UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

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

For the transition period from _____ to _____

Commission File Number: 001-40020

RELIANCE GLOBAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Florida

46-3390293

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

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

(Address of principal executive offices) (Zip Code)

732-380-4600

(Registrant’s telephone number, including area code)

N/A

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

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

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

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

Yes ☒ No ☐

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

Yes ☒ No ☐

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

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

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

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

Yes ☐ No ☒

At May 20, 2024, the registrant had 8,535,591 shares of common stock, par value $0.086 per share, outstanding.

TABLE OF CONTENTS

PART I
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	24
Item 4. Controls and Procedures.	24
PART II
Item 1. Legal Proceedings.	25
Item 1A. Risk Factors.	25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	25
Item 3. Defaults Upon Senior Securities.	25
Item 4. Mine Safety Disclosures.	25
Item 5. Other Information.	25
Item 6. Exhibits	26

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
	2024			2023
Assets
Current assets:
Cash	$	680,138		$	1,329,016
Restricted cash		1,432,847			1,409,895
Accounts receivable		1,020,879			1,298,863
Accounts receivable, related parties		6,512			6,603
Accounts receivable		6,512			6,603
Other receivables		29,498			899
Prepaid expense and other current assets		240,780			333,756
Total current assets		3,410,654			4,379,032

Property and equipment, net		144,723			139,999
Right-of-use assets		653,524			739,830
Intangibles, net		6,611,215			11,042,757
Goodwill		6,693,099			6,693,099
Other non-current assets		21,792			20,292
Total assets	$	17,535,007		$	23,015,009

Current liabilities:
Accounts payable and other accrued liabilities	$	1,180,328		$	835,483
Short term financing agreements		11,601			56,197
Current portion of loans payables, related parties		626,676			454,953
Other payables		23,809			7,414
Current portion of long-term debt		1,431,875			1,390,766
Current portion of leases payable		256,340			285,171
Earn-out liability, current portion		-			159,867
Total current liabilities		3,530,629			3,189,851

Loans payable, related parties, less current portion		780,915			897,529
Long term debt, less current portion		10,660,321			11,026,971
Leases payable, less current portion		427,972			484,335
Warrant liabilities		173,660			268,993
Total liabilities		15,573,497			15,867,679
Stockholders’ equity:
Preferred stock, $0.086 par value; 750,000,000 shares authorized and 9,076 and 0 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		-			-
Common stock, $0.086 par value; 2,000,000,000 shares authorized and 5,692,387 and 4,761,974 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		489,525			409,509
Additional paid-in capital		45,820,613			45,739,786
Accumulated deficit		(44,348,628	)		(39,001,965	)
Total stockholders’ equity		1,961,510			7,147,330
Total liabilities and stockholders’ equity	$	17,535,007		$	23,015,009

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

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months ended			Three Months ended
	March 31, 2024			March 31, 2023
Revenue
Commission income	$	4,082,438		$	3,939,103
Total revenue		4,082,438			3,939,103

Operating expenses
Commission expense		1,276,542			1,083,326
Salaries and wages		1,831,662			1,755,894
General and administrative expenses		1,374,890			837,766
Marketing and advertising		127,042			136,571
Change in estimated acquisition earn-out payables		47,761			476,692
Depreciation and amortization		534,152			653,778
Asset impairments		3,922,110			-
Total operating expenses		9,114,159			4,944,027

Loss from operations		(5,031,721	)		(1,004,924	)

Other (expense) income
Interest expense		(369,677	)		(351,823	)
Interest expense, related parties		(40,609	)		(41,477	)
Interest expense		(40,609	)		(41,477	)
Other income, net		11			3,949
Recognition and change in fair value of warrant liabilities		95,333			4,266,231
Total other (expense) income		(314,942	)		3,876,880

(Loss) income from continuing operations before tax		(5,346,663	)		2,871,956
Income (loss) from discontinued operations before tax		-			(4,660,494	)
Net loss	$	(5,346,663	)	$	(1,788,538	)
Basic (loss) earnings per share
Continuing operations	$	(0.81	)	$	1.92
Discontinued operations	$	-		$	(3.07	)
Basic (loss) earnings per share	$	(0.81	)	$	(1.15	)

Diluted loss per share
Continuing operations	$	(0.81	)	$	(0.59	)
Discontinued operations	$	-		$	(2.18	)
Diluted loss per share	$	(0.81	)	$	(2.77	)

