives to key employees of the Company and administer the Company's stock incentive plans; and reviews and recommends for Board approval compensation packages for new corporate officers and termination packages for corporate officers as requested by management.

Scott Korman, Ben Fruchtzweig and Sheldon Brickman sit on this Committee with Ben Fruchtzweig being the Chair.

**Changes in Nominating Procedures**

None.

**Board Leadership Structure and Role in Risk Oversight**

Although we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally determined that it is in the best interests of the Company and its shareholders to partially combine these roles. Due to the small size of the Company, we believe it is currently most effective to have the Chairman and Chief Executive Officer positions partially combined.

Our Board is primarily responsible for overseeing our risk management processes. The Board receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding the Company's assessment of risks. The Board focuses on the most significant risks facing the Company and our general risk management strategy, and also ensures that risks undertaken by us are consistent with the Board's risk parameters. While the Board oversees the Company, our management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing the Company and that our board leadership structure supports this approach.

**Compliance with Section 16(a) of the Exchange Act**

Section 16(a) of Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Commission initial statements of beneficial ownership, statements of changes in beneficial ownership and annual statement of changes in beneficial ownership with respect to their ownership of the Company's securities, on Form 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish our Company with copies of all Section 16(a) reports they file.

The Company does not report on compliance with Section 16(a).

**Item 11. Executive Compensation**

Pursuant to disclosure requirements in Item 402 of Regulation S-K and paragraphs (e)(4) and (e)(5) of Item 407, the following table summarizes executive compensation.

**Summary Compensation Table**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Name and principal position | Year | Salary<br> ($) | Bonus<br> ($) | Stock awards <br> ($) | Option awards (Unvested)<br> ($) | Non-equity<br> incentive plan<br> compensation<br> ($) | Change in pension value and nonqualified deferred compensation earnings | All other compensation<br> ($) | Total<br> ($) |
| Ezra Beyman, | 2022 | 300000 | 305963 |  | – |  | – |  | 605962 |
| CEO | 2021 | 228000 | 30000 |  | – |  | – |  | 258000 |
| Joel Markovits, | 2022 | 197499 |  | 130625 | – |  | – |  | 328124 |
| CFO | 2021 | 113820 |  | 25000 | – |  | – |  | 138820 |
| Jonathan Fortman | 2022 | 216058 | 10608 | 538750 | – |  | – |  | 765416 |
| VP of Acquisitions | 2021 | 160411 | 2699 |  | – |  | – |  | 163110 |
| Yaakov Beyman, | 2022 | 219539 | 30000 |  | – |  | – |  | 249539 |
| EVP Insurance | 2021 | 190000 | 30000 |  | – |  | – |  | 220000 |
| Julie Blockey, | 2022 | 169875 |  | 100000 | – |  | – |  | 269875 |
| General Manager | 2021 | 156907 |  |  | – |  | – |  | 156907 |

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***Director Compensation***

The table below shows the compensation paid to our non-employee directors during 2022 and 2021.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name** | | **Fees earned or paid in cash** | **Stock awards ($)** | **Un-exercisable Option awards**<br> **(# of Shares)** | **Non-equity incentive plan compensation ($)** | **Nonqualified deferred compensation earnings ($)** | **All other compensation ($)** | **Total**<br> **(# of Restricted Shares)** |
| Ben Fruchtzweig | 2022 | 42000 |  |  |  |  |  |  |
| Director | 2021 | $22500 |  |  |  |  |  |  |
| Scott Korman | 2022 | 42000 |  |  |  |  |  |  |
| Director | 2021 | $22500 |  |  |  |  |  |  |
| Sheldon Brickman | 2022 | $42000 | $- |  |  |  |  |  |
| Director | 2021 | 22500 |  |  |  |  |  |  |
| Alex Blumenfrucht | 2022 | 24500 |  |  |  |  |  |  |
| Director | 2021 |  |  |  |  |  |  |  |

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**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

The following table sets forth certain information concerning the ownership of our common stock as of December 31, 2022 with respect to: (i) each person known to us to be the beneficial owner of more than five percent of our common stock; (ii) all directors; (iii) all named executive officers; and (iv) all directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC that deem shares to be beneficially owned by any person who has voting or investment power with respect to such shares. Shares of common stock issuable upon exercise of options or warrants as of December 31, 2022 or are exercisable within 60 days of such date are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of calculating the percentage ownership of such person but are not treated as outstanding for the purpose of calculating the percentage ownership of any other person. Applicable percentage ownership is based on 1,219,573 shares of common stock outstanding as the date of December 31, 2022.

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| | | | |
|:---|:---|:---|:---|
| **Name and Address of Beneficial Owner(1)** | **Number of<br> Shares<br> Common** | **Number of<br> Shares<br> Preferred** | **Beneficial<br> Ownership<br> Percentage** |
| **5% Stockholders** |  |  |  |
| &nbsp;&nbsp;&nbsp;Reliance Global Holdings – 300 Blvd. of the Americas, Suite 105, Lakewood, NJ 08701\*\* | 289389 |  | 23.7% |
| **Named Executive Officers and Directors** |  |  |  |
| &nbsp;&nbsp;&nbsp;Ezra Beyman | 327657 |  | 26.9% |
| &nbsp;&nbsp;&nbsp;Alex Blumenfrucht | 8222 |  | \* |
| &nbsp;&nbsp;&nbsp;Yaakov Beyman | 3889 |  | \* |
| &nbsp;&nbsp;&nbsp;Joel Markovits | 2154 |  | \* |
| &nbsp;&nbsp;&nbsp;Sheldon Brickman |  |  | \* |
| &nbsp;&nbsp;&nbsp;Scott Korman | 2177 |  | \* |
| &nbsp;&nbsp;&nbsp;Ben Fruchtzweig | 204 |  | \* |
| &nbsp;&nbsp;&nbsp;All directors and executive officers as a group (7 persons) | 344303 |  | 28.2% |

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\* Represents beneficial ownership of less than 1%.

\*\* Reliance Global Holdings, LLC is an entity controlled by Ezra Beyman, CEO of the Company

The transfer agent and registrar for our common stock is VStock Transfer. The transfer agent and registrar's address is 18 Lafayette Place, Woodmere, New York 11598. Its telephone number is (212) 828-8436.

**Item 13. Certain Relationships and Related Transactions, and Director Independence**

The following is a description of transactions which we were a party in which (i) the amount involved exceeded or will exceed the lesser of (A) $120,000 or (B) one percent of our average total assets at year-end for the last two completed fiscal years and (ii) any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, any of the foregoing persons, who had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other similar arrangements, which are described under "*Executive Compensation*."

The Company entered into a Loan Agreement with Reliance Global Holdings, LLC, a related party under common control. There is no term to the loan, and it bears no interest. Repayment will be made as the Company has business cash flows. The proceeds from the various loans were utilized to fund the acquisitions of USBA, EBS, CCS, SWMT Acquisition, Fortman, Altruis, and UIS. As of December 31, 2022, and the 2021 the related party loan payable was $100,724 and $353,766 respectively. At December 31, 2022 and 2021, Reliance Holdings owned approximately 24% and 33%, respectively, of the common stock of the Company.

On September 13, 2022, the Company issued a promissory note to YES Americana Group, LLC, a related party entity for the principal sum of $1,500,000 (the "Note"). The Note matures on January 15, 2024, bearing interest of 0% per annum for the first six months, and 5% per annum thereafter, payable monthly. In the event the Note is not paid by the maturity date, the loan will automatically be extended for an additional year until January 15, 2025, and if necessary, extended again for one additional year through January 15, 2026.

To the best of our knowledge, during the past two fiscal years, other than as set forth above, there were no material transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party, in which the amount involved exceeds the lesser of (A) $120,000 or (B) one percent of our average total assets at year-end for the last two completed fiscal years, and in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest (other than compensation to our officers and directors in the ordinary course of business).

Messrs. Fruchtzweig, Korman and Brickman are "independent" directors based on the definition of independence in the listing standards of the NASDAQ Stock Market LLC ("NASDAQ").

**Policies and Procedures for Related Party Transactions**

All future transactions between us and our officers, directors or five percent stockholders, and respective affiliates will be on terms no less favorable than could be obtained from unaffiliated third parties and will be approved by a majority of our independent directors who do not have an interest in the transactions and who had access, at our expense, to our legal counsel or independent legal counsel.

**Item 14. Principal Accounting Fees and Services**

Mazars USA LLP ("Mazars") has served as our independent auditors since March 9, 2020. The appointment of Mazars as our independent public accountants was unanimously approved by the Audit Committee and our Board of Directors.

