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COMMITMENTS AND CONTINGENCIES
 3 Months Ended
Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

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 March 31, 2022 and December 31, 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 a number of 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.

 

 

As discussed in Note 2 - Prior Period Adjustments, a $300,000 adjustment was identified for earn-out liabilities which impacted the closing December 31, 2020 balance in the same amount. Accordingly, the December 31, 2020 balance is adjusted in the following table from the originally reported balance of $2,631,418 to $2,931,418. 

 

The following outlines changes to the Company’s earn-out liability balances inclusive of accumulated accretion for the respective period ended March 31, 2022 and December 31, 2021:

 

    CCS     Fortman     Montana     Altruis     Kush     Total  
Ending balance December 31, 2021   $ -     $ 515,308     $ 615,969     $ 992,868     $ 1,689,733     $ 3,813,878  
Changes due to fair value adjustments     -      

29,522

      

37,741

       -      

339,808

      

407,071

  
Ending balance March 31, 2022   $       -     $

544,830

     $

653,710

     $

992,868

     $

2,029,541

     $

4,220,949

  

 

   CCS   Fortman   Montana   Altruis   Kush   Total 
Ending balance December 31, 2020  $81,368   $432,655   $522,553   $1,894,842   $-   $2,931,418 
Changes due to business combinations   -    -    -    -    1,694,166    1,694,166 
Changes due to payments   -    -    -    (452,236)   -    (452,236)
Changes due to fair value adjustments   -    82,653    93,416    (449,738)   (4,433)   (278,102)
Changes due to write-offs   (81,368)   -    -    -    -    (81,368)
Ending balance December 31, 2021  $-   $515,308   $615,969   $992,868   $1,689,733   $3,813,878 

 

COVID-19 pandemic contingencies

 

The spread of the coronavirus (COVID-19) outbreak in the United States has resulted in economic uncertainties which may negatively impact the Company’s business operations. While the disruption is expected to be temporary, there is uncertainty surrounding the duration and extent of the impact. The impact of the coronavirus outbreak on the financial statements cannot be reasonably estimated at this time.

 

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.