Weighted average number of shares outstanding - basic		6,569,019			1,553,953
Weighted average number of shares outstanding - diluted		6,569,019			2,185,847

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

Reliance Global Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Shares		Amount		paid-in capital			Deficit			Total
	Three Months ended March 31, 2024
	Common stock				Additional paid-in			Accumulated
	Shares		Amount		capital			deficit			Total

Balance, December 31, 2023		4,761,974	$	409,509	$	45,739,786		$	(39,001,965	)	$	7,147,330

Common share payments for earn-outs		-		-		17,628			-			17,628

Common shares issued for ATM share sales		187,614		16,135		108,514			-			124,649

Common shares issued for Abeyance Share conversions		723,264		62,201		(62,201	)		-			-

Common share based compensation		19,535		1,680		16,886						18,566

Net loss		-		-		-			(5,346,663	)		(5,346,663	)

Balance, March 31, 2024		5,692,387	$	489,525	$	45,820,613		$	(44,348,628	)	$	1,961,510

	Three Months ended March 31, 2023
	Common stock				Additional paid-in			Accumulated
	Shares		Amount		capital			deficit			Total

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

Common shares issued for earn-out liabilities		109,358		9,404		973,074			-			982,478

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

Round up of Common shares due to reverse split		15,336		1,300		(5,946	)		-			(4,646	)

Common shares issued in 2023 private placement		155,038		13,333		3,433,151			-			3,446,484

Common share based compensation		-		-		43,797			-			43,797

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

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

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

Reliance Global Group, Inc. and Subsidiaries and Predecessor

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	2024			2023
	For the 3 months ended March 31,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	(5,346,663	)	$	(1,788,538	)
Adjustment to reconcile net income to net cash used in operating activities:
Depreciation and amortization		534,152			541,873
Asset impairments		3,922,110			-
Amortization of debt issuance costs and accretion of debt discount		11,721			11,721
Non-cash lease expense (income)		1,110			(5,098	)
Equity based compensation expense		18,566			43,797
Recognition and change in fair value of warrant liability		(95,333	)		(4,266,231	)
Earn-out fair value and write-off adjustments		47,761			476,692
Change in operating assets and liabilities:
Accounts receivable		277,984			23,976
Accounts receivable, related parties		91			6,676
Other receivables		(28,599	)		11,464
Prepaid expense and other current assets		92,976			81,381
Other non-current assets		(1,500	)		-
Accounts payables and other accrued liabilities		344,847			125,229
Other payables		16,395			(294,058	)
Net cash used in continuing operating activities		(204,382	)		(5,031,116	)

Net cash adjustments for discontinued operating activities		-			3,966,238

Total net cash used in continuing and discontinued operating activities		(204,382	)		(1,064,878	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(12,312	)		(6,695	)
Purchase of intangibles		(17,132	)		(73,894	)

Net cash used in investing activities		(29,444	)		(80,589	)

Net cash used in discontinued investing activities		-			(15,708	)

Total net cash used in continuing and discontinued investing activities		(29,444	)		(96,297	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments of debt		(335,533	)		(207,580	)
Proceeds of loans payable related parties		-			345,000
Principal repayments of short term financings		(44,596	)		(98,004	)
Payments of loans payable, related parties		(136,620	)		(412,500	)
Proceeds from common shares issued through an at the market offering		124,649			-
Cash payments on earn-out liability		-			(250,000	)
Private Placement of shares and warrants		-			3,446,484
Net cash used in and provided by continuing financing activities		(392,100	)		2,823,400

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

Total net cash (used in) and provided by continuing and discontinued financing activities		(392,100	)		2,805,700

Net (decrease) and increase in cash and restricted cash		(625,926	)		1,644,525
Cash and restricted cash at beginning of year		2,738,911			1,909,769
Cash and restricted cash at end of year	$	2,112,985		$	3,554,294

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

Reliance Global Group, Inc. and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

NOTE 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Presentation and Principles of Consolidation

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

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

Liquidity

As of March 31, 2024, the Company’s reported cash and restricted cash aggregated balance was approximately $2,113,000, current assets were approximately $3,411,000, while current liabilities were approximately $3,531,000. As of March 31, 2024, the Company had a working capital deficit of approximately $120,000 and stockholders’ equity of approximately $1,962,000. For the three months ended March 31, 2024, the Company presents loss from operations of approximately $5,032,000, which includes a non-cash asset impairment loss of approximately $3,900,000, and net loss of approximately $5,347,000. During the first quarter of 2024 the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) to which the Company may offer and sell, from time to time through the Agent, shares of its Common Stock (the “Shares”), having an aggregate offering price of up to $858,637.