The following table sets forth the aggregate fees paid by the Company for the fiscal years ended December 31, 2022 and 2021 to our independent auditors:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ***Auditors*** | ***Years*** | ***Audit Fees*** | ***Audit Related Fees*** | ***Tax Fees*** | ***All Other Fees*** |
| *Mazars USA LLP* | 2022 | $319750 |  | $11000 | $7500 |
| *Mazars USA LLP* | 2021 | $263480 | 99750 | $19000 |  |

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**PART IV**

**Item 15. Exhibits and Financial Statement Schedules**

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| | | |
|:---|:---|:---|
| a) | The following documents are filed as part of this Annual Report on Form 10-K | The following documents are filed as part of this Annual Report on Form 10-K |
|  | (1) | Financial Statements |
|  |  | See Index to Financial Statements on page F-1 of this Annual Report on Form 10-K |
|  | (2) | Financial Statement Schedules |
|  |  | Schedules not listed above have been omitted because they are not required, not applicable, or the required information is otherwise included elsewhere in Annual Report on Form 10-K. |
|  | (3) | Exhibits |

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**Item 16. Form 10-K Summary**

Not applicable.

***Report of Independent Registered Public Accounting Firm* PCAOB ID 339**

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

**Opinion on the Consolidated Financial Statements**

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

**Basis for Opinion**

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

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

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

**Critical Audit Matter**

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

 ****

***Impairment Evaluation of Goodwill***

 ****

*Critical Audit Matter Description*

 

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

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

*How the Critical Matter Was Addressed in the Audit*

 

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

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

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

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

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

Fort Washington, Pennsylvania

March 30, 2023

**Reliance Global Group, Inc. and Subsidiaries**

**Consolidated Balance Sheets**

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| | | |
|:---|:---|:---|
|  | **December 31**<br>**2022** | **December 31,**<br>**2021** |
| **Assets** |  |  |
| Current assets: |  |  |
| Cash | $505410 | $4136180 |
| Restricted cash | 1404359 | 484542 |
| Accounts receivable | 1067544 | 1024831 |
| Accounts receivable, related parties | 21887 | 7131 |
| Other receivables | 16852 |  |
| Prepaid expense and other current assets | 249327 | 2328817 |
| Total current assets | 3265379 | 7981501 |
| Property and equipment, net | 186883 | 130359 |
| Right-of-use assets | 1182079 | 1067734 |
| Investment in NSURE, Inc. | 900000 | 1350000 |
| Intangibles, net | 13757370 | 7078900 |
| Goodwill | 19112733 | 10050277 |
| Other non-current assets | 23284 | 16792 |
| Total assets | $38427729 | $27675563 |
| **Liabilities and stockholders' equity (deficit)** |  |  |
| Current liabilities: |  |  |
| Accounts payable and other accrued liabilities | $1457967 | $2759160 |
| Short term financing agreements | 154017 |  |
| Chargeback reserve | 915934 |  |
| Other payables | 1476113 | 81500 |
| Current portion of long-term debt | 1118721 | 913920 |
| Current portion of leases payable | 518054 | 276009 |
| Earn-out liability, current portion | 2153478 | 3297855 |
| Warrant commitment | - | 37652808 |
| Total current liabilities | 7794284 | 44981252 |
| Loans payable, related parties, less current portion | 1669514 | 353766 |
| Long term debt, less current portion | 12349673 | 7085325 |
| Leases payable, less current portion | 714068 | 805326 |
| Earn-out liability, less current portion | 556000 | 516023 |
| Warrant liabilities | 6433150 | - |
| Total liabilities | 29516689 | 53741692 |
| Stockholders' equity (deficit): |  |  |
| Preferred stock, $0.086 par value; 750,000,000 shares authorized and 0 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively |  |  |
| Common stock, $0.086 par value; 133,333,333 shares authorized and 1,219,573 and 730,407 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 104883 | 62815 |
| Additional paid-in capital | 35798139 | 27329201 |
| Stock subscription receivable |  | (20000000) |
| Accumulated deficit | (26991983) | (33458145) |
| Total stockholders' equity (deficit) | 8911039 | (26066129) |
| Total liabilities and stockholders' equity | $38427729 | $27675563 |

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

**Reliance Global Group, Inc. and Subsidiaries**

**Consolidated Statements of Operations**

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| | | |
|:---|:---|:---|
|  | **Year ended**<br>**December 31, 2022** | **Year ended**<br>**December 31, 2021** |
| **Revenue** |  |  |
| Commission income | $16755884 | $9710334 |
| Total revenue | 16755884 | 9710334 |
| **Operating expenses** |  |  |
| Commission expense | 3384734 | 2427294 |
| Salaries and wages | 8592051 | 4672988 |
| General and administrative expenses | 6717889 | 3589221 |
| Marketing and advertising | 2584895 | 325838 |
| Depreciation and amortization | 2801824 | 1607313 |
| Goodwill impairment | 14373374 | - |
| Total operating expenses | 38454767 | 12622654 |
| Loss from operations | (21698883) | (2912320) |
| **Other income (expense)** |  |  |
| Other expense, net | (899913) | (533337) |
| Recognition and change in fair value of warrant liabilities | 29064958 | (17652808) |
| Total other income (expense) | 28165045 | (18186145) |
| Net income (loss) | $6466162 | $(21098465) |
| Basic and diluted earnings (loss) per share | $(0.42) | $(31.34) |
| Weighted average number of shares outstanding – Basic and diluted | 1094989 | 673137 |

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

**Reliance Global Group, Inc. and Subsidiaries**

**Condensed Consolidated Statements of Stockholders' Equity (Deficit)**

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** |
|  | **Preferred stock** | **Preferred stock** | **Common stock** | **Common stock** | **Common stock**<br> **issuable** | **Common stock**<br> **issuable** | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br> **paid-in**<br>**capital** | **Subscription**<br>**Receivable** | **Accumulated**<br>**Deficit** |<br>**Total** |
| **Balance, December 31, 2021** | **-** | $**-** | **730407** | $**62815** |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $**27329201** | $**(20000000)** | $**(33458145)** | $**(26066129)** |
| Share based compensation |  |  |  |  |  |  | 1249873 |  |  | 1249873.00 |
| Shares issued in private placement | 9076 | 781 | 178060 | 15313 |  |  | (16043) | 20000000 |  | 20000051.00 |
| Shares issued pursuant to acquisition of Medigap |  |  | 40402 | 3475 |  |  | 4759976 |  |  | 4763451.00 |
| Series A warrants |  |  | 25000 | 2150 |  |  | 2472850 |  |  | 2475000.00 |
| Issuance of Series C warrants in exchange for common shares |  |  | (218462) | (18788) |  |  | 18788 |  |  |  |
| Shares issued for vested stock awards |  |  | 14675 | 1262 |  |  | (1262) |  |  |  |
| Issuance of common stock for conversion of Series C warrants |  |  | 218462 | 18788 |  |  | (17452) |  |  | 1336.00 |
| Issuance of common stock for conversion of Series D warrants |  |  | 81423 | 7002 |  |  | (6207) |  |  | 795.00 |
| Issuance of common stock for conversion of Series B warrants |  |  | 1667 | 143 |  |  | 12357 |  |  | 12500.00 |
| Warrant liability reclassified to equity upon exercise of Series B Warrants |  |  |  |  |  |  | 8000 |  |  | 8000.00 |
| Shares issued due to conversion of preferred stock | (9076) | (781) | 147939 | 12723 |  |  | (11942) |  |  |  |
| Net Income | - | - | - | - |  | - | - | - | 6466162 | 6466162 |
| **Balance, December 31, 2022** | - | **-** | **1219573**  | $**104883** |  | **-** | $**35798139** |  | $**(26991983)** | $**8911039** |

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

 

 

**Reliance Global Group, Inc. and Subsidiaries**

**Condensed Consolidated Statements of Stockholders' Equity**

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** |
|  | **Preferred stock** | **Preferred stock** | **Common stock** | **Common stock** | **Common stock issuable** | **Common stock issuable** | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional paid-in**<br>**capital** | **Subscription**<br>**Receivable** | **Accumulated**<br>**Deficit** |<br>**Total** |
| **Balance, December 31, 2020** | **395640** | $**33912** | **282735** | $**24315** | **1556** | $**340000** | $**11898441** | $- | $**(12359680)** | $**(63012)** |
| Share based compensation |  |  |  |  |  |  | 658077 |  |  | 658077 |
| Shares issued for services |  |  | 1000 | 86 |  |  | 90964 |  |  | 91050 |
| Shares issued due to public offering, net of offering costs of $1,672,852 |  |  | 120000 | 10320 |  |  | 9098828 |  |  | 9109148 |
| Over-allotment shares from offering, net of offering costs of $250,928 |  |  | 18000 | 1548 |  |  | 1364825 |  |  | 1366373 |
| Warrants sold during public offering at quoted price |  |  |  |  |  |  | 20700 |  |  | 20700 |
| Shares issued due to conversion of preferred stock | (395660) | (33912) | 263773 | 22685 |  |  | 11227 |  |  |  |
| Shares issued due to conversion of debt |  |  | 42222 | 3631 |  |  | 3796369 |  |  | 3800000 |
| Rounding shares related to initial public offering | 20 |  | 126 | 10 |  |  | (10) |  |  |  |
| Shares issued pursuant to software purchase |  |  | 1556 | 134 | (1556) | (340000) | 339866 |  |  |  |
| Shares issued pursuant to acquisition of Kush |  |  | 995 | 86 |  |  | 49914 |  |  | 50000 |
| Stock subscriptions |  |  |  |  |  |  |  | (20000000) |  | (20000000) |
| Net loss | - | - | - | - | - | - | - | - | (21098465) | (21098465) |
| **Balance, December 31, 2021** | **-** | $**-** | **730407** | $**62815** | **-** | $**-** | $**27329201** | $**(20000000)** | $**(33458145)** | $**(26066129)** |

