COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8. COMMITMENTS AND CONTINGENCIES

Legal Contingencies

The Company is subject to various legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations, or cash flows, and accordingly and no legal contingencies are accrued as of June 30, 2024, and December 31, 2023. Litigation relating to the insurance brokerage industry is not uncommon. As such the Company, from time to time has been subject to such litigation. No assurances can be given with respect to the extent or outcome of any such litigation in the future.

Earn-out liabilities

The Company, Southwestern Montana Insurance Center, LLC, a Montana limited liability company (the “Subsidiary”), Southwestern Montana Financial Center, Inc., a Montana corporation (the “Seller”), and Julie A. Blockey (the “Holder”, and collectively with the Company, Subsidiary, and Seller, the “Parties”) entered into a purchase agreement on or around April 1, 2019 (the “Purchase Agreement”), whereby the Company purchased the business and certain assets noted within the Purchase Agreement. On September 29, 2023, the Parties entered into a first amendment to the Purchase Agreement (the “First Amendment”). Pursuant to the First Amendment, the Parties agreed to a total remaining earn-out related balance of $500,000 owed under the Purchase Agreement. In satisfaction of such remaining balance, the Company agreed to issue 10,272 shares of the Company’s restricted common stock, par value $0.086 per share (the “Common Stock”), to the Holder. The First Amendment also stated that if the Nasdaq official closing price of the Common Stock is less than $41.31 on March 29, 2024 (the “Calculation Date”), then a determination of the Make-Up Amount (as defined herein) will be made. The “Make-Up Amount” means $425,000 minus the Blockey Shares Value (10,272 multiplied by the Nasdaq official closing price of the Common Stock on the Calculation Date). The First Amendment further stated that the Company shall pay the Make-Up Amount with a combination of cash and Company shares. Accordingly, on the Calculation Date, a total Make-Up Amount of $367,496 was determined, and as agreed upon by the Parties, will be payable, $190,000 in cash, and the remaining balance via the issuance of 30,029 of the Company’s Common Stock, subsequently issued to the Seller during April, 2024. The $190,000 cash balance was paid during the quarter ended June 30, 2024.

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

	Fortman		Montana			Altruis		Kush		Barra		Total
Ending balance December 31, 2023	$	-	$	159,867		$	-	$	-	$	-	$	159,867
Payments		-		(190,000	)		-		-		-		-
Estimates and fair value adjustments		-		47,761			-		-		-		47,761
Payable in common stock		-		(17,628	)		-		-		-		(17,628	)
Ending balance June 30, 2024	$	-	$	-		$	-	$	-	$	-	$	-

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

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

Definitive Acquisition Agreements

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