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

Use of Estimates

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

Cash and Restricted Cash

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

	March 31, 2024		March 31, 2023
Cash	$	680,138	$	2,116,333
Restricted cash		1,432,847		1,437,961
Total cash and restricted cash	$	2,112,985	$	3,554,294

Fair Value of Financial Instruments

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

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

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

Warrant Liabilities: The Company re-measures the fair value of its Level 3 warrant liabilities at the balance sheet date, using a binomial option pricing model. The following summarizes the significant unobservable inputs:

SCHEDULE OF WARRANT LIABILITY

	March 31, 2024			December 31, 2023
Stock price	$	0.34		$	0.54
Volatility		135.00	%		110.00	%
Time to expiry		4.74			4.99
Dividend yield		0	%		0	%
Risk free rate		4.20	%		3.80	%
Warrants measurement input		4.2	%		3.8	%

The following reconciles fair value of the liability classified warrants:

	Series B warrant liabilities			Placement agent warrants			Total
Beginning balance, December 31, 2022	$	6,384,250		$	48,900		$	6,433,150
Unrealized (gain) loss		(5,534,931	)		(48,575	)		(5,583,506	)
Warrants exercised or exchanged		(580,651	)		-			(580,651	)
Ending balance, December 31, 2023	$	268,668		$	325		$	268,993
Balance	$	268,668		$	325		$	268,993
Unrealized (gain) loss		(95,333	)		-			(95,333	)
Warrants exercised or exchanged		-			-			-
Ending balance, March 31, 2024	$	173,335		$	325		$	173,660
Balance		173,335			325			173,660

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

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

	March 31, 2024			December 31, 2023
Beginning balance – January 1	$	159,867		$	2,709,478

Acquisitions and settlements		-			(3,260,403	)

Period adjustments:
Fair value changes included in earnings*		47,761			1,716,873
Earn-out payable in common shares		(17,628	)		(159,867	)
Earn-out transferred to loans payable, related parties		(190,000	)		(846,214	)
Ending balance		-			159,867
Less: Current portion		-			(159,867	)
Ending balance, less current portion	$	-		$	-

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

Revenue Recognition

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

SCHEDULE OF DISAGGREGATION REVENUE

Three Months ended March 31, 2024	Medical		Life		Property and Casualty		Total

EBS	$	229,004	$	3,700	$	-	$	232,704
USBA		9,758		750		-		10,508
CCS/UIS		-		-		27,948		27,948
Montana		442,954		1,209		-		444,163
Fortman		292,188		1,782		228,815		522,785
Altruis		2,028,225		6,351		-		2,034,576
Kush		193,807		-		-		193,807
Reli Exchange		78,043		42,425		495,479		615,947
Total	$	3,273,979	$	56,217	$	752,242	$	4,082,438

Three Months ended March 31, 2023	Medical		Life		Property and Casualty		Total

EBS	$	233,280	$	4,100	$	-	$	237,380
USBA		11,265		764		-		12,029
CCS/UIS		-		-		46,770		46,770
Montana		486,009		4,985		-		490,994
Fortman		305,877		393		208,145		514,415
Altruis		1,868,136		-		-		1,868,136
Kush		320,175		116		-		320,291
Reli Exchange		71,370		23,381		354,337		449,088
Total	$	3,296,112	$	33,739	$	609,252	$	3,939,103

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

SCHEDULE OF CONCENTRATIONS OF REVENUES

Insurance Carrier	2024			2023
	Three Months ended March 31,
Insurance Carrier	2024			2023
Priority Health		45	%		43	%
BlueCross BlueShield		13	%		13	%
Insurance carrier		13	%		13	%

No other single customer accounted for more than 10% of the Company’s commission revenues during the three months ended March 31, 2024 and 2023. The loss of any significant customer could have a material adverse effect on the Company. Customers from 2022 were adjusted to reflect percentages of revenue from continued operations.

Income Taxes

The Company recorded no income tax expense for the three months ended March 31, 2024 and 2023 because the estimated annual effective tax rate was zero. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating loss carry forwards, and available tax planning alternatives.