---

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

 

**Reliance Global Group, Inc. and Subsidiaries and Predecessor**

**Consolidated Statements of Cash Flows**

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Net Income | $6466162 | $(21098465) |
| &nbsp;&nbsp;&nbsp;Adjustment to reconcile net income to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 2801824 | 1607313 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill impairment | 14373374 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt issuance costs and accretion of debt discount | 41875 | 22822 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-cash lease expense | 36442 | 7329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock compensation expense | 1249873 | 749127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earn-out fair value and write-off adjustments | 524 | (359470) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liability | (29064958) | 17652808 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payables and other accrued liabilities | (1304652) | (531123) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 49876 | (162234) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, related parties | (14756) | (7131) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note receivables |  | 3825 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other receivables | (16852) | 1952 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other payables | 269613 | 19000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chargeback reserve | (568539) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets | (6492) | (14992) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expense and other current assets | 2496689 | (144036) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (3189997) | (2253275) |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from partial sale of investment in NSURE | 450000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of property and equipment | (71212) | (71108) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business acquisitions, net of cash acquired | (24138750) | (1608586) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of intangibles | (882350) | (619666) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (24642312) | (2299360) |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings of debt |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Principal repayments of debt | (875010) | (887455) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt issuance costs | (214257) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans acquired through acquisitions | 6520000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of common shares in exchange for Series C and D warrants | 2131 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from loans payable, related parties | 1500000 | 2931 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments of loans payable, related parties | (184252) | (515685) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earn-out liability | (1704925) | (452236) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise of warrants into common stock | 2475000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments on short term financing | (263182) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Private Placement of shares and warrants | 17853351 | 10496221 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of common shares in exchange for Series B warrants | 12500 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 25121356 | 8643776 |
| Net increase (decrease) in cash and restricted cash | (2710953) | 4091141 |
| Cash and restricted cash at beginning of year | 4620722 | 529581 |
| Cash and restricted cash at end of year | 1909769 | 4620722 |
| **SUPPLEMENTAL DISCLOSURE OF CASH AND NON-CASH TRANSACTIONS:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | 863936 | 456482 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of Series D warrants | 6930335 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of placement agent warrants | 1525923 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid insurance acquired through short-term financing | 417199 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conversion of preferred stock into common stock | 190069 | 340268 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conversion of debt into equity | - | 3800000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cashless conversion of Series D Warrants for common stock | 36761 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock issued pursuant to acquisition | 4763451 | 50000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock issued in lieu of services | - | 91050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock pursuant to the purchase of software | - | 340000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unpaid deferred transaction costs | - | 2146700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock subscriptions | - | 20000000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of business deferred purchase price | 1125000 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrant liability reclassified to equity upon exercise of Series B Warrants | 8000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease assets acquired in exchange for lease liabilities | 628004 | 861443 |

---

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

 

 

**Reliance Global Group, Inc. and Subsidiaries**

**Notes to the Consolidated Financial Statements**

**NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS**

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

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

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

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

**NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Presentation and Principles of Consolidation***

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

***Liquidity***

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

Management believes the company's financial position and continued ability to raise capital to be reasonable and sufficient. Based on our assessment, we do not believe there are any conditions or events that, in the aggregate, raise substantial doubt about the Company's ability to continue as a going concern within one year of filing these financial statements with the Securities and Exchange Commission ("SEC").

***Use of Estimates***

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

***Cash and Restricted Cash***

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

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

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

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

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **December 31,**<br> **2021** |
| Cash | $505410 | $4136180 |
| Restricted cash | 1404359 | 484542 |
| Total cash and restricted cash | $1909769 | $4620722 |

---

***Property and Equipment***

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

SCHEDULE OF ESTIMATED USEFUL LIVE PROPERTY AND EQUIPMENT

---

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

---

***Fair Value of Financial Instruments***

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

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

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

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

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

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

---

| | | |
|:---|:---|:---|
|  | **December 22,**<br> **2022** | **December 22,**<br> **2021** |
| Stock price | $0.57 | $6.44 |
| Volatility | 105.0% | 90% |
| Time to Expiry | 4.01 | 5 |
| Dividend yield | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0% |
| Risk free rate | 4.1% | 1.10% |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Years ended December 31, 2022 and 2021** | **Years ended December 31, 2022 and 2021** | **Years ended December 31, 2022 and 2021** | **Years ended December 31, 2022 and 2021** |
|  | **Series B Warrant Commitment** | **Series B warrant liabilities** | **Placement agent warrants** | **Total** |
| Beginning balance, December 31, 2020 |  |  |  |  |
| Initial recognition | 20244497 |  |  | 20244497 |
| Unrealized (gain) loss | 17408311 | - | - | 17408311 |
| Ending balance, December 31, 2021 | $37652808 | $- | $- | $37652808 |
| Initial recognition |  | 55061119 | 1525924 | 56587043 |
| Unrealized (gain) loss | 17408311 | (48668869) | (1477024) | (32737582) |
| Warrants exercised or transferred | (55061119) | (8000) | - | (55069119 |
| Ending balance, December 31, 2022 | - | 6384250 | 48900 | 6433150 |

---

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

**Earn-out liabilities:** The Company generally values its Level 3 earn-out liabilities using the income valuation approach. Key valuation inputs include contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments. The following table summarizes the significant unobservable inputs used in the fair value measurements:

---

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

---

The Company values its Level 3 earn-out liability related to the Barra Acquisition using a Monte Carlo simulation in a risk-neutral framework (a special case of the Income Approach). The following summarizes the significant unobservable inputs:

SCHEDULE OF EARN OUT LIABILITY

---

| | |
|:---|:---|
|  | **December 31,**<br> **2022** |
| WACC Risk Premium: | 14.0% |
| Volatility | 50.0% |
| Credit Spread: | 7.7% |
| Payment Delay (days) | 90 |
| Risk free rate | USD Yield Curve |
| Discounting Convention: | Mid-period |
| Number of Iterations | 100000 |

---

Undiscounted remaining earn out payments are approximately $2,967,592 as of December 31, 2022. The following table reconciles fair value of earn-out liabilities for the years ending December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2022** | **December 31,<br> 2021** |
| Beginning balance – January 1 | $3813878 | $2931418 |
| Acquisitions and Settlements | (1104925) | 1160562 |
| Period adjustments: |  |  |
| &nbsp;&nbsp;&nbsp;Fair value changes included in earnings<sup>\*</sup> | 524 | (278102) |
| Ending balance | $2709478 | $3813878 |
| Less: Current portion | (2153478) | (3297855) |
| Ending balance, less current portion | 556000 | 516023 |

---

\* Recorded as a reduction to general and administrative expenses

 ****

***Deferred Financing Costs***

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

***Business Combinations***

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

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

 ****

***Identifiable Intangible Assets, net***

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

***Goodwill and other indefinite-lived intangibles***

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

***Financial Instruments***

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

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

 ****

***Revenue Recognition***

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

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

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

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

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

The following outlines the core principles of ASC 606:

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

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

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

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

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

Healthcare revenue recognition:

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

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

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

Healthcare typically utilizes the Direct Bill method.

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

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

<u>P&C revenue recognition</u>:

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

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

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

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

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

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

Insurance Marketing revenue recognition:

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

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

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

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

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

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

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

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

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

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

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

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

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

---

| | | | |
|:---|:---|:---|:---|
| **Year ended**<br> **December 31, 2022** | **Medical/Life** | **Property and Casualty** | **Total** |
| **Regular** |  |  |  |
| EBS | $798412 | $- | $798412 |
| USBA | 52470 |  | 52470 |
| CCS/UIS |  | 254325 | 254325 |
| Montana | 1868137 |  | 1868137 |
| Fortman | 1274649 | 842961 | 2117610 |
| Altruis | 4044449 |  | 4044449 |
| Kush | 1536456 |  | 1536456 |
| Medigap | 4994002 |  | 4994002 |
| RELI Exchange | 312239 | 777784 | 1090023 |
|  | $14880814 | $1875070 | $16755884 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Year ended**<br> **December 31, 2021** | **Medical/Life** | **Property and Casualty** | **Total** |
| **Regular** |  |  |  |
| EBS | $799474 | $- | $799474 |
| USBA | 60129 |  | 60129 |
| CCS/UIS |  | 333874 | 333874 |
| Montana | 1744515 |  | 1744515 |
| Fortman | 1173215 | 958521 | 2131736 |
| Altruis | 3313453 |  | 3313453 |
| Kush | 1327153 | - | 1327153 |
|  | $8417939 | $1292395 | $9710334 |

---

***General and Administrative***

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

***Marketing and Advertising***

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

***Stock-Based Compensation***

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

***Leases***

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

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

***Income Taxes***

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

***Seasonality***

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

***Prior Period Adjustments***

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

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

Accordingly, the Company's comparative consolidated financial statements and impacted notes have been revised from amounts previously reported to reflect these adjustments. The following table illustrates the impact on previously reported amounts and adjusted balances presented in the consolidated financial statements for the year ended December 31, 2021.

SUMMARIZES THE CHANGES TO THE PREVIOUSLY ISSUED FINANCIAL INFORMATION

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| | | | |
|:---|:---|:---|:---|
| **Account** | **12/31/2020**<br> **As reported** | **Adjustment** | **12/31/2020**<br> **Adjusted** |
| Goodwill | 9265070 | (503345) | 8761725 |
| Accumulated Deficit | (12482281) | 122601 | (12359680) |

---

***Recently Issued Accounting Pronouncements***

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

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

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

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

**NOTE 3. STRATEGIC INVESTMENTS AND BUSINESS COMBINATIONS**

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Acquired** | **Reliance 100% Controlled Entity** | **Date** | **Location** | **Line of Business** | **Status** |
| U.S. Benefits Alliance, LLC (USBA) | US Benefits Alliance, LLC | October 24, 2018 | Michigan | Health Insurance | Affiliated |
| Employee Benefit Solutions, LLC (EBS) | Employee Benefits Solutions, LLC | October 24, 2018 | Michigan | Health Insurance | Affiliated |
| Commercial Solutions of Insurance Agency, LLC (CCS or Commercial Solutions) | Commercial Coverage Solutions LLC | December 1, 2018 | New Jersey | P&C – Trucking Industry | Unaffiliated |
| Southwestern Montana Insurance Center, Inc. (Southwestern Montana or Montana or SWMT) | Southwestern Montana Insurance Center, LLC | April 1, 2019 | Montana | Group Health Insurance | Unaffiliated |
| Fortman Insurance Agency, LLC (Fortman or Fortman Insurance or FIS) | Fortman Insurance Solutions, LLC | May 1, 2019 | Ohio | P&C and<br> Health Insurance | Unaffiliated |
| Altruis Benefits Consultants, Inc. (Altruis or ABC) | Altruis Benefits Corporation | September 1, 2019 | Michigan | Health Insurance | Unaffiliated |
| UIS Agency, LLC (UIS) | UIS Agency, LLC | August 17, 2020 | New York | Health Insurance | Unaffiliated |
| J.P. Kush and Associates, Inc. (Kush) | Kush Benefit Solutions, LLC | May 1, 2021 | Michigan | Health Insurance | Unaffiliated |
| Medigap Healthcare Insurance Company, LLC (Medigap) | Medigap Healthcare Insurance Agency LLC | January 10, 2022 | Florida | Health Insurance | Unaffiliated |
| Barra & Associates, LLC (Barra) | RELI Exchange, LLC | April 26, 2022 | Illinois | P&C and<br> Health Insurance | Unaffiliated |

---

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

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

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

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

SCHEDULE OF ALLOCATION OF PURCHASE PRICE

---

| | | |
|:---|:---|:---|
| **Description** | **Fair Value** | **Weighted Average Useful Life<br> (Years)**  |
| Accounts receivable | $291414 |  |
| Trade name and trademarks | 685400 | 5 |
| Customer relationships | 551000 | 10 |
| Non-competition agreements | 827800 | 5 |
| Goodwill | 1288552 | Indefinite |
|  | $3644166 |  |

---

Trade name and trademarks was measured at fair value using the relief-from-royalty method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue from the trade name, a pre-tax royalty rate of 5.85% and a discount rate of 14.09%.

Customer relationships were measured at fair value using the multiple-period excess earnings method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue and costs associated with existing customers, and a discount rate of 14.09%.

Non-competition agreements were measured at fair value using the multiple-period excess earnings method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue and costs associated with existing customers, and a discount rate of 14.09%.

Goodwill of $1,288,552 arising from the Kush Acquisition consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the Kush Acquisition is currently expected to be deductible for income tax purposes. Total acquisition costs for the Kush Acquisition incurred were $58,092 recorded as a component of General and administrative expenses. The approximate revenue and net profit for the acquired business as a standalone entity per ASC 805 from January 1, 2021 to April 30, 2021 was $500,000 and $219,097, respectively.

Pro Forma Information

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

SCHEDULE OF PRO FORMA INFORMATION RELATED TO ACQUISITION

---

| | |
|:---|:---|
|  | **December 31,**<br>**2021** |
| Revenue | $10090683 |
| Net Income (Loss) | $(20931568) |
| Earnings (Loss) per common share, basic | $(31.10) |
| Earnings (Loss) per common share, diluted | $(31.10) |

---

**Medigap Healthcare Insurance Agency, LLC Transaction**

On January 10, 2022, pursuant to an asset purchase agreement, dated December 21, 2021, we completed the acquisition of all of the assets of Medigap Healthcare Insurance Company, LLC ("Medigap") for a purchase price of $20,096,250 consisting of: (i) payment to Medigap of $18,138,750 in cash and (ii) the issuance to Medigap of 40,402 shares of the Company's restricted common stock in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties. The shares issued to Medigap as part of the purchase price are subject to lock up arrangements pursuant to which 50% of the shares may be sold after the one-year anniversary of the date of closing of the transaction and the balance of the shares may be sold after the second-year anniversary of the date of closing of the transaction.

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

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

SCHEDULE OF ALLOCATION OF PURCHASE PRICE

---

| | | |
|:---|:---|:---|
| **Description** | **Fair Value** | **Weighted Average<br> Useful Life<br> (Years)** |
| Property, plant and equipment | $20666 | 6 |
| Right-of-use asset | 317787 |  |
| Trade name and trademarks | 340000 | 15 |
| Customer relationships | 4550000 | 12 |
| Technology | 67000 | 3 |
| Backlog | 210000 | 1 |
| Chargeback reserve | (1484473) |  |
| Lease liability | (317787) |  |
| Goodwill | 19199008 | Indefinite |
|  | $22902201 |  |

---

Trade name was measured at fair value using the relief-from-royalty method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue from the trade name, a pre-tax royalty rate of 0.5% and a discount rate of 11.0%.

Customer relationships were measured at fair value using the multiple-period excess earnings method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue and costs associated with existing customers, and a discount rate of 11.0%.

Technology was measured at fair value using the cost replacement method of the cost approach. Significant inputs used to measure the fair value include an estimate of cost to replace, an obsolescence rate of 40.3%.

The value assigned to backlog acquired was estimated based upon the contractual nature of the backlog as of the acquisition date, using the income approach to discount back to present value the cash flows attributable to the backlog, using a discount rate of 11.0%.

Goodwill of $19,199,008 arising from the acquisition of Medigap consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the acquisition of Medigap is currently expected to be deductible for income tax purposes. Total acquisition costs for the acquisition of Medigap incurred were $94,065 recorded as a component of General and administrative expenses.

The approximate revenue and net profit or loss for the acquired business as a standalone entity per ASC 805 from January 10, 2022 to December 31, 2022 was $4,994,002 and a loss of $1,127,088, respectively.

Pro Forma Information

The results of operations of Medigap will be included in the Company's consolidated financial statements as of the date of acquisition through the current period end. The following approximate Company combined supplemental pro-forma financial information assumes that the acquisition had occurred at the beginning of the years ended December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2022** | **December 31,**<br>**2021** |
| Revenue | $17122459 | $14823837 |
| Net Income (Loss) | $20853020 | $(20910374) |
| Earnings (Loss) per common share, basic | $(0.41) | $(29.31) |
| Earnings (Loss) per common share, diluted | $(0.41) | $(29.31) |

---

**Barra & Associates, LLC Transaction**

On April 26, 2022, we entered into an asset purchase agreement (the "APA") with Barra & Associates, LLC ("Barra") pursuant to which the Company purchased all of the assets of Barra & Associates, LLC on April 26, 2022 for a purchase price in the amount of $7,725,000 in cash, with $6,000,000 paid to Barra at closing, $1,125,000 payable in nine months from closing, and a final earnout of $600,000 payable over two years from closing based upon meeting stated milestones. The APA contains standard, commercial representations and warranties and covenants. The source of the cash payment was $6,520,000 in funds borrowed from Oak Street Lending ("Loan"), our existing lender pursuant to a Fifth Amendment to Credit Agreement and Promissory Note, of even date. The purchase price is subject to post-closing adjustment to reconcile certain pre-closing credits and liabilities of the parties.