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

Recently Issued Accounting Pronouncements

We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.

NOTE 2. GOODWILL AND OTHER INTANGIBLE ASSETS

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

SCHEDULE OF IMPAIRMENT OF GOODWILL

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

Asset Impairments:

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

The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of March 31, 2024:

	Weighted Average Remaining Amortization Period (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name and trademarks		1.3	$	1,807,188	$	(1,408,895	)	$	398,292
Internally developed software		3.0		1,694,186		(686,798	)		1,007,388
Customer relationships		6.5		7,372,290		(2,629,691	)		4,742,599
Purchased software		2.2		564,396		(562,844	)		1,552
Video production assets		-		50,000		(50,000	)		-
Non-competition agreements		0.6		3,504,810		(3,043,426	)		461,384
			$	14,992,869	$	(8,381,654	)	$	6,611,215

The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of December 31, 2023:

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

The following table reflects expected amortization expense as of March 31, 2024, for each of the following five years and thereafter:

Years ending December 31,	Amortization Expense
2024 (remainder of year)	$	1,225,917
2025		1,395,707
2026		1,146,882
2027		807,363
2028		717,314
Thereafter		1,318,032
Total	$	6,611,215

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

Long-Term Debt

The composition of the long-term debt follows:

SCHEDULE OF LONG TERM DEBT

	March 31, 2024			December 31, 2023


Oak Street Funding LLC Term Loan	$	354,376		$	369,602
Oak Street Funding LLC Term Loan for the acquisition of EBS and USBA, variable interest of Prime Rate plus 2.5%, maturing August 2028, net of deferred financing costs of $9,614 and $10,069 as of March 31, 2024 and December 31, 2023, respectively	$	354,376		$	369,602
Oak Street Funding LLC Senior Secured Amortizing Credit Facility for the acquisition of CCS, variable interest of Prime Rate plus 1.5%, maturing December 2028, net of deferred financing costs of $11,887 and $12,525 as of March 31, 2024 and December 31, 2023, respectively		581,392			604,830
Oak Street Funding LLC Term Loan for the acquisition of SWMT, variable interest of Prime Rate plus 2.0%, maturing April 2029, net of deferred financing costs of $7,365 and $7,733 as of March 31, 2024 and December 31, 2023, respectively		671,220			695,758
Oak Street Funding LLC Term Loan for the acquisition of FIS, variable interest of Prime Rate plus 2.0%, maturing May 2029, net of deferred financing costs of $29,572 and $31,026 as of March 31, 2024 and December 31, 2023, respectively		1,697,935			1,758,558
Oak Street Funding LLC Term Loan for the acquisition of ABC, variable interest of Prime Rate plus 2.0%, maturing September 2029, net of deferred financing costs of $34,029 and $35,649 as of March 31, 2024 and December 31, 2023, respectively		2,806,914			2,899,409
Oak Street Funding LLC Term Loan for the acquisition of Barra, variable interest of Prime Rate plus 2.5%, maturing May 2032, net of deferred financing costs of $171,406 and $176,762 as of March 31, 2024 and December 31, 2023, respectively		5,980,359			6,089,580
Long term debt gross		12,092,196			12,417,737
Less: current portion		(1,431,875	)		(1,390,766	)
Long-term debt	$	10,660,321		$	11,026,971

Oak Street Funding LLC – Term Loans and Credit Facilities

Fiscal year ending December 31,	Maturities of Long-Term Debt
2024 (remainder of year)	$	1,055,234
2025		1,552,772
2026		1,729,160
2027		1,925,603
2028		2,106,978
Thereafter		3,986,322
Total		12,356,069
Less: debt issuance costs		(263,873	)
Total	$	12,092,196

Short-Term Financings

The Company has various short-term notes payable for financed items such as insurance premiums and CRM software purchases. These are normally paid in equal installments over a period of twelve months or less and carry interest rates up to 0.0% and 12.75% per annum. As of March 31, 2024 and December 31, 2023, balances outstanding on short-term financings were $12,000 and $56,000, respectively.

NOTE 4. WARRANT LIABILITIES

Series B Warrants

The Series B Warrant liability effective exercise price as of March 31, 2024 was $0.63, and the outstanding balance, inclusive of 16,303 PAW warrants as of March 31, 2024 and December 31, 2023 was $173,660 and $268,993 respectively, presented in the warrant liability account on the condensed consolidated balance sheets. Pursuant to the terms of the Series B Warrants, during the second quarter of 2024, the Series B Warrant exercise price was reduced from $0.63 per share to $0.26 as a result of dilutive issuances of our Common Stock.