The acquisition of Barra was accounted for as a business combination in accordance with the acquisition method pursuant to FASB Topic No. 805, Business Combination (ASC 805). Accordingly, the total purchase consideration was allocated to the assets acquired, and liabilities assumed based on their respective estimated fair values. The acquisition method of accounting requires, among other things, that assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their fair values as of the acquisition date. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows, developing appropriate discount rates, estimating the costs, and timing.

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

---

| | | |
|:---|:---|:---|
| **Description** | **Fair Value** | **Weighted**<br> **Average Useful**<br> **Life (Years)** |
| Acquired accounts receivable | $92585 |  |
| Property, plant and equipment | 8593 | 7 |
| Right-of-use asset | 122984 |  |
| Trade names | 22000 | 4 |
| Customer relationships | 550000 | 10 |
| Developed technology | 230000 | 5 |
| Agency relationships | 2585000 | 10 |
| Lease liability | (122984) |  |
| Goodwill | 4236822 | Indefinite |
|  | $7725000 |  |

---

Trade name was measured at fair value using the relief-from-royalty method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue from the trade name, a pre-tax royalty rate of 0.5% and a discount rate of 19.5%.

Customer and Agency relationships were measured at fair value using the multiple-period excess earnings method under the income approach. Significant inputs used to measure the fair value include an estimate of projected revenue and costs associated with existing customers, and a discount rate of 19.5%.

Developed technology was measured at fair value using the cost replacement method of the cost approach. Significant inputs used to measure the fair value include an estimate of cost to replace, an obsolescence rate of 28.6%.

Goodwill of $4,236,822 arising from the acquisition of Barra consisted of the value of the employee workforce and the residual value after all identifiable intangible assets were valued. Goodwill recognized pursuant to the acquisition of Barra is currently expected to be deductible for income tax purposes. Total acquisition costs incurred through December 31, 2022 for the acquisition of Barra were $72,793 recorded as a component of General and administrative expenses.

The approximate revenue and net profit or loss for the acquired business as a standalone entity per ASC 805 from April 26, 2022 to December 31, 2022 was $1,090,023 and a loss of $(393,708), respectively.

Pro Forma Information

The results of operations of Barra will be included in the Company's consolidated financial statements as of the date of acquisition through the current period end. The following supplemental pro forma financial information approximate combined financial information assumes that the acquisition had occurred at the beginning of the nine months ended December 31, 2022 and 2021:

SCHEDULE OF PRO FORMA INFORMATION RELATED TO ACQUISITION

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| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2022** | **December 31,**<br>**2021** |
| Revenue | $17303506 | $11409850 |
| Net Income (Loss) | $6700594 | $(20370917) |
| Earnings (Loss) per common share, basic | $(0.21) | $(30.26) |
| Earnings (Loss) per common share, diluted | $(0.21) | $(30.26) |

---

**NOTE 4. INVESTMENT IN NSURE, INC.**

On February 19, 2020, the Company entered into a securities purchase agreement with NSURE, Inc. ("NSURE"), which was further amended on October 8, 2020, and as amended provides that the Company may invest up to an aggregate of $5,700,000 in NSURE to be funded in three tranches. In exchange, the Company will receive a total of 928,343 shares of NSURE's Class A Common Stock.

During the course of calendar year 2020 and by October 8, 2020, the Company funded the first tranche, $1,350,000 in exchange for 394,029 shares. The second tranche allowed the Company to acquire an additional 209,075 shares at a price of $6.457 per share by no later than December 30, 2020. The third full tranche allowed the Company to purchase an additional 325,239 shares at a purchase price of $9.224 after December 20, 2020, but no later than March 31, 2021.

The Company did not fund tranches two and three in the required timeframes, thus, the Company relinquished its rights under the contract to any additional NSURE shares aside for the ones already acquired with tranche one.

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

The Company measures the NSURE shares subsequent to acquisition in accordance with ASC 321-10-35-2, at cost less impairment since no readily determinable fair value is available to the Company. The investment is reviewed for impairment at each reporting period by qualitatively assessing any indicators demonstrating fair value of the investment is less than carrying value. The Company did not observe any price changes resulting from orderly transactions for identical or similar assets for the years ended December 31, 2022 or 2021. ASC 321-10-50-4 further requires an entity to disclose unrealized gains and losses for periods that relate to equity securities held at a reporting date. To date, the Company has not recognized any unrealized gains or losses on the NSURE security.

 ****

In accordance with ACS 321-10-35-3, the Company performed a qualitative assessment to determine if the investment may be impaired. After considering the indicators contained in ASC 321-10-35-3a –3e, the Company determined that the investment was not impaired.

**NOTE 5. PROPERTY AND EQUIPMENT**

Property and equipment consists of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2022** | **December 31, <br> 2021** |
| Computer equipment | $107195 | $72110 |
| Office equipment and furniture | 51532 | 36157 |
| Leasehold Improvements | 127497 | 89819 |
| Property and equipment | 286224 | 198086 |
| Less: Accumulated depreciation | (99341) | (67727) |
| Property and equipment, net | $186883 | $130359 |

---

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

**NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS**

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

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

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

SCHEDULE OF IMPAIRMENT OF GOODWILL

---

| | |
|:---|:---|
|  | **Goodwill** |
| December 31, 2020 | $8761725 |
| Goodwill recognized in connection with Kush acquisition on May 1, 2021 | 1288552 |
| December 31, 2021 | 10050277 |
| Goodwill recognized in connection with Medigap acquisition on January 10, 2022 | 19199008 |
| Goodwill recognized in connection with Barra acquisition on April 26, 2022 | 4236822 |
| Goodwill Impairment | (14373374) |
| December 31, 2022 | $19112733 |

---

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

SCHEDULE OF INTANGIBLE OF ASSETS AND WEIGHTED- AVERAGE REMAINING AMORTIZATION PERIOD

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Weighted Average Remaining Amortization period (Years)** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net**<br> **Carrying Amount** |
| Trade name and trademarks | 4.4 | $2146188 | $(991240) | $1154948 |
| Internally developed software | 4.1 | 1635178 | (285743) | 1349435 |
| Customer relationships | 9.0 | 11922290 | (2076086) | 9846204 |
| Purchased software | 0.4 | 665137 | (583744) | 81393 |
| Video Production Assets | 0.0 | 50000 | (50000) |  |
| Non-competition agreements | 1.9 | 3504810 | (2179420) | 1325390 |
| Contracts backlog | 0.0 | 210000 | (210000) | - |
|  |  | $20133603 | $(6376233) | $13757370 |

---

The following table sets forth the major categories of the Company's intangible assets and the weighted-average remaining amortization period as of December 31, 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Weighted Average Remaining Amortization period (Years)** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net**<br> **Carrying Amount** |
| Trade name and trademarks | 3.5 | $1777475 | $(609822) | $1167653 |
| Internally developed software | 4.7 | 595351 | (28443) | 566908 |
| Customer relationships | 7.7 | 4237290 | (1048726) | 3188564 |
| Purchased software | 0.6 | 562327 | (452985) | 109342 |
| Video Production Assets | 1 | 20000 |  | 20000 |
| Non-competition agreements | 2.9 | 3504809 | (1478376) | 2026433 |
|  |  | $10697252 | $(3618352) | $7078900 |

---

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

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

SCHEDULE OF AMORTIZATION EXPENSE OF ACQUIRED INTANGIBLE ASSETS

---

| | |
|:---|:---|
| **Years ending December 31,** | **Amortization Expense** |
| 2023 | $2557940 |
| 2024 | 2179838 |
| 2025 | 1785882 |
| 2026 | 1525785 |
| 2027 | 1192530 |
| Thereafter | 4515395 |
| Total | $13757370 |

---

**NOTE 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**

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

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2022** | **December 31, <br> 2021** |
| Accounts payable, | $1221336 | $547117 |
| Accrued expenses | 131334 | 2170215 |
| Accrued credit card payables | 58120 | 36103 |
| Other accrued liabilities | 47177 | 5725 |

---

**NOTE 8. LONG-TERM DEBT**

The composition of the long-term debt follows:

SCHEDULE OF LONG TERM DEBT

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2022** | **December 31, <br> 2021** |
| Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, variable interest of Prime Rate plus 2.5%, maturing August 2028, net of deferred financing costs of $12,388 and $14,606 as of December 31, 2022 and 2021, respectively | $426883 | $485317 |
| Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, variable interest of Prime Rate plus 1.5%, maturing December 2028, net of deferred financing costs of $15,076 and $17,626 as of December 31, 2022 and 2021, respectively | 693682 | 785826 |
| Oak Street Funding LLC Term Loan for the acquisition of SWMT, variable interest of Prime Rate plus 2.0%, maturing April 2029 net of deferred financing costs of $9,206 and $11,027 as of December 31, 2022 and 2021, respectively | 788596 | 884720 |
| Oak Street Funding LLC Term Loan for the acquisition of FIS, variable interest of Prime Rate plus 2.0%, maturing May 2029, net of deferred financing costs of $36,843 and $42,660 as of December 31, 2022 and 2021, respectively | 1987846 | 2226628 |
| Oak Street Funding LLC Term Loan for the acquisition of ABC, variable interest of Prime Rate plus 2.0%, maturing September 2029, net of deferred financing costs of $42,129 and $48,609 as of December 31, 2022 and 2021, respectively | 3249575 | 3616754 |
| Oak Street Funding LLC Term Loan, variable interest of Prime Rate plus 2.5%, maturing May 2032, for the acquisition of Barra, net of deferred financing costs of $198,188 and $0 as of December 31, 2022 and December 31, 2021, respectively | 6321812 | - |
|  | 13468394 | 7999245 |
| Less: current portion | (1118721) | (913920) |
| Long-term debt | $12349673 | $7085325 |

---

***Oak Street Funding LLC – Term Loans and Credit Facilities***

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

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

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

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

SCHEDULE OF CUMULATIVE MATURITIES OF LONG -TERM LOANS AND CREDIT FACILITIES

---

| | |
|:---|:---|
| **Fiscal year ending December 31,** | **Maturities of <br> Long-Term Debt** |
| 2023 | $1118569 |
| 2024 | 1431933 |
| 2025 | 1582287 |
| 2026 | 1744442 |
| 2027 | 1923234 |
| Thereafter | 5981758 |
| Total | 13782223 |
| Less debt issuance costs | (313829) |
| Total | $13468394 |

---

Short-Term Financings

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

**NOTE 9. WARRANT LIABILITIES**

***Series B Warrants***

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

By entering into the Private Placement on December 22, 2021, the Company entered into a commitment to issue the Common Shares, Preferred Shares and Series B Warrants on the Initial Closing Date for a fixed price and exercise price, as applicable. The commitment to issue Series B Warrants (the "Warrant Commitment") represents a derivative financial instrument, other than an outstanding share, that, at inception, has both of the following characteristics: (i) embodies a conditional obligation indexed to the Company's equity. The Company classified the commitment to issue the warrants as a derivative liability because it represents a written option that does not qualify for equity accounting The Company initially measured the derivative liability at its fair value and will subsequently remeasure the derivative liability, at fair value with changes in fair value recognized in earnings. An option pricing model was utilized to calculate the fair value of the Warrant Commitment. The Company initially recorded $17,408,311 of non-operating unrealized losses within the recognition and change in fair value of warrant liabilities account for the year ended December 31, 2021.

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

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

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

***Placement Agent Warrants***

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

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

**NOTE 10. SIGNIFICANT CUSTOMERS**

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

SCHEDULE OF CONCENTRATIONS OF REVENUES

---

| | | |
|:---|:---|:---|
| **Insurance Carrier** | **December 31, <br> 2022** | **December 31, <br> 2021** |
| LTC Global | 28% | -% |
| BlueCross BlueShield | 9% | 19% |
| Priority Health | 16% | 28% |

---

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

**NOTE 11. EQUITY**

***Preferred Stock***

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

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

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

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

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

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

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

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

***Common Stock***

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

***Warrants***

***Series A Warrants***

 ****

In conjunction with the Company's initial public offering, the Company issued 138,000 Series A Warrants which were classified as equity warrants because of provisions, pursuant to the warrant agreement, that permit the holder obtain a fixed number of shares for a fixed monetary amount. The warrants are standalone equity securities that are transferable without the Company's consent or knowledge. The warrants were recorded at a value per the offering of $0.15. The warrants may be exercised at any point from the effective date until the 5-year anniversary of issuance and are not subject to standard antidilution provisions. The Series A Warrants are exercisable at a per share exercise price equal to 110% of the public offering price of one share of common stock and accompanying Series A Warrant, $90.00. Series A warrant holders exercised 25,000 Series A warrants in January 2022, resulting in 113,000 of Series A warrants remaining issued and outstanding as of December 31, 2022 and 138,000 as of December 31, 2021.

***Series C and D Warrants***

 ****

In January 2022, as a result of the Private Placement and the Medigap Acquisition, the Company received a deficiency notification from Nasdaq indicating violation of Listing Rule 5365(a). As part of its remediation plan, in March 2022, the Company entered into Exchange Agreements with the holders of common stock issued in January 2022. Pursuant to the Exchange Agreements, the Company issued 218,462 Series C prepaid warrants in exchange for 218,462 shares of the Company's common stock. Additionally, as compensation for entering into the Exchange Agreements, the Company issued 81,500 Series D prepaid warrants to the Private Placement investors for no additional consideration. The fair value of the Series D prepaid warrants was treated as a deemed dividend and accordingly treated as a reduction from income available to common stockholders in the calculation of earnings per share. Refer to Note 7, *Earnings (Loss) Per Share* for additional information.

 ****

The Series C and D Warrants are equity classified pursuant to the warrant agreement provisions that permit holders to obtain a fixed number of shares for a fixed monetary amount. The warrants are standalone equity securities that are transferable without the Company's consent or knowledge. The warrants expire on the fifth anniversary of the respective issuance dates and are exercisable at a per share exercise price equal to $0.015.

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

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

***Equity Incentive Plan***

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

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

***Stock Options:***

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

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

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

SCHEDULE OF THE STOCK OPTIONS GRANTED, FORFEITED OR EXPIRED

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Options** | **Weighted Average Exercise Price Per Share** | **Weighted Average Remaining Contractual Life (Years)** | **Aggregate Intrinsic Value** |
| Outstanding at December 31, 2021 | 10928 | $232.78 | 2.61 | $- |
| Granted |  |  |  |  |
| Forfeited or expired |  |  |  |  |
| Exercised | - | - | - | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; - |
| Outstanding at December 31, 2022 | 10928 | $232.78 | 1.61 | - |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Options** | **Weighted Average Exercise Price Per Share** | **Weighted Average Remaining Contractual Life (Years)** | **Aggregate Intrinsic Value** |
| Outstanding at December 31, 2020 | 15594 | $231.45 | 3.63 | $- |
| Granted |  |  |  |  |
| Forfeited or expired | (4667) | $218.56 | 2.68 |  |
| Exercised | - | - | - | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; - |
| Outstanding at December 31, 2021 | 10928 | $232.78 | 2.61 | - |

---

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

SCHEDULE OF NON - VESTED STOCK OPTIONS

---

| | | | |
|:---|:---|:---|:---|
|  | **Options** | **Weighted Average Exercise Price Per Share** | **Weighted Average Remaining Contractual Life (Years)** |
| Non-vested at December 31, 2021 | 3587 | $227.78 | 0.90 |
| Granted |  |  |  |
| Vested | (3315) | 14.89 | 1.71 |
| Forfeited or expired | - | - | - |
| Non-vested at December 31, 2022 | 271 | $18.25 | 2.27 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Options** | **Weighted Average Exercise Price Per Share** | **Weighted Average Remaining Contractual Life (Years)** |
| Non-vested at December 31, 2020 | 10636 | $200.85 | 2.53 |
| Granted |  |  |  |
| Vested | (3315) | 206.40 | 0.82 |
| Forfeited or expired | (3734) | 218.55 | 2.68 |
| Non-vested at December 31, 2021 | 3587 | $227.78 | 0.90 |

---

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

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

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

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

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

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

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

SCHEDULE OF ASSUMPTION OF BLACK-SCHOLES OPTION PRICING MODEL

---

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

---

 ****

***Equity-based Compensation***

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

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

Pursuant to an equity-based compensation program at one of the Company's subsidiaries which provides agents the ability to earn and receive restricted stock awards upon completion of agreed upon service requirements, the Company granted 21,615 restricted stock awards which were immediately vested. Stocks earned are restricted for twelve months. The stocks were valued at $249,650 and recognized as stock-based compensation expense for the year ended December 31, 2022. No shares have been issued for this program as of December 31, 2022.

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

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

**NOTE 12. EARNINGS (LOSS) PER SHARE**

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

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

The following calculates basic and diluted EPS:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2022** | **2021** |
| Net income (loss) | $6466162 | $(21098465) |
| Deemed dividend | (6930335) | - |
| Net loss | $(464173) | $(21098465) |
| Weighted average common shares | 1094781 | 673137 |
| Effect of weighted average vested stock awards | 208 | - |
| Basic and diluted weighted average shares outstanding | 1094989 | 673137 |
| &nbsp;&nbsp;&nbsp;Basic and diluted loss per common share: | $(0.42) | $(31.34) |

---

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

SCHEDULE OF DILUTIVE NET LOSS PER COMMON SHARES

---

| | | |
|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | **2021** |
| Shares subject to outstanding common stock options | 10928 | 10928 |
| Shares subject to outstanding Series A warrants | 113000 |  |
| Shares subject to outstanding Series B Warrants and PAW | 1347970 |  |
| Shares subject to unvested stock awards | 6576 |  |

---

**NOTE 13. LEASES**

***Operating Leases***

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

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

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

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENT

---

| | |
|:---|:---|
| **Year ending December 31,** | **Operating Lease<br> Obligations** |
| 2023 | $570275 |
| 2024 | 269908 |
| 2025 | 144124 |
| 2026 | 113738 |
| 2027 | 117150 |
| Thereafter | 151053 |
| Total undiscounted operating lease payments | 1366248 |
| Less: Imputed interest | 134126 |
| Present value of operating lease liabilities | $1232122 |

---

**NOTE 14. COMMITMENTS AND CONTINGENCIES**

***Legal Contingencies***

The Company is subject to various legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations, or cash flows, and accordingly, no legal contingencies are accrued as of December 31, 2022 and 2021. Litigation relating to the insurance brokerage industry is not uncommon. As such the Company, from time to time have been, subject to such litigation. No assurances can be given with respect to the extent or outcome of any such litigation in the future.