For the periods ended March 31, 2024, and 2023, net fair value gains recognized for the Series B Warrants inclusive of the PAW warrants were $95,333 and $4,266,231 respectively, presented in the recognition and change in fair value of warrant liabilities account in the condensed consolidated statements of operations.

NOTE 5. EQUITY

Common Stock

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

During the first quarter of 2024, the Company issued 187,614 shares through its ATM program, 723,264 pursuant to Abeyance Share conversions and 19,535 shares for equity-based compensation.

As of March 31, 2024 and December 31, 2023, there were 5,692,387 and 4,761,974 shares of common stock outstanding, respectively.

Abeyance Shares

During the quarter ended March 31, 2024 upon request from the institutional investor, the Company converted 723,264 Abeyance Shares into Common Stock, thereby issuing 723,264 shares which resulted in a remaining balance of 1,011,000 of outstanding Abeyance Shares as of March 31, 2024.

During the second quarter of 2024, upon request from the institutional investor, the Company converted the remaining 1,011,000 Abeyance Shares into Common Stock resulting in zero Abeyance Shares outstanding.

Series G Warrants

Pursuant to the terms of the Series G Warrants, during the second quarter of 2024, the Series G Warrant exercise price was reduced from $0.6562 per share to $0.26 as a result of sales of our Common Stock pursuant to the ATM Agreement discussed below.

At Market Program (the “ATM”)

On February 15, 2024, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with EF Hutton LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time through the Agent, shares of its Common Stock (the “Shares”), having an aggregate offering price of up to $858,637 (the “ATM Capacity”). Any Shares offered and sold in the offering will be issued pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-275190), which was declared effective by the Securities and Exchange Commission on November 7, 2023, and the related prospectus supplement and accompanying base prospectus relating to the offering of the Shares. Under the Agreement, the Agent may sell Shares by any method permitted by law and deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The offering of Shares pursuant to the Agreement will terminate upon the earlier of (i) the sale of all of the Shares subject to the Agreement, or (ii) the termination of the Agreement by the Agent or the Company, as permitted therein. The Company shall pay to the Agent in cash, upon each sale of Shares pursuant to the ATM Agreement, an amount equal to 3.5% of the gross proceeds from each sale of Shares. The Company will also reimburse the Agent for certain specified expenses in connection with entering into the Agreement.

During the first quarter of 2024 the Company sold 187,614 shares of Common Stock under the ATM Agreement, at a price of $0.6891, receiving proceeds, net of $4,636 in Agent commissions and fees, of $124,649. As of March 31, 2024, the net remaining ATM Capacity was $729,352.

Subsequent to the first quarter of 2024, the Company sold an additional 1,320,829 shares of Common Stock under the ATM Agreement, receiving proceeds, net of $15,905 Agent commissions and fees, of $385,052, resulting in net remaining ATM Capacity of, $328,395.

Equity-based Compensation

Total stock-based compensation expense recorded in general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 is $18,566 and $43,797, respectively.

NOTE 6. EARNINGS (LOSS) PER SHARE

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

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

The following calculates basic and diluted EPS:

	March 31, 2024			March 31, 2023
	Three Months			Three Months
	Ended			Ended
	March 31, 2024			March 31, 2023
(Loss) income from continuing operations	$	(5,346,663	)	$	2,983,861
Net (loss) income continuing operations, numerator, basic computation		(5,346,663	)		2,983,861
Recognition and change in fair value of warrant liabilities		-			(4,266,231	)
Net loss continuing operations, numerator, diluted computation	$	(5,346,663	)	$	(1,282,370	)

Weighted average common shares, basic		6,569,019			1,553,953
Effect of series B warrants		-			631,894
Weighted average common shares, dilutive		6,569,019			2,185,847
Earnings (loss) per common share – basic	$	(0.81	)	$	1.92
Earnings (loss) per common share – diluted	$	(0.81	)	$	(0.59	)

The reversal of the gain on the change fair value of the Series B warrant liability for the three months March 31, 2023 is included in the numerator of the dilutive EPS calculation to eliminate the effects the warrants as the impact is dilutive.

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

SEC Form 10-Q filed by Reliance Global Group Inc.