***Earn-out liabilities***

The Company has recognized several earn-out liabilities resulting from contingent consideration provisions included in business combination agreements. Earn-out consideration is normally earned by acquirees when they meet or exceed pre-agreed upon earnings targets.

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

SCHEDULE OF EARN-OUT LIABILITY

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **CCS** | **Fortman** | **Montana** | **Altruis** | **Kush** | **Barra** | **Total** |
| Ending balance December 31, 2021 | $- | $515308 | $615969 | $992868 | $1689733 | $- | $3813878 |
| &nbsp;&nbsp;&nbsp;Changes due to business combinations |  |  |  |  |  | 600000 | 600000 |
| &nbsp;&nbsp;&nbsp;Changes due to payments |  | (34430) | (326935) | (84473) | (1259087) |  | (1704925) |
| &nbsp;&nbsp;&nbsp;Changes due to fair value adjustments | - | 186122 | 210967 | (73452) | (283112) | (40000) | 525 |
| Ending balance December 31, 2022 | $&nbsp;&nbsp;&nbsp;&nbsp;- | $667000 | $500000 | $834943 | $147534 | $560000 | $2709478 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **CCS** | **Fortman** | **Montana** | **Altruis** | **Kush** | **Total** |
| Ending balance December 31, 2020 | $81368 | $432655 | $522553 | $1894842 | $- | $2931418 |
| &nbsp;&nbsp;&nbsp;Changes due to business combinations |  |  |  |  | 1694166 | 1694166 |
| &nbsp;&nbsp;&nbsp;Changes due to payments |  |  |  | (452236) |  | (452236) |
| &nbsp;&nbsp;&nbsp;Changes due to fair value adjustments |  | 82653 | 93416 | (449738) | (4433) | (278102) |
| &nbsp;&nbsp;&nbsp;Changes due to write-offs | (81368) | - | - | - | - | (81368) |
| Ending balance December 31, 2021 | $- | $515308 | $615969 | $992868 | $1689733 | $3813878 |

---

***COVID-19 pandemic contingencies***

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

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

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

**NOTE 15. INCOME TAXES**

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

SCHEDULE OF ACTUAL INCOME TAX RATE

---

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

---

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

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

SCHEDULE OF DEFERRED INCOME TAX ASSETS AND LIABILITIES

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2022** | **December 31, <br> 2021** |
| Deferred tax assets (liabilities) |  |  |
| Net operating loss carryforward | $4938164 | $1900194 |
| Stock based compensation | 1148836 | 725546 |
| Goodwill | (771631) | (199086) |
| Intangibles | 745227 | 459441 |
| Fixed assets | (99002) | (56691) |
| Right of use assets | (300616) | (333347) |
| Lease liabilities | 313342 | 337671 |
| Other | 1525 | 1336 |
| Total deferred tax assets | 5975846 | 2835065 |
| Valuation allowance | (5975846) | (2835065) |
| Net deferred tax assets | $- | $- |

---

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

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

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

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

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

**NOTE 16. RELATED PARTY TRANSACTIONS**

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

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

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

On September 13, 2022, the Company issued a promissory note to YES Americana Group, LLC, a related party entity for the principal sum of $1,500,000 (the "Note"). The Note matures on January 15, 2024, bearing interest of 0% per annum for the first six months, and 5% per annum thereafter, payable monthly. In the event the Note is not paid by the maturity date, the loan will automatically be extended for an additional year until January 15, 2025, and if necessary, extended again for one additional year through January 15, 2026.

**NOTE 17. SUBSEQUENT EVENTS**

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

As previously disclosed, the Company issued a promissory note to YES Americana Group, LLC ("Americana"), a related party entity, for the principal sum of $1,500,000 (the "Note"). On February 7, 2023, the Company and Americana entered into an amendment to the Note pursuant to which (i) the principal amount of the Note was increased to $1,845,000 as a result of Americana's funding of an additional $345,000 to the Company during the period of January 23, 2023 through February 2, 2023, (ii) the maturity date of the Note was amended to January 15, 2026, (iii) the interest rate under the Note shall not increase after the maturity date, and (iv) the Note can be converted at any time, at the option of Americana, into shares of the Company's common stock, par value $0.086 per share (the "Common Stock"). The conversion price under the Note is equal to the Nasdaq minimum price, which is the lower of: (i) the closing price of the Common Stock (as reflected on Nasdaq.com) immediately preceding the signing of the Amendment; or (ii) the average closing price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Amendment. On February 13, 2023, Americana effectuated a conversion of $645,000 of the Note into 1,001,148 shares of the Company's common stock, $0.086 par value per share, in accordance with the terms of the Amendment.

On February 23, 2023, pursuant to authority granted by the Board of Directors of the Company, the Company implemented a 1-for-15 reverse split of the Company's authorized and issued and outstanding common stock (the "Reverse Split-2023"). The par value remains unchanged. All share and per share information as well as common stock and additional paid-in capital have been retroactively adjusted to reflect the Reverse Split-2023 for all periods presented, unless otherwise indicated.

On March 13, 2023, the Company entered into a securities purchase agreement with one institutional buyer for the purchase and sale of, subject to customary closing conditions, (i) an aggregate of 155,038 shares (the "Common Shares") of the Company's common stock, par value $0.086 per share (the "Common Stock") along with accompanying common warrants (the "Common Units"), (ii) prefunded warrants (the "Prefunded Warrants") that are exercisable into 897,594 shares of Common Stock (the "Prefunded Warrant Shares") along with accompanying common warrants (the "Pre-Funded Units"), and (iii) common warrants (the "Common Warrants") to initially acquire up to 2,105,264 shares of Common Stock (the "Common Warrant Shares") (representing 200% of the Common Shares and Prefunded Warrant Shares) in a private placement offering (the "Private Placement"). Additionally, the Company agreed to issue a warrant to the Placement Agent (defined below), to initially acquire 52,632 shares of common stock (the "PA Warrant"). The closing of the Private Placement occurred on March 16, 2023. EF Hutton, a division of Benchmark Investments, LLC (the "Placement Agent") acted as the sole placement agent for the Company in connection with the Private Placement. Pursuant to that certain Engagement Letter, dated as of January 30, 2023, between the Company and the Placement Agent, the Placement Agent is entitled to a cash fee of 8% of the gross proceeds of the Private Placement and the reimbursement of certain Placement Agent fees and expenses, including, but not limited to, up to $95,000 for fees and expenses including "road show", diligence, and reasonable legal fees and disbursements for the Placement Agent's counsel.

**PART IV**

**ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

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

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 3.1 | [Articles of Incorporation of Eye on Media Network, Inc. (now, Reliance Global Group, Inc.) as amended through October 19, 2018 (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 8, 2020 (File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315220019122/ex3-1.htm) |
| 3.2 | [Bylaws of Eye on Media Network, Inc. (now, Reliance Global Group, Inc.) (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 8, 2020 (File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315220019122/ex3-2.htm) |
| 3.3 | [Articles of Amendment to the Articles of Incorporation of Reliance Global Group, Inc. dated February 3, 2021 (incorporated herein by reference to Exhibit 3.9 to Amendment No. 4 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 5, 2021 (SEC File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221002712/ex3-9.htm) |
| 3.4 | [Articles of Amendment to the Articles of Incorporation of Reliance Global Group, Inc. dated December 23, 2021 (incorporated herein by reference to Exhibit 3.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2022 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222000509/ex3-1.htm) |
| 3.5 | [Articles of Amendment to the Articles of Incorporation of Reliance Global Group, Inc. dated February 16, 2023 (incorporated herein by reference to Exhibit 3.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on February 22, 2023 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315223005741/ex3-1.htm) |
| 4.1 | [Form of Series C Warrant (incorporated herein by reference to Exhibit 4.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2022 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222007697/ex4-1.htm) |
| 4.2 | [Form of Series D Warrant (incorporated herein by reference to Exhibit 4.2 to Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2022 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222007697/ex4-2.htm) |
| 10.1 | [Securities Purchase Agreement between Reliance Global Group, Inc. and Nsure, Inc. dated February 19, 2020 (incorporated herein by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 8, 2020 (SEC File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315220019122/ex10-2.htm) |
| 10.2 | [Irrevocable Assignment & Acquisition Agreement between Reliance Global Holdings, LLC and Ezra Beyman effective as of June 3, 2020 (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 8, 2020 (File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315220019122/ex10-3.htm) |
| 10.3 | [Lease between Coverage Consultants Unlimited, Inc. and Commercial Coverage Solutions, LLC dated August 17, 2020 (incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (Amendment No. 3) filed with the Securities and Exchange Commission on January 28, 2021 (File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221001946/ex10-4.htm) |
| 10.4 | [Master Credit Agreement between Southwestern Montana Insurance Center, LLC and Oak Street Funding LLC dated April 3, 2019 (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 (Amendment No. 1) filed with the Securities and Exchange Commission on December 4, 2020 (File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315220022969/ex10-1.htm) |
| 10.5† | [Reliance Global Group Inc. 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (Amendment No. 3) filed with the Securities and Exchange Commission on January 28, 2021 (File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221001946/ex10-5.htm) |
| 10.6 | [Amendment No. 1 to Securities Purchase Agreement between Nsure Inc. and Reliance Global Group, Inc. dated October 8, 2020 (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1 (Amendment No. 3) filed with the Securities and Exchange Commission on January 28, 2021 (File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221001946/ex10-6.htm) |
| 10.7 | [Form of Warrant Agent Agreement between Reliance Global Group, Inc. and VStock Transfer, LLC (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 (Amendment No. 3) filed with the Securities and Exchange Commission on January 28, 2021 (File No. 333-249381)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221001946/ex10-7.htm) |
| 10.8 | [Purchase Agreement among Kush Benefit Solutions, LLC, J.P. Kush and Associates, Inc. and Joshua Kushnereit dated May 12, 2021 (incorporated herein by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221011344/ex99-1.htm) |

---

---

| | |
|:---|:---|
| 10.9 | [Form of Securities Purchase Agreement among Reliance Global Group, Inc. and the investors identified on the signature pages thereto dated as of December 22, 2021 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221032355/ex10-1.htm) |
| 10.10 | [Form of Registration Rights Agreement 2021 (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221032355/ex10-2.htm) |
| 10.11 | [Form of Series B Warrant (incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221032355/ex10-3.htm) |
| 10.12 | [Form of Certificate of Designation for Series B Convertible Preferred Stock (incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2021 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315221032355/ex10-4.htm) |
| 10.13 | [Asset Purchase Agreement between Reliance Global Group, Inc. and Medigap Healthcare Insurance Company, LLC and the sole member thereof entered into agreement as of December 21, 2021 (incorporated herein by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2022 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222001265/ex10-1.htm) |
| 10.14 | [Form of Investor Exchange Agreement between Reliance Global Group, Inc. and the parties signatory to the agreement dated as of March 23, 2022 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2022 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222007697/ex10-1.htm) |
| 10.15 | [Form of Medigap Exchange Agreement between Reliance Global Group, Inc. and the parties signatory to the agreement dated as of March 23, 2022 (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2022 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222007697/ex10-2.htm) |
| 10.16 | [Asset Purchase Agreement between RELI Exchange, LLC and Barra & Associates, LLC dated April 26, 2022 (Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 2, 2022 (File Number 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222011820/ex10-1.htm) |
| 10.17 | [Security Agreement between Medigap Healthcare Insurance Agency, LLC and Oak Street Funding LLC dated April 26, 2022 (Incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 2, 2022 (File Number 001-40020))](https://www.sec.gov/Archives/edgar/data/1812727/000149315222011820/ex10-2.htm) |
| 10.18† | [Employment Agreement between Reliance Global Group, Inc. and Grant Barra dated April 26, 2022 Incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 2, 2022 (File Number 001-40020))Ex. 10.3](https://www.sec.gov/Archives/edgar/data/1812727/000149315222011820/ex10-3.htm) |
| 10.19 | [Promissory Note issued by Reliance Global Group, Inc. to YES Americana Group LLC on September 13, 2022 (incorporated herein by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2022 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222032181/ex4-1.htm) |
| 10.20 | [Amendment No. 1 to the Promissory Note between Reliance Global Group, Inc. and YES Americana Group, LLC, dated as of February 7, 2023 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2023 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315223004524/ex10-1.htm) |
| 10.21† | [Promotion Letter by and between Reliance Global Group, Inc. and Joel Markovits dated as of December 28, 2022 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2023 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315223000220/ex10-1.htm) |
| 10.22# | [Securities Purchase Agreement, dated March 13, 2023, between Reliance Global Group, Inc. and Investor (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315223007544/ex10-1.htm) |
| 10.23 | [Form of Warrant (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315223007544/ex10-2.htm) |
| 10.24 | [Form of Pre-Funded Warrant (incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315223007544/ex10-3.htm) |
| 10.25 | [Form of Placement Agent Warrant (incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020)).](https://www.sec.gov/Archives/edgar/data/1812727/000149315223007544/ex10-4.htm) |
| 10.26 | [Form of Registration Rights Agreement (incorporated herein by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2023 (SEC File No. 001-40020))..](https://www.sec.gov/Archives/edgar/data/1812727/000149315223007544/ex10-5.htm) |
| 14.1 | [Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company's Form 10-K filed with the Securities and Exchange Commission on March 31, 2022).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222008413/ex14-1.htm) |
| 21.1 | [List of subsidiaries (incorporated by reference to exhibits to the Company's Annual Report on Form 10-K filed with the SEC on March 31, 2022).](https://www.sec.gov/Archives/edgar/data/1812727/000149315222008413/ex21-1.htm) |
| 23.1\* | [Consent of Mazars USA LLP.](ex23-1.htm) |
| 24.1\* | [Power of Attorney (included on the signature page).](#power) |
| 31.1\* | [Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002](ex31-1.htm) |
| 31.2\* | [Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002](ex31-2.htm) |
| 32.1\*\* | [Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer](ex32-1.htm) |
| 101.INS\* | Inline XBRL Instance Document |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104\* | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

---

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

---

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 30, 2023.

---

| | |
|:---|:---|
| **Reliance Global Group, Inc.** | **Reliance Global Group, Inc.** |
| By: | */s/ Ezra Beyman* |
|  | Ezra Beyman |
|  | Chief Executive Officer and Chairman of the Board |

---

**POWER OF ATTORNEY**

Each person whose signature appears below hereby appoints Ezra Beyman and Joel Markovits, and each of them, as attorney-in-fact with full power of substitution to execute in the name and on behalf of the registrant and each such person, individually and in each capacity stated below, one or more amendments to the annual report on Form 10-K, which amendments may make such changes in the report as the attorney-in-fact acting deems appropriate and to file any such amendment to the annual report on Form 10-K with the Securities and Exchange Commission. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */s/ Ezra Beyman* | Chief Executive Officer and Executive Chairman and Director | March 30, 2023 |
| Ezra Beyman | (Principal Executive Officer) |  |
| */s/ Joel Markovits* | Chief Financial Officer | March 30, 2023 |
| Joel Markovits | (Principal Financial and Accounting Officer) |  |
| */s/ Scott Korman* | Director | March 30, 2023 |
| Scott Korman |  |  |
| */s/ Sheldon Brickman* | Director | March 30, 2023 |
| Sheldon Brickman |  |  |
| */s/ Ben Fruchtzweig* | Director | March 30, 2023 |
| Ben Fruchtzweig |  |  |
| */s/ Alex Blumenfrucht* | Director | March 30, 2023 |
| Alex Blumenfrucht |  |  |

---

## Exhibit 23.1

**Exhibit 23.1**

Consent of Independent Registered Public Accounting Firm

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

*/s/ Mazars USA LLP*

Mazars USA LLP

Fort Washington, Pennsylvania

March 30, 2023

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATIONS** 

I, Ezra Beyman, certify that:

1. I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2022 of Reliance Global Group, Inc.;

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

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

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

&nbsp;&nbsp;&nbsp;&nbsp;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):

&nbsp;&nbsp;&nbsp;&nbsp;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: March 30, 2023 | By: | */s/ Ezra Beyman* |
|  |  | Ezra Beyman |
|  |  | Chief Executive Officer and Executive Chairman (Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATIONS** 

I, Joel Markovits, certify that:

1. I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2022 of Reliance Global Group, Inc.;

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

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

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

&nbsp;&nbsp;&nbsp;&nbsp;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):

&nbsp;&nbsp;&nbsp;&nbsp;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: March 30, 2023 | By: | */s/ Joel Markovits* |
|  |  | Joel Markovits |
|  |  | Chief Financial Officer (Principal Financial Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**Certification**

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

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

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

The Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "Form 10-K") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: March 30, 2023 | By: | */s/ Ezra Beyman* |
|  |  | Ezra Beyman |
|  |  | Chief Executive Officer and Executive Chairman (Principal Executive Officer) |
| Date: March 30, 2023 | By: | */s/ Joel Markovits* |
|  |  | Joel Markovits |
|  |  | Chief Financial Officer (Principal Financial Officer) |

---